PJM Interconnection LLC’s board of managers on Feb. 13 directed PJM staff to submit a revised version of its energy price formation proposal for approval by the Federal Energy Regulatory Commission. The move comes after market participants failed to reach an agreement on a compromise proposal to update the energy reserve pricing rules. The board asked PJM to file a plan in line with that of the staff, with certain changes to reflect stakeholder discussions and feedback.

PJM issued a proposal in November 2017 to revise price formation rules in its energy markets by allowing all types of generators, both flexible and inflexible, to set the clearing price to accurately reflect the resources required to serve load to limit out-of-market payments. The plan has been under discussion since then, and last December, the board directed stakeholders to conclude deliberations by Jan. 31. PJM states criticized the “unnecessarily rushed timeline,” underscoring that the staff should be able to generate analyses that will inform stakeholders regarding the impacts of the revisions on market sellers and consumers.

PJM states raised concerns regarding the potential for duplication between energy or ancillary markets and the capacity construct that would result in ratepayers paying twice for the same product or service. They also expressed opposition to “non-market and administratively determined market design elements” which fail to reflect value to ratepayers with regard to operating reserve quantity risks they could face. The proposed changes to the energy and operating reserve markets would raise costs to ratepayers and the grid operator has not demonstrated how they will be implemented in a way that maintains reasonable rates, the states said.