At the September Distributed Resources Subcommittee (DISRS), PJM announced that it is proposing to move the effective date for the full DER Aggregation Model from February 2, 2026, to February 2, 2028. PJM states the February 2026 date is no longer feasible due to the length of time it took for PJM to receive clarity from FERC regarding the DER Aggregation Participation Model design.
There is a legitimate argument for PJM that FERC did not respond in a timely manner, although PJM did not ask FERC to decide by a certain date when it filed its first compliance plan. PJM shares some of the burden in FERC’s inaction, too, because PJM asked for multiple extension requests throughout the process. Regardless, customers in PJM territory could end up paying higher capacity market costs due to FERC and PJM’s actions.
Stranded DR capacity and delays in DER Aggregations may increase future capacity prices
A recent PJM capacity auction saw high capacity prices. While the rest of PJM cleared at $269 per MW-day, Baltimore Gas & Electric and Dominion zones cleared at $466 and $444 per MW-day, respectively. At the September 11 Market Implementation Committee (MIC) meeting, the Demand Response (DR) Coalition presented its proposal to reduce PJM’s capacity prices by proposing changes to access winter DR in PJM. Advanced Energy Management Alliance (AEMA), PJM Industrial Customer Coalition, CPower, Enel and NRG Curtailment Solutions, LLC are sponsors of this DR Coalition. The DR Coalition argues if PJM were able to access winter DR capacity then the capacity price would be approximately $210 per MW-day.
DR Coalition states that stranded winter DR increases costs to the load. The DR Coalition estimates that by removing 1300 MW of DR due to the recent Critical Issue Fast Path resource adequacy changes, PJM has increased the capacity costs by $2.96 Billion. The DR Coalition said capping the Installed Capacity (ICAP) at a lesser of Summer and Winter capability results in a stranded capacity of 3,000 MW, which is close to what PJM indicated for 25/26 BRA that Excess Capacity was reduced by 2,682 MW due to the CIFP changes. DR Coalition states at least half of this 2,682 MW appears to be DR. To access the stranded winter DR capacity of 1300-1500 MW, DR Coalition asked PJM to expand the DR Availability window.
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Additionally, consumer advocates in states like Maryland have recently complained to FERC about $785 million of grid solutions cost due to the 1272 MW Brandon Shores Power Plant deactivation. FERC didn’t side with Maryland’s consumer advocate. These transmission projects cannot be built overnight. Some of the new transmission projects could take years to build. Transmission advocates suggest this long lead time is why we should plan for high-voltage transmission now, not later. However, demand response and distributed energy resources are not long lead time resources. PJM’s proposed delay in implementing Order 2222 would mean it would take an additional two years for DERs to participate in PJM’s market and provide consumer benefits.
It is important to reflect upon how we got here
Any delay in PJM implementing FERC Order 2222 should be balanced against the time it took to arrive at a complete compliance proposal. FERC issued Order 2222 in September 2000. PJM’s proposed February 2028 date would mean that Order 2222 will be implemented after seven years and six months. Its start was delayed due to the Commission’s decision to first issue electric storage resource Order 841 in February 2018, even though the notice of proposed rulemaking for electric storage resources and aggregation of distributed energy resources was issued at the same time in November 2016.
PJM submitted its first compliance filing to FERC in February 2022, and FERC issued its decision in March 2023. I think PJM is justified in calling out FERC for its inaction during this nearly 11-month period. Still, PJM also asked for multiple extension requests throughout this process to work with its stakeholders. It is hard to keep track of these extension requests. PJM submitted its second compliance filing to FERC in September 2023, asking for an effective date of February 2026. To my knowledge, PJM did not tell FERC that it needs to receive a decision by a certain date; otherwise, the February 2026 effective date would be infeasible. In response to PJM’s September 2023 filing, FERC took nearly ten months and issued a decision in July 2024. PJM announced at its September 2024 stakeholder meeting that it is thinking of pushing out the implementation of Order 2222 until early 2028 because of FERC inaction.
It is crucial to find a way to streamline the communication and decision-making process between FERC and independent system operators like PJM. The current situation, where there is a significant time gap between a notice of proposed rulemaking and the issuance of an Order and where implementation is further delayed due to multiple extension requests and a lack of timely FERC decisions, is not sustainable.
This is especially true when considering the implications for state regulatory processes that need to be in place to implement an important order like Order 2222, which deals with distribution systems under state jurisdiction. Unless there is a strong and unified protest from DER providers, consumer advocates, and states at FERC when PJM ultimately files this new effective date, consumers will be left to bear the brunt of delays in implementing the aggregation of DERs.
