PJM Manual 11: Energy & Ancillary Services Market Operations Revision: 854 Effective Date: August 25, 2016 Prepared by Forward Market Operations ©PJM 2016 i Manual 11: Energy & Ancillary Services Market Operations Revision History Section 2: Overview of the PJM Energy Markets Welcome to the Overview of the PJM Energy Markets section of the PJM Manual for Energy & Ancillary Services Market Operations. In this section you will find the following information: • An overview description of the PJM Energy Markets (see “Overview of PJM Energy Markets”). • A list of the PJM Two-Settlement Market Business Rules (see “PJM Energy Markets Business Rules”). 2.3 Energy Market Business Rules 2.3.3 Market Sellers The following business rules apply to Market Sellers: • Self-scheduled generation shall submit an hourly MW schedule. • Generators that are Capacity Resources shall submit offers into the Day-ahead Market, even if they are unavailable due to forced, planned, or maintenance outages. • Generation Capacity Resources are considered Capacity Performance Resources for purposes of determining the applicable PLS for the resource if they have a daily Capacity Performance obligation for any MW of Capacity Performance product for that delivery day. In other words, if a Generation Capacity Resource has a capacity commitment for a certain number of MW in an RPM Auction for the 2016/2017 or 2017/2018 Delivery Years as an “Annual Resource” (i.e. non-Capacity Performance Resource), but also has a capacity commitment for a certain number of MW through a Transition Incremental Auction for the same Delivery Year as a Capacity Performance Resource, the PLS for that resource shall be the unit-specific PLS applicable to Capacity Performance Resources, not the default PLS that typically applies to “Annual Resources”. • Generators that are Capacity Resources and are self-scheduling shall submit offer data in the event that they are called upon during emergency procedures. Such offers shall be based on the ICAP equivalent of the cleared UCAP capacity commitment. • Generation Capacity Resources shall submit a schedule of availability for the next seven days and may submit non-binding offer prices for the days beyond the next Operating Day. • The set of offer data last submitted for each Generation Capacity Resource shall remain in effect for each day until specifically superseded by subsequent offers. 2 Manual 11: Energy & Ancillary Services Market Operations Revision History • If a Generation Capacity Resource is not scheduled in the Day-ahead Market, it may revise its offer and submit into the real-time market or it may self-schedule the resource. • Generation owners planning to run generation resources scheduled in the Day-ahead Markets are required to call the PJM Control Center at least 20 minutes prior to bringing the unit online. Generation owners of self-scheduled generation resources must also provide at least 20 minutes notice. • Generation resources that are scheduled in the Day-ahead Market have a financial obligation to sell their output in real-time. Provisions exist in the Tariff that permit make whole payments to be made to those combustion turbines that are scheduled in the Day- ahead Market and then not called on in real-time by PJM that are furthered defined in PJM Manual 28. • When a generation resource is not scheduled in the Day-Ahead Energy Market or the Reserve Adequacy Commitment (RAC) by PJM, the Market Seller may update the cost- based schedules availability hourly three hours prior to the operating hour. The cost- based schedule made available must follow the Generation Owner’s fuel cost policy as defined in PJM Manual 15: Cost Development Guidelines. A generation resource may not change schedule availability once it has been committed by PJM for the hours in which it is committed. In order to update cost-based schedule availability, the Generation Owner must select the ‘Use Cost Schedule in Real Time’ flag in Markets Gateway (New Schedule Availability Update Tab) between 1415-2100 the day prior to the operating day. Selecting this flag will make the price-based schedule unavailable for the operating day selected. • Generation Capacity Resources that have notification, startup, soak, and minimum run times that exceed 24 hours must submit binding offer prices for the next seven days. • Generation Capacity Resources that have notification plus startup times that exceed 24 hours and have been called on by PJM dispatch in advance of the close of the Day- ahead Market bid period for the desired Operating Day must modify their notification and startup time prior to the close of the market bid period for that day in order to create the possibility for the unit to be committed in the Day-ahead Market. • Generation resources that are committed by PJM in advance of the Day-Ahead Energy Market will be offer capped and committed on the available schedule at the time of the commitment. The cost-based schedule made available must follow the Generation Owner’s fuel cost policy as defined in PJM Manual 15: Cost Development Guidelines. • Each Generation Capacity Resource must make available at least one cost-based schedule and for price based units, if it falls within the types of generators in the PJM Unit Parameter matrix it must also submit a Price Based Parameter Limited Schedule. • Generation offers may consist of startup, no-load and incremental energy offer. Manual 11: Energy & Ancillary Services Market Operations Revision History • Generation resource cost based incremental energy offers must be developed in accordance with Manual 15 and PJM’s governing documents. • Generation resource market based incremental energy offers may not exceed $1,000/MWh unless cost based incremental energy offer is greater than $1,000/MWh then the market based incremental energy offer is capped at the lesser of the cost based incremental energy offer or $2,000/MWh. • Market Sellers with a cost based incremental energy offer greater than $2,000/MWh may be eligible to receive credit for Operating Reserves. Market Sellers must submit all relevant documentation demonstrating the calculation of costs greater than $2,000/MWh to PJM and the MMU in accordance with Attachment D. • Emergency and Pre-Emergency Demand Resource emergency or pre-emergency offer price may not exceed the following: o 30 minute lead time: $1,000/MWh, plus the applicable Primary Reserve Penalty Factor, minus $1.00 o approved 60 minute lead time: $1,000/MWh, plus [the applicable Primary Reserve Penalty Factor divided by 2]; and o approved 120 minute lead time: $1,100/MWh. • An economic demand resource offer may not exceed $1,000/MWh, plus the applicable Primary Reserve Penalty Factor, minus $1.00 • Energy resources may offer into the Day-ahead Market or Real-time Market. • If an Energy resource does not submit offer data, then the offer is assumed to be a zero MW quantity. • Intermittent Generation Resources, that are Capacity Resources, and Capacity Storage Resources shall meet the must offer requirement by either self-scheduling (Availability = Must Run) or may allow the Day-ahead Market to schedule by offering the unit as a dispatchable resource (Availability = Economic). • The hourly Day-ahead self-scheduled values for intermittent resources and Capacity Storage Resources may vary hour to hour from the capacity obligation value, • For price-based units, a price-based parameter limited schedule must be offered into the Day-ahead and Balancing Market. All price-based units have the option of submitting a second price schedule that is not parameter limited. In addition to the price-based schedules, one cost-based schedule shall be made available for PJM's use in the event that the resource is used to control a transmission constraint. The cost-based schedule shall be parameter-limited. Manual 11: Energy & Ancillary Services Market Operations Revision History • A generator offer that is accepted for the Day-ahead Market automatically carries over into the balancing market. • A generator offer for a generating unit with combined cycle capability shall make available either the schedules for the CTs or the schedule for the combined cycle unit, not both. Only CTs may submit weather curves, which specify MW limits for CTs as a function of temperature. • Forecast points shall consist of a daytime temperature and a nighttime temperature. • There are separate weather curves for economic MW and for emergency MW. • Each CT is assigned to a weather point, which is entered by the Operating Company. As generating units change ownership it may be necessary to add weather points. The default for the weather points is the PJM temperature forecast. • The priority of generator offer operating limits are as follows: (1) Unit Hourly MW limits (Markets Gateway>Generator>Unit>Hourly ), (2) Daily Unit Schedule Limits (Markets Gateway>Generator> Schedules>Detail), (3) Unit limits (Markets Gateway>Unit>Detail). Daily unit schedule MW limits can be overridden by unit hourly MW limits. Weather curves for CTs apply to both unit limits and schedule limits. • Market Sellers may submit increment offers or decrement bids at any hub, transmission zone, aggregate, single bus or eligible external interface point (posted on the PJM Web site) for which an LMP is calculated. It is not required that physical generation or load exists at the location that is specified in the increment offer or decrement bid. • A price-based unit has the option to choose cost-based start-up and no-load fees. A price-based unit that chooses the cost based option may change the start-up and no- load fees daily. A priced-based unit that chooses the price based option will continue to be able to change the start-up and no-load fees twice a year. • The choice between using cost-based and price-based startup and no-load fees can be made twice a year during the same open enrollment window (on or before 1030 hours March 31 for the period April 1 through September 30 and on or before 1030 hours September 30 for the period October 1 through March 31). Period 1 is defined as the period of time beginning April 1 and ending September 30. Period 2 is defined as the period of time beginning October 1 and ending March 31. If a priced based unit chooses the cost-based start-up and no-load fees option, the decision cannot be changed until the next open enrollment period takes place. • When a unit or part of a unit is designated as Maximum Emergency (ME), this means that the referenced output levels may require extraordinary procedures and that the designated MW is available to PJM only when PJM requests Maximum Emergency Generation. Designation of a unit or a portion of a unit as ME should be based on the Manual 11: Energy & Ancillary Services Market Operations Revision History real operating characteristics of the unit and not be used to withhold all or a portion of the capacity of a unit from the Day-ahead Market. • Designation of all or part of a unit’s capacity as Maximum Emergency (ME) constitutes withholding in the Day-ahead Market, if: o The capacity is not designated as ME in the bid for the Real-time Market, or; o There is no physical reason to designate the unit as ME. • The consequence of withholding a unit’s capacity under ME is: o The unit will be given an outage ticket which reflects a de-rating equal to the positive difference in capacity designated Maximum Emergency in the bid for the Day-ahead Market and capacity designated Maximum Emergency in the bid for the Real-time Market. • A unit bid includes an Economic Maximum point, which is the highest output on its bid curve that the unit is offering for economic dispatch. The Economic Max represents the highest unrestricted level of MW that the operating company will operate the unit, under its offer, for economic dispatch. The Economic Max point should be based on the actual capability of the unit to operate on its bid curve and should not be used to withhold a portion of the capacity of a unit from the Day-ahead Market. • Reduction of Economic Max MW constitutes withholding in the Day-ahead Energy Market, if: o The Economic Max MW is higher in the bid for the Real-time Energy Market than in the bid for the Day-ahead Market, or; o There is no physical reason to designate a lower Economic Max in the bid for the Day-ahead Market bid than in the bid for the Real-time Market. • The consequence of withholding a unit’s capacity by reduction of Economic Max MW is: o The unit will be given an outage ticket which reflects a derating equal to the positive difference in Economic Max output designated in the bid for the Real-time Market and in the bid for the Day-ahead Market. • Generating units that are connected to the system at the same electrical location may be aggregated and offered into the PJM market as a single unit. • The aggregated unit must be offered into the PJM markets as a single unit with only one set of offer data, including startup, no load and incremental energy. This rule applies to all energy and ancillary service markets into which the unit is offered. • Hourly integrated, revenue quality meter data must be submitted to Power Meter on the basis of the aggregated unit. Manual 11: Energy & Ancillary Services Market Operations Revision History • Real-time meter data is required for each physical unit in order to support the PJM state estimator model and to allow energy settlement on an individual unit level. • Balancing Operating Reserve deviations for aggregated units will be calculated based on the hourly aggregated unit output as defined in PJM Manual 28: Operating Agreement Accounting, Section Operating Reserve Accounting. • Balancing Operating Reserve Generator deviations for units deemed to be “not following dispatch” that occur at a single bus will be able to offset one another. • A “single bus” will be any unit located at the same site and that has the identical electrical impacts on the transmission system. Units are deemed to have identical electrical impacts on the transmission system if they meet the following criteria: o Units that have identical dfax to the system o Units that are on the same low side of the bus (i.e. connected at same voltage level) • In the case of units on busses with bus-tie breaker, if bus-tie breaker was open less than 5% of the hours in the previous 3 years, supplier netting of units will be allowed across this bus-tie breaker. • PJM will maintain a list of units that are deemed to have identical electrical impacts on the transmission system to be used for Balancing Operating Settlement. PJM will review the list on an annual basis. Generators will be reviewed as needed during any new generation activation or reconfiguration process as defined in Section 7 of PJM Manual 14d: Generator Operational Requirements. • Unit parameters do not have to be identical for the units’ deviation MW to offset one another. • If multiple units are deemed “not following dispatch” at a single bus, the deviation MW and direction of each unit at that bus will be summed to determine the deviation MW at that bus. • Units at a “single bus” must be owned or marketed by single PJM Market Participant. • Unit modeling changes in the PJM Markets Gateway system (unit type, aggregation level, for example), not including changes based on physical changes at the plant, can be made at the beginning of each quarter. • CT’s are permitted to provide an Economic Minimum less than the physical economic minimum value of the unit. Per the PJM Manual for Operating Agreement Accounting, for settlement purposes, PJM determines the resource’s hourly UDS LMP Desired MWh based on its dispatch rate, offer data, and minimum and maximum energy limits for that hour. For steam units, the lesser of the day-ahead scheduled and real-time Manual 11: Energy & Ancillary Services Market Operations Revision History economic minimum limits, and the greater of the day-ahead scheduled and real-time economic maximum limits, are used. For CT’s, operating at PJM direction, the actual real-time output is used as the UDS LMP Desired MWh value. 2.3.4 Minimum Generator Operating Parameters – Parameter Limited Schedules Below is the list of business rules to require units to submit schedules that meet minimum accepted parameters. Market Sellers are required to submit, per Section 2.3.3 of this Manual, as follows: (1) at least one cost-based schedule that is parameter limited, (2) one price-based schedule, and (3) one price-based parameter limited schedule. Generation Capacity Resources shall be committed on these schedules under the following circumstances: • For the 2014/2015 through 2017/2018 Delivery Years, in the event that PJM: (i) declares a Maximum Generation Emergency; (ii) issues a Maximum Generation Emergency Alert; or (iii) schedules units based on the anticipation of a Maximum Generation Emergency or a Maximum Generation Emergency Alert for all or any part of such Operating Day, generation resources will be committed on the more economic schedule of their price based parameter-limited schedule and price based schedule. • For Capacity Performance Resources, in the event that PJM: (i) declares a Maximum Generation Emergency; (ii) issues a Maximum Generation Emergency Alert, Hot Weather Alert, Cold Weather Alert; or (iii) schedules units based on the anticipation of a Maximum Generation Emergency, Maximum Generation Emergency Alert, Hot Weather Alert or Cold Weather Alert for all or any part of such Operating Day; generation resources will be committed on the more economic schedule of their price based parameter limited schedule and price based schedule. • For Base Capacity Resources, in the event that PJM: (i) declares a Maximum Generation Emergency; (ii) issues a Maximum Generation Emergency Alert, Hot Weather Alert during hot weather operations; or (iii) schedules units based on the anticipation of a Maximum Generation Emergency, Maximum Generation Emergency Alert, Hot Weather Alert during hot weather operations for all or any part of such Operating Day; generation resources will be committed on the more economic schedule of their price based parameter limited schedule and price based schedule. • If a Market Seller fails the three pivotal supplier test in the Energy Markets, the Seller’s resources will be committed on the schedule with the least cost among the cost-based schedule, price-based schedule and price-based parameter limited schedule. • For the 2014/2015 through 2017/2018 Delivery Years, PJM will define a list of minimum acceptable operating parameters for Generation Capacity Resources other than Capacity Performance Resources, and for the 2018/2019 Delivery Year for generation resources of FRR Entities not committed as Base Capacity Resources or Capacity Performance Resources, based on an analysis of historically submitted offers, for each unit class for the following parameters: Manual 11: Energy & Ancillary Services Market Operations Revision History o Turn Down Ratio o Minimum Down Time o Minimum Run Time o Maximum Daily Starts o Maximum Weekly Starts o Soak Time • For the 2016/2017 and subsequent Delivery Years for Capacity Performance Resources, and for the 2018/2019 and 2019/2020 Delivery Years for Base Capacity Resources, the list of minimum acceptable parameters will consist of the following parameters: o Turn Down Ratio o Minimum Down Time o Minimum Run Time o Maximum Daily Starts o Maximum Weekly Starts o Maximum Run Time o Start Up Time o Notification Time o Soak Time • For the Delivery Years up to an including of the 2017/2018 Delivery Year, the limits set forth in the Parameter Limited Schedule Matrix shall apply to Generation Capacity Resources, other than Capacity Performance Resources, and for the 2018/2019 Delivery Year for generation resources of FRR Entities not committed as Capacity Performance Resources or Base Capacity Resources, unless the generation resource is operating pursuant to an exception from the default values due to physical operational limitations that prevent the resource from meeting the minimum parameters. The Parameter Limited Schedule Matrix is found in Section 6.6(c) of Attachment K-Appendix of the Tariff and the parallel provision of Schedule 1 of the Operating Agreement found at: http://www.pjm.com/documents/agreements.aspx. • For the 2018/2019 and 2019/2020 Delivery Years for Base Capacity Resources, and the 2016/2017 Delivery Year and subsequent Delivery Years for Capacity Performance Resources, PJM will determine for each such resource its unit-specific parameter limits based on the operating design characteristics and other constraints of that resource. The resource’s unit-specific parameter limits will apply for that resource unless it is operating pursuant to an exception from those limits under section 6.6(h) of Attachment K- Appendix of the Tariff and the parallel provision of Schedule 1 of the Operating Manual 11: Energy & Ancillary Services Market Operations Revision History Agreement due to operational limitations that prevent it from meeting the minimum resource parameters. • Market Sellers that do not believe their individual resources can meet the unit-specific parameter limits determined by PJM due to actual operating constraints, can request that PJM establish adjusted unit-specific parameter limits for those resources. The Market Seller may request adjusted unit-specific parameter limits by providing all the necessary data, information and documentation to PJM in order to justify and support the adjusted unit-specific parameter limits at [email protected] by no later than the February 28 immediately preceding the first Delivery Year for which the adjusted unit-specific parameter limits are requested to commence, and provide technical information about the operational limits that support the requested adjustment. PJM shall notify the Market Seller if its request was approved or denied by no later than April 15. The effective date of the requested parameter shall be no earlier than June 1 of the first applicable Delivery Year. PJM will consult with the Market Monitoring Unit and consider any input received in its determination of a resource’s unit-specific parameter limits. • Once PJM has made a determination of the unit-specific parameter limited schedule values for a Generation Capacity Resource, those values will remain applicable to the resource until such time as the Office of the Interconnection determines that a change is needed based on changed operational capabilities of the resource. • The operational limitations that support adjusted unit-specific parameter limits shall be (a) physical operational limitation based on operating design characteristics of the resource, or (b) other actual physical constraints that are not based on the characteristics of the resource, including contractual limitations. For a contractual limit to be considered a physical constraint which the Market Seller should be permitted to reflect in its unit-specific parameter limits for the resource, and not an economic constraint which should not be taken into consideration in the determination of the unit- specific parameter limits for that resource, the contractual limit must be based on a natural gas pipeline transportation contract that is for the best available service offered by the pipeline and available to the Market Seller rather than a lower cost option that provides less flexible service. For example, if a pipeline offers hourly nominations and/or no notice service, the resource’s operational parameters will be based on those more flexible services that are available even if a less flexible service is procured. • Only actual physical operational limitations, fuel contractual constraints, environmental limitations and other actual constraints on a resource will be considered for adjustment requests. The following list is not an exhaustive list, but provides examples of the types of information and documentation PJM would request to support adjusted unit-specific parameter limits requests: o Start Up Time adjustments –OEM (Original Equipment Manufacturer) backup documentation, control room data, startup/loading curves and a detailed start-up sequence listing the required steps along with the time required to perform each step.