Author Dann Price

Dann Price

Dann Price has worked in the energy industry since 2008. As CPower’s Director of Market Development for the PJM market, Dann is responsible for keeping hundreds of demand response customers abreast of market conditions, energy prices, and regulatory issues.

With The Season’s First Snow, PJM Says “Bring It On”

December 12, 2017

A recap of the PJM 2017/18 Demand Response Summer season, and a preview of the Winter season just getting underway.

With the season’s first snow on the ground and the official start of Winter just days away, it’s a good time to look back at how the PJM Interconnection performed over the summer, and how it’s projected to perform in the months ahead. While we’re at it, let’s look a little further into the future, to the introduction of full-time Capacity Performance in DY 2020/21.

Early summer heat gave way to a milder late summer.

The 2017/18 PJM Summer DR season began with warmer than usual early summer temperatures and system loads. Although typically PJM’s five system peaks occur mid-July through August, this summer we saw two of the system peaks occur in early June and the others in July.  Which meant that DR customers needed to be on alert and ready for emergency events earlier in the summer then they are typically used to.  Peak shaving customers also had to be ready to predict early peak days and potentially may have missed them. This may mean higher Peak Load Contribution (PLC) values for the next power year. PJM’s Five Coincidental Peaks (5CP) for 2017 that are used to determine capacity costs through PLCs are shown in the table below.

7/19/2017 18 145,331
7/20/2017 17 145,097
7/21/2017 17 142,003
6/12/2017 18 140,660
6/13/2017 17 138,365

The summer ended without PJM declaring any emergency events, which means Limited DR customers needed only to comply with an hourly test event to show program compliance.  Extended Summer DR customers still have May 2018 to be on call for any emergency events, and Annual DR and Capacity Performance (CP) DR customers have the balance of the 2017/18 power year to be on call for emergency events.

Colder and snowier winter than last year projected by PJM.

In a recent press release, PJM states that weather patterns indicate a strong likelihood of a continuation of the cool Summer and Fall temperatures into the Winter. This could bring parts of the PJM territory periods of cold polar blasts, and bring greater chances for winter precipitation than we had experienced the past few winters.

But no worries. PJM reminds all end users that although it anticipates a colder winter—and has forecasted peak loads just over 135,000 MW—it has ample resources to meet the needs of the system demand, with just under 185,000 MW of dispatchable generating capacity.

This is good news for Annual and CP DR customers anxious about potential Winter emergency events.  Although all DR customers should be prepared to respond if needed and feel confident in their ability to perform, they should take comfort in PJM’s ability to meet demand and avoid the system entering into an emergency situation.

PJM’s Capacity Performance product is the answer to grid reliability.

As you’re probably well aware, PJM ushered in the new Capacity Performance (CP) product at the start of the 2016/17 season and will transition to a full CP-only market starting with the 2020/21 season.  This CP product was PJM’s response to the early 2014 extreme winter weather known as the Polar Vortex.  That winter exposed threats to PJM’s ability to meet winter demand as many generation units were unavailable or unable to meet system needs.  The CP product now imposes greater requirements on all capacity resources to ensure availability and reliability.  It is because of the new CP product that PJM feels even more confident in being able to meet both Winter and Summer system needs going forward.

CPower discusses the Capacity Performance product, the new market, and dissects some myths about the product and what it means to the DR community in its White Paper as well as part of its ongoing webinar series.  We highly recommend checking both of them out to help answer any questions you may have on the CP program and your ability to participate in it.

To learn more about PJM’s changing market or about how to be better prepared for potential grid instability this summer, contact Dann or any member of the CPower’s PJM Team.

What to expect in the upcoming PJM 2017/18 Demand Response season as well as a 2020/21 BRA preview.

April 27, 2017

A changing weather landscape may bring early summer heat.
Although the recent La Nina season is officially over, we are experiencing a Mother Nature hangover as the 2017 Spring season has seen above normal temperatures.  As we transition from La Nina to El Nino, we should expect the hotter than normal temperatures to continue through the early part of the summer in the PJM region.  This should give way to cooler than normal late summer temperatures, which is opposite of what we saw during the 2016 summer season.  Warmer temperatures early in the season could yield some emergency issues, especially localized transmission concerns, so be prepared early in the 2017/18 Demand Response (DR) season.

As usual, CPower tends to schedule the PJM mandatory test event early in the summer to ensure customers will have time to be retested in the event they under-perform. CPower customers should be on the lookout for our test event messaging.

Capacity Performance Non-Summer M&V changes take effect in 2017/18.
As part of PJM’s filing to FERC in November 2016, the Non-Summer Measurement and Verification (M&V) methodology for Capacity Performance (CP) has been changed starting with the 2017/18 season.  The new Non-Summer M&V will be a Winter PLC construct.  The Winter PLC will be based on the customer’s highest load value between 6am-9pm during PJM’s 5 Winter Peak Days.  CP Demand Response customers will have separate Summer and Winter PLCs and FSLs for compliance purposes although the load reduction will be the same value for the entire season.

PJM ushers in a new era of Demand Response with the 2020/21 BRA.
In May of 2017 PJM will conduct its annual Base Residual Auction (BRA) for the 2020/21 season.  This year marks the first year that Demand Response can only be Capacity Performance.  Although there will be a mechanism for Summer seasonal DR resources to offer and clear as a CP aggregation, the overwhelming majority of DR that clears the BRA will be pure CP.

Prognosticators are reviewing the auction parameters and making predictions on clearing prices.  Although capacity resources are expected to exit the market under the new CP construct, PJM has also lowered their load forecast, causing many to believe the CP price could clear flat compared to last year.  There is, however, reason to believe that there could be significant premiums in EMAAC and COMED due to limited CP resources and transmission constraints.  One can never predict participant behaviors which is a variable that always makes price prediction an interesting but inexact science.

During the 2020/21 season, many traditional “summer only” DR customers will be forced to participate as annual resources in the CP program at potentially a lesser load drop commitment, while others may leave the market entirely.  CPower would like to work with all DR customers to maximize their participation and find ways to keep them in the program as either CP enrollments or part of a CP aggregation.

To learn more about PJM’s changing market or about how to be better prepared for potential grid instability this summer, contact Dann or any member of the CPower’s PJM Team.

Hot Summer Ends Without Emergency Demand Response Events in PJM

October 07, 2016

The 2016 PJM summer compliance season which runs from June through September has come to an end without a PJM-initiated emergency demand response (DR) event.  The first six months of the year were already one of the warmest on record. So, for many of us sweating it out across the northeast, it was no surprise that this summer produced several heat waves that pushed system peaks to their highest levels in recent years.  PJM’s top 5 system peaks (see table), reflect the summer’s weather and should be the Five Coincidental Peaks (5CP) that drive customers’ capacity charges through their Peak Load Contribution (PLC).  It is important to note that any load reductions during these hours may reduce your capacity charges for next summer.


When it came to actual demand response events, however, a different picture unfolded compared to prior years. For instance, the 2013 summer saw system peaks at similar levels and was one of the most active summers for demand response customers ever.  So you may ask: Why were no Emergency DR events called this summer, despite the heat and high system peaks? A few reasons come to mind:

  1. Some of it may be attributed to PJM’s new reliability product, Capacity Performance (CP), which debuted this delivery year and imposes greater availability requirements on generation;
  2. Some of it may be attributed to increased transmission efficiency;
  3. Also, flat or declining system peaks are starting to reflect the impact of energy efficiency regulations (the last system peak demand record was set in 2007); and finally
  4. Pure Luck? After all, the timing of several heat waves passing through the PJM territory coincided during weekends.

Whatever the primary reason(s), PJM Emergency DR customers should take pride in their commitment to be on standby to reduce load when called upon. Your ability to curtail electricity consumption when needed by the grid is a tremendous asset to maintaining system reliability and preventing potential blackouts/brownouts.

This doesn’t mean that PJM may not have a reliability issue beyond the summer as the program year does run through May 2017. Also, while the summer period yields the greatest risk of an emergency event, demand response customers that have committed to curtailments all year should continue to be prepared to perform and reduce load if/when needed to support grid reliability.

Moreover, with the transition to the new CP product, demand response is morphing into a year-round program. Customers can start participating in CP now to get themselves prepared for the coming changes and earn additional capacity revenue in the process. Many forward-thinking facility managers are already thinking about how they may be able to participate beyond the summer and are reviewing effective winter curtailment strategies.

CPower would like to take this time to thank all demand response customers for their commitment to PJM reliability this summer.  CPower customers can always review their load drop test and event performance in the CPower App and should be expecting summer performance reports and payments starting early November.

Last but not least, we always encourage all participants to stay tuned for earnings opportunities in other DR programs available. Many participants augment their demand response earnings from the capacity program via active participation in PJM’s voluntary programs such as (price based) economic demand response and (faster response) ancillary services such as synchronized reserves.

Please feel free to contact Dann or the CPower team if you have any questions. Our engineering team is happy to help you understand the nuances of participating in these programs and assist in optimizing your overall energy savings and earnings year round.

How Weather and Capacity Performance will Affect Demand Response in PJM this Summer

June 16, 2016

El Nino, La Nina, and Capacity Performance could have an impact on demand response in PJM this summer. Let’s take a look at a few reasons why.

PJM is prepared to meet summer demand. Weather conditions are forecast to be mild, but don’t rule out emergency events.
In a May press release, PJM stated the RTO is prepared to meet the expected power demand of its more than 61 million customers this summer. The early patterns of the El Nino and La Nina cycles indicate we are expected to see milder temperatures early in the summer and hotter conditions in the late summer and early fall.

That’s not to say demand response participants shouldn’t expect an emergency event this season. PJM can still call events for smaller localized disturbances or if generation units in the region trip offline. That said, heat related calls should be minimal.

The addition of Capacity Performance (CP) on the system should help hold off PJM event calls as the Capacity Performance program requires resources to be available more often.

As usual, CPower tends to schedule the PJM mandatory test event early in the summer to ensure customers will have time to be retested in the event they under-perform. CPower customers should be on the lookout for our test event messaging.

Capacity charges on your supply bill will be higher than expected due to the Capacity Performance and the Transitional Auction.
The Base Residual Auction (BRA) set the capacity charge for customers. However, when PJM introduced Capacity Performance (CP) and adjusted their peak load by procuring 60% CP, they purchased the CP at a higher cost than the annual capacity. This will raise the total cost of capacity being allocated back to Load Serving Entities, who will in turn pass those costs along to the end user.

As always, demand response is a great way to offset increasing costs. However, the addition of Capacity Performance should result in less need for demand response resources to ensure grid reliability.

Results from the 2019/20 Base Residual Auction indicate a changing landscape and market dynamic for demand response resources in PJM.
This year’s BRA was the last that will include a seasonal or summer capacity product. Next year’s BRA for the 2020/21 delivery year will only contain the Capacity Performance product. For the 2019/20 BRA, PJM had adjusted their load forecast down to compensate for a few changes, most notably existing Energy Efficiency projects as their impact reduces the need for additional capacity.

This summer is the first to include capacity that will follow PJM’s Capacity Performance standards. Capacity Performance resources must produce electricity when called on regardless of weather conditions or extreme system conditions. Committed resources that do not perform when called upon will face significant non-performances charges. These resources were committed in a transitional capacity auction in August 2015.

To learn more about PJM’s changing market or about how to be better prepared for potential grid instability this summer, contact Dann or any member of the CPower’s PJM Team.