Demand Response related market discussions at MISO, SPP and PJM as of February 2024.
LMR notification times at MISO, Tiered approach for DR at SPP and no FERC decision yet on DR bonus payments at PJM.
If you are not following the Independent System Operator (ISO) stakeholder committees, then I have you covered for at least the demand response topic that I am following at MISO, SPP and PJM. I am aware of NYISO’s “Engaging the Demand Side, Issue Discovery Report” published December 2023. I will dig into that report at a future date.
At MISO – Load Modifying Resource (LMR) accreditation –
As most of you know, MISO is going to file a new method known as Direct – Loss of Load (D-LOL) for capacity credit. The focus has been on renewable resources so far, but MISO is also changing capacity credit calculations for LMRs. Recall that LMRs are LMR-DR and LMR-BTMG.
For LMRs, the sliding scale based on notification times is –
if an LMR needs less than 2 hours of notification time and can curtail for more than 4 hours, then, it receives 100% capacity credit.
See slide 7 here.
But if the LMR needs more than 2 hours but less than 4 hours of notification time, then, 70% capacity credit in the MISO seasonal capacity auction. LMRs needing more than 4 hours of notification time but less than 6 hours get 50% capacity credit.
LMRs needing more than 6 hours of notification time – sayonara!
MISO’s objective here is to provide more capacity credit for LMRs that can be called upon to perform with little notice. LMRs can cross-register as Emergency Demand Response resources, and MISO is planning to close this EDR program category. More on that later in the MISO section.
There are more than 10,000 MW of LMRs registered in the MISO capacity market. [See Table 16: Demand Response Capability in MISO and Neighboring RTOs]
Recall, for the most part, these LMRs provide a way for MISO utilities to reduce their planning reserve margin requirement. The SPP demand response policy paper is going down the same path with its tiered approach.
Both MISO and SPP have to file their approach with FERC, and FERC must approve. MISO is far along this process than SPP.
DR Providers dodged a bullet on MISO’s LMR Accreditation reform when MISO split their changes into short-term and long-term. MISO has proposed to require all Demand Response Resource – Type I (similar to Block Demand Response at SPP) to have telemetry in place. That DRR – Type I telemetry requirement is now in the long-term category, which means MISO will come back to this after FERC filing. Recall that only DRR-Type II requires telemetry because it can provide regulation.
Short-term changes at MISO for LMR accreditation, in addition to the sliding scale based on notification times, include requiring Elemental Pricing Nodes (EPNodes) instead of Zip Codes for locational information (this is not required until the registration period for the 2025/26 auction), and requiring documentation and meter data for end use associated with the LMRs in the affected area, including those LMRs without Scheduling Instructions, when a Capacity Advisory or higher is declared.[Slide 8 here]
MISO is also planning to close the Emergency Demand Response (EDR) program. [Slide 19 here]
So, a lot of DR-related changes are happening at MISO at the same time as renewable resource changes, just like at PJM with its seasonal capacity market filing.
I didn’t even mention the changes proposed by Voltus. MISO is in the process of collecting stakeholder feedback on these 2 changes. See “Location-based LMR approvals” and “Time of Replacement Capacity Enrollments”.
The timing of replacement capacity enrollments is a time-sensitive topic because, as Luke Metcalf of Voltus states, Mid-Year replacement capacity is only available when a need has been identified.
How about procuring Replacement capacity before the need arises? Luke says we need to buy fire extinguishers before there is a fire, not during. That analogy stuck with me.
Finally, MISO DERTF is discussing MISO’s revised proposal to FERC. This MISO FERC filing is due in May. The big question is - what is the proposed implementation date for FERC Order 2222 at MISO? Previously, it was 2030, and FERC didn’t agree with it.
At SPP – Demand Response Policy Paper/DR Tiered accreditation –
SPP is also changing how it is providing capacity credit to Demand Response resources, but the difference here is that SPP does not have a capacity market. So, the changes proposed – this tiered approach applies to demand response that is registered by the Load Resource Entities (similar to Load Serving Entities at most ISOs) to meet their planning reserve margin requirements.
There is no notification time that I am aware of in the SPP DR Tiered accreditation topic, but for 100% credit, the DR must be capable of curtailing demand for 8 hours or more.
Here, see for yourself the proposed SPP tiers for DR –
TIER 1 – 8 HOUR DURATION AND HIGH AVAILABILITY
Continuous Duration Requirement – 8 hours
Available Call Frequency – 1 call per 24 hours
Available Calls per Season – no limit
Seasonal Hours Limit – no limit
TIER 2 – 6 HOUR DURATION AND INTERMEDIATE AVAILABILITY
Continuous Duration Requirement – 6 hours
Available Call Frequency – 1 call per 24 hours
Available Calls per Season – 20 events
Seasonal Hours Limit – 120 hours
TIER 3 – 4 HOUR DURATION AND LIMITED AVAILABILITY
Continuous Duration Requirement – 4 hours
Available Call Frequency – 1 call per 24 hours
Available Calls per Season – 12 events
Seasonal Hours Limit – 48 hours
Then, there is capacity testing and operating testing. SPP still has a ways to go on this proposed requirement.
SPP is also proposing changes to its Market Storage Resource. That is a topic for another day.
At PJM – I am waiting for FERC's decision on Demand Response Performance Payments.
On this capacity market topic, I was surprised that Commissioner Clements approved PJM’s marginal capacity credit methodology even though she has dissented on the Demand Resource availability window topic, AND previously she had raised concerns at both MISO and SPP. When MISO proposed Schedule 53 resources, Commissioner Clements took MISO to task for bifurcating capacity credit process for non-thermal resources and thermal resources. But approved MISO’s seasonal capacity market.
The proposed requirement that I am most interested in is the lack of performance payments (aka bonus payments) for demand response resources in PJM’s capacity market.
I am also following an Issue Charge (called Issue Submission at MISO) at PJM, that deals with automating bid parameters for economic demand response. The issue is Economic Demand Response programs need manual intervention for Aggregators to update their offer parameters instead of automatically entering their downtime in between curtailment events. Read more here.
For the life of me, what I don’t understand is, how a simple automation change needs to go through a stakeholder committee process, multiple meetings, and endless discussions.