PJM to Modify Calculation Methodology for Marginal Losses

PJM has filed at FERC to modify the methodology for calculating marginal losses.

Specifically, PJM is seeking to base marginal loss calculations on all transmission facilities, meaning those facilities that the transmission owners report as part of their FERC Form 1 and include in the PJM transmission service rate.

This is essentially the same definition of "Transmission Facilities" used in the Consolidated Transmission Owners Agreement.

This methodology would also remove distribution facilities from the calculation.

PJM's marginal losses calculation currently is based on all facilities -- including not only transmission but also distribution -- that PJM includes in its network model.

"This current method of determining marginal losses is unjust and unreasonable. The Commission already has found that PJM should not calculate marginal losses on facilities that it does not operate and control, and PJM does not operate or control distribution facilities," PJM said.

Moreover, PJM said that use of the network model for the marginal loss determination also has led to arbitrary differences among transmission zones in the facilities included in the marginal loss calculation; as some zones have included distribution facilities, for example, and some have not.

"Equating the network model and the marginal losses calculation also is counterproductive. One goal of the model is to help calculate accurate State Estimator solutions to guide PJM's operations. Including distribution facilities that PJM does not operate or control can improve the accuracy and robustness (i.e. – the reliability with which the State Estimator is able to consistently achieve a solution) of the model. But if the model is then used to help determine the losses charged to customers, transmission owners adversely affected by those rate impacts may have an incentive to remove those facilities from the model. That, in turn, would reduce the accuracy and robustness of the model. The better approach is to separate these two determinations and include facilities appropriate to the losses determination in the losses determination, and facilities appropriate to the network model in the network model," PJM said