FERC Dismisses Complaint Concerning Limits on Use of Two Curtailment Service Providers By Same Customer in PJM

FERC dismissed a complaint from Viridity Energy, Inc. regarding the compensation provided to customers registering with one curtailment service provider (CSP) in PJM's capacity program, but who use a different CSP for energy and ancillary services (EL12-54).

Viridity claimed that PJM’s compensation provisions, as applicable to a Capacity Only resource, are unduly discriminatory because an end-use customer that registers with one CSP for capacity and a second CSP for energy does not receive a guaranteed energy payment when called to reduce load in response to an emergency. As a result, Viridity argues that Capacity Only participants, will not earn the same compensation as the Full Program Option participant, even though, according to Viridity, these entities are similarly situated.

FERC found that such treatment is justified, however, given certain measurement and verification issues

FERC noted that PJM's rules are designed to prevent demand resources represented by two different CSPs from submitting duplicate offers for the same megawatts, for the same time period, into any PJM market.

"[T]he distinctions in compensation accorded to a Full Program Option resource and a Capacity Option resource and a Capacity Only resource under the relevant provisions of PJM’s Emergency Load Response Program are justified by the need to avoid errors in measurement and verification by preventing end-use customers represented by two different CSPs from inadvertently (or intentionally) submitting duplicate offers for the same MWs covering the same time period. Duplicate offers, as PJM notes, could create reliability problems by erroneously indicating to PJM’s operators that they will be getting twice the demand reduction that is actually available during an emergency condition. As PJM further notes, market participants, in this circumstance, could be required to pay twice for the same reduction," FERC said

"Under PJM’s tariff, the end user can choose to use one CSP (and receive both capacity and automatic energy payments, with the possibility of being limited to the floor price), or use two CSPs (and receive only the capacity payment) and then seek an energy payment through an offer in the energy market. Viridity argues, in effect, that a customer given these options is being unduly discriminated against because the options, as their name implies, have qualitative differences. As the Commission has held, however, there is not necessarily undue discrimination simply because a customer is permitted to choose," FERC said