Incremental Auction Clause Samples

Incremental Auction. Revenue Rights (IARRs) are ARRs made available by physical transmission system upgrades from customer funded transmission projects or from merchant transmission or generation interconnection requests. In order for a transmission project to generate IARRs, the project must create simultaneously feasible incremental market flow capability in PJM’s ARR market model, over and above all system capability being used by existing allocated ARRs and/or would be used by granting any prorated outstanding ARR requests, in the ARR market model.17 There are three approaches to the creation and assigning of IARRs: IARRs can be requested by customers, which requires the customer to build sufficient transmission to support the request; IARRs can be the granted as a result of customer transmission projects such as merchant transmission or generation interconnection projects; and IARRs can be the result of RTEP upgrades. In each case, the customer(s) paying for the upgrades are allocated the IARR that are created. The direct customer request approach for creating and allocating IARR should be eliminated from PJM’s tariff. Given the current allocation of existing ARRs relative to system capability, the upgrades needed to produce any quantity of IARR under this approach are prohibitively expensive and impractical. The PJM process is not sufficiently transparent for a potential customer to make a rational decision about a potential IARR project. Much of the information required to determine whether a particular IARR project is economically viable is confidential and proprietary to incumbent transmission 17 See PJM Incremental Auction Revenue Rights Model Development and Analysis, PJM June 12, 2017. <▇▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/~/media/markets-ops/ftr/pjm-iarr-model-development-and- analysis.ashx>. companies including the nature and cost of any required upgrades. IARRs are appropriately allocated to customers that have been assigned cost responsibility for certain upgrades included in the PJM’s Regional Transmission Expansion Plan (RTEP). These customers as defined in Schedule 12 of the Tariff are network service customers and/or merchant transmission facility owners that are assigned the cost responsibility for upgrades included in the PJM RTEP. PJM calculates IARRs for each regionally assigned facility and allocates the IARRs, if any are created by the upgrade, to eligible customers based on their percentage of cost responsibility. The customers may choose to decline the IARR allocati...