Differences between the monthly settlement of the regulation market and the weekly settlement of the energy market leaves “regulation only” resources and resources that do not participate in the regulation and energy markets within the month in a position where they must provide PJM with collateral to support credit obligations even though such resources may net revenue positive (i.e., owed money by PJM) across invoices.
Revenues from regulation market participation are credited to the resource on a monthly basis. Regulation market participants that do not actively participate in the energy market are charged on a weekly basis for the incidental net withdrawal of energy from the PJM system incurred while following the regulation signal. Since the charges related to the incidental energy withdraws are not netted on a weekly basis against regulation market revenues, “regulation-only” resources incur collateral requirements despite being owed an outstanding receivable from PJM. The impacted assets are required to collateralize their
energy market settlement solely because of the timing disconnect. Stakeholders will consider opportunities to improve the PJM credit policy that may improve this disconnect.