New Jersey legislators are considering a bill that would require the Board of Public Utilities to study the implications of withdrawing from PJM and either going it alone or joining NYISO.

Members of the New Jersey Senate Environment and Energy Committee voted unanimously during a hearing on Monday to advance the bill, sponsored by committee Chair Bob Smith (D), with a series of amendments to the full Senate (S2804).

Lawmakers cited FERC’s Dec. 19 order expanding the PJM minimum offer price rule (MOPR) to all new state-subsidized resources as an impetus behind the bill. New Jersey was among several states to ask FERC in January to rehear the order. (See PJM MOPR Rehearing Requests Pour into FERC.)

Smith emphasized that his bill was not aimed at making any definitive answer as to leaving PJM but was created as a way for the BPU to analyze different options for the state’s electric grid and the potential impacts on ratepayers, utilities and energy generators.

“I actually had a whole bunch of calls about this bill saying, ‘What’s the real agenda?’ The real agenda is to get information,” Smith said during the hearing. “Nobody’s made a decision we want to leave PJM. Nobody’s made a decision we want to stay in PJM.”

Bill Language

The bill would require the BPU to conduct a study analyzing and comparing the potential costs and benefit impacts of five different scenarios, including:

• withdrawing from PJM and “establishing an electric transmission grid operating independently within New Jersey”;
• withdrawing from PJM and joining NYISO;
• remaining with PJM;
• any other electric transmission grid option that the BPU may consider to be “in the best interest of ratepayers of the state”;
• using the fixed resource requirement (FRR) alternative to satisfy the state’s resource adequacy needs and accelerate achievement of the state’s clean energy goals.

The BPU would be required to submit a written report to Gov. Phil Murphy and the legislature concerning the study results within a year of the bill’s passage, including the costs and impacts on renewable energy production, energy storage and distributed electric generation in the state. It also requires the study of any costs, physical or structural changes or regulatory approvals needed if there is a withdrawal from PJM.

The bill requires consultation with stakeholders, including power suppliers and public utilities, FERC, NERC and public and private entities that have conducted studies on transmission grids.

Smith said the BPU has already started public discussions mulling the implications of leaving the PJM capacity market in favor of the FRR option. (See N.J. Investigating Alternatives to PJM Capacity Market.) He said he doesn’t want the legislature to be “the dumbest group in the room” and not have enough information to make an educated decision.

“For anyone out there in the energy world, we’re not sending you a signal that we’re leaving PJM,” Smith said. “We’re sending you a signal that we want to be more informed rather than less informed.”

Current BPU Actions

New Jersey regulators have already taken the first steps in determining whether the state should remain in PJM’s capacity market or to go in a different direction to meet the state’s electricity needs.

The BPU voted March 27 to investigate if staying in the capacity market will impede Murphy’s goals of 100% clean energy sources in the state by 2050 or increase consumer costs (Docket No. EO20030203). (See NJ Unveils Plan for 100% Clean Energy by 2050.) The BPU received 40 filings of comments in response. (See NJ Regulators Weighing Input on Capacity Market Exit.)

Some stakeholders said the state should adopt the FRR because the expanded MOPR would hamstring its support for emission-free generation. Opponents said leaving the capacity market could end up costing state ratepayers millions, leaving them at the mercy of monopolistic generators.

PJM Perspective

Asim Haque, PJM vice president of state and member services, gave prepared testimony at Monday’s hearing, saying the RTO estimates that its regional operations, transmission planning and operation of wholesale markets saves between $3.2 billion and $4 billion a year, including $360 million to $460 million a year in New Jersey.

Haque’s testimony focused on PJM’s regional planning role and how New Jersey residents have benefited for more than 90 years being an integral part of the RTO. He said if the state chooses to “go it alone,” serious challenges would be presented because of the interstate nature of the transmission grid.

“PJM feels confident that New Jersey would continue to find the greatest value for its consumers in being part of PJM,” Haque said. “We believe that the study would show that PJM is the best option for New Jersey and all states in our footprint. Reliability. Affordability. All while trying to assist states in advancing their policy objectives.”

He said he is confident that any study conducted by the BPU would result in the state staying with PJM because leaving has “potentially some deleterious impacts to families and businesses in the state of New Jersey.”

“I understand that in these challenging times, folks are struggling, and this is an extremely complicated endeavor that could prove to be very costly during times of financial recovery,” Haque said. “We do feel confident that New Jersey will continue to find the greatest value for its consumers by being a part of PJM.”