By Rory D. Sweeney

HERSHEY, Pa. — New Jersey Board of Public Utilities President Joe Fiordaliso is so exasperated by PJM that he’s considering pulling the state from the RTO. And New Jersey is not alone in its frustrations, regulators said at the Mid-Atlantic Conference of Regulatory Utilities Commissioners annual meeting last week.

“I will not allow New Jersey to be the Cinderella of PJM,” Fiordaliso said in an interview he sought out with RTO Insider. “It’s not rocket science to make people feel a part of the process. I don’t feel a part of the process. … Pick up the phone. … That’s all we want.”

Cinderella’s story, of course, ended happily. Fiordaliso’s mood last week was more like Patrick Swayze’s declaration in Dirty Dancing: “Nobody puts Baby in a corner.”

Fiordaliso said he doesn’t feel PJM is “serving New Jersey well” and that he’s “been disturbed about it since I assumed the [BPU] presidency” in January. And while he proudly states that the Garden State is one of PJM’s “founding fathers” — “the ‘J’ stands for New Jersey,” he reminds — the tension could be the beginning of the breakup.

“I’m exploring it, let’s put it that way,” he said of whether he would push the state toward leaving the RTO.

“I have to work what’s in the best interest of the ratepayers and the citizens of the state of New Jersey. If I don’t feel that PJM is providing that, then I have to start looking at other options. … If PJM is not in my corner on that, then I guess we have nothing to talk about.”

Other States

Although he declined to name anyone else, Fiordaliso indicated other PJM states may share his perspective. While commissioners in other states weren’t as outspoken, several said they shared his frustrations.

“I think you would find a number of states that certainly would have the same concerns that he has,” said Illinois Commerce Commissioner John Rosales, the president of the Organization of PJM States Inc. (OPSI). “I’ve made this clear to [PJM CEO] Andy [Ott] that the communication could be better.”

“With regard to people being frustrated enough to consider other options, I will say it’s been bandied about a bit,” said a Maryland Public Service Commissioner who spoke on condition of anonymity. “I’m not sure Maryland is there quite yet, but if the states are pushed too far, I think more than a few states will come to similar conclusions. … There’s a lot of frustration with an entity like the market operator trying to mitigate or overcome state policies. States are sovereign states, and they have every right to set their own policy. We don’t obtain that right from the market operator. The states don’t exist to serve the market; the market exists to serve the states.”

W.Va., Pa. Staying Put

Regulators from West Virginia and Pennsylvania said they are not considering leaving the RTO.

West Virginia Public Service Commissioner Brooks McCabe said he has heard no discussions about his state considering leaving PJM. He advised states to “keep the powder dry; don’t get into fights you don’t need to get into.”

The Pennsylvania Public Utility Commission said in a statement that it “values the role that PJM plays in the wholesale markets. Pennsylvania is not considering withdrawing from the RTO.”

However, there are tensions in Pennsylvania as well.

The Pennsylvania legislature’s Nuclear Energy Caucus said in a Feb. 9 letter that the lawmakers are “losing confidence in the ability of wholesale electric markets to … ensure stable prices for our citizens and a reliable and resilient electrical grid.” (See PJM Responds to Pa. Concerns About Baseload Plants.)

PUC Vice Chairman Andrew Place told RTO Insider in May that he agreed with FERC Commissioner Robert Powelson, a former Pennsylvania regulator, that there is an “erosion of confidence” in RTO stakeholder processes. Place said “PJM is swimming and drowning in capacity” and that its capacity repricing proposal “only worsens that.” (See Powelson: ‘Erosion of Confidence’ in Stakeholder Process.)

FERC on Friday rejected PJM’s repricing proposal and instead ordered the RTO to expand its minimum offer price rule to include existing generation receiving state subsidies — including New Jersey’s and Illinois’ nuclear plants and generation supported by renewable portfolio standards. (See FERC Orders PJM Capacity Market Revamp.)

Commissioner Cheryl LaFleur, who dissented, said the ruling could force states into “reregulation.”

“I am particularly troubled that, as a result of today’s order, the commission will be hamstrung in its ability to openly and honestly engage with the states about whether this proposal will meet their needs, and how they might operate under this construct,” she wrote.

PJM Responds

PJM spokeswoman Susan Buehler said in a statement that the RTO is a “customer service organization” and is “always striving to enhance our communications.”

But because of the diversity of PJM — 13 states and D.C. — she said, “It is likely on any given matter one or more states may have a view opposite of PJM and possibly opposite other states. We attempt to find solutions that work for all interested stakeholders and members. PJM is independent of our members and stakeholders; we execute our mission of reliable operations, nondiscriminatory markets and long-term transmission planning.”

‘Very Disappointing’

Illinois’ Rosales told RTO Insider in May he agreed with criticism that PJM has not been sufficiently responsive to the states, calling the RTO’s capacity repricing filing “very disappointing.”

Rosales said he is not pushing for Illinois to withdraw from PJM but would not “hinder” it. Commonwealth Edison, a utility owned by Exelon, is the sole PJM member serving load in Illinois.

“We would not stand in their way if they decided they wanted to go to MISO,” Rosales said, adding that the idea of Illinois creating its own single-state RTO has “never come up … in conversations with this commission.”

Commonwealth Edison did not respond to a request for comment.

Rosales said communication has improved since PJM’s annual meeting in May. He said he had a one-on-one meeting with Ott there, and “it seems to be going a little better.”

However, for the first five months of this year, “I can understand the states saying that we’re really having bad communications,” he said. The issue, he said, was that PJM often sends mid-level envoys to meetings who can only communicate messages, rather than decisionmakers who could answer for the RTO. That lack of direct engagement has improved, he said.

“It always seemed like they wanted to [improve], but let’s see where they go from here,” he added.

McCabe: Stay Engaged

West Virginia’s McCabe said the states have issues “that we can effectively address” with PJM.

“Just because we have disagreements doesn’t mean we have to get mad and leave the discussion. I am one for staying at the table. I’m very comfortable in a somewhat contentious environment as long as everyone is at the table and really trying hard to not just clarify their positioning properly but to understand the position of the opposing parties. We need to focus more on that,” he said. “At some point, we’ll have to make some of those tough decisions, but I think we have time.”

Lack of Partnership

Fiordaliso said he believes he’s getting “lip service” and “being patronized” by PJM. Specifically, he feels PJM failed to defend the state in a recent FERC fight with NYISO over transmission construction costs. (See PSE&G on the Hook for Bergen-Linden Costs.)

“We feel that PJM should be supporting New Jersey’s position regarding another entity,” he said. “They submitted a letter in support but never used the word ‘support.’ That’s disturbing to me. … We would like more support. Shouldn’t PJM be defending N.J.’s position? … I’m sure they listen, but I wonder how much they hear.”

He recounted an April OPSI meeting in Jersey City that he said PJM decision-makers did not attend. “We’re looking at [these] beautiful Lower Manhattan lights, and I jokingly say to my colleagues in OPSI, ‘Look at those lights. New Jersey ratepayers are paying for them,’” he said. “I don’t mind New Jersey paying for what it gets, but I’m not willing to pay for what New York gets.”

Buehler said transmission cost allocation is beyond PJM’s authority. “Understandably, there are many factors to consider and many equity implications related to FERC’s goal in establishing cost allocation — ensuring that the beneficiaries of transmission reinforcement, either systemwide or specific, are assigned the cost obligation,” she said.

Fiordaliso wants more individual and direct communication from PJM in ways that make states feel like “partners” in the market and said he doesn’t feel RTO staff want to do that. He acknowledged that disagreements are inevitable but said, “Many times out of disagreement comes a better product.”

“I would like to see them to say, ‘You know what, New Jersey? Some of your ideas maybe are pretty good. Let’s see what we can work out,’” he said. “I find us more in contention with PJM rather than in cooperation with PJM. And that disturbs me.”

He said he purposefully declined PJM’s invitation to a luncheon it was hosting at last week’s MACRUC meeting because “I’m annoyed.” He questioned why PJM staff did not inquire why he didn’t attend. He conceded that they probably didn’t get the message and don’t have a “next step” planned.

PJM’s size may play against it, as there are “diverse interests between the many states,” he said, but added that staff have “an obligation, as we do, to try to get us all together.”

“Might I be wrong? Maybe I am. But they have to show me I am wrong,” he said. “My door is always open. My phone works. Call me. Come to my door. I’m willing to meet you more than halfway.”