April 24, 2024
Public Interest, Environmental Groups Urge Transparency at PJM
Tyson Slocum, Public Citizen
Tyson Slocum, Public Citizen | © RTO Insider LLC
Consumer advocates, environmental groups and a Maryland lawmaker urged PJM to adopt more transparent decision making processes.

CAMBRIDGE, Md. — Consumer advocates, environmental groups and a Maryland lawmaker last week all urged PJM to become more transparent in its decision making.

Maryland legislators often find their energy policies are stymied at the RTO level and struggle to identify why, Lorig Charkoudian, a Democratic member of the state’s House of Delegates, said during a meeting of PJM’s Public Interest and Environmental Organizations User Group on May 3.

Charkoudian was sponsor of HB 1186, a bill that would require state utilities to submit annual reports detailing any recorded votes they make at an RTO and explain how each vote benefits the public interest. The bill passed the House 100-35 in March but was not brought to a vote before the Senate prior to conclusion of the legislative session and would require reintroduction for further consideration. (See Maryland Bill Would Require Utilities to Report Votes at PJM.)

Charkoudian said the complexity of PJM’s operations and decisions makes transparency doubly important, as many of her constituents don’t understand what the RTO is and how it impacts the legislation they have pressed their elected officials to enact.

“A lot of what I have to do is then explain to them how an RTO works, which is interesting to do in a community town hall,” she said.

States’ confidence in organized markets comes from the ability of RTOs to predict and forecast, making it difficult for Charkoudian to understand how PJM didn’t predict a future in which a high volume of renewable resources would enter the interconnection queue, requiring a faster pace of processing requests to keep up, she said.

As Maryland pursues stronger clean energy policies, including the passage of the Promoting Offshore Wind Energy Resources (POWER) Act (SB 781) last month, Charkoudian said closer collaboration with PJM will be necessary. (See Md. Legislature Sends POWER Act to Governor’s Desk.)

“Our overall experience with PJM is [that] we pass laws and those laws can’t be enacted because of PJM interconnection queues,” she said.

Tyson Slocum, director of Public Citizen’s Energy Program, said public confidence in PJM has been undermined by the RTO’s recent fast-track processes for generators attempting to lower capacity performance penalties, closed-door discussions about the Independent Market Monitor contract and Base Residual Auctions (BRAs) being rerun with minimal stakeholder feedback. (See “Capacity Performance Penalties,” PJM MRC Briefs: April 26, 2023)

“This creates a credibility problem with PJM, and when you lose credibility you start to lose confidence in the markets … and I’d say that’s where we are with PJM,” he said. “… The more light that is shown on your deliberations, it will relieve those questions about whether special interests are driving your decision making.”

PJM CEO Manu Asthana said the RTO holds more than 400 meetings each year, the vast majority of which are open to the public, and it publishes records of the votes taken at the Members Committee, broken down by how each sector and individual member voted.

“Transparency is important, [and] it does lead to credibility, and we think we are extremely transparent,” he said.

PJM Board of Managers member Charles Robinson said it’s critical that all stakeholders be able to engage with the board to promote transparency and accountability, though it may not be possible to always involve simultaneous access. He said the board plans to release a written summary of the feedback it has received on the possibility of a review of the Monitor contract.

Consumer Advocates Question Transmission, Capacity Costs

Gregory Poulos, of the Consumer Advocates of the PJM States (CAPS), said PJM must be more transparent about transmission costs, which have been steadily rising, according to his presentation, and are likely to go higher as transmission plays a major role in making renewable generation deliverable in efforts to meet states’ clean energy goals.

Following recent meetings of the Transmission Expansion Advisory Committee (TEAC), Poulos said he was rebuffed after reaching out to transmission owners that presented supplemental projects and asking how they developed estimated project costs and solution budgets. Given the lack of cost information being presented to the TEAC and the short timeframe for presenting solutions, there’s little opportunity for stakeholder engagement, he said.

“These are really self-approved projects, and that’s not to say if they’re good or bad. I don’t have the information to know if they’re good or bad,” he said.

T. David Wand, an attorney with the New Jersey Division of Rate Counsel, said the December 2022 winter storm demonstrated that generators may not be able to deliver the capacity they’ve been paid for, undermining the foundations of the capacity market.

“How do we ensure performance? Without performance, it’s hard to have confidence that the capacity market is serving its intended purpose,” he said.

Wand said that when the capacity performance (CP) structure was created to incentivize performance, the Rate Counsel and other advocates expressed concern that risk penalties would be built into capacity bids, a reality that has come to pass, costing consumers millions of dollars.

“Generators did not complain when they received these [capacity payments] and saw no penalties. It was always known that penalties would happen and excusals would not be allowed,” he said.

Asthana said CP includes significant penalties that provide an incentive to perform and credited the CP program with contributing to years without any significant issues in the PJM markets. Nonetheless, PJM can still make improvements, such as exploring whether gas resources are over-accredited for winter operations.

While those improvements are being considered, Asthana said, it’s important to not cause generators to retire prematurely.

Poulos questioned whether that way of thinking represents a shift in priorities — from guaranteeing reliability to a focus on reducing penalties to hold onto existing generation.

“Are we going from performance and reliability as the No. 1 issue and goal to [a situation in which] we have resources that are too big to fail even though they’re not performing,” he said.

Advocates Defend Monitor

Ankush Nayar, of the D.C. Office of the People’s Counsel, said some stakeholder factions are “clamoring” for changes to the Monitor contract. Those critics want to allow others to compete for the contract, currently held by Monitoring Analytics, and they seek greater access to the Monitor’s data. (See PJM Stakeholders Discuss Monitor Contract Review.)

Nayar said states have confidence in the way that Monitoring Analytics’ Joseph Bowring has performed as PJM’s IMM. Mandating data access could undermine the independence that allows Bowring to continue his work, while putting an auditor in place would be “overkill,” he said. Rather than issuing an RFP for new applicants, Nayar said he’d prefer to see the contract revised, to maintain continuity.

PJM board member David Mills said the board has “the utmost respect for Monitoring Analytics,” and that its proposed review of the contract doesn’t seek to reduce the independence or strength of the Monitor but instead seeks to address stakeholder comments and concerns.

Environmental Groups Seek More Renewable Development

Environmental groups pushed PJM to ensure that its markets and operations were structured to support the growth of clean energy, arguing that the grid operator has lagged behind other RTOs in the volume of wind and solar cleared in recent auctions.

Casey Roberts of the Sierra Club said PJM’s February report on resource retirements and load growth — the “4R” study — ignored the role played by capacity market signals and offered a lopsided perspective on how state policies impact resource adequacy by not noting the impact of incentives to increase the pace of renewable resource development. She said the report has been cited in proceedings seeking to delay the retirement of coal plants and referenced a May 1 letter from the PJM board stating that retirements unforeseen by the study have already been filed.

“In our view, retirement of facilities like that is a good thing … rather than raising false alarms of the need to slow down retirements,” she said.

Tom Rutigliano, of the Natural Resources Defense Council, said the issues identified in the 4R study are the same as those being addressed by stakeholder initiatives to improve the capacity market, which is where resource adequacy concerns should be focused. Rutigliano thinks capacity market price signals are being impacted by over-accreditation of gas resources that are not accounting for fuel supply issues.

“PJM probably has several gigawatts of phantom capacity from gas plants that can’t deliver. Fixing that is the first step to preventing excessive requirements,” Rutigliano said.

Asthana said PJM’s interconnection queue has been advancing significant volumes of renewables, including some projects that require minimal network upgrades. However, few of those have been completed over the past year due to issues such as siting and supply chain challenges.

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