COLUMBUS, Ohio — The PJM Board of Managers and Monitoring Analytics are seeking a resolution by the end of next month to negotiations on the company’s contract to serve as Independent Market Monitor after more than a year.  

Speaking during the Organization of PJM States Inc. (OPSI) Annual Meeting on Oct. 22, PJM Manager David Mills said the contract review was initiated as a “corporate hygiene” effort to review longstanding agreements. The two parties have been meeting weekly with a mediator appointed through the FERC dispute resolution process — the sticking points of which Mills said are confidential. (See PJM Stakeholders Discuss Monitor Contract Review.) 

“There is no one in the room that wants this resolved more than I do,” Mills said. “It’s been a challenge; it’s a lot of work; but I want to go down why we started on this path: … [The board] has a series of fiduciary responsibilities. One of them is the duty of care, and so when this board took a look at all the existing contracts that the organization has in place, we had an eye to those that had not been reviewed and renegotiated.” 

Monitor Joe Bowring said the board did not have a proper succession plan in place to share information between outgoing and incoming members. While he expressed disappointment in the board’s review thus far, he said he is cautiously optimistic regarding [the] prospect of the mediation concluding in the coming weeks, stating that the efficacy of the process will be clear by late November. If common ground has not been found by that time, he said the Monitor will “move to whatever the next steps are.” 

“We’re disappointed in the board’s failure to engage in what we regard as productive and timely discussions at this point, but we’ve been trying to talk to the board about this for two or three years, and as the cliché goes, ‘actions speak louder than words,’” Bowring said. “So we don’t think the board fully understands or appreciates the role of a truly Independent Market Monitor.” 

Bowring said the continued negotiations and uncertainty around their outcome are impinging on the firm’s ability to fulfill its monitoring role, with staff wondering if their jobs are secure and considering taking positions elsewhere. 

“We’re already at the point where this is impinging on our planning; we’re already at the point where it’s affecting how we enter into contracts for hardware and software,” Bowring said. “So it’s already having a significant effect on the morale of my folks. … We’re not willing to let it go past the end of November without taking some additional action,” though he is “not sure what that would be.”

“This is the longest it’s ever taken,” Bowring continued. “It’s never gone this late into the process before, so we’re in uncharted waters. But it creates very significant uncertainty for us and makes our ongoing functioning more difficult; we’ve lost some people as a result of this; I suspect some people are starting to look around as it becomes more public what’s going on.” 

North Carolina Utilities Commission Senior Attorney Jennifer Harrod said the Monitor operates on a defined-term contract that is regularly reviewed by PJM and state commission staff. She said the ongoing negotiations have no clear benefit to consumers and create a distraction affecting the Monitor’s work. 

“Independence of the Market Monitor is paramount,” she said. “We can’t have an RTO without that independent market monitor, and I speak not out of any loyalty to Dr. Bowring in particular or Monitoring Analytics. … The functioning of the market requires that independence, and we are definitely extremely concerned that independence is under attack. And it’s not necessarily as a result of the intent of PJM or the PJM board … but at least to a certain extent, it’s the perception that that independence is under attack.” 

Mills responded that there is no endgame to replace the Monitor or impugn the independence of the role. The focus is on reviewing an agreement that has seen little change since it was implemented, he said. (See PJM, IMM Extend Contract Through 2025.)

“The contract is more than 20 years old. Yes, you’re correct the current version of the contract was inked, I believe, in 2018, but the contract and the service level agreements and rate schedules attached to it have lived on nearly virtually unchanged since they were conceived,” Mills said. 

Maryland Public Service Commissioner Michael T. Richard said his colleagues, as well as the Maryland Office of People’s Counsel, rely on the Monitor to understand the complexities of PJM’s markets. 

“Talking to commissioners in my state and some of our People’s Counsel and others, they all just emphasize how much we depend on the Market Monitor to have confidence in PJM,” Richard said. “And at this point with the complicated issues before us and the turmoil that is all around us in the PJM footprint, this is something that’s very distracting. We need to have a Market Monitor that can fully focus on these important issues. … I want you to be able to do your job with whatever this hygiene is you’re talking about, but again what’s really important is we get on with making sure we have a fully functioning Independent Market Monitor right now.”