What happened: Last week’s long-awaited, super long meeting gave everyone (including FERC) a space to vent their frustrations with PJM’s decision-making processes. As we predicted with our bingo board—see above—discussions kept circling back to states’ lack of power.
Red card: The conference also highlighted how PJM members can “effectively fire” people from the board, as Utility Dive reported. An apt post-World Cup analogy from FERC Commissioner David LaCerte: “The players should not be able to fire the referees if they don’t like their calls.” ⚽
What’s next: FERC says PJM has until the end of September to land on stakeholder and governance reforms. And if they can’t? FERC will do it for them…that is, if they actually have the legal authority to do so.
To properly digest what unfolded in D.C. last week, we called Frank Felder. He’s an electricity market consultant, and he works with Pennsylvania officials to address ratepayers’ concerns. (This conversation has been edited and condensed for clarity.)
What was your major takeaway from the conference?
Given the FERC commissioners’ strong views, my read is that some fundamental changes need to happen. Some of the stakeholders realize that they need to agree to something, or it could get a lot worse.
In your opinion, is PJM responding to states’ criticisms?
PJM’s market reforms proposed in May don’t address higher capacity prices and the costs not being allocated to data centers. In fact, I think the reforms could exacerbate them. For example, PJM is considering long-term capacity requirement contracts. During a time of scarcity, this could lock in high prices.
Now, maybe PJM gets the message from the recent FERC conference and the White House’s Ratepayer Protection Pledge update. But with the path I think PJM is going down, the Ratepayer Protection Pledge is not the primary focus—the focus is on certain limited market reforms.
Do you think PJM can agree on stakeholder reforms by the September deadline—or will FERC have to do it for them?
PJM will have to use its stakeholder process to do that…and the concern is that this takes too long and never gets to any sufficient consensus. So, I appreciate the irony there.