Trump, member states aligned on reform of PJM amid capacity concerns

By Sean Reed | The Center Square
The Center Square

(The Center Square) – The White House and a bipartisan group of governors want significant changes made to how the nation’s largest power grid is managed, including more say from state officials and less from energy suppliers and plant owners.

A conference between PJM, which operates a grid between Pennsylvania and the greater Chicagoland area, and the Federal Energy Regulatory commission was held last week to discuss reforms.

PJM leaders were questioned by federal regulators looking to address recurring and projected issues with the organization’s operation, including the looming risk of regular blackouts when capacity doesn’t meet demand.

The meeting, which came after PJM failed to secure a minimum required amount of electric capacity multiple times in a row, featured discussions and debate over the organization’s governance and potential reforms to the operation.

Peter Lake, senior director of power for the White House’s National Energy Dominance Council, said change will be coming to PJM in one way or another, noting that the organization needs reform, and state governors spanning the political spectrum and President Donald Trump, agree.

“As it is evidenced in the failed capacity auctions. With the alignment of all of those stars, this system, this stakeholder process at PJM could still still not deliver even without all of that alignment,” Lake said. “The core function of PJM and any grid provider in the United States is delivering reliable, affordable power to homes and businesses.”

Lake, who steered the Texas grid operator to reliability after winter storms in recent years, noted that in just two years, a winter storm would likely cause a blackout across the grid if PJM doesn’t find a way to increase capacity.

A potential reform discussed was giving states, specifically governors, more decision-making authority within PJM.

Illinois Gov. J.B. Pritzker mentioned during an appearance at a climate conference last week that the part of the state’s power grid being on the PJM grid has negative impacts on residents.

“I almost want to declare independence. Not from the United States, although there’s moments,” Pritzker said. “Independence from these regional transmission organizations because when we’re doing it right here and yet someone next door or five states away is doing it wrong and it’s affecting everybody.”

Membership of PJM consists of power plant operators and electric transmission infrastructure owners, who are separate from the organization’s board of managers, but have a say through votes on the organization’s actions.

Another point of discussion was to bring more independence between the board and members.

Lake said stakeholders shouldn’t have the power to veto, as it causes gridlock in decision making and scares off trillions of dollars in investment. He pointed to two other grid operators, MISO in the Midwest and ERCOT in Texas, neither of which has a similar veto process.

“They have a stakeholder process that provides member companies a voice but not a veto. And they have an independent, empowered board that can make decisions in the public interest without being so fearful of the members jumping on their shadow that they’re forced into inaction,” Lake said.

Involved parties on PJM’s side said they may implement simple reforms proposed during the conference while the commission works to put together a larger package of reforms, which will be based on the conference and be prepared for a forum with involved parties in September.