The Chaos Continues in PJM

As noted in this blog several weeks ago, the nation’s largest RTO is fighting multiple fires simultaneously.  From changes in its rules, to battles with the states, to growing reliability risks – PJM has its hands full.

And we now know the fate of one the proposals at FERC that arose from this confluence of troubles.  Late last week, FERC narrowly approved PJM’s plan to delay its capacity auction.  But judging by the order’s attached Commissioners’ statements, PJM should take little solace from its preferred result.

In dissent, Commissioner Allison Clements described the matter as a “recipe for chaos.”  She has a point, though it could fairly be said that the current state of PJM is less a recipe, and more a fully baked cake of chaos. Commissioner James Danly said as much.  He voted for the order delaying the auction, but because he believes PJM’s rules are already so “manifestly unjust and unreasonable” that delaying the auction was an appropriate action by FERC.

For states already in PJM, it must be a frustrating experience.  Having ceded a good deal of responsibility for electricity delivery to the RTO, they now find their state policy goals and their consumers at the mercy of a large bureaucracy that, as acknowledged by its own federal regulators, is teetering towards chaos.

For states that are not in the RTO, the lessons of this experience are important.  Amidst the disorder in PJM, supporters of the expansion of RTOs have been busy whitewashing the record.  No where has this been more evident than in South Carolina, where consultants that do work for PJM, unsurprisingly, extolled the virtues of PJM to state legislators, while downplaying or ignoring obvious problems.

Yet, as John Adams wrote, “facts are stubborn things,” and it is a hard to see how policymakers in any non-RTO state will look at these facts as flattering towards RTO membership.  For years, energy policy wonks have asked when RTOs will expand.  Perhaps just as pertinent a question at this point is, “why would a state willingly subject itself to this chaos?”