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Commissioner Bernard L. McNamee Statement
July 25, 2019

Docket No. EL16-49-000 PDF

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Concurrence Regarding PJM Interconnection, L.L.C.

I approve today’s order because it is important that the regulated community be afforded certainty that PJM’s capacity auction cannot be run under rules the Commission deemed unjust and unreasonable. Although I was not a member of the Commission when it issued the June 2018 Order,1 and am therefore the only current member who was unable to engage in deliberations leading to that order, I am sympathetic to the large degree of uncertainty this proceeding has brought to the PJM community. However, I write separately today because I disagree with certain characterizations put forth in my colleagues’ concurrences.

In particular, one of the concurrences invokes the “Pottery Barn Rule,” stating “[t]he Commission is now fully responsible for the damage done to date and whatever comes next.” Though it may be rhetorically satisfying, this statement is misleading. To suggest the Commission is the source of the problems presently facing PJM is to ignore nearly a decade of proceedings attempting to address the interaction between competitive markets and out-of-market subsidies. More importantly, such a statement only makes sense if one ignores the impetus behind PJM’s original filing in Docket No. ER18-1314-000, which was PJM’s desire to address issues arising from state out-of-market support for generation resources in its footprint.

At that time—April 2018—PJM argued “[t]he time has come . . . to fill this gap in the PJM Tariff” and “[d]oing nothing . . . is not an option.”2 In addition, PJM’s April 2018 filing stated:

    Some may argue that no action is needed at this time because capacity commitments in PJM are well above the installed reserve margin, and because the PJM Region continues to see new entry. This argument ignores the current drivers of new entry in PJM . . . ; and falsely suggests that there are times during the business cycle when it is appropriate to distort markets.3



As discussed in the June 2018 Order, the Commission engaged in a thorough analysis and considered the pleadings of dozens of participants and ultimately determined that PJM’s tariff was unjust and unreasonable because the current MOPR “fails to mitigate price distortions caused by out-of-market support granted to [non-natural gas-fired] new entrants or to existing capacity resources of any type.”4 As a Commission, we must fulfill our statutory duties, letting our decisions be led by the law and the facts in each case before us.

With every proceeding, the Commission strives to ensure rates that are just, reasonable, and not unduly discriminatory. In that respect, this proceeding is no different. I commit to continuing to work diligently to address this matter—and all matters—pending before the Commission.

For these reasons, I respectfully concur.






                                               

    1 Calpine Corp. v. PJM Interconnection, L.L.C., 163 FERC ¶ 61,236 (2018) (June 2018 Order).
    2 PJM April 9, 2018 Filing, Docket No. ER18-1314-000, at 17.
    3 Id. at 36-37 (footnote omitted).
    4 June 2018 Order, 163 FERC ¶ 61,236 at P 5.  The finding in the June 2018 Order was based not only on PJM’s filing but also a complaint from 2016 in Docket No. EL16-49-000, which was consolidated with Docket No. ER18-1314-000 by the June 2018 Order.  Id. P 6.
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