FERC Chairman Laura Swett spoke at PJM’s Annual Meeting in Baltimore, Maryland today. Below are selected portions of her address:
On How We Got Here
“It is not often that an institution reaches a full century. And even rarer that it does so with the continued relevance, scale and complexity that defines PJM today.
“PJM’s story began in 1927 when three utilities came together to form what would become the world’s first power pool. This was a novel concept at the time, and it took courageous, forward-thinking leaders to take that first step of developing new models of delivering affordable and reliable power. Those utilities were motivated by a basic principle: collective problem solving can produce benefits greater than any one of them could achieve alone.
“This guiding principle has allowed PJM to navigate some of the greatest challenges our nation has faced, and we can’t fall short now. From its very inception, PJM has weathered major figurative and literal storms. Instead of buckling, PJM grew and evolved into the vast, integrated RTO it is today, serving 67 million people across 13 states and the District of Columbia.
“Now, we face historically unprecedented demand—with potentially historically unprecedented catastrophic failure. PJM is the tip of the spear—the laboratory of national and economic security on which our country may rise or fall.
“This is not a time for weak leadership or to be crippled by fear—this is a time for difficult, history-making decisions that are not for the faint of heart, decisions that may leave many unhappy, decisions that may make or break part of a nation. We need NEW—not already planned or queued—generation and we need it NOW. There’s no excuse for failure—companies are ready and willing to pay for more than their fair share of getting the power they require.
“But whatever happens, we cannot disrupt finalized commercial agreements. At FERC, I have no appetite to compromise investor confidence when those investors are driving the buildout of the generation that PJM desperately needs. However you get there PJM, you need to figure it out. Fast.
“I don’t make these statements flippantly. We all know that PJM faces incredible obstacles not shared by other markets. It sits at the crossroads of 13 states and DC with fundamentally different regulatory structures, resource portfolios, and politics; is divided between states with vertically integrated utilities that own generation, transmission, and distribution assets and other states that have various levels of restructuring and retail competition that rely on competitive markets.
“Difficulties acknowledged, we still expect PJM to run markets that are fair and efficient for everyone, to plan transmission across diverse jurisdictions, and to maintain reliability through extreme weather, shifting fuel mixes, and rapid technological change. If this can’t be landed given PJM’s huge and diverse footprint, perhaps it simply has grown too big to function.”
On Current Stakeholder Process
“Consensus isn’t always better than decisive action. I am painfully aware of that as FERC Chairman, when I must make tough decisions for what I believe is the greater good of our country. I’m sure I won’t always get it right, but I must try, as must PJM.
“The current stakeholder process is slow where it must be fast, opaque where it must be transparent, and vulnerable to vetoes and agenda control exactly when the region needs immediate action.
“The stakes for reliability, affordability, and public confidence are too high to tolerate a system that stalls when the hard decisions arrive. Simply put, the status quo is unacceptable and has been for some time.
“These are not marginal complaints—they are warning signs of a serious legitimacy crisis and a signal that confidence in PJM’s decision making has completely eroded.
“We simply cannot have a market that falls short at exactly the time when we must successfully navigate this once-in-a-generation opportunity to cement America’s energy leadership. We are at a moment of profound consequence. Across the globe, nations are racing to harness the power of artificial intelligence to sharpen their competitive edge across all economic sectors. PJM—and all the companies that are represented in this room—are at the epicenter of that race. The United States cannot fail.”
Announcement of Technical Conference
“Under my leadership, FERC will not shy away from taking action if necessary. And I personally have great appetite for aggression when the country’s future hangs in the balance. To that end, I am announcing that the Commission will convene a conference on July 23rd focused on identifying flaws and solutions related to PJM’s stakeholder process and governance.
“We will invite PJM’s Board, executive management, representatives from the five membership sectors, investors, the IMM, state regulators and OPSI, consumer advocates, and perhaps experts from other RTOs to provide candid, concrete proposals for reform. This will not be another airing of grievances; it will be a work session to build a record eyed toward actionable change.
“This technical conference will be an opportunity to explore structural and procedural governance issues that are standing in the way of progress.”