Docket No. ER22-962-004, ER23-2841-000 (not consolidated)
The Order No. 2222 compliance morass keeps getting deeper, forcing market operators like PJM through a regulatory version of Dante’s Nine Circles of Hell, all pursuant to a special-interest driven exercise in rent-seeking advertised as “market competition.”[1] Despite repeated attempts by RTOs to meet their compliance tasks by submitting proposals with credible explanations of the manifold real-world complexities they are facing because of the Order No. 2222 impacts on the operation of their markets, this Commission responds by repeatedly sending RTOs back to the drawing boards in rounds of micromanagement that have absolutely nothing to do with ensuring just and reasonable rates to consumers. Today’s order is no different.
In fact, today’s order makes clear that the number of Order No. 2222 round-trip compliance filings ordered by the Commission and the time required to make and respond to those multiple compliance filings means tariffs, facts and proposals may change in the interim. For example, the fact that PJM now has new Base Residual Auction (BRA) dates and that it cannot anticipate where the Commission will come down on a pending additional compliance filing (including whether there will be yet more compliance filings), led PJM to here ask to postpone implementation of the Commission-approved rules allowing DER Capacity Aggregation Resources to participate in PJM’s capacity market.
In both its Third Compliance Filing[2] and its subsequent FPA section 205 filing,[3] PJM makes clear that the original July 1, 2023 effective date for the rules allowing DER Capacity Aggregation Resources to participate in PJM’s capacity markets beginning with the 2026/2027 BRA is no longer appropriate and, indeed, could cause confusion.[4] Due to an intervening Commission order,[5] the date for the 2025/2026 BRA is now June 2024 and the date for the 2026/2027 BRA is now December 2024. A July 1, 2023 effective date could incorrectly suggest the ability to participate in the 2025/2026 Auction.
Moreover, in both the Third Compliance Filing and the PJM 205 Filing, PJM also makes clear that it will need at least 24 months from the time the Commission approves major, outstanding Order No. 2222 submissions without “radical divergence” from PJM’s proposals in order for PJM to get any DER Aggregator Participation Model up and running so as to permit DER Aggregation Resources to provide capacity in the 2026/2027 Delivery Year, all of which may impact a previously accepted February 2, 2026 effective date:[6]
[A]s PJM has explained, successful implementation requires at least 24 months from a Commission order approving most of the major outstanding compliance directives to develop, test, and implement the approach, and any Commission directive that radically diverges from the current-contemplated market design would lengthen (maybe significantly) the implementation timeframe. As PJM explained in the February 1, 2022 Compliance Filing, the DER Aggregator Participation Model requires significant software changes, including changes to the PJM Day-ahead and Real-time Energy Market clearing engines. PJM will also need to stand up a database and system to support the registration process and data management around DER Aggregation Resources, and design and implement locational mapping processing, planning study processes, and updated market procedures (including Markets Gateway) for registration and operation of DER Aggregation Resources. Thus, given the lack of a statutory date by which the Commission must act on PJM’s upcoming September 1, 2023 compliance filing and the at least two-year-long implementation timeframe, PJM is unsure whether everything can be in place in time for DER Capacity Aggregation Resources to provide capacity in the 2026/2027 Delivery Year.[7]
As a result, in its June 2023 Third Compliance Filing PJM requested that the Commission accept an undefined effective date “for the entirety of its Order No. 2222 compliance tariff revisions.”[8] PJM’s proposal was not without limits, however: PJM proposed that by May 1, 2024 it would file either (i) a motion asking the Commission to make the Tariff revisions effective July 1, 2024 – to allow participation in the December 2024 2026/2027 BRA or (ii) an informational report on the implementation status and a projected effective date.[9]
Three months later – during which time the Commission had not ruled on PJM’s Third Compliance Filing and PJM had filed its Fourth Compliance Filing with the Commission – PJM this time asked the Commission in the PJM 205 Filing to temporarily remove Commission-approved rules allowing DER Capacity Aggregation Resources to participate in PJM’s capacity market and to postpone implementation of those provisions. PJM represented:
[T]hese proposed revisions are limited to the effective date only and do not include any substantive changes to the Tariff or RAA. That is, PJM essentially is proposing to change the effective date for these rules to December 31, 9998 [, which is an indefinite] effective date, a change that both eliminates confusion regarding the applicability of capacity market participation rules prior to the 2026/2027 Delivery Year and provides the flexibility to accommodate for potential delays in implementation.[10]
PJM made a similar request as to timing as it did in its Third Compliance Filing.[11]
Today’s order rejects PJM’s timing proposals in both its Third Compliance Filing and its PJM 205 Filing. With respect to PJM’s requests as they relate to the July 1, 2023 date, today’s order notes that PJM is not precluded from submitting another 205 filing providing a specific revised effective date or an indefinite effective date accompanied by a commitment to file a specific implementation date within a specific timeframe.[12] With respect to the February 2, 2026 effective date as raised in the Third Compliance Filing, today’s order instructs PJM that it could return with a motion requesting an extension for the February 2, 2026 Tariff provisions that accounts for PJM’s ability to develop and implement necessary software changes in advance of DER Aggregation Resources participating in its markets.[13] Today’s order expounds on this issue further in addressing the PJM 205 Filing on this issue:
[The Commission is] not persuaded that a potential delay in the implementation of the DER Aggregator Participation Model by February 2, 2026 is reasonable grounds to preemptively establish an indefinite effective date in this case. While PJM correctly notes that its compliance with a number of issues related to Order No. 2222 remain pending before the Commission, PJM fails to demonstrate that an indefinite effective date is just and reasonable under these circumstances given Order No. 2222’s requirement that each RTO/ISO propose a “reasonable implementation date” that implements the final rule “in a timely manner.”[14]
This pronouncement rings hollow to me given the Commission’s failure to directly grapple with what PJM said: it is not simply a problem that PJM has filings “pending before the Commission,” but rather it is that PJM is hamstrung by its inability to divine (i) how the Commission will rule on its compliance filings (or whether still other filings will be required) and (ii) when the Commission will do so. Moreover, it’s not that PJM doesn’t want to move forward; it’s that PJM should not be required to invest time and resources without assurance that it is headed down a path that this Commission will ultimately bless.
I concur in today’s order, but just barely; today’s order appears consistent with the Commission’s prior interpretation and application of Order No. 2222. It must be clearly recognized, however, that PJM’s requests under consideration in today’s order are unsurprising to any observer of the Order No. 2222 compliance process: the indefiniteness of the timeline PJM proposes is based on the indefiniteness of the Order No. 2222 compliance process.[15] As I have said before, I do not blame PJM for the Order No. 2222 compliance problems it has encountered in this process.[16] In its filing here, PJM informed the Commission of the problem it faces. If time later judges this order to have been ineffective – or worse, damaging to PJM’s market operation – it will not have been PJM’s delay in identifying the problem and relaying its concern that is the reason.
For these reasons, I respectfully concur.
[1] I would be remiss if I did not again mention that the states are similarly dealing with this mess and the consumers will be paying for it. See, e.g., PJM Interconnection, L.L.C., 182 FERC ¶ 61,143 (2023) (First Compliance Order) (Christie, Comm’r, concurring at P 5) (available at https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-pjm-order-no-2222-compliance-filing-er22-962) ((“In my concurrence to the letter order granting PJM’s motion to extend the time in which it had to make its Order No. 2222 compliance filing, I noted: ‘These motions offer a preview of what’s coming in terms of the complications and impacts on reliability caused by these orders and the substantial costs that will have to be expended not only to address those threats but to address the complexity of the requirements these orders impose, costs that will be piled on consumers.’”) (emphasis in original) (quoting Participation of Distributed Energy Resource Aggregations in Markets Operated by Regional Transmission Organizations and Independent System Operators, 175 FERC ¶ 61,013 (2021) (granting extensions to PJM, MISO and SPP for Order No. 2222 compliance filings) (Christie, Comm’r, concurring at P 7) (available at https://www.ferc.gov/news-events/news/commissioner-mark-c-christie-concurrence-regarding-order-granting-compliance) and citing id. P 3 (footnotes omitted) (“The motions filed by each of MISO, SPP and PJM illustrate the daunting complexities, potential negative impacts on reliability, and certain increased costs to consumers, all of which I referenced in my dissent to Order No. 2222-A and which apply equally to its forebear, Order No. 2222. The problems and complexities of compliance described in these motions is further evidence that implementing Order Nos. 2222 and 2222-A will be far more complicated, far more costly to consumers and far more burdensome to states, public and municipal power authorities, and electric co-operatives, than these orders and many of their supporters acknowledge.”)).
[2] PJM June 14, 2023 Compliance Filing passim, Docket No. ER22-962-0004 (Third Compliance Filing).
[3] PJM September 14, 2023 Filing passim, Docket No. ER23-2841-000 (PJM 205 Filing).
[4] See, e.g., Third Compliance Filing at 5-6; PJM 205 Filing at 4-5.
[5] PJM Interconnection, L.L.C., 183 FERC ¶ 61,172 (2023).
[6] As today’s order notes, the February 2, 2026 effective date impacted Tariff, Operating Agreement, and RAA revisions effectuating the balance of PJM’s original proposal (i.e., beyond those effective July 1, 2023 for the limited purpose of allowing Planned DER Capacity Aggregation Resources to participate in the 2026/2027 Delivery Year BRA) including energy and ancillary services markets participation. Order at P 5.
[7] Third Compliance Filing at 7 (footnotes omitted) (emphases added). See also PJM 205 Filing at 5-6.
[8] Order at P 11. See also, e.g., Third Compliance Filing at 8 (footnote omitted) (“. . . PJM is submitting the enclosed Tariff, Operating Agreement, and RAA revisions with a December 31, 9998 effective date. Such an effective date provides the flexibility to accommodate for potential delays in implementation.”). PJM’s request was applicable to effective dates including the previous July 1, 2023 effective date related to rules allowing DER Capacity Aggregation Resources to participate in PJM’s capacity market and the previous February 2, 2026 effective date related to tariff provisions implementing PJM’s DER Aggregator Participation Model. Order at PP 11-12.
[9] Third Compliance Filing at 8.
[10] PJM 205 Filing at 7 (emphases added).
[11] Id. (“PJM proposes to file by May 1, 2024, either a motion asking the Commission to make the enclosed revisions effective July 1, 2024 – to allow participation in the 2026/2027 BRA which is to be held in December 2024, or an informational report on the implementation status and a projected effective date.”).
[12] Order at P 32.
[13] Id. P 29.
[14] Id. P 33; see also id. P 29.
[15] As noted herein, PJM’s Fourth Compliance Filing was filed on September 1, 2023 and currently has a number of filed comments and protests. My vote here does not reflect prejudgment of that matter.
[16] First Compliance Order, (Christie, Comm’r, concurring at P 3) (emphasis in original) (footnotes omitted) (“Let me emphasize I do not blame PJM in any way for this complex and complicated compliance process. PJM did not ask for Order No. 2222 and has devoted enormous amounts of time and effort to try to implement it, as have other RTOs. It is indeed ironic that almost simultaneous with this order, PJM has just announced that it faces the prospect of losing nearly 40 gigawatts of dispatchable generation by 2030, a loss of essential resources that will clearly threaten reliability.”).