Docket No. ER24-462-000
I concur with the Commission’s order because I believe that Commission and court precedent dictate that PJM has met its burden under the Federal Power Act. Nevertheless, I write separately to register my concern with the approach that PJM has taken, which holds potential to harm consumers by singling out the ComEd zone for potentially higher capacity rates. I urge PJM to work more closely with states to arrive at market rules that are more harmonious with states’ exercise of their authority.
There can be more than one just and reasonable rate. Facing the uncertainty inherent in developing capacity market parameters based on what may occur across the potential economic life of a unit, this gives PJM and other RTOs significant discretion in establishing those parameters. Our precedent allows PJM to adopt an approach that “avoid[s] speculating about future technological development and costs.”[1] Further, the D.C. Circuit remanded a previous order for failing to offer a “reasonable and reasonably explained”[2] rationale where that order found that a similar proposed shortened amortization period was unjust and unreasonable because it was based on a “speculative assumption that fossil-fueled resources will cease operation in 2040” due to a law that required electricity demand in the relevant region to be served by 100% zero-emission resources by that date.[3] While I believe that the Federal Power Act obligates me to vote to approve PJM’s proposal as just and reasonable in light of this precedent, I am concerned that PJM has exercised its discretion in a manner that may harm Illinois customers when better options were available.
As the Illinois Consumer Advocates point out, the Illinois Climate and Equitable Jobs Act (CEJA) is but one of many potential factors that may influence the cost of development within particular transmission-constrained areas falling inside of a broader capacity zone, yet PJM has not engaged in similar sub-zonal analysis of these myriad factors.[4] In my view, PJM has narrowly cleared the bar in demonstrating that its proposal is not unduly discriminatory because it has provided unrebutted evidence that CEJA is the only state law affecting costs across an entire LDA.[5] Yet singling a state policy out in this fashion suggests an adversarial position toward state policies reminiscent of PJM’s failed MOPR misadventures. This is exacerbated by the fact that PJM chose not to build in assumptions regarding the potential retrofitting of units with clean technology, as permitted by CEJA, or to otherwise take an approach recognizing the intuitive implausibility that a developer would choose to construct a new natural gas unit within the ComEd zone in the near future, only to shutter the plant entirely by 2045.
Further, PJM’s antagonistic approach toward state policy appears to have been exacerbated in this case by a process that took state entities by surprise.[6] For markets to function effectively, regional grid operators should endeavor to work closely with states to achieve policies that operate harmoniously with one another. While the evidence suggests that organized markets offer significant value to customers,[7] the approach taken by PJM here may contribute to undermining consumer confidence in markets.
For these reasons, I respectfully concur.
[1] New York Indep. Sys. Operator, Inc., 183 FERC ¶ 61,130 at P 35 (2023).
[2] Indep. Power Producers of New York, Inc. v. FERC, No. 21-1166, 2022 WL 3210362, at *3 (D.C. Cir. Aug. 9, 2022).
[3] New York Indep. Sys. Operator, Inc., 175 FERC ¶ 61,012 at P 161 (2021).
[4] See Illinois Consumer Advocates Protest at 17-18.
[5] See Order at P 46.
[6] See Illinois Consumer Advocates Protest at 7-9, 22-26.
[7] PJM’s published “Value Proposition,” for example, states that its “operations, markets and planning result in annual savings of $3.2 – 4 billion.” PJM Value Proposition, available at https://www.pjm.com/about-pjm/~/media/about-pjm/pjm-value-proposition.ashx (last accessed January 17, 2024).