Commissioner James Danly Statement
June 29, 2023
Docket No. RD23-1-001
I concur with today’s order affirming that the recovery of costs incurred to comply with the proposed reliability standard is outside the scope of the proceeding and that the Commission was not required to initiate a separate proceeding under section 206[1] of the Federal Power Act (FPA).[2] “Administrative agencies enjoy ‘broad discretion’ to manage their own dockets.”[3]
Nevertheless, I write separately to urge my colleagues to initiate a FPA section 206 investigation into whether the cost recovery mechanisms established by regional transmission organizations (RTOs) and independent system operators (ISOs) can be relied upon to ensure just and reasonable rates. There is significant evidence—particularly increasing reliability risk throughout the country—that RTOs and ISOs struggle to provide incentives required for the retention and addition of needed dispatchable generation resources. PJM Interconnection, LLC recently warned that “the rate of retirements of generation [are] exceeding the rate of new additions of resources that have the attributes we need to manage the grid of the future,”[4] and that these retirements are in part due to “state and federal policy requirements, . . . reduced costs and/or subsidies for clean resources, . . . and diminished energy revenues.”[5]
Mandatory reliability standards represent but one half of the Commission’s authority to ensure that the Bulk Power System operates. The other is our power over tariffs. If we fail in our oversight of either, the stability of the electric system will be put in jeopardy. We should initiate sua sponte FPA section 206 actions immediately; in fact, we should have done so long ago. In approving the proposed reliability standards, the Commission declared, “[i]t is essential to the reliable operation of the Bulk-Power System to ‘ensure enough generating units will be available during the next cold weather event.’”[6] Prudence demands that the Commission make sure its markets adequately compensate compliance with such standards in advance of those standards becoming mandatory and enforceable. Otherwise, sufficient generation may not be available during the next cold weather event. They may have already retired.
For these reasons, I respectfully concur.
[1] 16 U.S.C. § 824e.
[2] N. Am. Elec. Reliability Corp., 183 FERC ¶ 61,222 (2023).
[3] Fla. Mun. Power Agency v. FERC, 315 F.3d 362, 366 (D.C. Cir. 2003) (quoting Telecomm. Resellers Assoc. v. FCC, 141 F.3d 1193, 1196 (D.C. Cir. 1998)); see also 16 U.S.C. § 824e(a) (“If, after review of any motion or complaint and answer, the Commission shall decide to hold a hearing . . . .”) (emphasis added).
[4] Pre-filed Statement of Manu Asthana on Behalf of PJM Interconnection, L.L.C., Docket No. AD23-7-000, at 11 (June 9, 2023) (Accession No. 20230609-5146).
[5] PJM Interconnection, L.L.C., Energy Transition in PJM: Resource Retirements, Replacements & Risks, at 5 (Feb. 24, 2023), https://www.pjm.com/-/media/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx.
[6] N. Am. Elec. Reliability Corp., 182 FERC ¶ 61,094, at P 2 (2023) (citation omitted).