ROSNER, Commissioner, PHILLIPS, Commissioner, concurring:
We concur in today’s order accepting PJM’s Reliability Resource Initiative (RRI) proposal as just and reasonable, and not unduly discriminatory or preferential, because it is a one-time, extraordinary measure that is only needed because of the equally extraordinary circumstances PJM finds itself in today.
Let’s review the situation. First, PJM is undergoing the most significant interconnection process reform in its history. PJM is transitioning its queue from an inefficient “first come, first served” serial process to a streamlined “first ready, first served” cluster-based process.[1] Further, PJM has not yet complied with the Commission’s Order No. 2023, which directed additional reforms to further speed the process of connecting new resources to the grid. Both of these steps are absolutely necessary because PJM’s legacy interconnection process is overwhelmed by the volume of requests to connect new generation and storage, causing the typical wait time in PJM’s queue to exceed five years.[2] While long overdue, PJM’s transition away from a legacy serial process includes the unfortunate feature of pausing study of all new interconnection requests while PJM implements its new, faster process.[3] This pause remains in place today, more than two years after the Commission accepted PJM’s queue reforms.[4] The result? Developers’ ability to respond to market signals by constructing new resources is severely limited.
Second, in parallel to its ongoing transition to a faster interconnection process, PJM is in grave danger of not having enough generation to meet demand. Multiple factors are driving PJM’s reliability challenges, including slow entry of new resources, extraordinary load growth expectations, and accelerating resource retirements.[5] As PJM explains in its filing, PJM recently increased its Summer 2030 load forecast by 16.6 GW and its Winter 2030 load forecast by 22.3 GW.[6] At the same time, the amount of new generation and storage capacity entering commercial operation in 2024 was roughly 3 GW, among the lowest in PJM’s history.[7] This trend is not sustainable.
While there is roughly 290 GW[8] of new generation and storage waiting to connect in PJM, there is simply not enough time for PJM to complete its transition to a streamlined interconnection process to process all these requests before significant reliability risks manifest.
Therefore, PJM asks—with support from State officials and regulators[9]—that the Commission approve a one-time stop gap measure, which reopens Transition Cycle 2 to allow a limited set of 50 generation projects with demonstrated resource adequacy value and commercial readiness to join the cycle with earlier queued projects, so that these projects can come online soon enough to prevent a reliability crisis.
This is not a request we take lightly. Any perceived violation of the Commission’s longstanding principle of nondiscriminatory open access threatens to seriously undermine confidence in Commission-jurisdictional electricity markets. Nonetheless, we believe that the Commission must confront the real and consequential harm that failing to act could have on consumers in the PJM region. For the reasons discussed below, we believe PJM has narrowly demonstrated, on balance, that its proposal contains sufficient protections to be just, reasonable, and not unduly discriminatory or preferential.
First, and crucially, PJM is clear that RRI is a one-time solution to a problem caused by its ongoing transition to reformed interconnection procedures. After the transition period ends and the RRI process sunsets, PJM will have a fully open, cluster-based interconnection process that is designed to allow generation to interconnect more efficiently and, in turn, to allow PJM to meet its resource adequacy needs.[10] Furthermore, in conjunction with its RRI proposal, PJM is pursuing additional reforms that will help to ensure that PJM never needs a mechanism like RRI ever again.[11] These include PJM’s proposal to reform Surplus Interconnection Service, which the Commission unanimously approves today.[12] PJM also commits to make further process improvements to leverage technology that significantly improves the speed, accuracy, and transparency of its interconnection process.[13] Thus, through its commitments and its actions, PJM is clear: RRI is a one-time emergency measure only, not a substitute for a well-functioning interconnection process that allows all resources to connect to the grid quickly and efficiently. If RRI were not a one-time emergency request, we would not find PJM’s proposal to be just and reasonable.
Second, PJM’s proposal allows all interconnection customers with resources at least 10 MW in size—including those with longstanding queue positions in Cycle 1—to compete for selection as an RRI resource and inclusion earlier, in Transition Cycle 2.[14] By opening RRI up to all resources, including those already in the interconnection queue, PJM’s proposal provides sufficient protections to prevent undue discrimination.
Third, PJM’s proposal minimizes harm to legacy interconnection customers in Transition Cycle 2. As PJM explains, over 500 of the legacy customers that could have opted to remain in Transition Cycle 2 declined to do so.[15] This demonstrates that adding 50 RRI projects to Transition Cycle 2 will have a limited effect on legacy customers’ settled expectations regarding the number of projects ultimately included in the Transition Cycle 2. Further, PJM’s RRI scoring criteria include a “headroom” category, which awards points to projects that have a limited impact on the transmission system and thus are unlikely to require significant—and time consuming—network upgrades. As the Commission’s order explains, no Transition Cycle 2 projects will be displaced by RRI projects, no Transition Cycle 2 milestones will be altered, and no interconnection customer will lose its current queue position because of PJM’s proposal.[16] Had PJM’s proposal caused delays for earlier-queued projects or risked their queue positions, PJM’s proposal would not be just and reasonable.[17]
Fourth, PJM’s proposal uses objective, fuel-neutral metrics to assess the relative resource adequacy value of different resource types. Specifically, PJM proposes to score prospective RRI projects based on their marginal ELCC rating, a probabilistic and technically rigorous metric that the Commission has found “provides a reliability-neutral basis for comparison between different resource types.”[18] PJM’s proposal also considers resources’ Unforced Capacity rating, which is the MW of dependable capacity that a resource provides, derived from its ELCC rating and its maximum generating capability. Crucially, these metrics allow all resource types to compete on a level playing field for selection as an RRI resource, regardless of fuel type. New generation, additions to existing facilities such as battery storage, and even repowering existing generators are all eligible to apply.[19] Had PJM proposed to select resources using subjective metrics divorced from PJM’s resource adequacy needs, PJM’s proposal would be unjust, unreasonable, and unduly discriminatory or preferential.
Finally, PJM’s proposal includes Commercial Operation Date Viability criteria and an additional readiness deposit that provide reassurance that an RRI project will be at least as ready as other projects in Transition Cycle 2. The readiness deposit, in particular—which effectively doubles the readiness deposit for RRI projects as compared to other projects in Transition Cycle 2—adds financial teeth to PJM’s measure of project readiness and ensures significant consequences for project developers who do not achieve timely commercial operation.[20] The readiness deposit requirement aligns with one of Order No. 2023’s most significant reform objectives, i.e., to discourage speculative projects from entering the queue. Absent these provisions to ensure that RRI projects are “shovel ready,” PJM’s proposal would be unjust, unreasonable, and unduly discriminatory or preferential.
All of this said, it is still a close call. We would have fewer reservations about PJM’s RRI proposal had the Commercial Operation Date Viability criteria been stronger. We are concerned that PJM’s proposal may not enable sufficient “shovel-ready” resources to interconnect and enter commercial operation in time to prevent the resource adequacy crisis that motivated PJM to develop this proposal in the first place. In particular, the proposal does not outright require RRI resources to achieve commercial operation by a date certain (e.g., in service prior to 2030) and assigns only 35 out of 100 points to Commercial Operation Viability criteria. We recognize, however, that PJM “need not show that [this] is the best or most just and reasonable option,”[21] and that PJM must balance competing factors to address its resource adequacy challenges. Nonetheless, we strongly encourage transmission providers considering similar mechanisms to make every effort to achieve stakeholder consensus and ensure their proposals advance only those projects that are truly “shovel ready.”
Going forward, we expect—and the circumstances on the ground demand—that PJM transition to its reformed interconnection procedures as soon as possible, fully implement the reforms directed in the Commission’s Order No. 2023, continue working with its stakeholders to proactively identify targeted interconnection process reforms,[22] and deploy automation tools to improve interconnection process efficiency.[23] Ultimately, PJM must establish a level of consumer and market participant confidence in its interconnection process that is fitting for the nation’s oldest and largest organized electricity market.
For these reasons, we respectfully concur.
________________________
David Rosner
Commissioner
________________________
Willie Phillips
Commissioner
[1] Transmittal at 18-19; see also Queue Reform Order, 181 FERC ¶ 61,162, at P 30 (2022).
[2] J. Rand, et al., Queued Up: 2024 Edition, Lawrence Berkeley National Laboratory, at 35 (2024), https://emp.lbl.gov/sites/default/files/2024-04/Queued%20Up%202024%20Edition_R2.pdf.
[3] OPSI’s comments on PJM’s queue reform proposal were prescient on this point, warning that “[i]t is important that PJM’s proposed four-year pause on reviewing new applications be an absolute upper limit,” and that “exceeding the proposed timeline . . . would . . . risk driving developers outside of the PJM region.” OPSI, Comments of the Organization of PJM States, Docket No. ER22-2110-000, at 6 (July 14, 2022).
[4] Queue Reform Order, 181 FERC ¶ 61,162.
[5] PJM documented these challenges in its 2023 “Four Rs Report,” which warned that PJM would face decreasing reserve margins if these trends continued. See PJM, Energy Transition in PJM: Resource Retirements, Replacements & Risks, at 3 (2023), https://www.pjm.com/-/media/DotCom/library/reports-notices/special-reports/2023/energy-transition-in-pjm-resource-retirements-replacements-and-risks.ashx.
[6] Transmittal at 10-12. See also PJM Inside Lines, 2025 Long-Term Load Forecast Report Predicts Significant Increase in Electricity Demand, https://insidelines.pjm.com/2025-long-term-load-forecast-report-predicts-significant-increase-in-electricity-demand/.
[7] Bielak Aff. ¶ 11.
[8] J. Rand, et al., Queued Up: 2024 Edition, Lawrence Berkeley National Laboratory, at 9 (2024), https://emp.lbl.gov/sites/default/files/2024-04/Queued%20Up%202024%20Edition_R2.pdf.
[9] See, e.g., OPSI Comments at 3-4; Governor Shapiro Comments at 1 (“[G]iven the constraints imposed by PJM’s queue delays, Pennsylvania supports the RRI proposal as a necessary short-term measure needed to allow new projects to connect to our grid more rapidly.”).
[10] Transmittal at 22-23.
[11] Id. at 16 (“PJM plans to file within a week of this filing changes to the Tariff that will increase the availability of Surplus Interconnection Service and, in January 2025, make changes to facilitate the transfer of Capacity Interconnection Rights from deactivating resources, to address PJM’s pressing resource adequacy issues.”)
[12] <OSEC – Please insert a citation to the order concurrently issued in ER25-778-000.>
[13] Transmittal at 23-26.
[14] Cycle 1 includes projects that submitted interconnection requests as far back as October 1, 2021. See Queue Reform Order, 181 FERC ¶ 61,162 at P 41. RRI Resources will be placed in Transition Cyle 2, i.e., one spot ahead of projects in Cycle 1.
[15] PJM Answer at 14.
[16] Order at P [245].
[17] See Sw. Power Pool, Inc., 147 FERC ¶ 61,201 at P 124 (2014) (finding that SPP failed to demonstrate that its proposal is just and reasonable because its proposal could induce multiple restudies of interconnection requests and earlier-queued interconnection customers would not be confident that meeting their milestones and other requirements would be sufficient to maintain their queue positions).
[18] PJM Interconnection, L.L.C., 186 FERC ¶ 61,080 at P 42, order on reh’g, 189 FERC ¶ 61,043 (2024).
[19] Order at P [123].
[20] See Bielak Aff. ¶ 20 (“[A] Generation Project Developer applying for the RRI process must provide an RRI Deposit in the amount of $4,000 per MW of energy or Capacity, whichever is greater; this RRI Deposit will become 50% at risk at the beginning of Phase II of Transition Cycle #2, 100% at risk when the RRI Project has a Commission-accepted and effective Generator Interconnection Agreement or Wholesale Market Participation Agreement, and will be forfeited if, at any point, the RRI Project is withdrawn or the Generator Interconnection Agreement or Wholesale Market Participation Agreement is terminated.”).
[21] Midcontinent Indep. Sys. Operator, Inc., 180 FERC ¶ 61,141, at P 79 (2022); see also Petal Gas Storage, L.L.C., 496 F.3d 695, 703 (D.C. Cir. 2007) (“FERC is not required to choose the best solution, only a reasonable one”).
[22] See Transmittal at 16 (“PJM plans to file within a week of this filing changes to the Tariff that will increase the availability of Surplus Interconnection Service and, in January 2025, make changes to facilitate the transfer of Capacity Interconnection Rights from deactivating resources, to address PJM’s pressing resource adequacy issues.”).
[23] See id. at 23-26 (“We are confident that these tools will significantly improve the speed, accuracy, and transparency of the interconnection process, positioning PJM as a leader in innovation and operational excellence in an evolving energy landscape.”).