Commissioner Richard Glick Statement
November 12, 2020
Docket Nos. EL19-58-002, EL19-58-003
I dissented from the underlying orders in this proceeding, which approved PJM’s proposal to execute a sweeping overhaul of its energy and ancillary services market.[1] Those orders abdicated the Commission’s responsibility to protect consumers from unjust and unreasonable rates and were fundamentally arbitrary and capricious.[2] Today we address PJM’s compliance filings implementing the Commission’s directives in those prior orders. Accordingly, I dissent in part from this order because, for the reasons supplied in my previous statements, it implements a rate that is unjust and unreasonable.[3]
While I disagreed with the Commission’s determinations in the underlying orders, I did note one lone bright spot: the decision to require PJM to move to a forward-looking energy and ancillary services offset (E&AS Offset) when calculating the net cost of new entry in the capacity market.[4] Moving to a forward-looking E&AS Offset helps to ensure that PJM’s various markets work in concert and that expected increases in energy and ancillary services revenues are reflected in the capacity market.
The Commission, however, forced PJM to complete this unprecedented, highly technical exercise in an impossibly short period of time.[5] The reason for that rush is readily apparent: Implementing the forward-looking E&AS Offset is a necessary pre-requisite to running PJM’s much-delayed capacity auction for the 2022-2023 delivery year. The responsibility for that delay lies squarely at the feet of this Commission and we owe it to all stakeholders to proceed with running that auction as soon as reasonably possible.[6]
Accordingly, while PJM’s E&AS Offset is by no means perfect, I believe that it is good enough to remove this issue from the list of roadblocks standing between PJM and, finally, running its auction. In addition, PJM has pledged to revisit its new forward-looking E&AS Offset in its next quadrennial review, which begins this coming spring.[7] During that review, I expect PJM, its consultants, and its stakeholders to take a hard look at the new E&AS Offset—especially in light of actual data from its implementation in the next auction—and to strive to fix any problems it uncovers.
For these reasons, I respectfully dissent in part.
[1] PJM Interconnection, L.L.C., 171 FERC ¶ 61,153 (2020) (May 2020 Order) (Glick, Comm’r, dissenting at PP 1-2, 17, 29); PJM Interconnection, L.L.C., 173 FERC ¶ 61,123 (2020) (Rehearing Order) (Glick, Comm’r, dissenting at PP 1-2) (stating that PJM’s proposal “abandons basic principles of competitive markets in favor of a byzantine administrative pricing regime”).
[2] May 2020 Order, 171 FERC ¶ 61,153 (Glick, Comm’r, dissenting at PP 2, 18, 30, & n.52) (explaining that the result of this proceeding is an unjustified windfall to inflexible generators); Rehearing Order, 173 FERC ¶ 61,123 (Glick, Comm’r, dissenting at PP 14-15, 24).
[3] May 2020 Order, 171 FERC ¶ 61,153 (Glick, Comm’r, dissenting at PP 17-27); Rehearing Order, 173 FERC ¶ 61,123 (Glick, Comm’r, dissenting at PP 14-22).
[4] Rehearing Order, 173 FERC ¶ 61,123 (Glick, Comm’r, dissenting at P 22).
[5] See PJM Interconnection, L.L.C., Motion for Extension of Time and Shortened Comment Period, Docket No. EL19-58-000, at 3 (filed June 25, 2020) (describing the Commission’s compliance deadline as “ambitious” and explaining that more time allows for “detailed engagement with stakeholders and the Market Monitor, which . . . .will translate into a better designed and better supported proposal being presented for Commission consideration”).
[6] Calpine Corp. v. PJM Interconnection, L.L.C., 168 FERC ¶ 61,051 (2019) (Glick, Comm’r, concurring at PP 4-5); see Calpine Corp. v. PJM Interconnection, L.L.C., 169 FERC ¶ 61,239 (2019) (Glick, Comm’r, dissenting); Calpine Corp. v. PJM Interconnection, L.L.C., 171 FERC ¶ 61,034 (2020) (Glick, Comm’r, dissenting).
[7] PJM Answer at 2-3 (“PJM acknowledges that there may be alternative methods to estimate the projected E&AS Offset that may also be just and reasonable, but submits that other potential approaches be reviewed as part of the next quadrennial review, which commences in the Spring of 2021. This will allow sufficient time to consider such alternative approaches with the benefit of experience with the current E&AS Offset, while avoiding any further delay of the upcoming Base Residual Auctions (BRAs).”) (internal citations omitted).