Commissioner James Danly Statement
September 21, 2023
Docket No. ER23-2327-000

PJM Interconnection, L.L.C. (PJM) is the public utility charged with administering the bulk power markets in a large section of the United States covering all or part of 13 states and the District of Columbia.  I have previously stated on numerous occasions my concerns with PJM’s administration of the bulk power markets, namely its “leadership” in undercutting or dismantling core market design principles essential for just and reasonable rates, like honoring auction clearing prices and preventing state-subsidized renewable resources from gaming the markets.[1]  But with this order,[2] we learn that PJM also is not very good at reliability, having incurred $140,000 in penalties for reliability rule violations.[3]

The FERC-approved PJM tariff, however, permits PJM to file with the Commission pursuant to section 205 of the Federal Power Act (FPA)[4] to pass through these penalties to ratepayers in line with Commission guidance.[5]  I reluctantly agree that PJM has met its relatively light burden under FPA section 205 and its existing tariff to pass through these penalties.

But I do not like it.  I would treat PJM like the public utility that it is and act pursuant to FPA section 206[6] to investigate PJM’s manifest failures to ensure or at least advocate for just and reasonable rates—and now to also investigate whether PJM is complying with existing reliability rules.  The Commission should not hesitate to inquire whether a public utility serving as a Regional Transmission Organization—including PJM—should continue in this critical role when rates and reliability failures suggest it is not doing very well.

To date, the Commission has not instituted such an action against PJM, but any entity with standing can file a similar 206 action at any time.  That might have more of an effect on policing PJM’s administration of the bulk power markets than a $140,000 penalty that we pass through to ratepayers.

For these reasons, I respectfully concur.



[1] See, e.g., PJM Interconnection, L.L.C., 182 FERC ¶ 61,109 (2023) (Danly, Comm’r, dissenting at PP 31, 38) (listing capacity market design failures).

[2] PJM Interconnection, L.L.C., 184 FERC ¶ 61,179 (2023) (Order).

[3] Id. PP 5-6 (identifying PJM reliability violations).  I agree that these reliability violations likely were not “intentional or grossly negligent,” see id. P 25, but reliability violations still are serious matters and demonstrate a significant failure in PJM’s operation of the bulk power markets.

[4] 16 U.S.C. § 824d.

[5] Order, 184 FERC ¶ 61,179 at PP 4, 9-10.

[6] 16 U.S.C. § 824e.

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