Propelled by a political crisis that grew out of soaring customer electric bills, along with fears of reliability issues as data centers drive a historic growth in demand, a coalition of governors, both Democrats and Republicans, convened with PJM Interconnection member organizations in Philadelphia September 22. The governors gave emphasis to their calls for reform at PJM with the threat to leave the nation’s largest grid operator and find a new path.
PJM Interconnection is the largest regional transmission organization in the country, spanning 13 states, including New Jersey, and managing the grid operations that support over 65 million people. The private organization is regulated by the Federal Energy Regulatory Commission. PJM has taken considerable heat since its electric capacity auctions have ended with historically high prices that expose states and their ratepayers to rapidly rising supply rates for electricity.
A bipartisan group of governors from the PJM service area, including New Jersey’s Phil Murphy, issued a July joint letter to PJM’s Board of Managers calling for more direct member state involvement in PJM’s policies and operations. They wanted literally a seat at the table, calling for at least two positions on the nine member Board of Managers to be filled by the states.
Seven of the 13 member state governors, again including Phil Murphy of New Jersey, issued a September 10 letter to the PJM board and its membership committee urging them to “recognize the urgency of this moment.” The governors say they want a “new, more meaningful collaborative, vision for PJM’s relationship with the states as a whole and to take steps to ensure greater ratepayer representation as the RTO makes major decisions in the coming months.”
Just days later at the September 22 PJM meeting in Philadelphia, the governors expressed their discontent in even stronger terms. In opening remarks to the PJM members meeting in the National Constitution Center, Governor Josh Shapiro, a Democrat, pointed to Pennsylvania’s status as the largest generator of energy in the entire PJM network. He added, “If we need to chart a new course that delivers more for the good people of Pennsylvania – we will.”
Virginia Gov. Glenn Youngkin, a Republican, also said his state was prepared to leave PJM. Virginia is among the top states in the nation as a home for the fast growing data center industry.
“This is a crisis of not having enough power, and it is a crisis in confidence,” Youngkin said. “It’s this crisis that demands real reform, real reform immediately — and at the top of the list is that states must have a real say.”
Gov. Phil Murphy also called for giving states a larger voice at PJM. Murphy joined with ten other governors to form a collaborative to work on PJM issues. Murphy took this step with only four months left in his term and while a campaign to replace him has energy policy high on the list of issues the candidates are differentiating themselves on.
Manu Asthana, PJM president and CEO, said the grid operator is open to discussing reforms but that the company’s form of governance and the regulatory environment within which it operates can make reforms a time consuming process. Asthana has indicated that he will step down by year’s end which could complicate matters further.
While PJM says it is open to change, not everyone agrees. The governors’ demands met with opposition from the Electric Power Supply Association, a trade group for independent power producers. EPSA is against giving states a governance role at PJM.
In a statement Todd Snitchler, President and CEO of EPSA said the moves to seek a greater role for the states in PJM governance can be seen as a way for states “to exert control over the non-partisan regional grid operator by electing officials pursuing short-term political wins.”
Snitchler added that his organization stands in favor of “common-sense reforms that will improve power market functionality, grid reliability, and consumer affordability.” But, he goes on to say, “the actions taken by some elected officials do nothing more than disrupt PJM’s ability to do its job.”
Snitchler says what no elected official wants to hear, “high prices, while unpopular, are essential, typically brief market signals that attract investment, expand supply, and help keep costs stable over time.”
While some oppose, others cheer. Evergreen Action, an advocacy group focused on addressing the dangers arising from climate change, has applauded the move by the governors and the threat to leave PJM if they are ignored. In a release the group says, “The question now is whether PJM will finally listen and take responsibility for fixing the cost crisis it helped create.”
The states want more say. PJM in the past year has blamed state policies for why supply is lagging behind demand. The states want lower costs for consumers while power generators say without high costs the needed investment to build plants and increase supply will not materialize. Murphy harangues PJM while both he and the CEO of PJM will be off the stage over the next four months.
There were bold moves in Philadelphia and strong threats, but what they all mean in terms of how power is reliably supplied and at what price is unclear.
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
