The nation's largest grid operator has a stakeholder process that has "continued to just grind into gridlock," making the "status quo is really untenable," according to Federal Energy Regulatory Commission Commissioner David LaCerte, who spoke Thursday at a transmission sector meeting in Philadelphia. PJM Interconnection runs the grid and wholesale power markets in 13 mid-Atlantic and Midwestern states and the District of Columbia. FERC is slated to hold a technical conference on July 23 focused on PJM's governance issues, aiming to discuss "potential concrete actionable reforms to improve the effectiveness of the PJM stakeholder process and create fast-path or time-bound review procedures for critical issues."
Some sectors use PJM's stakeholder process to defend their business interests to the detriment of the wider region, LaCerte said. He pointed to generators who oppose the capacity price collar as an example of stakeholders blocking PJM measures to protect their economic interests. LaCerte said the commission has "a lot of other models at other RTOs and ISOs across the country that are much more functional," and can "pick and choose which work, which don't" to find reforms that might ease stakeholder concerns.
The report says LaCerte acknowledged that "looking at things differently is hard, especially in entrenched utilities that have been doing this for a long time." But change is necessary, he argued, warning that FERC "can't have a group of stakeholders that are incentivized to vote one way economically that are driving us into the ground for an entire region of the country." On transmission incentives, LaCerte said FERC is considering revising the benefits it provides to spur transmission development, including an extra 0.5% return on equity for regional transmission organization membership and construction work in progress allowances that let utilities recover expenses during construction rather than waiting for rate cases.
The dysfunction at PJM matters because stakeholder gridlock can block critical grid improvements across a region serving over 65 million people. LaCerte argued that FERC's current incentive structure isn't delivering results, noting the agency has "a history of adopting an incentive structure and then putting it on a shelf and not revisiting it for 20 years sometimes." He said those days "have got to be over," and that FERC needs to ensure its incentives lead to specific outcomes rather than "just throwing money out the window." The commissioner compared revising the incentives to "flying a helicopter here and trying to land it on a really small landing pad in the middle of the ocean," acknowledging it's "a difficult thing to get right."
As part of FERC's effort to keep electricity prices low, LaCerte said the agency will continue focusing on advanced transmission technologies, also called grid-enhancing technologies. When considering these tools—whether advanced transmission lines or dynamic line ratings—he wants to know their cost savings and whether they're ready to be deployed. LaCerte said he thinks "we could do much better" on dynamic line ratings in particular, signaling where the commission sees room for immediate improvement.