By Danielle Friel Otten, Special To The Times
State Rep. Danielle Friel Otten
When summer heat waves hit, you want to know that the power for your air conditioning will be there when you need it. The folks in charge of making that happen — for us in Chester County and for households as far away as Illinois and North Carolina — work right nearby at PJM Interconnection, headquartered in Valley Forge.
PJM isn’t widely known, but the sway PJM holds over the markets where utilities buy our electricity carries sweeping impacts: for a reliable power grid, for our electric bill costs, and for the kinds of energy sources that power our lives.
A recent annual wholesale energy market run by PJM was a case in point: it saved billions of dollars over the prior auction and stopped propping up uneconomical and unnecessary fossil fuel power plants. In a couple weeks, PJM will have another critical moment to do right by consumers and state clean-energy priorities when it files its proposal for undoing an anti-clean-energy market manipulation called the “MOPR.” I’ll say more on that in a minute.
First, it’s important to recognize that PJM was created during an era when fossil fuel power plants dominated our power supply and sources like solar and wind were nascent or nonexistent. Today, PJM operates in a very different world, and it needs to retool.
Communities and states across PJM’s 13-state region are calling for a rapid transition to renewables, battery storage and demand response. These are the sources we need to stem the worst of climate change, protect clean air and water for our communities, ensure a reliable and affordable grid, and spark family-sustaining jobs for our region. Recent moves at PJM are promising. Their annual electricity capacity auction this spring saved more than $4 billion for 65 million people, which is an average savings of $100 per household.
“Electricity capacity” is a cushion of electricity supply PJM buys ahead of time so there will always be plenty in case of any emergency. Unfortunately, it’s a market that has historically been wasteful and exploited by fossil fuel interests. Until this year’s auction, PJM’s annual capacity markets have routinely made consumers pay for far more generation than needed, and at far too high a price. Those excess payments–all at the consumer’s expense–have largely gone to more expensive fossil fuel power plants that wouldn’t otherwise be competitive.
In the wake of this latest auction, it’s time for PJM to enact deeper and more lasting reforms that ensure this year’s improvements won’t be a one-off. Reforms include better estimating of future energy needs, putting a more accurate price tag on what it costs to generate power, and better valuing the ways renewables can provide us with a capacity cushion—all of which would help ensure the next markets don’t snap right back to overbuying, overcharging, and slowing our clean energy transition.
The Chairman of the Federal Energy Regulatory Commission (FERC), which oversees PJM and other such regional transmission organizations, summed it up well: “If you are charging $10 and you should be charging $2 and you lower the price to $5, it doesn’t mean you pat yourself on the back and say, ‘Well, everything’s worked out great.'”
He’s right. Prices should still be lower, and consumers should not settle for a system that stops short of where we need to go.
We also need the PJM Board of Managers to hold firm on its stance against a threat to affordability and clean energy called the “MOPR,” short for Minimum Offer Price Rule. The MOPR amounts to an anti-clean-energy market fix at PJM pushed through by fossil fuel owners. The FERC chairman rightly characterized this rule as “dramatically increasing the price of capacity in PJM and slowing the region’s transition to a clean energy future…a bailout [for fossil fuels], plain and simple.”
By needlessly inflating the price of clean energy in PJM and forcing households to pay for more polluting sources, keeping the MOPR would leave hardworking Pennsylvanians to pick up the tab and hamstrings efforts across the Commonwealth to create a sustainable future for our children. The MOPR poses such a threat to clean and affordable energy that I joined with more than 70 fellow state legislators from across the region earlier this year in writing directly to PJM CEO Manu Asthana on the matter.
The PJM Board needs to commit to fully undoing the MOPR when it files its proposal in mid-July with federal energy regulators.
I love getting to know my neighbors, and as I’ve gotten to know more about PJM, I’ve become both encouraged by PJM’s recent steps in the right direction and alarmed by how far they still need to go to transform their markets and transmission for the clean energy era my constituents want and Pennsylvania needs.
Danielle Friel Otten is Pennsylvania State Representative for House District 155 in Chester County, co-chair of the bicameral Legislative Climate Caucus, and serves on the Environmental Resources and Energy Committee. She is also a member of the National Caucus of Environmental Legislators.
