PJM Says Wholesale Market in Ohio Enables Reliability

At today’s Markets Reliability Committee meeting, Vincent Duane, PJM general counsel and senior vice president, presented PJM’s views on actual and proposed state initiatives to sponsor particular types of generation. The statement is below.

The statement presented:

PJM has been asked for its views about the proposed settlement stipulations filed by FirstEnergy and AEP with the Public Utilities Commission of Ohio. We are also asked from time to time about the consequences generally to RTO operations raised by potential state initiatives to sponsor particular generation types.

PJM recognizes that state and local interests – including jobs, local tax bases and overall economic conditions in communities – can be affected by the operation of competitive power markets. Quite simply, when PJM’s markets signal a need for investment, responsive new entry will bring jobs and add economic vitality to the affected community. Prices that signal the exit of uneconomic resources can lead to the closure of generating plants, which will also impact local economies.

PJM’s job is to administer efficient markets to meet electric reliability needs. Our job is not to make policy decisions – or to try to prevent lawmakers and regulators from making choices that advance valid state and local interests, even where such choices might complicate PJM’s functions. It is our job, however, to express our views on regional reliability and the performance of the wholesale electricity markets in assuring that objective in the least-cost manner. This responsibility includes assessing the potential for state policies to negatively impact this objective and informing policy makers of the trade-offs that can arise from their policy objectives.

The record in Ohio shows that PJM’s markets have, since their inception, succeeded in providing reliable, competitively priced wholesale electricity. Our markets and regional transmission expansion planning process will ensure that wholesale electricity remains reliable and competitively priced in Ohio and across the entire region PJM serves. We will continue to monitor developments in Ohio and throughout our footprint for any potential impacts on wholesale electricity markets.

PJM is preparing a paper on the performance and value of markets that will include an analysis of the interplay between state initiatives and competitive power markets, with an anticipated public release by spring 2016. Our hope is that this analysis can help to inform the public debate so that regulators and policymakers understand fully any trade-offs that may arise through the policies they may be considering.