Three CEOs Look at PJM Evolution at General Session  

“How do you take 65 years of history and move it forward?”

The question was the challenge for PJM as it moved from its power pool years to an independent system operator and then to a regional transmission organization.  Former CEOs Phil Harris and Terry Boston and current president and CEO Andy Ott shared insights on that transition at PJM’s Annual Meeting, held this week in Chicago.
According to Harris, the answer had a lot to do with the character of PJM and the people who make the organization what it is. Harris cited “forward thinking and innovative problem solving,” as reasons that PJM overcame challenges, survived and thrived.

He used the January 1994 ice storm in to illustrate how PJM employees came together as a team throughout the transition.

Then, PJM had 106 employees. The energy management system was an IBM 360 mainframe, reprogrammed in machine language to be a real-time processor. Communication with the New York Power Pool was hourly by teletype. The dispatchers came from the member companies’ substation or generation departments, and everyone sat in hand-me-down chairs.

On January 19, a major ice storm hit the middle part of the country. Accumulated ice was responsible for transportation disruptions, plants shutting down and many unable to start.

Due to the lack of fuel deliverability, PJM ordered three rotating outages of 500 megawatts each for eight hours. Although it was small in the context of the load, this was the first time PJM had ordered service interruptions since the 1970s.

A public appeal had gone out, closing all government buildings in most of the states.  Harris called the White House with a “code blue” from the emergency preparedness guide, which meant closing federal government buildings. By 8 a.m., Energy Secretary Hazel O’Leary was landing on the PJM helipad.

Harris said the way employees handled the ice storm and its aftermath went a long way to moving toward a real company with dedicated goals.

Like Harris, Boston cited the excellence of employees.

He characterized PJM as having a “world-class stakeholder process” with people working on many issues. When he was at PJM, said Boston, he “preached excellence a lot,” believing nothing is impossible.

Now, PJM is an organization prepared to make decisions in nanoseconds – a far cry from the teletype communications with New York. It was prepared to handle the heat wave of 2010, when not one customer was lost, despite some of the all-time hottest temperatures in the Mid-Atlantic, and to tackle the aftermath of Superstorm Sandy in 2012, which saw destructive storms along the Atlantic and blizzards in the mountains of West Virginia.

He admitted that the speed in the development of natural gas and retirements of coal-fired generation surprised him. And, he acknowledged there are always opportunities to improve, saying that, during the polar vortex, “we were caught with our plants down.”

Ott said the hallmark of the PJM he took over was the speed of the pace of change. He said he thinks about the system and operational challenges, the changes in fuel supply and the idea of moving the fuel closer to the load centers and considers how “the system is so different than a few years ago.”

He stressed that PJM has to be adaptable with system design as customers have more choices in connecting to the grid. PJM stakeholders see the opportunity to address it through the stakeholder process and embrace “the notion that we can do this together.

“We used the wisdom of the group to move forward. This type of change is not going to slow down,” he said.