PJM’s newly appointed President and CEO David Mills outlined the key elements of his vision going forward in his opening remarks at the PJM Annual Meeting Monday.
“The state of PJM is one of transition – complex and demanding, but full of promise,” Mills told PJM members and stakeholders in Baltimore in his first Annual Meeting address as CEO. Mills was named to lead the organization on May 1.
PJM is at a pivotal moment: The entire energy landscape is undergoing one of the most significant transformations in history, Mills said, noting that for the first time in decades, the RTO finds itself in a position of managing scarcity instead of surplus.
To add to the complexity, the grid is shifting away from centralized power plants and becoming increasingly dependent on intermittent resources.
“My vision for PJM is to deliver uncompromised reliability through a best-in-class interconnection process supported by competitive and progressive markets, and to do so in a cost-effective manner,” he said. “Successfully delivering on this will require trust, transparency, open communications and a willingness to invest in innovation and challenge the status quo.”
Mills went on to describe five pillars of his vision:
- PJM must deliver on its promise of reliability, which Mills called PJM’s “North Star.”
- PJM needs an immediate return to resource adequacy. This will include designing a Connect and Manage process as well as a Reliability Backstop Procurement mechanism, a one-time stopgap measure to mitigate the reliability requirement shortfall experienced in December’s capacity auction.
- PJM will advance competitive markets for the future and examine whether the current construct is sending the right price signals to incent investment in new resources. “The future of our markets has to be the primary focus for all of us,” he said.
- PJM must continually improve its interconnection process. Since 2020, Mills noted, PJM has processed 294 GW of projects and completed interconnection agreements for 103 GW of new projects. Of these, 23 GW of new generation have gone into service. Another 54 GW have cleared PJM’s planning processes but are still moving slowly to construction or not at all, meaning that many projects are facing hurdles outside PJM’s control.
- PJM will work to fulfill the role of a trusted advisor and thought leader in the electricity sector.
Mills referenced the results of the first cycle of PJM’s new interconnection process, designed to prioritize viable projects that can move to operations with better speed and certainty. The cycle drew applications for 811 new generating projects representing about 220 GW of capacity, signaling significant interest from developers.
The Future of PJM Markets
Prior to the meeting, participants heard from Maryland Gov. Wes Moore.
Moore called on PJM to work with states and stakeholders to help lower energy costs and require large energy users, like data centers, to pay their fair share of costs.
“We are eager for us to come together to find tenable solutions for the people that we are all here to serve,” Moore said during his speech, adding later: “Let’s move in partnership. Let’s move in coordination with these other states. And let’s move now.”
Adam Keech, Sr. Vice President – Market Services, presented remarks on the recent release of PJM’s paper, Powering Reliability Through Market Design (PDF).
The paper highlights opportunities to work together, compromise on solutions and build a secure energy future in PJM, Keech said. Pathways for consideration are varied, he said, from considering how reliability is valued RTO-wide, the design of capacity and energy markets, and more.
“How we move forward is critical. The technical details matter. What matters equally is getting buy-in on the solution,” Keech said.
He outlined steps ahead to begin that stakeholder collaboration for holistic market design, beginning with a presentation at the Markets and Reliability Committee May 20, stakeholder workshops this summer and a formal stakeholder process starting in the fall.
Panel Explores Investment Perspectives
PJM Chief Operating Officer Stu Bresler moderated a panel entitled “Supply Resource Investment Climate Within PJM” to discuss the challenge of retaining durable investment required to serve growing demand, especially by large loads, during this period of affordability pressure, government policy and market rule changes.
The panelists represented investment interests, independent power producers, merchant generation developers and the public power sector. They were:
- Denise Foster Cronin, Chief Compliance Officer and Senior Vice President, East Kentucky Power Cooperative
- Stacey Dore, Executive Vice President, Chief Strategy & Sustainability Officer, Vistra
- Sherman Knight, Chief Executive Officer, Competitive Power Ventures
- Bryan L. Long, Executive Director, J.P. Morgan Commodities, U.S. Power Origination
- Curt Morgan, Chief Executive Officer, Alpha Generation
Panel participants agreed that capital remains available from investors who are also seeking more market stability. Risks include the need to balance investment in new power resources versus investment to retain existing resources, coupled with the uncertainty posed by changing federal energy policy.
Participants also said participation in bilateral contracting is actively ongoing in the PJM market, and in many cases has provided capital for generation uprates that is not available from energy or capacity market proceeds.
Increases in bilateral contracting activity, more of which is being discussed by PJM and stakeholders as part of the Reliability Backstop Procurement process, will be better realized, panelists said, by rules that enforce those frameworks. The one-time centralized procurement envisioned in the ongoing stakeholder process was welcomed, as it may secure as much as 15 GW of generation while providing durable investment signals.
After decades of flat-to-low load growth, investments by large loads with strong balance sheets present the potential to strengthen the economies of individual states and the PJM region, panelists also said. In all, they urged PJM stakeholders, members and states to move quickly toward reforms that support and encourage existing interest in market investment, and to serve the needs of large load customers and generation assets that may otherwise choose to invest elsewhere.
PJM’s Five-Year Strategy
Chief Strategy Officer Aftab Khan presented on PJM’s work to refresh its five-year strategic plan. Stakeholders have resoundingly responded to this initiative, he said. Coalescing around the following three areas of emphasis:
- Reliably operate an increasingly complex grid.
- Enhance market incentives and state coordination.
- Implement innovative and forward-looking planning processes.
PJM’s final strategic planning efforts are expected to culminate, pending approval by the PJM Board of Managers in July, with a presentation to members in August, he said.
Khan also shared planning underway for a recurring annual innovation summit convened by PJM to kick off this fall. The summit, to take place Oct. 15 at PJM, will be titled “Applying Artificial Intelligence to the RTO.” Featured topics will be operations, markets and transmission planning and the potential for improvements in these areas by appropriate deployment of artificial intelligence.