PJM Annual Meeting 2022: Year in Review

    Reliable operations, market evolution, interconnection reform and stakeholder collaboration highlighted at first Annual Meeting convened on campus since 2019

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    A PJM panel looked back at 2021 and ahead to the future of the electric industry at PJM’s Annual Meeting May 17, as the nation’s first grid operator marked its 95th year and the 25th year as an independent system operator.

    The meeting celebrated the official campus reopening since the onset of the COVID-19 pandemic restrictions in March 2020. Susan Buehler, PJM’s Chief Communications Officer, led the Year in Review panel with stakeholders attending in person and remotely.

    Joining Buehler from PJM were:

    • Stu Bresler, Senior Vice President – Market Services
    • Mike Bryson, Senior Vice President – Operations
    • Asim Haque, Vice President – State and Member Services
    • Ken Seiler, Vice President – Planning

    Also on the panel was Joseph Bowring, President of Monitoring Analytics, the independent market monitor for PJM, who offered his perspective on multiple issues.

    From left to right: Stu Bresler, Senior Vice President – Market Services; Ken Seiler, Vice President – Planning; Mike Bryson, Senior Vice President – Operations; Asim Haque, Vice President – State and Member Services; and Joseph Bowring, President of Monitoring Analytics

    Reliability is “Mission One”

    Overall, PJM is prepared for reliable operations during the peak summer season, Bryson said.

    Bryson highlighted operations lessons learned from 2021. Immediately in the wake of power outages in ERCOT during Winter Storm URI in February 2021, PJM worked closely with transmission owners and members to scrutinize load-shed procedures and strengthen winter preparation to include drills and training. Among 20 actions identified by PJM, many were later reflected in the post-storm joint review and recommendations by the North American Electric Reliability Corporation and the Federal Energy Regulatory Commission.

    Monitoring of fuel inventory dynamics, including coal and gas pricing, supply and delivery, was stepped up in 2021 from a twice-a-year review to a weekly reporting cadence, Bryson said. This key reform, he added, sparked productive continuing dialogue and collaboration between PJM, asset owners and regulators. He commended stakeholders for Manual changes that enabled critical gas, coal and oil units to run as required for reliability this past winter.

    To ensure ongoing reliability, PJM continues to closely monitor and adapt operations to various factors affecting the resource mix in its footprint and within grid operators elsewhere, while the forward capacity market continues to ensure healthy power reserves.

    “We certainly see the landscape changing in the future. One of the things I think helps us is our capacity market. It gives us some certainty,” Bryson said. Reliability must remain “mission one,” while PJM and stakeholders move through the energy transition, he said.

    Market Reform Collaboration

    Bresler credited stakeholders for speedy action on market design reform on the Minimum Offer Price Rule (MOPR) in the capacity market last year in response to clear direction from FERC that the market should accommodate state energy policies.

    Panel moderator Susan Buehler, PJM’s Chief Communications Officer, asks Stu Bresler, Senior Vice President – Market Services, about PJM market reforms.

    “That is a good news story from where we sit today with some of the big things that got done in 2021,” Bresler said. “That cleared the way for us to move on.”

    Haque noted the importance of the first-ever implementation of the Critical Issue Fast Path stakeholder process to expedite that market reform and praised stakeholders for their participation in the process.

    “That is what the stakeholder process is for,” Haque said. “The ability for members to impact where we are positioned is an extraordinarily important part.”

    Bowring said he believes that elimination of the MOPR in the capacity market would have been a better solution than what stakeholders collectively agreed on, and that he MOPR as approved by FERC weakened market power mitigation. He also emphasized that the MOPR issue was not final as it is currently being challenged in court.

    Bowring said he worried about the future of the capacity market, with so many issues unsettled. But, he said, the markets still work in combination to serve their purpose, and unlike some other ISO-administered markets, have been self-sustaining to provide reliability through competition.

    “There is lots to be done,” Bowring said, “but the markets work well.”

    Working With Policymakers

    Working together to face challenges successfully was a recurring theme, including in policy matters. While PJM is not a policymaker, “we seek to provide policymakers with information and analysis to make informed policy decisions,” said Haque. Haque touted PJM’s collaboration with Illinois government to advance reliability guidance related to the Illinois Climate and Equitable Jobs Act (CEJA), and looked forward to producing more analytics in 2022 to help inform important policy discussions.

    PJM also seeks to utilize its subject-matter expertise to help states advance their policy initiatives. FERC’s approval of the State Agreement Approach to help New Jersey plan reliably for offshore wind objectives was a “major milestone,” Seiler said.

    Work continues with New Jersey to screen the most reliable and efficient proposals for transmission to serve wind generation off New Jersey shores. As more states adopt renewable resource policies, the state agreement approach framework can be replicated, Seiler said. “This is one path to success,” he added.

    The interconnection process reform recently approved by an overwhelming majority of stakeholders similarly represents a leap forward to efficiently expedite project studies and results, and will provide more cost certainty for generation developers, Seiler said. PJM will file its reform proposal with FERC in June.

    And as the transmission system itself is changing, FERC advanced transmission planning reform with a Notice of Proposed Rule Making (NOPR). Seiler commended stakeholders for their work on the NOPR as well as: FERC Order 2222 (on integrating distributed energy resources into the wholesale electricity markets); FERC Order 881 (continuing work to comply with ambient line ratings methodology); and dynamic line rating processes being undertaken by certain transmission owners.

    Grid of the Future

    Asked by Buehler to comment on PJM’s strategy to plan for and implement the grid of the future, Seiler said reliability and resilience remain in steady focus amid vast waves of change.

    “We are really in the midst of a major transformation that is going to impact planning, operations, markets. It’s also going to impact our consumers’ rates, how the transmission system is built out, how we prepare for the future,” Seiler said. “There is no silver bullet that is going to solve all our problems. But it is going to be a multitude of things across generation, transmission and load that will continue to keep our system reliable.”

    As power flows shift from east to west and upward from the distribution system in certain areas, he added, “we need to be accountable and responsible to make sure that, as we go through this transformation, we continue to be reliable, we continue to have a resilient system in such a way that we can react toward those changes that maybe we don’t expect.”

    A key point is that competition to build transmission is essential, Bowring said. He said that the State Agreement Approach process will challenge PJM’s ability to compare projects offering widely varying solutions to New Jersey’s offshore wind transmission needs, including evaluating projects offering cost caps.

    Order 881 is important because it requires line-rating methods to be transparent and subject to review by PJM and the IMM and because it will result in a better and more consistent approach to line ratings across PJM, Bowring said.

    Resource Adequacy

    Going into the 2023 delivery year, PJM is keen to continue market enhancements through the Resource Adequacy Senior Task Force, Bresler said, on issues such as the market seller offer cap.

    The work of this task force builds on capacity market reform in 2021 to ensure that markets incentivize the generation attributes required for reliability. In this way, PJM continues to work with stakeholders to “clearly define what is necessary to operate a reliable grid given the way everything is evolving,” he added.

    “The core structure of our markets are sound. They are successful. They can be successful in the future,” Bresler said. “We have to address the issues in front of us to evolve them.”

    The demands of the grid of the future, PJM leaders agreed, keep operations, markets and planning in focus going forward. Stakeholders can expect collaboration ahead to specifically focus on operations drills and coordination to promote reliability, workshops on transmission planning reform and continuing work on markets to ensure necessary resource attributes remain available for continuous dispatch.