WASHINGTON (September 23, 2021)—PJM, the regional transmission organization that coordinates the movement of wholesale electricity in 13 states and the District of Columbia, has two proposals before the Federal Energy Regulatory Commission (FERC) that, if approved, could result in substantially more clean energy on the grid.
“PJM has really turned the corner with these proposals,” said Mike Jacobs, senior energy analyst at the Union of Concerned Scientists. “Not only has it stopped fighting state policies intended to boost renewable energy use, but it’s also collaborating with New Jersey to connect offshore wind to the grid. I think PJM heard loud and clear that it needs to start heeding the wishes of states and their voters who are committed to ramping up renewable energy.”
By September 28, FERC will have finished considering PJM’s proposal to ease the harm of a prior policy decision around PJM’s capacity market. Several years ago FERC approved PJM’s request to require electricity suppliers to use minimum prices when bidding into that market. That approach, prompted by coal and natural gas generators, forced state-supported renewable energy providers to bid at higher prices than their costs warranted, to avoid underbidding fossil fuel energy providers and squeezing some of them out of the market. The effect of the rule, if left unchanged, would be to price renewables out of the market instead and raise consumer costs by some $2 billion dollars a year to cover the costs of the higher priced fossil fuel-generated energy, according to a range of estimates.
PJM realized it needed to back down from the minimum bid rule after hearing from outraged state lawmakers and utility commissions, particularly in Maryland, New Jersey and Illinois. Over 50 members of the National Caucus of Environmental Legislators, representing eight states, recently commended PJM for their new efforts to support state clean energy goals and encouraged FERC to approve PJM’s filing to revise the minimum offer price rule.
“The rule needs to be changed because it amounts to a price penalty on the clean energy sources that states and cities are prioritizing through their policies and incentives,” said Jacobs. “Cutting zero-emissions sources out of the capacity market hurts consumers and could thwart the transition to clean energy. It’s appropriate, and a relief, that the minimum bid requirement likely will be rolled back.”
Meanwhile, PJM will file a second proposal with FERC to designate a 7,500 megawatt New Jersey offshore wind project as meeting “public policy purposes,” meaning a project that allows a state to meet its energy goals. Such a designation allows PJM to work closely with a state to more easily and quickly construct transmission lines to connect a new energy source to the grid.
“PJM is to be commended for getting this new public policy transmission planning process on the books,” said Jacobs. “Planning ahead for offshore wind has been badly needed, and this level of cooperation between PJM and New Jersey is cause for celebration.”