By Ethan Howland of UtilityDive
The PJM Interconnection’s just-held capacity auction cleared nearly 7 GW below its reliability target and only drew roughly 500 MW of new power supply, Federal Energy Regulatory Commission Chairman Laura Swett said Thursday.
“These numbers compound the alarm bells for a call to action in PJM,” Swett said during the agency’s monthly meeting. “Am I surprised that PJM failed to deliver? No, I am not,” Swett said later during a media briefing.
However, FERC isn’t trying to “target” PJM, she said.
“This is a problem that involves people at the federal level, at the market level, the state level, the registered entities, the market participants … all the utilities, the companies there,” Swett said. “This is a very complex issue that everyone has to coalesce around, coming up with a solution.”
FERC aims to address some of the problems at a technical conference on July 23 focused on PJM’s governance issues.
“The current stakeholder process in PJM is slow where it must be fast, opaque where it must be transparent, and vulnerable to vetoes and agenda control exactly when the region needs immediate action,” Swett said.
From the conference, FERC expects to get “ideas on paper, on a record,” Swett said. “I am very optimistic that certain proposals will be front runners that are grounded in the record that we collect next week, so that there should be a more clear path forward for PJM after that.”
FERC Commissioner Lindsay See also highlighted the need for reforms at PJM, the nation’s largest grid operator, serving 67 million people in the Mid-Atlantic and Midwest regions.
“PJM has to be able to get reforms across the finish line in a timely and transparent way,” See said. “Part of that also includes the need for a governance structure that can not only deliver concrete results but that can give parties the type of confidence in those reforms that’s necessary to drive investment where and when it’s needed.”
Last week, FERC Commissioner David LaCerte said the status quo at PJM was “untenable.”
Here are five other takeaways from FERC’s meeting.
Data center reliability standards
FERC set deadlines for the North American Electric Reliability Corp. to develop reliability standards for computational loads — data centers and crypto-mining operations — and the rules for registering those loads by Dec. 31. The grid watchdog is already developing those standards and rules.
FERC also directed NERC to file by March 1 a plan detailing the next steps in its standards development process for computational loads.
“I applaud NERC’s proactive efforts on these matters,” Swett said. FERC set the deadlines because “they are a great mechanism for producing results,” she said.
As part of its Large Loads Action Plan, NERC expects to issue the proposed reliability standards and draft registry criteria for public comment in August, it said Thursday.
FERC orders CAISO, SPP Western seams report
FERC ordered the California Independent System Operator and the Southwest Power Pool to file a report by Sept. 30 on how they plan to manage the seams between their markets and neighboring balancing authority areas in the West. The CAISO-run Extended Day-Ahead Market started operating in May. SPP expanded its footprint into the Western Interconnection in April, and its Markets+ initiative is expected to go live in October 2027.
“While the increased deployment of organized markets is intended to bring substantial reliability and economic benefits to the West, the resulting seams create reliability, operational, and market efficiency hurdles that warrant proactive attention,” FERC said.
Earlier this month, CAISO President and CEO Elliot Mainzer said the grid operator was working with SPP to develop a joint operating agreement before Markets+ begins operating.
Complaint over PSE&G cost recovery advances
FERC advanced a complaint over Public Service Electric and Gas Co.’s cost recovery of a $546 million transmission project it built in New Jersey. The agency ordered an administrative law judge to conduct hearings on Public Citizen’s January complaint alleging that the costs were imprudently incurred.
In December 2024, PSE&G agreed to pay a $6.6 million fine to settle a FERC enforcement office investigation into the utility’s justifications to PJM for building the Roseland-Pleasant Valley transmission project.
FERC rejects complaint over Duke transmission rates
FERC rejected a complaint that sought to stop Duke Energy Progress from including the costs of four transmission lines that could benefit solar developers into its overall transmission rates.
The agency dismissed arguments made by North Carolina Electric Membership Corp. in its complaint, saying, “Rolled-in rate treatment for the costs of the four … projects is consistent with longstanding Commission precedent that favors rolled-in rate treatment for integrated transmission facilities.”
FERC eyes changes to ‘hypothetical capital structure’ incentive
FERC approved a 50/50 hypothetical debt to equity capital structure for two transmission projects that Basin Electric Power Cooperative plans to build in North Dakota for about $469.3 million. FERC offers hypothetical capital structures as an incentive for transmission development.
“They can help new transmission companies secure financing for large projects and allow developers to move forward even when their actual capital structure may not yet reflect a project’s long-term financial profile,” Swett said.
However, FERC is considering changes to the incentive, which increases consumer costs, Swett said at the agency’s meeting.
“This is a very complex topic with significant implications for financing, project development, regional planning, and customer affordability. Even small changes to utilities’ return can have significant impacts,” she said. “I am confident that working with my colleagues, we can get that balance right and ensure that our policies promote needed transmission investment while protecting consumers.”
