Dive Brief:
- The Organization of PJM States Inc., or OPSI, is urging the PJM Interconnection to quickly shift from a “reactive” planning approach towards proactive, affordable ways for maintaining grid reliability.
- OPSI, which represents state utility commissions in the PJM region, wants to work with PJM to find “solutions, tools and reforms” that may more rapidly and cost effectively ensure grid reliability, according to a letter released Wednesday by the grid operator.
- Many OPSI members have been concerned for years about PJM’s “siloed, reactive planning,” including “immediate need” transmission projects that can be built without a competitive solicitation and multi-year reliability-must-run, or RMR, contracts that keep power plants operating past their planned retirements, state utility regulators said in the letter.
Dive Insight:
OPSI’s letter to PJM comes as the grid operator’s board is expected to vote at a Dec. 11 meeting on a roughly $5 billion package of transmission projects that are needed in response to data center load growth and power plant retirements. The projects are set to be built by Dominion Energy, FirstEnergy, Exelon, PPL, NextEra Energy, Transource and Public Service Electric & Gas.
OPSI said the transmission upgrade package is at a level never seen before in PJM’s region, which includes 13 Mid-Atlantic and Midwest states, plus the District of Columbia.
On top of the pending transmission package, PJM’s board in July approved a $786 million transmission upgrade plan needed to handle Talen Energy’s planned shutdown of its Brandon Shores power plant and in October 2022 approved $627 million in upgrades related to data center growth in Virginia.
OPSI pressed PJM to keep in mind that it can change any approved package of upgrades in future regional transmission expansion plans, including by authorizing non-transmission alternatives.
The recent reliability challenges and the cost of addressing them have amped up concerns that factors outside PJM’s transmission planning process may contribute to the high cost of transmission upgrades, the state regulators said.
Solutions to the issue may be PJM-focused, but they could also mesh with actions states could take, according to OPSI.
Although PJM has created a task force that is considering changes to give the grid operator more time to prepare for retiring power plants, that effort alone doesn’t go far enough, the state regulators said.
“Exploring innovative solutions that complement this scope, and transmission planning in general, are necessary to make sure all the other important improvements PJM is undertaking, such as Order No. 2023 compliance, long term transmission planning and capacity market reform are given the opportunity to work in concert,” OPSI said. “Unless PJM tackles grid reliability holistically, it may not always be ‘cost-effective.’”
The PJM board has in the past used fast-track stakeholder processes to address critical issues, OPSI said while calling on the grid operator to “act with the same sense of urgency in working with us to address this important issue.”
The letter was supported by all OPSI members except the Virginia State Corporation Commission.
PJM looks forward to engaging with OPSI on the issues outlined in the letter, Jeffrey Shields, a PJM spokesman, said.
American Municipal Power, a wholesale power supplier to public power utilities, supports OPSI’s letter, according to Steve Lieberman, AMP vice president of transmission and regulatory affairs.
“Transmission costs are out of control,” Lieberman said Thursday. In particular, AMP is concerned about “supplemental projects” that utilities build, often with little scrutiny, he said.
AMP is also concerned about PJM’s use of RMR contracts, which can run for years, according to Lieberman. “They’re a runaway train,” he said.
AMP, based in Columbus, Ohio, supports more proactive transmission planning, he said.
“It seems to be that there's a problem and [PJM staff] find an engineering solution to fix the problem, but we're not planning the grid in a way to avoid problems,” Lieberman said.
PJM knows which power plants face possible retirement, according to Lieberman. “It can begin to plan and do studies well in advance instead of always being reactive in nature and resulting in these RMR contracts and these expensive engineering fixes to problems that we would rather see PJM plan for sooner than later.”
