The PJM Interconnection on May 28 said that Andrew Ott, president and CEO of the grid operator, will retire from the organization on June 30, 2019.
Ott, who has worked at PJM for 22 years, joined the regional transmission organization in 1996 and helped launch the PJM wholesale energy market in April 1997.
The PJM Board of Managers has formed a committee to oversee the search for a new CEO. In the interim, the board has announced that Susan Riley, a board member since 2005, will serve as interim CEO, beginning July 1, 2019.
Ott, who became the CEO of PJM in October 2015, has agreed to serve as an adviser to the PJM board through December 31, 2019.
Transmission planning
In recent years, federal energy regulators and market participants have raised questions about PJM’s transmission planning process and, more specifically, if that process is allowing for stakeholders to have an adequate voice in grid planning activities.
In August 2016, the Federal Energy Regulatory Commission issued an order in which it voiced concern that the transmission planning process governed by the PJM Interconnection's operating agreement was not providing stakeholders with the opportunity for early and meaningful input and participation in the transmission planning process, as required by FERC's Order 890.
Then, in early 2018, FERC issued an order concluding that the transmission planning procedures used by transmission owners in the PJM Interconnection for supplemental transmission projects were inconsistent with the requirements of Order No. 890.
At the time, Commissioner Cheryl LaFleur noted that the order was “the culmination of a lengthy process that started with a technical conference in November 2015, followed by a show cause order in August 2016.”
More recently, at an event in Washington, D.C., earlier this month, Sue Kelly, President and CEO of the American Public Power Association, said that transmission project developers should show that they have considered all available alternatives before moving forward with a grid project and that the project is the most cost-effective solution. Kelly cited PJM supplemental projects.
Lisa McAlister, Senior Vice President and General Counsel, American Municipal Power, recently said that supplemental projects “don’t get the same regulatory oversight and process” as baseline projects in PJM do, “but we’re footing the bill for all of them.”
Markets
On the markets side of the ledger, there have been a number of significant developments in the grid operator’s wholesale markets under Ott’s watch.
One area that has received a lot of attention involves PJM’s capacity markets.
In a recent development, while FERC in April accepted proposed revisions made by PJM to the parameters of its capacity auctions, Commissioner Richard Glick dissented, saying that FERC should take a holistic review of the capacity market given the “mountains of evidence” indicating that PJM’s capacity market is over procuring resources.
In several states in PJM’s footprint, there have been moves to preserve nuclear generation, some of which have proved successful, while others have not.
Exelon in early May said that said it planned to follow through on its previously announced plan to close its Three Mile Island (TMI) nuclear plant in Pennsylvania on Sept. 30.
Two years ago, Exelon said that “absent needed policy reforms,” it would close the 837-MW plant. The announcement came shortly after Three Mile Island and another Exelon nuclear plant, Quad Cities in Illinois, failed to clear PJM’s auction to procure capacity for the June 2020 – May 2021 delivery year. The plant also did not clear the 2021/22 auction, along with the Dresden and most of the Byron nuclear plants in Illinois. Exelon reported that the 2018 auction was the fourth consecutive year that Three Mile Island had failed to clear a capacity auction.
Price formation plan stirs debate
A PJM price formation plan has also stirred debate in recent months. The American Public Power Association and multiple other parties recently argued that PJM’s proposed revisions to its reserve market price formation should be rejected by FERC because, among other things, there is no crisis requiring major changes to the design of the reserve market.
In an April 30 blog, Elise Caplan, Director, Electric Market Analysis, at the Association, noted that PJM’s proposal for changes to its rules for pricing operating reserves is estimated to increase both energy and reserve costs by about $2 billion per year, according to PJM’s initial estimate.
“Many PJM stakeholders, including public power, opposed these rule changes, stating that PJM has not justified a need for price increases of this magnitude. Moreover, these revenues will overlap with earnings from the capacity market, creating a double payment to sellers,” wrote Caplan.
FTR market
In other recent PJM market developments, a report released in late March that examined the actions of PJM leading up to the default of GreenHat Energy LLC, a financial transmission rights trader in the PJM markets, concluded that the grid operator was late to recognize GreenHat as a problem and that PJM personnel “were naive about GreenHat’s assurances of creditworthiness and a future revenue stream pledged to PJM.”
Kelly in September 2018 said that there was a strong argument to be made that financial entity participation in the wholesale markets, including FTR markets, should be investigated.
PJM announces executive appointments
Meanwhile, PJM on May 28 also announced executive appointments effective July 3, 2019. The appointments, among five executives, “are designed to realign responsibilities and refine the focus on its key functions of system reliability, competitive wholesale electricity markets and infrastructure planning,” PJM said in a news release.
Additional details about the executive changes are available here.
