PJM Must Stay in Its Lane—and Stop Blaming Renewable Advocates.

Protesting in front of PJM is something I don’t advocate for.

I am responding to WHYY News Climate Desk’s story titled “Electricity bills in Pa., Del., N.J. to rise starting June 1. Advocates say more renewables would lower future costs” by Sophia Schmidt.

PJM must be technology-neutral. That’s not a request—it’s their FERC mandate. So, when a PJM spokesperson blames renewable advocates for higher prices and reliability risks, we have a bigger problem than just a bad soundbite. We have an RTO stepping outside its lane.

What PJM Said — and Why It’s a Problem

What concerns me most in this debate is the following statement from PJM spokesperson – ““Those organizations who visited today have actively worked to push critical power resources off of the system, raising prices and threatening reliability, and now they are protesting the results of their own actions,” said PJM spokesperson Jeff Shields in an emailed statement. “We have been warning of this imbalance between supply and demand for some years now and continue to work proactively to maximize our available electricity for the benefit of consumers. Today’s protest is simply an exercise in blame shifting.””

Stakeholder Forums Exist for a Reason

Protesting in front of PJM is something I don’t advocate for. PJM has several stakeholder forums and committees, and one must attend to raise these points in a professional manner. Not everything will go the renewable advocate's way, and most renewable organizations and the industry associations they represent are aware of this. But what puzzles me as an ex-MISO engineer is PJM’s spokesperson blaming renewable advocates for raising prices and threatening reliability. When did FERC give PJM the authority to say that? The mandate from FERC for PJM is to be technology-neutral and run the market impartially.

If there is analysis that renewables raise prices at the wholesale level, because PJM is responsible for the wholesale market not the retail market, then, PJM should share that at a stakeholder forum and seek comments from its stakeholders. Similarly, if PJM has an analysis that renewables are threatening reliability, then PJM should share the report. To PJM’s credit, PJM did share a report called “Resource Retirements, Replacements and Risks” – the “4R Report”.

PJM’s Own Reports Tell a Different Story

PJM released the first phase of this report on December 15, 2021. PJM released the second phase of the report on May 17, 2022. The findings of Phase II report are instructive – “

1. Electrification shifts the seasonal resource adequacy risk to winter.

2. Retail rate design and energy storage become increasingly important with electrification.

3. Market reforms are needed to incentivize flexibility and mitigate uncertainty.

4. The integration of renewable resources increases the need for balancing resources to meet forecasted ramping requirements.

5. Energy storage (four hours) enhances operational flexibility, but seasonal capacity and energy constraints require transmission expansion, long-term storage and other emerging technology.”

Solar’s 18% Capacity Credit and the Fossil Bias

Since the focus of renewable advocates cited in the WHYY news story is about high retail electricity bills in PA, DL and NJ, this is what PJM stated in the Phase 2 report regarding retail rate design, “Retail rate design can harmonize the load-loss risk profile with renewable resources. Assuming that customers have access to real-time prices, Internet of Things (IoT) technology, and customer-facing programs that incentivize electric vehicle (EV) charging in off-peak hours, the capacity value of solar climbs back to 18%. The net effect of retail rate design is an overall reduction of the amount of capacity procured to meet the North American Electric Reliability Corporation’s 1-in-10 Loss of Load Expectation (LOLE) reliability standard.”

This is the reality we face today: even if all the renewables in PJM’s interconnection queue get built, PJM only gives solar an 18% capacity value. Why? Because it’s intermittent. Fossil plants get much higher credit, and even when they fail, some of their outages are excluded from the data PJM uses.

Renewables Have Zero Fuel Cost — That Matters.

What bothers me in this debate about “we need dispatchable capacity” is that the message that renewables have zero fuel costs is lost in the translation. Why is it such a hard sell that more renewables mean lower electricity costs? If all things are equal (e.g., load, transmission, generator outages), wouldn’t a grid with more renewables have a lower wholesale locational marginal price of electricity? I would think so because the load does not have to pay for fuel costs. Fuel costs of fossil fuels, such as natural gas, are passed through to ratepayers via the retail price of electricity. Therefore, a higher reliance on natural gas generators leads to higher retail electricity prices. I realize that’s not always the case because if we have lower gas prices, then, that should translate into lower retail prices.

Capacity Markets and Misplaced Blame

But the issue renewable advocates have is with the PJM capacity auction. If PJM assigns only an 18% capacity value to solar, then, even if all the solar in the PJM queue is built, only 18% of it will be counted in the auction. Is that what the protestors in front of PJM’s offices in Audubon, PA are protesting about?

We can revisit the 5^th point of PJM’s findings in their Phase II 4R report. Energy storage, specifically 4-hour duration storage, can help, but we need transmission to charge the batteries, according to PJM.

PJM released the 3^rd phase of the 4R report on February 24, 2023. The key takeaway for me from the Phase III report is this: “PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources. Given the operating characteristics of these resources, we need multiple megawatts of these resources to replace 1 MW of thermal generation.”

PJM states that it needs 48 GW of nameplate or 8 GW of capacity on the low end and 94 GW of nameplate or 17 GW of capacity on the high end of wind/solar (including hybrids with battery storage) to replace the 40 GW of retiring coal, natural gas and other fossil fuels. This brings us back to the reason why there were protesters in front of PJM – they were protesting that PJM didn’t interconnect renewables more quickly. They have a point here.

Source: PJM

PJM is going through its interconnection reform and adding backlogged generators slowly but steadily. Obviously, that pace is not fast enough for the protestors. At the same time, PJM took a more direct approach, bypassing this same queue. Under the Reliability Resource Initiative, PJM selected 51 projects with a total capacity of 9,300 MW. The majority of that RRI capacity is natural gas. Is that what the protestors were protesting about? PJM’s federal regulator, FERC, approved this.

Source: PJM

PJM also stated that it is taking the following actions:

· “Automation – Additional automation in the interconnection process, along with increased staffing over the past several years, has improved quality while reducing the backlog by 60%. PJM on April 10 also announced a multiyear collaboration with Google and Tapestry to deploy AI-enhanced tools to further streamline PJM’s planning process for connecting new generation resources to the grid.

· Surplus Interconnection Service – PJM obtained FERC approval to streamline the use of the unused portion of interconnection service for facilities that cannot or do not operate continuously, every hour of every day, year-round (such as adding battery storage to a renewable site).

· Capacity Interconnection Rights Transfer – A reform package endorsed by PJM stakeholders and currently pending review by FERC would facilitate an expedited interconnection process for a replacement resource seeking to use the capacity interconnection rights of a retiring resource.”

Some of these actions take time. However, in the meantime, capacity auctions are ongoing, and we may continue to see higher prices until this situation resolves itself.

A Word About R Street’s Scorecard on the electricity competition.

R Street, a think tank “whose work is grounded in liberty and freedom” recently released a scorecard on the electricity competition and Pennsylvania got a B+ rating. Delaware is a B, and New Jersey is a B-. Overall, these are favorable ratings for the PJM states mentioned in this news story.

Source: R Street

R Street offers three specific suggestions for states to improve –

· “Complete the rollout of smart meters and enable customer access to Green Button-quality, near-real-time data. Doing so lets people manage use, cuts costs, and spurs new service ideas.

· Strengthen an independent, well-resourced consumer advocate office that can appear in rate cases, track complaints, and keep both regulated utilities and competitive suppliers honest.

· Quarantine the monopoly by separating the regulated wires business from competitive ventures or (at minimum) tightening ring-fencing and affiliate rules to prevent cross-subsidies and self-dealing.”

The Real Target Should Be EDCs and PUCs

All of these are worthwhile suggestions for the protestors who were protesting in front of PJM’s offices. These protestors should put the pressure on PUCs to complete the rollout of smart meters and demand why Electric Distribution Companies (EDCs) are not providing that data to enable customer access to Green Button-quality, near-real-time data – because that’s exactly what PJM pointed out in its Phase II 4 R report (“Assuming that customers have access to real-time prices, Internet of Things (IoT) technology, and customer-facing programs that incentivize electric vehicle (EV) charging in off-peak hours, the capacity value of solar climbs back to 18%.”)

Customers will have access to real-time prices if EDCs complete the rollout of smart meters and if those customers have access to Green Button-quality, near-real-time data. Put the pressure on EDCs, not PJM.

So, Who’s Really Responsible for Your Electric Bill?

The key point of the debate over electricity bill increases in Pennsylvania, Delaware, and New Jersey is that renewable advocates are blaming PJM for the high capacity prices. Because if more renewables were interconnected in a faster fashion, then that would result in lower electricity bills at the retail level, in their contention.

Because PJM runs the Base Residual Auction – the capacity market - PJM is often portrayed as the bad guy. PJM is responsible for the capacity market, which determines the price that loads in PJM must pay for generating capacity.

Lost in this translation is the connection between the wholesale market and the retail price of electricity. PJM doesn’t set retail electricity prices—the state PUCs do. However, PJM runs the capacity auction, which influences how much ratepayers are charged for capacity. That’s where the link gets blurred. PJM is a policy taker, not a policy maker. If the state PUCs demand more renewables, PJM must account for this in its resource adequacy plans.

Until PJM clears its backlog, reforms its capacity credit methods, and state PUCs step up their efforts on rate design and smart meter access, we’ll continue to have the same debate. But pointing fingers at clean energy advocates—who are calling for exactly those reforms—isn’t just inaccurate. It distracts from the real work PJM and the states still need to do.