Press Release

11 States, D.C. Call for Comprehensive Hearing on PJM Reliability Pricing Model, Ask FERC to Reject Request for Expedited Process

Published on 10/20/2005

Filed under: Electric

HARRISBURG –   The Pennsylvania Public Utility Commission (PUC) today announced that the Organization of PJM States Inc. (OPSI) has asked for the Federal Energy Regulatory Commission (FERC) to hold hearings on PJM Interconnection’s (PJM) Reliability Pricing Model (RPM) citing significant concerns on the proposal’s impact on electric markets and customers.

OPSI requested that the Federal Regulatory Commission (FERC) conduct comprehensive hearings to review the Reliability Pricing Model (RPM) offered by PJM, rejecting the company’s request for an expedited process.

“I would like to thank the other regulators and their staff for their support in developing these comments, which was a team effort. We are not convinced that the RPM model will have the intended effects on investment nor will it improve reliability for all of our participants,” said OPSI President Wendell F. Holland, Chairman of the Pennsylvania PUC. “We are calling for a full and fair hearing of the proposal, which will allow all parties to be heard. The Organization of PJM States is firmly committed to working with the federal government, PJM, and other stakeholders during the coming months to develop a workable plan for the region.”

OPSI has a vital interest in the effect on electric markets and grid reliability. With that, OPSI requested that FERC not expedite the process but rather scheduled hearings so the full scope of the proposal can be explored.

“While locational reliability problems exist in certain areas of PJM, it has not been demonstrated in the filing that the RPM model will have the intended effects on investment that will solve these local reliability problems or be the most cost effective mans of solving future reliability programs,” OPSI said in its comments. “With significant concerns having been raised regarding PJM’s RPM proposal and its potential impact on the development of a joint and common market, FERC should conduct a comprehensive proceeding to include, in addition to a thorough review of RPM, consideration of alternative resource adequacy constructs. The stakes involved are considerable.”

The OPSI comments filed with FERC marks the first time the group has formally addressed an issue. Established as a non-profit organization in July 2005, OPSI unites the 14 regulatory commissions within the PJM footprint giving them the means to work together on issues of mutual interest related to PJM operations; the electricity generation and transmission system serving the PJM states; FERC matters; and systems within the states’ boundaries.

While this is a joint OPSI filing, each member reserves the right to file additional individual comments.

On Aug. 31, 2005, PJM filed its RPM as a proposed replacement for its existing unforced capacity obligation. According to PJM, the RPM coordinates the price paid for generation capacity with overall system reliability requirements. PJM said reliability may be compromised in PJM in the absence of a capacity model. However, OPSI is concerned the model does not address long-term needs and the effects on the development of competitive markets.

The members of OPSI are the Delaware Public Service Commission, District of Columbia Public Service Commission, Illinois Commerce Commission, Indiana Utility Regulatory Commission, Kentucky Public Service Commission, Maryland Public Service Commission, Michigan Public Service Commission, New Jersey Board of Public Utilities, North Carolina Utilities Commission, Public Utilities Commission of Ohio, Pennsylvania Public Utility Commission, Tennessee Regulatory Authority, Virginia State Corporation Commission, and Public Service Commission of West Virginia.

PJM Interconnection, L.L.C., based in Valley Forge, Pennsylvania, plays a vital role in the U.S. electric system.  As a regional transmission organization (RTO), PJM  coordinates the movement of electricity through all or parts of 13 states and the District of Columbia; ensures the reliability of North America’s largest centrally dispatched control area; operates the largest competitive wholesale electricity market in the world; plans generation and transmission expansion to ensure reliability; operates independently and neutrally; and provides real-time information to its members/customers to support their decision-making.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition.

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FERC Docket Nos. ER05-1410-000 and EL05­148-000

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