Commissioner Christie’s Concurrence in PJM Order No. 2222 Compliance Filing in ER22-962

Docket Nos. ER22-962-000, ER22-962-001

I concur in today’s order, although I remain concerned with the Order No. 2222 compliance process as it relates to PJM.  It is important to my decision to concur that the Organization of PJM States, Inc. (OPSI) did not express opposition to this compliance filing by PJM, although it did express several concerns regarding the practical realities and potential challenges facing the states as PJM’s Order No. 2222 compliance process continues to unfold.[1]  As this complicated compliance process continues — as it will by necessity — I urge PJM to give the concerns of the OPSI states the highest priority.  For example, while today’s order appears literally responsive to comments in this docket by OPSI and states, it fails in my view to adequately consider that the actions taken here necessarily implicate state laws, rules and deadlines.  States may even require new legislation to implement Order No. 2222’s requirements and, at a minimum, these practical challenges facing the individual states will take time to resolve.[2]  Today’s order recognizes that this Commission cannot direct the states in the timing of their actions and responses related to Order No. 2222; nonetheless, it appears to do so indirectly anyway by setting an effective date that essentially would require the states to be ready on that deadline as well.  Even though I concur, I note this important issue for future attention. 

As I have noted before, I would have voted against Order No. 2222.[3]  So in a more general sense, this order illustrates exactly what I said in my dissent to Order No. 2222- A.[4]  Among its many examples of fundamentally flawed reasoning, Order No. 2222 and its progeny blithely ignore the fact that resources on the distribution grid are matters first and foremost of state jurisdiction, state responsibility and state rate regulation.  So Order No. 2222 was and remains fundamentally in conflict with state regulations and policies in an area — retail rate and distribution grid regulation — that has always been dedicated to state authority.  

Let me emphasize I do not blame PJM in any way for this complex and complicated compliance process.[5]  PJM did not ask for Order No. 2222 and has devoted enormous amounts of time and effort to try to implement it, as have other RTOs.  It is indeed ironic that almost simultaneous with this order, PJM has just announced that it faces the prospect of losing nearly 40 gigawatts of dispatchable generation by 2030, a loss of essential resources that will clearly threaten reliability.[6] 

That the costs associated with Order No. 2222 compliance will be enormous and paid by the consumer cannot be denied.  Equally obvious to me is that these costs will be driven by the very complexities of the resulting grid upgrades required by this Commission in that order:

[T]he majority also sides against the consumers who for years to come will almost surely pay billions of dollars for grid expenditures likely to be rate-based in the name of “Order 2222 compliance.” . . . A rapid concentration of behind-the-meter aggregated DERs at various locations on the local grid will inevitably require costly upgrades to a distribution grid that has largely been engineered to deliver power from the substation to end-user retail customers.  Meeting the technological challenges of this re-engineering of the local grid are not insuperable but there are substantial costs and we all know these costs will ultimately be imposed on retail consumers.[7]

In my concurrence to the letter order granting PJM’s motion to extend the time in which it had to make its Order No. 2222 compliance filing,[8] I noted: 

These motions offer a preview of what’s coming in terms of the complications and impacts on reliability caused by these orders and the substantial costs that will have to be expended not only to address those threats but to address the complexity of the requirements these orders impose, costs that will be piled on consumers.[9]

That my prediction was correct is demonstrated alone by the order’s girth:  169 pages.  It is further supported by the fact that the order repeatedly admonishes PJM — 34 times, per a word search — that it only “partially complies” or is only “partially compliant” in its attempts to meet Order No. 2222 standards, leading to who knows how many more compliance filings resulting from today’s order and any future attempts by PJM to comply.  Complexity does not even begin to describe the hard spot these RTOs, states and market participants are in.

As I mentioned at the outset of this statement, I remain concerned that the absolute import of the jurisdictional concerns for state commissions has not really remained at the forefront here.  In its comments in this proceeding, OPSI specifically asked that the Commission:

reaffirm that PJM’s governing documents can in no way impose requirements or deadlines on state commissions or other state governmental entities that are subject to state law and will not interfere with any matter under state jurisdiction.  The reason for this request is that the PJM Compliance Filing would establish tariffs that rely on compliance with rules and regulations of state commissions or other similar regulatory authorities, as well as their involvement in the process, and would include effective dates for tariff changes of July 1, 2023, and February 2, 2026.  As such, OPSI requests FERC clarify that neither FERC nor PJM may impose deadlines or assign responsibilities to state commissions in the implementation of any tariffs.  State commissions and agencies alone, pursuant to applicable state law, determine when and how any rules or protocols that may be relied upon by PJM to implement its proposal within their states may be promulgated.[10]

Similarly, today’s order states that PUCO “expresses concern about the amount of regulatory groundwork for [PUCO] to develop the state regulations that are contemplated through the PJM Compliance Filing.  [PUCO] avers that state-jurisdictional initiatives and associated timeframes cannot and should not be dictated by the Commission or PJM.”[11]  But PUCO’s concerns appear to go a little further than this.  PUCO also notes, for example, that:

The Order and PJM’s Compliance Filing create significant needs in Ohio, to augment our retail interconnection process to address resources including some forms of battery storage and electric vehicle charging, and to change related state-level rules and tariffs.  Those processes may take more time than proscribed in PJM’s filing, and neither PJM nor FERC can dictate deadlines for the state to act.  Ohio’s role in dispute resolution also needs to be clarified, and all states deserve the option to be involved in that process.[12]

When it comes to implementing PJM’s effective dates, today’s order literally recognizes OPSI, certain individual states and certain utilities’ concerns:  

As for Ohio Commission’s and Indicated Utilities’ concerns about whether PJM’s timeline is achievable, we recognize that PJM was not able to specify milestones at the time of the filing.  Nonetheless, we also acknowledge that the rules and processes that state commissions and electric distribution companies may need to revise as a result of Order No. 2222, and the associated timing of those changes, are outside the scope of the Commission’s jurisdiction.  In response to OPSI, we note that PJM’s proposal does not impose requirements or deadlines on RERRAs to make changes to their rules and regulations.[13]

However, what the order does not answer is the problem PUCO and others appear to identify:  given all of the complexities of Order No. 2222, and the state’s own processes and jurisdictional charges, the states may not be on the same timeline as the one approved by the Commission today, nor are they required to be.  This issue is the inevitable result of the tension that Order No. 2222 has created with jurisdictional boundaries and the burden that this process imposes on the states, public and municipal power authorities, and electric co-operatives. 

I want to be clear, as I have said before:  “encouraging the development of DERs is a good thing.”[14]  I just don’t think Order No. 2222, which “eviscerat[es] the states’ historic authority in the name of encouraging DER development,” was the right vehicle.[15]  I believe that the complexities that Order No. 2222 creates will haunt the RTOs and RERRAs — let alone the reliability of the grid and the pocketbooks of consumers — for a very long time.  This compliance filing by PJM is only one example.

For these reasons, I respectfully concur.