Docket Nos. ER23-2612-001, ER23-2612-002
PJM has told us that if we fail to approve those transmission projects in this RTEP driven by the closure of the Brandon Shores coal generating unit located in Maryland, the grid will likely suffer a severe voltage collapse in Baltimore and the surrounding zones, including Northern Virginia, the District of Columbia, Delaware and southeastern Pennsylvania. Such a result could be potentially catastrophic.
While these projects are very costly – and I take seriously the concerns expressed by the Organization of PJM States, Inc. (OPSI), Maryland Public Service Commission (MD PSC) and Maryland Office of People’s Counsel (OPC) – given this Hobson’s choice I concur with approving PJM’s RTEP filing.
While I concur, I note that this element of the RTEP filing raises more questions than it answers, and some of those questions are extraordinarily important. Among the most important topics are these:
First, both the MD PSC and OPC criticize PJM for not adequately planning for the closure of the Brandon Shores plant and/or considering alternatives to the transmission solutions contained in the RTEP. OPSI’s protest generally alleges a lack of greater transparency as to the selection of specific transmission solutions and notes, as the MD PSC points out, the PJM process could have provided for the opportunity to consider non-transmission solutions under Maryland state jurisdiction.
Giving states in RTOs adequate notice and time to react to imminent reliability threats with state-jurisdictional solutions should be done, but context is relevant and important here. In April 2022, over a year before this filing was made and approximately a year before PJM was provided the notice of the intent to deactivate Brandon Shores, the Maryland legislature enacted the “Climate Solutions Now Act of 2022,” a law that requires Maryland to achieve a state-level “net zero” greenhouse emissions mandate and achieve a 60% reduction from 2006 levels by 2031 (as compared to 40% by 2030 under prior law).
I have found nothing in this record to indicate specifically whether Talen Energy Corp. (Talen Energy), the owner of the Brandon Shores units, saw the writing on the wall and decided to close Brandon Shores in response to the new Maryland law, which appears by its terms intended to force the closure of GHG-emitting generating units, including coal units such as Brandon Shores, oil-fired units, and possibly natural gas units as well, to meet the statutory goals and deadlines. But policy-driven closures – sooner rather than later – of GHG-emitting generating units such as Brandon Shores would appear to be well within the realm of reasonable foreseeability both for PJM’s system operators, as well as load-serving utilities in Maryland and the Maryland state officials who regulate them.
Let me emphasize that the State of Maryland, within its sovereign police powers, clearly has the authority to mandate any particular mix of generating resources it prefers. Maryland’s new climate law is well within its inherent authority to enact. Such policies are for Marylanders to choose, not RTOs or FERC. But if the resulting transmission projects under protest in this RTEP filing are caused more by Maryland’s policy choices than by organic load growth and economic resource retirements, then a salient question that may be asked is whether these transmission projects are more accurately categorized as public policy projects, essentially the same as the transmission upgrades caused by New Jersey’s offshore wind projects?
And if they are more accurately categorized as public policy projects, should such projects be regionally cost-allocated, potentially to consumers in Pennsylvania, West Virginia, Ohio, et al.? For example, the State of Illinois has a law similar to Maryland’s that PJM has already estimated will cause $2 billion in transmission upgrades, costs that will be allocated to consumers in other states under PJM’s existing cost-allocation formula. These are questions that the states within OPSI may wish to start considering, as some already have. As the National Association of Regulatory Utility Commissioners (NARUC) noted in comments filed at FERC: “. . . the PJM states are not voting members of PJM, but the majority have reached an equally valid agreement that the burden for costs driven by public policy requirements of one state should not be placed on customers of load serving entities in non-participating states.”
Second, this RTEP filing raises several other questions under a different broad topic heading: deregulation. Broadly speaking in the PJM context, “deregulation” means that resource adequacy is largely dependent on the PJM markets, particularly the PJM capacity market, rather than on a mix of state-regulated, rate-based, utility-owned generating units and purchased power. I have expressed my views before on whether “deregulation” worked to provide consumers with reliable power at the least cost, so I will not repeat them here. This filing does illustrate, however, the risks to reliability of depending primarily on a regional capacity market for resource adequacy, rather than on a state’s own integrated resource planning (IRP) process, with a resource mix that includes sufficient state-regulated, rate-based, reliability-critical units to ensure its load-serving utilities always have adequate resources.
This raises an important point: PJM is not a regional IRP planner, with a duty to evaluate the proper mix of generation, transmission, and distributed energy resources (DERs), as well as demand-side programs, to ensure reliability and the resource mix that each individual state wants, whether 100% wind and solar or a mix of dispatchable and renewables. It is ultimately the job of each state to ensure resource adequacy to serve its consumers, even in a multi-state RTO.
So while I am deeply sympathetic to the concerns expressed by the MD PSC, OPSI and the OPC as to the impact on consumers, there is really no practical choice for us but to approve this filing. We simply cannot risk the potentially catastrophic consequences laid out by PJM in its filing. But the states in OPSI, as well as all states in multi-state RTOs, may want to consider the broader questions this filing raises, as I have described above.
For these reasons, I respectfully concur.
 See, e.g., PJM Oct. 3, 2023 Answer at 3 (“Specifically, PJM analyses showed that the deactivation of the Brandon Shores units resulted in nearly 600 reliability violations.”); id. at 14 (footnote omitted) (“In the case of the Brandon Shores deactivation, PJM determined that there were no viable non-transmission alternatives or operating measures that would address the significant reliability violations triggered by the proposed deactivation. PJM analyses showed that upon the deactivation of the Brandon Shores units, there will be severe voltage drop and thermal violations across seven PJM zones particularly under N-1-1 contingency conditions, which could lead to a widespread voltage collapse in Baltimore, Maryland and the immediately surrounding areas (e.g., the BGE, APS, ME, PPL, PECO, PEPCO and Dominion Zones). In the absence of timely, adequate and properly-located generation, violations of this size and severity can only be addressed by building Transmission System reinforcements.”); id. at 16 (“PJM considered potential non-transmission alternative solutions to the Baseline Upgrades, but determined that, in light of the very significant area-wide violations resulting from the proposed deactivation of the Brandon Shores units, a robust transmission solution will be necessary and that, otherwise, not only Baltimore’s load cannot be reliably served, the reliability of other zones will also be negatively impacted in a significant way.”); PJM Oct. 3, 2023 Transmittal to Answer (PJM Transmittal) at 2 (“Finally, there is no existing technology that can cure the reliability problems that Brandon Shores will create when it deactivates other than transmission. Brandon Shores is a spinning-mass generator that provides certain physical attributes, such as inertia, that are necessary for electricity to get from point to point. The retirement of Brandon Shores results in nearly 600 reliability violations because the area is simply lacking in bulk electric system infrastructure. Again, transmission is the only viable solution for that area right now until there are technologies deployable at a scale that could take the place of units like Brandon Shores.”).
 See also infra n.12.
 See, e.g., MD OPC Sept. 13, 2023 Protest at 2, 13-21; MD PSC Sept. 19, 2023 Protest and Comments at 3 (“Rather, by focusing primarily on an immediate transmission solution, the RTEP process – as applied in this instance – precludes consideration of viable alternatives, with the prospect of exposing Maryland ratepayers using the transmission facilities to unreasonable costs.”).
 See, e.g., OPSI Sept. 25, 2023 Protest at 2-4.
 See Climate Solutions Now Act of 2022, Fiscal and Policy Note for Senate Bill 528 at 2, Department of Legislative Services, Maryland General Assembly, 2022 Session, SB 528, https://mgaleg.maryland.gov/2022RS/fnotes/bil_0008/sb0528.pdf.
 “. . . Talen Energy made statements and public filings that it planned to switch to oil-burning operation.” PJM Transmittal at 1.
 Of note, as today’s order recognizes, this PJM RTEP cost allocation filing includes revisions to six enhancements or expansions to existing public policy baseline projects as selected by the New Jersey Board of Public Utilities pursuant to the State Agreement Approach (SAA). Order at 7 & n.19. This amounts to another approximately $29.26 million in transmission upgrades related to New Jersey’s offshore wind projects, to be allocated solely to New Jersey under its State Agreement Approach agreement with PJM. See, e.g., PJM’s Attachment A, Cost Responsibility Assignment Summary Sheets for Baseline Upgrades b3737.53-b3737.56 and Baseline Upgrades b3737.59-b3737.60.
 John Norris, Illinois Climate Bill Could Force $2B in Tx Upgrades, PJM Says, RTO Insider, Aug. 14, 2022, https://www.rtoinsider.com/30632-illinois-climate-bill-force-2b-tx-upgrades-pjm-says/ (“Illinois’ climate goals could cost other states in PJM and MISO tens of millions in transmission upgrades over the next two decades as coal and natural gas power plants are forced to retire, PJM said last week.”) (emphasis added).
 James Downing and Devin Leith-Yessian, Ohio Legislators Raise Concerns About Cost Impact of Illinois’ CEJA, RTO Insider, Jul. 10, 2023, https://www.rtoinsider.com/49838-ohio-legislators-concerned-rate-impacts-illinois-ceja/ (“Ohio lawmakers are raising concerns about how Illinois’ Climate and Equitable Jobs Act (CEJA) will impact their state’s ratepayers after PJM last year found that power plant retirements stemming from the law could require $2 billion in new transmission to maintain reliability.”).
 NARUC, Motion to Intervene and Comments, Docket No. RM21-17-000, at 24 (filed Oct. 12, 2021). Should this principle referenced by NARUC be violated, it would raise another important question: Whether the resulting rates would be just and reasonable under the FPA or possibly provide the basis for a Section 206 filing.
 See, e.g., Mark C. Christie, It’s Time to Reconsider Single Clearing Price Mechanisms in the U.S. Energy Markets, Energy Law Journal, May 2023, https://www.eba-net.org/wp-content/uploads/2023/05/3-Commr-Christie1-30-1.pdf.
 Indeed, as this order recognizes, the threshold question of our analysis in these RTEP cost allocations filings is limited: “We review the proposed revisions to Schedule 12 Appendix A and Appendix C to determine whether PJM followed its Tariff provisions in allocating cost responsibility according to its Tariff. . . . As PJM noted in its answer, the Commission has limited its review of these cost allocation filings to whether PJM has followed the cost allocation provisions of the Tariff, and the issues raised by the protests are beyond the scope of the Commission’s review of the proposed cost responsibility assignments.”) Order at P 24. Today’s order also notes, “[P]rotestors do not dispute that PJM followed the cost allocation provisions in its Tariff to determine the proposed cost responsibility assignments for the baseline upgrades.” Id.