Commissioner Rosner’s Concurrence to Order Accepting Tariff Revisions under ER26-455

Docket No. ER26-455-000

I support today’s order approving PJM’s revised capacity market demand curve because PJM has provided robust support to demonstrate that it is just and reasonable.  I write separately to commend PJM and its stakeholders for crafting a demand curve that earned supermajority support from PJM stakeholders—a true feat when PJM’s capacity market is making national headlines. 

Achieving a workable capacity market requires both a solid economic foundation and buy-in from the people that finance, build, permit, and pay for generation.  A market design straight out of an economics textbook will not work if the people who that market serves do not believe in it.  And a market design that conflicts with the hard lessons underpinning economic theory will never succeed.  Credit where credit is due, this filing gets the balance right.  PJM should make its approach in developing this filing with stakeholders a template for the future, and work to develop a long-term vision and strategy for its market that earns buy-in from across its membership and its states.  A market that people believe in is a market that people will invest in to deliver the new generation PJM customers so badly need.

But PJM market price signals cannot do the job alone.  Given states’ authority over siting generation and transmission, Public Utility Commissioners, governors’ offices, and state legislatures are all necessary partners in any effort to ensure energy infrastructure is built out at the pace needed to stay ahead of load growth and keep energy affordable and reliable for PJM customers.  Just as PJM must earn buy-in from its states and its members to achieve durable market rules, we depend on PJM states, load-serving entities, and developers to take the financing, procurement, permitting, and construction steps needed to turn PJM market signals into steel in the ground.  The PJM market is intended to support these efforts — not supplant them.

So, in parallel to today’s update to the demand curve, PJM and its states must pursue consensus-driven solutions that can bring supply and demand back into balance as soon as possible.  Case in point:  I’m encouraged that the bipartisan governors of all thirteen PJM states and the National Energy Dominance Council recently proposed seven principles that they believe should drive PJM’s addition of needed generation in the short term and PJM’s return to market fundamentals in the long term, while protecting consumers.[1]  On the same day, the PJM Board released its own proposal[2] that, while not identical, shares a great deal in common with the governors’ vision for their region, including calls for: (1) an immediate reliability backstop auction to procure generation capacity on a multi-year basis;[3] (2) significant load forecasting improvements;[4] (3) expedited generator interconnection;[5] and (4) a holistic review of PJM’s market design.  I look forward to considering the proposals PJM ultimately files with the Commission after deliberating with its stakeholders, based on the full record that comes before us.  In the meantime, I urge the states to expeditiously pursue their own procurement and permitting reforms to get new generation and transmission built and demand response programs up and running.[6]

None of this is easy.  But PJM’s filing in this docket shows that, when parties prioritize consensus, hard things get a lot easier.  I am thankful for this outcome that we approve today and, moving forward, I encourage all stakeholders in PJM to keep it up for the sake of the 67 million PJM customers that depend on you for a reliable and affordable grid.

For these reasons, I respectfully concur.