OGJ Online Staff
HOUSTON, Sept. 21, 2001 – A regional transmission organization combining three existing grid operators in the Northeast is “workable,” says PJM Interconnection LLC CEO Phil Harris, “but we don’t think it is a merger of equals.”
Speaking in Houston Thursday, Harris said there is “not a lot” of benefit to PJM in a combined regional transmission organization, but there is a “lot in it for New York and New England.” PJM markets “aren’t broken,” but “New York and New England are,” he said.
Mediation talks to form a single regional RTO in the Northeast were ordered July 12 by the Federal Energy Regulatory Commission, after it appeared PJM, ISO New England, and the New York Independent System Operator were going their separate ways. FERC commissioners ordered similar talks in the Southeast.
Harris told OGJ Online that New England and New York have had problems with billing and settlement, problems PJM doesn’t share. For their part, New England and New York have said governance of the new organization is a major unsettled issue.
With 54% of the Northeast’s total load, PJM is the largest of the three organizations, and several of the proposed options for board composition for a regional RTO are weighted in favor of PJM. In an assessment of the process, Administrative Law Judge Peter Young said the PJM platform is “sound and proven – in its region.”
But, he also noted, in the mid-Atlantic region served by PJM not as much electric generating capacity has been sold off by incumbent utilities as in New York and New England. Moreover, Young said, PJM doesn’t have to contend with load pockets such as New York City and Boston.
And, while the FERC order reflected the expectation the new Northeast RTO would be based on a PJM platform, Young said FERC also anticipated incorporating the best practices employed in other regions. But PJM was unwilling during mediation to concede that “any” practice preidentified by another ISO constituted a best practice, Young said.
Cautioning his comments should not be taken as a “polemic” against the PJM platform, Young said he was confident it will prove more than adequate so long as it incorporates “essential best elements from the other ISOs,” and provided further that “impatience, haste, and greed are not permitted to drive RTO implementation as the expense of sound policy.”
In his comments before the Gas Industry Standards Board annual meeting, Harris said PJM is successfully operating eight markets, including day ahead, day-ahead balancing, black start, with a spinning reserve possibly by spring.
He predicted that 20-30 markets could develop in time and that derivative markets are not far off. What has happened, Harris said, is that ISOs and RTOs have taken data and turned it into useful information.
However, he described the capacity market as a square peg in a round hole, compared to the energy market. Harris said it is difficult to value the worth of making sure enough generating capacity will be available when it is needed and translate it into marketing terms. “No one else has solved this problem either,” Harris said. “I don’t think it will ever be perfect.”