WASHINGTON, Oct. 10, 2001 — PJM President and CEO Phillip Harris, testifying before the U.S. House of Representatives Subcommittee on Energy and Air Quality, today called on Congress to adopt simplified reliability legislation assigning the ultimate responsibility for devising, implementing and enforcing mandatory reliability standards to the Federal Energy Regulatory Commission (FERC), instead of hard-wiring a self-regulating organization that would be granted, in effect, the ability to tax ratepayers.
Harris noted that the electric industry has traditionally operated through various outlets of operation — from the acquisition and delivery of fuel, to the generation of electricity, to transmission and distribution — each operating as an autonomous island with little integration and sharing of data. Harris stated that the FERC should be empowered to ensure that every transmission entity in the United States participates in Regional Transmission Organizations (RTOs) as an essential element of a synchronous market, so as to produce consistency, promote rational regional planning, relieve congestion and refine pricing.
“We urge Congress not to create yet another organization to oversee reliability,” Harris said, referring to a proposal by the North American Electric Reliability Council. “The industry should be looking for ways to integrate its functions into the marketplace, not creating new industry silos.”
Harris also restated his support for the FERC plan to integrate existing wholesale electric markets into four RTOs. The creation of large RTOs under the Regional Network Model that PJM proposed for the Northeast will significantly enhance the security and continuity of the national grid. Under the PJM Regional Network Model approach, data and responsibility will be decentralized among multiple paths while, through a hierarchical design, the benefits of integration and uniformity are realized. Harris noted that this approach is far more secure than the system which presently exists where there are silos of security responsibility among each of the individual utilities in much of the country.
In addition to recommendations on reliability and security issues, Harris highlighted additional ways Congress could support delivering real and measurable results to electric consumers. These include:
— Siting – Congress should provide deference to decisions reached through balanced regional planning processes which are open and which do not favor transmission solutions over generation solutions or one technology over another; embracing and enhancing open regional planning processes that involve all affected states.
— More standardization of market design – FERC needs to more clearly delineate the exact market functions to be performed by emerging RTOs and ensure a certain degree of standardization of design so as to promote the free flow of information to enable commerce of this instantaneous, speed of light product. Harris noted that PJM remains concerned that in much of the rest of the country the developing RTOs seem to want to remain passive grid operators with no obligation to ensure a vibrant marketplace.
— FERC resources – Congress should ensure that the FERC is fully staffed and has the resources needed to appropriately monitor the markets and regulate in those areas where any market is not properly functioning. Harris noted that this is not the time to pull the rug out of the FERC’s efforts to deliver on the promise of the Energy Policy Act of 1992 and Order 2000.
— Role of technology – The nation is moving rapidly to networked information through advanced technology. The FERC should have these advanced tools and the staff resources to use them in order to identify and be responsive to market dysfunctions in a timely manner. And even more importantly, Harris noted, in writing laws in the electricity area Congress should provide broad authority to the FERC and other government institutions rather than codifying constraints, which will tie the agency’s hands.
“Our message is simple,” Harris noted. “With the wise use of information and with institutions such as the FERC having broad and flexible authority and a clear mission to promote competitive markets, our laws and institutions can begin to catch up and operate closer to the speed and efficiency of this instantaneous product — electricity.”
A complete copy of Harris’ comments is available on PJM’s Web site at www.pjm.com — under PJM news, current topics.
PJM, the country’s only fully functioning regional transmission organization, operates the world’s largest competitive wholesale electricity market and one of North America’s largest power grids. The company currently coordinates a pooled generating capacity of more than 59,000 megawatts and operates a wholesale electricity market with more than 200 market buyers, sellers and traders of electricity. PJM has administered more than $5 billion in energy and energy service trades since the regional markets opened in 1997. More than 70 nations have sent delegates to PJM to learn about the market model and the operation of the grid in the mid-Atlantic states.
SOURCE: PJM Interconnection, LLC