It was hard to fault PJM Senior Vice President Asim Haque for going a couple of extra overtime minutes at NJBIA’s annual Energy and Environmental Policy Forum this week.
More than waiting as the final speaker for a loaded, two-day event that drew more than 450 registrants, PJM Interconnection has become something of a political football over the past election year in New Jersey.
And this was his opportunity to present the grid operator’s actual playbook to an energy-focused audience.
“(Our) mission is power grid reliability,” Haque said. “To keep the lights on for the 67 million consumers in our footprint. It is a mission that we take very seriously and is a mission that is at the heart of every action that we take at PJM.
“We perform that mission through these core business functions, grid planning, running markets, and most importantly, grid operations.
“This is an organization that does not have sharp elbows. It is literally trying to just keep the lights on every single day for all of these consumers.”
Earlier this year, the winning prices for New Jersey’s 24th annual electricity auction for Basic Generation Service (BGS) increased for all four regulated electric distribution companies (EDCs) in the state.
As a result, the average monthly bill increased for New Jersey residents between 17.23% and 20.20%, depending on the service territory, just in time for summer.
NJBIA had warned for years that New Jersey was in danger of greatly increased energy prices by Gov. Phil Murphy’s target to achieve 100% clean energy by expansion of offshore wind, solar and other energy efficiency programs, but without adding natural gas or nuclear energy.
When that actually happened, Republicans pounced on the talking point as for the reason of skyrocketing energy costs in a gubernatorial election year.
Democrats pointed to PJM’s operations as the culprit, even recommending investigations into some of its practices.
With great patience and context, Haque responded to some of the denunciations PJM has faced during the conference:
PJM somehow profits off higher energy costs:
Haque: “We operate as a nonprofit. We don’t have shareholders. We don’t have share prices. We do not have earnings. We do not profit from high energy prices.
“We have a budget that we submit to our federal regulator, who is the Federal Energy Regulatory Commission, and we collect what we need in order to operate the power grid. We are a fully regulated entity.”
PJM makes self-advantageous decisions in a silo:
Haque: “Every major issue gets discussion in public stakeholder processes and gets a vote by a spectrum of entities in the industry, including consumer advocates. The New Jersey Office of the Consumer Advocate is one of those entities that gets a vote on things that happen within the PJM stakeholder sphere.
“Then that issue goes to the FERC, where there is more feedback provided via a fully regulated, litigated proceeding. We have an independent board that has no financial entanglements with any of our utilities or generators, a market monitor that ensures that none of our generators are conducting nefarious activity in our markets.
“We have heard that these markets are somehow rigged in some way, shape, or form. There are a lot of safeguards around that. And again, (there is) federal oversight in tandem with an independent market monitor. Ultimately, all of that adds up to this concept that we are a mission-driven organization that is divorced again from any concept of financial earnings or profit.”
PJM is/was anti-wind energy:
Haque: “(There) is a metric called effective load-carrying capability. The easiest way I know how to explain it is when you flip the switch, you don’t know whether that energy you are consuming is from a coal watt, a nuclear watt, a gas watt or a renewable watt.
“But when you trace that watt all the way back to its source, each one of those source types, has its different availability and capability. That math is called effective load carrying capability (ELCC).
“Most markets in the world are utilizing effective load carrying capability. We do as well. So, if nuclear is the gold standard at 95% ELCC, it’s always running morning, noon, and night, regardless of the weather. Solar has a relatively low ELCC. Offshore wind is a high performing resource at 60% ELCC.
“If you want to match the capacity of a nuclear plant with solar, you need 9 times or 10 times that amount of solar. Offshore wind would be about 1-1/2 times. So, it’s important to have (those) facts when crafting policy.
“We welcome all of these resources to the grid, just as we would have welcomed offshore wind to the grid. (In fact), we worked hard with (New Jersey’s) previous iteration of the BPU to try and make offshore wind a reality.
“It’s unfortunate that those developers couldn’t make the economics pencil out. But that does not for one second change the documented and proven history of PJM wanting to work with New Jersey to try and make offshore wind a reality for the state.”
PJM hasn’t changed its new generation queue process:
Haque: “The generation interconnection queue is the line that generators or prospective generators get into to be electrically studied to safely plug into the power grid.
“Our queue used to consist of a historical, first-come, first-serve study framework, which made sense for a system that was just processing large coal, nuclear and gas plants.
“But in 2020, we noticed an enormous uptick in much smaller scale renewable projects and wanted to plug into the grid. So we had to change that framework from ‘first-in, first-out’ to ‘first-ready, first-out’ and study these projects in clusters, as opposed to electrically studying them individually.
“We started that conversation with our stakeholders, got approval from our stakeholders and moved forward overwhelmingly. We made a filing with the FERC in late 2022 to implement reform.”
“We started this reform effort with over 200,000 megawatts worth of projects to study. We are now just down to 46,000 megawatts, which will be processed next year. Sixty-three thousand megawatts worth of projects have either signed or have been issued agreements to connect to the grid.”
PJM is responsible for what happens when a project leaves the queue:
Haque: “Here’s the thing, though: We haven’t been seeing those resources constructed over the past few years. And this was an issue before even we had an administration change in DC.
“The reasons that developers have provided to us are constraints with global supply chain, financing in a high inflationary environment, and state and federal permitting restrictions.
“We are going to finish this process out. We are going to clear that remaining 46,000 megawatts, and we hope that with these supply demand dynamics and the price signal that’s being sent that we are going to get more generation that wants to plug into the power grid.
“But the real question is after spending the last four, five or six years processing 200,000 megawatts worth of projects is how much power will we actually get after all these years of pushing? My honest answer to you is I don’t know.
“After we tell developers that they can plug into the grid, it’s out of our control. But let me just say this: We need the watts. I don’t care what type of fuel it is. We need as many watts as we can get. We welcome all of these. These are all primarily renewable resources. We welcome all of these resources to the grid.”