Congestion is at the heart of PJM’s claim that “market forces” make PJM’s system effective at managing the electricity investment in its region. Congestion, and “cost” associated with it, sends signals that more power is needed in particular parts of PJM’s area. If higher peak demand on the East Coast is causing congestion, then there are four basic choices for eliminating congestion on circuits serving the East Coast:
- Reduce and manage peak demand through conservation and shifting demand away from peak times
- Build more generating capacity on the East Coast
- Rebuild existing transmission lines with updated conductor materials that increase transmission capacity and upgrade congested substations
- Build more transmission lines
Obviously, managing peak demand is the best and least expensive solution. It is the best for rate payers, because if they are using less electricity, they will have lower electric bills. Reducing and managing demand is a no-brainer, but it can be difficult for consumers who have been trained by a profit-hungry power industry to use more and more electricity. PJM itself has rapidly expanded its own demand management mechanisms. PJM’s demand resources auctions have had a significant impact on reducing peak demand in the last two years.
Building new generating capacity at or near congestion causing areas costs more money, but this is also a good solution. The people who want more electricity take responsibility for their own situation and pay to fix the problems they are causing. Higher population density and serious air pollution problems prevent new coal-fired plants from being built on the East Coast, but offshore wind, rooftop solar and local combined cycle natural gas plants are all viable alternatives now.
It has been clearly demonstrated that PJM’s capacity auctions have suppressed the construction of new power generating facilities on the East Coast. New Jersey, Maryland, Virginia and Delaware are all making rapid strides to break free of PJM’s controls and are legislating financing of new power sources in their own states and off the Atlantic coast, independent of PJM’s “mechanisms.”
With enough new generation on the East Coast, and enough shifting of demand away from peak times, congestion at current PJM bottlenecks will decline dramatically. If that is the case, there is no need for new transmission capacity to relieve current congestion points.
There are many aging bulk transmission lines on the PJM system, including Allegheny’s Pruntytown to Mt. Storm 500 kV line and Dominion’s 500 kV Mt. Storm to Doubs line. Those existing lines still need to be upgraded and rebuilt simply because they are beyond the end of their normal working lives.
State PSCs and the Federal Energy Regulatory Commission (FERC) have failed at their statutory duties, because they have pushed PJM Interconnection into a leadership position in grid management that PJM cannot handle. PJM manages only transmission. As PJM engineers have repeatedly told state regulators, they have no control over where new power plants get built. But, as numerous parties (the American Public Power Association, Mirant Mid-Atlantic, and even the Baltimore Sun’s Jay Hancock) have pointed out, PJM’s market system has prevented the much more cost effective construction of new power plants where they are needed most in the Mid-Atlantic region.
PJM manages only transmission, so the only “solutions” to congestion that PJM can recommend with any authority involve rebuilding existing power lines or building new transmission lines. To PJM engineers, who only have the transmission hammer, every solution to congestion looks like a power line nail. That’s fine as far as it goes, but there is no legal or engineering reason why state PSCs or FERC have to accept the “solutions” put forward by the PJM cartel.
Yes, I said cartel. PJM is a membership organization composed primarily of power companies whose purpose is to control access to the electricity market and to set prices.
Two of the biggest and most powerful members of PJM are AEP and Allegheny(FirstEnergy). AEP and Allegheny(FirstEnergy), because most of their operations are based in WV and OH, both regulated states, still control both generating plants and major bulk transmission lines. It is not surprising at all that PJM awarded its major new transmission construction project, which just happens to dramatically increase demand for power from the companies’ own power plants, to AEP/Allegheny(FirstEnergy) . These same power plants have also been the primary beneficiaries of the same PJM capacity auctions that have prevented states on the East Coast from solving their own power problems.
So, no, PJM has a very poor track record at resolving “congestion” problems on its own system. PJM has created many of these problems itself.
Here is the real problem with power lines like PATH, MAPP, TrAIL and Susquehanna-Roseland. All of the states in eastern PJM are now breaking free from PJM’s corrupt and failed systems for resolving congestion. TrAIL and S-R have already been approved by state regulators. FERC is already forcing ratepayers in PJM to pay for them.
What if demand management and conservation have dramatic impacts over the next ten years? What if all of the new power generation being planned and promoted by state governments on the East Coast is built in the next ten years? What if, as a result of these developments all of the congestion costs and NERC violations that PJM is predicting never materialize?
What if all of PJM’s new power lines were built, costing PJM rate payers perhaps tens of billions of dollars, and they were never needed?
When FERC approved PATH, it never required AEP/Allegheny(FirstEnergy) to prove that PATH was the most cost effective solution to PJM’s congestion “problem.” When PJM’s planners developed their “solution” to their own “problems” they never developed alternative solutions, until they were forced to last fall by independent expert testimony in the East Virginia SCC case. That same testimony forced AEP/Allegheny(FirstEnergy) to withdraw their entire East Virginia application and start all over again. When it approved the TrAIL project in August 2008, the WV PSC accepted every piece of PJM evidence and rejected entirely any evidence that did not fit PJM’s flawed congestion scenario.
Perhaps the worst thing about PJM’s power line scams is that they will flood the East Coast with “cheap” coal-fired power and defeat just the kind of “market mechanisms” that PJM engineers are always squawking about. Congestion costs are market signals that offer power plant or wind farm developers higher prices in areas of high demand, which encourages new investment in generating capacity in those areas. PJM’s congestion “solution” will destroy that incentive for new market-based solutions.
So it should be perfectly clear that PJM, and its “more equal” members AEP/Allegheny(FirstEnergy), have never had an interest in real solutions to congestion or “market mechanisms.”
By now, PJM engineers should have very little credibility left with state PSCs or FERC or in the press, for that matter. They certainly have no claim to be honest brokers in the discussion of solutions to congestion on the PJM system.