PJM Creating “Generation Congestion”

While PJM and FERC are claiming there is “transmission congestion,” New Jersey is learning that PJM is actively creating generation congestion.  The total control that PJM exercises over connecting new electrical generating sources to its transmission system is quite likely the real reason for high power prices in eastern PJM.

Keep in mind that PJM operates as a cartel.  One of the main functions of a cartel is to protect its members from competition by “outsiders.”  All of the big players in PJM, like AEP, First Energy and Exelon, are major generators of electricity and control PJM’s transmission planning.  The MD PSC has demonstrated for years that PJM’s capacity markets, where electricity is sold years in advance to “reserve capacity” on PJM’s system, is a direct mechanism for shutting out new sources of generation on the PJM’s regional grid.

Here is an article from a recent NJ Spotlight that focuses on the experience of NJ applicants for PJM generation approval.

The state is asking the operator of the regional power grid to no longer allow incumbent transmission owners to play a crucial role in determining what new electric generating stations hook up to the grid.

In a letter to PJM Interconnection, which oversees the grid serving more than 50 million people, the New Jersey Board of Public Utilities (BPU) suggested that the current process is “problematic.” Right now, transmission owners that have affiliates providing large amounts of electricity to the grid decide what new power plants can come online.

The issue is important to consumers in New Jersey, a state saddled with some of the highest electric bills in the nation. The problem is largely blamed on too little generating capacity, which leads to congestion on the power grid in the northern part of the state, according to agency officials. By state projections, consumers here will pay $1 billion or more this year because of congestion.

The BPU’s concerns stem from the fact that transmission owners do the cost analysis of what it would take to let new power plants tie into the power grid. If they determine that the costs, most of which involve expensive upgrades to the grid, are too steep, it could discourage the development of new power generation. Such an outcome would benefit the affiliate’s existing power plants, which would continue to reap high electricity costs because of continued congestion.

The people of NJ, and their government, are finally figuring out that PJM, and the power conglomerates that control it, are systematically destroying the state’s ability to solve its own power problems.

Keryn also has a post over at StopPATH about this situation, including a more in depth look at the order the BPU has issued opening an investigation into market and planning manipulation by PJM.

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