i'm prepared to proceed on the basis of the court's order all right that's fine and you can reserve your bottle of i'd wish i'd like to reserve two minutes for both thank you yeah procedur jersey board of public utilities the electric utility industry making decisions about future generation resources involves more than money is the cheapest option may not satisfy environmental goals or avoid over dependence on a fuel pipework technology source or promote local economic development weighing these considerations is called resource planning and in the federal power act congress left that job to the states which have always regulated we select for service you know getting the siding has you directly prices so it can regulate indirectly prices and accordingly you don't have you don't have a complaint that they are outside their jurisdiction when they're doing the kind of thing that they're doing here your honor yes c circuit case what the court said was the states get to decide how to meet their capacity obligations first sets the number and the states have the options the side what you do those are choices the states make and they may have natural impacts on the outcome what that means is if the states decide not to build any additional resources that may constrict the supply and raise the price in the flood the market with resources that may lower the price but either way the states get to make those choices  is saying you still get the make the choice you just don't get it you just don't get the offer your supply into the residual auction on a subsidized basis you can you can make as you can build them a power plants you want knock yourself out you just don't get to subsidize in the auction well but for is doing through applying an economic test and remember only in the context of gas resources not as anything else it's only the context of new gas resources the resources that the state of new jersey saw as necessary to meet a problem that they identified after hearing from p j and that they would be rolling blackouts in jersey based on that new jersey identify gas resources as those furka said if you want to build those you have to meet an economic criteria if you want to build wind solar hydro nuclear whatever you want go right ahead we're not worried about price suppression or only worried about your price oppression and that's the sort of that that doesn't sound like that sounds like an argument going to the exercise of discretion not to the question of jurisdiction it sounded to me like you were starting out make a jurisdictional argument and you've shifted your ground now and you're complaining about how they exercise their jurisdiction no which is would you acknowledge that they've got the jurisdiction to to say you can make with it you can build whatever plants you want but here's the parameters in which you have to offer your your supply into the auction our argument is that you do not have the jurisdiction to do take to the states how they need capacity allocations they can deal with the rate impacts of those choices if the state of new jersey builds gas resources and first wants to do something to mitigate the price in the capacity auction that may be an option available to them assuming they can do so in a way consistent with the statu the first place that seems to me to be having given something that maybe they're not entitle to do now they're just equalizing the plane none of the exemption that we had in the original market the sign met our concerns because it allowed the states in the instances in which they found a capacity deficiency to take action to try to address that the fishing and to be sure that they could use those resources to meet the deficiency you know one problem i have is i do not understand this a lot about this case about our new stance i don't understand  this has done something dastardly got to back it up to my mind they're requiring you to be efficient and economical in what you in what he they're only requiring us to be efficiently economical from build gas if we don't happen now you're somewhere some clearance some not lead other entrants into the market they have they be having the say it would not be an issue for the states because the states have the authority select instances of the exemption when there is a capacity deficiency which which by the way first never found that new jersey had met the conditions of the exemption for eliminated the exception you have but here's the here's the thing and i apologize if i'm being up to speed i'm still not what they said was if you're going to build gas fired power plants and you're going to subsidize them then you can't offer that into the market into the auction without facing the same mitigation that everybody  right that that's what they said not don't build power plants you know what they said was you if you build a gas power plant and you have states lots of program to do that you can offer three options but you alone of all the resource types will be required to meet a you maybe and maybe i'm having a difficult time for you but it sounds to me like what you're saying is they have unlawfully discriminated and they're not supposed to do that i will not they're not allowed to tell us the t on which we participate in the ah it's an excellent question actually addresses both for sure they're not allowed to discriminate we also take the position that we have the jurisdiction of the federal power act to decide how we meet those capacity obligations and that's what that exemption is if you were going to come in and artificially lower the price and that's what the contract provided and for had to react to that in the contract did not provide for artificially lowering the prices when you look you you said in your brief th the price impact the rate impact of that decision because they thought that that's an unfair impact on the price they could have done that but that's not that's what they're saying they did unless i completely misunderstand this case there are certain is the assertion from the connecticut case of the saying we could have told you this is the rate but instead it's going that we set up this auction system and we're telling you the basis on which you can participate in the auction if you build your plan if you want we're not telling you not to but if you do and you subsidize it you're not coming into this auction with up in mitigated and how is that different in a meaningful sense it's not a rate then a rate it is not a rate regulation it isn't because what they're doing is not regulating rates resetting offers and in this case a zero offer is an offer not to buy from the auction the auction is a residual last resort device if you can't procure something anywhere else you have the option it was never intended to be different had to be the only arbiter of whether or not you got to use capacity resources because the plants had clear but this regiment will restrict us into the future assuming it's not changed so whatever happened to have no and they have no right to change the rules of the game of course they do your own certainly they do they have a right to change them as as their changes are consistent with their authority of the federal power the point of our conflict concerning the thrust of our concern is that they are involving themselves in interfering in state the citizens about resource planning and how you need to pass the obligation here's what i don't tell me why it doesn't work here because all of those plans should've clear and the test that they established a cost base test for these resources is an inappropriate standard it's not the way in which the market was to work so your your argument is just across the board they have no authority to not at all you're wrong they have authority over the rate impacts of our decisions but that's not what they did here they didn't set rates can i just i mean i'm really eager to have you distinguish because you've said we're different from this d c circuit case here's the case well it says the commission made directly establish prices for capacity or much the same prices for failing to acquire enough capacity even for the express purpose of incentivizing construction new generation facilities and you don't disagree with that you've said they can do that right then that court says that the commission may do so directly would seem to include the power to do so indirectly by setting a target for capacity demand and using a market mechanism to look at the price appropriate to that quantity how is that not exactly this case how it's not this case because what the court also said in the connecticut case was that states can make choices about how to meet their capacity obligations without federal interference and that those choices will have impacts on the market and that those impacts are natural here remember fergus going the opposite direction here in the new jersey we don't want you to have that impact so we're going to reach upstream and we're going to skew your choices we're going to tell you if you want to build gas units you're not going to be able even to get them into our auction unless they meet this price t new gas and get them at the auction you will have to meet a cost criterion otherwise we want to accept them that's contrary to what our pm is about we believe that's contrary to their jurisdiction to impose that we think the connecticut case is consistent with that so it's a different argument where confer could have regulated the rate outcome here but that's not what they did they reached upstream and they regulated the states choice and that's where we think they crossed the jurisdiction good afternoon then may please the court so that you representing the maryland public service commission the maryland public service commission has a statutory obligation to keep the lights on throughout the state of maryland this is a responsibility that the public service commission takes very seriously so when p j am came to the commission in two thousand and seven and two thousand and eight and said that maryland could be looking at rolling blackouts and brownouts beginning exemption ok and in your assertion that it was arbitrary and capricious is based on the fact that what the they changed the rule right but they gave a reason for it well  enables states to meet their responsibilities to ensure local reliability and they sure and then they get five years experience with the auctions and and p j and comes forward and says we're we're concerned and it seems like it's you know a looks like the facts are the the p three folks come in and say hey they're about to subsidize a bunch of stuff in the auction  an and p g m says yeah the fir don't let up and for x as well we think that is a problem we think that subsidies on those levels would be a problem that it would distort the price ignores and it would foul up what we're trying to do here so i guess we won't let them if that's the route this took white why isn't for allowed to identify that there's a change except that there's a change give a reason for the change and implement years of experience in the capacity options nothing changed except for the fact that maryland started considering doing exactly what the rule contemplated merrily began the route on a fighter that the states would come in and artificially low prices no that well that's no no absolutely not the study isn't that what was predicted to happen in the the knowledge that p j m p three and ferk were operating under no your honor there was absolutely no showing whatsoever that the maryland public service commission was coming it was intentionally come again and seeking to suppress prices in the capacity market what are you going to do are you going to come focus only on cost well but evidence that the regime that they set up and i asked mr strauss and you're you're saying that burke does not have the ability to say this is going to be cost base we're going to require everyone to be economical you're not just attacking your own situation you're attacking the whole premise of of their view of how the the market how to get the market to operate in a proper way are you not your honor actually i apologize i'll get to that in women  new generation resource realistically a new generation resource is going to be more expensive than some of the other resources in the market it is true that a new gas fired cleaner gas fired resource will be more expensive to bring on line than well but then you go and hold the option is still there has to go to for and asked for a specific situation and appeal to them on that basis that the only thing you're not getting now is an automatic automatic exemption right a couple items here your honor this is by no means an automatic exemption and the exemption has some very important significant safeguards built into it  t exemption itself says that it only exempt plan generation capacity resources developed in response to a state regulatory or legislative mandate to resolve the protect projected capacity shortfall as determined pursuant to a state evidentiary proceeding that includes due notice p j our participation and an opportunity to be heard sure and and i don't think anybody's questioning that maryland in new jersey walked through so i don't recall reading it in the masses of paper that were given to us feuding that the people in maryland in new jersey the regulators didn't walk through those steps the only issue i think that we're dealing with with the states is could for properly change the rule change its mind i mean it acknowledged that it was changing it and it gave a reason for why it was changing it now you can disagree as to whether it's as well supported as you'd like but but they seem to have said hey we recognize i'm doing here is different from what we said before but we think there's a real risk to the price mechanism and and that's why we're making a change and i guess the question i'm trying to put to you is in the broad discretion these folks have how does it fall outside it right you know i understand supposition and conjecture and this is supposition and conjecture that was actually raised to far back in two thousand and six so and further at the time said to the generators who raised the concerns and these are the same generators sure  that are here and this is the can the price is up in the market right is it enough though for them to say believe me i think i can i think i can appreciate to some degree the frustration that the states are expressing with having relied on this rule having invested themselves having courage other people to invest to have for come in and say on the basis of the same things as you point out that were said in two thousand hoops change their minds but but is there something in the law that prevents them from changing their mind from saying well that seemed like a good idea at the time but we're concerned about what this is going to do to our base residual auction set up if you are allowed on a large scale to be dumping capacity agency departs from the stablish precedent it has to announce a principal reason for that reversal otherwise its action is arbitrary and capricious and i think that the issue here with folks decision so it 's also about her of looking at the evidence it's a matter of looking at what has happened in the market there has been no evidence of that but you haven't been i mean the in the sense that in the sense  had to be theoretical because while the exemption was in place it's only when you folks started to actually turn it into something real and the power providers complained again that that things changed and then they said well you know what i guess i guess you may be right you power provider folks if these people come in with subsidized offers it will distort the price signals and that will be problematic enough that we should have this exemption now i grant you that that doesn't look and i've worked i haven't seen that there was any anything that they couldn't have anticipated in two thousand that's different in two thousand and eleven except the changes from maybe this will happen to wait this is actually going to happen and it's going to wreck things and maybe bigger quantity and some references to thousands of megawatts i don't know whether they will impact is bigger but the real question is as they look at that change or see change how you want to explain it why are they not empowered they come to a different conclusion yeah make a change what what should we say you're precluded from this because right now i understand a concern i mean let me just correct well let me just make one statement we're not looking at maryland is not going out there and knocking itself out building new plants just for the sake of it there was a deliberate process where marilyn found that there was a specific reliability need and after the record closed maryland determined that a new low threshold right it sounds surprise and immigration i think substantial evidence of financial evidence is actually very low but the point is they looked at what they looked at and they came to the conclusion that there that there's a looking at that looking at the arguments come to a different conclusion say we need a change right i think the issue though is that when you look at the underlying data when you look at what the generator submitted what peter answered it i think your audience especially you will see that none of that evidence actually creates a causal connection between the new entry into the p j r market and prices in the market that are not just a reasonable there's nothing connecting these two it's so for really first relied on particular logic and just presume that the state mandated resources are quote unquote  economically they do presume that new jersey admitted i said you would have to as well that your subs that you're going to be price pickers you're going to you're going to be price takers you're you're you're you've made the arrangement and the arrangement is we're subsidizing you go in generation to a state to state such as environmental benefit and well i suppose we could get into the semantics of what it means to be an economic but in this context the use of that term seems to be strictly talking about whether it's an actual cost justified or a subsidized price at which one is offering their capacity in the market if we stick with that costs only on the basis of the price in a single year of an option the reality is that a resource may be economic over the length of the term of the contract or maybe economic in several years you know after after  of the maryland public service commission if you're looking at years to go one two three four and beyond insuring the liability for its citizens i think that the bottom line is that looking at just cost in that one year this is not the approach that is not the approach to for tough in two thousand and six and there is no reason no reason in the record for for to have deviated from that approach  their group of nonprofit consumer load serving in today's who are obligated to serve their customers with reliable of fordable power over the long term i've asked for two minutes refusal whether we were harmed by the commission's refusal to adopt arguments in the two thousand and eleven twelve auctions and then if not whether we have an injury that's and eleven up till today when they're proposing to do something different yet again where this change actually affected the the load petitioners yes your honor there are just come to a place in the record twenty five seventy nine there's a statement by patrick mccall or who is the president  is problems he now i don't want to confuse you it isn't under the self supply the two thousand and eleven auction was still under what was called the unit mitigation and he was brought in to be mitigated by his testimony i'll summarize it that's all there he indicated that the market monitor would require wanted to said look even though you're a co op and you have he can midsomer color came in and said look my cost of financing are low because i'm a co op in the market monitor said oh that's a subsidy and i'm going to bump you up if the if the market market monitor had bumped him up to the price to the finance costs that the monitor wanted to use he would not have cleared the so here's your home the harm your honor is what we consider the chilling effect of this kind of mitigation process on our ability to finance and to bring on lo something happened where we had a loss that the function differently than it had preached thousand and eleven we can point to it and we can say this was the problem and that's ok now i there well i think mr mccall are there is an issue that the problem that we're raising here remember is not there is no guarantee clearing that has been removed we're not claiming anything about what we call them zero per mitigation i'm not i'm not suggesting that if this didn't continue on the two thousand and eleven program there might not be a problem but right now clearance for self supply regime was in place if what you're telling me is that in that period the one thing the the most dramatic thing you can point to is affecting low petitioner's is there was this episode with the delaware folks and where they had to wrangle to get their supply cleared that's ok tell me that that's your best shot and then i'll then we can move on is that the best shot that's your best argument for that there was harm in the in the context of the twenty thousand and eleven option yes but the premise of your question is not correct it is not it because remember what were asking for is the return of guaranteed clearing and that has not changed you're saying what we call it inferred land it's a locked in period there is a locked in period and you know the rate was this and then it changed at this point and so you're just talking about that finite period of time but we're talking about the guaranteed clearing and you know you'll never have the self self don't you have to make an argument or a pitch about the twenty thirteen how can we what good does it do for us to say that two thousand and eleven idea was a bad one because there had sort of that is what we're not doing that anymore we've got this other thing and you have a say then you are going to sue me twenty thirteen same clearing but with tests right exactly what's wrong with the test the same thing that was wrong with the twenty eleven it can't be the same thing because their favor reinstituted certain things i mean it's a different regime and there's and believe me i'm not looking for more briefing but there's no briefing in this case that would direct itself to why twenty thirteen as opposed to preach twenty eleven represents an abuse of discretion the only thing you folks have argued is twenty eleven this elimination of automatic clears for self supply they were they didn't recognize that they were changing the rule and therefore what they did was unsupported you know it's cetera i think i understand your argument but i expect that here maybe you'll surprise me state up and say well we're not doing that anymore let's say to that the cost features of the option so that i'm guarantee clearing means people are coming in clearing at any price and that they decided that's not that's not going to work so now they put in twenty thirteen an amendment that provides for clearing with a test test that really i'm led to believe again we don't have briefing i counts for are you a net taker a net buyer what you know who are you yourself supply are you coming in just for a small amount so that you know it really is just a small amount that's not going to have an impact how is that test not appropriate and how is it that it will continue to harm you ok job randall i just want to move back a little bit because even with guaranteed clearing we were always subject to what i call them over mitigation other words if we came in in our yes were guaranteed clear we whatever we did we cleared but then the prices were adjusted for the remaining auction so that there was no effect on the price that as that was the regime in two thousand and six so there wasn't somehow this change in two thousand and eleven that price mitigation came in we were all we the elysees have always been subject to that  question that is separate from the question of guaranteed clearing and so but but there's an explanation in the record since two pages i can see it but i can't remember pages they were talked about how even if you were  you were mitigated still it prevented the market it prevented some of the low cost write letters to to be chosen if you're right and i don't remember the page but that's exactly the sense of the commissions and if you're in our responses that says that's an option that people have all the time in the markets you can choose approach you can choose to buy a product that's more costly than another product that's your choice that's our consumers choice they made a choice to build this load and they are supporting it for whatever reasons and i would add not to go back to an argument that both you and judge gordon seem to be concerned about we don't agree with the commission's definition of economics as you say randell are we close enough are entirely would solve our problem because then we would not have the risk the problem that we have is the risk that we won't clear if we don't clear that means we can't guarantee it i want a guarantee work we can't go to our finances and say hey look here's a package we have together part of it is capacity and we know we're going to clear and so we're going to get the cost the finances are going to say no you don't get  look at what for good and then we're not going to be able to build and we may have foregone forgone opportunities however you want to put it but that is the problem that we have that's why we have all along what's your articulation of why for can't do that is it any different than your co counsel articulate i will not say i'm not going to they argued very well and the issue here is the prices are going to we're not getting enough capacity let's pretend that's valid we don't agree it is but let's pretend it's valid what we say is you hat there are two conditions that i said you have the guarantee clearing on one side and you have got a column over mitigation and you've always had motor mitigation that solves the problem because it keeps the price up in the market you keep the price up even though you're guaranteed clearing so what we're saying the commission is wrong it looked at guarantee clearing which has nothing to do with the pricing and instead it had a but i thought you i thought that your argument was please correct me if i've got you're wrong i thought your argument was different from the states in this important respect you seemed to be arguing that unlike for streetman of the automatic state exemption when it came to the automatic clearing albeit with mitigation for the low petitioners that ferg didn't even acknowledge that it was changing the rule it pretended that it was a clarification p j and said we're just clarifying this and for bob and said yeah we're just clarifying it when it wasn't just clarify and it  doing something different and in fact doing something different in the face of seventy years of history of how who would supply and then these do their business and that constituted a radical change with no acknowledgement that it was a radical change and because  they could not be said to have rationally approached this and their after the fact excuses about it don't meet their burden of proof under two hundred five to show that p g m had i should say that pm carry this thirteen and they say you know what we're changing this and we're given a rationale for a change and we're doing something different when i'm going to give automatically or it's but we're going to recognize that there is value in what the elysees are doing to meet their long term capacity needs and so we're just going to focus now more than we had before on what we are concerned about deliberate market manipulation sor going to put a sort of a modified net short test back into the the broad scope of their discretion now because what they're saying that it's the same problem that they had the first time that house is the same problem because if your problem before was they didn't even acknowledge a change and now they're acknowledg justifying it and telling you see how it works it isn't  the change this time is they've changed the test that they actually haven't changed the tests they've added a new test they still have the unit test which they've they had previously and then they added the self supply and so if if we and if we have cell supply and we're analyse and we need the conditions and we're natural and we're win then that narrow net short net long range then yes we have an exemption but it it what that does again is it goes back to mitigating you know i don't i don't like it but i'm struggling with movements here that's what i'm working with and i'm trying to draw you out on it you're making arguments about what they did do now they've got something different going on and i understand you still don't like it i just don't understand how the arguments you've made about two thousand and eleven are responsive to what's happened in tw well i guess one answer is your honor we you came out with with your order on friday i mean i'm happy to brief if you explain some of the differences but i'm sure i saw to the questions that sure jordan has the i mean i could answer it right now judge greenway if you'd like for me ok well i think that what you see with four particularly i don't know if you have our brief it happens to be on page twenty  language but i'm assuming you are referring to one first also offers in their entirety designated as self supply committed regardless of price in that is the guaranteed clearing provision was never active it i never active it is no it was activated that's the point i mean it was never applied wasn't it was always applied we always cleared this this ok let's go back if you look at a twenty and you pretend there's no strike out that's what the tariff language from two thousand and six looked like then in two thousand and eleven pm come in and they struck out that language so in fact judge arendelle from two thousand six forward it was applied in only in two thousand and eleven was it no longer applied that's the difference and so that's that's what we're resting our change board that this was the language this is how it was applied we had moper mitigation to solve the pricing issues this was a separate vehicle designed to do something different and they conflated  together i won't go through your wonderful explanation by all right well we will hear from you on thank you very much amazing well why that's why we ration and why did reliability matter so much in two thousand and six and the states get all geared up to solve their reliability problem building  facilities and then all of a sudden you know reliability really doesn't matter all that much let's make low cost let's make a cost  so the goal but it seems like there was a real shift your honor i wanted to get to that and i will right now because it actually goes to my right or we're right on our two issues helicopters and it goes to the ship which actually was not so much on this side of the table but on the side of the table it may have escaped you but you have before you several contestants from the  not build anything if you like you'll pay a penalty because the price will go up and that's exactly the way the incentives in first market design were designed to work the price you know cause injury or pain one of the other into yield this case is about  circumstance but you know around three years ago the tune changed and suddenly we see steve's concern we have to bill the bill we're concerned about reliability now explain why that's a false concern in the sun but what the reason the mr is wrong is that if the incentive is you want to push prices down you need then the market is not going to give a soft correcting incentive if you're successful you just get the benefit of low prices and the whole marketplace suffers and consumers suffer in the long run so that's why for it decided it needed the motor because the way this market's designed and this is not in dispute here by the way much of the answer to everything lies in the fundamental design of the market's we have this hostile new entry level and i have a few quibbles with with some of this but the other side doesn't and over time on average yeah you supposed to hit that because otherwise merchant we can't occur and the price as this the states pitch as i understand it is there's nothing that p three the power providers said in two thousand and eleven that was any different than what was being said in two thousand and six they have an incentive they want everybody to have to take all their supply of this market but the market's been operating and allowing people to do what they want to do for long term supply arrangements in lots of different ways long before that and and so when they came in and they started making these noises about that first made a decision made a reasoned decision p j i'm did suggest that the for me to reason this issue and that it's ok for us to give this special exemption to special state authorized supply because we recognize that the auction isn't the whole game and and then when we actually act on it when they elicit reliance and cost isn't imposed on us for relying on it p three comes back with the same fine wine and this time for drinks it and that's not right it shouldn't happen there's no excuse for it because nothing in the real world changed except we relied on what they told us well what's wrong with that argument many things wrong they said let me start by one by the way if you look at our original papers the original complaint we talk about the fact that new jersey in particular was not shy about advertising its desire to suppress prices across the market and benefit globally so we saw what's different oh that's what i'm trying to chance mistresses they're very human as i understand it is nothing changed and since nothing changed for fur to change its rules is by definition arbitrary priests they knew what it was before they got the same arguments later the only thing in the real world that changed is we relied on them and that can be sound decision  just want what i'm saying your honor is that something did change but i also think that it would be a defense bull and sustainable on judicial review for an agency to still look at a problem afresh and say you know we think we didn't get this quite right before it matters greatly ok we'll get back to that you could mean over the changes the shape but change change was we had two states barreling down the highway ready to to subsidize new entrants ready to do what the rule told them they could do right ready to do what the tariff explicitly told them they could do there were restrictions it was not clear whether they would bind or how they would buy and we had real concerns that the rules weren't tight enough that's true we came into the commission and prices by three billion dollars below the cost of magick and i'm not not not disputing that with it all just trying to get you to explain if there's a change what i hear you saying is not really well there is no real change except the time there was an increasing understanding of the spirit of the threat that these site types of subsidize and freeze represented the severity of the price drop and the harm that the consumers in the long run faced in the my clients in the markets faced as a result if you're looking down the barrel of a shotgun i'll grant your honor it looks different than it might have in your mind's eye when you didn't think it was real and and the real question is is defer justify it decision because they get to look at circumstances afresh and i'll submit you that when these people stand up you'll see you'll see chapter and verse of these arguments for addressed and i just like to go back though to i think one of the things that is the court starts to bring once or twice what will put quotation marks around that because here is the right posture metric the price is above it and you know what it's no harm no foul if you want to sponsor a project when the prices are down here the whole market designs telling you it's not time to drink that one and and if you want to drink it then what are you doing why it's cheaper to buy from the market why do you want to build something cost this instead of buying here the market has incentives that ill that they elicit liable and consequences of that that they will speak for themselves i'm sure but i anticipate the argument will be what's in their briefs which is nobody ever intended for this residual market to replace sound planning for long term supply that's the way the market has functioned for seven decades and that's the way the brawl was set up to be the ira whatever you call the thing that that that residual auction was supposed to be something to modify and even out price fluctuation at the far end and  never meant to be the whole market and in fact if you make us make that the whole market you make all of us less secure that's what i understand them to be telling us and that doesn't sound frivolous to me well i think first dealt with end and that argument is inconsistent with the fundamental design of the markets because the way the markets are structured you say what's our target like the big targets like one hundred fifty thousand megawatts all in we're going to build a volume of  purchase the full requirements to provide adequate reliable service and then we're going to have and so we're going to have a demand curve like this downward sloping to the right and here's here's where we want to  right equilibrium ok where my watch is and then when supplies down here you're not ready when it's here you buy one hundred fifty thousand and then the question is what makes up that that supply stack and what we're fighting about is you get to go into that stack by a matter of right automatically doesn't matter what price you read and you get to go in as price taker or volume either having that and be unmitigated my side of the market doesn't get to argue about being mitigated and by the way these mitigations our screens in the first instance were subject to the mall the time on the south side and what happens to us is when we have a screen happens all the time we go in and we talk to the market monitor we have one of these cases the sick reviews  if we really didn't like what happen we follow a complaint for so the screen as perks says in this order is meant to be conservative because you have these feel saves and we don't want to build our net too loosely because then we could really crash the market and if the medicine that's a little too tight that's ok because we have case specific pressure release valves to make it right you can always go in and say hey i think over over the a period of years i am in the money right now and if i'm not for one year if i'm calling it right with the big deal so everybody gets a little wrong you have a right to enter this market on your own terms and shield your price effect from further mitigation under connecticut if you see  erring on the side of unfairly for bailing to trigger the m o p r as compared to unfairly triggering it so they're being conservative i mean i'm with all due respect judge window i think i think the conservative goes to catching too much not too little because if you catch too much you can always let your fish go if it turns out in your case the review there were intended to get that should be what we're saying your honor is that grant you expertise and everything like that but they do have to engage us in this we submit on these two issues not to let's take that one we said gates you on the on the local area delivery they said we think it makes sense to pitch it at the high end that's a judgment we made based on our expert the decks parties you've been leaning on so hard for all the other stuff you've gotten like they made this isn't that that's a that's the sound pennsylvania somebody wants to buy a house in philadelphia you have to value it in the most expensive zip code that exists when when you could go on zilo you could find every other zip code and find every street every other house what we said is you know you have an interest you know where he's located there is a note there there's a price specific point that we know is accurate and you should use that and then this and they disagreed with you and i'm about to tell you why that doesn't engage her right what they said is see because otherwise if used my proof that you trigger market power screens even though the research was simply using historical values for it zone well first of all  know that doesn't answer why more accuracy is bad if you use the highest value it's by nature going to be occasionally right only if the plants located there and all of the times wrong and there's a directional bias to the air well i thought i thought that they are assertion was we don't want to punish people for relying on historical data and that sounds to me like a perfectly sound thing for an agency to say that that there's historical data people have to make forward projections if they make it based on those projections we're not going to punish them because they happen to be building something in a place where there's lower energy ancillary service revenues well it's not going to do that  came in and said well there is historical data actually for our new interest particular location and why not more accuracy want to use that we never got a good answer that sustained scrutiny i would submit that if the answer is well we're not going to penalize you for being in a lower priced area well then you're giving him headroom that he shouldn't deserve is not actually ever you know getting those dollars and so he needs to have a higher having a hard time seeing how you can argue for broad discretion and then you're at a level of granularity here that it's super fine sandpaper and i'm having a tough time understanding how you can make that argument because they did not engage us let me try this point again mitigation mitigation supposed to be conservative we call that question out on rehearing the commission changes its tune and doesn't really talk so much about about this historical question goes through the cases we've raised the reason why p j proposals not just and reasonable you can't just ignore it saying we don't have to look at alternatives you have to look at it and then finally we hear from the commission in their brief referees they say well you know argument the statute says that unless you have reasonable grounds for not raising argument you have to raise it on rehearing we were not reasonably apprises the case law requires that they were relying on the historical existing v in the location and everything like that they had to change their curve and this is why the commission's original language is to look at messed up because with the original the existing curve said is it said well we're going to take the resources that were hypothetically modeling this in he said one clearing option but you have to show you not subsidized the commission just cuz i've been a subsidies and we're not going to do that that we like his reasoning one option now weeks admit they didn't grapple with our concerns we said have it's it's remarkable thing to say it's arbitrary and capricious to be that one instead of two when the only thing you can really say is we think two is safer because they can say and did say what we think once is enough but you know what they didn't do run they didn't explain their departure from the new york press and that is a red letter short coming on judicial review we raised this case this is the economic equivalent of two years in fact the orders regularly site took their orders from other markets back and forth repeatedly but they always have to explain why they're not talking about something that is that right if under the under the boston case from the d c circuit if you can reasonably swerve from do that as our expert explained and nobody's ever contested us that means a minimum of two years because you'll get a clear in the summer probably and she need to get two summers in the week the way that she g m works that's really two years and nobody's contested that i think ultimately the new york model is a two year approach the commissioner that's right all we were saying was you have explain why that doesn't that doesn't that doesn't mean you're wrong here was why we came up with two years to begin with we call that markets did need to be identical and said we recognize that each market is developed individually through its stakeholder process and we do not see the need to require complete uniformity in this regard and this goes to a larger point that i want to go to that this case is about the commission's decision making i just want to put this discussion of this market in context that p j m is the regional operator that operates this market as the new england independent system operator operate market new york has one so those are the ones that have really been dealing with the capacity issues so they're going to come up the most there are others in other parts of the country and the commission does not impose a one size fits all uniform solution of its own on these markets these markets have mr flynn will stand up for p j i'm to talk more about how they do their process but these markets these operators run these markets develop these markets learn from each other learn from the commission these have been going on for something close to ten years i think and all parties have learned a lot from them including the regional operators so when we're looking at this filing and this is particularly true with regard to the issues raised by the petitioners this was p j m coming in with its proposals to change its tariff to further refine the market that it has created and developed and the commission ruling often under section two zero five which is a very different standard than into a six as to whether the this particular regional operators rules for its particular market are just and reasonable they may not be the only way to do it they don't even have to be the best way weren't changing things either so we have a real problem with that but before we get into the not let's let's deal with the move this thing for most are twenty thirteen may shows up you guys come up with a new rule  unexplained change in feed an unneeded knowledge change lose their force because of what happened in the twenty third i would love to tell you a definitive yes but i can't because because we don't know for a couple of reasons one is that it really only matters for twenty eleven i think you were right to shorten your earlier comment that were bookended we purpose not have the information as to which heard i think we heard that there isn't but the most that they had was one person had to negotiate then they are cleared if that's the case well we haven't argued that they're moved but based on that representation that the one thing about a couple things about twenty if we take at face value what we've heard here today there was no there was nothing in between twenty eleven and twenty thirteen that except for the distressing circumstance of  there's no one who was mitigated and feel the clear that then i guess not ok and i'm certainly not urging the court to continue with the issue we just had an argument because we didn't have any way to know which entities and that's i think even though j am in theory knows they're not allowed to disclose so really the low petitioners have to be the ones to tell you we had units that are we had resources that were mitigated and failed clear but going to that point i did want and i think this may be the same judg well actually i found what i was referring to was twenty two sixty nine but that's ok what's that page again when i need to one ninety three it is it is the last two pages in volume one at the very end of march this is where the commission said you know if we didn't make clear earlier that we understand that the load petitioners thought they had guaranteed clearing and that p j s proposed removal of this tariff language took that away this is where the commission answered that and  very last paragraph of the second rehearing were i think you should be running away from the low to sure stuff right now probably talking about the state what it what it will almost i would like to make one point that i don't want to lose that goes to this idea of the residual base awesome i want to make clear because it may not be clear i think it isn't there it is in the record but i may not be clear as we're discussing this that over ninety five percent of the resources that into the auction are price takers their existing resources for the most  part in fact in the twenty twelve base residual auction for twenty fifteen twenty sixteen the number is something like ninety seven and a half percent so we're only talking about a narrow slice of the resources the bidding to this auction at all and that that really goes and i i'd be happy to explain how the market works but i do not want to impose further emotional distress but the locating the price of of the incremental new planned resource three years in the  future that all and the mitigation rules that apply that battle takes place in the two percent slice of everything going on in this auction so i did want to make that point and i do have a cite for that somewhere because it's not always clear that we're really talking  us we're going to be facing blackouts if we don't do something and we negotiated with ph and we came to a settlement in two thousand and six it wasn't like this came from on high we had issues we fought it out we came to a reasoned decision with them it was mediated in the end we got a decision and that decision included allowing the states and this exemption if they went through certain procedures and and we were good with that because that protected us in our capacity to make long term plans for the citizens of our states and nothing at all in the real world changed between two thousand and six when that attention and and then suddenly for excess you know what we're worried and that that can't be reasoned decision making matches arbitrary that's like the definition of arbitrary and capricious nothing in the real world changes except we we act a reliance on what you do and you pull the rug out from under us now that's the that's the real argument that what's the come back with a comeback is well there are several and one which is in our brief is that actually an agency can change its mind if it doesn't pretend that it isn't it can the cases that we cited at mechanic change its mind as to policy i mean you look at zero six and everything was about reliability and the you know we need to give the states the ability to to have reliable energy and not have problems and reliability seems to be a policy matter and then all of a sudden when p reliability at all we're not looking at reliance we're not looking at you know what the states have done or or are they going to then not build capacity so they're there they're citizens won't have the power it's all about cost all to i do have to make the point that this is the first that i heard that there was one of the new jersey resources that didn't clear because what we knew from c p s brief as well as new jersey's reply brief is that the new jersey that their sponsored resources they the last time the commission had had visited this was in two thousand and six there was a settlement but let's make clear that was approved under two or five just reasonable that was not approved as a black box package settlement and i'm not aware of any case law  in deciding whether or not a change in agency position is legitimate or arbitrary and capricious i think stay firm says i think i'm pretty sure false television says so state is a state for if that's the motor vehicle case example it's new policy response factual findings that contradict those which underlies party policy or when it's part policy has engendered serious reliance interests that must be taken into account in those circumstances in more detail justification that would suffice for a new policy may be needed so that seems to me to be the supreme court of the united states saying you can't ignore for the reliance interest that you engender in the market if you lay out a rule and people act on it you can say i've changed my mind without some reason for changing your mind that would justify imposing those costs on the public who act on what for excess right but in this these market rules are constantly being changed usually under two but so i think that that there is no it was very moving in or did they with the proposed that they actually propose removing it yet is a proposed adding a condition well what they this automatic exemption to you can come in and persuade us if you want to give the shot well wasn't it do you do you have not persist you have to come in and show that this mitigating these resources to the the one which to them i think it is not chump change if you've got a you've invested or you've got somebody else committed you have got to focus on this could you have focus for the next couple of minutes on the reasons for the determination it came in and said we want to remove this so we looked at it and said we think that's reasonable we think it's just unreasonable not to have this exemption because we we had met we didn't fully appreciate the size of this loophole in the first rule when it was it was the we complained about it it was the first time we're putting in the minimum offer price will i think p j and point out it's brief that in the first seven auctions the minimum offer price rule was never triggered which is the reason they want to change it because it wasn't doing anything and how do you know it wasn't going to that's a striking comment how do you know something is not working because it is a trigger i mean if if there are minimum mandatory drug sentences and there are and nobody gets sense to them i guess you could say it's because they're they're set at a drug level is too high or maybe it's because nobody's committing the crime because it's working so well how do you know it's not right i because everything's working it's for pm to say what the significance of not being triggered was but that was why they were looking at but is there any data of the distortion that would would occur and the magnitude of it as compared to  caused by the states yes and i was i'm hoping that i have a cite for it because i know that the new jersey in particular that the reason that there was concern about the impact on the market the effect on the market of of what new certain constrained areas i forget exactly which area new jersey is in whether it's eastern matter i get that confused but my understanding is that the the total cleared resources  appendix that goes to this and shows i think that it's a that's seemed to me like the fur was appreciating that what its role what this might be  page thirty eighty nine of the joint appendix you say the one paragraph one sixty nine this is going back to april two thousand and six the commission recognizes the party's concerns it's our view however that  demonstrated that the short term nature of the commitments required under p m s current capacity contract has contributed to a lack of investment in keeping generating generation operating and in building new generation in other words we understand what's going centralized planner and procurer of capacity under a cost of service rate making regime unquote that look to me like first was pacifically saying don't worry we recognise that there's more than cost to be dealt with by you folks and we're not going to let p j i'm just become we're not going to let this base residual auction take over the market so that everything's got to be cost base we're going to let other issues like state concerns about long term liability work their way in and we've built that the end and is that not what the commission said and the reasons why it said it well i think you have to go into the next couple of sentences where the sense is where the commission market which includes the market rules that will produce the price signals that everyone can act upon so that they know where the price signals weren't supposed to be i mean that's the reason there was this negotiated result the load petitioner say we negotiated for automatic clearance the states say we negotiated for and got this exemption for special state mandated resources we we work this out because there are things besides cost they need to be taken account of be knowledge in that don't worry we're not going to let this all become just about some economists in the back room with a green eye shade figuring cost to rule the roost we're going to recognize these other things and we've set it up to a w that no no what what i would say that is the commission's orders in this case were very much about making sure that that market produces real  entry that is coming in at zero price taking is coming in at zero it's displacing resources that actually are needed by the market that the price signal a real price economic needed by the market passy that your discouraging new entrants to the market who would be able to come in on a cost justified basis and again with a three year forward market and the fact that you're only looking at gas fired resources that means they don't get built the reason it's a three year the timing as well as the price rules in this market are shaped around gas fired because they can be built quickly so you do the market three years out if a resource if a new plant resource doesn't clear in that market there's never any steel in the ground because that resource could be built in the three years to begin service at that time so that's why the commission had said gas fired resources can test the market if they don't clear they are even built so that we have this market we're looking at just the two and a half percent of new stuff we have people trying to make plans on that let's shift the entire curve over substantially by allowing so much price taking cost competitive coming in at zero it shifts the entire curve over actually it's just this way things up here that would have cleared don't clear could be some existing j thirty one forty eight to thirty one fifty which is in the the rely be the two thousand seven rehearing or on the prior when there are some graphs and it's not all relevant to you because it includes a vertical demand line that this was for the purpose of saying why the the slope demand was better than the vertical for the service but i use this to visualize what it means when i'm saying stuff over here clears and stuff over here doesn't win you win too much price taking zero dollar resource resources come in they shift that whole curve and that goes back to the site i give you on the very last page of volume one that paragraph twenty eight in the second rehearing order that says assuring every unit with an adjusted unit even this was in response to low petitioner's even if we mitigate you but then we variance you clearing every one of these things that clears the market could result in rejecting the offer from a less expensive unit that otherwise would have cleared but the and that's when you don't have a true pricing anymore but the question is how is the horses different in two thousand and six most i'm trying to i'm trying to figure to figure that out ok so i'm i'm i'm i'm one of your advisors in two thousand and six or not it was spring to you you know there could be a two thousand lead in particular thinks that the commission was was looking at the intent of the states and i know some of the other parties have made allegations about intent of the states in the commission said in paragraph three i think of the first rehearing order that you were careful to them they could do well go ahead and build some plants and then they build support to do it and you say not only didn't did you anticipate they were going to come in at zero well was that a fair anticipation i think good afternoon for the commission left the microphone please thank you thank you to back up just for a minute i think it's important to reflect on the balancing that the commission has done here in these orders as is evident no one is happy and perhaps the same will hold true in two thousand and thirteen yes we don't know but to move this to the point about the mitigation period in particular there the commission was dealing with competing proposals and what it found was not only was the existing giant loophole in p j am's rule they're just not reasonable forcing the commission to act under two six as opposed to two of five but none of the proposals before would do the real justice either and yes is there any recourse for a party like the states here because what we what we've heard is the only thing that changed was a realization that the states are actually going to do this and when they do it it's actually going to affect the more if i can i certainly can understand i think that recognizing a problem is an important thing for an agency to do but when you've told a party like a sovereign state hey do this if you want and they actually do what you told them they could do and then the federal agency says not anymore that there's just nothing for the state to do they're just out of luck i'm not as prepared as my colleague just had to address those issues i am intending to respond to the p three issues however i won't let that stop me  and i'll just comment that the commission deals with every day evolving market behavior in response to evolving markets there was nothing evolving about this there was a statement you can you can do this thing they did that thing and then you said no you can't do this thing it's like the kid's game of red like green light and there's nothing that happened there that wasn't that it's hard to it's hard to hear the nobody anticipated this when you said just to the states go ahead and do this and then your reason for stopping them is to say well we can't let states one state do something different also my lunch to all the states go ahead and do this you had to yeah i had the anticipate that if any one of them did it and came in under the price point which they were surely going to do they were going to come in and zero be price takers that it was going to affect everybody else it's just it's a strange thing to hear the federal government come in and say  who knew i believe mr banta reflected on the magnitude of the truck as he referred to it and you know that the commission wasn't driven primarily by that but also that the commission here was acting under two zero zero five where it's not necessarily comparing the existing rule against what was proposed to it the question is maybe what was there was just and reasonable maybe something else would be just and reasonable but what p j am is proposing here is also just unreasonable there is a reason the basis you now now do this as opposed to the actual change to sell so i don't want to say that we're looking at things in reliance interests  mitigation period what the commission needed to do was adequately respond to the arguments before that it did that it doesn't need to respond to every single case that is raised before it or differences between p j am and every single other market what it did here was explained that here resources are economic if they clear once and by the way it's said the same thing in the new york case and even pointed that out in the tariff order paragraph sixteen no eighty seven bringing this around to judge by bell's point about regional differences the commission does as it did here in this brief and as it did in the orders rely on the regional differences in the markets and allow the parties to craft their own approaches and i should mention here that it seems relevant t v continuing evolution of the markets that the commission is even holding a technical conference at the end of this month where the question of of how to estimate those you know saawariya services that go in with the highest cost only distorts the market and you have ready right there available to you accurate data which you refused to use and that is in and of itself it's an arbitrary thing to not use the best data which the i think mr estes referred to that issue and also the mitigation period issue as a quibble himself and on that point the commission is using an estimate there because it's looking for the price for a reference resource not the specific unit that's being into the market that's not the way that estimating the cost of new entry works it's based on a reference resource it's supposed to be an estimate and the understand them to be saying is you can have better and worse estimates and we proposed for you a way that you could have a better estimate and you declined and chose to go with a worse estimate and you didn't really satisfactorily explain why worse is better than better my understanding is that mr s's clients think that it would be a better estimate because it would result in more frequent triggering of the rule and what the commission about accuracy would be more accurate he really didn't talk about the trigger more so i think that the best means i was going morsy is i'm sorry is it more accurate is the highest more accurate than what he's proposing not in the sense that the commission is choosing a an estimate of the revenues for a reference resource not for any particular specific unit that might later after that reference resource and  nigeria's decided bid into the market it's an estimate for a reference resource a hypothetical unit it's a hypothetical so why choose a specific price or revenue estimate for a specific unit why choose the highest why choose the highest two avoid over triggering the rule and subjecting units that i think that's his problem he says triggering isn't the be all the end all of the accuracy of what could be better could be more accurate but it doesn't need to be here under the commission section two zero five burden that's one that's one response the other one is that again it's a reference resource it's intended to be an estimate the have these issues and it didn't go on and on for it for pages but the commission did responds to the arguments raised by the parties and in particular in i'm sorry that paragraph and that goes in particular to he three's argument that the commission didn't adequately address the consistency with the variable resource requirements curve the v r r curve which they assert was not  reliance argument that is unwarranted all of us agree that the reason for the state exemption was to allow states to have proceedings to build new capacity in response to documented valid capacity under supply concerns with p m s involvement as you know these proceedings happened he gems i in them and kind of market monitor came and testified this was a very bad thing that they were doing but the it and and you didn't say to them at that point hey don't do this but what you know peter hamby james an infinite market monitor went to new jersey ends in maryland and said what you're doing is very bad for new jersey what you're going to do is going to cost is going to cost the market at least a billion dollars and then subsequently one maryland one parent maryland acted on them so that now together what you guys are going to do is crush the market by three billion dollars and the gains you're going to get out of it are fractional compared to the damage you're doing everyone else and there isn't a reason why utilities or states other states she responsible for subsidizing what you're now describing as non economic things like job programs or environmental concerns i ask the gains of be minimal because we're just talking about the smallest that the the last two percent of capacity here no your honor that that the net benefit to them would be on the order of two hundred fifty million dollars but the damage done to everybody else just in the market would be thousands and then this this comes it looks like you're struggling for a for a joint an extension for this discussion you know joe jordan so would you please look at the testimony of dr shanker j pages seventy three seventeen three eighteen it doesn't actually have all of the i m m's testimony in it but what it does is quote liberally from it and so that should that should should should get to you to get you what you need so relevant changes you would want th an anticipated that this would be catastrophic i've i would very much want to turn to that for that to that point but first i want to make this point and it's from the same page that you and i thought that i just gave you we asked dr shankar in his really just trying to change change the price and answer the question and there isn't a problem with with that at the time there was no there were no problem with their lacking capacity you asked a question about what changed in jordan i want to reverse the chronology that you vertically integrated utilities are using your control over the transmission lines to try to prevent competition in generation that's not going to work you're going to have buy a sow's next thing we've got is an evolution was archos california blew up and then it became very politically unpalatable for there to be all energy markets where people would accept wild swings in price that would give that would give accurate price signal so they said you know what we're going to mitigate your energy ancillary services maxim prices this created what is called the missing money problem missing money problem is why we now have capacity markets you have to pay you have to pay suppliers who are marginal peakers rarely used super hot days like today's when they get turned on of the was are sitting idle in order to make sure that they actually have a basis going and the in the shift between the imposition of market caps and the development of capacity markets a lot of people said well if we can't we can't operate we're going to shut down and there were a lot of plants at that close so then we had a passing market and people started to rebuild what is i said this is a yes or no let me let me have you respond to something that that the the  majority of their load obligations with owned passy and long term contracts so it works what i understand that to be saying it's not stuff that they acquire through the b r a it is widely considered in fact to be irresponsible rely upon an arc centralized market for more than a fraction of their electricity needs so when i read this i understood them to be saying the following the history you just described  everyone of everybody being dramatically and it costing too much ben zimmer's and there was and then there was this problem with the cap and they moved to a short term market with like literally vertical demand curve aim was to try to at the top end just like you said on the hottest easier for example when you needed some extra capacity to have actual extra capacity this whole residual market was supposed to be a residual market was not supposed to take over the way elysees planned for and built and developed generation and made long term plans that this is a case of the of the exception now that's no answer at all because we can't we can't function that way that only works there's one people there's one outfit on the whole planet that's situated to take advantage of that an economic way sort of say oh you got a four hour rule this really is really to give the back there was one disability there is so much extra and so much extra capacity that they could actually get by so i guess one might ask if you're if you think the m o p r isn't working well because it's never been triggered why do you think that far is working well if it's triggered once ever if one personal take advantage of it why do you think that's a satisfactory out for these states and others who are saying we've got long term needs and we've always meant our long term needs and the fact that we needed something to by understood you correctly you were taking issue with the assertion that ike took from the dishes argument but i also understood that to be basically something that was being said by parties more generally which is we have to plan for our long term needs and we do that outside the context of the base residual auction it's supposed to be a residual auction we have long term needs that we plan for outside that and that p g m and for forcing us into a situation where we can't do that because now in spite of what fergus said in two thousand and four about don't worry we're not going to let this turn into a cost based circumstance repeat g m is running the whole market that's exactly satisfy reliability needs that's the capacity side of the market the same way that location margin pricing is as i said on energy mansouri services that's the objective and their end and if they are saying that they would like to build whatever they want to build to is the way what the market wants this isn't this base residual market this isn't a real market is it is risible i mean real market in the sense of people walking in and commodities changing hand this is a this is a sounds like a sensible logical construct where you try to mimic market forces but if it's i guess i'm struggling with r lines of these days as a result unlike anything else and i had to grapple with this like crazy when when i was a clerk and dealt with my first case and then later on when it when i entered private practice every other every create an environment in which price ignace can help people make sound judgments about how when we're to build capacity is that not true that is correct but no one is having a fight here about whether or not they are curves as such are good or bad things that that  e was well pathway right i understand that the point that i am trying to put you in a question perhaps in artfully is used you seem to be saying that this is this market we had to do what we did in two thousand and eleven because things just weren't working and that and the story we're here from the other side is things were working there was a way that they worked for seven decades and when we hit a place where things were problematic because of the way society the vul up in the technology you develop that we needed to do something about a capacitor on a man and not work the price for all resources was too high there was overbilled everywhere worse this is those p g m's position that these bilateral contracts these long term supply arrangements these these decisions that states for example are making about how to avoid rolling blackouts but that's add policy bad decision making because the only game in town is the base residual auction and if you were sensible people you come here to our auction because that's where sensible decisions are made and i think you are at some point you have to make a decision about whether or not you  control based strictly on cost that's first language loosely translated i apologize and go back and read it again but that's what the assured people in two thousand and six when they signed off on this settlement what i hear you saying is not so the centralized market that's the only legitimate way for this thing to work since the smartest way for it to work if you i want to go the f r route they want to go the traditional route they want to overbill they want the consumers to pay more that's fine but if the question is how are we going to get least cost a passerby or at least cost guaranteed clearing up not that as mother's first so that's that's not a return of i realize your dissertation laying i don't i want to spend too much time on that i guess i could i could spend a little bit of time asking what is confusing about the words all cell offers in their entirety designated the self supply committed regardless of price i guess we could spend some time trying to figure out what could possibly be ambiguous about that but since since we've got the load petitioner's the sort of set aside here for other reasons it's probably not a sound investment time if you can help us with the one question that we've come back with several people on what was different between two thousand and six and two thousand and eleven that made p j s decision to go to do things with a good heart first went out of its way to try to explain that that that they were going to only look at non intent based things but there is a lot of money on the line and i'm not prepared to be so so polite and  public utility control please please read j two fifty nine which includes excerpts from her testimony because it is difficult to hear them talk about a lack of any of any evidence that there was there was there was intent to depress prices when that is exactly what we see going on the testimony so i didn't disagree with the idea that there was reliance here i think that there was abuse here this got signalled quickly got signaled in the end of two thousand and ten and we pounced on it as fast as we could i want to point out in addition i don't know if this point sank in there was not a lack of generation in either p j m or in maryland we talk about that and dr shaker testimony of giving your pressure clerks can help chase down the the pages already said maurice of them in the record  in particular look at three seventeen and three eighteen but we have been arguing about passing markets in stereo in i soon england and if you jam now and now now in the west iso in the same issues keep coming up again and again there's a new evolution every time but what is very very very odd is to hear the claim being made in this case oh gosh we need to build these new these new things because they're going to they're going to increase our reliability and then sometimes will be some additions fuel mix remember it's sort of about environmental things the case multi colored rainbow fan of all the new things that i'm at now you got to know that now that you have it the fact is they've got they've got the capacity that they that they need now what they're saying now is we think we're paying too much the other thing that changed your honor is that after we had passed the market people began to observe how they operated we get the results published we see the price separation between the different locational deliverability areas we suited to price separation a few different tones and there's sometimes a radical radical differences first energy closed down seven plants last two years have how much people need you know exactly how much you need to do in order nicolay the market and that is why i think this happened i can't jump into their heads i think that the public testimony speaks for itself about why they did what they did i think that the complaints this is somehow unduly discriminatory because they didn't do the same thing to one solar or are utterly without merit when you consider the fact that those resources globally throughout the jam are less than one half of one percent of all the negative there when you want to drop a one thousand or two thousand one entity thing which completely obliterate all all renewals together in one location now this is this was not reason for alliance this was abuse and i don't need to meet me to be under fanatic by by saying that but i think that's what the record shows and if people want to a significant change in policy or philosophy in two thousand and six two thousand and one this has from p m s perspective this has always been about reliability and continues to be about reliability what the r p m market says is that we're trying to determine a way that we can create a market in p j m that supports your competitive revenues the construction of new capacity when and where it is needed that's what relies on the revenues in our market if you are a resource that is not lucky enough to have some state providing you an out of market pain and we want to make sure that you get enough revenue from our market that you can be built when and where we need you and that's what this is always been about so there wasn't a shift from two thousand and six were oh my gosh we're worried about reliability tatoos to twenty eleven we're only worried about cost we're worried about offers below new entry offers below that cost from the very beginning and that's what's always been in this market and so there was a motor from the very beginning for said in approving them over as part of the two thousand and six last summer that it was designed to prevent self supply offers from suppressing the props by offering an below what it would actually cost to build a new power plant and so that has always been the case and i would say that what has changed we had a comprehensive settlement  thousand and six that addressed a great number of issues p jam looked at the state exemption and said there will be an opportunity for us to participates of perhaps this is something we can live with but after two thousand and six we saw the experience in new england where there was a great deal of out of market activity but out of market i mean there were new plants being supported by payments outside there that's in my case it was really bringing the price near capacity market down such that it was clear that it was not  be able to support independent new generation which is what we're trying to do so we saw that experience and then we also saw the discussions going on in new jersey in maryland about doing something very much like that which came to a head i guess with passage of this law new jersey at the end of twenty ten and to get to the lines in perspective we acted very quickly is that things moving forward such that we got a filing in defer within a month and a half after they passed their law to say in which they directed their commission to go forth and undertake this process so our filing was before her proposing to change these rules while they were going through their process so you know it wasn't that much reliance  the well when you say there wasn't that much of her alliance interests there was four years of reliance and sovereign legislature moving through a process and a third party being drawn  just stuff was happening based on the exemption that p j and i had supported right well there were no state sponsored new entry projects that triggered them over during this entire time there was there was no there was no was struck and it included the exemption what did p g and think was going to happen i may be impossible to go back and recreate this nazi cause you're looking at a total package settlement that does a lot of things including the slope demand curve locational pricing three or four these are all huge things that we've got and so on and i think we anticipated that whatever happened it wouldn't be enough the problem and we'd be able to live with it and if you had isn't that that it was finally at that level you'd heard the complaints from p three and other power providers prior to this becoming the rule right we knew that that was potentially a risk we thought it would be manageable  and we saw that our own market monikers and look this is a three billion dollars problem and we also have the experience you know experience is a great teacher of what happened up in new england where they were having a real problem with the level with their attempt to do something similar which is to set up a market that could support independent new entry to provide competitive capacity when and where it's needed and that was the essential thing so so what you're telling us is yes there are differences between the world as we knew it in two thousand and six and the world as we knew it in twenty eleven we were constantly monitoring the market and our assessment was over that period of time there were different things that occurred and informed us that changes in us yet what product and frankly it hadn't been an issue because there wasn't any such state sponsored new entry on the table until this process which moved very quickly at the end of two thousand and ten at the state level started to to have these proposals and frankly a monkey jam it because some considered warm because we're looking at oh my gosh this is really going to destroy what we're trying to do with these precious with these  market and so those folks who are dependent on this market for the revenue in order to do new entry won't be able to do it and that is a major reliability concern yes the state will take care of itself but what about the rest of the region if we've got a market provide those precious seconds then we've got a serious problem and we need to let everybody know that look we can't let that happen so we're going to get in front of her as quickly as possible while you guys are still thinking about this to make clear this is how we want to change the rule and as being pretty roughly the same time are you talking about their building or their contracting process this is that they the state said directed that the new jersey p u two hire consultant do a study and take actual costs are higher will be the difference and so if you record them to do all of that and so what was going on in the first quarter of two thousand and eleven was they retained a consultant they decided what the offer the parameter for the offer should be that they were soliciting solicitations the consultant did or work that was all happening in the first quarter twenty eleven ok so again the the key consideration there is that it was always about reliability the marginal resource sets the price for everybody the last resource to come in sets the price that all the generators are paid and sets the price that loads up to and so it's always about making sure that you're matching up all the loads with all the supply so it has always been the case contrary to the portrayal this is this was always about don't let pm put everything in the market from the time deal you have to they are a lot of delivery charge you can also offset some of that by putting stuff into our auction clearing and being picked but that's subject to all the rules of precipitation in the auction including the rule that you can't offer new entry below the cost and consistent with the federal power act this was a failsafe provision to address a specific problem we bargained for it it was approved p j which now says gee we didn't know what was going to happen called we respectful reasonable and balanced and said they understood why the states wanted now there's been a lot of talk about a barreling truck in new jersey barreling truck to be clear there's no analysis in the first orders of what the new jersey resources would do to prices as to whether it would shift on the curve and whether they were an economic new jersey went through a competitive r f p process to select those resources they were the least cost resources to meet the criteria that new jersey had nothing on economic about them there's been a lot of talk about new jersey's intent there was no finding in the first quarter of new jersey's had there's no finding that new jersey didn't meet the requirements of the exemption remember what happened instead of making a finding for it might have said look you didn't meet the requirements p three and all these people say there's no capacity shortfall that's not what happened here instead what happened is  exemption which is implicitly a finding that new jersey had met the requirements and that instead of allowing new jersey to have the rights it bargained for for took them away finally one final point there's a lot of concern by ferg about shifting on the curve and what's going to happen keep in mind that the same time that p j m came in and proposed eliminating the exemption it proposed additional exemptions for wind and solar facilities there's nothing in the record about what those facilities cost whether they're economic or not how many of them are going to be built and what impact that would have on the curve and it's completely inconsistent to say that new jersey couldn't have those gas resources but you can build wind and solar till the cows come home if you're worried about that decision that it could be a convoy of trucks containing wind and solar power and down the highway my time's up thank you thank you dictated by the size of the reliability problem if a smart car or prius addresses the problem that's what maryland will be getting not a hummer and not a truck because the state exemption all that is justified under the state exemption is the amount of a liability that's needed to address the shortfall mr flynn talked about concerns about price ignores in the market and judge joint and you you correctly point out this was designed to be a they say residual mr shaker is p three s expert and it's not mr shanker its role to determine whether there's a capacity problem that role is the role of the maryland public service commission and similar to the agencies to determine what is needed in the state as a reminder maryland considered developing new resources because there was a reliability need that j m first identified and the undisputed fact is that despite very high prices and capacity market no new resources to address the very real need in those regions and i think at bottom it comes down to the fact that r p m is a short term market and maryland has to look at the long term maryland has to look at reliability five years ten years fifteen twenty years down the road to ensure for its citizens and one final word about harm it's true even without the state exemption maryland could develop the resources but without  risk that our citizens will have to pay twice for that capacity because if the u n tree doesn't clear but that would just be in the first year i'd correct it but it's a very real it's still a very significant risk for our citizens and i think you're correct that we were led down the garden path just short in that we relied on this exemption we understood that we would be able to address our reliability concern see high prices in that role and you just you know new generation coming in to address that we ok thank you thank you very much just like their address the moon this issue and i want to if i may read a passage from shays and me him versus federal election commission for fourteen fed third seventy six at ninety and it's as although that the f e c federal election commission insists that the congress and the plaintiffs happen to be congressmen and happen to be a political that when adverse use of illegally granted opportunities appear inevitable affecting parties may challenge the government's authorisations of those opportunities without waiting for specific competitors to seize them and they firk at eight ninety nine f second twelve thirty at twelve i'm sorry twelve thirty at twelve fifty nine they're all d c circuit cases the point that i trying to make is that the guaranteed clearing elimination remains in existence the fact that someone wasn't cleared in a project someone cleared in a particular year doesn't take away the fact that those opportunities will continue to happen year after year under both the two thousand under the two thousand six hundred to two thousand and eleven under the two thousand and thirteen changes and that is a risk original approach was to say hey here's a hypothetical resource and here's his own work located not my light at least if random be symmetrically wrong one way or the other between when unchanged and said it's the highest which is always wrong in a direction  arrange for a transcript to be made this argument some could contact the clerk's office and we would ask that you share the expense of that