PJM©2018

A Romp Through Restructuring...

Looking Back to Look Forward

Craig Glazer

Vice President, Federal Government 

Policy – PJM Interconnection

“Electric Industry Transition” Conference

US Energy Information Administration 

June 4, 2018
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• Need slide that is black.
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And What Were They Mad About???

At the Wholesale Level...

• Transmission access

– Negotiation of “wheeling rights”

– Discriminatory treatment

– Lengthy litigation: “Refunds to a Corpse”

• Build-out costs

• “Reliability” and “native load” as code 

• TLRs, demand ratchets, price squeeze you name it...
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And What Were They Mad About? 

At the Retail Level...

• Rates significantly above the national average

• Industrial subsidies for public interest programs

• Investment stagnation 

• Hit to global competitiveness
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The Regulatory World Circa 2006

• Reminding Ourselves What We Got 

Right: Taking credit for our 

accomplishments

• Building on Past Experience: Learning 

What Needs Further Work

• Avoiding the Quagmire of Inaction 
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Restructuring: The Good, the Bad and the Ugly

Accomplishment No. 1

We moved the risk allocation formula:

aka “There was no Enron rate case!”
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Pre-and Post Enron Prices 

$0

$5

$10

$15

$20

$25

$30

$35

2/5/20022/6/20022/7/20022/8/20022/9/2002

2/10/20022/11/20022/12/20022/13/20022/14/20022/15/20022/16/20022/17/20022/18/20022/19/2002

Enron 

Collapse

$/MWh Mean PJM RTO LMP
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Restructuring: The Good, the Bad and the Ugly

Accomplishment No. 2: 

We got the fundamentals right! 
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The Development of RTOs

Structural Solutions Have Worked

• Eliminating multiple control areas

• Regional planning

• Redispatch in lieu of TLRs

• Maximizing use of the Grid

• Allowing customers to make economic decisions

• Transparency
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PJM as Part of the Eastern Interconnection 

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As of 2/2018

• 27% of generation in Eastern Interconnection

• 27% of generation in Eastern Interconnection

• 28% of load in Eastern Interconnection

• 20% of transmission assets in Eastern Interconnection

21% of U.S. GDP 

produced in PJM

Key Statistics

Member companies 1,040+

Millions of people served 65

Peak load in megawatts 165,492

MW of generating capacity 178,563

Miles of transmission lines 84,042

2017 GWh of annual energy 773,522

Generation sources 1,379

Square miles of territory 243,417

States served 13 + DC
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ISO RTO Council

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eData
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Electricity Policy Headaches: 2018 Version

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Policy Headaches Looking Forward

• Impact of state legislative support for specific resources

• Losing our way: Re-regulation by piece part

• “Resilience”— A new challenge or new repackaging
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Policy Headache No. 1

State Legislative Actions 

Gradations of actions with different 

market impacts:

• Federal subsidies

• State support for customer-focused programs 

(e.g. weatherization, energy efficiency)

• Generic RPS goals

• State-ordered ratepayer $$$ subsidies for a particular

class of units or single units 
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Policy Headache No. 1 (Continued) 

Solution Options

• No action

• PJM IMM Proposal: Across the bard 

minimum offer pricing rule (MOPR)

– Issue: ‘Paying twice’ problem

• PJM Proposal Capacity Repricing

– Issue: Accommodates individual states 

but does not immunize neighboring states 

as much as MOPR
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Policy Headache No. 2

Re-regulation plant by plant

• The “half slave/half free” problem

• Skewed investment signals

• Re-juggling the risk allocation formula 

once again

• Ignoring the lessons of the past –

(stranded costs, technology risk etc.) 
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Policy Headache No. 3

“Resilience”—

A New Challenge or Reliability by 

another name?

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RESILIENCE 101

Starting with the Basics...

Mrs. Gould’s admonition:

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“If you don’t know what it 

means, look it up in the 

dictionary!”
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Resilience – Dictionary Definition

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1. The power or ability to return to the original form, 

position, etc., after being bent, compressed, or stretched; 

elasticity.

2. Ability to recover readily from illness, depression, 

adversity, or the like; buoyancy.

Synonyms:

“flexibility” “recoil” “snap” “pliancy” 
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Resilience – PJM Definition

• “The ability to withstand or reduce the magnitude and/or duration of 

disruptive events, which includes the capability to identify 

vulnerabilities and threats, and plan for, prepare for, mitigate, absorb, 

adapt to, and/or timely recover from such an event 

• Key elements: 

– Identify

– Plan and prepare for

– Timely recover from

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Getting from Wordsmithing to Reality

Planning – Key Reforms 

• Resilience 1.0 – Consider enhancing resilience under existing planning criteria –

range of possibilities do “no harm” (i.e. don’t make an existing problem worse) 

• Opportunistic – incorporate resilience as a factor in our selection among Order 

1000 competitive proposals 

• Resilience 2.0 – address resilience as a stand-alone driver

Related Reforms

• Developing resilience measurement tools – Resilience criteria 

would require new analytical procedures and tools assess 

vulnerabilities 

• Develop resilience indices 

• Interconnection coordination with natural gas pipelines

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Operations – Key Reforms

• Dual fuel requirements for black start and critical load

• Behind the meter resources: visibility and dispatchability

• Gas/electric coordination

– Real time modeling of contingencies

– Consistency in information sharing

– Triggers for conservative operations

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Markets – Key Reforms

• Identification and valuing of reliability attributes

• Pricing reforms to reflect value of all units 

needed to serve load

• Shortage pricing signals

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System Restoration – Key Reforms 

• Identification of critical load

• Gas Coordination of restoration plans

• Coordination with telecommunications and water utilities

• Enhancing restoration resources – black start needs, behind 

the meter resources etc. 

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An added Complication:

Who Decides?

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• States

– State Energy Policies (governors/legislators)

– State PUCs

• FERC 

• Environmental agencies

• Department of Energy

• Congress

• US Supreme Court

– Demand response case

– Hughes case

Who Decides?

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Resilience: An actionable goal 

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or a new fad?
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The Goal of a Resilient Future Grid...

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Or...a passing buzzword relegated to the ash heap of history

The choice is ours....

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Avoiding The Quagmire Of Inaction

“Hanging in mid-air”: 

a dangerous place 
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A restructured industry or “Golden memories of yesteryear...”

The choice is ours
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Let’s talk....

Craig Glazer

Vice President, Federal Government 

Policy – PJM Interconnection

Washington, D.C. , USA

1-202-423-4743

craig.glazer@pjm.com

www.pjm.com