Industry, regulators react to FERC rejection of PJM market reform proposals

Energy industry leaders and state regulators had varied reactions to a recent 3-2 decision by the Federal Energy Regulatory Commission (FERC) to reject two market reform proposals from Eastern grid operator PJM Interconnection.

The proposals aimed to address the suppression of prices in the market caused by state energy subsidies. The FERC order concluded neither proposal would adequately mitigate their impacts.

FERC also called for a paper hearing to consider a FERC-proposed solution, which would alter the capacity market construct to remove some degree of subsidized resources.

“Illinois has long benefited from regional partnerships with PJM and the generators, transmission providers, and other entities operating in PJM markets, Illinois Commerce Commission (ICC) Brian Sheehan said. “The most recent actions by PJM and FERC threaten to unravel this partnership to the detriment of market participants and Illinois electricity consumers.”

Some industry leaders said they remain hopeful the action could have a positive outcome.

“We see pathways to a positive outcome from FERC’s 3-2 decision if the resulting proceeding ensures states can continue to shape the fuel mix within their borders as intended under the Federal Power Act,” Amy Farrell, senior vice president of government and public affairs for the American Wind Energy Association (AWEA), said. “We will be weighing in heavily with the commissioners and PJM to explain our concerns and how they can be addressed.”