PJM CEO sees room for power markets, state policies as it looks to grid of the future

With recent regulatory actions driving some to question the future viability of certain wholesale power markets, the new head of the PJM Interconnection was insistent Tuesday that markets could coincide with state clean energy policies and even help facilitate innovations needed for the grid of the future.

PJM President and CEO Manu Asthana said he's had a "fascinating and very humbling" first four months at the regional transmission organization.

Taking the helm January 1, he recalled his first week included a meeting to discuss the sweeping capacity market rule changes directed by the Federal Energy Regulatory Commission, plans for significant credit risk-management policy reforms triggered by GreenHat Energy's June 2018 default in the financial transmission rights market, and early pandemic preparedness talks.

Delivering the keynote address at the Energy Policy Roundtable in the PJM Footprint, a forum convened and moderated through a webinar Tuesday by Raab Associates President Jonathan Raab, Asthana said he took the position at PJM because he wanted "to have a broader impact" as the country undergoes an energy transformation driven by environmental concerns and technological advancements.

"I'm a huge believer in the power of markets to deliver efficiency to customers, but looking at it from the outside, it didn't appear obvious to me that the efficiency that PJM is able to deliver through its markets was inevitable," he said. "I felt I was uniquely positioned to help the organization try to navigate these issues, and that if we could do it successfully, it would have a meaningful impact beyond just the organization and hopefully benefit the 65 million people that live within PJM's footprint."

PRIORITIES

Asthana said his top priority will be reliability. "If we have an issue there, we will only be talking about that. There will be no discussion about market structure," he said.

Other priorities he noted were improving the stakeholder process to make better use of the diversity of thought in PJM to get to market solutions more efficiently and effectively, and internally ensuring that PJM is developing talent and building high levels of trust in its capabilities.

Top of mind for many in PJM is the capacity market overhaul that will expand the application of the grid operator's minimum-offer price rule to all new resources and some existing generators that receive a state subsidy.

PJM was among more than 50 entities that asked FERC to rethink the MOPR order. In filing for rehearing, Asthana said PJM tried to balance its desire to support and accommodate states' right to make generation mix choices with the need to run auctions that send price signals to inform generation investment and retirement decisions.

Although FERC largely denied rehearing requests April 16, Asthana said PJM would "continue to work with stakeholders to get to a sustainable, durable solution that ideally uses our markets to help states accomplish what they want to accomplish while delivering a reliable supply of power."

FUTURE OF THE GRID

Beyond the MOPR, Asthana said it was important for PJM to start envisioning a future grid in which states have new environmental policies in place.

"It's essential for us to facilitate a discussion with stakeholders about what that future does look like, and what do we need to do to facilitate it and to prepare for it," he said. "I think that is a broader question than just MOPR, and unfortunately, I think MOPR has sort of overtaken the discussion."

As more and more states pursue aggressive decarbonization goals, "the question for us is how do we then bring the power of markets to help states implement those decisions and facilitate those decisions in an effective way," he added.

The exact market rule tweaks and modifications needed for a durable solution remains an open question, he said, but offered that it was not one for PJM to answer alone.

"We have ideas like everybody else that we'll put on the table, but this is one of those examples of where the power of our stakeholders can really be harnessed, hopefully, to get to a good answer," he contended.

PJM will also need to consider how to adapt its technologies, tools, and markets to enable "an era that puts significantly more power in the hands of the consumer," he said, noting rooftop solar, electric vehicles, battery storage and the Internet of things that are producing a growing number of devices that can control home and business power usage.

Asthana said PJM's planning, operations, and market divisions would need to be involved to ensure flexibility and market solutions that allow those technologies as well as innovations that have yet to be thought of to drive the grid of the future.