Restructuring Today
July 12, 2005

PJM promises to find an accord with critics

If you read between the lines in PJM's views sent to FERC last week on capacity markets you get a hint of what Craig Goodman, president of NEMA, told us about mixed markets (RT, 7/11).

            Is it fair for utilities to compete as utilities in the marketplace, asks Craig Goodman -- with all of the advantages of funding and legal protection of a utility while offering competitive products unfairly.

            He thinks it should be prohibited.

            PJM's view is that it's come a long way -- as shown by FERC's recent technical conference -- in dealing with the conflicts of developing competitive markets.

            The RTO is positive about forging a reliability pricing model (RPM) in a market of monopolies and competitive firms.  That's why they've had about 40 stakeholder meetings and expect to come up with a proposal to FERC this year that FERC can accept.

            PJM cited its commitment to reach out to critics and narrow differences such as with those who claim that the system is broken.

            That's positive thinking.

            How about opting out?

            "The commission staff and others raised the question of allowing resources involved in vertically integrated utilities that operate in a bundled rate environment the ability to "opt out of the RPM program."

            PJM is concerned that this could lead to less efficiency over the entire PJM area and may lead to lack of investment or to redundant investment in resources.

            They have their work cut out for them.

            Nonetheless PJM committed to finding a transitional compromise.

            The assignment is grand in scope -- how to deal with vertically integrated utilities in a market environment.

            The PJM capacity plan had lost the vote in an advisory committee (RT, 1/14).  A spokesman stressed that the committee is advisory and that the real vote is by the PJM board.

            Those against had been in the majority.

            A day earlier the plan failed in the reliability committee (RT, 1/13).


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