The Federal Energy Regulatory Commission on Feb. 11 accepted revisions to a section of PJM Interconnection’s Open Access Transmission Tariff known as the Reliability Resource Initiative to add provisions enabling a one-time reliability-based expansion of the eligibility criteria for “Transition Cycle #2” of PJM’s existing interconnection queue.
The RRI modifications are designed to add up to 50 additional projects to be studied in Transition Cycle #2 to address near-term resource adequacy concerns (Docket No. ER25-712-000).
Background
On November 29, 2022, the Commission approved a comprehensive reform of the PJM generator interconnection process designed to more efficiently and timely process new service requests by transitioning from a serial first-come, first-served queue process to a first-ready, first-served clustered cycle approach.
The reforms included transition period rules, in Part VII of the PJM Tariff, and rules that would apply after the transition period, in Part VIII of the PJM Tariff (New Rules).
On July 10, 2023, PJM began the transition period, during which PJM plans to finish clearing the backlog of pending new service requests from the prior serial interconnection process using the new clustered cycle approach.
The transition process includes an Expedited Process, Transition Cycle #1, and Transition Cycle #2.
Currently, PJM is approximately halfway through the transition period between its old process and the New Rules, having almost finished the Expedited Process and nearing the end of Phase II of Transition Cycle #1.
PJM is scheduled to commence Phase I of Transition Cycle #2 in April 2025, following a December 17, 2024 deadline for project developers to declare whether they want to continue with projects assigned to Transition Cycle #2, and the application review phase.
PJM administers a capacity market called the Reliability Pricing Model (RPM) to ensure that enough capacity is procured, at a reasonable cost, to maintain reliable grid operations. RPM Base Residual Auctions (BRA) are run to procure enough capacity to meet the reserve requirement three years ahead of the associated delivery year. The concept of sufficient capacity on the transmission system to maintain reliable operations is termed “resource adequacy.” PJM assesses resource adequacy using a statistical measure of reliability that measures how often, on average, the available capacity is expected to fall short of the demand for capacity. The product in the RPM capacity market is unforced capacity (UCAP).
PJM also uses an effective load-carrying capability (ELCC) measure for assessing the capacity value of resources, because UCAP by itself does not provide assurance as to when and under what conditions that UCAP will be available.
PJM Filing
In its December 2024 filing, PJM explains that it has identified near-term resource adequacy concerns, occurring as soon as the 2029/2030 delivery year.
PJM stated that it anticipates a 10 GW gap in capacity in the 2030/31 delivery year that could swell to more than 20 GW based on forecasted load growth.
PJM also explained that, based on its analysis, its planning reserve margin may suffer erosion as soon as 2026.
In response to these concerns, PJM stated that the revisions under the RRI are intended to holistically address significant near-term resource adequacy concerns in PJM.
Specifically, PJM proposed to introduce a one-time application window for additional projects to be studied in Transition Cycle #2.14 While requiring a 10 MW UCAP minimum, PJM explains that there is no limit on the number or type of projects that may apply, but PJM will select no more than 50 additional projects to be studied as part of Transition Cycle #2.
In order to determine which projects are ultimately selected, PJM said that it has developed scoring criteria that are calibrated to satisfy its resource adequacy needs.
PJM proposes two sets of criteria for scoring RRI projects: (1) market impact criteria, which assign RRI projects up to 65 points based on UCAP, ELCC, and location; and (2) commercial operation date viability criteria, which assign RRI projects up to 35 points based on planned in-service date, project support, uprates, and headroom.
PJM’s proposal also places certain requirements and obligations on these additional projects that would not apply to other generator interconnection requests, including waiving an otherwise automatic ability to extend milestones and a requirement to participate in PJM’s BRA for 10 consecutive delivery year periods.
American Municipal Power Submits Comments
In response to the filing, American Municipal Power submitted comments in the proceeding at FERC.
AMP said it supports the concept behind PJM’s RRI Filing, which is expediting the interconnection of certain generating facilities based on the ability to mitigate identified shortfalls in near-term resource adequacy.
“While the RRI Filing has potential merit, the filing weights project eligibility criteria toward Unforced Capacity (UCAP) and Effective Load Carrying Capability (ELCC), when commercial operation date viability and location are fundamentally more critical to curing in a timely manner the reliability challenges identified by PJM as necessitating the filing in the first place,” it said.
Further, AMP said PJM’s proposal of its RRI Filing only emphasizes the failures of PJM’s Reliability Pricing Model.
“To ensure resource adequacy within the PJM region, RPM erroneously focuses on capacity as a fungible product, as opposed to resource attributes. Similarly, PJM’s RRI Filing effectively seeks to expedite the interconnection of allegedly ‘fungible’ capacity, rather than resources with the specific needed attributes,” AMP said.
Between this filing and two other recent PJM filings “proposing piecemeal changes to the RPM construct, it is clearer than ever that RPM is failing to meet its stated goal of ‘ensur[ing] the adequate availability of necessary resources that can be called upon to ensure the reliability of the grid,’” AMP said.
Although AMP did not ask the Commission to reject the RRI Filing, “these comments identify concerns with PJM’s proposal and highlight the need for more tailored reforms to PJM’s interconnection process,” it noted.
AMP said the Commission should issue an order accepting PJM’s RRI Filing, subject to the condition of PJM making revisions proposed by AMP in a future compliance filing.
The proposed Tariff eligibility criteria “should be revised, and certain commitments should be required of the selected projects to further PJM’s overarching objective of expediting the timely interconnection of substantial quantities of reliable resources in areas where they are most needed,” AMP said.
FERC Order
FERC in its order said that that PJM’s proposed RRI Tariff revisions are just and reasonable and not unduly discriminatory or preferential, “and we accept the Tariff revisions, effective December 14, 2024, as requested.”
FERC found that the proposal reasonably addresses the possibility of a resource adequacy shortfall driven by significant load growth, premature retirements, and delayed new entry.
While several commenters argue that the RRI proposal is inconsistent with Order Nos. 2003 and 2023, “we find that PJM’s proposed Tariff revisions meet the independent entity variation standard,” it said.
“We find that PJM’s proposed Tariff revisions accomplish the purposes of Order Nos. 2003 and 2023 because they will improve the efficiency of PJM’s transition process and will help ensure interconnection to the transmission system in a reliable, efficient, transparent, and timely manner,” FERC said.
Moreover, although multiple commenters argued for modifications to the RRI proposal or suggest alternative solutions for addressing PJM’s near-term resource adequacy needs, “the Commission need only determine, under FPA section 205, whether the proposed filing is just and reasonable; the Commission is not obligated to consider whether the proposal is more or less reasonable than other alternatives.”
FERC said that PJM’s RRI proposal, which builds on the existing rules for PJM’s interconnection transition period, represents a just and reasonable and not unduly discriminatory approach to addressing PJM’s near-term resource adequacy concerns.
PJM has authority to evaluate and maintain resource adequacy through its capacity market, as well as to manage its interconnection queue, it said.
“The RRI proposal enables PJM to address concerns that the current state of its interconnection queue does not enable sufficient resources to interconnect to meet projected near-term resource adequacy needs. Specifically, PJM’s proposal will accelerate the interconnection of up to 50 additional projects with specific characteristics that will be obligated to offer into future RPM auctions.”
Commissioner Chang Dissents
FERC Commissioner Judy Chang dissented from the order.
“I dissent from this order because PJM has not demonstrated that its proposal represents a just and reasonable and not unduly discriminatory or preferential solution to the resource adequacy and reliability concerns it has identified beginning as soon as 2026,” she wrote.
“I would instead reject PJM’s filing with targeted guidance to place greater weight on the Commercial Operation Viability criteria in a revised proposal and thereby better align PJM’s reforms with its demonstrated needs.”
Commissioners Phillips and Rosner
In a joint concurrence to the order, FERC Commissioners Willie Phillips and David Rosner said that “We concur in today’s order accepting PJM’s RRI proposal as just and reasonable, and not unduly discriminatory or preferential, because it is a one-time, extraordinary measure that is only needed because of the equally extraordinary circumstances PJM finds itself in today.”
Going forward, “we expect—and the circumstances on the ground demand—that PJM transition to its reformed interconnection procedures as soon as possible, fully implement the reforms directed in the Commission’s Order No. 2023, continue working with its stakeholders to proactively identify targeted interconnection process reforms, and deploy automation tools to improve interconnection process efficiency,” they said.
“Ultimately, PJM must establish a level of consumer and market participant confidence in its interconnection process that is fitting for the nation’s oldest and largest organized electricity market.”
