Maryland officials say changes to electric grid governance aren’t enough

Democratic leaders in Maryland and around the region have long called for PJM Interconnection, which administers the regional electric grid, to give more weight to state voices in its decision-making.

But at the conclusion of PJM’s process to reevaluate its governance structure Wednesday, the lawmakers leading the charge were dissatisfied with the result. Critics said that while PJM members would give states some additional say, they kept most of the decision-making authority for themselves.

“The fact that companies that benefit from the current rules get to write and approve their own reform highlights the broken system Marylanders are footing the bill for,” Gov. Wes Moore (D) said a statement released by his office.

“FERC [the Federal Energy Regulatory Commission] gave clear direction to PJM and its members to give states a real voice, but PJM’s members responded with a term sheet that stifles the states by handing those same members a veto over any proposal the states bring forward,” Moore’s statement said. “Maryland strongly rejects this move, and the PJM Board and FERC should too.”

PJM was reevaluating its governance structure at the direction of the FERC, after Chair Laura Swett in July urged PJM to make “meaningful” reforms amid mounting pressure from states, including a leading state in Pennsylvania, and the White House.

“I want you all to hear this plainly: If the stakeholders cannot reach a set of credible, meaningful reforms or an agreement in principle by the end of September, then this commission is not going to hesitate to use the full extent of our legal authority to implement reforms necessary to restore confidence in PJM’s governance,” Swett said at the time.

The governance decision, announced Wednesday, was “PJM’s opportunity to show that it heard Chairwoman Swett’s warning,” said Pennsylvania State Rep. Danielle Friel Otten, part of the collaborative of Democratic legislators pushing for change at PJM.

Instead, PJM members, including transmission owners and generators, gave themselves “veto power over the very decisions at issue,” Friel Otten said in a statement Thursday.

The proposal advanced by PJM members, if approved by FERC, would let the state’s executive branches participate for the first time in the Organization of PJM States, or OPSI. It is currently made up of state utility regulators — in Maryland’s case, the Public Service Commission.

But PJM’s member committee would still get to make the final decision on the filing of key documentation before FERC, under Section 205 of the Federal Power Act. And two-thirds of members would need to support a proposal from OPSI for it to move forward.

PJM members also voted Wednesday to add one state seat to their nominating committee, which decides PJM’s board members. At least one competing proposal, from PJM staff, would have added two seats for states on the nominating board, plus the opportunity for an additional independent appointee.

Maryland Sen. Katie Fry Hester (D-Howard and Montgomery) said the governance plan offered by PJM members made states “spectators” to the process.

“PJM’s decisions shape what families pay for electricity, whether our grid is reliable, and whether states can carry out the energy policies their residents elected them to pursue,” said Hester. “States cannot be treated as spectators in a system whose decisions have such enormous consequences for our constituents.”

Hester has been among the Maryland legislators and climate groups criticizing PJM for slowing the arrival of clean energy to the grid and inadequately managing a data center boom, which has placed immense strain on the regional grid.

Jeff Shields, a spokesman for PJM wrote that Wednesday’s vote represents “an important step in the governance reform process and reflects substantial work by PJM members and stakeholders over the past several weeks.”

“At the same time, we recognize that differences remain, particularly regarding the appropriate role of states in PJM’s governance and stakeholder processes,” Shields wrote in a statement.

“PJM will continue working with its Board, FERC, and stakeholders towards meaningful governance reforms that improve decision-making, preserve PJM’s independence, and appropriately consider the perspectives of states, members, consumers, and other stakeholders,” Shields said.

For several Maryland legislators, Wednesday’s decisions from PJM were not enough.

“We have known for a long time that PJM is controlled by the for-profit energy and transmission companies that profit by slow-walking the clean energy transition and keeping consumer prices high,” said Del. Lorig Charkoudian (D-Montgomery). “Today’s vote by those same members made it clear that these members are willing to vote to protect their profits, even in the face of FERC directing them to reform the system.”

Climate group the Chesapeake Climate Action Network agreed.

“PJM proved once again that its governance is broken, and FERC needs to step in and force drastic governance changes within PJM,” said Jamie DeMarco, Maryland Climate Change Commissioner. “You cannot ask a broken system whether it wants change. Change must be forced upon it.”

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Courtesy of Maryland Matters