Here's more on the situation between the New Jersey BPU, PJM and FERC and industry manipulation of New Jersey's energy market.
As reported last week, New Jersey wants to site several new gas fired generation plants in New Jersey in order to bring down the price of electricity in the state. The high prices are caused by lack of generation near load. PJM pretends that the markets it runs encourage market solutions, such as siting of new generation in areas of high load, to reduce cost. These load pockets experience higher prices because they don't have enough local generation and must rely on long-distance transmission lines to supply enough power. The more power these load pockets demand, the more "congested" transmission lines become. When generation is sited near load, "congestion" on transmission lines disappears. But then so do the enormous profits for the power companies that supply that high-priced electricity via "congested" transmission lines. "Congestion" also keeps the old, decrepit, dirty coal plants these energy supply companies own on standby to provide generation via transmission lines at times of peak load through "reliability must run" contracts. These generators are paid handsomely to keep their plants available to supply generation just a few days a year. They essentially get paid to sit idle. This "congested" situation is a huge financial windfall to coal-lovin' companies like FirstEnergy and AEP, who also score big profits by building more new transmission to supply more of their coal-fired generation to relieve "congestion" in areas of high load.
If another company builds a gas-fired plant in New Jersey near load, then FE & AEP's profits from RMR contracts, as well as both existing and new transmission lines, goes bye-bye. PJM has a history of favoring AEP & FE and other big energy corporations in their decisions. Therefore, PJM is fighting with New Jersey to prevent these new plants from being built. FERC has weighed in on PJM's side of the argument and New Jersey is now being held hostage by all this market manipulation being carried out by the very entities tasked with ensuring that energy markets are fairly run.
Maryland has also experienced a similar situation where they were prohibited from building new generation near load.
Now, New Jersey says they are not going to tolerate it any longer. A new transmission line project that will bring more coal-fired power into the state, which was approved by the BPU last year, is now being appealed. New Jersey's BPU is no longer in favor of the project. If their earlier decision is kicked back to them, they are free to reconsider. They could reverse their approval of the Susquehanna Roseland transmission line in the hope of forcing PJM and FERC to acquiesce.
Who will win this game of chicken?
As reported last week, New Jersey wants to site several new gas fired generation plants in New Jersey in order to bring down the price of electricity in the state. The high prices are caused by lack of generation near load. PJM pretends that the markets it runs encourage market solutions, such as siting of new generation in areas of high load, to reduce cost. These load pockets experience higher prices because they don't have enough local generation and must rely on long-distance transmission lines to supply enough power. The more power these load pockets demand, the more "congested" transmission lines become. When generation is sited near load, "congestion" on transmission lines disappears. But then so do the enormous profits for the power companies that supply that high-priced electricity via "congested" transmission lines. "Congestion" also keeps the old, decrepit, dirty coal plants these energy supply companies own on standby to provide generation via transmission lines at times of peak load through "reliability must run" contracts. These generators are paid handsomely to keep their plants available to supply generation just a few days a year. They essentially get paid to sit idle. This "congested" situation is a huge financial windfall to coal-lovin' companies like FirstEnergy and AEP, who also score big profits by building more new transmission to supply more of their coal-fired generation to relieve "congestion" in areas of high load.
If another company builds a gas-fired plant in New Jersey near load, then FE & AEP's profits from RMR contracts, as well as both existing and new transmission lines, goes bye-bye. PJM has a history of favoring AEP & FE and other big energy corporations in their decisions. Therefore, PJM is fighting with New Jersey to prevent these new plants from being built. FERC has weighed in on PJM's side of the argument and New Jersey is now being held hostage by all this market manipulation being carried out by the very entities tasked with ensuring that energy markets are fairly run.
Maryland has also experienced a similar situation where they were prohibited from building new generation near load.
Now, New Jersey says they are not going to tolerate it any longer. A new transmission line project that will bring more coal-fired power into the state, which was approved by the BPU last year, is now being appealed. New Jersey's BPU is no longer in favor of the project. If their earlier decision is kicked back to them, they are free to reconsider. They could reverse their approval of the Susquehanna Roseland transmission line in the hope of forcing PJM and FERC to acquiesce.
Who will win this game of chicken?
RSS Feed