What if states just checked out of their "voluntary" participation in the PJM cartel? Would this signal a reversion to 1920s-era state-regulated electricity lawlessness, or will it be historically viewed as the important first step toward a modern, sustainable, affordable, and independent energy future?
Maybe we'll find out soon, as the PJM cartel and its 800-pound incumbent gorillas continue to rankle states chafing at their continued captivity in the increasingly expensive electricity zoo.
Following on the heels of the U.S. District Court for Maryland's decision that Maryland's RFP program to stimulate the building of new generation in state violated the Supremacy Clause of the Constitution several weeks ago, on Friday the U.S. District Court for New Jersey also found that New Jersey's LCAPP program violated the Supremacy Clause. The second decision really is no surprise, if you read the first one.
The only bright spot is the court's rejection of the secondary argument that LCAPP also violated the Commerce Clause.
Maybe we'll find out soon, as the PJM cartel and its 800-pound incumbent gorillas continue to rankle states chafing at their continued captivity in the increasingly expensive electricity zoo.
Following on the heels of the U.S. District Court for Maryland's decision that Maryland's RFP program to stimulate the building of new generation in state violated the Supremacy Clause of the Constitution several weeks ago, on Friday the U.S. District Court for New Jersey also found that New Jersey's LCAPP program violated the Supremacy Clause. The second decision really is no surprise, if you read the first one.
The only bright spot is the court's rejection of the secondary argument that LCAPP also violated the Commerce Clause.
Despite the abovementioned evidence, the plaintiffs fail to overcome the most persuasive evidence that substantiates the reasons the State is seeking in-state development. A significant portion of the trial focused on locational deliverability areas (LDAs). (Stipulated Fact ¶ 30). As previously noted, New Jersey is located in such an area that is known as EMAAC. In addition, there are two other locational deliverability areas within New Jersey known as PSEG and PS North (T. 1529, 3-13). Generally, these LDAs have higher capacity prices than other PJM areas due to transmission costs. Even the Plaintiffs agree that a capacity price cannot be set for an entire region. (Pl.’s Ex. 26, at 34). As a result, there is separation in price which is authorized by PJM and the Commission. The record as a whole supports the proposition that the closer the generation facility is to the delivery area, transmission costs will subside. As Mr. Herling concluded when discussing the reliability crisis, reliability issues could only be resolved in one of two ways – transmission via the Susquehanna Connection or additional generation in or near the location where the reliability issue will occur. (Def.’s Ex. 563, at 33) (emphasis added). As such, it appears reasonable that the Board would incentivize construction in areas where reliability concerns are in flux. As such, the Board has the authority to incentivize construction within New Jersey. What is good for the goose is good for the gander. As such, the incentive for community benefits to generators in New Jersey appears reasonable. Since Plaintiffs have not briefed or argued the commerce clause in such a fashion, the Court finds that Plaintiff has not met its burden of proof.
This should come in handy in the future when PJM and big wind try to force eastern states to pay for new transmission lines in Kansas and Iowa by preempting any preference for in-state renewables to attain RPS goals. But that's an argument best left for another day...
If you've read both of these court decisions, you may have noticed that they manifestly document that, despite its protestations to the contrary, PJM does in fact and indeed control where and when generation gets built or retired. And this has always been the rub with PJM's failed markets and the reason they don't work.
PJM's markets are supposed to create incentives for generation to develop where electricity prices are high. PJM's markets don't work. This is because PJM will always force a transmission "solution" to artificially lower prices before the market can work. Why? Because PJM is a transmission building cartel, therefore the only tool PJM has is a hammer, and every problem looks like a nail. Because PJM builds new transmission before new generation has a chance to develop, PJM controls the development of generation.
And when PJM builds new transmission to lower prices in a particular area, everyone in PJM pays. However, when new generation gets built in Maryland or New Jersey, it's paid for by consumers in those states who use it. PJM's preference for transmission costs YOU money.
And if you think the states of Maryland and New Jersey are the only ones calling foul on the PJM cartel's deference to its incumbent utilities, check out this little back and forth between the Chairman of the Pennsylvania PUC and PJM's Board of Managers. The PA PUC is irritated at the way FirstEnergy continues to game PJM's markets with its plant closure game.
Chairman Powelson Letter to PJM
PJM's "shocking" Response to Chairman Powelson
Chairman Powelson Threatens to Go to FERC
Sounds scary, but FERC is what gives PJM its power to serve its incumbents first. Going back to the 1935 law that gave FERC its power, we might ask why FERC has seen fit to delegate that power to regional transmission organizations that are merely thinly disguised cartels of for-profit utility interests? When did the regulated become the regulator?
Not that any of this is going to matter much 10 years from now when distributed generation and consumer-owned, onsite energy production has made PJM, FERC and utility holding companies that control them about as useless as teats on a bull.
If you've read both of these court decisions, you may have noticed that they manifestly document that, despite its protestations to the contrary, PJM does in fact and indeed control where and when generation gets built or retired. And this has always been the rub with PJM's failed markets and the reason they don't work.
PJM's markets are supposed to create incentives for generation to develop where electricity prices are high. PJM's markets don't work. This is because PJM will always force a transmission "solution" to artificially lower prices before the market can work. Why? Because PJM is a transmission building cartel, therefore the only tool PJM has is a hammer, and every problem looks like a nail. Because PJM builds new transmission before new generation has a chance to develop, PJM controls the development of generation.
And when PJM builds new transmission to lower prices in a particular area, everyone in PJM pays. However, when new generation gets built in Maryland or New Jersey, it's paid for by consumers in those states who use it. PJM's preference for transmission costs YOU money.
And if you think the states of Maryland and New Jersey are the only ones calling foul on the PJM cartel's deference to its incumbent utilities, check out this little back and forth between the Chairman of the Pennsylvania PUC and PJM's Board of Managers. The PA PUC is irritated at the way FirstEnergy continues to game PJM's markets with its plant closure game.
Chairman Powelson Letter to PJM
PJM's "shocking" Response to Chairman Powelson
Chairman Powelson Threatens to Go to FERC
Sounds scary, but FERC is what gives PJM its power to serve its incumbents first. Going back to the 1935 law that gave FERC its power, we might ask why FERC has seen fit to delegate that power to regional transmission organizations that are merely thinly disguised cartels of for-profit utility interests? When did the regulated become the regulator?
Not that any of this is going to matter much 10 years from now when distributed generation and consumer-owned, onsite energy production has made PJM, FERC and utility holding companies that control them about as useless as teats on a bull.
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