On September 27, 2024, Sierra Club’s Environmental Law Program filed a complaint at the Federal Energy Regulatory Commission against PJM Interconnection (the grid operator for 13 eastern and Midwest states and Washington, D.C.) that seeks to save consumers up to $5 billion annually and eliminate price incentives that tend to prop up fossil fuels.
PJM runs an energy market (where power generators are paid for the electricity they generate) and a capacity market (where power generators are paid for the capacity they agree to keep running in the future). The new complaint challenges PJM's capacity market rules. Their rules ignore the capacity value of power plants operating under reliability-must-run agreements ("RMRs"). These are plants that would no longer be operating were it not for an order from PJM requiring them to keep running to ensure reliability of the electric grid.
Because the rules ignore the capacity of these plants to provide energy, millions of households are paying twice: first to keep the RMR units online, and again for capacity payments to other power plants to provide the same capacity that the RMR units already provide. These rules caused prices to soar throughout the region, most severely impacting customers in Maryland. The high capacity prices that result when RMRs are ignored not only harm consumers, but also encourage the construction of unneeded new gas plants, and can delay the retirement of other fossil fuel plants throughout the region.
In response to the complaint PJM has made significant changes to upcoming capacity auctions that will ensure that these RMR units are counted. The Commission should, however, take action on our complaint by requiring PJM to make lasting changes to its capacity market rules to ensure that consumers do not pay twice for these resources going forward.
The Sierra Club Environmental Law Program has been working to prevent RMRs from further delaying fossil fuel retirements in PJM by encouraging more proactive transmission planning and pushing PJM to seek out short-term alternatives such as energy storage. This complaint builds on that work. Sierra Club senior attorneys Casey Roberts and Justin Vickers drafted the complaint, along with Earthjustice senior attorney Nick Lawton, and with significant administrative support from ELP legal assistant Emma Szymanski. More detail can be found in Casey's blog post, Grid Operator PJM Makes Customers Pay Twice for Fossil Fuel Power and in Sierra Club's press release.