PJM exec recommends boosting FERC's transmission authority

Phillip Harris, CEO of the PJM Interconnection, said the Federal Regulatory Energy Commission should be granted full authority to set electric reliability transmission standards and enforce them. Harris's position contrasts with current legislative proposals that would give the North American Electric Reliability Council responsibility for reliability and market monitoring.

Aug 2nd, 2001


By the OGJ Online Staff

HOUSTON, Aug. 2 -- Phillip Harris, CEO of the PJM Interconnection LLC, said the Federal Regulatory Energy Commission should be granted full authority to set electric transmission reliability standards and enforce them.

Harris testified Thursday before the US House Subcommittee on Energy Policy, Natural Resources and Regulatory Affairs. Legislators were seeking input on the role of FERC in a deregulated market.

Harris's position contrasts with current legislative proposals that would give the North American Electric Reliability Council (NERC) responsibility for reliability and market monitoring.

"We remain concerned that this 3-year old proposal submitted by NERC seeks to codify outdated tools and cumbersome structures when nimbleness and agility are needed," said Harris.

FERC's toolbox, said Harris, should be appropriately filled to oversee the workings of a marketplace, including the following:

-- FERC should work through joint boards and defer to regional solutions, while recognizing the interstate nature of the grid.

-- FERC should ensure public power companies and federal power agencies provide equal access to their grids.

-- All transmission entities should participate in a regional transmission organization (RTO).

-- Demand response tools must be used.

-- Siting decisions should be deferred to regional and state authorities.

-- FERC should establish mandatory and enforceable reliability rules for all system operators that are enforced by the RTOs.

-- FERC should have the ability to balance competing market and reliability issues.

In general, Harris recommended RTOs be required to operate a transparent spot electricity market. But he noted not all purchases are made on the more volatile spot market. In PJM, spot market purchases accounted for 18% of all transactions. He said it's insufficient for an RTO to be a grid operator without a market.

"The market represents a critical benchmark for the larger market, including bilateral arrangements. And it is for that reason that the spot market needs to be both liquid and transparent so the bilateral market will work and ensure fair prices for consumers," he said.

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