FERC Order 1920 Can Help PJM Plan for the Future

The new FERC rulemaking creates valuable opportunities for PJM to strengthen its current draft long-term regional transmission planning proposal.

Imagine you’re going on a camping trip this summer but fail to create a packing list. In your haste to get out the door, you forget several critical items — matches for the stove, the can opener, rain fly for the tent — resulting in you being unable to cook dinner and spending a rather soggy night under the stars after a surprise thunderstorm rolls in. If only you’d planned ahead!

That’s the conundrum that grid operators such as PJM, the United States’s largest regional transmission organization, are finding themselves in today. PJM, whose territory covers 13 states and the District of Columbia, is embarking on a particularly epic camping trip, where it will face challenges such as unprecedented load growth from data centers and economy-wide electrification, anticipated retirement of 40 GW of coal and gas plants, and an interconnection queue with almost 300 GW of largely clean energy resources seeking to join the grid (more than enough to replace retirements).

The good news is that PJM is working on a packing list that can help them prepare for the future while minimizing costs to consumers. It’s called Long-Term Regional Transmission Planning (LTRTP), and it involves taking a more forward-looking approach to forecast how the grid will change and what transmission investments will be needed to facilitate such changes.

While PJM’s initial LTRTP proposal, released earlier this year, is a good first step, the Federal Energy Regulatory Commission (FERC) has recently released its own master packing list, Order 1920. This landmark rulemaking contains several requirements for how transmission operators in the United States should use long-term planning to prepare for the future. FERC has given regional grid operators 10 months to submit their own regional packing lists, known as “compliance filings,” meaning that PJM now has a key opportunity to improve on LTRTP by checking it against the master list now through next spring.

So, how does PJM’s initial LTRTP proposal stack up against FERC’s Order 1920? Where is there room for improvement by PJM? To answer these questions, I did a line-by-line comparison of the two plans and summarized the key points by topic below.

While PJM’s LTRTP proposal is a start toward full compliance with Order 1920, there is still room for improvement, as the above table illustrates. Moving forward, PJM has several actions it must take:

  1. PJM can start today under its existing tariff authority, which allows for scenario-based planning, to develop inputs and assumptions for its first round of LTRTP. As it does so, PJM should update its scenarios to be consistent with what Order 1920 now requires. This process can run in parallel to PJM developing its Order 1920 compliance filing.
  2. PJM can utilize its original LTRTP proposal as a baseline for a compliance filing, ensuring that they:
    • Expand their list of proposed benefits to include all seven benefits in Order 1920 and utilize these benefits to comprehensively identify transmission needs
    • Expand the list of scenario inputs to include all seven factors in Order 1920
    • Mandate consideration of Alternative Transmission Technologies and right-sizing in bids submitted by transmission providers
    • Ensure that scenarios are not designed based on cost allocation methodologies that are non-compliant with Order 1000 (e.g., State Agreement Approach)
    • Consider a portfolio-based approach to planning, benefits quantification, and cost allocation (encouraged, but not required, by FERC)
  3. This fall, PJM must launch a six-month Engagement Period with Relevant State Entities, as required by Order 1920, to develop an ex ante default cost allocation methodology for LTRTP. The outcome of this Engagement Period must be included in PJM’s compliance filing.

Just as there’s nothing like an unsuccessful camping trip to motivate you to plan ahead next time, there’s nothing like a successful camping trip to make you want to do it again. We have successfully planned for and built out our grid –– both regionally and nationally –– in the past; now, to set us up to meet the 21st century grid challenges before us, it’s time for PJM to roll up its sleeves and begin work to prepare a full compliance filing for Order 1920 as swiftly as possible. If they don’t start their packing list soon, though, PJM could be setting themselves up for being rained on in the woods.