There’s been growing criticism of the organization that operates the power grid in Virginia and 12 other states, in addition to Washington, D.C.
Governors and ratepayers have complained as electricity prices rise – largely from the rapid growth of demand from data centers — while power plants struggle to keep pace.
Now, Appalachian Power's parent company has teased the possibility of leaving altogether. But is it a negotiating ploy?
PJM Interconnection is the largest power grid operator in the U.S. It administers electricity markets, oversees the flow of power through transmission lines, and makes decisions on how and when new power plants can hook up to the grid. And, right now, a lot of people are upset at PJM.
"AEP continues to identify some issues around how quickly and efficiently load is being connected to generation,” said Bill Fehrman, president and CEO of AEP, or American Electric Power, during a quarterly earnings call last month. “The current state of PJMʼs performance and stakeholder approval process does not give me great confidence that these issues will be resolved anytime soon."
AEP is Appalachian Power's parent company, and Fehrman is clearly frustrated with PJM's issues meeting power demand with new generation. Right after those remarks, he said AEP would assess its options, including reviewing its membership in PJM.
But how realistic is the idea that AEP might leave PJM?
It's possible, said Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School — but it would involve a lot of steps.
"They'd have to figure out how to make the case both to the investors and to ratepayers that this is a good idea," Peskoe said
AEP would have to go through state regulators in multiple states as well.
Peskoe pointed out Fehrman’s remarks were made during a shareholders' meeting — so they could well have been aimed at reassuring the company's investors that AEP is taking this seriously.
"How are the utilities going to try to take advantage of the current chaotic situation at PJM?" Peskoe said. "I read the comments from the CEO as part of broader dissatisfaction with PJM, and giving themselves some options."
Meanwhile, PJM is trying to reassure its utilities and member states that it's also taking broad criticism against it seriously, including with a white paper that considers some major changes in its operating procedures.
Federal regulators are looking into the question of how PJM is balancing generation with rising demand from data centers and other large-load customers. The Federal Energy Regulatory Commission recently approved PJM's proposal to fast-track up to 10 "shovel-ready" power generation projects per year. And FERC also is planning a conference next month to evaluate PJM's performance.
And last week, regulators approved PJM to temporarily fast-track the process for approving large generating projects.
How soon could this affect your energy bill?
Well, it's complicated, with a lot of different parties and moving pieces. So – probably not soon.
