By Jamie Smith Hopkins, The Baltimore Sun
7:41 PM EDT, October 10, 2012
Maryland's Public Service Commission objected Wednesday to "clandestine" negotiations over a possible change in electricity bidding rules in the region, saying states and consumer advocates had been left out of discussions on a proposal that could drive up prices and hurt reliability.
Commission Chairman Douglas R.M. Nazarian sent a letter of complaint to PJM Interconnection — which runs the regional grid — and the grid's independent market monitor. He said PJM facilitated, and both parties participated in, "a secret and exclusionary negotiation" over electricity auctions.
The PJM auctions, held to ensure there is enough power to meet demand, set a price that eventually feeds into consumers' electricity bills in the District of Columbia, Maryland and a dozen other states. At issue is whether to change the complex "minimum offer price" rule that dictates how low bids can go for new power plants.
Nazarian said in an interview Wednesday that the commission was concerned that the new proposal would keep electricity supply tight and artificially raise prices, benefiting current power plant owners at the expense of consumers. But the commission's letter of protest focused on the process.
"We were not informed of this and consumer advocates were not informed of this until after the deal was already cut," Nazarian said. "It's now being rolled out as a PJM proposal. ... It's going to go to the [Federal Energy Regulatory Commission] with the imprimatur and endorsement of PJM, which normally would preside over a much more open and transparent stakeholder process."
Paula DuPont-Kidd, a PJM spokeswoman, said the proposal is just that.
"This is the beginning of the process, not the end," she said in an email. "The outcome has not been pre-determined."
DuPont-Kidd said a large group of PJM members "came together around a conceptual proposal to resolve problems" with the minimum-price rule and asked PJM staff and the market monitor to hear the ideas.
"The ad hoc group's ideas are now being brought into the formal stakeholder process where they will receive full discussion and vetting," she said.
But the Maryland commission's letter called it a "fully formed proposal" and said the plan was to submit it in less than two months for Federal Energy Regulatory Commission approval.
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