As stakeholders head into tomorrow’s technical conference to discuss PJM’s governance, no one is arguing that the RTO should be broken up into smaller regional grid operators — despite recent comments from Trump-appointed FERC chair Laura Swett that the region at present is “too big to function.” Comments filed at the Federal Energy Regulatory Commission last week broadly agree that the problem isn’t PJM’s geographic footprint, but rather how decisions get made, and who has the authority to step in when decisionmaking stalls.
Both PJM’s management and transmission owners asked FERC for broader authority over core market and transmission planning functions, arguing that waiting for stakeholder consensus before submitting new market rules to the regulator is untenable. FERC should give the grid operator a freer hand to file market rules directly, they argue, avoiding stakeholder vetoes.
State governors, meanwhile, are arguing for greater state influence in market governance moving forward, to shield ratepayers from soaring energy prices, and align grid expansion with policy goals.
Both the PJM Governor’s Collaborative — which includes the leadership of all 13 states in PJM’s footprint and the mayor of D.C. — and the Indiana governor’s office, which filed separate comments, urged FERC to give states more direct access to the PJM board, a formal role in board seat nominations, and new pathways to advance their own market proposals directly to federal regulators.
Indiana, which has just a portion of its northeastern region served by PJM, argued that states should be able to submit their own rules to FERC on issues like resource adequacy and transmission cost allocation. The Governors’ Collaborative takes a slightly different approach, suggesting that PJM adopt a framework based on ISO New England’s regional state committee, which weighs in on on board nominations and policy filings. The Collaborative argues for a “jump ball” structure, where if state regulators disagree with PJM on major issues, they can submit their own proposal to FERC, in addition to the proposal PJM itself submits.
Both argue that PJM’s current governance structure gives too much weight to private corporations, and that the board should instead be legally and structurally bound to prioritize consumer affordability, grid reliability, and the broader public interest.
PJM should be “expressly charged with acting to benefit the public interest of the region as a whole,” rather than in the interest of any individual members, the Collaborative said. Giving states more authority to help nominate PJM board members, they added, would help ensure public interest is represented during board selection.
The governors aren’t alone in their approach to reform: In a letter sent to FERC this week, the National Caucus of Environmental Legislators, which includes nearly 100 state-level lawmakers across PJM, asked the regulator to “codify an explicit public interest mandate” that requires PJM to consider ratepayer costs and state public policy alignment in addition to system reliability and market efficiency.
Revamping decisionmaking
FERC’s technical conference tomorrow will take on PJM governance and stakeholder reforms, and is designed to identify flaws in PJM’s governance process — and, implicitly, whether it is indeed too big to function under current market conditions.
But while PJM’s management and the states that form its membership both want more authority, other stakeholders, including generation providers and large loads, are arguing against expanding influence for either of them.
PJM’s primary challenges have more to do with unprecedented load growth and weak process execution, not fundamental flaws in governance structure, they told FERC. Giving either PJM or state officials the power to bypass stakeholder votes and file rules directly to FERC would destroy market predictability, they added; the risk is that energy companies won’t risk billions in private capital to build new generation if rules can be rewritten overnight.
Google, in its filing, warned FERC against adding in even more stakeholders to its processes at a time when it is facing “an unprecedented amount of pressure,” including from President Trump — who has urged PJM to hold a separate data center auction — and from state governors, who have pressed PJM to lower its capacity price cap, and to give states more power in the bargain.
“The PJM stakeholder process would, without question, benefit from more consistent engagement from all of the PJM states,” Google said about the latter. “However, if changes are contemplated that would give states more authority…those changes need to be explicit regarding their ability to address and resolve the identified problems.”
Despite the concerns over politicizing grid operations, the reality PJM finds itself in largely endorses broader state participation, said Elizabeth K. Whitney, managing principal at government relations firm Meguire Whitney. Today’s landscape is such that, without state buy-in, serious reforms will remain challenging to execute, Whitney explained in an interview with Latitude earlier this summer.
If state policymakers don’t like the outcome of a PJM proceeding, she added, “no amount of perfect analytical and economic analysis and structure is going to overcome the fact that they are going to drive a stake into the heart of it.”
