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Energy Official Threatens New Jersey Brexit from PJM Regional Power Grid

Board of Public Utilities president unhappy with ‘lip service’ and decisions that lead to NJ customers paying more for electricity

transmission power grid

Is New Jersey pulling out of the PJM Interconnection, the regional operator of the nation’s largest power grid?

“We’re looking at a number of options and that is one of them,’’ said Board of Public Utilities president Joseph Fiordaliso, who first raised the issue last week at a conference of state utility commissioners in Hershey, Pa.

Fiordaliso, as well as other BPU commissioners, have long been frustrated with certain PJM decisions, actions which he believes have boosted what customers in New Jersey end up paying on their electric bills.

PJM oversees a transmission system for 13 states and the District of Columbia. In that role, it has presided over a huge modernization of the system amid a rapid transformation of the energy sector. Its decisions have riled states beyond New Jersey as it seeks to maintain the reliability of a system serving 65 million customers.

New Jersey has taken issue with many of PJM’s decisions, often ending up on the losing end. Most recently, the state was unhappy with the Federal Energy Regulatory Commission’s decision to side with PJM and others on allocation of the costs of a $1.2 transmission upgrade.

“Sometimes, PJM just gives us lip service,’’ said Fiordaliso, citing the FERC decision that he said unfairly saddled New Jersey ratepayers with the costs of the project.

Short end of stick for NJ ratepayers

Fiordaliso, who said his biggest beef with PJM is a lack of communication, argued the grid operator fails to take into account the effect its decisions are going to have on New Jersey ratepayers.

“We don’t want our ratepayers unjustly penalized,’’ the BPU president said. His agency also has opposed initiatives by PJM dealing with the grid operator’s capacity auction, which is designed to ensure reliability by making sure suppliers hold enough power in reserve to meet times of peak demand.

Susan Buehler, chief communications officer, said PJM “certainly values’’ New Jersey as well as its relationship with the state. As far as costs go, Buehler said wholesale electric rates have fallen by 40 percent to the lowest they have been since 2008.

“We sometimes make important decisions about reliability, and sometimes it is not exactly what a state wants us to do,’’ she said.

The state’s ties to PJM began in 1927 when Public Service Electric & Gas joined with Philadephia Electric and Pennsylvania Power & Light Company to form a power pool to dispatch electricity from power plants in the region.

New Jersey is not an official member of PJM, which is comprised of about 1,000 companies supplying power and owning transmission lines. If the state severed its ties with PJM, it could cause wide repercussions.

“You don’t want a situation where a state regulatory body doesn’t want to be part of an RTO,’’ said Paul Patterson, an energy analyst with Glenrock Associates in New York City, referring to a regional transmission organization, the name given to those who oversee power grids.

If New Jersey pulled out of the PJM, it would a big deal, Patterson said. “It’s kind of like a nuclear option or a Brexit,’’ he said.

Fiordaliso declined to say how New Jersey would pull it off. “There are a number of possibilities if it comes to that and I hope it does not,’’ he said.

Fiordaliso, who became president of BPU in January after serving as a commissioner with the agency since 2005, signaled his frustration with PJM and FERC early in his tenure. He established a new Office of Federal and Regional Policy to focus and monitor issues at the two agencies.

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