PJM and its Market Monitor: AEP Proposal Will Hurt Customers and Investment

02/05/2016

PJM, the regional transmission organization (RTO) and administrator of the wholesale power markets in Ohio this week filed a post-hearing brief expressing concerns about the negative effects on electricity markets of AEP’ s power purchase agreement (PPA) case pending before the Public Utilities Commission of Ohio (PUCO). PJM said of its reason for filing, “(Addressing faults in the proposal) is critical in order to send the right signal as to Ohio’s interest in attracting competitive generation to meet the state’s future economic development needs. Silence on this issue will only make it harder for investors in new generation to view Ohio as a place where their investment is welcome and can compete fairly with existing legacy generation of the sort covered by the Stipulation.” As to the claim that system reliability will be threatened if the PPA is not approved, PJM wrote, “There has been significant new generation entry that, combined with demand response and imports within PJM’s capacity import limit, has consistently kept PJM’s reserve margins on target. Indeed, as various witnesses noted, there are several substantial new plants under construction or proposed for Ohio.” PJM Independent Market Monitor Dr. Joseph Bowring also filed a brief, in which he stated, “The purpose of the PPA Rider is to transfer the costs and market risks associated with the PPA Rider Units from AEP’s shareholders to AEP’s ratepayers.  AEP has not demonstrated and cannot demonstrate why customers should bear these costs and take these risks, if a well-informed generation owner is not willing to do so.”

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