posted on Thursday, August 24, 2006 9:40 AM by Gunnar Birgisson

Revised PJM Market Monitoring Plan Continues to Draw Ire

What role the market monitors of RTOs and ISOs should play in investigations and enforcement of market rules continues to be in dispute.  At issue is the perceived lack of accountability of RTOs/ISOs, together with mounting confusion over how much FERC has relied on and wishes to rely on market monitors to police markets.  PJM’s recent modification of its market monitoring plan has brought to the fore numerous concerns about the authority and independence of market monitors.

In May 2005, FERC issued a Policy Statement on Market Monitoring in which it attempted to better define the scope of a market monitors’ authority, and laid out those types of issues the market monitor had to refer to FERC rather than address itself.  Last month, the agency largely approved a PJM proposed tariff amendment that was intended to comply with the Policy Statement.  In the amendment PJM relinquished in favor of FERC any claim to authority to issue demand letters or request that market participants discontinue certain actions. 

However, separate requests for rehearing of FERC’s order were filed by the Pennsylvania Public Utility Commission, the Organization of PJM States, a coalition of state regulatory commissions of most of the states in which PJM operates, and the Indicated Parties — a hodgepodge of various consumer, industrial and municipal interests in the PJM region.  They complained that PJM’s plan (as approved by FERC) fails to grant the market monitors sufficient independence from PJM and market participants and denies them sufficient authority to communicate independently with FERC, state commissions, and  market participants or to fulfill its other responsibilities.  The petitioners echoed the dissenting statement of Commissioner Suedeen Kelly who had called for an investigation into whether certain aspects of PJM’s market monitoring plan were just and reasonable, and argued for greater specificity in the PJM tariff regarding the market monitor’s independence and authority.