posted on Tuesday, June 05, 2007 9:27 AM by Jennifer Rinker

FERC to Investigate Claims of PJM Management Interference in Market Monitoring

Noting that it lacks the factual record needed to determine whether actions by the PJM Interconnection's (PJM) management prevented or impeded PJM's Market Monitoring Unit (MMU) from performing its duty, FERC on May 18 issued extensive discovery requests to PJM and Dr. Joseph Bowring, PJM's Market Monitor.   The information requested is necessary to resolve complaints that PJM stakeholder filed at FERC in early May in reaction to Dr. Bowring's April 5 allegations of PJM management's interference in market monitoring.  Responses to FERC are due June 12.

The PJM Board has committed to conducting its own independent investigation, but some were not convinced that actual independence could be achieved.  Allowing PJM alone to investigate the allegations, said New Jersey Democrat Robert Menendez, "is a little bit… like having the fox guard the chicken coop."  In comments on the complaints, a number of stakeholders echoed this concern, urging the FERC to conduct a "probing investigation" into the allegations for the sake of public confidence in the integrity of the organized markets and the merits of electric industry restructuring.  The May 18 order rejects PJM's argument that the Commission should await the results of PJM's investigation before initiating its own.  The Commission did commit, however, to entering the results of PJM's investigation into the record of its own proceeding.

FERC's discovery requests went to the heart of the management interference allegations in the complaints.  They also questioned the ongoing role of the PJM MMU pending FERC's investigation.   FERC specifically inquired as to the number of employees who had left the MMU, whether their functions were shared, and the details and interim effectiveness of PJM's employee retention plan.  Regarding the specific allegations made by Dr. Bowring, FERC requested that both Dr. Bowring and PJM provide significant details regarding allegations that PJM management ordered modifications to the PJM state of the market report, prevented Dr. Bowring from delivering interface exemption presentations to membership committees, and delayed the release of an MMU report on the regulation market.

Importantly, FERC asked whether Dr. Bowring ― before making his April 5 allegations ― had informed PJM management that the MMU was being interfered with and prevented from performing its responsibilities.