FERC Commissioner LaCerte signaled that PJM status quo interconnection model is 'untenable' under AI demand.

David LaCerte, Federal Energy Regulatory Commission commissioner, called the PJM Interconnection's "status quo really untenable" at a Thursday meeting in Philadelphia hosted by WIRES, an advocacy group for utilities and transmission-sector players. PJM's stakeholder process has "continued to just grind into gridlock," he said.

FERC is scheduled to hold a technical conference on July 23 focused on PJM's governance issues, aiming to discuss "potential concrete actionable reforms to improve the effectiveness of the PJM stakeholder process and create fast-path or time-bound review procedures for critical issues."

LaCerte argued that some sectors exploit PJM's stakeholder process to defend narrow business interests at the region's expense. "If you're a generator and you hate the capacity price collar, and you think that continuing the status quo with stakeholder engagement, blocking measures by PJM, is going to be successful, how'd you get the price collar in the first place?" he asked. "This current system is not helping you."

He acknowledged the difficulty of change. "Looking at things differently is hard, especially in entrenched utilities that have been doing this for a long time," he said. Yet change is necessary. "We have a lot of other models at other RTOs and ISOs across the country that are much more functional, so we can pick and choose which work, which don't. We can pick which might alleviate concerns to get people on board, but we can't have a group of stakeholders that are incentivized to vote one way economically that are driving us into the ground for an entire region of the country."

PJM, the largest U.S. grid operator, runs the grid and wholesale power markets in 13 mid-Atlantic and Midwestern states and the District of Columbia.

FERC is reconsidering the incentives it offers to spur transmission development. "We need to make sure that the incentives that we give are properly tailored to actually meet the goals, and we're not just throwing money out the window," LaCerte said. FERC's current incentives include an extra 0.5% return on equity for regional transmission organization membership and "construction work in progress," which allows utilities to recover expenses during building rather than waiting for a rate case after project completion.

"We have a history of adopting an incentive structure and then putting it on a shelf and not revisiting it for 20 years sometimes, and I think those days have got to be over," LaCerte said. FERC must ensure its incentives produce measurable outcomes. "I don't think we do the best job doing that at FERC. We need to make sure we do it in a way that is laser-focused on outcome and laser-focused on legal durability as well."

Revising the incentives presents challenges. "It's kind of like we're flying a helicopter here and trying to land it on a really small landing pad in the middle of the ocean. It's a difficult thing to get right—we're trying to look at things differently than we used to," he said.

As part of its effort to keep electricity prices low, FERC will continue focusing on grid-enhancing technologies. "Whether that be an advanced transmission line, whether it be dynamic line ratings—which I think we could do much better on—I think we need to consider it," LaCerte said, adding he wants to understand a technology's cost savings and deployment readiness.