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Pulling An Inside Job

PJM loses luster in a squabble over market monitoring.

Fortnightly Magazine - May 2007

PJM CEO Phil Harris actually had told the MMU staff only a week earlier that PJM would replace them with an outside consultant. Moreover, if the staffers would play their cards correctly, they easily could lock up another plum job somewhere else within the organization, if interested, since the staffers were experienced and well-qualified for many other jobs requiring expertise in wholesale-power markets.

This written testimony claimed even that PJM management already had taken steps to hold on to valued MMU employees:

“A job description was posted this week that precisely matches the market monitoring duties of one of the MMU supervisors, a person with specific, virtually irreplaceable monitoring skills and knowledge developed both in prior jobs and while working at the MMU.”

Such a revelation would come as news to many — even to stakeholders who previously had urged PJM to tighten up its market-monitoring function. Yet things became even more curious when you consider that on April 13, a week following the conference at FERC, PJM issued a press release denying that PJM management ever had told the MMU that it would be disbanded.

“It has been erroneously asserted,” read the press release, “that PJM has already informed the Market Monitoring Unit that it intends to disband the group.”

The news release added that on April 6, the day after the technical conference at FERC, PJM had convened a special meeting of its Board of Directors to deal with the situation. Also, that it had hired an outside counsel to lead an investigation of market monitoring at the RTO, with CEO Phil Harris recusing himself from participating.

Now, in addition to its efforts at re-examining its long-running policy on RTO market monitoring, the FERC also must deal with the April 17 complaint cited above, which asks FERC to provide relief along several lines:

• Direct PJM to show cause why it should not be found to have actively attempted to undermine the market monitor;

• Direct PJM to show cause why it should not be found to be in violation of its tariff, requiring it to provide the MMU with adequate resources to do its job; and

• Direct PJM to comply with its tariff by giving the MMU full access to relevant data and databases, maintaining its staffing at the 2006 level, and ensuring that the MMU has sufficient independence to do its job.

This entire episode clearly has proven to be damaging for PJM, as Bowring’s testimony — his written version, at least — has questioned the very survival of PJM’s ongoing market-monitoring function:

“I believe,” writes Bowring, “that if PJM management continues on its current path with respect to the MMU, within a very short time we will not have adequate resources to meet our tariff-defined responsibilities.

“I also believe that if PJM management continues its current path, within a very short time we will not be able to collect and maintain information as we are required to do under the tariff.” (See FERC Docket EL07-56, Apr. 17, 2007, attachment A.)

Back at the conference, Bowring continued