Attached is a report on reforms to the regional planning process used by PJM to predict electricity demand. The report discusses issues related to energy efficiency, renewables, and the shut down of old coal-fired plants to illustrate the need for reform of the planning process used to determine the need for transmission lines like PATH. I recommend reading this report, it is long but worthwhile, as we will need to understand some of these issues as we move forward with plans for our overall energy campaigns.

One aspect I found most striking was the concept of "Reliability Must Run" contracts. For example, several old dirty plants like Albright or that must install scrubbers or shut down (under the new rules EPA finalized last week). These would normally be shut down as it is not cost effective to install scrubbers on such old plants. But PJM could order them to stay open under an RMR contract and install scrubbers at ratepayer expense if PJM determines that they are needed for reliability purposes. Such RMR contracts would keep old dirty plants on line longer, raise consumer costs, reduce the incentives for renewables, and distort the market signal that utilities need to plan properly. So including energy efficiency and renewables in the PJM planning model is important to avoid the needless expense of installing scrubbers on plants that are not cost-effective.

I am not sure we need to go to this level of detail for our public meetings, but we certainly need more people who understand the implications of this as we develop energy campaigns.

Enjoy!

Jim Kotcon

...

...

Jim Sconyers jimscon@gmail.com 7/16/2011 10:08 AM >>>

---------- Forwarded message ---------- From: Craig Segall Craig.Segall@sierraclub.org Date: Thu, Jul 14, 2011 at 4:56 PM Subject: FYI - PJM Reform and Coal Retirements in your state To: nancymoore.desierra@gmail.com, gwynjones@aol.com, jack.darin@sierraclub.org, dmaidenberg@gmail.com, alicehowell@insightbb.com, ron.henry@mdsierra.org, awoiwodesc@earthlink.net, jeff.tittel@verizon.net, vkloepfer@suddenlink.net, sierrabob@oh.rr.com, jeff.schmidt@dejazzd.com, kdpendleton1@aol.com, glenbesa@gmail.com, jimscon@gmail.com Cc: Mark Kresowik Mark.Kresowik@sierraclub.org, Josh Stebbins Josh.Stebbins@sierraclub.org

Hi all,

For those of you I haven't yet had the chance to work with, let me introduce myself: I'm one of the attorneys on the national law staff, where I work mostly on greenhouse gas and regulatory issues. As part of that work, I've been focused lately on PJM (www.pjm.com) which, as you likely know, is the regional transmission grid operator for much of the mid-Atlantic and midwest. I'm writing because PJM is working on reforming its processes to allow it to better handle both the ramp-up of clean energy measures and the retirement of a large chunk of old coal generation. Because PJM covers your states, I want to make sure that you know what Mark Kresowik, of the coal campaign, Josh Stebbins, in the law program, and I are up to as we work on these issues.

Basically, PJM's existing transmission planning process does not allow it to react nimbly to coal plant retirements or to new clean energy opportunities -- which could delay both of them, and add to ratepayer costs. PJM has launched a reform process, through its Regional Planning Process Task Force (the RPPTF) -- see http://pjm.com/committees-and-groups/task-forces/rpptf.aspx for more -- that would help fix many of these problems. To succeed, PJM must move its reforms through a series of internal committees this fall, which are dominated by generation interests, and then file its proposed changes with FERC this December.

We're closely monitoring the process, and are working with national allies, including the Project for a Sustainable FERC, NRDC, Earthjustice, Audubon, and the Piedmont Environmental Council, to advocate for useful reforms. As part of that work, we commissioned an expert report on transmission reform, which we've shared with each of the PJM state's utility commissions and ratepayer advocates. I'm attaching that report and a short memo summarizing its recommendations.

We'd, of course, appreciate any help you can offer in generating positive state pressure on PJM to keep moving down the path to reform. I will certainly keep you informed as PJM moves forward, and can schedule a call to discuss possible grasstops organizing options if you are interested -- just drop me a line.

Chees, Craig

Craig Holt Segall Associate Attorney Sierra Club Environmental Law Program 50 F St NW, Eighth Floor Washington, DC, 20001 (202)-548-4597 (202)-547-6009 (fax) Craig.Segall@sierraclub.org

CONFIDENTIAL LEGAL COMMUNICATION/WORK PRODUCT This e-mail, and its attachments, may contain privileged and confidential attorney-client communications and confidential attorney work product. If you received this e-mail inadvertently, please notify me and delete all versions on your system. Thank you.