FERC finally wakes up – Watt?

Michael McKenna

The Federal Energy Regulatory Commission released the Article 206 petition at its public meeting in February that held that the PJM tariff was unfair or unreasonable (or I think both) because it did not include rules that allow power generation in data centers or data centers.

Let me praise FERC for finally talking about the key issues of how we power data centers, which is crucial for the US to work to win the AI ​​competition. Welcome to the competition.

Let me also praise FERC for its distrust vote on organized market issuance. I'm not sure this is the first time such a vote, but it's definitely the first time that the FERC recognizes that an organized market may be able to cope with the challenges facing the absolute demands of building more power and more reliable power quickly.

Article 206 issued to PJM acknowledges that the current regulatory model is unlikely to produce the results required by the state at this moment; the PJM is currently configured to be impossible to establish sufficient generation in a timely manner.

What's worse is that the committee is not the only one who has lost confidence. In January, after auctions last summer, prices rose 800%, Pennsylvania Governor Shapiro decided that PJM would need more generations. In an open letter to PJM in January, Mr Shapiro warned that the price increase “has the potential to undermine public confidence in PJM as an institution”.

In response to his letter, PJM wrote that it has long warned of a shortage of high demand, accusing “state and federal policy decisions that are driving generators to retire prematurely” and “unprecedented and rapidly growing data center construction.” In short, the problem is that customers actually start generating electricity to the generator.

PJM finally argues in terms of energy that the “market” will solve this problem. just kidding. What really happened is that the PJM folded quickly and set a price cap for its next two capacity auctions.

The Commission has filed more Article 206 petitions than Article 206, which was proposed back and forth between Governor Shapiro and the desperate and out of reach PJM. For those who think it will be resolved soon, the committee’s petition contains questions of 6 single spacer pages (39 questions in total). They varied in complexity from simple questions that can't be answered (“Please explain whether the existing Tariff rules are sufficient to ensure resource adequate if increasing numbers of large existing generators choose to co-locate with load.”) to complicated questions that won't be answered (“Please explain whether or not it would be appropriate to establish an interaction study outside of PJM's interconnection queue process for newly interconnecting co-location arrangements . . . “).

We have solved a problem of data center demand, and it's been over a year now, just the question to ask questions is close to the core of the problem, which of course, no matter how loud the information from the capacity market is, many places and PJM seem to have abandoned the creation of buildings altogether.

As always, no one seems to be responsible for reliability. There will be no generators, otherwise they will be building power plants. The person running PJM is not; they are not elected or appointed by anyone and therefore are not responsible for anyone. The capacity market obviously hasn't done its job.

The demand for data center-driven and the urgency to win the AI ​​contest now – exposing flaws in slow, hardened, self-absorbing systems. FERC and its descendants in the Valley are totally happy to live in their shared dependence, throwing paper back and forth to each other.

But for the rest of us, winning the next three generations of economic and national security highs, it is too important to leave to organizations that cannot even decide who may be responsible for the reliability of the system, and the meaning of their urgency and clarity, its six-page question value six pages, and the answers to these questions will even generate more questions and inevitable litigation.

The system broke. Pretend that FERC orders can build power units, which will not be fixed.

What we need – What is unlikely to get from the FERC-driven process is some kind of difference or span on our current approach, so that builders and their clients do not have to embed rules, customs and folklore in some organized market without having to linger.

Until we get something like this, we will continue to struggle with reliability, cost, and concerns about our national competitiveness.

Michael McKenna, President of MWR Strategy, advises utilities, merchant generators and transmission companies. He is a deputy director of the White House Office of Legislative Affairs under President Trump.

This article was originally published by RealClearenergy and is provided by Realclearwire.

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