THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE RESOLUTION

INTRODUCED BY BOSCOLA, FERLO, KITCHEN, FONTANA, D. WHITE, O'PAKE, KASUNIC AND RAFFERTY, SEPTEMBER 27, 2010

REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE, SEPTEMBER 27, 2010  

A RESOLUTION

Urging the Federal Energy Regulatory Commission to adopt

policies and regulations that will phase out or reform the

Reliability Pricing Model (RPM) to promote competition in the

electric market, increased efficiency and savings to electric

consumers.

WHEREAS, Regional transmission organizations and independent

system operators exist throughout the country as part of the

electric power market and are under the jurisdiction of the

Federal Energy Regulatory Commission (FERC); and

WHEREAS, PJM Interconnection, LLC, is a regional transmission

organization that administers wholesale markets in a region that

covers all or portions of Delaware, the District of Columbia,

Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey,

North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West

Virginia; and

WHEREAS, PJM Interconnection and other regional transmission

organizations and independent system operators are responsible

for providing and maintaining orderly wholesale electric power

markets and transmission of electric power; and

WHEREAS, Through PJM Interconnection and other regional

transmission organizations, wholesale power is bought and sold

in what is supposed to be a competitive market; and

WHEREAS, As part of PJM Interconnection's power markets, PJM

Interconnections had in place prior to 2007 a capacity market

whereby willing buyers and sellers purchased electric capacity

from each other in a competitive market, which produced

reasonable capacity prices; and

WHEREAS, In 2007, PJM Interconnection changed its capacity

market by adopting an administratively based Reliability Pricing

Model (RPM) whereby wholesale generation is paid at the highest

amount bid by wholesale generators, thereby resulting in an

artificially determined price instead of a competitive price;

and

WHEREAS, PJM Interconnection's RPM has resulted in

significant increases in the price of electric capacity with no

discernable increase in reliability; and

WHEREAS, The RPM has resulted in suppliers in PJM

Interconnection paying approximately $18 billion over a three-

year period to electric generators solely for capacity, a

significant increase in the charges of $3 billion for capacity

for the three years prior to the implementation of the RPM;

therefore be it

RESOLVED, That the Senate of Pennsylvania oppose PJM

Interconnection's Reliability Pricing Model and urge the FERC to

adopt policies and regulations to phase out or reform the RPM;

and be it further

RESOLVED, That the Senate urge FERC to adopt an energy policy

which better promotes competition in the electric market, as

well as places an increased emphasis on conservation, demand

response, renewable energy, energy-efficient alternatives and

innovation and technology to increase economic efficiency,

reduce electric usage and provide real savings to the average

consumer; and be it further

RESOLVED, That the Senate urge FERC to work with Congress on

legislative and regulatory initiatives to phase out or reform

the use of capacity charges and similar inefficient and

anticompetitive administrative price-setting mechanisms in favor

of policies and regulations which provide for fully mature

competitive wholesale and retail electric market design that

promotes customer choice, economic efficiency, long-term

contracting and realistic electric rates for retail consumers;

and be it further

RESOLVED, That copies of this resolution be transmitted to

the Governor of Pennsylvania, to each member of Congress from

Pennsylvania, to the commissioners of the Federal Energy

Regulatory Commission, to the commissioners of the Pennsylvania

Public Utility Commission and to the officers and board of PJM

Interconnection, LLC.