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News & Insights

Industry Insight: featuring Tony Barnhart on PJM

Tony Barnhart, Managing Director

EnerConnex has a strong customer base throughout the United States and beyond, operating across many different ISOs (Independent System Operator) and RTOs (Regional Transmission Organization). With this comes great responsibility in understanding the ins-and-outs of each ISO/RTO, how the uniqueness of each affects end-users, all while factoring in what is going on with current markets. EnerConnex proudly has extensive expertise in all ISOs/RTOs and can confidently advise our customers regardless of where they are located geographically. EnerConnex’s Tony Barnhart provides an inside look at how he is advising PJM customers as well as other insight on topics pertaining to PJM territories. PJM is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or part of 13 states and the District of Colombia.

  • How are you advising customers given current market conditions in PJM territory?

In today’s energy price environment, when and how to buy your energy is a common question we receive from buyers.  Unfortunately, there’s not a simple answer given the many factors that weigh on a buyer’s decision.  Factors include risk appetite, geo-political events, supply/demand fundamentals, weather and the economy.  For these reasons, we take a consultative approach to energy procurement helping buyers understand the risk/reward of energy price structures or products.  These products range from 100% fixed where a buyer wants price/budget certainty to 100% variable with several options in between.  Given today’s 10-year plus high electric and natural gas prices, we have also witnessed more interest in a hybrid product structure approach.

Also, it’s important for buyers to understand what components, if any, of their contracted price are being passed through – either via regulatory changes or due to a supplier(s) estimate of a component in the contract rate.

  • Do you advise customers in PJM differently than ones in other ISOs/RTOs? If so, how? What things/factors are you considering?

While many of the same factors weigh on a buyers decision in PJM as in other ISOs/RTOs, there is some uniqueness to each ISO/RTO.  For example, ERCOT is an energy-only market so capacity isn’t a part of the price component analysis.  In the NE ISO, buyers must understand the price impact of the Clean Peak Energy Standard (CPES) and the Clean Energy Standard Expansion (CES-E).  NY ISO has a similar, but different Clean Energy Standard.  While PJM states have various renewable portfolio standards and demand charges that impact a buyer’s price.

Understanding the various programs in each state ensures buyers are getting on their monthly invoice what they intended from their contracted rate.

  • What is PJM doing to incorporate renewable energy projects? How has this impacted the way that your customers in PJM territories are buying energy?  

There is a significant backlog in the PJM interconnection queue – perhaps as much as 4 years.  As such, it may take a while for new renewable generation to come on line.  This will impact how customers buy renewable energy and the price.  Much like how we discuss energy procurement, we take a consultative approach to advising buyers on renewables – from RECs to PPAs to behind the meter solar –  the whole renewable spectrum, to help them achieve their sustainability goals.