Numbers, Capacity and Public Policy

by Ray E. Dotter

Numbers. In a technical organization like PJM, we have numbers for almost everything. Numbers by themselves are neutral. They don’t tell the merit of something; they are neither good nor bad. People use their values to interpret numbers, to see good or bad.

Take .35, for example. Is that good or bad? If it’s the career batting average of a baseball player, baseball fans would think it pretty good. (And, people who don’t follow baseball might have no idea.) If it’s the success rate of a surgeon, potential patients might think it not so good.

How about $136? Last week, PJM released the results (PDF) of its annual auction for power supply resources. The “base” price was $136. Is that good or bad?

One blogger thought the price increase from the previous year was no big deal for consumers. She wrote, “…our total bills may well go down even with a slight increase in the capacity portion.”

Digging down into the numbers from the auction, she found “great for consumers” the increase in demand response, which, she said, “is less expensive than building power plants, and makes the system both leaner and cleaner by reducing peak demand.”

Another blogger found the price increase to be harmful and evidence of the damage environmental regulations are doing to coal-fired capacity.

He wrote that the “massive price increases… will be passed on to consumers at the retail level.” He used the numbers to support a call for repeal of an environmental regulation.

PJM’s mission is to make sure electric power is available to keep the lights on at the most competitive price. We don’t set public policy. Because PJM is independent and neutral, we provide solid numbers to inform the debate on policy.

Are the numbers good or bad? From our perspective, the numbers are “good” because they’re accurate and show that, PJM, our members and the markets can respond quickly and efficiently to public policy to keep the lights on.

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