PJM Interconnection, which operates and plans the transmission grid in the mid-Atlantic region, has begun a stakeholder process on its implementation of the Federal Energy Regulatory Commission's Order No. 1920, including scenario development. Order No. 1920 requires PJM to engage in long-term planning for the transmission grid by developing at least three 20-year-out scenarios that represent possible futures, and then planning new transmission investments in light of those scenarios. Under Order No. 1920, one mandatory input into these scenarios is policy-driven retirements of generation resources. PJM requested feedback on how it should forecast policy-driven retirements.
Policy Integrity's comments explained that PJM should not rely exclusively on generation owners' self-reports of their intentions to retire or continue operating their units, because generation owners face incentives to make strategic but erroneous reports to benefit other generation assets in their portfolios. Instead, Policy Integrity recommended a three-step approach that (1) first assumes that certain old generators will retire instead of complying with so-called "invest-or-retire" policies, (2) then requires PJM to vet the self-reported intentions of the remaining generators that are subject to invest-or-retire policies, and (3) requires PJM to ensure that the generators that pass the first two steps would still be financially viable in light of other policies (like incentives) that are financially mediated. Additionally, the comments recommended that PJM account for uncertainty by including plausible but distinct policy-driven retirement inputs in each scenario. Finally, Policy Integrity suggested that PJM require generators to base their retirement predictions within each long-term scenario on the same assumptions that PJM uses to construct each scenario, in order to maintain internal consistency.