PJM Interconnection: Assessing a Stakeholder Process

In June 2009 PJM Interconnection asked CBI and Raab Associates, a long-time CBI partner, to conduct an assessment of PJM's stakeholder process and overall governance structure. PJM is the US’ largest regional transmission organization (RTO) and coordinates the movement of wholesale electricity in 13 states and the District of Columbia. With over 600 member companies, 56,000 miles of transmission lines, and 51 million customers, PJM utilizes a complex governance structure for coordinating its members. PJM’s stakeholder process includes a broad, multi-layered system for making decisions and providing recommendations on two of PJM’s primary objectives: ensuring reliability and maintaining competitive markets.

Working closely with PJM’s Governance Assessment Team (GAST), CBI and Raab Associates created a carefully tailored, participatory approach to gather and inventory PJM member concerns. To acquire a broad understanding of stakeholders’ views, CBI interviewed 75 member companies, staff, management, and the PJM Board; conducted focus groups; and observed meetings. Using this information, CBI developed an online survey for all PJM member companies to complete.

Survey results provided CBI and Raab Associates with extensive insight into members’ overall goals, objectives and satisfaction level, as well as detailed information on more specific issues within the stakeholder process.

Among its findings, the assessment team noted that:

Members had a high degree of agreement regarding what the stakeholder process does well and does not;
Members regard the process as an excellent arena for them to express their views and understand each other’s perspectives;
Respondents also stated that the process is not particularly effective at helping stakeholders reach consensus;
All sectors strongly agreed that it is beneficial for issues to be vetted through the stakeholder process even when members can’t reach agreement;
Most members believe a more effective stakeholder process is necessary to ensure that PJM fulfills its mission of providing reliable service and competitive markets.

Upon completion of the assessment, CBI and Raab Associates issued a report detailing the actions PJM should take in order to address the issues raised. PJM reviewed the report and decided to move forward to a phase two, facilitated process to optimize their stakeholder process. Phase two focuses on eight specific areas including building transparency among the Board and members; increasing clarity and expectations for participants’ roles and responsibilities; and providing support for lower level standing committees.

PJM and CBI are developing a handbook and a detailed plan to implement these phase two recommendations. When implemented, the recommendations will lead to:

Greater efficiency in finding areas of consensus
More consistency within working group processes
Improved work planning and control of workgroup direction
Enhanced stakeholder education on key issue topics
Better informed members through improved reporting
Greater clarity and separation of PJM’s multiple roles in stakeholder process
Clearer responsibilities for all
Greater assurances for minority positions
Improved transparency between members and the Board
More efficient process for implementing tariff changes

In June of 2010, the PJM Members Committee received the recommendations of the Governance Assessment on improving the overall process.