By Michael Yoder and Rich Heidorn Jr.

FERC has ruled that two merchant transmission operators in New Jersey are still liable for some cost allocations under PJM’s Regional Transmission Expansion Plan (RTEP) despite converting from firm to non-firm service after the cancellation of the “Con Ed-PSEG wheel” in 2017 (ER18-680).

In its ruling on Wednesday, FERC said despite the conversion from firm to non-firm transmission withdrawal rights (TWRs) that would limit exposure to future RTEP costs, Linden and HTP were still liable for RTEP costs previously allocated while still under their firm TWR status.

Linden VFT and Hudson Transmission Partners (HTP) own merchant transmission facilities that carried power into New York City as part of the former Con Ed-PSEG wheel, in which 1,000 MW were exported from upstate New York to PJM through Public Service Electric and Gas facilities in northern New Jersey, and then exported to the city. Consolidated Edison and PSE&G canceled the agreement in April 2017, prompting HTP and Linden to convert their firm TWRs to non-firm TWRs.

FERC approved the TWR changes in orders in December 2017 (EL17-90, EL17-84). (See NJ Merchant Tx Operators Win Relief on Upgrade Costs.)

The commission had previously found that merchant transmission facilities with firm TWRs are “like loads in that they remove energy from PJM, thus requiring PJM to study deliverability of energy from the PJM system to the point of interconnection.”

PJM interpreted the December 2017 orders as directing that all allocations to Hudson and Linden cease as of Jan. 1, 2018, and proposed to pro-rate the allocations to the remaining zones. But the commission said Tuesday that the companies should only be relieved from ongoing cost allocations in Schedule 12-Appendix A, which PJM redetermines annually based on the level of firm transmission withdrawal rights. It said the companies remain liable for costs of lower-voltage facilities that use the pre-Order No. 1000 violation-based distribution factor (DFAX) method and economic projects that are allocated on the load energy payment method, which is also fixed at the time the projects are included in the RTEP.

“Our finding here accords with the commission’s prior holding that the merchant transmission facilities remain responsible for targeted market efficiency projects, because these calculations were not based on the level of firm transmission withdrawal, but on the basis of congestion savings,” FERC said. “The merchant transmission facilities continue to benefit from these savings regardless of whether they hold firm transmission withdrawal rights. For these reasons, we reject PJM’s proposal to reassign cost responsibility from Hudson and Linden for the economic projects identified in PJM’s compliance filing.”

FERC ordered PJM to submit a filing within 60 days correcting the allocations.

The New Jersey Board of Public Utilities had protested PJM’s filing, arguing that eliminating the RTEP allocation to HTP and Linden would “result in unduly burdensome costs on PJM customers, particularly in northern New Jersey, at a preference to New York load” and was “particularly egregious in light of the benefits retained by New York load regardless of the character of Hudson’s and Linden’s transmission rights.”

FERC ruled that the BPU’s arguments were “beyond the scope of a challenge to a compliance filing” and that they should instead be raised in a rehearing request, not a protest to the compliance filing implementing that order.

Last month, the BPU appealed FERC’s rulings on Linden and HTP’s TWRs, and the reassignment of Con Ed’s cost responsibility assignments for RTEP projects including the Bergen-Linden Corridor project, to the D.C. Circuit Court of Appeals.

Rehearing Denied

In a related ruling Tuesday, the commission rejected rehearing of its March 2018 ruling accepting PJM’s annual cost responsibility assignments for regional transmission facilities and lower-voltage facilities included in the RTEP for 2018 (ER18-579-002).

PJM transmission owners American Electric Power, Dayton Power and Light, Dominion Energy, Exelon, FirstEnergy, PPL and PSE&G challenged PJM’s decision that Linden and HTP should not have a cost assignment for Schedule 12-Appendix A projects for 2018.

“PJM transmission owners advance no argument on rehearing to explain why merchant transmission facilities must be responsible for cost allocation assignments for a year in which they hold no firm transmission withdrawal rights,” the commission said.

The commission also dismissed as moot Dominion’s rehearing request over PJM’s initial assignment of 100% of the costs of the Loudoun-Brambleton 500-kV and 230-kV lines (project b2372) to the Dominion zone.

FERC noted that PJM responded to Dominion’s original protest by conceding the utility was correct and that the project should be allocated as a regional facility needed for reliability, with 50% of costs allocated via the load-ratio share and 50% using the solution-based DFAX. PJM filed a modified allocation assigning two-thirds of the costs to the Dominion zone and one third to the APS zone, which FERC accepted in August 2018 (ER18-2028).