PJM members endorsed a proposal to open end-of-life (EOL) projects to competition Thursday, setting up a showdown with Transmission Owners at FERC.

The joint stakeholder proposal, which was sponsored by American Municipal Power (AMP), Old Dominion Electric Cooperative (ODEC) and others, cleared the two-thirds threshold with a sector-weighted vote of 3.45 (69%) to win the Members Committee’s endorsement. The measure had fallen short with a 3.23 (65%) vote at the May 28 Markets and Reliability Committee meeting. (See PJM End-of-life Proposals Fail at MRC.)

In the interim, the Transmission Owners Agreement-Administrative Committee (TOA-AC) on June 12 filed Attachment M-3 amendments with FERC, laying out their own EOL proposal, which aligned with the position of PJM staff (ER20-2046). (See TOs Vote to File End-of-life Rules with FERC.) [Late Thursday, ODEC and AMP Transmission filed a motion seeking to have the TOs’ filing dismissed on procedural grounds. The companies said the TOs issued the 30-day notice of their filing without a formal vote of the TOA-AC, violating the Consolidated Transmission Owner Agreement and AMPT and ODEC’s rights as PJM Transmission Owners.]

PJM General Counsel Chris O’Hara said after Thursday’s vote that the RTO will file the stakeholders’ proposal with FERC within two weeks, even though it believes it violates its governing documents.

“This is obviously a difficult spot for PJM,” he said, citing the “tension between PJM’s obligation to … comply with all of its governing documents [and its] obligation to accomplish the will of the members.

“We understand there’s a pending TO [Section] 205 proposal at FERC, so we will act with reasonable diligence to accomplish this filing,” O’Hara added.

On Thursday, the joint stakeholders’ proposal won support from 100% of End-Use Customers, 97% of the Electric Distributors, 83% of Generation Owners and 51% of Other Suppliers. It was opposed by all but two of the 14 Transmission Owners. The difference maker was a shift by Other Suppliers, who only gave the proposal 41% support at the May 28 MRC meeting, and Generation owners, whose support increased by 12 percentage points.

Under the stakeholders’ proposal, TOs would be required to notify PJM and stakeholders of any facility nearing the end of its life at least six years before its retirement date so that the project could be included in five-year planning models and potentially opened to competitive bidding. It would also modify the supplemental project definition to exclude EOL projects, which would become a new category of regionally planned projects.

The MC vote was one of two victories for advocates of transmission competition in PJM Thursday as FERC ruled that the RTO has failed to comply with its conditions for the “immediate need” exemption under Order 1000. The commission said PJM must increase the transparency of its practices. (See related story, More Transparency Ordered on PJM `Immediate Need’ Tx.)

The Proposal

Mark Ringhausen of ODEC gave a presentation on the joint stakeholder proposal, saying the goal is to improve transparency and incorporate the EOL determination process into the Regional Transmission Expansion Process (RTEP).

Ringhausen said he wanted to clarify some misconceptions about the proposal, explaining that the language allows TOs that don’t want to utilize the EOL process to continue to use maintenance activities for their transmission facilities. The new rules would only impact TOs declaring an entire line or facility as having reached its EOL, he said.

“It’s very clear in the CTOA that maintenance activities are 100% under the purview of the transmission owners,” Ringhausen said.

The stakeholder proposal should also lead to fewer supplemental projects from the TOs, he said. PJM has reported that TOs’ supplemental projects totaled almost $3.4 billion in 2019, more than double the less than $1.5 billion in regionally planned baseline projects. It was the fifth year out of the last six in which supplemental projects exceeded baseline projects. (See Stakeholders Urge PJM: Plan ‘Grid of the Future’.)

“It just gives PJM the ability to plan a better transmission system to allow market participants to use going forward,” Ringhausen said.

Sharon Segner of LS Power offered a series of friendly amendments to the OA changes. Segner said the amendments were a result of conversations with PJM staff and other stakeholders to clarify definitions and other language in the proposal.

Segner said PJM staff made it clear they were not endorsing the changes when discussions took place but simply wanted to provide legal comments on what was being proposed and help edit draft language.

Some of the changes included making sure the TOs, not PJM, are responsible for the EOL look ahead program, Segner said.

“I think it’s fair to say there continues to be policy differences with PJM, but it’s certainly been a good faith effort on everyone’s part,” she said.

Dave Souder, PJM senior director of system planning, presented the RTO’s response, including a May 27 letter from the Board of Directors, detailing PJM’s concerns with the stakeholder package.

Souder said the stakeholder proposal introduces a “dichotomy” by requiring a final EOL determination six years in advance when final EOL determinations typically occur at the one- to three-year time frame. Forcing a final binding six-year EOL determination may result in premature retirement of transmission facilities, he said.

Supporters

Cynthia Holland, director of federal and regional policy for the New Jersey Board of Public Utilities (NJBPU), said the joint stakeholder proposal provides a path to transparency in the planning process.

“We appreciate the efforts of the stakeholders who have put forward this proposal,” she said. “We do think it has merit.”

Susan Bruce of the PJM Industrial Customer Coalition (ICC), which co-sponsored the joint proposal, said that consumers have been living with “unprecedented transmission costs” for years and that her members experience difficulties budgeting for the rising costs of transmission each year.

She said many ICC members are pursuing clean energy, and generation interconnection is a key issue for them.

“It’s important for this issue to be before [FERC] for us to make progress,” Bruce said.

Disagreements

Robert Taylor of Exelon said the stakeholder proposal is “substantively and legally flawed.”

Alex Stern, director of RTO strategy for PSEG Services Corp., went even further in his critique of the proposal, saying the result of Thursday’s vote calls into question the entire stakeholder process. He said the TOs spent six months trying to work with other stakeholders only to find “divide and a disconnect” in the stakeholder process.

He said the OA changes will hinder, not facilitate, “the grid of the future.”

The proposal would confront needed transmission projects with “unnecessary roadblocks while some gamblers in the crowd hope there’s uncertainty that brings competitive opportunities,” Stern said.