PJM transmission owners demanded Friday that the RTO refuse to submit to FERC the end-of-life (EOL) proposal approved by stakeholders, saying the bid to subject transmission replacement projects to regional planning violates the TOs’ rights under the Consolidated Transmission Owners Agreement (CTOA).
After the Members Committee approved the joint stakeholders’ EOL proposal with a 69% sector-weighted vote on June 18, PJM General Counsel Chris O’Hara said the RTO would file the proposal with FERC within two weeks, although it believes it exceeds the RTO’s authority under the CTOA. (See related story, Gen. Owners, Other Suppliers Key to EOL Win.)
“We are at a loss to understand why the board could agree to file a stakeholder proposal when the board itself agrees that the proposal exceeds PJM’s delegated authority under the CTOA,” the TOs said in a letter to the Board of Managers.
“While we understand that one of PJM’s duties under section 10.4(xiii) of the Operating Agreement is to file on behalf of PJM members amendments to that agreement and its schedules, that duty is not absolute,” the TOs continued. “Since there is no dispute between PJM and the undersigned transmission owners that the stakeholder proposal would require PJM to perform functions and undertake responsibilities that have not been voluntarily transferred to PJM under the CTOA, those commitments outweigh any duty to file the stakeholder proposal under section 10.4(xiii).”
The TOs noted that FERC requires PJM to act independently of its members as well as its TOs. “If that independence is to mean anything, PJM cannot be obligated to file unlawful amendments to the Operating Agreement or its schedules that it acknowledges would give PJM planning authority that transmission owners never voluntarily transferred to PJM. … In short, it is neither sufficient nor appropriate to simply ‘let FERC decide.’”
The TOs asked that members of the board or CEO Manu Asthana meet with them to discuss the filing. If PJM does file the proposal with FERC, the TOs said, it should inform the commission of its previously expressed views regarding its planning authority under the CTOA.
The TOs cited PJM staff presentations during the EOL debate and an October 2019 letter to members from Dean Oskvig, chair of the board’s Reliability & Security Committee, in which he said decisions on when a facility is at the end of its useful life or otherwise needs to be replaced “are the sole responsibility of the transmission owner.”
The joint stakeholders insist their proposal honors the TOs’ rights by letting them decide when a facility must be replaced — but then allows PJM to incorporate such projects in the Regional Transmission Expansion Plan.
It would require TOs to notify PJM and stakeholders of any facility nearing the end of its life at least six years before its retirement date so 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.
American Municipal Power, Old Dominion Electric Cooperative, LS Power and the PJM Industrial Customer Coalition, who led the joint stakeholders’ proposal, responded with their own letter to the board Tuesday.
“The sector-weighted, supermajority of votes cast by the Members Committee is a clear indication of PJM members’ desire,” they said, adding that nothing in the CTOA prohibits the RTO from making the filing.
The TOs “are free to argue their position in a protest” to FERC, they said. “What the PJM transmission owners and the PJM board or a delegate may not do is meet to ‘discuss the decision to file the stakeholder proposal before PJM makes any such filing.’ Such an action is, by definition, an attempt by the PJM transmission owners to exert undue influence over the board’s decision-making. The transmission owners’ letter is a blatant attempt to exercise undue influence; the very request and tone is itself a threat to the board’s independence.”
