FERC last week partially accepted Dayton Power and Light’s transmission rate incentives request, requiring more information on its petition for an RTO participation adder for its continued membership in PJM (ER20-1068).

DP&L submitted a request for approval on Feb. 25 of incentives for investment in transmission projects it asserted are needed for reliability, including:

• a 50-basis-point adder to reflect its continued PJM membership;
• inclusion of 100% of construction work in progress (CWIP) for the projects;
• and 100% recovery of all “prudently incurred transmission-related development and construction costs” if one or more transmission expansion plan projects are canceled or abandoned because of factors beyond the company’s control.

In its petition for the PJM participation adder, DP&L argued that the commission has a “longstanding policy” to provide a 50-basis-point adder to the base return on equity of a transmission owner’s entire rate base as a way to encourage utilities to join an RTO. The company said it has not had a rate case to seek the incentive since joining PJM in 2004.

FERC on Aug. 17 accepted the adder proposal but suspended it for a five-month period subject to the outcome of a paper hearing “exploring whether Dayton has shown that its participation in PJM or another RTO is voluntary, as required for it to be entitled to the adder, or if such participation is mandated by Ohio law.”

The Public Utilities Commission of Ohio and the Ohio Consumers’ Counsel objected to the adder, arguing that, under state law, all TOs with facilities in the state are required to be members of an RTO. The OCC also contended that if DP&L were not a member of an RTO, the utility would be forbidden to own or control transmission facilities in Ohio.

Commissioner Richard Glick dissented in part to the RTO participation adder decision. He said the record made clear that Ohio law requires DP&L to be a member of an RTO. As a result, Glick said, there was nothing for the commission to incentivize by awarding an additional adder for the utility’s PJM membership.

“Where the law is as clear as it is here, I see no reason to give Dayton a second bite at the apple after it has already failed to adequately prove an essential element of its case for the requested incentive,” Glick said. “Under those circumstances, our role is to answer the legal questions presented to us, not to punt those questions to another day.”

Expansion Plans

FERC granted DP&L’s requests for the CWIP and abandoned plant incentives for Category 1 and Category 2 projects. Category 1 projects include baseline upgrades identified and selected by PJM through the Regional Transmission Expansion Plan (RTEP) process to resolve NERC reliability violations, while Category 2 projects are identified as supplemental projects operating at or above 125 kV and are required under Ohio law to be approved by the Ohio Power Siting Board.

DP&L’s abandoned plant incentive requests for two of its Category 2 projects are effective May 3, including the Buckeye Haas Delivery Point in Bethel Township and the 138-kV Gebhart Substation. Three other Category 2 project requests are effective upon approval from the state siting board: the 345-kV South Charleston Substation, the 345/69-kV Clinton transformer and the Fort recovery line, transformer and capacity bank.

But the incentives were denied for Category 3 projects, which are supplemental projects that DP&L said are “required to enhance reliable operations but, because they operate at voltage levels below 125 kV, are not subject to approval from either the PJM RTEP or the Ohio Siting Board.”

“Dayton indicates that Category 3 includes projects that primarily improve segments of its 69-kV transmission system and states that the majority of these projects will improve reliability by reducing outages and line overloading,” the commission said. “However, we note that the PJM Board [of Managers] does not approve or select supplemental projects in the RTEP. Further, Dayton provides no congestion analysis nor any third-party analyses of reliability benefits.”

DP&L said its transmission expansion plan projects are estimated to cost approximately $170 million, which is projected to increase its gross transmission plant in service by approximately 40% over the next four years and its net transmission investment by 90%. It said almost all the projects will be placed into service by the summer of 2023.