By Rory D. Sweeney

PJM transmission owners’ processes for developing supplemental projects violate Order 890’s transparency and coordination requirements, FERC ruled Thursday in a victory for customers — and, potentially, competitive transmission developers (EL16-71, ER17-179).

PJM stakeholders have been battling for years with TOs over the rules involving supplemental projects — transmission expansions or enhancements not required for compliance with PJM system reliability, operational performance or economic criteria. TOs can develop, build and seek reimbursement for such projects without the approval of PJM, which only reviews them to ensure they don’t harm reliability.

Since 2012, according to an analysis produced for American Municipal Power, PJM’s $11.6 billion in baseline and network upgrades have been exceeded by $12.7 billion of transmission owner-identified (TOI) supplemental projects.

“I’ve frequently spoken about my concern about … the amount of transmission spend[ing] that is directed to categories that are not subject to competitive bidding under Order 1000 and in some cases subject to very little planning that’s done privately by the transmission owners,” Commissioner Cheryl LaFleur said at Thursday’s open meeting. “It’s obviously our responsibility to make sure that if customers are paying for transmission, it’s needed; that regional needs are considered, that things aren’t done individually and that the process is fair and transparent, and I think today’s order is a part of that responsibility.”

LaFleur is the only member remaining from the commission that issued a show cause order over the TOs’ supplemental projects in August 2016, which followed a technical conference on the issue in 2015.

The order caused PJM’s Transmission Replacement Processes Senior Task Force to go on a 10-month hiatus that, even after it ended, has been slow to progress as TOs remained reticent to discuss issues involved in the order. (See PJM TOs, Customers Await Ruling on Supplemental Projects.)

Order 890 Inconsistencies

The TOs responded to the show cause order by contending they were already in compliance with Order 890 and proposing a new Tariff Attachment M-3 that they said spelled out their processes.

The commission agreed with the TOs’ request to move the supplemental project language from PJM’s Operating Agreement to Attachment M-3 but said the attachment fell far short of compliance with Order 890.

FERC found that TOs’ handling of supplemental projects violates both the transparency and coordination principles of Order 890. It said that both the level of detail in the supporting information provided by TOs and the timing of providing that information — often either just before or during meetings to discuss those projects — fails to meet the order’s requirements.

The commission cited Subregional RTEP Committee meetings on Dec. 1, 2016, in which AMP said TOs presented almost 100 transmission projects for stakeholder review, 80% of which were supplemental projects. Two of the projects presented were already complete, seven were under construction and 24 were already in the engineering phase, “at which point it is not possible for stakeholders to provide meaningful input,” the commission said.

“The record in this proceeding indicates that the PJM transmission owners often provide models, criteria and assumptions as part of the supplemental project transmission planning process that are vague or incomplete and do not allow stakeholders ‘to replicate the results of planning studies’” as required by Order 890, the commissioners wrote. “In addition, in some cases, the PJM transmission owners provide the models, criteria and assumptions to stakeholders at the same time as a proposed supplemental project, at which point that project is often at an advanced stage of development and stakeholder feedback is less likely to be meaningful or effective.

“As a result of these two factors — the quality of the models, criteria and assumptions the PJM transmission owners provide and the point in the transmission planning process at which they are provided — stakeholders frequently are not in a position to comment on the transmission planning studies or the resulting transmission needs before the PJM transmission owners take significant steps towards developing supplemental projects to address those needs,” the commission wrote. “The fact that there may be multiple criteria and considerations underlying the need for a supplemental project does not prevent the PJM transmission owners from timely posting a thorough description of those criteria and considering stakeholder feedback before identifying a particular supplemental project. Similarly, the fact that those criteria may vary among the PJM transmission owners also does not prevent them from timely posting each transmission owner’s different criteria.”

The commissioners said the TOs’ practice of simultaneously presenting both the problems and their proposed solutions discriminates against potentially better alternatives.

“The most obvious solution will not always be the best solution. In many cases, supplemental projects address facilities that have existed for several decades, during which time the topography of the electricity grid and the set of potential technologies available to address the underlying need may have changed considerably. As a result, rebuilding the facility that was the most obvious solution many years ago may no longer be the best solution today,” the commission wrote.

FERC also sided with customers that the current process doesn’t clearly define when they should receive critical information about criteria and proposals and when they can comment during the analysis and project development.

M-3 Revisions

The TOs did prevail in their request to move the procedures for planning supplemental projects from the OA — which requires a super-majority endorsement from PJM stakeholders to make changes — to Attachment M-3 of the Tariff. The TOs have exclusive filing rights under Section 205 of the Federal Power Act to make changes in Attachment M-3; to make any changes, stakeholders would need the PJM Board of Managers to file a complaint under Section 206.

However, the commission also ordered revisions to the new attachment, saying it “duplicates and otherwise relies heavily on the provisions … that we found above to be unjust and unreasonable.”

The commission ordered the TOs to revise M-3 and to hold three meetings on each proposed supplemental project: the first to discuss “the models, criteria and assumptions” used to plan supplemental projects, the second to address the needs identified and the third to discuss the solutions proposed to meet the needs.

The revised M-3 must spell out a minimum number of days between each meeting, deadlines for posting the meeting materials beforehand and time frames for stakeholders to provide comments after meetings, the commission said.

“We also find that this additional transparency will help mitigate concerns that supplemental projects may be structured to avoid or replace regional transmission projects that would otherwise be subject to competitive transmission development under Order No. 1000,” the commission wrote.

FERC also ordered the TOs to detail what dispute resolution they plan to use, as the previous rules relied on the procedures in the OA. The commission also ordered PJM to make changes to its OA to ensure consistency with M-3 and compliance with Order 890. PJM and the TOs have 30 days to file the required revisions.

The commission shot down proposals by AMP and Old Dominion Electric Cooperative to require TOs to respond to stakeholder comments, greater PJM involvement in planning for and selecting certain supplemental projects, and PJM review and approval of TOs’ local transmission plans.

‘Encouraged’

AMP’s Ed Tatum said his company is still reviewing the order but is “encouraged by what we have seen so far.”

He pointed to the commission’s affirmations on transparency and coordination principles from Order 890, the need for meaningful input from consumers and the opportunity to replicate TO results.

“Since October 2016, the PJM transmission owners have been unwilling to move from their litigation position and fully engage absent an order,” he said. “Now that we have an order with clear direction, we are ready to roll up our sleeves and work with PJM and the transmission owners to implement the order and make sure consumers are getting the transmission system they need at right price.”

Representatives from Exelon and Public Service Electric and Gas did not response to requests for comment in time for publication.

Chairman Kevin McIntyre did not participate in the ruling.