By Rory D. Sweeney

VALLEY FORGE, Pa. — In light of the amount of debate that proposed cost-containment provisions provoked at last week’s Planning Committee meeting, it might come as a surprise that both sides seemed pleased with the outcome of the session.

Proponents of LS Power’s proposal to require consideration of cost-containment provisions in PJM’s analysis of transmission construction bids are relieved that the package remains largely intact and on schedule to return for a vote at this month’s Markets and Reliability Committee meeting. Opponents were happy the measure got the standing committee scrutiny it never received the first time around.

The debate has been building to a confrontation since LS Power surprised some stakeholders by presenting the plan with little forewarning at January’s MRC as an alternative motion to Manual 14F changes developed by PJM. The RTO took its proposal, which had been debated at special sessions of the PC, to the MRC, which rejected the plan and deferred a vote on the LS Power alternative, remanding it for more discussion at the PC in the hope of finding consensus. (See “Transmission Flashpoint,” PJM MRC/MC Briefs: Jan. 25, 2018.)

In follow-up special sessions, LS Power has removed operations and maintenance costs from the list of categories in which developers can offer cost-containment provisions, but the company has resisted most other revisions promoted by transmission owners.

At last week’s PC, PJM’s Sue Glatz presented two proposals the RTO is developing. The first would require staff to consider commitments on construction costs and evaluate the risk of costs exceeding the estimate based upon specified project risk factors identified in templates that PJM and stakeholders have been developing over the past two months. PJM has yet to fully flesh out how the consideration will be implemented and what weight such commitments will receive in project evaluations.

PJM’s alternative is continuing the status quo, in which the RTO evaluates cost-containment measures included in transmission development proposals as it sees fit.

Greg Poulos, the executive director of the Consumer Advocates of the PJM States, reiterated his support for the LS Power proposal, which would require the RTO to consider several other types of cost commitments and provides evaluation guidelines.

“As you know, consumer advocates have been clearly voicing their opinion that they would like to see more than the construction costs included” in the analysis, Poulos said. “I do think this is a significant step and [PJM’s] efforts to compromise on this will be greatly appreciated by the advocate offices.”

Tension grew when Public Service Electric and Gas’ Alex Stern moved for a vote on PJM’s proposals.

“Alex, you’re a good man,” American Municipal Power’s Steve Lieberman responded before criticizing Stern’s call for a vote, noting that Stern had objected when LS Power’s Sharon Segner sought to bring her proposal unannounced for the January MRC vote. [Editor’s Note: While the proposal was not listed on the meeting’s agenda, it was properly posted on the committee’s web page before the meeting.]

Lieberman had teed up his critique by receiving clarification at the outset of the meeting that any items that weren’t on the agenda for endorsement weren’t prepared for a vote.

“What I heard from Sue [Glatz] is there are a number of things here that PJM is thinking about,” he said. “It’s not in a situation where the information being presented is finalized.”

NextEra Energy’s Steve Gibelli agreed.

“This to me doesn’t feel right. It feels like we’re trying to force a decision through. I’m uncomfortable voting on something without seeing the Tariff changes. I’m not sure how we can vote a motion without seeing those details here,” he said.

Stern defended himself, saying PJM’s proposals have been part of discussions for two months while the LS Power proposal was “completely out of the blue.” He argued that he would prefer to have more time to discuss the proposals “on an even footing” and follow the standard committee protocol of readings at no less than two meetings, but he recognized there are no other PC meetings before the LS proposal is scheduled for a vote at the MRC. Manual 34 rules allow for proposals to be brought straight to the MRC without input from lower committees, he acknowledged, while contending that “all stakeholders believe that such an approach should be the exception and not the norm.”

“Trust me when I say my motives were pure. I was trying to restore some balance to the stakeholder process. I was trying to allow the standing committee to do what it’s supposed to do,” he said.

John Horstmann of Dayton Power and Light attempted to be a peacemaker by proposing the committee take an advisory vote recommending that the MRC defer a vote on Segner’s proposal until August and allow special sessions of the PC on the issue to extend past their intended deadline of May 11 if necessary. PJM would prioritize additional meetings if necessary so that the group could recommend a package for the PC to endorse by its July meeting.

“I didn’t think in January consensus was possible. I think it’s possible, but not on the [existing] deadlines,” Horstmann said in explaining the motivation for his proposal. Stern seconded the motion.

The advisory recommendation received a favorable vote of 78%, with 155 in favor and 43 opposed. There were 13 abstentions. PJM’s Dave Anders confirmed that Segner’s proposal would retain its position as the first package to be voted upon on the topic.

A vote on PJM’s proposal received 107 votes in favor and 60 opposed (64%), while the status quo received 82 in favor and 93 opposed (47%).

The advisory vote may not make much difference if the sides can’t agree. Erik Heinle of the D.C. Office of the People’s Counsel argued that the process remains lopsided.

“Consensus can’t be consumers give everything and TOs hold their ground. I’d like to see what TOs are willing to give up. It can’t just be ‘what else can we take from ratepayers and consumers?’” he said.

Such divisiveness could undermine Horstmann’s intent.

“The goal was ideally one proposal comes forward and not multiple,” he said.

Stern said the TOs believed they had achieved compromise by agreeing to caps on construction costs and suggested that “given a little more time to review options on a level playing field, we could actually get to a single consensus-based resolution.”