By Christen Smith

FERC last week rejected a set of rehearing requests by PJM merchant transmission owners, New Jersey regulators and the New York Power Authority contesting the cost allocations for several cross-seams projects.

The commission’s ruling Thursday reaffirmed a July 2018 order that directed PJM and its TOs to submit compliance filings revising Tariff provisions regarding cost responsibility assignments for four targeted market efficiency projects (TMEPs) with MISO included in PJM’s Regional Transmission Expansion Plan (ER18–614).

FERC had approved 41 PJM transmission projects but rejected the allocations for TMEPs b2971, b2973, b2974 and b2975, instituting a Section 206 proceeding to resolve the matter and ensure the Tariff contained clear language regarding allocations for the future. (See FERC OKs PJM RTEP Allocations, Sets TMEP 206 Proceeding.) The PJM TOs had argued that the RTO erred in not allocating project costs to Hudson Transmission Partners and Linden VFT, which operate merchant lines into New York City and had recently converted their firm transmission withdrawal rights to non-firm. Those lines would benefit from the TMEPs, the other TOs contended.

On July 31, 2018, PJM submitted a compliance filing updating the cost responsibility assignments to reflect Hudson and Linden, while the PJM TOs the next day submitted a separate filing clarifying that TMEP allocations would be assigned to merchant facilities.

Hudson, Linden and NYPA contested FERC’s rejection of the original cost allocations excluding merchant owners from the TMEP assignments. They argued that the commission misinterpreted PJM Tariff language that “limits all cost allocations … based on their actual firm transmission withdrawal rights.”

FERC rejected that argument, noting that the basis for cost allocation under the TMEP provision “is the net congestion incurred in PJM zones” regardless of merchant transmission facility contracts for firm or non-firm withdrawals rights.

“Customers of merchant transmission facilities without firm transmission withdrawal rights still receive benefits from TMEPs in the form of lower congestion costs,” the commission said. “PJM transmission owners make clear that the intent of the TMEP provision was to assign costs to merchant transmission facilities based on the net congestion relieved by the project.”

BPU Rebuffed

The commission also rejected the New Jersey Board of Public Utilities’ contention that FERC erred in accepting TMEPs b2955 and b2956 because the projects were no longer necessary after Hudson and Linden relinquished their firm withdrawal rights. The BPU argued that PJM should have therefore withdrawn the projects from the RTEP.

But FERC pointed out that PJM re-evaluated the projects after the merchant owners relinquished their firm withdrawal rights, citing an affidavit from Aaron Berner, the RTO’s manager of transmission planning, that explained why that move did not change the results of the RTO’s reliability studies that determined the rejected projects to still be “necessary.”

“Mr. Berner explained … that the analysis showed that injections of electricity by the merchant transmission facilities, not withdrawal from these facilities, contributed to the need for the projects. Because firm transmission withdrawal rights relate only to withdrawals from PJM, the relinquishments of the firm transmission withdrawal rights have no bearing on the need for projects b2955 and b2956,” FERC said.

The commission further accepted the cost allocation revisions submitted in PJM’s July 31, 2018, compliance filing that reflected Hudson and Linden’s pro rata share of the sum of the net transmission congestion charges paid by market buyers, as identified in the TMEP study. It also approved the PJM TOs’ Aug. 1, 2018, compliance filing clarifying the language regarding TMEP cost allocations.