PJM will likely approve only one of 17 congestion relief transmission proposals submitted in September, saying most failed to provide sufficient benefits or targeted problems that were already addressed.

Five of the projects were rejected because the congestion developers targeted had been addressed by other transmission projects or generation, PJM told the Transmission Expansion Advisory Committee in a briefing last week. Another nine projects failed to clear the 1.25 benefit-to-cost ratio.

Only three projects passed the cost-effectiveness screen. Because they all address congestion on the Hunterstown 230/115 kV transformer only one project — FirstEnergy’s proposed $8 million upgrade in the MetEd zone — is likely to be approved. Two proposals by Northeast Transmission Development (LS Power) were more expensive and had lower benefit-to-cost ratios, even under sensitivity analyses assuming a $1/mmBtu increase in natural gas prices and a 2% increase in load.

Wasted Time

It was a disappointing beginning for those who had hoped the Federal Energy Regulatory Commission’s Order 1000 would unleash competition in transmission development. Six developers and utilities submitted proposals ranging from $200,000 to $64 million, many of them targeting congestion in AP South and the Cleveland interface.

“A tremendous amount of time was spent on [these proposals] with no result,” said one stakeholder.

“PJM needs to educate stakeholders about how we calculate these values,” PJM’s Tim Horger told the Transmission Expansion Advisory Committee last week, citing one of the “lessons learned” from PJM’s first competitive window for “market efficiency” projects. “They’re not getting the same results we’re getting.”

“I’ll take the fault in that,” he added. After PJM conducts its training next year, he said, developers are “not going to spend a month developing a proposal that’s getting thrown out.”

Evaluating the proposals also consumed substantial PJM staff and computing time. Each proposal took 30 to 40 hours of computing time to evaluate, according to Vice President of Planning Steve Herling.

Cleveland Congestion Clears

PJM told the TEAC in June that the Cleveland Interface – the location of three proposed projects  – was projected to have $15.5 million in annual congestion costs in 2017, growing to $38.3 million by 2023.

But Horger told the TEAC that the updated Regional Transmission Expansion Plan (RTEP) model showed “there’s no more congestion … or minimal congestion” in the area. “The model is constantly changing” due to new generation and transmission reliability projects, Horger explained.

Jung Suh, of Noble Americas Energy Solutions, noted that a $62 million FirstEnergy project rejected by PJM included a static VAR compensator. “Maybe you’re missing out on an opportunity to reduce reactive costs,” he said.

“That’s certainly something we could look at,” responded PJM’s Paul McGlynn, general manager for system planning.

Auction Revenue Rights

Dominion Virginia Power’s $24.6 million proposal to address constraints at AP South was rejected because it reduced Auction Revenue Rights (ARRs) more than it did Locational Marginal Prices – thus resulting in negative benefit-cost ratios.

“There was no information provided along with the models regarding ARRs,” said another stakeholder.

Horger said PJM had provided developers only information on ARRs from previous years because the Tariff requires a six-month lag before release. He said the values “don’t change much from year to year.”

“I agree it’s surprising to see negative values,” he added.

Moving Target

Herling said he hoped the next round of proposals would fare better. But he and Horger said developers will still face the risk of having proposals rejected because of the dynamics of the grid.

PJM will begin a new two-year planning cycle in January. Planners will conduct analyses through the spring and summer and release results in October, in time to open the next market efficiency window between November 2014 and February 2015. At the same time, however, PJM will be proposing upgrades to address reliability problems identified in their analyses.

(The PJM Board last week announced it has approved $4.6 billion in reliability upgrades, including a $1.2 billion project in the PSEG Zone. See Planners Choose $1.2B PSEG Short Circuit Fix.)

“For developers it’s somewhat of a moving target,” Herling acknowledged. Their projects “may be superseded by a reliability solution.”