By David Jwanier
With PJM planners nearing a proposed fix for the Artificial Island stability problem, the issue of who will pay for the project took center stage last week. Delaware regulators were not happy with what they heard.
Paul McGlynn, general manager of system planning, presented the Transmission Expansion Advisory Committee with preliminary cost allocation examples on the two least expensive projects among 10 finalists.
The cost of a $240 million proposal by Exelon and Pepco Holdings Inc. to add a 17-mile 500-kV line paralleling an existing 500-kV line from Red Lion to Hope Creek would be spread among two dozen transmission zones and merchants. The Jersey Central Power & Light zone would be responsible for about 27% of the project, with the Atlantic City Electric zone picking up almost 20%. No other zone was as high as 8%.
In contrast, LS Power’s $234 million proposal to run a 230-kV line across the Delaware River to a new or expanded substation on Delmarva Peninsula would be assigned entirely to the Delmarva Power and Light (“Delmarva”) zone, McGlynn said.
John Farber, of the Delaware Public Service Commission, said he couldn’t understand how Delmarva would be wholly responsible for a project meant to address stability problems in New Jersey. He said the assessment would boost total network transmission costs for Delmarva by 20%.
Farber requested that PJM provide cost allocations for all the projects still under consideration so those who would have to pay could use it to “assess PJM’s decision.”
McGlynn defended the allocation. “The flow on that line [would be] from Salem to Silver Run [Delaware] all year long,” he said.
McGlynn said the cost allocation, which will follow methodology approved by the Federal Energy Regulatory Commission, will not be a factor in determining which project is selected.
Just and Reasonable?
Sharon Segner, of LS Power, said PJM should consider Delmarva’s concerns and whether the RTO’s choice produces just and reasonable rates. “There may be some wiggle room in terms of working with Delaware on the cost allocation,” she said. “It would be worthwhile to be creative.”
The LS Power proposal is the lowest cost option, according to an analysis presented to the TEAC in April. The Exelon-PHI proposal was the second cheapest. (See Planners Near Artificial Island Pick.)
McGlynn also presented the TEAC last week with the results of market efficiency studies that showed neither the southern Delaware crossing nor the line to Red Lion would produce sufficient savings to be a consideration in the selection. The two projects showed benefit-to-cost ratios of 0.25 and 0.15, respectively, well below the 1.25 threshold for market efficiency projects.
PJM has scheduled a special TEAC meeting for May 19 to share information on how the 10 finalists fared in several key areas, including cost, project complexity, siting and permitting.
After receiving feedback from stakeholders, another special meeting will be held June 16 during which PJM will discuss its final recommendation. “I wouldn’t expect, necessarily, a recommendation on the 19th,” McGlynn said. “I expect a recommendation on the 16th.”
The PJM Board of Managers is expected to consider the recommendation at its July 22 meeting.
Artificial Island is the home of the Salem and Hope Creek nuclear plants in Hancocks Bridge, N.J. Five utilities and three independent developers made more than two dozen proposals in PJM’s first competitive transmission project under FERC Order 1000.