PJM objected last week to a transmission developer’s efforts to reduce credit requirements on Qualifying Transmission Upgrades (QTUs), saying the RTO lacks authority to compel construction of the projects.
QTUs are small transmission projects that can be offered into capacity auctions to relieve transmission constraints in locational deliverability areas (LDAs). Developer H-P Energy Resources LLC won stakeholders’ OK in February to reconsider the current credit requirements, which it contends are out of proportion to the costs and risks of such projects. (See Members OK Review of Qualifying Transmission Upgrades Credit Rules.)
Janine Durand, attorney for the developer, told the Market Implementation Committee last week that a $7 million reconductoring would require posting credit of about $32.5 million. Durand proposed a change that would limit the credit to 100% of the upgrade cost.
“This is unreasonable for Qualifying Transmission Upgrades and presents a barrier for entry for these types of projects,” she said, adding that the majority of QTUs “move ahead quickly” and are relatively low-risk compared with generation projects that offer into capacity auctions.
However, Durand and PJM disagreed over how the RTO could protect other market participants if a QTU is not completed before the delivery year for which it cleared a capacity auction.
Durand contended PJM could force a transmission owner to complete the project under its Tariff. “At the end of the day, we’re not talking about some kind of proposal out of the blue. It’s considered an obligation once everyone [developer, TO and PJM] signs the Interconnection Agreement,” she said.
PJM’s Hal Loomis disagreed. “PJM really doesn’t have authority to [demand] that a QTU has to be built,” he said. “Even if some sort of reliability issue is involved, there’s no link between the reliability issue and the QTU, and no assurance that it would be done. To dramatically reduce [the credit posted] seems inappropriate.”
Dave Pratzon of GT Power Group said he was concerned that “if a QTU isn’t built, other market participants will be affected in terms of reliability.”
The MIC is expected to vote on the proposed change at its next meeting on July 9.