PJM planners today recommended Public Service Electric and Gas be awarded the contract to fix the Artificial Island stability problem with a new 500-kV line from Hope Creek, N.J. to Red Lion, Del. at a cost of about $300 million.

The planners recommended PSE&G construct the 18-mile line and upgrades to its Hope Creek 500-kV station. Pepco Holdings Inc. will upgrade its Red Lion 500-kV station at the other end of the line under the recommendation.

The stability fix for Artificial Island — home of the Salem and Hope Creek nuclear plants — is PJM’s first competitive transmission project under the Federal Energy Regulatory Commission’s Order 1000.

The competition attracted 26 proposals from five utilities and three independent developers, led by PSE&G with 14 alternatives. In May, planners identified a shortlist of 10 proposals, including the 500-kV proposal by PSE&G and a similar project by Dominion Virginia Power.

The two projects — which had been in the middle of the pack in cost and did poorly in their original forms in an analysis of risk factors and technical concerns — had their standings improve dramatically when PJM reevaluated them after eliminating a second tie line between the two nuclear plants.

The revised Dominion and PSE&G proposals got top scores in the analysis and also saw their costs reduced by $34 million and $43 million, respectively. PJM estimated either project would cost between $211 million and $256 million, the same range it assigned to a 230-kV proposal by LS Power that had been the cheapest proposal prior to the change. (See Dominion, PSE&G Proposals Gain in Artificial Island Race.)

The estimates do not include an additional $80 million for a static VAR compensator (SVC), which PJM added to all of the proposals. In total, the winning project is expected to cost $291 million to $337 million.

Paul McGlynn, general manager of system planning, said that planners chose the 500-kV proposal because it provided greater transmission capacity than the 230-kV alternatives and would use an existing Delaware River crossing rather than a new southern crossing employed by the 230-kV proposals. PJM said the river crossing “represents the greatest component of schedule risk” for all proposals.

McGlynn said planners chose PSE&G over Dominion because PSE&G is a party to the Lower Delaware Valley (LDV) Transmission Service Agreement, which controls an existing 500-kV right of way in New Jersey that the new line will largely parallel. Although PSE&G will need expand the right of way for 8.5 miles, Dominion would have needed to acquire the right of way for the entire route, PJM said.

The planners will recommend the Board of Managers include the project in the Regional Transmission Expansion Plan at the board’s July 22 meeting. McGlynn said PJM will accept comments on the recommendation through July 16.

The winning project is a modification of PSE&G’s proposal (#7K), which was originally proposed at a cost of $1.066 billion. PJM planners reduced the cost by eliminating a 500-kV line between New Freedom and Deans, making changes to breaker configurations and eliminating the second tie line between the two nuclear plants. Eliminating the second tie line also eliminated the need for the 500-kV line to cross another 500-kV line, which would have created a risk of a multiple facility trip.

The SVC will be added at PSE&G’s New Freedom switching station. PJM added the SVC despite opposition from PSEG Nuclear LLC, the operator of the nuclear plants, which said SVCs have never been used to correct “transient angular stability.” PSEG Nuclear said the SVC would pose “unknown and potentially challenging regulatory risks,” including an “in-depth review” by the Nuclear Regulatory Commission.” (See Contestants Make Last Pitch for Artificial Island Prize.)

PJM acknowledged that the selected route faces land-permitting challenges because it will cross the Supawna Meadows National Wildlife Refuge, the Alloway Creek Watershed Wetland Restoration Site and the Abbotts Meadow and Mad Horse Creek Wildlife Management Areas. The New Jersey Board of Public Utilities said PJM’s analysis of the 500-kV option underestimated likely public opposition.

Sharon Segner, vice president at LS Power, said afterward that she was “profoundly disappointed” by PJM’s decision and predicted PSEG will be unable to win approvals to build the line across the New Jersey wetlands and wildlife areas.

McGlynn said the project’s cost allocation will be “very similar” to the allocation outlined in May, which spread the cost 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%.

FERC Order 1000 eliminated incumbent utilities’ federal right of first refusal (ROFR) on new transmission projects, opening the business to competition from independent transmission developers.

Others submitting proposals in addition to PSE&G, Dominion and LS Power were Transource Energy, a partnership between American Electric Power and Great Plains Energy (owner of Kansas City Power & Light Co.); FirstEnergy Corp.; Atlantic Wind Connection; and a partnership between Pepco Holdings Inc. and Exelon Corp.