Two of the finalists for the Artificial Island transmission fix have offered to cap their costs while a third has teamed up with Pepco Holdings Inc. in a bid to improve its chances.

In July, PJM’s Board of Managers delayed action on planners’ recommendation that it select Public Service Electric & Gas to address stability problems at Artificial Island at a cost of $211-$257 million. The board told PSE&G and finalists Transource Energy and Dominion Resources to “supplement” their proposals in response to finalist LS Power’s offer to cap its project cost at $171 million. (See PJM Board Puts the Brakes on Artificial Island Selection.)

In response, PSE&G offered to cap its price at $221 million and LS Power reduced its cap to $146 million.

Dominion declined to provide a cost cap but revised its estimate for one proposal to $174 million, including a 10% contingency for construction and a 50% contingency for real estate and permitting.

Transource, which also declined to agree to a cost cap, revised its estimated cost to $203 million, excluding work required at the Salem station and a $52.3 million contingency. The company, which had previously estimated its project at $165 million to $208 million, said its revised estimate reflected the need to employ specialized drilling techniques and the addition of a second underwater cable.

Transource said it would forego 50% of any return-on-equity incentives on any costs between $203 million and $255.3 million and 100% of the ROE incentives on any costs exceeding $255.3 million.

Transource also disclosed that it had signed a memorandum of understanding with Pepco, parent of Delmarva Power & Light, to partner on the project. “This arrangement significantly improves the likelihood of project success based on PHI/Delmarva’s significant experience working in the project area, familiarity working with the numerous permitting agencies and on‐the‐ground resources to provide operations and maintenance services over the life of the project,” Transource said.

FERC Oversight

The board delayed action on staff’s recommendation of PSE&G following criticism over planners’ decision to eliminate two 500-kV lines from the company’s original $1.066 billion proposal.

Seeking to avoid additional controversy, the board also asked the Federal Energy Regulatory Commission to appoint an administrative law judge to serve “in a non-decisional role to ensure the fairness and due process” regarding PJM’s discussions with the finalists.

ALJ Steven Sterner will attend meetings between PJM and the finalists or review agendas and proposed questions to “ensure that PJM’s line of inquiry is consistent with each of the bidders and that no bidder is given an undue advantage in their presentation to PJM,” the RTO said in an Aug. 29 letter to Chief ALJ Curtis Wagner.

Sterner “will observe and comment upon … the fairness of the process undertaken by PJM through these final negotiations but not attempt to influence PJM staff’s substantive recommendation or the final PJM board decision in any way.”

PJM will not be required to follow the judge’s recommendations.