By Suzanne Herel

PJM acted properly in its solicitation of bids to fix a stability issue at the Artificial Island nuclear complex, the Federal Energy Regulatory Commission has ruled, denying a request by losing bidder Public Service Electric and Gas seeking to have the project reposted.

While the commission found that PJM was not required to use its Order 1000 solicitation rules because the call for bids predated that measure, Commissioner Cheryl LaFleur said the case presented an opportunity to consider the order’s competitive solicitation procedures more generally.

“One of Order No. 1000’s key goals was to harness the benefits of competition in transmission development for customers, and it is important that, as regions implement their Order No. 1000 procedures, we do not lose sight of that goal: facilitating the identification, development and ultimately the construction of more efficient or cost-effective transmission projects that are better for customers,” she wrote in a separate note included with the ruling (EL 15-40).

PSE&G had accused PJM of failing to follow its own rules by unilaterally modifying finalists’ proposals and allowing LS Power – the winning bidder – to modify its proposal more than a year after the proposal window closed. (See PSE&G: PJM Broke the Rules in Artificial Island Solicitation.)

If PJM did not believe that any one proposal represented the most efficient or cost-effective solution, PSE&G said, it should be required to repost the solicitation.

PJM countered that such an interpretation of the rules “would result in PJM engaging in interminable, never-ending solicitations until the perfect project was proposed, with the inevitable result that PJM would have to default to assigning many projects to incumbents due to time constraints.” (See PJM: PSE&G’s Remedy for Artificial Island Bid Process ‘Draconian,’ ‘Self-Serving.’)

In addition, it said, that type of thinking “would turn the Order No. 1000 solicitation process into a strict bidding process of the type that would govern homogenous products such as the purchase of paper clips.”

PJM also noted that without the authority to combine and modify proposals, “it would be left with accepting a proposal four times as expensive as the combination it is considering.”

FERC concluded, “PJM followed its commitment to evaluate Artificial Island proposals using its then-effective transmission planning process and to incorporate its new Order No. 1000 proposal window into that process ‘to the extent feasible and practicable.’”

PJM planners announced April 28 that they would recommend to the Board of Managers that LS Power build a new 230-kV transmission line from New Jersey’s Artificial Island to Delaware at a cost of $146 million. (See PJM Staff Picks LS Power for Artificial Island Stability Fix; Dominion Loses Out.) PSE&G and Transource Energy were chosen for necessary connection facilities.

PSE&G initially was picked for the job last summer, but the Board of Managers reopened the bidding following an outcry from losing bidders, New Jersey officials and environmentalists.

The Board of Managers once again will be asked to decide the issue at their meeting July 29. Prior to that, PJM planners will present their recommendation to the board’s four-member Reliability Committee.

The recommendation has drawn comments and complaints from several losing bidders and the public service commissions of Maryland and Delaware, which object to the cost allocation. The Delaware Public Advocate and Old Dominion Electric Cooperative also raised objections over the allocation.