By Suzanne Herel

Delaware Gov. Jack Markell has joined regulators, consumer advocates and industrial customers representing the Delmarva Peninsula in lobbying the PJM Board of Managers to reject planners’ recommended reliability fix for Artificial Island, barring a new look at why virtually all of the project’s $275 million price tag will be charged to Delaware and Maryland customers.

“As the project is currently structured, Delaware consumers would bear over $100 million of costs associated with the project in exchange for a very small portion of the value it would create,” Markell wrote in a July 13 letter to board Chairman Howard Schneider.

According to the Delaware Public Service Commission, that could translate to a 25% increase in transmission costs in the state. Some of the state’s heaviest users could see their monthly bills surge by hundreds of thousands of dollars, Markell said.

‘Neither Reasonable nor Equitable’

“It seems patently unfair that electricity users in the Delmarva Peninsula would bear almost the entirety of the costs of a project for which the principal benefit is not expanded energy transmission in Delaware, but maximizing power from generating units in New Jersey that serve customers throughout the PJM region,” Markell said.

“Allocating to Delaware and Maryland consumers the bulk of those costs for a project not necessitated by demand in this area is neither reasonable nor equitable.”

Paul McGlynn, PJM’s general manager of system planning, said in an interview that cost allocations for Order 1000 projects are formulaic and governed by PJM’s Tariff as approved by the Federal Energy Regulatory Commission.

When the 10-member board meets Wednesday in closed session, it could take a position anywhere on a wide spectrum, from approving the project as-is, to directing staff to develop Tariff changes regarding cost allocation, he said.

Previous Board Action

A number of those dissatisfied with the cost allocation recalled the board’s rejection last summer of a Public Service Electric & Gas proposal to upgrade Artificial Island following outcry from losing bidders, environmentalists and New Jersey officials. (See PJM Board Puts the Brakes on Artificial Island Selection.)

“The board displayed leadership and courage in July 2014 to defer decision on the Artificial Island proposal selected,” a group of end-use businesses said a July 17 letter.

“We respectfully submit that similar leadership and courage is necessary again now with respect to Artificial Island to ensure that the project selected by PJM staff and the cost allocation produced by PJM’s solution-based DFAX [distribution factor] do not undercut PJM’s important efforts to implement Order No. 1000 in a just and reasonable manner,” said the group, which includes Linde, E.I. du Pont de Nemours and Co., Delaware Racing Association, Kuehne Chemical Co., Delaware City Refining Co. and Christiana Care Health System.

LS Power Plan

PJM staff announced at a special April 28 meeting of the Transmission Expansion Advisory Committee that they would recommend LS Power’s plan to use horizontal directional drilling under the Delaware River to build a new 230-kV circuit from Salem, N.J., to a new substation near the 230-kV corridor in Delaware, tapping the existing Red Lion-Cartanza and Red Lion-Cedar Creek 230-kV lines. (See PJM Staff Picks LS Power for Artificial Island Stability Fix; Dominion Loses Out.) LS Power’s proposal also includes the option of an overhead crossing.

PSE&G and Transource Energy, two other finalists, were tapped to build necessary connection facilities.

Home to the Salem and Hope Creek nuclear reactors, Artificial Island is the second largest nuclear complex in the country. Special operating procedures that historically have been used to maintain stability in the area have become increasingly difficult to implement while respecting the system’s other operational limits.

Beneficiary Analysis Sought

In their letters, the Delaware Public Service Commission, the Maryland Public Service Commission and Old Dominion Electric Cooperative requested that PJM provide a detailed beneficiary analysis justifying the project’s cost allocation.

ODEC went further, requesting a breakdown of cost allocation and benefits for all four project finalists. (See Artificial Island Finalists Face Off in Tense Meeting.)

ODEC noted that the cost of PSE&G’s alternative 500-kV project would have been divided among all PJM zones on a load-ratio share basis, with 50% allocated using the solution-based DFAX method.

“In other words, two transmission upgrades designed to address the same operational performance issues and both costing approximately the same would be allocated to widely varying groups of customers,” it said.

“ODEC believes that, in this specific situation, the cost allocation of the proposed Artificial Island solutions is highly relevant to the determination of whether the proposal is ‘the more efficient and cost-effective solution.’”

It noted that FERC is considering a number of similar challenges to certain DFAX cost allocations.

Environmental Challenge

The board received another letter opposing the Artificial Island project, but on environmental grounds, from the Delaware Riverkeeper Network. It urged the board to seek out an alternative with fewer environmental impacts that does not include crossing the Delaware River.

Riverkeeper Maya K. van Rossum noted that the project’s route will traverse the Augustine Wildlife Area and the Appoquinimink River, which include large expanses of wetlands that are part of the largest preserved coastal marshland on the East Coast.

Several endangered bald eagles breed in the area, which also supports the similarly endangered northern harriers, she said.

“Furthermore, species such as the federally endangered Atlantic Sturgeon — of which there are less than 300 spawning adults each year of the river’s genetically unique population — can ill afford additional harm to their population, spawning capabilities or juvenile survival.”

If PJM proceeds with the LS Power proposal, she said, the group will request federal agencies to prepare a full environmental impact statement.

“In addition to potential time delays, any environmental impacts will raise the cost of the project through the need for mitigation projects,” she said.