By Suzanne Herel
The Delaware Public Service Commission, the Delaware Municipal Electric Corp. and American Municipal Power are protesting the formula rates proposed by LS Power’s Northeast Transmission Development for the Artificial Island project (ER16-453).
Northeast Transmission “has failed to demonstrate that its proposed return on equity [ROE], formula rate protocols, process for using a projected transmission revenue requirement, capital structure approach, depreciation rates or incentives are just and reasonable,” the PSC wrote.
The protesters asked FERC to suspend Northeast Transmission’s filing for the maximum of five months and conduct an evidentiary hearing on the matter.
Northeast Transmission is a subsidiary of LS Power, which PJM chose to build a stability fix for the the Salem and Hope Creek nuclear reactors in New Jersey. (See PJM Board OKs LS Power’s Artificial Island Project Despite Objections.)
In its 810-page, Dec. 2 filing, the company requested that FERC approve its annual transmission revenue requirement and five categories of transmission rate incentives — including 100 basis points in adders for participation in PJM and “the increased risks and challenges” of the project — effective Feb. 1. It asked to replicate the rate and incentives for future projects conducted by yet-to-be-formed affiliates.
In its protest, the Delaware Municipal Electric Corp. took issue in part with the proposed 10.5% base ROE, which it called “unjustified and inconsistent with commission precedent.” It also criticized the company’s request for a 50-basis-point adder for participation in PJM as unwarranted. If awarded, the adder should not take effect until the project goes into service, expected to be June 1, 2019, it said.
AMP also challenged Northeast Transmission’s proposed ROE and depreciation rates. It asked that FERC issue a delinquency filing requiring the company to provide additional information supporting its income tax calculations and post-employment benefits expense and said it would participate in any settlement judge procedures.
The project will consist of a new 230-kV transmission line between the Salem substation in New Jersey and the 230-kV Red Lion-Cartanza and Red Lion-Cedar Creek transmission lines in Delaware by way of the newly constructed Silver Run substation. Northeast Transmission will construct the river crossing, with Public Service Electric & Gas and Pepco Holdings Inc. doing related substation and connection work.
PJM’s proposed cost allocation, which would bill nearly all of the $146 million price tag to consumers in Maryland and Delaware, will be the subject of a Jan. 12 FERC technical conference. The conference will “explore both whether there is a definable category of reliability projects within PJM for which the solution-based DFAX [distribution factor] cost allocation method may not be just and reasonable, such as projects addressing reliability violations that are not related to flow on the planned transmission facility, and whether an alternative just and reasonable ex ante cost allocation method could be established for any such category of projects,” FERC said (EL15-95). (See FERC Questions Fairness of Artificial Island Cost Allocation.)