By Michael Brooks

Reversing a prior decision, FERC ruled Tuesday that PJM transmission owners should pay all of the cost of projects that solely address a TO’s local planning criteria (ER15-1387).

The commission accepted the proposal by PJM Transmission Owners, saying it had erred in its May 2015 order rejecting the Tariff change as contrary to Order 1000.

The commission also made its first application of the new rule, rejecting PJM’s proposed cost allocation for Dominion Resources’ Cunningham-Elmont rebuild project (b2582). The commission said that it was not eligible for regional cost allocation because it only addressed local needs (ER15-1344).

FERC based its original decision on a mistaken understanding that all projects in the RTO’s Regional Transmission Expansion Plan are included for the purpose of regional cost allocation.

Based in part on a Nov. 12 technical conference and comments submitted afterward, the commission acknowledged that the RTEP lists some local projects that are included solely to ensure consistency with PJM’s overall regional expansion plan.

“Based on the rehearing requests and comments on the technical conference, it has become clear … that it is just and reasonable for the costs of projects with these characteristics to be allocated entirely to the zone of the individual transmission owner whose Form 715 local planning criteria underlie each project,” FERC said.

The commission said the rehearing order was consistent with its earlier finding approving MISO cost allocation provisions for baseline reliability projects (ER13-187, et al.).

Cunningham-Elmont

In the second order, FERC accepted PJM’s proposed cost allocation for 60 low-voltage baseline reliability projects but told it to revise the cost assignments for the 500-kV Cunningham-Elmont project based on the revised cost allocation rule.

Dominion originally submitted the $106 million rebuild as a supplemental project, meaning it alone would pay for it, but later revised its end-of-life criteria. PJM reclassified it as regional baseline project, determining a reliability violation would occur if it were taken out of the RTEP.

Dayton Power & Light protested the change, accusing Dominion of exploiting what it called a loophole to shift costs from its ratepayers to the entire RTO. It said the project was a replacement for an existing line “for which Dominion has always had 100% cost responsibility” but later recharacterized it as a “new” line eligible for regional cost allocation. Double-circuit 345 kV and 500 kV and above projects are allocated 50% on a postage stamp basis and 50% based on a solution-based DFAX analysis.

Dayton also said that as a project eligible for regional cost allocation, Cunningham-Elmont should have been subject to a competitive proposal window under Order 1000. (See DP&L Protests Dominion Project Over New Cost Allocation.)

PJM designated the project as an immediate need, meaning it was not required to open the project to competition.

While the commission found that PJM had correctly designated the project, it scolded the RTO for not providing enough transparency into the designation process. In filings and at the technical conference, PJM officials acknowledged there was no language in its governing documents detailing how a project is reclassified from supplemental to baseline.

FERC said that the RTO should post information regarding immediate-need projects more explicitly on its website, rather than relying on presentation materials at its Transmission Expansion Advisory Committee meetings. “We expect PJM will improve its processes to post information,” FERC said.

LaFleur Dissents

Commissioner Cheryl LaFleur dissented in part on both orders, saying that high-voltage projects such as Cunningham-Elmont should be eligible for regional cost sharing even if they were developed for local needs.

“I would condition acceptance of the PJM transmission owners’ filing on the preservation of the current regional cost allocation method for certain high-voltage projects, even if those projects are selected solely to address local planning criteria,” she said.

FERC has previously found that high-voltage projects have significant benefits for the entire PJM footprint, she noted. “I continue to believe that these high-voltage projects in PJM, even if developed solely to address local planning criteria, provide regional benefits that warrant some regional cost allocation,” LaFleur said.

Undermining Order 1000

LaFleur seemed sympathetic to complaints by ITC Mid-Atlantic Development and LSP Transmission Holdings that the TOs’ proposal would undermine the competitive process set out in Order 1000.

The majority rejected the companies’ arguments, citing data from the TOs that for 98% of the 303 projects included in the RTEP solely to address local transmission owner planning criteria, costs have been allocated exclusively to the individual TO’s zone.

It also noted that where PJM finds that a project is needed not only for local planning criteria but also regional needs, “costs may be allocated outside of the zone of the transmission owner that filed the criteria” and a nonincumbent transmission developer could be selected to build it.

But LaFleur pointed out the TOs’ admission that “the overwhelming majority” of the 303 projects they cited were lower voltage facilities. “They therefore fail to demonstrate that this dataset is representative of high-voltage projects that the PJM Transmission Owners previously argued, and the commission previously found, confer regional benefits.”

“Order No. 1000 was intended to ensure just and reasonable transmission rates through the improvement and expansion of regional planning and the introduction of competition,” LaFleur wrote. “Even if crafted within the letter of Order No. 1000 and the commission’s compliance orders, proposals to limit access to existing regional cost allocation and competitive bidding processes are, in my view, inconsistent with the rule’s underlying goals.”

Other Issues Pending

The commission said it is still reviewing other issues discussed at the November technical conference. (See PJM TOs Defend Jurisdiction at FERC Conference.)