By Suzanne Herel

WILMINGTON, Del. — A problem statement and issue charge seeking to develop RTO-wide criteria for end-of-life transmission facilities kicked off a long and heated discussion before being approved by an 80% sector-weighted vote of the PJM Markets and Reliability Committee on Thursday.

Just two of 12 Transmission Owners voted in favor of the proposal, which won 90% or more support from each of the other sectors.

Ed Tatum of American Municipal Power presented the proposal, which AMP co-sponsored with Old Dominion Electric Cooperative, the PJM Industrial Customer Coalition, the PJM Public Power Coalition, LS Power and ITC Mid-Atlantic Development.

“Aging infrastructure is a primary driver of investment,” Tatum said, noting that $5.5 billion in replacement projects have been identified and more are expected. That’s because most of the grid was built 30 to 50 years ago, he said. “We’re concerned about the number of dollars being spent.”

Some transmission owners have criteria for end-of-life facilities, but others do not, treating them as supplemental projects, Tatum said. Supplemental projects are improvements not required for compliance with PJM system reliability, operational performance or economic criteria.

Uniform guidelines would improve how the local and regional planning process determines the need for replacement facilities, according to the problem statement.

The discussion raised issues debated in a FERC technical conference in November. (See PJM TOs Defend Jurisdiction at FERC Conference.)

The newly formed End of Life Task Force will be charged with developing “alternatives for providing more transparency and consistency in the review of end-of-life projects, including the development of PJM end-of-life-criteria.” It will report to the MRC.

The majority of transmission owners opposed the plan, saying the problem statement prescribed a solution, that such guidelines should be voluntary and that it was illegally treading on the rights of transmission owners to maintain their own equipment. They called for an education session before bringing the issue back for a vote and said any such task force should report to the Planning Committee.

Tatum said the sponsors rejected a proposed revision by the TOs to make the guidelines voluntary because “making it voluntary is the status quo.”

And, he said, “Based on the conversations I’ve had with a number of you, I think that the definition you all may be using for maintenance is a bit expansive. My water heater blew last week and I didn’t maintain it, I replaced it.”

Speaking on behalf of the TOs, Chip Richardson of PPL said, “The TOs have expressed some concern that the very nature of this problem statement would violate their rights. … We think that the MRC needs to understand that this is a task to do something. This is not a problem statement or opportunity to do something. We’re implementing a solution that this group has chosen.”

Richardson said the TOs would have supported the issue if the guidelines were voluntary. He called for an education session to address three issues: to whom the task force should report; the rights of the TOs and PJM under the Consolidated Transmission Owners Agreement; and the implications of such criteria on cost allocations for projects in the Regional Transmission Expansion Plan.

“We’re launching a solution but are not well informed of what the implications are,” he said.

Tatum said it was not the intent of the sponsors to infringe upon TOs’ rights and that the task force would not be considering the issue of cost allocation. While the problem statement suggests “criteria and guidelines” would improve transparency, the task force would consider other approaches that accomplish the goal, he said.

PJM Vice President of Planning Steve Herling said transparency was the RTO’s primary concern as well, and to that end it could support the problem statement and issue charge.

“There’s an expectation as we start our planning process … that there is the opportunity for full vetting,” he said. “As long as [the criteria] are out there and people can see them and we have the opportunity to vet the issues and solutions, I think we’re OK with this moving forward. I’m less concerned with who the group reports to. The same people are going to have to be on the task force regardless.”

Jason Barker of Exelon cautioned that the task force’s work could embroil PJM in litigation if it treads on TOs’ rights under the CTOA.

“This is unquestionably a discussion about cost allocation. The overture here is that that’s not an intent … but it naturally follows from the discussion we’re having. Let’s acknowledge the elephant in the room,” he said, adding, “With regard to the committee reporting, it’s interesting that the sponsors want to put this at the MRC. We have a PC that’s described in our Operating Agreement: ‘The [Planning Committee] shall advise the [Markets and Reliability Committee and PJM] on matters pertaining to system reliability … and planning strategies and policies.’ That’s exactly what we’re talking about here. This is exactly in the PC’s wheelhouse, and there’s really no reason to diverge from it aside from politics.”

Gloria Godson of Pepco Holdings Inc. said the initiative “may be a back door way of imposing a risk profile on the TOs.”

A TO’s asset management practices result in a certain life expectancy for each asset and when the asset needs to be replaced, she explained after the meeting. “If the PJM stakeholders become the determinants of when and how transmission assets will be replaced, [they] will effectively be imposing their risk profile on the TOs and usurping this key corporate decision-making of the company owning the asset,” she said. “Who is going to bear the risk for these assets going forward?”

Dan Griffiths, executive director of the Consumer Advocates for the PJM States, said that no one in his group opposed it.

Jim Jablonski, of the Public Power Association of New Jersey, said he would welcome more transparency in the rates that consumers are charged.

One municipality has seen its annual bill rise over four or five years from $300,000 to $1.5 million, he said. “I get questions about why this is happening,” he said. “I need to be able to explain.”

Co-sponsor Susan Bruce, representing industrial customers, said, “Customers have seen their bills increase on the transmission side like never before.”

The task force’s work, she said, “is meant to be done in a way that is respectful of TOs’ rights and those who end up paying” for transmission costs.