By Suzanne Herel
PJM’s solution-based distribution factor cost allocation method is inappropriate in certain situations and an alternative scheme should be developed, the majority of commenters told FERC as the comment period on the issue closed last week (EL15-95).
FERC called for an inquiry in November in response to complaints over the cost allocation for two transmission projects: a stability fix for New Jersey’s Artificial Island nuclear complex and the Bergen-Linden Corridor upgrade.
Of 10 filings, only two, from Public Service Electric and Gas and the PJM Transmission Owners, defended the status quo, echoing their testimony at a Jan. 12 technical conference on the issue. (See DFAX: ‘Poison Pill’ or ‘Best Method’ of Cost Allocation?)
FERC posed two questions: Is there a definable category of projects for which the DFAX cost allocation method might not be appropriate, and could a fair approach be developed for those occasions?
“Cost causation is the gold standard for allocation of new transmission projects,” wrote Hudson Transmission Partners and Neptune Regional Transmission System.
“When an analytical methodology hits the boundaries of its usefulness (and every model has such bounds), it starts to kick out unreasonable results,” they said. “The solution-based DFAX cost allocations for the New Jersey projects and for Artificial Island are jarring in their unreasonableness.”
PSE&G disagreed, saying the evidence “does not provide any basis for identifying one or more categories of [Regional Transmission Expansion Plan] projects for which the current solution-based DFAX cost allocation methodology does not provide a just and reasonable methodology for allocating costs commensurate with benefits. To the contrary, the cost allocation for each of the projects at issue in the underlying dockets is supported by the existing record.”
The transmission owners’ group concurred.
“Solution-based DFAX provides a just and reasonable measure of benefits from relative use over time for the vast majority of reliability projects in PJM,” the TOs wrote.
The remaining commenters said that DFAX should not be used to assign cost for projects not driven by flow-based issues, such as the stability fix at Artificial Island.
“The commission should direct PJM to modify the DFAX methodology to include load zone counterflow impacts in determining load zone impacts on that studied facility, to consider whether a project’s need is driven by flow-based issues, and to eliminate discriminatory post-analysis exceptions including the de minimis threshold,” wrote ITC Mid-Atlantic.
Wrote Consolidated Edison: “The record here, as developed at the technical conference, establishes that there is no rational relationship between energy flows and the intended benefits of non-overload projects.”
The Delaware Public Service Commission, together with the Maryland Public Service Commission, Delaware Division of Public Advocate and the Maryland Office of People’s Counsel, asked FERC to determine that stability-driven projects constitute a definable category for which the DFAX method should not be used.
Similarly, Old Dominion Electric Cooperative asked FERC to direct PJM to use an alternative cost allocation method for projects designed to address generator stability problems.
Weighing in with similar concerns were Linden VFT, the New York Power Authority and the Easton Utilities Commission.