FERC on Tuesday accepted revisions to PJM’s Consolidated Transmission Owners Agreement (CTOA) changing the voting rules in the Transmission Owners Agreement-Administrative Committee (TOA-AC) and giving more voting power to larger transmission owners in the RTO (ER22-358).

PJM TOs in November filed the proposed revisions to the CTOA. The changes

• called for the removal of an individual vote majority requirement “where an extreme supermajority of ownership supports an action;”
• permitted voting action to occur “where a quorum of an extreme supermajority ownership is present;”
• provided “comparable changes to the conduct of simple majority votes,” and;
• limited the open meeting requirement to matters subject to a two-thirds voting rule under the existing CTOA language.

The commission said the revisions received “broad support” among transmission owners in a vote taken in October at the TOA-AC. The revisions become effective retroactively to Jan. 10.

“We find that the proposed CTOA revisions are just and reasonable as they are limited modifications to the CTOA that allow PJM Transmission Owners to resolve concerns potentially affecting their ability to achieve the needed vote to propose tariff changes to the Commission, and to effectively and efficiently conduct the business of the TOA-AC and execute their responsibilities as transmission owning members of PJM pursuant to the CTOA,” FERC said in its order.

Issues

The TOs said the CTOA currently features a voting structure based on a combination of two separate votes needed to act on an issue: an individual vote based on the votes of individual, unaffiliated PJM transmission owners; and a weighted vote based on the net asset value of each PJM transmission owner’s transmission facilities. According to the rules of the CTOA, no individual TO can have a weighted vote of more than 24.9% of the sum of the weighted votes.

Voting under current CTOA rules at the TOA-AC is divided into two procedures, including an action where a supermajority, or two-thirds, of the individual and weighted votes is required, or an action where a simple majority of both the individual and weighted votes is required.

The voting items requiring a supermajority include comments on the Regional Transmission Expansion Plan (RTEP) and tariff changes related to the recovery of transmission-related costs, including “joint rates or the PJM transmission rate design.” If a proposed issue such as a tariff change is supported by 95% of the weighted vote, a simple majority of the individual vote is required instead of the two-thirds rule.

The TOs said since the CTOA voting rules were adopted in 2006, there have been “several significant developments” impacting the number of transmission owners in PJM and the type of facilities qualifying a company to become a TO.

“PJM transmission owners assert that the commission’s approval of NERC’s definition of bulk electric system made it possible for small municipal electric systems to be eligible to have their transmission facilities integrated with the PJM region and become PJM transmission owners and thus parties to the CTOA,” FERC said in its order.

The TOs said without changes to the CTOA, the required majority individual vote “could create difficulty” in achieving consensus on tariff changes that “protect the PJM transmission owners’ substantial investment in the PJM transmission system that fairly allocate its costs among their transmission customers.” The TOs also said the CTOA should acknowledge the differing levels of investment among the voting entities, pointing out that more than $67 billion was invested in the PJM transmission system as of the beginning of 2021 with individual TO investments ranging from more than $140,000 to almost $15 billion.

In the proposal, the TOs requested the elimination of the majority individual vote approval “in a situation in which the requirement for a two-thirds vote is not met, but a weighted vote of 95% approves the proposal.” The proposal will leave the 95% weighted vote requirement in the CTOA unchanged.

The TOs also argued that the “proliferation of smaller, non-traditional transmission owners could also frustrate the ability to achieve quorum at TOA-AC meetings and thus the ability of the transmission owners to conduct business.” The proposed CTOA revisions called for a quorum to be present when “either 50% of the PJM transmission owners eligible to vote are in attendance or when PJM transmission owners representing 95% of the weighted vote are in attendance.”

In making its argument regarding voting in ISOs/RTOs, the PJM TOs cited FERC’s decision in 2019 to reject RTO Insider’s bid to force the New England Power Pool to open its meetings to the public and press, saying it lacked authority to act. (See FERC Rejects RTO Insider Bid to Open NEPOOL.)

“The commission found that rules prohibiting press and public access to NEPOOL meetings do not directly affect rates, because they do not affect who may vote on NEPOOL proposals,’” the TOs said in their filing.

Protests

A joint protest was filed in November by AMP Transmission, Old Dominion Electric Cooperative and Silver Run Electric, arguing that the impact of the CTOL changes would “disenfranchise non-traditional transmission owners whenever enough of the large incumbent PJM transmission owners coordinate their votes, as they have done in the past.”

The protesters said the changes would allow a “supermajority” of weighted votes to “override a proposal’s failure to obtain the required share of individual votes” and to “negate” the individual votes of the minority PJM TOs. They also argued that the TOs “fail to identify a single instance” where they were stopped from making a filing under the existing CTOA rules by the non-traditional transmission owners.

“Protesting parties assert that the proposed CTOA changes are unjust and unreasonable because they are premised entirely on speculation that ‘the proliferation of smaller, non-traditional [PJM] transmission owners’ could prevent a filing by larger incumbent PJM transmission owners,” the commission said in its order. “Protesting Parties contend that they have no incentive to block a filing that does not adversely affect their interests and that the existing TOA-AC voting rules already provide sufficient protection to incumbent PJM transmission owners.”

The commission said it disagreed with the argument that the CTOA revisions will disenfranchise the non-traditional PJM transmission owners.

“All PJM transmission owners retain the opportunity to express their views on proposals and to cast a vote,” the commission said in its order. “Furthermore, we find that the proposed revisions rebalance the CTOA voting rules to better align with individual PJM transmission owners’ economic stakes in the transmission system.”

Consenting Commissioners

FERC commissioners Allison Clements and Willie Phillips issued a concurring opinion, saying the revisions were approved by 80% of the individual vote under the current voting rules at the TOA-AC. They said PJM stakeholders also retain the ability to protest Section 205 filings “regardless of size.”

The two commissioners said they had “some concerns” with the voting changes, but they were not great enough to reject the proposal. They specifically pointed to the removal of the individual vote, saying the changes make that vote “irrelevant” when the TOs achieve a 95% or greater weighted vote.

The commissioners said they were also “concerned” that the TOs “failed to adequately respond” to a question in a deficiency letter issued by FERC about whether it was just and reasonable “for a small number of PJM transmission owners with the largest transmission rate base to meet the 95% weighted vote threshold for approving a voting item when a majority of individual PJM transmission owners vote against the item.”

“Instead, the PJM transmission owners dodged the question by revising it,” the commissioners said in the concurrence.