VALLEY FORGE, Pa. — PJM consumer advocates and transmission owners appear headed for a showdown over a proposed initiative to review the RTO’s use of designated entity agreements (DEA).

Consumer advocates narrowed their differences with TOs but were unable to “get across the finish line” with a consensus issue charge, Denise Foster Cronin, of East Kentucky Power Cooperative, told the Markets and Reliability Committee at its meeting Wednesday.

As a result, members will be asked at the MRC’s meeting this month to choose between two competing issue charges for a review of the DEA and PJM’s use of it, including potential changes based on the experience with the implementation of FERC Order 1000.

The major difference between the two issue charges, Foster Cronin said, was TOs’ insistence that revisions to the rights and responsibilities of PJM and the TOs under the Consolidated Transmission Owners’ Agreement (CTOA) be out of scope.

The initiative arose from a 2018 FERC order rejecting PJM’s request to revise the Operating Agreement to exempt incumbent TOs from executing the DEA (ER18-1647). (See FERC Rejects PJM Exemption for Incumbent TOs.)

PJM had proposed two changes to the competitive proposal window process mandated by Order 1000. The commission approved PJM’s request to allow transmission developers 60 days to accept a DEA after receiving it as the winner of a competitive project under Order 1000.

But the commission rejected the request to exempt incumbent TOs from executing a DEA for Regional Expansion Transmission Plan (RTEP) projects that the OA requires PJM to designate to an incumbent. Such projects include TO upgrades; projects that would alter the TO’s use of its right of way; and those located solely within a TO’s zone that are not cost allocated outside.

The commission rejected TOs’ rehearing request in 2019, saying that breaching a DEA is more expensive for nonincumbent TOs, which are subject to meeting construction milestones that may be delayed for reasons beyond their control while incumbent TOs only risk breaking the terms of a CTOA by missing scheduled in-service dates.

Unlike incumbents, nonincumbents must also “obtain a letter of credit or other financial instrument equal to 3% of the incremental project cost in the event of a breach,” meaning this extra cost must factor in project submissions, making the incumbent TO’s proposal cheaper by default, FERC said. (See Rehearing Denied on PJM Designated Entity Agreements.)

Greg Poulos, executive director of the Consumer Advocates of the PJM States (CAPS), said his group was unable to reach agreement on the scope of the issue charge despite six hourlong meetings with the TOs.

Poulos said the advocates question whether PJM is complying with schedule 6, section 1.5.8 of the OA, which requires entities assigned to construct and operate RTEP projects to comply with the DEA. PJM is not requiring incumbents to sign DEAs for all the situations identified in the OA, he said.

“We’re concerned that the language of the issue charge brought by the TOs could eliminate some of the projects” FERC intended to have covered by DEAs, such as immediate-need projects, he said.

The advocates’ issue charge includes a goal of ensuring “appropriate consumer protections” are followed by entities assigned to construct RTEP projects.

Steve Lieberman, of American Municipal Power, said PJM is “in a little bit of hot water” for not interpreting the OA as FERC directed.

“I’m not sure PJM would agree to that characterization,” responded Stu Bresler, the RTO’s senior vice president of market services.

“Our goal is making sure we’re treating everyone fair and equitably,” said Ken Seiler, PJM’s vice president of planning.

Foster Cronin said the TOs would like to review the DEA’s security requirements and development milestones to see if there are opportunities to streamline it based on PJM’s experience with Order 1000 over the last decade. “No developer should bear costs that don’t provide benefits,” she said.

Susan Bruce, representing the PJM Industrial Customer Coalition, said her group supports the broader look that CAPS proposed.

Alex Stern of Public Service Electric and Gas said the advocates’ issue charge doesn’t address the concern raised by FERC but raised a “new issue on how to apply more stringent requirements” on incumbents.

“It’s too simplistic to say PJM should just comply with the language” of the OA, he said. “We’re all confused.”