FERC on Friday approved revisions to PJM’s tariff that assign the full costs of constructing transmission upgrades necessary for the installation of 7,500 MW of offshore wind in New Jersey to the state (ER22-2690).
The commission affirmed that the proposal conforms with Order 1000’s State Agreement Approach, which permits a state to take on the cost of transmission upgrades for generation projects supporting their public policies. The order allows the installation of an estimated $1.07 billion in grid upgrades to go forward.
FERC found that the tariff revisions would not result in costs being passed to customers outside New Jersey, a concern raised by Long Island Power Authority; New York Power Authority; and three merchant transmission facilities (MTFs), Neptune Regional Transmission System, Linden VFT and Hudson Transmission Partners, which filed a protest as the “MTF Parties” on Oct. 31. (See NY Stakeholders Balk at NJ OSW Cost Allocation.)
The groups argued that the proposed language left open the possibility that a portion of the costs could be indirectly passed on to New York customers through border rate service. They called for more explicit clarifications to be added to preclude that possibility and specify that costs can only be applied to firm point-to-point transmission service.
The commission ruled that PJM adequately addressed those concerns in the revisions, as well as in a settlement agreement that FERC approved the same day between the RTO, its TOs and the MTF Parties, pertaining to point-to-point border rates (ER19-2105).
“We do not agree with MTF Parties that the crediting under the border rate revenue requirement, as proposed in the border rate settlement, may still result in New Jersey SAA project costs being passed through to entities that did not voluntarily agree to pay for those costs,” the commission said. “The border rate settlement specifically provides that the revenue requirement will not include the costs of state agreement public policy projects. Passing on such costs would violate that term.”
The order was unanimously approved, though Chair Richard Glick did not participate. Commissioner James Danly wrote in a concurring statement that he believes the order addresses the MTF Parties’ concerns, but if they continue to believe there are issues with the approved revisions, they should seek a rehearing.
“To the extent to which the MTF Parties find that the language set forth in today’s order fails to allay their concerns, they should pursue rehearing by citing the specific tariff language to which they object and should enumerate the specific misinterpretations that they fear, along with the consequences of those misinterpretations,” he wrote.
The FERC approval now allows for PJM and the New Jersey Board of Public Utilities to shift their attention to filing amendments to the SAA. During a Nov. 4 meeting of the PJM Transmission Expansion Advisory Committee, Assistant General Counsel Pauline Foley said filing those amendments with FERC first required the approval of a cost allocation methodology from the commission.
