FERC has opened the door for PJM to resubmit a previously rejected proposal to shift its Regional Transmission Expansion Plan (RTEP) protocol from its Operating Agreement to its tariff, while dismissing a rehearing request for a connected proposal by the RTO’s transmission owners (ER24-2336).  

PJM’s RTEP protocol proposal had been linked with another proposal by several transmission owners to revise the RTO’s Consolidated Transmission Owners Agreement (CTOA), including adding “overlap provisions” that would have required PJM to consult with TOs before proceeding with a regional project that would address the same need as a local, supplemental project proposed by a TO.  

The TO proposal also would have established a conflict mediation process for instances when a TO contended that an action by the PJM Members Committee conflicts with the CTOA.  

PJM and the transmission owners had asked the commission to consider both filings as one proposal, arguing that one could not be approved without the other. 

But in a December 2024 order rejecting the proposals, the commission found the CTOA changes would impinge on PJM’s independence by providing TOs with an exclusive opportunity to affect filings PJM is able to submit under Section 205 of the Federal Power Act. (See FERC Rejects PJM and Transmission Owners’ CTOA Proposals.) 

At the same time, FERC also rejected PJM’s proposal to shift the RTEP protocol to the tariff because of its tie with the CTOA revisions, while also finding that PJM had not made the case that keeping the planning protocols in the OA renders the RTO’s governing documents unjust and unreasonable. 

The July 14 rehearing order again rejected the CTOA revisions, saying they would grant TOs too much influence over PJM’s decision making on planning, extend Mobile-Sierra protections to the revised language and place “substantive transmission planning rules in the CTOA.” 

“The CTOA amendments go beyond changes to enable this transfer and also would restrict PJM’s ability to make independent FPA Section 205 filings that PJM TOs believe contravene the CTOA, add substantive transmission planning rules to the CTOA, and grant the Mobile-Sierra public interest standard presumption to several CTOA provisions,” the commission wrote. “Thus, the broad cumulative effect of the integrated package of filings would be to shift the ability to influence PJM’s FPA Section 205 filings from a diffuse right shared by the Members Committee representing diverse interests to a concentrated right possessed by a single class of stakeholders, the PJM TOs. Moreover, PJM TOs’ new rights would be housed in the CTOA and granted Mobile-Sierra protections, which would raise the bar for any future changes.” 

However, the commission withdrew its determination that PJM’s proposal had not met the FPA Section 206 burden of showing that the OA is unjust and unreasonable with the inclusion of the RTEP protocol, instead dismissing the proposal as moot given the rejection of the intertwined CTOA revisions. 

“We emphasize that our dismissal of the PJM complaint here does not preclude a future filing proposing to move the RTEP protocol from the OA to the tariff. The PJM board has the authority to petition the commission under FPA Section 206 to modify any provision or schedule of the OA that the PJM board believes to be unjust, unreasonable or unduly discriminatory,” the commission wrote. 

‘Resounding Victory’

Ari Peskoe, director of Harvard’s Electricity Law Initiative, said the rehearing order protects PJM’s independence and creates an uphill battle for TOs appealing the commission’s determination. 

“The rehearing order cements a resounding victory for the region’s consumers,” Peskoe told RTO Insider in an email. “The utilities’ proposed CTOA would have compromised PJM’s independence by letting the utilities interfere with PJM’s decision-making processes, particularly about transmission planning. That’s why state regulators, consumer advocates, generators and public power lined up against the CTOA. Because FERC reiterated three separate and independent reasons for finding the utilities’ CTOA deficient, the utilities will have a nearly impossible task in trying to convince the D.C. Circuit to reverse FERC’s order.” 

Peskoe also argued the CTOA revisions were not legally necessary for PJM to transfer the RTEP protocol to the tariff and the RTO can pursue the changes on their own merits. 

“With FERC’s modification, PJM is now free to try again — on its own — to move the regional transmission planning provisions from the operating agreement to the tariff. However, rather than filing a complaint, PJM should try to work with its members to see if there’s a deal on governance that might be acceptable to a majority of its members and to state regulators,” he said. 

PJM did not respond to a request for comment on whether it plans to refile the proposal or thinks that would require a fresh consultation with its membership. 

Alex Stern, Exelon director of RTO relations and strategy, said the utility expects PJM and member TOs to continue working to find solutions to ensure the grid keeps up with accelerating load growth. Defending PJM’s proposal to transfer the RTEP protocol during a May 2024 Members Committee meeting, he said TOs would be giving up stakeholder process veto rights over planning as part of the proposal in an effort to ensure PJM has the authority it needs to plan projects that can facilitate the clean energy transition while meeting reliability challenges. (See Members Vote Against Granting PJM Filing Rights over Planning.) 

“We are still reviewing the order, and there is still an appeal pending,” Stern said. “The CTOA is the foundation of the relationship between the transmission owners and PJM. Both are bound by this agreement and mutual responsibilities to work with one another. Nothing in FERC’s order changes that. We expect the TOs and PJM will continue to discuss ways to ensure PJM has the necessary tools to plan transmission to support load growth, including AI needs, and the evolving grid.”