FERC last week approved PJM’s proposed Operating Agreement language to provide more transparency in the conditions that exempt “immediate need” transmission projects from competition under Order 1000 (ER20-2686).

The commission first opened an investigation into PJM’s practices for designating immediate-need projects in October 2018, questioning whether it was opposing Order 1000’s competition mandate by misusing the exemption. (See FERC to Probe Order 1000 Competition Exemptions.)

Order 1000 allows a right of first refusal (ROFR) for transmission projects needed for reliability so urgently that there is insufficient time to hold a competitive proposal window.

The commission determined Thursday that PJM’s compliance filing “establishes a just and reasonable implementation structure for immediate-need reliability projects.” PJM had been ordered in June to make OA changes regarding language it developed to create a ROFR exemption. (See More Transparency Ordered on PJM ‘Immediate Need’ Tx.)

Criteria Met

In its June order, FERC concluded PJM was complying with only two of the five criteria to limit the RTO’s discretion for applying the immediate-need exemption, saying it should be used only in “certain limited circumstances.”

Regarding the second criterion, FERC said PJM did not comply with a requirement that it separately identify and post an explanation of reliability violations and system conditions for which there is a time-sensitive need, including sufficient detail of the need and time sensitivity.

In Thursday’s filing, the commission determined that PJM’s proposed supplemental document providing details on each identified immediate-need reliability violation that the RTO proposes to exempt from the competitive proposal window process complied with requirements of the criterion. FERC also said PJM’s plan to both post the supplemental document on its website and include the supplemental document with Transmission Expansion Advisory Committee meeting materials met the criterion.

As an example of what the supplemental documentation would look like, PJM provided the compliance attachments for the Northern Neck Area and Manassas Area, two reliability violations the RTO identified as immediate need in 2020.

LS Power argued in a protest filing that the supplemental document should be part of “presentation” materials rather than “informational” materials. FERC said it was not persuaded by LS Power’s arguments and that it was satisfied with PJM’s solution.

“We expect PJM to adequately inform its stakeholders about all immediate-need reliability transmission projects such that transmission project-specific information will be included in the materials for TEAC meetings, included for discussion, and stakeholders will have opportunities to raise comments and questions about specific immediate-need reliability projects,” FERC said.

For the third criterion, FERC said PJM must provide a “full and supported written description” on any decision to award a project to an incumbent TO, including an explanation of other transmission or non-transmission options that the RTO considered and the cause of the need and why it was not identified earlier.

PJM proposed that the example attachments comply with the requirement to “provide a full and supported description of its decision to designate the immediate-need reliability project to the incumbent transmission owner, the alternatives considered and the circumstances generating the need, including why the need was not identified earlier.”

Protesters argued that the compliance attachments do not explain if other transmission and non-transmission alternatives were considered or why a time-sensitive reliability need was not identified earlier. LS Power also argued that the compliance attachments “make only sweeping statements about the reliability issues and the resulting determination that a competitive proposal window is infeasible.”

FERC said it agreed that PJM’s clarifications are “adequately responsive to these concerns” and that the compliance attachment for the Manassas Area specifically identified why a reliability need was not identified earlier. FERC did say PJM acknowledged that it “did not explicitly provide discussion of the alternative transmission and non-transmission options” considered in the attachment.

“In all future supplemental documents, we expect PJM to include an explicit explanation of other transmission or non-transmission options that it considered before designating an immediate-need reliability project,” FERC said.

Finally, in the fourth criterion, FERC said stakeholders must be permitted time to provide comments in response to the project description and the comments must be made publicly available. The commission had found that PJM providing three days for stakeholders to review immediate-need reliability project materials was not an adequate amount of time.

PJM proposed to revise the OA to add a specific period of “no less than 10 days” for stakeholders to review the meeting materials and transmission project-specific supplemental documents.

“We find that PJM’s proposed revisions are just and reasonable given the time-sensitivity of the reliability violations being addressed by proposed immediate need reliability projects,” FERC said.