By Rory D. Sweeney

In a win for PJM’s incumbent transmission owners, FERC ruled Thursday that transmission projects driven by TOs’ individual planning criteria are exempt from competitive bidding.

It also ruled against a competitive transmission developer’s request to allow bidding on some immediate-need projects (ER16-2401, EL16-96).

The order approved Tariff and Operating Agreement revisions PJM proposed in response to FERC’s July 2016 show cause order initiating a Section 206 proceeding over inconsistencies in the OA. (See FERC Rejects PJM Cost Allocation on Dominion Project.)

PJM made revisions suggested by the commission to clarify that projects driven solely by a TO’s Form 715 local planning criteria are not subject to PJM’s competitive process because all the costs are allocated to the zone of the TO. PJM’s competitive process is limited to regionally allocated projects.

In the revisions, PJM also said it will identify local planning criteria transmission needs at the monthly Transmission Expansion Advisory Committee meetings so stakeholders can review and comment on them. The RTO will present its solutions to the issues, identifying applicable criteria, the project’s zone, alternatives it considered and an explanation of the decision to assign the project to the incumbent TO.

LSP Challenge

LSP Transmission, an LS Power subsidiary, challenged both the 206 proceeding and PJM’s filing in response. It said the RTO’s proposed revisions stifle competition and overlap with issues outstanding in other dockets, including a request for rehearing on an order that Form 715 projects aren’t eligible for regional cost allocation (ER15-1387). It also cited a show cause order in August 2016 questioning whether PJM TOs’ procedures for planning supplemental projects provided stakeholders opportunity for “early and meaningful input and participation,” as required by Order 890 (EL16-71).

Neither has been decided. In December 2016, the commission did reiterate an earlier ruling that Form 715 projects are not eligible for regional cost allocation. (See FERC Rejects Challenges on Local Tx Cost Allocations.)

Defining ‘Immediate Need’

LSP also argued that FERC “got it backwards” in directing PJM to clarify the three-year threshold for immediate-need reliability projects. LSP said immediate-need projects should only be exempt from competition if the in-service date of a solution is within three years, rather than also exempting those with a need date within that period.

PJM responded that it “makes no sense” to delay a project that cannot be built within three years to conduct bidding.

FERC agreed, saying, “The fact that it may take longer than three years to build a solution to an immediate reliability need is not a persuasive justification for potentially further delaying the solution.”

RTEP Approvals

In a related order, FERC on Thursday confirmed its approval of PJM’s cost allocations for projects added to its Regional Transmission Expansion Plan in March 2017 (ER17-1236). Commission staff had approved the allocation tentatively in June 2017 while the commission was without a quorum.

FERC denied a protest and request for rehearing from Dominion Energy, which had argued it shouldn’t be allocated all costs for two 500-kV facilities in its zone to address its Form 715 criteria. Dominion is appealing the order that allocated all Form 715 project costs to zones in which the criteria apply (ER15-1387).

Commissioner Cheryl LaFleur issued a separate concurrence, pointing out that she had dissented on the order Dominion is appealing.

“As explained in that dissent, I believe the commission should have retained regional cost allocation for transmission projects that are double-circuit 345 kV and 500 kV and above,” she wrote.