By Suzanne Herel

Public Service Electric & Gas (PSE&G) on Thursday submitted a letter to the PJM Board of Managers defending the cost estimate for its share of the Artificial Island project, which has nearly doubled to $272 million.

PJM planners, who say the increase could lead to a rebid of the project, expect to update the board on the project when it meets this week. (See Artificial Island Cost Increase Could Lead to Rebid.)

PSE&G told the board it was not involved in determining PJM’s initial cost estimate of $125.9 million, which later grew to $137 million.

‘Unusual’ Project

At the March meeting of the Transmission Expansion Advisory Committee, Vice President of Planning Steve Herling said PJM stood behind its choice of project for a stability fix at the New Jersey complex housing the Hope Creek and Salem nuclear reactors. The work is unusual, so PJM had little to compare it to, and the estimate didn’t reflect a design-level study, he said.

LS Power was chosen for the bulk of the project, which involves building a new 230-kV transmission line from the nuclear complex, under the river and into Delaware. PSE&G and Pepco Holdings Inc. were assigned upgrades necessary for the interconnection. LS Power says it is standing by its $146 million cost cap.

PSE&G said it didn’t begin preparing a detailed cost estimate for the 230-kV line terminating at the Salem substation until July, as its own proposals had the line ending at Hope Creek.

“PSE&G has clearly stated throughout this process that any work required to be done in Salem would be expensive and complicated,” the company said, citing a handful of communications supporting the assertion.

“Any proposal with work at Salem will be very challenging; the location of the switchyard controls and protection are located inside of the nuclear generating station,” it had told the board in July 2014.

In one of its proposals, it had said, “Due to experience with multiple historical baseline projects at Artificial Island, PSE&G can state that [Nuclear Regulatory Commission] governing requirements, critical site power maintenance and outage complexities, as well as known controls expansion limitations, will all contribute to design constraints potentially limiting a Salem expansion. PJM should carefully consider the implications of allowing such risks or costs to be understated or excluded from a total project cost comparison.”

At April’s TEAC meeting, planners said they are now considering alternate configurations, including terminating the new line at Hope Creek instead of Salem — a change in scope that could lead to rebidding for the project.

Tortured History

It was just the latest twist in the tortured history of the project, PJM’s first competitive solicitation under FERC Order 1000.

PJM planners originally recommended awarding the stability fix to PSE&G, but the board reopened bidding to finalists following protests from spurned bidders, state officials and others, leading to awards for LS Power, PSE&G and Pepco.

In November, FERC ruled that PJM’s proposed allocation of virtually all the project’s costs to ratepayers in Delaware and Maryland might not be just and reasonable (EL15-95). At a technical conference in January, commenters said PJM’s solution-based distribution factor cost allocation method was not appropriate for projects such as Artificial Island and the Bergen-Linden Corridor upgrade. (See Commenters: DFAX Cost Allocation Inappropriate.)