Future of ComEd’s Grand Prairie Gateway transmission project uncertain

Commonwealth Edison’s failure to demonstrate that relieving infeasibilities in auction revenue rights (ARR) allocation will promote regional competition could jeopardize the future of the $109.6 million Grand Prairie Gateway transmission line.

Administrative law judges for the Illinois Commerce Commission issued a proposed order on Sept. 4 to deny ComEd’s application to build the Grand Prairie Gateway project, according to TransmissionHub.

As proposed, ComEd would build a 57-mile, 345-kV transmission line from an existing substation in Byron, Ill., to an existing substation in Wayne, Ill., to increase transmission capability and give customers greater access to low-cost, clean power.

ComEd estimates that the project would reduce carbon dioxide emissions over the first 15 years of operation by 473,000 tons.

In its proposed order, ICC staff took exception to ComEd relying on a determination from PJM Interconnection that the project was necessary to relieve transmission constraints that cause infeasibilities in the allocation of Stage 1A ARRs.

ComEd said in its application that Stage 1A ARRs are a “linchpin in the mechanism by which the regional market efficiently protects the native load customers from the consequences of congestion imposed by other transactions” and that they provide protection that “is critical to managing customers’ energy costs, providing certainty and to keeping the competitive market functioning efficiently and fairly.”

ICC staff said in the proposed order that there is no evidence that any load-serving entities in the ComEd zone rely on ARRs for long-term hedging against congestion cost increases, thus the theory does not apply to ComEd.

In a Sept. 25 reply, ComEd said the proposed order relies on the premise that the Illinois Power Agency (IPA) auction process renders ARRs irrelevant to retail customers when, in fact, the majority of Illinois load is not served through the IPA auction but by alternate retail energy suppliers or by ComEd from the market. ComEd pointed to evidence it presented showing that currently infeasible Stage 1A ARRs are assigned to Illinois load-serving entities and “sink in the ComEd load zone.” Furthermore, PJM records show that continued ARR infeasibilities cost Illinois customers approximate $70m per year.

As an alternative for showing that Grand Prairie Gateway would promote a competitive market, ICC staff set aside ComEd’s claim regarding the long-run hedging of congestion costs and noted that load-serving entities in the ComEd region benefit directly from ARR allocations, which are a source of revenue.

ICC staff instead highlighted unhedged congestion benefits as compared to long-run hedges.

“[Grand Prairie Gateway] will not only restore Stage 1A ARR feasibility, but it will also reduce unhedged congestion and [locational marginal pricing] and, all else equal, will therefore reduce the cost to serve load in the ComEd zone,” ICC staff said, noting that estimated benefits resulting from the project will be in the range of $121 million to $324 million.

In its review of the proposed project route, ICC staff said that, while it finds the overall project beneficial to the market, ComEd did not identify an alternative right of way for 20 percent of the project from Eglin, Ill., to the Wayne substation and “failed to show good cause why it should be excused from providing and identifying an alternative right of way for that part of the project.”

ComEd suggested in its reply that the ICC issue a certificate of public convenience and necessity for the project as a whole, but withhold permission to construct the Elgin-to-Wayne portion of the route until additional evidence supporting that segment is provided at rehearing. This approach, ComEd said, would allow the utility to begin construction on uncontroversial portions of the project and deliver benefits to retail customers as soon as possible.

The deadline for ICC action on the proposed order is Oct. 24.

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