Public Service Electric & Gas files complaint against PJM over Order 1000 issue

Public Service Electric and Gas (PSE&G) filed on Jan. 29 at the Federal Energy Regulatory Commission a complaint against PJM Interconnection over grid reliability issues around its “Artificial Island” nuclear facilities in southern New Jersey.

PSE&G said it is submitting this complaint because PJM did not follow its rules when conducting a competitive transmission solicitation to resolve operational performance issues at Artificial Island. PSE&G requests that the commission order PJM to comply with its rules in this and all future transmission solicitations under Order No. 1000.

Artificial Island is PJM’s first major competitive solicitation for transmission under its Order No. 1000 rules. “Artificial Island” refers to the transmission and generation infrastructure associated with the second largest nuclear complex in the United States, including the Salem 1 and 2 and Hope Creek nuclear generating units that have a total generating capacity of 3,818 MW.

Artificial Island has historically been stability-constrained and special operating procedures have been used to maintain stability in the area. PJM proposed to mitigate these limitations through a competitive transmission solicitation that commenced in April 2013.

The utility noted in its complaint that PJM’s Order No. 1000 rules for transmission solicitations use a “sponsorship model” under which potential transmission solutions are proposed by sponsors, not by PJM. The process begins when PJM posts information on the transmission problem and requests proposals to address it. Prospective transmission developers then have the opportunity to submit proposals during a defined “proposal window” (ranging from 30 to 120 days).

After the window closes, PJM can request additional information from the project sponsors. The sponsors must respond within ten days if they want to remain in the solicitation, but they cannot modify their proposal in response to PJM’s request (or at any time after the window closes). PJM staff then evaluates and compares the proposals and, after seeking stakeholder input, PJM selects the more efficient and cost-effective proposal.

If, however, none of the proposals represents the more efficient or cost-effective solution, PJM re-posts the solicitation or, if there is insufficient time to do that, PJM proposes its own solution and designates the incumbent transmission owner to build it. This is the only situation in which PJM may craft its own solution under its rules.

"PJM did not, however, follow this process when conducting the Artificial Island solicitation," said PSE&G. "Rather than evaluating and comparing the proposals and selecting the best one, PJM unilaterally modified all of them. PJM removed major line segments from several proposals. It added static VAR compensators to many of them. It fixed the proposals that failed to meet its posted criteria so they would pass the criteria. After making all these changes, PJM sought stakeholder comment on a short list of four PJM-modified proposals and then recommended one of the proposals to the PJM Board. The board did not accept that recommendation, but rather allowed one sponsor to modify its proposal to include a cost cap. The Board then invited the other short-listed sponsors to submit cost caps as well. PJM then conducted more evaluations and requested more information. That process continues today, nearly two years after it started, with no conclusion or even a recommendation.

"The competitive transmission process envisioned by Order No. 1000 cannot succeed if the regions do not follow their solicitation rules," PSE&G added. "The commission gave each region significant flexibility in implementing the reforms associated with removing federal rights of first refusal, but it required each of them to have clear and transparent rules for conducting solicitations and selecting a winner from among the competing proposals. PJM emphasized the clarity and transparency of its rules when it complied with Order No. 1000. Additionally, PJM emphasized the limitations on its role in the process—specifically, its role as an independent evaluator of competing solutions, not the entity crafting those solutions. PJM also emphasized the importance of not allowing bidders to modify their proposals after the proposal window closed. PJM said this would 'chill' the competitive process and give one bidder an 'unfair advantage' over the others.

"Because PJM did not adhere to this process, the commission should grant the complaint and order PJM to follow its rules in this solicitation and all future ones. If PJM believes that no proposal submitted during the proposal window represents the more efficient or cost-effective solution, it can re-post the solicitation. When doing so, it can provide more guidance to potential sponsors based on the experience of its first major solicitation.

"PSE&G appreciates that there are growing pains with implementing any significant new process. PSE&G also believes that PJM has acted in good faith and is no doubt trying to achieve an end result that it believes reasonable. But it is the competitive process that is relied upon to produce reasonable results in this area and that process can succeed only if the rules are clear and they are followed. If PJM believes its rules need improvement, it can discuss its concerns with stakeholders and, as appropriate, file proposed amendments with the Commission. But in the meantime it must follow the rules. Artificial Island was lauded as the initial test of those rules and that test will fail if the rules continue to be abandoned."

PSE&G later pointed out: "PJM is experiencing operational performance challenges in the Artificial Island area. Artificial Island has historically been stability-constrained, and special operating procedures have been used to maintain stability in the area for the past several years. Also, scheduled or forced outages on the 500 kV transmission circuits at Artificial Island can require a significant reduction in the output of the generating units and potentially cause 500 kV voltage criteria to be violated. There are, however, no identified reliability violations to date. PJM’s planning studies through 2022 do not show reliability violations associated with Artificial Island."

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