FERC to hear revisions on PJM transmission owners tariff

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FERC has granted rehearing of an order in which it rejected the PJM Transmission Owners’ proposed revisions to the PJM Interconnection open access transmission tariff involving cost allocation.

The PJM Transmission Owners last March proposed revisions to allocate all of the costs of certain regional transmission expansion plan projects, which would not otherwise be included in the RTEP but for the fact that they address local transmission owner planning criteria, to the transmission zone of the transmission owner that filed the criteria, FERC added in its order issued on Feb. 12.

The PJM Transmission Owners proposal addressed projects that are included under individual transmission owner’s FERC Form No. 715 criteria, which are developed according to the transmission owner’s local planning criteria, rather than to address PJM regional criteria or NERC reliability standards, FERC said.

Historically, the PJM Transmission Owners said, those projects are lower voltage transmission projects, the costs of which are allocated using solution-based distribution factor method, and that for 98 percent of the 303 projects included in the RTEP solely to address local transmission owner planning criteria, all of the costs have been allocated exclusively to the zone of the transmission owner that filed the local transmission owner planning criteria that gave rise to the need for the project.

FERC added that the PJM Transmission Owners argued that the proposed revisions will better align the purpose and intent of local transmission owner planning criteria with the need for and beneficiaries of those projects.

FERC last May rejected the PJM Transmission Owners’ proposal, finding that under FERC Order 1000, transmission projects selected in a regional transmission plan for purposes of cost allocation must be eligible to use the regional cost allocation method. In its May 2015 order, FERC further stated its understanding that local transmission owner planning criteria are incorporated into the regional transmission planning process, and as a result, projects intended to address such criteria may be selected in PJM’s RTEP for purposes of cost allocation.

FERC added that it found that the PJM Transmission Owners’ proposal did not comply with the Order 1000 requirement that transmission projects selected in the regional transmission plan for purposes of cost allocation be eligible to use the regional cost allocation method, as it would eliminate regional cost allocation for the subset of transmission projects selected in the regional transmission plan for purposes of cost allocation to address local transmission owner planning criteria.

Discussing rehearing requests, FERC said that the PJM Transmission Owners contend, for instance, that the May 2015 order is based on the incorrect reasoning that every project included in the RTEP is by definition selected in the regional transmission plan for purposes of cost allocation.

The PJM Transmission Owners agree that a project must be included in the RTEP to be eligible for regional cost allocation, but they contend that projects proposed and considered in the RTEP are not necessarily selected for the purposes of regional cost allocation. Instead, FERC added, the PJM Transmission Owners state that certain projects proposed and considered in the RTEP are included to address various issues, some of which are local needs and some of which are regional needs.

FERC said that based on the rehearing requests and comments on a November 2015 technical conference, it has become clear that the PJM Transmission Owners’ proposed tariff revisions apply to projects that are included in the RTEP; solely address transmission owner Form 715 local planning criteria; and are not selected in the RTEP for purposes of cost allocation.

With that clarification, and consistent with a prior commission order, FERC said that it finds that it is just and reasonable for the costs of projects with those characteristics to be allocated entirely to the zone of the individual transmission owner whose Form 715 local planning criteria underlie each project.

As the PJM Transmission Owners explain, not all projects included in the RTEP are selected for purposes of cost allocation, FERC said, adding that the PJM Transmission Owners’ proposal would include among the projects that are included in the RTEP, but are not selected for purposes of cost allocation, a new category of projects that solely address transmission owner Form 715 local planning criteria.

In PJM, such projects are not needed to meet PJM regional criteria or NERC reliability standards, FERC said. Instead, those projects involve transmission facilities needed as determined solely by individual transmission owner Form 715 local reliability criteria; they are included in the RTEP and approved by the PJM Board only to ensure that such projects are developed in a manner that is consistent with PJM’s overall regional expansion plan, FERC said.

The PJM Transmission Owners also explain that only if a transmission project is driven solely by an individual transmission owner’s Form 715 local planning criteria it is included in that new category of transmission projects, FERC said.

Any project included in the RTEP not only to address an individual transmission owner Form 715 local planning criteria, but also to address PJM regional criteria or NERC reliability standards, would not be in that new category and would continue to be selected for purposes of cost allocation, making it eligible to use the regional cost allocation method, FERC said.

FERC said that it accepts, effective May 25, 2015, the PJM Transmission Owners’ proposed tariff revisions.

FERC Commissioner Cheryl LaFleur dissented in part, saying that while she generally agrees with the decision, she would condition acceptance of the PJM Transmission Owners’ filing on the preservation of the current regional cost allocation method for certain high-voltage projects, even if those projects are selected solely to address local planning criteria.

The PJM Transmission Owners provide data demonstrating that the overwhelming majority of projects approved to address local planning criteria are already allocated solely to the zone in which they are located through the DFAX methodology, and therefore propose to automatically allocate the costs of all such projects to a particular zone, without the potential for regional cost allocation, LaFleur said.

However, by their own admission, the overwhelming majority of these projects are also lower voltage facilities, she said, adding that they therefore fail to demonstrate that this dataset is representative of high-voltage projects that the PJM Transmission Owners previously argued, and FERC previously found, confer regional benefits justifying the application of the 50/50 regional cost allocation methodology.

“I continue to believe that these high-voltage projects in PJM, even if developed solely to address local planning criteria, provide regional benefits that warrant some regional cost allocation,” she said. “I also believe the currently-effective 50/50 methodology reasonably balances the near-term benefits identified through the DFAX analysis with a recognition of the high-voltage projects’ broader regional benefits.

Without a more targeted record, I am not persuaded that the PJM Transmission Owners have rebutted the commission’s prior findings regarding the per se regional benefits of these high-voltage transmission projects to the PJM region.”

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