FERC denies request for PSE&G transmission project rehearing

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FERC in a May 10 order denied Linden VFT LLC’s request for rehearing related to FERC’s May 2014 order, in which the commission granted Public Service Electric and Gas’ request for authorization to recover certain transmission incentive rate treatments regarding PSE&G’s investment in the Bergen–Linden Corridor Transmission Project.

FERC noted that PJM Interconnection in March 2014 submitted, on behalf of PSE&G, a request for authorization to recover certain transmission incentive rate treatments, including construction work in progress under sections 205 and 219 of the Federal Power Act and FERC Order 679 (“Promoting Transmission Investment through Pricing Reform”) regarding PSE&G’s investment in the project.

In the March 2014 filing, PSE&G explained that the PJM Regional Transmission Expansion Plan included the project to address PJM reliability violations and that the project was the most cost-effective and efficient solution.

As noted in FERC’s May 2014 order, the project includes the construction of 26 single-circuit miles of new overhead 345-kV lines and 30 miles of underground circuits, including one mile of new circuits to be built beneath Newark Bay. The projected in-service dates of the project would occur in three phases: Phase 1 (345-kV conversion in the Hudson–Bergen overhead transmission corridor) targeted to be in service by June 2016; Phase 2 (345-kV conversion in the Linden–Bayway overhead transmission corridor) targeted to be in service by June 2017; and Phase 3 (work on the facilities interconnected by underground cable, looping together Bayway–North Avenue–Newark Airport–Bayonne–Marion) targeted to be in service by June 2018.

During its December 2013 board meeting, PJM approved the Bergen–Linden Corridor Project at an estimated cost of $1.2 billion in its RTEP and assigned responsibility for the project to PSE&G.

According to FERC’s May 10 order, the New Jersey Division of Rate Counsel, Linden VFT and the Public Power Association of New Jersey protested the March 2014 filing.

As noted in FERC’s May 2014 order, Linden VFT stated that it was in the process of filing a complaint regarding PJM’s solution-based DFAX cost allocation and requested that FERC either reject PSE&G’s incentive request filing without prejudice and direct PSE&G to refile following the conclusion of the other dockets dealing with cost allocation (Docket Nos. ER14-972 and ER14-1485, dealing with PJM’s determination of nested zone and cost allocation for RTEP projects); hold the proceeding in abeyance pending the outcome of those dockets; or set the proceeding for hearing and consolidate it with the other dockets.

FERC, in its May 2014 order, denied Linden VFT’s request to consolidate the proceeding with the proceedings in Docket Nos. ER14-972 and ER14-1485 dealing with regional cost allocation for RTEP projects. In general, FERC said in that order, the commission formally consolidates matters for purposes of hearing and decision only if a trial-type evidentiary hearing is required to resolve common issues of law and fact and consolidation will ultimately result in greater administrative efficiency. As such, FERC said, the proceedings did not warrant consolidation and, in any event, the commission believed the record is sufficient for it to rule on PSE&G’s filing without a hearing.

In its May 2014 order, FERC granted PSE&G’s request for authorization of 100 percent CWIP for the Bergen–Linden Corridor Project, subject to PSE&G submitting a compliance filing, and granted PSE&G’s request for the abandonment incentive for the project.

In its May 10 order, FERC said that in its request for rehearing, Linden said that the proposed cost allocation for the project would apply to Linden. Linden contends that the issues with respect to the cost allocations of the project have not yet been resolved, and FERC erred by not delaying or deferring the cost allocations for the project, or make those cost allocations subject to refund, depending upon the outcome of that proceeding.

FERC also noted that according to Linden, because the May 2014 order does not state that the incentive rates are delayed, deferred or subject to refund, PSE&G may seek to collect CWIP from Linden – and the other entities that have challenged those cost allocations in the cost allocation proceeding – prematurely. FERC said that Linden contends that commission precedent requires that customers who have paid CWIP, and are not ultimately responsible for the allocated cost of transmission expansion should receive refunds.

FERC said that it disagrees with Linden that granting the transmission rate incentives was premature. In Order No. 679, FERC established the process for filing for acceptance of rate incentives prior to projects being proposed in order to provide incentive for transmission infrastructure investment. FERC added that it did not require that such incentive filings be made only after projects have been approved and cost allocation issues have been resolved.

The PSE&G project concerns the justness and reasonableness of the incentives requested by PSE&G and not how those costs will be allocated to customers, FERC said. In the May 2014 order, FERC granted PSE&G’s requested incentives subject to a compliance filing addressing accounting controls and protocols, which FERC also accepted.

FERC added that since no issues regarding the appropriateness of the rate incentives needed to be resolved, FERC found no basis to make the filing subject to refund. Any refund issues are appropriately addressed in the rate and cost allocation proceedings, FERC said.

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