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Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region

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Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region Randall B. Palmer Senior Corporate Counsel – PowerPoint PPT presentation

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Title: Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region


1
Transmission Owner PerspectivesTransmission
Siting and Order No. 1000 Cost Allocation in the
PJM Region
  • Randall B. Palmer
  • Senior Corporate CounselFirstEnergy Service
    Company 1

University of Pittsburgh School of Law 2013
Energy Law Policy Institute Pittsburgh,
Pennsylvania
2
Challenges of Siting and Constructing New
Transmission Facilities
  • Selection of a proposed route, especially in well
    developed or environmentally sensitive areas
  • Possible project reconfiguration to avoid these
    areas
  • Design and engineer to minimize impacts, if
    possible
  • State siting authorizations, e.g., certificate
    of public convenience and necessity
  • Lengthy, complicated and revised procedural
    schedules
  • High volume of discovery
  • Many parties, including numerous pro se
    intervenors
  • Vigorous public and political opposition
  • Changing PJM need justifications and in-service
    dates
  • Coordination required in multi-state projects to
    assure authorized routes connect

3
Challenges of Siting and Constructing New
Transmission Facilities (Continued)
  • Acquisition of right-of-way
  • Exercise of eminent domain may be a lengthy
    process if quick take is not available
  • Voluntary negotiations may provide access earlier
  • Authorizations to cross federal lands, e.g.,
    Appalachian Trail, national parks and forests,
    may require several years of study by government
    agencies and require expensive mitigation
  • State and federal environmental and cultural
    authorizations, e.g., U.S. Fish and Wildlife
    Service, Corps of Engineers, historic
    preservation agencies, may require mitigation of
    impacts to endangered species, wetlands,
    historical sites, etc.

4
Challenges of Siting and Constructing New
Transmission Facilities (Continued)
  • Other state and local authorizations, e.g.,
    special use exceptions, road and highway crossing
    permits, may be required and may be controversial
  • Uncertainty of timing of regulatory
    authorizations may cause the acquisition of
    material, equipment and labor when needed and in
    sufficient amounts to be more difficult
  • Cost recovery
  • Ability to obtain incentives from FERC maybe
    more difficult2
  • Recovery of abandonment costs may bedifficult,
    e.g., PATH and MAPP projects3

5
A New Transmission Planning Dynamic after ROFR
Elimination
  • FERCs Order No. 10004 eliminated the right of
    first refusal in favor of incumbent transmission
    owners to construct, operate and maintain new
    transmission facilities in their zones
  • PJM planning process timeframe extended to allow
    for proposal window process5
  • During proposal window process, incumbents and
    non-incumbents submit proposals to build, operate
    and maintain upgrades and new transmission
    facilities
  • Non-incumbents may be designated to build,
    operate and maintain upgrades and new facilities
    as part of the incumbents existing transmission
    system

6
A New Transmission Planning Dynamic after ROFR
Elimination (Continued)
  • Elimination of ROFR likely to lead to a
    hodgepodge of ownership and maintenance
  • Long-term impacts to reliability, efficiency and
    overall integrity of the PJM interconnected
    transmission system as a result of ROFR
    elimination not yet known
  • ROFR elimination is on appeal6

7
Order No. 1000 Cost Allocation for PJM Region
  • Cost allocation for new transmission facilities
    greater than 500 kV (Opinion No. 494) in dispute
    for nearly 10 years and remains in litigation7
  • Order No. 1000 requires regional cost allocation
    for new transmission facilities to meet six
    principles8
  • PJM Transmission Owners workinggroup formed in
    August 2011 todevelop a forward-looking
    regionalcost allocation methodology inresponse
    to Order No. 1000

8
Order No. 1000 Cost Allocation for PJM Region
(Continued)
  • FERC adopted the PJM Transmission Owners October
    2011 Section 205 cost allocation proposals
    effective for projects approved by PJM Board on
    and afterFebruary 1, 20139
  • Regional Facilities and new Necessary Lower
    Voltage Facilities10 required for reliability
    50 postage stamp, 50 solution-based DFAX
    analysis
  • Regional Facilities required for market
    efficiency 50 postage stamp, 50 based on zonal
    decreases in load energy payments resulting from
    the new facility
  • Lower Voltage Facilities11 required for
    reliability 100 solution-based DFAX analysis
  • Lower Voltage Facilities required for market
    efficiency 100 based on zonal decreases in load
    energy payments resulting from the new facility

9
Order No. 1000 Interregional Cost Allocation for
PJM Seams
  • PJM Transmission Owners working group negotiated
    interregional cost allocations for seams with the
    MISO, NYISO and SERTP12 regions
  • Negotiations for MISO region were unsuccessful
  • PJM Transmission Owners July 10, 2013 filings13
  • PJM/MISO seam Cost allocation provisions of
    existing MISO-PJM Joint Operating Agreement are
    compliant with Order No. 1000 requirements and no
    changes are necessary
  • PJM/NYISO and PJM/SERTP seams Avoided cost
    methodology allocates cost of a new interregional
    facility crossing the seam on a pro rata basis
    based upon the ratio of each regions avoided
    cost associated with a potential separate
    facility in its region to the total avoided costs
    of both regions potential separate facilities

10
Thank You
Thank You
Questions

Answers
11
Endnotes
  • 1. The views and opinions expressed in this
    presentation and provided by the presenter in
    response to questions and comments are those of
    the presenter and do not necessarily reflect the
    views, opinions or positions of FirstEnergy Corp.
    and its affiliates.
  • 2. Promoting Transmission Investment Through
    Pricing Reform, 141 FERC 61,129 (2012).
  • 3. PJM Interconnection, L.L.C., et al., 141
    FERC 61,177 (2012) PJM Interconnection, L.L.C.,
    et al., 142 FERC 61,156 (2013).
  • 4. Transmission Planning and Cost Allocation by
    Transmission Owning and Operating Public
    Utilities, Order No. 1000, FERC Stats. Regs.
    31,323 (2011), order on rehg, Order No. 1000-A,
    139 FERC 61,132, order on rehg, Order No.
    1000-B, 141 FERC 61,044 (2012).
  • 5. PJM Interconnection, L.L.C., et al., 142
    FERC 61,214 (2013).
  • 6. South Carolina Public Service Authority, et
    al. v. FERC, Case Nos. 12-1232, et al., (D.C.
    Cir.).
  • 7. Illinois Commerce Commission, et al. v.
    FERC, Case Nos. 13-1674, et al. (7th Cir.).
  • 8. Order No 1000 at PP 622, 637, 646, 657, 668,
    685.
  • 9. PJM Interconnection, L.L.C., et al., 142
    FERC 61,214 at PP 1, 21.
  • 10. Regional Facilities are double-circuit 345 kV
    and 500 kV and higher. Necessary Lower Voltage
    facilities are lower voltage facilities required
    to support new Regional Facilities.
  • 11. Lower Voltage Facilities are facilities that
    are neither Regional Facilities nor Necessary
    Lower Voltage Facilities.
  • 12. Southeastern Regional Transmission Planning.
  • 13. Docket Nos. ER13-1924, ER13-1926 and
    ER13-1927.
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