Title: Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region
1Transmission 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
2Challenges 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
3Challenges 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.
4Challenges 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
5A 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
6A 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
7Order 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
8Order 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
9Order 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
10Thank You
Thank You
Questions
Answers
11Endnotes
- 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.