United States: FERC Conditionally Approves PJM’s "Multi-Driver" Transmission Planning Process

On February 20, 2015, the Commission conditionally approved PJM Interconnection, L.L.C.'s ("PJM") proposed modifications to the PJM Operating Agreement ("OA") and the PJM Open Access Transmission Tariff ("OATT") to allow for the planning and selection of "Multi-Driver" projects—i.e., transmission enhancements or expansions that address a combination of reliability, market efficiency, and public policy objectives—in the PJM Regional Transmission Expansion Plan ("RTEP"). Additionally, the Commission approved an associated cost allocation method proposed by the PJM Transmission Owners for the newly adopted process. Currently, PJM's process selects projects based on one factor, but does not have a procedure in place for selecting projects based on a combination of factors.

In its September 12, 2014 filing, PJM proposed its plans to develop a Multi-Driver project by identifying a more efficient or cost-effective solution that uses one of the following two methods:

  1. Proportional Multi-Driver Method – Under the Proportional Multi-Driver Method, PJM will take transmission projects that are identified as stand-alone solutions that address individual drivers, and identify a completely new, single regional transmission project that resolves a combination of those drivers with a more efficient, cost-effective solution.
  2. Incremental Method – Under the Incremental Method, PJM will add drivers incrementally to expand upon a single-driver solution already included in the RTEP. If the resulting Multi-Driver Project is a more efficient, cost effective solution for the combined drivers, PJM will replace the single-driver solution with the new solution.

PJM also proposed to revise its planning process for Multi-Driver projects to include projects identified through its existing "State Agreement Approach," a process by which states, individually or jointly, agree to be responsible for the allocation of costs for a proposed transmission expansion or enhancement that addresses public policy requirements identified or accepted by the state(s). Specifically, PJM proposed revisions so that a State Agreement Approach project may be added to an existing RTEP project or Multi-Driver project if the resulting, combined project would be more efficient or cost-effective.

On September 12, 2014, Baltimore Gas & Electric Company ("BG&E"), on behalf of the PJM Transmission Owners, separately filed revisions to PJM's OATT, proposing a specific cost allocation methodology for Multi-Driver projects. Notably, BG&E proposed:

  1. For a Proportional Multi-Driver Project, PJM will determine the relative contribution of each respective driver to the cost of the resulting Multi-Driver Project. The resulting cost will then be assigned to each driver and charged to the responsible customers in the same way that the costs would have been otherwise charged under a single driver project.
  2. For an Incremental Multi-Driver Project, the initial apportionment of benefits under the single driver project before it was upgraded to accommodate one or more additional drivers will remain unchanged. Only the incremental costs of the expansion or modification of the single driver project will be assigned to the respective beneficiaries of the additional drivers.

In its order, the Commission approved PJM's proposed revisions and the PJM Transmission Owner's proposed cost allocation methodology, subject to the following conditions:

  1. PJM must revise its OATT to include the criteria it will use to determine whether and how to divide a Multi-Driver project among transmission developers that combines two or more proposed transmission projects with two or more transmission developers.
  2. PJM must revise its OATT to clarify the cost-allocation protocols for: (a) when an entity already selected in the RTEP may propose to expand or add to its transmission project to meet additional drivers identified in a new proposal window; (b) whether such an entity may make a similar proposal to combine two or more of its own transmission projects that PJM previously selected in the RTEP to create a new Multi-Driver project in a future window; and (c) when entities attempt to propose additions to other proposals to form a Multi-Driver project after a proposal window is closed.

A copy of the Commission's order may be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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