New York Power Authority v. PJM Interconnection, L.L.C., 112119 FERC, EL17-94-000

Docket Nº:EL17-94-000
Party Name:New York Power Authority v. PJM Interconnection, L.L.C., and PJM Transmission Owners in their Collective Capacity
Judge Panel:Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee. Kimberly D. Bose, Secretary.
Case Date:November 21, 2019
Court:Federal Energy Regulatory Commission
 
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169 FERC ¶ 61, 114

New York Power Authority

v.

PJM Interconnection, L.L.C., and PJM Transmission Owners in their Collective Capacity

No. EL17-94-000

United States of America, Federal Energy Regulatory Commission

November 21, 2019

Before Commissioners: Neil Chatterjee, Chairman; Richard Glick and Bernard L. McNamee.

ORDER DENYING COMPLAINT

1. On September 28, 2017, New York Power Authority (NYPA), pursuant to sections 206, 306, and 309 of the Federal Power Act (FPA), 1 and Rule 206 of the Commission Rules of Practice and Procedure, 2 filed a complaint (Complaint) against PJM Interconnection, L.L.C. (PJM) and the PJM Transmission Owners In its Complaint, NYPA contends that PJM is violating its Open Access Transmission Tariff (Tariff) by continuing to invoice Regional Transmission Expansion Plan (RTEP) Transmission Enhancement Charges following Hudson Transmission Partner's (Hudson) notice that it had relinquished its Firm Transmission Withdrawal Rights and that such practice is unjust and unreasonable.[3] In addition, NYPA filed a motion to consolidate this proceeding with the investigation, initiated by the Commission in Docket No. EL17-84-000 pursuant to FPA section 206, to examine the justness and reasonableness of Hudson being unable to convert its Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights.

2. In this order, we deny the Complaint. In addition, we deny the motion to consolidate the proceeding with the investigation initiated by the Commission in Docket No. EL17-84-000.4

I. Background

A. Tariff Provisions

3. PJM files cost responsibility assignments for transmission projects that the PJM Board of Managers (PJM Board) approves as part of PJM's RTEP in accordance with Schedule 12 of PJM's Tariff and Schedule 6 of the Amended and Restated Operating Agreement of PJM (Operating Agreement).5 Schedule 12 of the Tariff establishes Transmission Enhancement Charges for "[o]ne or more of the Transmission Owners [that] may be designated to construct and own and/or finance Required Transmission Enhancements by (1) the PJM RTEP periodically developed pursuant to Operating Agreement, Schedule 6; or (2) any joint planning or coordination agreement between PJM and another region or transmission planning authority set forth in Tariff, Schedule 12-Appendix B."6 In developing the RTEP, PJM identifies transmission projects to address different criteria, including PJM planning procedures, North American Electric Reliability Corporation (NERC) Reliability Standards, Regional Entity reliability principles and standards, 7 and individual transmission owner Form No. 715 local planning criteria. Types of Reliability Projects[8] identified in the RTEP include Regional Facilities, 9 Necessary Lower Voltage Facilities, 10 and Lower Voltage Facilities.11

4. PJM utilizes a hybrid cost allocation method, which the Commission found complies with Order No. 1000, [12] for Regional Facilities and Necessary Lower Voltage Facilities that address a reliability need13 Under this method, PJM allocates 50 percent of the costs of Regional Facilities or Necessary Lower Voltage Facilities on a load-ratio share basis and the other 50 percent based on the solution-based distribution factor (DFAX) method.14 PJM allocates all of the costs of Lower Voltage Facilities using the solution-based DFAX method.15

5. With respect to transmission expansions or enhancements for which costs are assigned using the solution-based DFAX method, PJM makes a preliminary cost responsibility determination for each Required Transmission Enhancement at the time such Required Transmission Enhancement is included in the RTEP.16 Beginning with the calendar year in which a Required Transmission Enhancement is scheduled to enter service, and thereafter annually at the beginning of each calendar year, PJM updates the preliminary cost responsibility determination for each Required Transmission Enhancement using the values and inputs used in the base case of the most recent RTEP approved by the PJM Board prior to the date of the update. All values and inputs used in the calculation of the DFAX in a determination of cost responsibility shall be the same values and inputs as used in the base case of the most recent RTEP approved by the PJM Board prior to the determination of cost responsibility.

6. With respect to Merchant Transmission Facilities, the 50 percent of cost responsibility for Regional Facilities and Necessary Lower Voltage Facilities that is assigned annually on a load-ratio share basis is based on: (1) for the calendar year following the year in which it initiates operation, the actually awarded Firm Transmission Withdrawal Rights associated with its existing Merchant Transmission Facility; and (2) for all subsequent calendar years, the annual peak load of the Merchant Transmission Facility (not to exceed its actual Firm Transmission Withdrawal Rights) from the 12-month period ending October 31 of the calendar year preceding the calendar year for which the annual cost responsibility allocation is determined.17

7. The remaining 50 percent of cost responsibility assigned to a Merchant Transmission Facility for Regional Facilities and Necessary Lower Voltage Facilities, and for all of the costs of Lower Voltage Facilities assigned, using the solution-based DFAX method, is based on:18

(i) the existing Firm Transmission Withdrawal Rights of the Merchant Transmission Facility being evaluated, if the Merchant Transmission Facility is in service, or (ii) for a Merchant Transmission Facility that is not yet in service, the planned Firm Transmission Withdrawal Rights of the Merchant Transmission Facility being evaluated as identified in the Interconnection Service Agreement in effect for such Merchant Transmission Facility.19

B.

Hudson Request to Convert Firm Transmission Withdrawal Rights to Non-Firm, Docket No. ER17-2073

8. On July 10, 2017, at the request of Hudson, pursuant to FPA section 205, PJM filed an unexecuted, amended Interconnection Service Agreement among PJM, Hudson, and Public Service Electric and Gas Company (PSEG).20 The amended Interconnection Service Agreement sought to convert Hudson's 320 megawatts (MW) of Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights. On September 8, 2017, the Commission rejected PJM's July 10, 2017 filing.21 The Commission found that neither the existing Interconnection Service Agreement nor PJM's Tariff require PJM to file, under section 205, an unexecuted amended Interconnection Service Agreement with modifications requested by an interconnection customer.

C.

Show Cause Proceedings, Docket No. EL17-84-000

9. In rejecting PJM's July 10, 2017 filing, the Commission found that the existing Interconnection Service Agreement appeared to be unjust and unreasonable and unduly discriminatory to the extent it fails to permit Hudson to convert Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights and that PSEG's withholding of consent to the amended Interconnection Service Agreement appeared to be unjust and unreasonable. Accordingly, on September 8, 2017, in Docket No. EL17-84-000, the Commission initiated a proceeding, pursuant to FPA section 206, to examine why the exiting Interconnection Service Agreement and PSEG's failure to consent to the amended Interconnection Service Agreement is not unjust and unreasonable and unduly discriminatory.[22]

10. On December 15, 2017, in Docket No. EL17-84-000, the Commission found that the existing Interconnection Service Agreement is unjust and unreasonable insofar as it does not permit Hudson to convert its Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights.23 The Commission required PJM to make a compliance filing amending the existing Interconnection Service Agreement to reflect the conversion of Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal Rights, effective the date of the December 15, 2017 Order.24

11. On December 22, 2017, PJM submitted a compliance filing in response to the December 15, 2017 Order that required PJM to revise an existing Interconnection Service Agreement among Hudson, PSEG, and PJM to reflect Hudson's conversion of its Firm Transmission Withdrawal Rights to Non-Firm Transmission Withdrawal...

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