PJM Testifies at FERC Technical Conference on Cost Allocation

Steve Herling, PJM vice president – Planning, was among those who testified Tuesday at a Federal Energy Regulatory Commission technical conference on the assignment of cost in reliability projects.

 The commission set up the conference after it issued an order in November 2015. The order accepted PJM’s Tariff filing on the Artificial Island project in New Jersey then suspended the changes for five months to further explore the broader context of how cost allocation methodology is applied.

The commission wants to explore whether an alternative cost allocation system can be established for projects which do not fit well with the FERC’s current solutions-based methodology.

PJM’s transmission owners, as a separate entity from PJM, determine cost allocation methodology.

Artificial Island was the first project for which PJM solicited for competitive transmission proposals in an open window, consistent with the FERC’s Order 1000 (although it predated the order’s enforcement date itself). Order 1000 opened competitive bidding on transmission projects to non-incumbent as well as incumbent transmission owners not in the project’s area, in an effort to find the most cost-effective proposal.

Herling and the panel members discussed a number of topics and concerns regarding the applicability of solution-based distribution factor cost allocation methodology (pages 1-2), relative to various categories of reliability projects.

These are the categories:

  • Thermal violations
  • Voltage
  • Stability
  • Short circuits
  • Storm hardening
  • Aging infrastructure
  • Real-time operations

Representatives from PJM Transmission Owners, PSE&G, Consolidation Edison (New York), the Delaware and Maryland state commissions, Linden VFT, Hudson and Neptune Transmission and ODEC also testified.