Long-term transmission planning is an essential part of PJM Interconnection’s core responsibility to keep power flowing to the 65 million people in its footprint. As risks, drivers and opportunities change the way PJM plans the high-voltage transmission system must evolve.
PJM planners have to consider new factors such as new public policy, changing generation mix, the integration of new technologies, aging infrastructure and resilience objectives. The process also must consider risk factors such as security of the fuel supply, extreme weather events, and cyber and physical security.
PJM and its stakeholders spent much of 2018 re-examining various facets of the transmission planning process. Among these facets, two were paramount: developing processes to comply with the Federal Energy Regulatory Commission (FERC) show/cause order to further enhance transparency of transmission replacement projects, and developing principles for PJM to use when considering cost-containment provisions in the competitive solicitation process required by the FERC’s Order 1000.
FERC has called for more competition in the transmission planning process. To that end, through a “sponsorship model,” potential developers propose independently developed solutions to transmission issues that PJM has identified.
PJM and its stakeholders will consider other transmission planning models and processes. As the term “evolution” implies, changes to this model entail an ongoing and collaborative effort that is responsive to emerging issues. PJM’s planning, markets and operations are interconnected, and they must work in harmony with one another and with stakeholders.
Transmission Owner-Driven Planning Changes
Transmission replacement projects, also known as supplemental projects, are transmission expansions or enhancements that are not required for compliance with PJM reliability, operational performance or economic efficiency criteria, and are not state public policy projects.
These projects are initiated by transmission owners for a variety of purposes, including: serving local customers, updating and replacing equipment, and addressing physical security, cyber security and safety and environmental impacts. These are coordinated with PJM and represented in PJM’s Regional Transmission Expansion Plan (RTEP) models.
The new attachment M-3 transmission planning process established an open, transparent procedure for transmission replacement projects, including opportunities for stakeholder feedback and comment.
The process stems from a FERC order directing revised and additional steps in the review process. It features the additional steps intended to encourage more member participation, as well as earlier identification of customer transmission needs and solutions that may better address their needs.
While PJM has limited authority over these transmission projects, it performs analysis to understand the impacts to the transmission system and tracks every aspect of them, whether a PJM-Board-approved project or a replacement project.
In June, members easily passed a package of cost containment proposals related to FERC Order 1000. PJM and stakeholders had been discussing the proposal for the better part of the year.
Order 1000 opened an opportunity to design and build transmission projects to transmission developers other than the owner of the existing facilities. The process gave developers the opportunity to submit project proposals through an RTEP process window to be considered for project construction, ownership, operation and financial responsibility.
PJM adopted its sponsorship model in 2014 as part of FERC Order 1000 compliance by implementing proposal windows that seek transmission enhancement solutions to identified reliability and market efficiency issues.
PJM has long been concerned with the volume of projects related to the FERC Order 1000 competitive window process, but believes that its focus should instead be on transmission replacement project transparency and robust solutions to ensure the reliability of the grid including solutions where the cost and efficiency gains are potentially much higher.
PJM committed to developing the comparative framework to implement the cost containment proposal passed by the stakeholders, but it is just a framework. There are concerns about how the cost containment may affect the PJM sponsorship model. Other concerns relate to developing infrastructure to replace the retiring assets and how much of an impact that will have on PJM’s RTEP process.
The implementation of Order No. 1000 varies widely across the country because of the differences in cost allocation practices in different regions, which exclude certain issues or solutions from competition.
PJM’s sponsorship model is not like a request-for-proposal process used by other RTOs, where the RTO bids out the construction of a predetermined project developed and selected by the RTO. Rather, PJM’s sponsorship model opens the door for submittal of innovative ideas that solve the potential reliability violations, economic constraints, system conditions and public policy requirements identified by PJM through its RTEP analysis.
PJM’s evaluation and comparison of cost commitments, such as cost caps and cost containment provisions, has been made more difficult given that some entities have presented construction cost caps while others have proposed “all in” cost caps, which can presumably include overall project return. This is important because cost caps are treated as a component of costs (i.e., cost certainty) in the overall evaluation.
The RTEP must remain a timely process that is not unduly burdensome, and whatever is developed under the cost containment provisions needs to address those requirements.
Effective Load Carrying Capability Analysis
As part of its continuing look at the integration of renewable energy into the interconnection system, PJM has been examining effective load carrying capability (ELCC).
The methodology determines the contribution that an individual generator or a fleet of generators makes to overall system resource adequacy. Specifically, ELCC is a measure of the additional load the system can supply with the particular generator(s) of interest without a change in reliability.
PJM’s future calculations will use the median instead of the mean performance of wind units over peak summer hours to calculate ELCC. Because of stakeholder interest, PJM is scheduling future education and discussion for 2019.
Market Efficiency Process Enhancement
The Market Efficiency Process Enhancement Task Force looked at a number of issues in its first phase and will continue that in Phase 2 – capacity benefits calculation, regional targeted market efficiency process and project reevaluation.
The purpose of the Market Efficiency process is to assess future energy and capacity market congestion, and to solicit, evaluate and approve the best projects to relieve congestion where it is identified. Factors considered include load forecasts, transmission topology (how the elements are interconnected), generation resources and demand resources.
The task force was convened to identify manual changes based on experiences with the prior market efficiency project proposal windows held since the implementation of FERC Order No. 1000. The group has focused its work on which generators to include in the benefit-to-cost ratio calculations, the market efficiency evaluation cycle and the interregional market efficiency project selection process.
The Targeted Market Efficiency Project process looks at projects that have significant historical border (market-to-market) congestion. The guiding principles state that the projects must be small and low cost, with a short lead time to construct the project and targeted at specific, historical congestion issues.
Revisiting Projects – Artificial Island and Independence Energy Connection Project
PJM was involved in revisiting two significant transmission projects in 2018, Artificial Island and the Independence Energy Connection project.
Artificial Island, in southern New Jersey, is the home of the Salem and Hope Creek nuclear generating stations. It is not an island in a geographical sense, but an isolated region of generation that includes only the nuclear power plants.
PJM Interconnection previously identified grid stability issues on the transmission system around Artificial Island. To resolve these reliability issues, in July 2015, the PJM Board approved a new transmission line between New Jersey and Delaware. Objections were raised about the federally required allocation of the project’s costs to consumers in Delaware and Maryland. In response, PJM identified potential alternative methods of allocating the costs.
In July, the Federal Energy Regulatory Commission ordered a rehearing – through a paper hearing proceeding – of an April 22, 2016 Order that denied a complaint filed by the Maryland Public Service Commission and the Delaware Public Service Commission. On Sept. 17, 2018, PJM and other parties filed their answers.
Power system stability is the ability of an electric power system to regain a state of operating equilibrium after being subjected to a physical disturbance, so that practically the entire system remains intact. Typical threats to stability include loss of one or more generators or major pieces of equipment, system faults or line outages, demand changes and drops in voltage.
The Artificial Island project is the only stability-driven reliability project involving a new transmission line approved by the PJM Board to be included in the Regional Transmission Expansion Planning process. There is no precedent for using a different method to identify and measure beneficiaries for stability.
The Independence Energy Connection project, developed by Transource, is a market efficiency project that would establish two new 230 kV transmission lines across the Pennsylvania-Maryland border. It would allow low-cost power to flow into areas of eastern PJM, especially parts of Maryland and Northern Virginia and into the District of Columbia, relieving long-standing transmission system bottlenecks that, without relief, are forecast to continue costing consumers in those areas into the future.
Each year PJM staff analyzes the economic value of approved market efficiency projects, to confirm that the benefits of the projects outweigh the costs.
The re-evaluation of the Transource project in September 2018 and a benefit-to-cost ratio calculation in October 2018 continued to find that it would provide benefits that extend across a wide area, including areas of Pennsylvania and Maryland. The most recent re-evaluation also identified emerging reliability problems that would be addressed by the project as well.