PJM Developing Framework to Evaluate Competitive Project Cost Caps

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PJM Planning Committee members reviewed proposed manual revisions Thursday outlining a new “comparative cost framework” to help guide PJM planners in deciding among competitive transmission project proposals.

The framework enables the structured evaluation process to take into consideration any cost-containment provisions that developers voluntarily include in their project proposals.

Following a year of discussion, members last summer endorsed a cost-cap proposal sponsored by LS Power and the D.C. Office of the People’s Counsel. Since then, PJM and its members have worked on developing the construct now being drafted into Manual 14F: Competitive Planning Process.

Upcoming Workshop to Provide Process Overview

Before the proposed manual revisions return to the Planning Committee for a vote, PJM is holding a Cost Containment Workshop Aug. 29 to give an overview of the concept and some examples of what the evaluation process would look like.

Mark Sims, manager, infrastructure coordination – System Planning, who presented the item, encouraged members to reach out to him with questions before the workshop.

Sims also introduced a proposed new fee structure for competitive project proposals, which will require changes to the Operating Agreement.

Incorporating a comparative cost framework will involve extra work, Sims said, including additional and parallel analyses of proposals that will require more staff time and hired consultants. As a result, a closer look at the fee structure is appropriate at this time.

Currently, PJM employs a tiered fee system that charges a non-refundable fee of $5,000 to review projects with estimated costs of $20 million to $100 million, and $30,000 for projects greater than $100 million.

The new structure would apply a flat, non-refundable fee of $5,000 to all projects, plus itemized study costs, as needed, so that projects that require detailed analysis will bear the cost of that work.

PJM plans to have the manual and Operating Agreement changes in place by the end of the year.

Transmission Replacement Planning Discussed

Also on Thursday, the Planning Committee spent several hours discussing a pair of problem statements and issue charges regarding replacement planning for transmission facilities that have reached the end of their useful life.

American Municipal Power and Old Dominion Electric Cooperative presented an issue charge, “Transparency and End of Life Planning,” to develop Operating Agreement language “to establish PJM criteria that will apply to all transmission projects that address end of life drivers on PJM Tariff transmission assets and improve overall transparency, consistency and clarity in the PJM planning process.”

An additional issue charge (to be offered as a proposed friendly amendment or alternative), “Transparency and Asset Management and Condition Planning,” was offered by The Dayton Power and Light Company, Exelon Corp., Public Service Electric & Gas Company and PPL Electric Utilities Corp. That issue charge also stated its intention to improve transparency, consistency and clarity. The agenda item was initially submitted with a request for endorsement, but the sponsors of both proposals later agreed to delay action until the Sept. 12 meeting.