Presentation on theme: "August 1-2, 2013 Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region Randall B. Palmer Senior Corporate."— Presentation transcript:
August 1-2, 2013 Transmission Owner Perspectives: Transmission Siting and Order No. 1000 Cost Allocation in the PJM Region Randall B. Palmer Senior Corporate Counsel FirstEnergy Service Company 1 University of Pittsburgh School of Law 2013 Energy Law & Policy Institute Pittsburgh, Pennsylvania
August 1-2, 2013 2 Challenges of Siting and Constructing New Transmission Facilities Selection of a proposed route, especially in well developed or environmentally sensitive areas –Possible project reconfiguration to avoid these areas –Design and engineer to minimize impacts, if possible State siting authorizations, e.g., certificate of public convenience and necessity –Lengthy, complicated and revised procedural schedules –High volume of discovery –Many parties, including numerous pro se intervenors –Vigorous public and political opposition –Changing PJM need justifications and in-service dates –Coordination required in multi-state projects to assure authorized routes connect
August 1-2, 2013 3 Challenges of Siting and Constructing New Transmission Facilities (Continued) Acquisition of right-of-way –Exercise of eminent domain may be a lengthy process if quick take is not available –Voluntary negotiations may provide access earlier Authorizations to cross federal lands, e.g., Appalachian Trail, national parks and forests, may require several years of study by government agencies and require expensive mitigation State and federal environmental and cultural authorizations, e.g., U.S. Fish and Wildlife Service, Corps of Engineers, historic preservation agencies, may require mitigation of impacts to endangered species, wetlands, historical sites, etc.
August 1-2, 2013 4 Challenges of Siting and Constructing New Transmission Facilities (Continued) Other state and local authorizations, e.g., special use exceptions, road and highway crossing permits, may be required and may be controversial Uncertainty of timing of regulatory authorizations may cause the acquisition of material, equipment and labor when needed and in sufficient amounts to be more difficult Cost recovery –Ability to obtain incentives from FERC may be more difficult 2 –Recovery of abandonment costs may be difficult, e.g., PATH and MAPP projects 3
August 1-2, 2013 5 A New Transmission Planning Dynamic after ROFR Elimination FERCs Order No. 1000 4 eliminated the right of first refusal in favor of incumbent transmission owners to construct, operate and maintain new transmission facilities in their zones PJM planning process timeframe extended to allow for proposal window process 5 During proposal window process, incumbents and non- incumbents submit proposals to build, operate and maintain upgrades and new transmission facilities Non-incumbents may be designated to build, operate and maintain upgrades and new facilities as part of the incumbents existing transmission system
August 1-2, 2013 6 A New Transmission Planning Dynamic after ROFR Elimination (Continued) Elimination of ROFR likely to lead to a hodgepodge of ownership and maintenance Long-term impacts to reliability, efficiency and overall integrity of the PJM interconnected transmission system as a result of ROFR elimination not yet known ROFR elimination is on appeal 6
August 1-2, 2013 7 Order No. 1000 Cost Allocation for PJM Region Cost allocation for new transmission facilities greater than 500 kV (Opinion No. 494) in dispute for nearly 10 years and remains in litigation 7 Order No. 1000 requires regional cost allocation for new transmission facilities to meet six principles 8 PJM Transmission Owners working group formed in August 2011 to develop a forward-looking regional cost allocation methodology in response to Order No. 1000
August 1-2, 2013 8 Order No. 1000 Cost Allocation for PJM Region FERC adopted the PJM Transmission Owners October 2011 Section 205 cost allocation proposals effective for projects approved by PJM Board on and after February 1, 2013 9 –Regional Facilities and new Necessary Lower Voltage Facilities 10 required for reliability: 50% postage stamp, 50% solution-based DFAX analysis –Regional Facilities required for market efficiency: 50% postage stamp, 50% based on zonal decreases in load energy payments resulting from the new facility –Lower Voltage Facilities 11 required for reliability: 100% solution- based DFAX analysis –Lower Voltage Facilities required for market efficiency: 100% based on zonal decreases in load energy payments resulting from the new facility (Continued)
August 1-2, 2013 9 Order No. 1000 Interregional Cost Allocation for PJM Seams PJM Transmission Owners working group negotiated interregional cost allocations for seams with the MISO, NYISO and SERTP 12 regions –Negotiations for MISO region were unsuccessful PJM Transmission Owners July 10, 2013 filings 13 –PJM/MISO seam – Cost allocation provisions of existing MISO- PJM Joint Operating Agreement are compliant with Order No. 1000 requirements and no changes are necessary –PJM/NYISO and PJM/SERTP seams – Avoided cost methodology allocates cost of a new interregional facility crossing the seam on a pro rata basis based upon the ratio of each regions avoided cost associated with a potential separate facility in its region to the total avoided costs of both regions potential separate facilities
August 1-2, 2013 11 Endnotes 1. The views and opinions expressed in this presentation and provided by the presenter in response to questions and comments are those of the presenter and do not necessarily reflect the views, opinions or positions of FirstEnergy Corp. and its affiliates. 2. Promoting Transmission Investment Through Pricing Reform, 141 FERC ¶61,129 (2012). 3. PJM Interconnection, L.L.C., et al., 141 FERC ¶61,177 (2012); PJM Interconnection, L.L.C., et al., 142 FERC ¶61,156 (2013). 4. Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Order No. 1000, FERC Stats. & Regs. ¶ 31,323 (2011), order on rehg, Order No. 1000-A, 139 FERC ¶ 61,132, order on rehg, Order No. 1000-B, 141 FERC ¶ 61,044 (2012). 5. PJM Interconnection, L.L.C., et al., 142 FERC ¶61,214 (2013). 6. South Carolina Public Service Authority, et al. v. FERC, Case Nos. 12-1232, et al., (D.C. Cir.). 7. Illinois Commerce Commission, et al. v. FERC, Case Nos. 13-1674, et al. (7th Cir.). 8. Order No 1000 at PP 622, 637, 646, 657, 668, 685. 9. PJM Interconnection, L.L.C., et al., 142 FERC ¶61,214 at PP 1, 21. 10. Regional Facilities are double-circuit 345 kV and 500 kV and higher. Necessary Lower Voltage facilities are lower voltage facilities required to support new Regional Facilities. 11. Lower Voltage Facilities are facilities that are neither Regional Facilities nor Necessary Lower Voltage Facilities. 12. Southeastern Regional Transmission Planning. 13. Docket Nos. ER13-1924, ER13-1926 and ER13-1927.