The Federal Energy Regulatory Commission on Feb. 8 rejected without prejudice a PJM Interconnection LLC proposal that critics argued would shield incumbent transmission owners from competitive bidding requirements for certain projects.
PJM filed the proposed tariff revisions at issue on Sept. 1, 2021, under the same docket (ER13-198) dealing with compliance filings made in response to Order 1000, a 2011 rule designed in part to encourage more competition among incumbent and nonincumbent transmission developers.
FERC eventually accepted the last of PJM's compliance filings for Order 1000 in 2015.
In making an additional compliance filing six years later, however, PJM claimed that its definition of a "designated entity" under Order 1000 was broader than intended.
PJM's proposal
Under PJM's operating agreement, transmission developers must execute designated entity agreements when they are selected for projects included in PJM's regional transmission expansion plan. Those agreements require designated entities to provide letters of credit or cash securities and agree to project development schedules.
PJM's current definition of a designated entity covers immediate-need reliability projects, short-term projects, long-lead projects, and economic-based enhancements or expansions.
The grid operator's September 2021 filing proposed to clarify that incumbent transmission owners are not designated entities when they are selected to construct immediate-need reliability projects in cases where PJM determines a need is too great to open a competitive bidding window.
PJM also proposed to exempt incumbent transmission owners when none of the solutions proposed within a competitive bidding window are found to be the most efficient or cost-effective solution and time constraints prevent the grid operator from reopening the bidding window. In addition, PJM proposed the same exemption for transmission owner-designated projects.
PJM said the clarifications are needed to eliminate "ambiguity and avoid any potential future disputes," maintaining that its amended compliance filing would not substantively change the grid operator's Order 1000 compliance obligations.
'No ambiguity'
PJM's proposed changes drew a motion to dismiss from a coalition of merchant transmission developers, industrial customers and consumer advocacy agencies representing Indiana and the District of Columbia.
Arguing that the proposal "would be detrimental to consumer protections," the coalition noted that PJM submitted its filing without a vote by the PJM Members Committee. Such a vote is required to file operating agreement revisions with FERC under Section 205 of the Federal Power Act, the group argued.
"There is no ambiguity in the currently effective operating agreement provisions, as alleged by PJM, and the filing is an impermissible collateral attack on the unambiguous provisions previously approved by the commission," the coalition asserted.
FERC granted the motion to dismiss in its Feb. 8 order and rejected PJM's filing without prejudice.
"We grant the motion to reject and find that PJM improperly filed revisions to its operating agreement as a compliance filing in response to an order that was final and required no compliance," FERC said.
Should PJM wish to pursue the proposed changes further, the grid operator is free to do so through a new Section 205 filing that complies with its operating agreement, the commission concluded. Alternatively, PJM can also seek to demonstrate its current definition for designated entities is unjust and unreasonable through a Section 206 filing, FERC said.
Commissioner Mark Christie, who previously served as president of the Organization of PJM States, did not participate in the Feb. 8 order.
