The Federal Energy Regulatory Commission on Aug. 26 reversed an administrative law judge's earlier finding that the PJM Interconnection's processing of system impact studies for transmission upgrade requests made by Transource, LLC was nontransparent and unduly discriminatory.
In doing so, FERC sided with PJM by finding the facts presented by TranSource in the contentious dispute do not support a finding of undue discrimination. While FERC found that PJM made errors in processing TranSource's system impact studies in violation of its own tariff, the regulator nevertheless concluded that "all such errors were immaterial."
At the same time, however, the commission found that PJM's tariff omits key information about how it processes the type of system impact studies at issue and directed the grid operator to address the problem through a compliance filing within 45 days.
The long-running conflict dates back to 2014 when TranSource submitted three applications to PJM proposing congestion-easing transmission upgrades that would allow the merchant developer to obtain incremental auction revenue rights. Those rights entitle the holder to receive an allocation of revenues from PJM's annual financial transmission right auction, which is designed to give transmission customers another hedging mechanism to manage costs.
After signing a system impact study agreement and paying a $50,000 deposit to hold three different interconnection queue positions, TranSource subsequently challenged study results that showed the upgrades necessary to accommodate its proposed projects would cost approximately $1.7 billion. In a June 2015 complaint, TranSource alleged that PJM repeatedly refused to provide requested data and work papers underlying the system impact studies. Moreover, the company said it had lost its project financing due to what it claimed were grossly inflated cost estimates.
TranSource later expanded on its allegations in an amended complaint, arguing it was not provided equal and open access by PJM to the expansion, planning, and construction of the grid operator's transmission system or to incremental auction revenue rights.
In January 2018, Judge Philip Baten in an initial decision sided with TranSource by concluding PJM failed to use a transparent and replicable process to model TranSource's upgrade requests. Baten recommended that PJM restore TranSource's original queue positions and refund all monies paid for system impact studies.
In its Aug. 26 order, however, FERC found that Baten's finding was inconsistent with the commission's legal standard for claims of undue discrimination. Contrary to the presiding judge's determination that new elements or components of PJM's system impact studies often "emerged ... without warning" in the grid operator's emails to TranSource, the commission concluded that emails and other communication between the two parties actually favored PJM.
"The record demonstrates that PJM provided TranSource with numerous meetings, phone calls, emails, and instructions on how to obtain data necessary to evaluate the upgrade requests," FERC said. TranSource was also eventually able to replicate PJM's results once the company applied the grid operator's instructions and guidance, the commission noted.
In reversing the judge's initial order restoring TranSource's queue positions, FERC also denied all other relief related to numerous errors the commission found occurred during the system impact study phase. Commissioner Bernard McNamee did not participate in the proceeding. (FERC docket EL15-79)
