Federal regulators have determined that the PJM Interconnection transmission owners' local transmission planning processes do not require enough coordination and transparency and therefore discriminate against competing transmission developers and other stakeholders. The Federal Energy Regulatory Commission further found that revisions jointly proposed by PJM and its transmission owners, or TOs, to remedy some of those defects are lacking and accordingly need to be revised.
Before voting on the order during FERC's Feb. 15 open monthly meeting, Commissioner Cheryl LaFleur recalled that she frequently has expressed concern about the number of transmission projects that are not being opened to competitive bidding. She said the current order reflects FERC's responsibility to ensure that if customers are paying for transmission, the projects "are needed, regional needs are considered, ... things are not done individually, and ... the process is fair and transparent."
The FERC order represents the second time in less than a month that agency officials have determined that transmission planning processes in PJM fail to offer enough openness and transparency. On Jan. 22, a FERC administrative law judge found that the grid operator's handling of transmission upgrade requests made in 2014 by Transource, LLC was nontransparent and discriminatory.
FERC's Order 890 requires transmission providers to give stakeholders "a meaningful opportunity to engage in planning along with their transmission providers." The agency also obliges those providers to disclose information key to their planning decisions, including basic underlying criteria, assumptions and data.
PJM's TOs chose to comply with Order 890 by participating in PJM's planning process. In signing off on that process, FERC understood that the local planning procedures allow stakeholders to be involved in the early stages of an individual TO's planning of so-called supplemental projects — transmission expansions or enhancements not required for reliability, operational performance, economic or public policy reasons — and that the process is open and transparent.
However, FERC began hearing complaints during a November 2015 technical conference that certain PJM TOs were not allowing stakeholders to participate early enough in the planning of supplemental transmission projects. Therefore, the agency in August 2016 ordered the TOs to submit tariff revisions remedying the situation or explaining why no changes are needed.
Responding to that show-cause order, the TOs insisted that their operating agreement with PJM already complies with the requirements of Order 890. They also asserted that FERC's concerns were grounded in the comments of just two participants in the technical conference and are largely unfounded.
Nevertheless, acknowledging that "there is always room for improvement," the TOs filed concurrent amendments to the PJM tariff and the operating agreement to provide additional detail regarding the process for planning supplemental projects.
FERC on Feb. 15 found that the PJM tariff and operating agreement regarding the TOs' practices in planning supplemental projects do not comply with Order 890 and that the TOs' proposed amendments fail to remedy some of those defects.
The record shows that the TOs "often provide models, criteria, and assumptions … that are vague or incomplete and do not allow stakeholders 'to replicate the results of planning studies,'" FERC explained. As result, the agency found that stakeholders often cannot identify the needs that supplemental projects will address early enough in the planning process, or the information is provided too late for stakeholders to provide meaningful or effective feedback.
FERC also cited evidence that even when the TOs give stakeholders the chance to provide input, "there is often considerable uncertainty about the specifics of that opportunity, limiting its utility to stakeholders."
Furthermore, FERC said the TOs often provide complex planning information — such as the models, criteria, and assumptions used — at the same time it is to be discussed during a stakeholder meeting. As such, those practices do not give stakeholders a meaningful opportunity to participate in that discussion.
As for the TOs' proposed remedies, FERC said they fail to fix the ways in which the TOs implement the provisions of the PJM operating agreement in a manner that is consistent with Order 890.
FERC therefore gave the TOs 30 days to make additional changes to their planning procedures, detailing certain minimum meeting requirements that the agency said are necessary to satisfy Order 890's transparency and coordination principles. For instance, it ordered the TOs to consult with stakeholders to establish a minimum number of days between meetings to discuss needs and the potential solutions to meet those needs. The commission also directed the TOs to clarify a number of matters, including the dispute resolution procedures that apply to the transmission planning process for supplemental projects. (FERC dockets EL16-71 and ER17-179)