Utility Integration

Why FERC should mandate an independent monitor at PJM

Why FERC should mandate an independent monitor at PJM
(Image by Couleur from Pixabay)

An independent monitor could provide oversight over local investments made in PJM and facilitate transmission alternatives, like battery storage, writes Renewable Energy World contributor Rao Konidena.

Transmission projects are typically delayed, but it’s not the transmission owners that pay the price for because steel prices are beyond their control. Meanwhile, transmission project cost estimates are routinely increasing with no recourse for transmission customers.

The Pennsylvania-New Jersey-Maryland (PJM) Interconnection has released a new transmission plan for accommodating new data center load in the Mid-Atlantic region. There is no oversight for these billion-dollar transmission projects.

As the federal agency responsible for PJM, the Federal Energy Regulatory Commission (FERC) should define non-transmission alternatives and mandate an Independent Transmission Monitor (ITM) to provide oversight for these billions of dollars. Otherwise, transmission rates are unjust and unreasonable. At a minimum, FERC should mandate an ITM for transmission projects that are based on local transmission planning criteria because those local projects are not scrutinized like the regional transmission projects and, in the PJM region, they are not approved by the PJM board.

FERC must define non-transmission alternatives

As Scott Hempling wrote in a published paper, before becoming an administrative law judge at FERC, FERC Order 1000 never defined a non-transmission alternative. Without a definition, it is left up to a stakeholder to propose a battery as an alternative to a transmission project, for example. But the TO can quickly argue against the battery because a) the battery has a lower asset life compared to a transmission solution, b) the battery is not similar to a transmission solution because it needs to charge from a generation solution, c) the costs of the battery are higher compared to the transmission project.

That is where an ITM can help develop a record during the stakeholder process because a) an augmentation plan from the battery vendor can ensure the asset life of a battery solution is on par with the transmission solution, b) a battery is similar to a transmission solution because both need energy from an external source to function and c) a line item by line item cost comparison can ensure the battery is not rated higher to inflate the costs. This record developed during the PJM stakeholder process can serve as a starting point for the state commission approving the transmission project.

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But for a battery to have a chance in PJM’s planning process, FERC needs to define batteries as non-transmission alternatives. Mandating an ITM is the perfect opportunity to address the lack of an NTA definition gap in FERC Order 1000. If defining an NTA is left up to individual state commissions, then I am afraid that the transmission utility is going to point to state law that only new transmission projects need an evaluation for NTAs, not rebuilds of existing transmission lines. The hands of state commissions will be tied unless legislative action is taken that mandates NTAs be evaluated even for rebuilds. Hence, FERC needs to take action, not leave it up to individual PJM states.

4 ways an ITM would be useful in the PJM transmission planning process

First, an ITM would develop a transmission project cost estimate that includes the steel price index and specific construction details, such as ensuring the increase in labor costs for workers working next to energized lines is included to present an accurate cost estimate at the PJM “Solutions” meeting. A solutions meeting is the third stage. The first two stages are “Assumptions” and “Needs.” Once the Assumptions-Needs-Solutions chain is complete, there is no going back.

In PJM, local transmission planning criteria needs-driven projects are called “Supplemental Projects.” The PJM Board does not approve these supplemental projects. Oversight by an ITM would make sense here as a starting point.

Additionally, in comments filed at FERC on the generator interconnection Advanced Notice Of Proposed Rulemaking (ANOPR), one PJM state commission urged FERC to examine the concept of an ITM to recommend best practices on cost containment. The state commission stated it favors an ITM in an advisory role in PJM’s Regional Transmission Expansion Plan (RTEP) process. Multiple stakeholders commented at FERC in favor of an ITM. Only the RTOs and Transmission Owners (TOs) are not in favor of an ITM.

Second, an ITM would gain answers from TOs to questions such as why removing circuits and remediating towers were the only options presented at the PJM “Solutions” meetings when TOs initially proposed solutions to supplemental projects. Why not non-transmission alternatives such as batteries or dynamic line ratings? Because all of the alternatives presented at these Solutions meetings tend to be transmission-oriented.

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It is increasingly difficult to interject a non-transmission alternative discussion at a state commission proceeding because a) the TO will show that no other alternatives were presented at the PJM meeting, b) the TO would argue that this is a PJM process and the state commission has no authority, and c) the PJM Transmission Owners Agreement is the binding agreement between the PJM TOs and PJM, and PJM depends on its TOs for “good utility practice.”

There is really no practical way to interject non-transmission alternatives in these solutions meetings without an ITM mandated by FERC. If each PJM state commission had an ITM, it would be impractical. Hence, FERC should mandate an ITM for the entire PJM region.

Third, an ITM would ensure the exploration of all alternatives at the “Solutions” meetings, including non-transmission. An ITM would report the findings from PJM meetings to state commissions, including alternatives presented by other TOs to the utility’s rebuild option as an example. If an ITM is in place, the analysis for alternative options would be conducted before, not after, the transmission utility seeks the state commission’s approval to build.

Finally, an ITM would ensure there is enough time between identifying the project need and proposed solutions so that non-transmission alternative solutions developers are given time to develop alternatives. An ITM would also inform stakeholders unfamiliar with PJM’s model-building and planning process to prepare them better to respond to PJM’s deadlines.