By Christen Smith
The ruling comes eight months after the commission established a paper hearing to settle on the calculation for determining how PJM should distribute costs for grid stability projects, agreeing — in this case and for future stability upgrades — the existing solution-based distribution factor (DFAX) method doesn’t align allocations with benefits (EL15-95).
“Based on the record developed through the additional hearing procedures, we find that the stability deviation method is a just and reasonable replacement rate for PJM to apply to all of the costs of lower-voltage facilities that address stability-related reliability issues and [to] 50% of the costs of regional facilities and necessary lower-voltage facilities that address stability-related reliability issues, including the Artificial Island project,” FERC concluded in its Feb. 28 ruling.
Unjust and Unreasonable Status Quo
The debate stems from a yearslong discussion over who should pay for new transmission lines between New Jersey and Delaware to address stability limits on generation at the Salem and Hope Creek nuclear plants and transmission constraints that sometimes prevent the generators from exporting power at full capacity. Such a project is rare and doesn’t conform well to the DFAX method, PJM contends. (See DFAX: ‘Poison Pill’ or ‘Best Method’ of Cost Allocation?)
For reliability projects, PJM assigns 50% of the costs of regional facilities (500-kV lines or higher and double 345-kV lines) and “necessary” lower-voltage facilities required to support regional lines on a load-ratio share basis. The other 50% is allocated using DFAX. All costs of lower-voltage facilities not supporting regional lines are allocated via DFAX.
Using this methodology, 93% of the $280 million Artificial Island project cost would have fallen on Delmarva Power & Light — much to the dismay of Maryland and Delaware utility regulators who said the distribution disproportionately targeted their ratepayers.
In July, FERC agreed with the state commissions, noting that unlike thermal overloads, the parties that cause stability issues don’t necessarily have flows on the corresponding transmission facility. While Delmarva customers will use the new transmission lines from the Artificial Island project, the company neither caused the need for the lines nor does it benefit from those flows sufficiently because its transmission system already was adequate to serve its load, FERC found.
“While Delaware load will receive some increase in reliability from having a more robust transmission system, we find that the costs that would be allocated to the Delmarva parties under the solution-based DFAX method would not be at least roughly commensurate with the benefits received,” FERC concluded.
Stability Deviation Method
PJM long agreed it needed a different way of divvying costs for stability-related issues, noting those who cause these problems aren’t always the same ones who will benefit from it being repaired — such as in the cases of thermal violations, voltage/reactive issues, storm hardening, end-of-life/aging infrastructure or real-time operation concerns.
Staff crafted a few different possibilities, including the stability deviation method, which determines that a measurement of the change in the voltage angle is higher for substations that are more impacted by a disturbance or stability event, also referred to as the angular deviation. This change would identify the loads that would be most impacted by a stability disturbance and would benefit from transmission projects that address stability-related issues.
Under this calculation, costs of the Artificial Island project would fall 19% to the Public Service Electric and Gas, 15% to PECO Energy, 12.5% to PPL, 12.4% to Jersey Central Power & Light, 10.4% to Delmarva Power, 7.2% to Atlantic City Electric and about 5% to Metropolitan Edison. (See PJM: AI Costs Would Shift to NJ, PA Under New Allocations.)
TOs described the method as arbitrary, unexplained and unjustified, saying it amounts to the opposite of the basic underlying principle of PJM transmission cost allocation in the post-Order 1000 era. Instead, TOs pushed for a reversion back to the status quo — an idea FERC outright rejected.
“The PJM transmission owners have not demonstrated that, for transmission facilities addressing stability-related reliability issues, it would be just and reasonable to revert to the solution-based DFAX method to identify the beneficiaries of transmission facilities, once the stability-related reliability issue supporting the need for the transmission facility is resolved,” the commission said. “Further, while the PJM transmission owners’ reversion proposal identifies retirement of generating facilities as triggering the reversion, other system topology changes, such as transmission facility enhancements or expansion, may also affect the stability concern, but are not addressed by the reversion proposal.”