By William Opalka
Consolidated Edison will stop using the “PSEG wheel” next April, following through on a promise it made late last year in a dispute with PJM over transmission upgrade costs.
The company said it would not renew two point-to-point transmission agreements under which Public Service Electric and Gas takes 1,000 MW from Con Ed at the New York border and delivers it through New Jersey to Con Ed load in New York City.
Con Ed, which said it has identified less costly alternatives, informed the New York Public Service Commission of its decision in a letter May 2 (12-E-0503).
The company says that renewing the wheel after its April 30 expiration would expose it to $680 million in cost allocation charges for two transmission projects that it says primarily benefit New Jersey customers.
“Con Edison no longer requires power sources from the PJM wheel for reliability purposes, and unfair cost allocations have become too costly for our customers,” spokesman Bob McGee said. “Other electric projects added in recent years that already serve our customers will help us maintain reliability. We will continue to have access to the PJM wheel in an emergency.”
PJM assigned Con Ed $629 million of the costs of PSE&G’s $1.2 billion Bergen-Linden Corridor upgrade to address a short-circuit problem. PSE&G was allocated $52 million of the cost. Con Ed was also assigned $51 million of PSE&G’s $100 million Sewaren storm-hardening project.
Con Ed contended it should pay only $29 million for the two New Jersey projects, but FERC approved PJM’s cost allocation on the Bergen-Linden project last month in a 3-1 vote. (See FERC Upholds Cost Allocation for Artificial Island, Bergen-Linden Projects.)
Paul McGlynn, PJM general manager of system planning, told the PJM Planning Committee on Thursday of Con Ed’s intentions.
“We will need to make changes to the procedures we use in planning and operations,” he said. “This is just a heads-up that we’re going to need to be discussing it in the future. As plans take shape, we will be doing analysis on them. The goal is to discuss and determine how we will manage that interface without the wheel.
“When that wheeling agreement is canceled, we will need to redo cost allocations for any and all of the projects that Con Ed has allocation for, and we’ll have to file them at FERC. They would become effective when the agreement actually terminates in the spring of 2017,” McGlynn added.
“NYISO is working with PJM to develop an effective going-forward approach for the border,” ISO spokesman David Flanagan said. “In addition, NYISO will include this change in the full range of system information currently being gathered for the 2016 Reliability Needs Assessment that will study potential reliability needs for the period of 2017-2026.”
Identification of the transmission projects that allowed Con Ed to cancel the wheel began in 2012, although for an entirely different reason. New York regulators at that time began discussions about transmission alternatives that would be needed if the Indian Point nuclear plant closed because its licenses were not renewed.
The NYPSC approved several projects in 2013 for that contingency, including three named the Transmission Owner Transmission Solutions. FERC in March accepted a cost allocation formula submitted by state regulators and New York transmission owners, including Con Ed. (See FERC OKs Settlement for NY TOTS Projects.)
One of the alternative projects, the $274.3 million “Staten Island Unbottling” would make 440 MW of generation available to the New York grid through Con Ed’s substations in a two-phase project.
However, in a February order, the NYPSC accepted a Con Ed motion to cancel the second phase. Con Ed said that once the wheel expired, transmission limitations caused by it would be eliminated and that only the $51.3 million first phase was necessary.
Suzanne Herel contributed to this article.