By Michael Brooks

WASHINGTON — PJM transmission owners defended their jurisdiction over maintenance of the grid last week under questioning by FERC staff at a technical conference held to gain insight into the RTO’s local planning process.

Commission staff questioned PJM officials for almost four hours on subjects ranging from the difference between its Planning Committee and Transmission Expansion Advisory Committee to what is discussed at its sub-regional committee meetings.

The staffers were particularly interested in learning how PJM reclassifies supplemental projects as baseline projects in its Regional Transmission Expansion Plan and how it determines whether local transmission needs should be opened to competitive proposals under Order 1000.

FERC ordered the conference in September, partially in response to a complaint by Dayton Power & Light over the reclassification of the Cunningham-Elmont 500-kV end-of-life project in Virginia as a baseline project in the 2015 RTEP. Dominion Resources originally proposed the rebuild as a supplemental project, meaning it would bear the full costs. (See FERC Sets Tech Conference on PJM Tx Planning Rules.)

In June, FERC issued a deficiency letter seeking additional information on PJM’s cost allocations for 61 baseline upgrades, including the Cunningham project. In its response, PJM acknowledged that “there is no specific language in either [the Tariff] or the PJM manuals that explains how PJM re-categorizes a supplemental project to a required transmission enhancement eligible for regional cost allocation.”

Supplemental Projects

PJM Vice President of Planning Steve Herling, who did most of the talking for PJM at the hearing, told FERC that supplemental projects are proposed at the discretion of the TOs and are not in response to any violations of North American Electric Reliability Corp. standards or the TO’s own planning criteria. They’re often proposed to replace aging infrastructure. “If you went down the list in our database, I guess half of them start with the word ‘replace,’” he said.

Supplementals “could very well mask a violation that would have otherwise arisen, and it will not be obvious to anyone that such a violation would have arisen,” Herling said. This only becomes apparent if the TO decides not to go forward with the project and, once pulled from the RTEP, PJM finds that a violation would occur. The project would then be converted to a baseline project.

Valerie Teeter, of FERC’s Office of Energy Policy and Innovation, asked PJM what that conversion process entails: “Does that violation kind of go back to the beginning of the stakeholder process? [Does it] go through the process that any other violation would? Is there a proposal window for solutions?”

“It’s all a matter of timing,” Herling responded. If the supplemental was identified three years ago and PJM realizes that absent the supplemental there will be a violation, construction on the project is likely to have begun. “At that point, we’re certainly not going to shut the project down so that we can hold a [proposal] window and see if a better project exists,” he said.

But, Herling said, that decision is “purely judgmental,” meaning there’s no bright line for when the RTO would open a proposal window to select the most cost-effective solution.

“Where it gets gray is in the middle,” when PJM notices a potential violation a year after a supplemental is proposed, for example. “Depending on the circumstances, we would likely say, ‘OK, put the brakes on, we’re going to open up a window’” for competitive proposals, Herling said. “Again, it’s very judgmental. It’s all going to be case-by-case based on the circumstances.”

Cunningham-Elmont

PJM reclassified the Cunningham line after Dominion revised its planning criteria last year. In its complaint, DP&L accused Dominion of exploiting what it called a loophole resulting from an Order 1000-related filing by PJM TOs that permits a portion of the costs of new 500-kV baseline projects to be shared by load-serving entities throughout the RTO.

Herling said that any party, including PJM, can identify whether a project might need to be converted from supplemental to baseline, especially in the case of aging infrastructure. However, “most often, my gut is it will be the transmission owner who will recognize the likelihood that the project should be converted. It is not always intuitive to anyone else.”

For the Cunningham rebuild, Dominion provided a “condition assessment” that the company said justified converting the project to baseline. Performing a condition assessment “is not the kind of thing that PJM could take as an initial step on their own,” Herling said. PJM then did its own evaluation based on Dominion’s work to confirm that it met the criteria for a baseline.

FERC staff asked why a proposal window was not opened for the need associated with Dominion’s planning criteria for aging infrastructure.

“That’s one we’re continuing to think our way through as a general matter,” Herling replied. “It’s challenging to us to justify going out and seeking other proposals when you’re going to have to tear the line down anyway, [and] the state would prefer you reuse the existing right of way.” In Cunningham’s case, PJM determined a violation would occur if it was taken out of the RTEP, so it needed to be replaced.

Hertzel Shamash, vice president of resource planning for DP&L, spoke up at this. “You [eliminate] any of the existing transmission lines … and you’re going to violate NERC standards, because you need that line. It wouldn’t be there if you didn’t need it.

“Regarding the open window: Yeah, you can build on existing rights of way, but someone can build it for a lower cost,” he said.

Maintenance, not Planning?

TO representatives pushed back at staff’s focus on the lack of a defined conversion process. The Cunningham case, in which a change in planning criteria led to a conversion, “is relatively rare,” said Steve Naumann, vice president of transmission and NERC policy for Exelon. “It’s a unique circumstance.”

“The drivers [of supplemental projects] can be so different, and many of them are management of the assets, which is not something that has been turned over to PJM,” Naumann said. “That has remained with the transmission owner: to manage their own assets, as opposed to transmission expansion. The TOs as a whole believe there’s no need — nor is there a requirement — to have a … hard and fast set of filed criteria for supplemental projects. Otherwise they wouldn’t be supplemental projects.”

Maintenance of the system is solely the purview of the TOs, said Frank “Chip” Richardson, manager of transmission regulatory and business affairs for PPL. “It’s excluded from PJM’s processes… You don’t see any processes where PJM evaluates the maintenance of the system.”

“We, by definition, don’t think supplemental projects are planning projects,” said Raja Sundararajan, vice president of transmission asset strategy and policy for American Electric Power. When AEP finds things that are broken and need to be fixed, it lets PJM know, he said. “Is that a planning process? No, that is not a planning process. That is fundamentally a maintenance and replacement of the assets.”

Maintenance is a business decision left solely up to the TO. “There’s a clear delineation of where planning is and when operation begins,” Sundararajan said.

FERC Unconvinced

FERC staff seemed unconvinced by these arguments. “I am not seeing that delineation,” replied Zeny Magos of FERC’s Office of Energy Markets and Reliability. “I personally do not see the difference between planning your transmission system and maintaining your transmission system.”

Mark Ringhausen, vice president of engineering for Old Dominion Electric Cooperative, also had complaints about the lack of process. He said one of ODEC’s neighboring TOs presented $250 million in supplemental projects last year, including rebuilds for aging infrastructure. He said PJM told ODEC the co-op didn’t have the ability to influence changes to other TOs’ supplemental projects because PJM said such projects are outside the RTO’s jurisdiction. “Clearly there is no process,” Ringhausen said.

Ringhausen cited FERC’s June 22 rehearing order on the planning and cost allocation requirements of Order 1000. In it, the commission said it read the PJM Operating Agreement as giving stakeholders “an opportunity at the early stages of each individual PJM transmission owner’s planning of supplemental projects (i.e., before each transmission owner actually identifies any potential supplemental project) to review the criteria, assumptions and models each individual transmission owner uses to plan supplemental projects” (ER13-198).

“Is that happening today?” Ringhausen asked. “Clearly … it’s not happening at the early stages.”

“RTEP is the Regional Transmission Expansion Plan,” Richardson countered. “It’s not the ‘Regional Transmission Maintenance Plan.’ There’s never been anything in PJM about how the transmission owners maintain their equipment.

“The definition of ‘supplemental’ is PJM does not need it,” he said. “They would never tell us to do it.”

Going Forward

Magos asked PJM if it thought it needed to update its Tariff or manuals to include a conversion process.

“My gut is we would probably want to take a look at updating the PJM manuals, which probably could be made to point to any number of existing practices that are in the Tariff, just to ensure they are applicable also,” Herling said. “Now if in the commission’s judgment that needs to be in the Operating Agreement or the Tariff, fine, we can certainly do that. But we would do the manuals first.”

“It would be very helpful, I think, for some of the people who have to pay for these projects to have a bright line in the Tariff that explains how you go from supplemental to regional transmission planning,” said Amy Fisher of Linden VFT. “That would be kind of an exclamation point that people should be very engaged in that process.”

FERC staff requested comments be filed by Dec. 10 on several issues discussed at the conference, including the process for reclassifying supplementals, stakeholder input on supplemental projects and the difference between transmission planning and transmission maintenance.