FERC Filings
MOTION FOR LEAVE TO FILE OUT OF TIME AND PROTEST OF THE ELECTRIC POWER SUPPLY ASSOCIATION
BODY
Comments on PJM’s filing were due on Monday, October 1, 2001. Due to the press of events and the need to provide an adequate opportunity for members to review this filing, EPSA was unable to make its filing in a timely manner. EPSA has been an active participant in prior Commission proceedings both on PJM’s development of an RTO and on PJM interconnection issues. We respectfully request that this protest be accepted four days out of time.
As the Commission is well aware, EPSA has long argued that interconnection procedures be handled nationally on a consistent basis. We have repeatedly urged the Commission to undertake a rulemaking to accomplish this goal. EPSA applauds the Commission’s recent renewed interest in giving policy guidance on interconnection issues. Such guidance would provide a basis for assessing the appropriateness of particular interconnection proposals, addressing, among other issues, the rights, obligations and expectations of interconnecting generators and interconnection service/transmission providers.
EPSA has also advocated that RTOs, not transmission owners (TOs) should be responsible for interconnection rules and procedures. In fact, in comments filed November 20, 2000 in this proceeding, EPSA argued that PJM’s proposed interconnection procedures left too much control in the hands of the TOs:
In particular, PJM’s generation interconnection procedures inappropriately leave significant responsibility and authority with PJM’s transmission owners. In particular, transmission owners remain responsible for conducting facilities studies and system impact studies. The experience of many EPSA members in the study process in PJM has not been positive. Feasibility studies take much longer than they should, and transmission owners have too much say concerning the nature and costs of interconnection. Most of these same transmission owners have affiliates with existing generation assets and projects in the interconnection queue. In addition, the transmission owners have their own interests at stake when evaluating the nature of transmission reinforcements required to interconnect. The Commission should direct PJM to modify its interconnection procedures to ensure that PJM, and not the transmission owners, is responsible for ensuring timely completion of studies and negotiations. In addition, PJM, and not the transmission owners, must ultimately be responsible for determining what transmission reinforcements are required.
Comments of the Electric Power Supply Association in RT01-2-000, filed November 20, 2000.
The situation has not changed since November and EPSA now reiterates these concerns and requests that the Commission require PJM to comply with the Commission’s July 12th Order, so that interconnection projects can go forward and that PJM can become a fully qualified RTO.
Certain of EPSA’s members presently are, or are in the process of, developing new generating projects in PJM’s service territory that must interconnect to PJM’s transmission system. EPSA is interested in facilitating the adoption of interconnection rules, procedures and agreements, both within PJM and from a national perspective, that are just and reasonable and not unduly discriminatory and promote the development of competitive electricity markets. As the Commission has recognized, placing the interconnection issue in the hands of an independent RTO will benefit all consumers. A key impediment to the interconnection of new supply is eliminating the ability that incumbent transmission owners (TOs) currently have to delay the interconnection. Consequently, it is important that interconnection policy and uniform procedures be developed and controlled by independent RTOs.
As EPSA has pointed out before, uniform and fair interconnection practices will allow generation developers, many of whom are national companies, to develop more streamlined procedures for their project developments. All interconnection procedures should include the same time frames, deposit requirements and scope. There is no rational reason for these requirements to vary from transmission provider to transmission provider. While EPSA would prefer to see this issue addressed on a national basis, the Commission now has before a PJM compliance filing that fails to comply with the Commission’s directives.
The Commission’s Order of July 12, 2001 specifically addresses the interconnection procedures in PJM’s proposal. The concern that Commission recognized was that the continued TO involvement will stifle new generation:
Numerous intervenors repeat many of the same concerns about PJM’s policies and procedures on generator interconnection that they voiced in earlier PJM ISO filings. As in the past, many continue to express concerns that TOs have too much influence in the process, and some, such as Shell, believe that entry of competitive generation is discouraged as a consequence. Reliant, EPSA, Southern Energy and others continue to complain that TOs have too much influence in setting priorities, determining the needed facilities, and assigning cost.
The Commission went on, definitively resolving the issue:
Concern that TOs have too much influence in the generator interconnection process, and that the TOs have the ability and the incentive to bias the process to favor their competitive interests, especially since the TOs own significant amounts of generation in the region, remains virtually universal among intervenors. Order No. 2000 emphasizes that decision-making authority should rest with the RTO. Final decision-making authority is not, however, enough to ensure that the process supports the competitive goals specified in Order No. 2000…
We conclude that efficient decision-making on investments in transmission facilities requires that the entire interconnection process must be under the decisional control of the RTO. PJM must be responsible for all aspects of the interconnection process. Customers should deal with and sign interconnection and study agreements with PJM alone. To the extent that PJM requires the expertise and services of the TOs or others in providing interconnection service, PJM may enter into appropriate contracts with such entities.
PJM has failed to comply with this requirement. The PJM compliance filing has altered some provisions of the PJM Tariff to provide that PJM shall have sole responsibility for all studies and agreements related to interconnection. However, PJM, in its transmittal letter, says that the Commission’s Order is “a fundamental change to the generation interconnection process under the PJM Tariff,” that the PJM TOs “have expressed concern,” and that “TOs point out that their bilateral interconnection agreements with generators address essential matters” which “are not covered in PJM’s interconnection service agreements with generators”. PJM says that “[t]hose terms and conditions will have to be memorialized elsewhere”.
PJM goes on to say that it is initiating deliberations on this matter “within the appropriate PJM committee(s)” and will be “developing through its stakeholder process appropriate changes to the PJM Tariff and/or PJM’s form of interconnection service agreement”.
While the revised tariff sheets purport to comply with the Commission’s Order by deleting explicit reference to various roles played by the TOs, the
Transmittal Letter clearly defers full compliance with the Commission’s requirements to an open-ended future PJM internal process. While supporting the PJM stakeholder process, EPSA believes that PJM should be required to fully comply with the Commission’s Order now, rather than defer compliance indefinitely.
EPSA notes the Transmittal Letter confirms what EPSA has been saying all along – that the TOs are still too involved in the interconnection process through their bilateral interconnection agreements. PJM says that the TOs’ bilateral interconnection agreements address many matters, and that “PJM has not had any responsibility for addressing these matters.” PJM says that shifting control of these matters from the TOs to PJM would be “a fundamental change.”
Unfortunately, it is not clear whether or when this “fundamental change” is forthcoming. PJM says that “terms and conditions will have to be memorialized elsewhere.” At issue now is PJM’s compliance with a specific Commission directive that needs to be accomplished in an efficient and timely manner. Thus, a reformed interconnection process and any necessary terms and conditions to give effect to the Commission’s Order should be developed quickly and on a clearly defined timetable – not deferred indefinitely to an internal PJM process.
The ability of new generation to freely enter the market is so central to a properly functioning RTO that entry rights have to be assured before an RTO is fully qualified as such. PJM should be directed to memorialize the terms and conditions under which generators’ facilities will be physically interconnected to the grid as required by the Commission’s Order. This presumably would be done in the form of an expanded Interconnection Service Agreement between PJM and the generator and would address those “essential matters” presently contained in the bilateral interconnection agreements between TOs and generators.
Most of the proposed tariff sheets are in compliance with the Commission’s Order with respect to deleting TOs roles. With the exception of the general concern discussed above, however, there appear to be some omissions particularly in the ability of third parties to construct interconnection facilities.
Section 36.8.1 addresses cost reimbursement. As currently written, the generator (Interconnection Customer) agrees to reimburse PJM for subject costs “(for the benefit of the affected [TO] or [TOs]).” Thus, this section does not allow for the possibility of a third party constructing and owning interconnection facilities; and therefore is not consistent with the Commission’s ruling that third parties may construct and own transmission facilities.
This same section also says that unless the generator and the TOs agree to specify an “appropriate rate” for the subject costs, the generator will have to reimburse PJM “(for the benefit of the affected [TO] or [TOs]) as the expenditures for design, engineering, and construction are made.” This provision excludes a third party from constructing facilities, as discussed above, and in requiring the TO’s agreement before a generator can know the interconnection costs up-front. The generator must have some estimate of the costs prior to construction beginning and should not be forced to accept a blank check. The TO should not have the ability to force a generator to commit to a blank check for interconnection costs.
Similarly to the above, the last sentence of this section only allows for amounts paid to PJM by a generator to be distributed to the affected TO. As with the other provisions, this restriction is inconsistent with the rights of third parties to construct interconnection facilities.
Finally, a variety of sections must be changed to allow third parties to construct facilities. Section 36.8.3, which PJM does not propose to amend, only allows “the [TO] or [TOs]” to construct interconnection-related facilities and upgrades. Section 36.8.4 is similarly flawed in only allowing the affected TO to be the beneficiary of a letter of credit or other security. Section 36.8.5 is similarly flawed in only contemplating construction of facilities by the TO. Also, the heading of Section 36.11 should be changed from “Responsibilities of the Transmission Provider and RTOs” to “Responsibilities of the Transmission Provider and Third Parties.”