Ohio utilities American Electric Power, Dayton Power and Light, Duke Energy Ohio and FirstEnergy, plus other PJM Interconnection utilities, such as Dominion Energy, PPL, and Public Service Electric and Gas, on Friday urged the Federal Energy Regulatory Commission to reject a complaint seeking expanded oversight of transmission projects.
The PJM Interconnection, the Edison Electric Institute, a trade group for investor-owned utilities, and WIRES, a trade group for transmission owners and others, also asked FERC to deny the complaint from the Office of the Ohio Consumers’ Counsel.
Ohio’s utilities have added close to $6.5 billion in PJM-approved “supplemental projects” to their local transmission plans since 2017 without any oversight of their need, prudence and cost-effectiveness, according to the complaint filed in late September. The OCC asked FERC to fill that “regulatory gap” by creating an independent monitor to review the projects.
Supplemental projects are transmission expansions or enhancements planned by transmission owners to address local reliability needs. They are exempt from competitive bidding. PJM evaluates them to make sure they do not cause grid reliability problems.
The complaint was supported by state utility regulators, ratepayer advocates, consumer advocates and others. They include the New Jersey Board of Public Utilities, the Maryland Office of People's Counsel, the Public Utilities Commission of Ohio’s Office of the Federal Energy Advocate, the Indiana Office of Utility Consumer Counselor, the Pennsylvania Office of Consumer Advocate, American Municipal Power, or AMP, Old Dominion Electric Cooperative, called ODEC, the PJM Industrial Customer Coalition, the Electricity Consumers Resource Council, the Clean Energy Buyers Association, the R St. Institute, Advanced Energy United and the Natural Resources Defense Council.
Many supplemental projects in New Jersey and across PJM evade regulatory scrutiny, leading to unjust and unreasonable rates, the New Jersey BPU said.
From 2012 through 2022 PJM’s transmission owners spent almost $43.5 billion on supplemental projects compared to about $23 billion on baseline projects, which receive greater scrutiny and can be open to competitive bidding, according to the BPU.
“Monopoly utilities also spend these billions of dollars of ratepayer money without any exposure to cost-disciplining competition,” the BPU said. “Such a lack of either competition or meaningful regulatory oversight leaves consumers exposed to unrestrained monopoly power that results in unjust and unreasonable rates.”
The agency said it strongly supports OCC’s call for FERC to establish an independent transmission monitor to review supplemental projects, but that the reviews should only be for states that don’t do it themselves.
AEP and the other Ohio utilities said the oversight of supplemental projects is more than adequate. It includes a FERC-approved PJM transmission owners’ local planning process, the agency’s formula rate processes, the commission’s Federal Power Act section 206 complaint process and the Ohio Power Siting Board’s pre-construction review of supplemental projects larger than 100 kV, they said.
Supplemental projects are a key tool utilities use to address customer and system needs, according to the filing.
“A pre-construction approval process is beyond the commission’s authority to adopt and would impose substantial, additional costs and delay, thereby reducing the Ohio transmission owners’ ability to address those needs,” the utilities said. “OCC makes no attempt to address this burden on the Ohio transmission owners — and ultimately on customers and the system as a whole — let alone to justify it given the total absence of any evidence of imprudent project costs under the current review processes in place.”
Also, the complaint is an improper vehicle to make what would be nationwide changes, according to the utilities. FERC is considering changing its rules for transmission planning and cost allocation and held a technical conference on cost management practices for local transmission planning, they noted.
Meanwhile, the U.S. Court of Appeals for the District of Columbia Circuit on Friday upheld FERC’s approval of a utility proposal to change PJM’s supplemental project process concerning “end of life” projects.
The appeal of FERC’s decision was made by AMP, PJM Industrial Customer Coalition, ODEC and LSP Transmission Holdings II.
