Dive Brief:

• Staff of PJM Interconnection presented an analyses, “Stability Project Beneficiary Identification Alternatives,” to stakeholders and members last week as the grid operator looks at cost allocation behind the $280 million Artificial Island transmission project.
• The analyses recommended two approaches to split costs, RTO Insider reports, and would saddle New Jersey and Pennsylvania with the majority of the costs, instead of the current allocation that burdens Delmarva Power & Light (DPL) with more than 90% of the costs. 
• Both plants are located on Artificial Island in Delaware Bay. The project was suspended last summer, but restarted in April after PJM reaffirmed its initial decision that transmission upgrades could resolve operational issues and improve system stability related to the Artificial Island complex.

Dive Insight:

Having determined the Artificial Island transmission project will efficiently resolve operational issues, PJM is now taking a harder look at how to allocate benefits and costs of the project.

In 2015, the PJM board approved a proposal to construct a 230 kV transmission line under the Delaware River, connecting the Salem Nuclear units 1 and 2 with the Hope Creek unit 1 in southern New Jersey, to a new Delaware substation, to boost reliability in the area. But governors in Maryland and  Delaware pushed back against the project over worries their residents will shoulder most of the costs without many of the benefits. 

In the 15-page analysis, PJM says the board’s call for exploring alternatives was in response to concerns expressed by legislators, consumer advocates and other stakeholders, and is an acknowledgement that "there are a number of different ways to identify the beneficiaries of a stability-based project such as Artificial Island."

The 230-kV line under the Delaware River will connect a substation at one of the nuclear stations to a new substation to be built in Delaware.

In a blog post, PJM staff said it "views the posted analysis as a starting point for all stakeholders, including the states, to review and use in discussing alternative approaches to cost allocation for stability-based projects."

"The existing cost allocation methodology (solution-based distribution factors – DFAX – using power flow analysis) appropriately aligns costs and beneficiaries for most transmission projects," staff said. "However, analysis related to stability projects such as Artificial Island suggests additional beneficiaries may exist."

The analysis concluded that the DFAX method "relies on the same analytics as the existing allocation methodology," and therefore would be "easy to implement and should be familiar and readily understood." The method also relies on the same analytics, meaning cost allocations could be updated on an annual basis.

The grid operator said it is not planning to file its analysis with the Federal Energy Regulatory Commission; instead, the document was intended to provide stakeholders, including transmission owners and states, with "alternatives to the existing cost allocation methodology that might better align with stability projects."