In an order issued February 15, 2018 (“February 15 Order”), FERC found that several transmission owners participating in the PJM Interconnection, L.L.C. (“PJM”) market have been acting inconsistently with FERC Order No. 890, and that certain terms and conditions in PJM’s Open Access Transmission Tariff (“OATT”) are unjust and unreasonable. In particular, FERC concluded that the PJM transmission owners’ planning processes ran afoul of the coordination and transparency principles in Order No. 890 by allowing the incumbent transmission owners to bypass input and, effectively, competition, from other transmission planning stakeholders. FERC ordered the transmission owners to revise the OATT and Operating Agreement in compliance with Order No. 890.

In a November 2015 technical conference, several PJM stakeholders argued that they had been unable to meaningfully participate in the transmission planning process for PJM “Supplemental Projects,” which are transmission projects unrelated to, among other things, system reliability or operational performance (see September 6, 2016 edition of the WER). As a result, FERC established a proceeding to evaluate the transmission owners’ Order No. 890 compliance in August 2016. Order No. 890 established nine transmission planning principles, the first of which was for transmission providers to give customers and other stakeholders a “meaningful opportunity” to provide input to transmission providers and not be “merely given an opportunity to comment on transmission plans that were developed in the first instance without their input.” Under Order No. 890, attendant to this “cooperation” obligation is the duty of transmission providers to disclose the basic criteria, assumptions, methodologies and data supporting their transmission plans so that stakeholders can provide timely input on a project’s merits.

According to several intervening stakeholders, some PJM transmission owners were identifying, and even beginning to develop, certain Supplemental Projects before the stakeholder participation stage. Some noted, for example, that the transmission owners would both provide plans and studies supporting the need for Supplemental Projects at the same time that they would solicit feedback from stakeholders. Some stakeholders alleged that the transmission owners structured the planning process to avoid or replace regional transmission projects that would have otherwise been subject to a competitive transmission development process under Order No. 1000.

The PJM transmission owners both responded to stakeholder comments and filed, in a separate docket, a revised Supplemental Project planning process to preemptively address some of the problems identified by FERC in the August 2016 proceeding. In the latter filing, the PJM transmission owners proposed to add a new OATT Attachment M-3 to further detail Supplemental Project transmission planning. The PJM transmission owners argued that proposed Attachment M-3 sufficiently laid out the Supplemental Project planning process, and that it was neither feasible nor helpful to describe system needs without identifying potential solutions—the “most obvious” of which being replacing the facility in question.

In the February 15 Order, FERC agreed that it was appropriate to move the Supplemental Project planning process into a separate OATT attachment, but otherwise largely rejected the PJM transmission owners’ arguments that the substance of the process was itself just and reasonable. FERC stated that the planning process did not provide stakeholders with adequate time and opportunity to comment on the models, criteria, and assumptions used to identify the needs underlying Supplemental Projects. According to FERC, in light of technological changes and the evolving electricity grid, the “most obvious solution” will not always be to replace facilities when alternative solutions may be more effective. FERC directed PJM and the PJM transmission owners to make a series of revisions to the OATT and Operating Agreement in a compliance filing, including establishing separate meetings for providing and soliciting feedback on Supplemental Projects, and clarifying the dispute resolution procedures for addressing stakeholder concerns with the Supplemental Planning process.

FERC required PJM and the PJM transmission owners to submit the required compliance filings within 30 days. A copy of FERC’s order can be found here.