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Merchant Mania: Regional Markets Draw Gen Plant Projects

Fortnightly Magazine - January 1 2000

facility, upping its capacity to 1,050 MW. The project, while it hasn't reached financial closure, is moving forward, and Entergy believes it "will reach fruition."

As for how many of the proposed projects actually will be built, ERCOT ISO engineer Donohoo says that, too, is somewhat of a mystery. "You know it's not all going to be built. You just can't judge it." But the projects that have been publicly announced have a lot more credibility. "Once it goes public, it's pretty much a sure thing," he says.

PJM: First-Come, First-Served

At last count, some 88 anonymous projects totaling over 30,000 MW have queued up at PJM Interconnection LLC. PJM has created a "queue system," under which applicants are given first-come, first-served treatment. The new approval process consists of three stages. The first stage involves a feasibility study, which addresses interconnection costs and gives sponsors an opportunity to make "a reasonable decision on whether to proceed," as explained by Richard Wodyka, PJM vice president for system coordination and chief operating officer.

If a project proceeds past the feasibility study, it moves on to the next stage, the impact study, and finally to the third stage, the facilities study, which covers the more physical components of a project. PJM has split up sponsors into Queue A, for requests prior to April 15, 1999 and Queue B, for requests between April 16, 1999, and Nov. 30, 1999. The weeding-out process appears to be moving along. All projects in Queue A have completed the feasibility study, with 14 out of a total of 61 applicants having withdrawn by the end of that first stage. None have made it to the third stage, but some are about ready to do so. In the more infant Queue B, one applicant of 27 has completed the feasibility study, and another has withdrawn.

Thus far, Wodyka thinks PJM's never-before-tested system is working well. "We think we have a fair, open process¼. It's orderly, it's very systematic."

New York: Informal

Consultations are Encouraged

In New York state, the plant siting process calls for applicants first to file a "pre-application report," which lists the studies it plans to conduct to support its application. However, even before that first formal initiative, prospective project sponsors are encouraged to "consult informally early in the planning phase of its project with state agencies, municipalities, environmental organizations and other groups that may be interested in the facility."

Once the pre-application report has been filed, the New York Department of Public Service assigns a hearing examiner to mediate issues related to the scope and methodology of the proposed studies. Then public meetings typically are held. Finally, the project sponsor files an application under Article X of the state Public Service Law with the Board on Electric Generation Siting and the Environment, an agency led by the chairman of the state Public Service Commission chairman and comprising members from the Departments of Health, Environmental Conservation, Economic Development and Public Service. Eventually, the board rules on the application. Thus far, the Athens Generating Plant appears to be furthest along