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Commission Watch

What everybody missed in setting up the regional grids.
Fortnightly Magazine - March 2005

2007. Neptune says it can fill the bill, but only if PJM signs off on all required paperwork and issues a final interconnection agreement by March of this year.

Proposed in December 2000, the line won a completed feasibility study from PJM in 2001, plus a system impact study (SIS) agreement in July 2002, with updates issued several times to reflect project amendments and the withdrawal of a higher-queued project. (That higher-queued project was the 1,100-MW Liberty gen plant, proposed by PG&E National Energy Group, now National Entergy & Gas Transmission, Inc.) On Jan. 21, 2004, PJM sent a revised SIS, billing Neptune for $4.4 million in grid system upgrades required to accommodate the project (which Neptune accepted as a valid deal).

But since then, utilities and power producers in the region have notified PJM of their intention to retire an inordinate number of power plants. That, in turn, has caused PJM to rethink system impacts.

But since then, utilities and power producers in the region have notified PJM of their intention to retire an inordinate number of power plants. That, in turn, has caused PJM to rethink system impacts.

In July 2004, PJM told Neptune that the line could not be built without more grid upgrades, costing another $25 million or so. But then, in the fall, PSE&G announced plans to retire another seven power plants in New Jersey, totaling more than 1,100 MW ().

This latest bombshell sent PJM back to the drawing board. At a meeting of its Transmission Expansion Advisory committee, held Nov. 19, 2004, PJM stated that in the past six months it had received requests to retire as much as 5,000 MW of generating capacity. That, said the committee, would require more than $130 million in grid upgrades across the region (but not all from Neptune) to deal with the chaos. And so, as of Dec. 21, when Neptune filed its complaint seeking a go-ahead for construction, PJM had yet to execute an interconnection agreement to authorize the project.

A Game of Chicken?

According to ex-FERC commissioner and lawyer Michael Naeve, representing Neptune and its investors, the Atlantic Energy Partners, LLC, the incumbent power producers who already enjoy projected status as network capacity are holding the transmission line hostage. Naeve concedes that PJM rules envision a possible second look (a restudy) after PJM has executed a system impact study and calculated any required upgrade costs. But he argues that FERC Order No. 2003 allows such a restudy only if the earth has moved because of one of three events: (1) a modification or (2) a dropping out of a higher-queued (proposed) project; or (3) a redesignation of the point of grid interconnection for the principal project.

In this case, however, Naeve implies that PSE&G is playing a game of chicken, choosing perhaps to mothball certain underperforming plants while it waits to see if PJM adopts rule changes that would make them more profitable. But that could leave Neptune up in the air for years, waiting for the smoke to clear.

As it happens, PSE&G had conceded