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Barriers to Transmission Superhighways

History teaches us that the most successful American businesses emerge from the crucible of competition.

Fortnightly Magazine - May 2006

method is more appropriate—“beneficiary pays” or “everyone pays”—is the subject of ongoing discussions within PJM and before FERC. We believe this particular project should qualify as a long-term reliability project, assuming an expansive, policy-based definition in which reliability includes PJM fuel diversification. Needless to say, this is a complex issue, and another example of how transmission development will continue to take place under investment regimes that include both regulated and market-based principles.

2. PJM Open Access Transmission Tariff, 1.13A, p. 35.

3. See Neptune Regional Transmission System LLC v. PJM Interconnection LLC, 110 FERC ¶ 61,098, at P 31 (2005), reh’g denied, 111 FERC § 61,455 (2005), appeal pending sub nom. Pub. Svc. Elec. & Gas Co. v. FERC, No. 05-1325 (D.C. Cir. filed Aug. 16, 2005); see also PJM Interconnection LLC, 112 FERC ¶ 61,276, at PP 5, 13 (2005). It should be noted that the author is a consultant to the Neptune Project and a principal in the company (Atlantic Energy Partners LLC) that developed the project.

4. This proposal creates some barriers to entry in its own right. If a point-to-point regime is applied in this fashion, potential users of the new transmission project’s FTWRs may not know what their point-to-point transmission costs will be for several years. First, they cannot request point-to-point service to the new projects withdrawal node from the ISO/RTO until the new transmission nodes are in the system, from a studies standpoint. That will happen only after the system-impact studies are completed, or perhaps even later, when the network upgrades that the new project has to provide are finalized. Only then can the ISO/RTO study the point-to-point request into the new transmission project’s source or sink nodes. Then, if there is not enough capacity, the company making the request must cycle through all of the usual feasibility/SIS/facilities studies before it knows the full cost of providing capacity and energy services to its customer. This could take several years.

5. PJM Interconnection LLC, Docket No. ER06-456-000, Filing Letter at 5-6, Tariff Revs. at 1 (filed Jan. 5, 2006). PJM proposes to designate the “sink” end of these projects as “load” areas. PJM did acknowledge that its filing does not address whether such costs ultimately should be paid by the project, by the project’s transmission customers, or by PJM market participants that deliver power to the project’s point of withdrawal.

6. PJM’s FAQs on Neptune indicate PJM’s intention allow is to Neptune’s customers to opt for network integration service into Neptune, or point-to-point service. See Question 38: “b. Transmission service from the source(s) in PJM to the HVDC terminal in PJM. The transmission customer can choose either point-to-point transmission service or network transmission service, depending on their respective circumstances. See response to 44 below regarding those circumstances under which network service may be used to serve external load.” Question 44 asks, “Which type of service (Network vs. Firm PtP) would be applicable in the case where an entity enters into a call option arrangement under a defined indexed value with a generator in PJM, thereby providing that