(November 2008)Economic uncertainties are raising doubts over utility returns. Will regulators feel the need to consider broader economic effects when engaging in ratemaking? While...
FERC fights for the green-grid superhighway—even if Congress won’t.
“A right of first refusal avoids placing the ISO in the position of having to evaluate competing projects based on potentially spurious cost estimates.”
Sunflower Electric Power, a Kansas G&T co-op and a staunch supporter of the green-grid superhighway, defends the ROFR concept as a catalyst for sparking collaborations between merchant developers and utilities. Sunflower adds that like other incumbent utility TOs, it owns existing rights of way and can fall back on relationships already established with landowners who might be affected:
“We have the boots on the ground.”
Exelon’s 345-kV Gambit
Consider the major 500-kV high-voltage transmission projects set for eastern PJM that figured in the August ruling by Judge Posner and the 7th U.S. Circuit Court of Appeals (ICC v. FERC) that struck down FERC Opinion 494. FERC had OK’d PJM’s proposal to spread the costs of the lines (see Figure 1) across the entire RTO footprint, thus imposing costs on Ohio’s Dayton Power & Light and Illinois’s Commonwealth Edison.
The court’s ruling sent the case back to FERC, with instructions to the commission to return with more convincing evidence to justify the so-called “postage-stamp” cost allocation. The remand proceedings now are underway, and illustrate how difficult it might prove for FERC to pursue its envisioned rulemaking, given the complications already brewing over this single dispute.
And time is of the essence.
On November 6, for example, a group of municipal townships in Northern New Jersey, joined by the Eastern Environmental Law Center and the ad hoc coalition known as “Stop the Lines!” (www.stopthelines.com) asked the New Jersey Board of Public Utilities to dismiss the pending application of Public Service Electric & Gas for a certificate of need for its proposed Susquehanna-Roseland 500-kV transmission lines (see right-hand upper corner of Figure 1) , arguing that the line was no longer financially viable, given the 7th Circuit’s ruling that struck down PJM’s cost-sharing model—and PSE&G’s expected funding mechanism. (See Motion to Dismiss, N.J. BPU Docket No. EM09010035, filed Nov. 6, 2009.)
In a letter of clarification sent to the BPU a week later, on November 11, attorneys for the opponents asked for a stay pending PJM’s anticipated “retooling” of cost allocation rules during the remand: “Until this occurs, this Board and the parties cannot know who will pay how much for the Project … The folly of proceeding under such circumstances is only too apparent.”
Local newspapers from Northern New Jersey since have reported that BPU hearing commissioner Joseph Fiordaliso has set aside the motion, and that a BPU ruling on a certificate of need was due to be issued around Jan. 15, 2010. But the case stands as an example of the financial turmoil FERC must accommodate.
In addition, FERC must decide not only whether to defend the PJM model against calls for a retreat to the former beneficiary-pays regime, but also whether to go in the opposite direction—to extend RTO-wide cost sharing to even smaller-voltage lines, as Exelon is prepared to propose.
For background: In late October 2009, against the wishes of many utility members