A case study from PJM on competitive procurement of regional transmission under FERC Order 1000.
John Dalton is a senior electricity market analyst and electricity policy consultant with Power Advisory LLC. Mr. Dalton has evaluated generation and transmission system investments in markets across North America, and has testified on electricity market price forecasts, wholesale market competitiveness issues, transmission pricing issues, power contracting policies, and electric utility resource planning issues. Contact him at firstname.lastname@example.org.
In Order No. 1000, issued in 2011, the Federal Energy Regulatory Commission (FERC) directed regional transmission organizations (RTOs) to remove rights of first refusal (ROFRs) from their federally approved tariffs governing construction of new grid facilities that would qualify for regional cost allocation as part of a regional transmission plan.1 One of the first competitive processes to implement this requirement was a "proposal window" issued by the PJM Interconnection seeking project proposals to address planning criteria violations for a discrete network of 500-kV transmission lines located in an area of New Jersey known as the "Artificial Island." The experience from this process offers valuable lessons for all regional transmission organizations (RTOs) and transmission owners as they work to comply with FERC's order and to realize the potential benefits offered by the competitive procurement of transmission.
Competitive procurement processes have been employed successfully for electricity generation projects for decades.2 Recently, competitive procurement processes for transmission facilities have received increased attention and been employed successfully.