FERC finds PJM Tariff unjust Orders Refunds
In the latest chapter of the PJM Transmission Rates saga, complaints about how transmission costs are shared in PJM, which have been an issue for more than 20 years, took a new turn last week on Friday March 6th, when FERC issued its: ORDER ON REMAND, COMPLAINT, REJECTING TARIFF PROPOSAL AND SETTLEMENT, DIRECTING A COMPLIANCE FILING, AND ESTABLISHING PAPER HEARING PROCEDURES in Docket No. EL15-18-005. This is a big deal because it requires refunds (and backward charges) plus interest for cost allocations of regional transmission expansion projects (RTEP) since June 2015.
If you need help getting to sleep try reading the first 6 pages of the Order to gain a better understanding of the complicated methods PJM and its Stakeholders devised to allocate costs for new regional transmission projects, and if that doesn't do the trick read the rest of the Order and find out how arcane and unstable these cost allocation methods really are.
FERC concludes in paragraph 92: “We therefore require PJM, on behalf of the PJM Transmission Owners, to recalculate the cost allocations in Schedule 12 and correct the billing (with interest calculated pursuant to section 35.19(a) of the Commission regulations) within 90 days of the date of this order for all projects back to June 18, 2015, the date on which the Commission committed legal error by denying the Con Edison Complaint.”
The cost allocation methods that were found unjust existed much before June 2015, so it would appear that it's only the technicality of a Complaint having been rejected on that day in 2015 that limits the re-billing to just the last 11 years.
If FERC, in circa 2000, had stuck to it's prior 5 decades of precedent that, except in very limited and unusual circumstances, the only fair, just and reasonable rate for transmission service on an integrated transmission network is a single rate based on the "all rolled-in" cost of the transmission network. RTO's like PJM plan and operate the transmission facilities in a large region as an integrated network and should be required, based on long-standing FERC policy, to charge all customers in that region the same rate, based on the all rolled-in costs of transmission - whether they are considered "old" or "new" and regardless of their operating voltage so long as they are considered as parts of the integrated network. That squares with the fact that every customer in the region has access to all the facilities in the network to serve its load. Equal rates for equal access seems like a no brainer, but untold millions have been spent to thwart that simple concept and will continue to be wasted until it is made the rule.
The graphic below, which I have shared before, shows, in $/MW per day the widely varying cost of transmission service in PJM when you add the 2025 Zonal and Regional (Schedule 12) charges for each zone and divide by their peak demand (PJM's NSPL).
Sleepy yet?