PJM Seeks Declaratory Order to Allocate Costs of ITC Phase Angle Regulators

PJM has sought a declaratory order from FERC to resolve uncertainty regarding how PJM should recover from its members the costs allocated to PJM by FERC for certain phase angle regulator (PAR) transmission facilities to be installed by International Transmission Company on ITC's transmission system in the Midwest ISO.

PJM has no existing mechanism to recover these charges from its members and thus no source of revenues to pay MISO's bills.

"Because the ITC PARs facilities were not approved under either the regional transmission planning process of the PJM Open Access Transmission Tariff ('PJM Tariff') or the interregional planning process established by the Joint Operating Agreement ('JOA') between PJM and MISO, the PJM Tariff does not provide any cost recovery mechanism to enable PJM to recover these costs. Nor is there any Commission precedent for PJM to follow to develop a cost recovery mechanism for the ITC PARs facilities charges, inasmuch as the Commission has never before approved a unilateral transmission facilities charge assessed by one region upon another region where the paying region has not voluntarily agreed to pay for the costs of transmission facilities," PJM said.

Indeed, FERC's PARs order is yet another example of FERC ignoring the real-world implications of its cost allocation orders on competitive LSEs, who could not reasonably have anticipated these potential new costs (if assessed on PJM load-serving entities as will be likely) in their business plans and competitive offerings.

PJM itself expressed no opinion as to a method of cost recovery that would be appropriate, nor did it suggest any specific proposals, and only explained how current regional or local transmission cost allocation procedures are inapplicable to the PARs.

PJM is not connected to the PARs, which were designed to meet local system needs and were not designed to address any reliability issue in the PJM region.