FirstEnergy Solutions Asks FERC to Uplift Incremental Real-Time Congestion Charges to All Transmission Customers

FirstEnergy Solutions has petitioned FERC, in a complaint, to direct PJM to allocate incremental real-time congestion charges to all transmission customers (EL12-19).

Incremental real-time congestion charges result from unexpected changes in transmission outage schedules, real-time changes in transmission system capability, unexpected system loop flows, and real-time modifications in neighboring balancing authority areas.

Currently, such incremental real-time congestion charges are only allocated to Financial Transmission Rights (FTR) holders, which FirstEnergy Solutions said is unduly discriminatory as FTR holders do not cause the incremental real-time congestion charges.

The cause of incremental real-time congestion charges, "appears to be a function of the transmission system as a whole and is not caused by any particular class of market participants," FirstEnergy Solutions said.

"Therefore, real-time congestion costs should be allocated to all transmission system customers on a pro rata basis, rather than any particular market participant or class of market participants," FirstEnergy Solutions argued.

However, while this allocation is FirstEnergy Solutions' stated recommendation, FirstEnergy Solutions said that as long as FTR holders are not singled out as the only customer class responsible for incremental real-time congestion charges through the calculation of the value of their FTRs, it defers to the Commission, PJM, and market participants as to how to resolve this cost allocation issue.

FirstEnergy Solutions said that during the 2010/2011 planning period, it and affiliate Allegheny Energy Supply Company lost over $35 million in revenues that they should have received to hedge congestion costs due to the allocation of incremental real-time congestion charges to FTRs.

"Since March 2010, incremental real-time congestion conditions have increasingly eroded FTR values," FirstEnergy Solutions continued. "In the 2010/2011 planning year alone, FTRs were underfunded by 15%, which represents over $256 million. This revenue inadequacy started in March 2010, has continued for the last 21 months (spanning three consecutive planning years) and appears to be worsening over time, thereby creating additional costs and risks for FTR holders that will ultimately be reflected as risk premiums that will be included in wholesale and retail prices."

"Furthermore, as a result of this revenue inadequacy, FTRs cannot be used to adequately hedge congestion as originally intended and are sending less efficient price signals," FirstEnergy Solutions said.