Finally, here's your first FERCenese translation from last week about FERC's Order on Rehearing regarding postage stamp rates in PJM.
Not surprisingly, FERC reconfirmed it's original Order on Remand and brushed off all the arguments made by parties in their requests for rehearing. The Commission continues to cling to its illogical presumption that “When a system is integrated, any system enhancements are presumed to benefit the entire system.”
Also not surprisingly, Commissioner LaFleur dissented (again). However, joining her in dissenting this time around was the newest addition to the FERC stable, Commissioner Tony Clark.
Both dissenting Commissioners mentioned that FERC is reaching by assigning PJM "system wide benefits" to "Western PJM" entities like ComEd in exchange for bearing 14.7% of the costs. These "system wide benefits" accrue from membership in PJM, and not from construction of the subject transmission projects. Commissioner Clark also opined that FERC has fallen short of the 7th Circuit's directive in remanding the case back to FERC.
Although I usually encourage you all to read these filings yourself, this Order is a real deja vu snoozer that doesn't say anything new. Everything you need to know is contained in the dissents.
Commissioner LaFleur's Dissent
Commissioner Clark's Dissent
The only thing different this time around is that a new cost allocation process for PJM transmission projects has been approved as part of PJM's Order No. 1000 compliance. The new cost allocation method became effective February 1, 2013. Therefore, this Order on Rehearing affects only a specific set of transmission projects approved between June 20, 2006 and February 1, 2013 (aka The Project Mountaineer Era). These projects (TrAIL, Susquehanna Roseland and the dearly-departed, abandoned PATH and MAPP) will continue to be allocated and paid for by the postage stamp rate methodology that has been decided in this Order.
PJM's new cost allocation methodology will allocate 50% of the cost of transmission 345kV and over by postage stamp methods, with the remaining 50% allocated via a DFAX methodology, which more accurately assigns costs to those who cause them and to those who receive current benefits from the project. (More on that in a future FERCenese translation).
So, while "Western PJM" will continue to pay an equal share of 500kV+ Project Mountaineer lines that are exclusive to the east coast, the current 345kV expansion going on in "Western PJM" (where they don't build 500kV lines) won't be allocated to "Eastern PJM" in the same proportions. Sound fair to you?
FERC reasons that since this postage stamp business now applies only to a finite, historical set of projects that this decision will put the matter to rest.
Probably not. The parties can now bump it back to the 7th Circuit.
And, curiously enough, the Illinois Attorney General intervened out of time in the PATH abandonment docket today.... because now Illinois is going to be stuck paying 14.7% of PATH's abandonment costs. Coincidence?
Style of technical, legal prose utilized in filings and orders at the Federal Energy Regulatory Commission. To the average layperson, the filings appear to be written in a language other than the familiar English. The Scott Thorsen Dictionary, 2013.