PJM Given Regulatory Authority by Federal Court

I'm sure even PJM's jaw dropped when it read a recent court decision that essentially says that a state MUST approve a transmission project planned by PJM.  PJM has been given new power by a judge legislating from the bench.  Surprise!

In Transource Pa. LLC v. Defrank, CIVIL 1:21-CV-01101 (M.D. Pa. Dec. 6, 2023), the court determined that the Pennsylvania Public Utility Commission's denial of Transource's application to build the Independence Energy Connection market efficiency project was unconstitutional.

When I first read Transource's screwy arguments appealing the PUC's decision, I laughed.  Maybe that was because I know too much about federal laws governing transmission, how the different actors relate to each other, and how PJM's planning process works to even entertain such a ridiculous argument.

Here's a clip from the overly long opinion that sums up what's at stake here:

“Defendants also argue that the PUC's decision related to siting, and not regional planning, because it was procedurally different from PJM's transmission planning process. (Id. at 12-14.) In support of this argument, they point to various ways in which PJM's process was purportedly faulty, whether by not conducting evidentiary hearings, taking sworn testimony, permitting cross-examination, or purportedly basing the benefit-to-cost analysis on stale information. (Id.) Meanwhile, the PUC's determination was based on timely information which provides, in Defendants' words, “an important procedural check on the unlitigated, un-reviewed conclusions reached by PJM.” (Id. at 13.)

If they were not allowed this important procedural check, Defendants argue, state laws would merely be a “rubber-stamp [of] every RTO-approved transmission line application.” (Id. at 14 (internal quotation marks omitted).) Defendants argue that the court need not parse the meaning of FERC's instructions in Order 1000 “because FERC has clearly instructed that its jurisdiction did not reach siting and permitting.” (Id.) Here, the PUC's decision was made “after the transmission planning process was completed. The PUC decision, therefore, was a valid exercise of its siting authority.””)

But yet the Court ruled that the state PUC must accept PJM's determination of "need" for this project and substitute it for any investigation of their own.  Pennsylvania's statute that the PUC operates under requires the PUC to make the following determination:

To obtain approval for their application, public utilities must satisfy the following requirements by a preponderance of the evidence:

1) That there is a need for it.
2) That it will not create an unreasonable risk of danger to the health and safety of the public.
3) That it is in compliance with applicable statutes and regulations providing for the protection of the natural resources of this Commonwealth.
4) That it will have minimum adverse environmental impact, considering the electric power needs of the public, the state of available technology and the available alternatives.

Public utilities must satisfy these criteria in the opinion of the PUC, not PJM.  Just because PJM finds a project "needed" does not obligate the PUC to make the same finding.  Transmission permitting is state jurisdictional.  The only space for FERC-regulated PJM or federal transmission permitting is under Sec. 216 of the Federal Power Act, where the U.S. Department of Energy may designate a National Interest Electric Transmission Corridor in order to give FERC backstop permitting authority.  The Transource project does NOT have a corridor, therefore permitting is entirely up to the state.  In a state proceeding without a corridor designation, PJM's opinion about the project is just that -- another opinion for the PUC to consider in its evidentiary findings.  The PUC did not find PJM credible.  It was not required by state or federal law to do so.

In fact, if this absurd decision holds, then it will never be necessary for another regionally planned transmission project to ever apply for a NIETC.  It won't need one because PJM's determination of need trumps a state determination and the only thing left for the state to do is to decide where to put it.  This court has interpreted "siting" in isolation from "permitting."  It's siting AND permitting, and under Pennsylvania law, the PUC must make a determination of need before it permits.  There is absolutely NOTHING in federal law that supersedes Pennsylvania law in this area.  Federal law cannot require the PUC to defer to PJM's findings of need.

So, the PUC has 30 days to appeal this travesty.  If it does not, this precedent will be used to cut off every state utility commission from doing anything other than rubber stamping projects PJM or another FERC-approved RTO/ISO selects.  PJM is a GRID PLANNER.  It has no authority to site and permit transmission.  There is absolutely no reason for this court to give them new authority that does not exist in the law.

​This cannot stand!