PJM utilizes a hybrid cost allocation method, which the Commission found complies with Order No. 1000, for Regional Facilities and Necessary Lower Voltage Facilities that address a reliability need.  Under this method, PJM allocates 50% of the costs of Regional Facilities or Necessary Lower Voltage Facilities on a load-ratio share basis and the other 50% based on the solution-based distribution factor (DFAX) method.  PJM allocates all of the costs of Lower Voltage Facilities using the solution-based DFAX method.  Cost responsibility assignments pursuant to the Order No. 1000-compliant cost allocation method are included in Schedule 12-Appendix A of the Tariff. 

PJM has told us that if we fail to approve those transmission projects in this RTEP driven by the closure of the Brandon Shores coal generating unit located in Maryland, the grid will likely suffer a severe voltage collapse in Baltimore and the surrounding zones, including Northern Virginia, the District of Columbia, Delaware and southeastern Pennsylvania. Such a result could be potentially catastrophic.
While these projects are very costly – and I take seriously the concerns expressed by the Organization of PJM States, Inc. (OPSI), Maryland Public Service Commission (MD PSC) and Maryland Office of People’s Counsel (OPC) – given this Hobson’s choice I concur with approving PJM’s RTEP filing.
While I concur, I note that this element of the RTEP filing raises more questions than it answers, and some of those questions are extraordinarily important.  

Let me emphasize that the State of Maryland, within its sovereign police powers, clearly has the authority to mandate any particular mix of generating resources it prefers.  Maryland’s new climate law is well within its inherent authority to enact.  Such policies are for Marylanders to choose, not RTOs or FERC.  But if the resulting transmission projects under protest in this RTEP filing are caused more by Maryland’s policy choices than by organic load growth and economic resource retirements, then a salient question that may be asked is whether these transmission projects are more accurately categorized as public policy projects, essentially the same as the transmission upgrades caused by New Jersey’s offshore wind projects?
And if they are more accurately categorized as public policy projects, should such projects be regionally cost-allocated, potentially to consumers in Pennsylvania, West Virginia, Ohio, et al.?

It is ultimately the job of each state to ensure resource adequacy to serve its consumers, even in a multi-state RTO. ​

Clean Line Investment LLC (“Clean Line Investment”) is a Delaware Limited Liability Company that was formed for purposes of investments in independent transmission projects.  Clean Line Investment was a financial partner in Clean Line Energy Partners LLC, which originally developed the Grain Belt Express Project.  While Invenergy has acquired ownership and control of the Grain Belt Project, Clean Line Investment maintains a long-standing, direct interest in the successful implementation of this project.  Given its originating role in this project, Clean Line Investment’s interests cannot be represented by any other party.  Therefore, this intervention is in the public interest.

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“No public utility shall, without first having secured an order of the Commission authorizing it to do so -- sell, lease, or otherwise dispose of the whole of its facilities subject to the jurisdiction of the Commission, or any part thereof of a value in excess of $10,000,000.” 

The Needs Study is not intended to displace existing transmission planning processes and is not intended to identify specific transmission solutions to address identified needs, but it does identify key national needs that can inform investments and planning decisions.  ​

The findings of this Needs Study are intended to inform regional and interregional planning, as well as help guide the Department in the execution of its transmission-related authorities. The Department understands the factors that drive industry transmission planning today and the entities and institutions that perform such planning. This Needs Study is not meant to displace these planning processes or the reliability standards they address. Rather, the Department believes it will be an important addition to overall industry and government planning efforts to reduce transmission congetion and capacity constraints that adversely affect consumers. 

A few individuals express opposition to the basis of the Study and what they view as political or parochial goals of the Study. One individual, Keryn Newman, criticizes the discrepancy between needs identified in the 2020 Congestion Study and the draft Study, stating that in 2020, DOE did not find a need to designate transmission corridors. In contrast, this report finds significant transmission need “in an area so vast that if the DOE were to designate corridors to solve it, the entire continental U.S. would be one gigantic ‘corridor.’” Newman concludes that this discrepancy can only be attributed to the fact that the studies “are not based on data and science, but on political goals. 

Keryn Newman criticizes the Study’s conclusion that large-scale transmission build-out is cost-effective. Newman cites the Study’s “vague claims of ‘economies of scale,’” arguing they are never justified and allow DOE to avoid a comprehensive analysis of the cost of transmission. 

Keryn Newman argues that the Needs Study does not include adequate consultation with landowners, whom Newman identifies as those who will most experience the devastating impacts of transmission development. Newman argues that the Study identifies landowner concerns as a barrier to transmission deployment but does not bother to consult these “barriers” or to devise solutions to mitigate their concerns. For this very reason, Newman also objects to the FERC Report on Barriers and Opportunities for High Voltage Transmission, which is cited in the Needs Study. Additionally, Newman argues that landowner interests should be represented on DOE’s Technical Review Committee. ​

Department Response
In response to comments from parties requesting additional, targeted stakeholder and Tribal outreach and continued stakeholder engagement, the Department has made additional efforts to engage with entities beyond the Department’s consultation with states, Tribes, and regional entities pursuant to Section 216(a) of the FPA, as amended (16 U.S.C. §824p(a)(1)). The Department has continued to accept meeting requests from commenting and interested parties to discuss draft Study findings.
Further, the Department has created regional and national fact sheets to be appended to the final Study and released concurrently to help make Study findings more accessible. The Department hopes the final Needs Study will be used as an educational tool to engage communities in discussion about grid needs. Departmental communications on final Study findings are a tool to solicit additional feedback from stakeholders on what future iterations of the Needs Study should entail.
The Department agrees with commenters that landowner, community, stakeholder, and Tribal engagement is imperative. The Department added Section V.e. Siting and Land Use Considerations (pages 95–108) to the final Study on subjects of unique interest to the communities. This section contains discussion of best practices for developers in engaging with landowners and other affected parties. 

Keryn Newman objects to the Needs Study’s statement that “large amounts of low-cost generation potential exist in the middle of the country and accessing this generation through increased transmission is cost-effective for neighboring regions.” Newman argues this approach is only low-cost due to taxpayer-funded subsidies and lower-cost lands and that “turning rural America into an energy serfdom to provide power to far-away cities” benefits urban communities that do not want to build infrastructure in their own backyard. Newman also argues that the statement exhibits “cultural and political elitism.” Furthermore, Newman argues that the Study dismisses legitimate landowner concerns as “NIMBYism” and barriers to transmission development without attempting to address them. Accordingly, Newman concludes that the Study lacks awareness and empathy. 

The Department stresses that addressing landowner concerns is critical to ensuring just and equitable outcomes in transmission deployment. The Needs Study makes no reference to “NIMBYism” and the Department has taken care to ensure that landowner concerns are not presented as a barrier to transmission deployment in the final Study. 

Transmission can share much of its rights-of-way with other activities, such as agricultural fields or recreational paths, and are considered a “mixed use” activity. 

Protect Our Winters, a group formed to safeguard outdoor recreation from the effects of climate change, is advocating a draft bill that would increase fees on Energy Department loans for transmission lines, with the new revenues going for infrastructure projects in communities where the new lines are built.

In doing so, the group is hoping to dispel a “not in my backyard” mentality that has been common in some rural communities, where transmission lines were seen as detriments to the aesthetics of the wilderness frequented by skiers, climbers and outdoor enthusiasts.

The group’s staff, along with outdoor athletes, are seeking support for the draft they partnered on with Rep. Ann McLane Kuster, D-N.H., hoping that it will garner bicameral, bipartisan support when it’s formally introduced. The group came to Washington last week to drum up support.

I saw and heard many statements today that a grant project must “be connected to”, “nearby”, or “have a nexus to” a transmission project.  In order to determine if applying for funding is even worthwhile, I need to have this explained.

1. DOE has not specifically defined a geographic distance from the project for eligibility purposes.  We anticipate that each project may differ in its scope and impact, therefore we have requested that each applicant should explain how their proposed project is eligible for support under this program. In addition, please note that the merit review criteria listed in the FOA at Section V states that applications for economic development activities will be assessed in part based on, “The extent and clarity of the connection described in the Application between the proposed activities and economic development benefits in communities that are likely to be impacted by a covered transmission project.”
   
   

How will “communities that may be affected by the construction and operation of a covered transmission project” be defined for eligibility purposes?  How far from the centerline of the transmission project does such a community extend?

1. As we anticipate that impacts may vary by project and by community, DOE has requested Applicants for Area of Interest 2 address how the project will promote economic development in areas that may be affected by the construction and operation of a covered transmission project. See Section IV.E.iii of the FOA.
   
   

What is considered an “affect” of construction and operation of the project?

1. For an understanding of how grants will be awarded, please refer to the merit review criteria for Area of Interest 1 (siting and permitting) and Area of Interest 2 (economic development) listed in the FOA at Section V. You may also refer to the “Standards for Application Evaluation” and “Other Selection Factors” including “Program Policy Factors” that are also referenced in Section V of the FOA. 
   
   

How will an economic development grant be expected to speed up siting and permitting?

1. While the funds associated with an economic development grant can only be disbursed once either the siting authority has approved the covered transmission project (if the applicant is a siting authority) or construction has commenced (if the applicant is a state, local, or Tribal governmental entity other than a siting authority), DOE may select awardees for economic development grants prior to a decision to site and permit the relevant transmission project and obligate federal funds for such awardees.  To the extent that the activities, if awarded, would accelerate transmission siting timelines and/or increase the chance that a transmission project would be developed, DOE will consider that as part of the established Merit Review Criteria.

Kuster, a member of the House Energy and Commerce Committee, noted in a statement that the U.S. may need to triple energy transmission capacity by 2050 to meet the target of net-zero carbon emissions by bringing more renewable electricity generation on line.

“In order to make that a reality, we must ensure that communities where transmission projects will be built are excited to host these lines,” Kuster said.  “By securing tangible benefits for the towns and cities that host these projects, like new schools, roads, or outdoor recreation facilities, in addition to improved electricity reliability, this legislation will help build support for transmission projects across the country.”

“There’s been this move afoot in which markets have become something closer to a mechanism by which to harvest … subsidies, rather than what they were intended to do, which is ensure least cost dispatch of available resources and to incentivize new investment.”

For the most part, RTOs have embraced the goal of economic efficiency for the past 23 years (since Order No. 2000). However, some RTOs have begun to include the “clean‐​energy transition” and “environmentally sustainable power system” in their mission statements. Advocates of economic efficiency should be concerned that the IRA will push RTOs further into a new era in which the goal of economic efficiency is secondary to environmental goals or ignored entirely.

The value of the PTC today is $27.50 per megawatt‐​hour. In the price contour map above, several of the indicated hubs were trading below that amount (in the range of $25–26 per megawatt‐​hour). Again, in most other industries, a federal subsidy larger than the price of the commodity would be unimaginable—people familiar with the industry would sound alarms about the distorting effects of large subsidies. People would be justified in losing their temper, for example, if Congress implemented a new federal subsidy of $70–90 per barrel of crude oil produced in the United States (the going rate over the last year or so). With subsidies larger than the commodity price, will RTOs trade as much (or more) in federal subsidies as they do in electricity?

Coal and natural gas are dispatchable generation resources that presently provide 60 percent of our electricity. They are also essential if grid operators are to maintain reliability. Subsidies for intermittent generation will lead to the retirement or bankruptcy of dispatchable resources, which will not only create challenges in maintaining grid reliability but will open the door for subsidies for dispatchable resources (whether or not they are truly needed for reliability). Such a subsidy spiral could be endless and could pit federal subsidies in the IRA against state subsidies for preferred resources, all paid for by American taxpayers or electricity customers one way or another.

Counting the many reasons to repeal the energy subsidies in the Inflation Reduction Act (IRA) has become my favorite activity.