More Expert Testimony Reveals Transource Project Isn't Needed

In Part Deux of our look at the expert testimony filed on behalf of the Pennsylvania Office of Consumer Advocate, let's consider the testimony of Peter Lanzalotta and Geoffrey Crandall.

Peter Lanzalotta is a electric power engineer who takes a look at PJM's dreadful planning process and the other viable options PJM didn't consider when evaluating the Transource project.

First, neither Transource nor PJM considered minimizing the environmental impacts of new
transmission ROW and new transmission towers proposed for the IEC. As discussed later in my testimony, there are two existing available PPL transmission lines on existing rights-of-way, recently completely rebuilt with towers that have the capability of carrying an additional 230 kV circuit in the vicinity of the IEC East Project Line. PJM did not consider trying to use these as part of the IEC, because such use was not included as part of any of the proposals submitted to PJM. Such use could significantly reduce the environmental impact of this portion of the IEC.

Got that?  PJM put absolutely no value on using existing infrastructure and rights of way when evaluating solutions to its market efficiency needs.  Supposedly PJM carefully evaluated the submitted projects, but failed to recognize the cost and time savings that would result by using existing infrastructure and rights of way.  A project that uses existing assets is often cheaper, and doesn't face the costly and time consuming opposition that a project on new right of way creates.  Well, that's kind of naive, don't you think, PJM?  Maybe someday PJM will learn its lesson about greenfield projects of questionable necessity and include just such an evaluation in its review criteria.

In addition, PJM's shoddy attempt at competitive transmission creates another senseless conundrum.  PJM only considers projects that are submitted in the competitive window, even if better solutions are available.  PJM pretends to have no idea what existing transmission assets are out there (belief in this is hard, I know) and would have no way of determining that a transmission need could be met cheaper and faster by using existing infrastructure.  Perhaps it's time for PJM to re-evaluate its process here.  FERC's Order 1000 that instituted competitive transmission processes was supposed to be for the purpose of saving consumers money on necessary transmission.  PJM's attempt at process has lost sight of the goal.  The tail is wagging the dog here.

Lanzalotta next disposes of Transource's claims in the media that its project improves reliability.

Q. Transource witness Ali testified that an additional benefit of this Project was that it would also improve reliability. How do you respond?

A. Any major new piece of transmission line infrastructure will provide additional paths for power to flow, and thus could potentially improve reliability. However, there is no stated reliability need here, based on the Company’s filed testimony.

Transource is a solution in search of a problem.  Sounds kind of like gold-plating "reliability" to me.  We only build reliability improvements when there is an identified reliability problem.  No problem, no solution needed.

So, what is the purpose of this project?

PJM solicited proposals to address congestion on the AP South Reactive Interface (“APSRI”) as part of its 2014/15 Long Term Proposal Window. The APSRI is a set of four 500 kV transmission lines running from West Virginia into Maryland and Virginia. If the sum of the power flows over these four lines exceeds certain calculated limits, then the electric system can be susceptible to low voltages or voltage collapse under certain operating conditions. The power flow across the APSRI must be kept within these limits. Sometimes that means that less expensive-to-operate generating units outside of Maryland and Virginia will be backed down to generate less power, while more expensive-to-operate generating units inside Maryland and Virginia will be ramped up to generate more power, thus resulting in decreased power flows across the APSRI and increased generation costs for Maryland, DC, and Virginia customers.10 Transource witness Paul McGlynn references the PJM Independent Market Monitor, which has estimated that congestion costs on the APSRI were about $800 million from 2012 through 2016. The IEC reduces congestion costs on the APSRI by providing an alternative path to load centers in Maryland, DC, and Virginia, connecting them mainly to lower-cost generating units located outside of these areas.

So because the DC-metro area is such a power suck of power generated in West Virginia, sometimes its sucking exceeds the capacity of the existing transmission infrastructure and the power hungry have to suck from more expensive power plants closer to their own neighborhood.  Wah!  Cry me a river, fellas.  And, hey, look, there's that $800M figure that Transource says its project will save for the DC suckers.  And where did that number come from?  Apparently it's the sum of congestion from 2012-2016, when congestion costs were much higher than they are right now.  Why is PJM cherry-picking old congestion figures that support this project?

As Table 3 shows, the annual congestion costs due to the AP South Interface have been sharply declining since 2014 both in absolute terms and as a percentage of PJM total congestion costs. The 2017 annual congestion cost due to the AP South Interface has decreased by more than 95% from 2014.  Table 3 also shows the total decline in PJM
congestion costs since 2014. For 2014, total PJM congestion is $1.98 billion. For 2017, total PJM congestion has decreased to $697 million. This means that total congestion on PJM’s transmission system has decreased by more than 60% over the past three years.

That's why.  All part of PJM's magic math!

Lanzalotta takes a look at PJM's benefit-cost ratio for this project and finds...

One of the major shortcomings of PJM’s process of determining the B/C ratios of the IEC Project is that the costs of the project elements have not been updated since the project was initially evaluated in 2015.

Lanzalotta testifies that the cost of building transmission has risen 7.76 percent since 2015.

Another issue with the B/C ratio is the fact that PJM's electric load forecasts are way too high.  Historically, they always have been.  This is nothing new, however, PJM refuses to acknowledge this fact.  And magic math is born.

Summer peak loads and peak load forecasts have been declining across PJM’s Mid-Atlantic area for at least the past five years or more. This area includes loads in New Jersey, Maryland, Delaware, DC, and Pennsylvania, some of which are loads that contribute to the projected loads on the IEC Project transmission lines.

And then Lanzalotta mentions new generation that PJM also didn't take into account.

In recent months, there have been proposals of new renewable resource generating units
proposed to be located in Maryland and Virginia on the load-side of the APSRI. On July
24, 2018, Dominion Energy announced new plans to add 3,000 MW of new solar and wind generation during the 2020s. The Dominion announcement also referenced plans to add 240 MW of solar generation to be located in Virginia. There is no indication that the effects of any of these recent proposals, which could reduce the amount of load in Maryland and Virginia potentially being served over the APSRI, have been reflected in PJM evaluations of the IEC Project.

Which brings us to the testimony of Geoffrey Crandall, who provides a bunch of evidence that Maryland, Washington, DC, and Northern Virginia are actively planning to bring new renewable generation, energy efficiency, demand response, distributed generation, and other non-transmission alternatives to the Transource project.

There are also non-transmission alternatives that could address the load requirements in the MD-DC-VA area and reduce any congestion levels that currently exist in the Project area and without the impact on land, the environment and communities that have been identified in the public input hearings and site views.

Hey, now, that's a novel idea, PJM!  Perhaps the power suckers could build what they need right in their own neighborhoods instead of sucking it out of WV and PA.  But Crandall points out that PJM didn't even consider this option.  The only thing PJM can order is transmission, therefore transmission is the solution to every problem.  Except it's not, it's really not.  And here's the real kicker... MD, DC & VA all have their own energy policies that are encouraging local solutions to the problem PJM is trying to solve for them by importing more dirty power from the west.  These areas don't even want this project!  So, just like bequeathing reliability we don't need, PJM is also usurping the authority of these states to manage their own energy programs.  Maybe PJM is trying just a bit too hard to please its investor-owned utility membership that wants to sell more of its dirty power into the DC-metro area in order to prop up marginal power generators that might otherwise close.  Whose needs does PJM serve again?  It's not the electric consumers.

All in all, this is the BEST testimony I have seen filed in any state transmission permitting case (and I've seen a lot of them over the years).  Bravo to the Pennsylvania Consumer Advocate's office for so skillfully fulfilling it's mission for benefit of electric consumers.  Perhaps PJM should take some notes so it may begin to reform itself to actually serve consumers?

We don't need the Transource IEC project and it will not be approved.  Isn't it time for, at the very least, putting this project in abeyance until further studies can be performed?  We simply must stop the waste of consumers' money going on here for a project that will never be constructed.