PJM Consumers on the Hook for $80.5M for Failed MAPP Project

A settlement has been approved by the Federal Energy Regulatory Commission in the matter of recovery of costs of PJM's failed Mid-Atlantic Power Pathway (MAPP) project.

MAPP was one of four unnecessary transmission projects proposed by PJM in their Project Mountaineer initiative to increase the use of coal-fired resources by shipping 5,000MW of coal-fired electricity from the Ohio Valley to the East coast.  Of these 4 projects (MAPP, PATH, TrAIL and Susquehanna Roseland), two have been cancelled, one has been completed, and one is under construction.  The only difference between them is timing and execution by their owners.

All four of these projects took advantage of newly-minted transmission project incentives available from FERC, brought to you by the Energy Policy Act of 2005.  One of the incentives granted to these projects was the guaranteed recovery of prudently-incurred project investment in the event the project was abandoned and not built through no fault of the owner.

Therefore, once MAPP was abandoned, its owner, Pepco, filed with FERC for permission to recover its investment in the unbuilt project.  Unrecovered investment included capital expense "construction work in progress" costs, which is roughly defined as all expenses for electric projects under construction, including such items as land purchased, labor, engineering and regulatory costs.  The amount Pepco filed to recover was $87.5M.

Because some parties intervened and protested the recovery, FERC set the matter for settlement and hearing.  A settlement was reached and recently approved by the Commission.

The settlement allows Pepco to recover $80.5M in abandonment costs over a three year period, and allows the company to maintain ownership of all land and land rights purchased as part of the project.  However, Pepco must remove the land from its rate base (capital account) that earns a yearly return paid by all electric consumers in the PJM region.

In its cost recovery filing, Pepco valued its land acquisition activities at $38.1M, although actual land values would most likely be much less.  So, how much land did Pepco buy for MAPP that the company now owns free and clear?

Converter station sites in Calvert and Wicomico County, MD and Sussex
County, DE were acquired;

Takeoff points into and out of the Chesapeake Bay were acquired;

Transition station locations in Dorchester County were acquired; and

Transmission line right-of-way for entire length was acquired, except for one property in Dorchester County where negotiation was pending.

Looks like Pepco has enough land to concoct another unnecessary transmission project at ratepayer expense, and it looks like Pepco still holds these landowners' lives in limbo under the threat of building a transmission line across their properties.  Let this be a lesson to you... do NOT sign right-of-way agreements early in the process, before a project is approved and receives a permit from all states through which it is routed.

Ratepayers in 14 states will remember PJM's failed Project Mountaineer as they pay off Pepco's unbuilt MAPP debt in their electric bills for the next three years.  Thanks, PJM!