FERC Questions PJM Transmission Owners’ Compliance with Order No. 890

On August 26, 2016, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) established a proceeding to determine whether transmission owners in the footprint of the PJM Interconnection L.L.C. (“PJM”) are complying with the requirements of Order No. 890.  This proceeding follows a November 2015 technical conference in which several PJM transmission customers and other parties suggested that stakeholders are unable to meaningfully participate in the transmission planning process for certain PJM projects. 

To ensure that transmission service is provided on a just, reasonable and nondiscriminatory basis, in 2007, FERC reformed the pro forma Open Access Transmission Tariff (“OATT”) through Order No. 890.  Among other requirements, Order No. 890 established nine transmission planning principles, the first of which being for transmission providers to give customers and other stakeholders a “meaningful opportunity to engage in planning along with their transmission providers,” as opposed to facilitating “a mere exchange of information” and “after the fact” review.  Attendant to this “cooperation” obligation was the duty of transmission providers to disclose the basic criteria, assumptions, methodologies and data supporting their transmission plans so that stakeholders could provide timely input on a project’s merits.

At the Order No. 890 compliance stage, FERC rejected several initial filings by PJM out of concern that they did not sufficiently address how locally planned projects would fit into the larger regional transmission planning process or how stakeholders could review and comment on those projects before they were finalized.  PJM ultimately revised sections of its Operating Agreement to allow for earlier opportunities to provide input and to establish a sub-regional review committee to address stakeholder concerns.  FERC relied on these revisions as the basis for both its ultimate approval of PJM’s Order No. 890 compliance filing as well as of PJM’s compliance filing for Order No. 1000—another order addressing transmission planning issues, which the Commission issued in 2011.

Following a November 12, 2015 technical conference, however, FERC grew concerned that PJM’s local transmission planning process failed to conform to PJM’s Operating Agreement or to the requirements of Order No. 890—or, for that matter, of Order No. 1000, the Commission suggested.  According to comments from customers and stakeholders during and following the conference, it appeared that some PJM transmission owners were identifying, and even beginning to develop, certain projects before the stakeholder participation stage.  Although some regional transmission owners were providing early and meaningful opportunities for stakeholder participation, the Commission was concerned that this was not a common regional practice.

Acting on its own authority under section 206 of the Federal Power Act, the Commission opened this proceeding to determine whether PJM transmission owners are meeting their Order No. 890 obligations.  The Commission required that, within 60 days from the date of the order, PJM transmission owners must either “(1) propose revisions to the PJM Operating Agreement to comply with Order No. 890, (2) revise their portions of the PJM OATT or revise their individual OATTs to comply with Order No.  890, or (3) show cause why they should not be required to do so.”  In turn, if no final decision is issued after 180 days following the proceeding’s commencement, the Commission must state reasons why and provide a best estimate of when a final decision could be reasonably expected.  Assuming the transmission owners file OATT revisions, however, the Commission estimated that it could issue its decision within three months of those filings.

A more detailed version of this post first appeared on the Troutman Sanders’ Washington Energy Report.

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