Docket No. ER22-477-002
Generation developers in RTOs should pay the full “but for” costs of their interconnection, including network upgrades. Consumers (load) should not pay one nickel. They are not the ones seeking to profit from the interconnection. New generation in RTOs is supposed to be driven by the market, not by integrated resource planning, as in non-RTOs. That is the compelling principle underlying participant funding of interconnection in RTOs. The same rationale applies to developers of merchant transmission lines who seek to interconnect.
When, however, either a generation developer or a merchant transmission line developer pays the full costs of its interconnection, it is the developer incurring a cost of capital, not the transmission owner. Allowing the transmission owner a profit (i.e., return on equity, or ROE) on someone else’s capital investment would be an unearned windfall. When the transmission owner incurs operations and maintenance (O&M) costs associated with the upgrade, the transmission owner can seek cost recovery in compliance with applicable utility accounting rules or other acceptable procedures.
For these reasons, I respectfully concur.