Docket No. EL25-49-002
In today’s order, the Commission addresses rehearing requests and the paper hearing and compliance record regarding the rates, terms, and conditions through which Co-Located Loads may take transmission service from the PJM Interconnection, L.L.C. (PJM) system. I write separately to address the Commission’s resolution of the “minimum charge” issue raised in my concurrence to the December Order,[1] which I believe provides a reasonable path forward based on the record before us.
In its December Order, the Commission asked two briefing questions regarding establishing an additional charge for Eligible Customers on behalf of a Co-Located Load that elects not to take any amount of transmission service or only a de minimis amount of transmission service.[2] At that time, I wrote separately to emphasize my concern that the implementation of our rules around the new transmission services could risk cost shifting if those loads take little or no transmission service and thereby do not contribute to paying for the transmission system costs. Broadly, I remain vigilant about the impacts on consumers as the Commission continues to respond to new challenges from large and Co-Located Loads.
In today’s order, the Commission concludes that the record does not adequately support either the need for an additional charge at this time, or how such a charge should be calculated and assessed. In so doing, the Commission acknowledges the complexity of (1) documenting the benefits that accrue to Co-Located Loads paying little or no transmission service from the grid, and (2) designing a charge that corresponds to those benefits.
As explained in my concurrence to the December Order, because the Commission does not require a Co-Located Load to take any specific amount of the new transmission services, it creates the possibility that the load could pay little or nothing towards the costs of the transmission system, notwithstanding potential benefits it receives from that system. If this fact pattern occurs, particularly on any significant scale, it may result in problematic cost shifts to other transmission customers. However, if Co-Located Loads do, in fact, take meaningful transmission service via an existing service or one or both of the new contract demand services, they would pay transmission charges that contribute to the recovery of the transmission system’s capital and operations and maintenance costs. Therefore, whether underlying concerns around cost shifting actually manifest will ultimately depend on how the new transmission services will be used.
So, today’s order reasonably concludes that insights from concrete experience with the use of these new transmission services will help inform whether further action would be needed to address cost shifting issues. Given the challenges demonstrated in the record with articulating or documenting the specific benefits associated with being synchronized to the PJM system, and designing a rate (including conditions under which and the parties to whom it will be charged) that is commensurate with those benefits, I am persuaded that continued monitoring of this issue is appropriate.
Furthermore, as part of a broader recognition that implementing the new transmission services represents a significant development in PJM, the Commission directs PJM to prepare an annual report that includes critical information about how these services are being requested and used, as well as how loads using the services contribute toward transmission owners’ revenue requirements.[3] The annual reports will provide information that helps the Commission, the states, market participants, and stakeholders monitor the impacts of these new transmission services, including assessing whether the potential cost shift concern discussed above and in my prior concurrence actually occurs. If it does, I stand ready to consider Federal Power Act section 205 filings or section 206 complaints (including sua sponte action by the Commission) to address those cost shifts.
For these reasons, I respectfully concur.