E-6: Commissioner Rosner’s and Commissioner Chang’s Joint Concurrence to Order Denying Complaint re RWE Clean Energy, LLC v. PJM Interconnection, L.L.C. (EL26-7-000)

We support today’s order because we agree that PJM reasonably applied its Common Mode Outage analysis procedure when studying RWE’s interconnection request using a DC power flow analysis rather than an AC power flow analysis. 

But this case nonetheless demonstrates that the generator interconnection process too often asks developers to take shots in the dark in pursuit of low-cost points of interconnection that fail to materialize.  Although the band AC/DC once sang “a shot in the dark, make[s] you feel alright,”[1] reading the facts of this complaint felt more like being “on the highway to hell.”[2]  This complaint is the latest example among many that shows how strict adherence to “but for” cost allocation[3] has made building a new generator too costly and too slow, making energy more expensive and less reliable for customers.

The facts in this case test common sense:  the cost to connect a 125 MW solar and battery storage power plant to the grid swings by more than $70 million based just on whether PJM runs a power flow analysis using AC or DC.  And this is only one of the many technical assumptions PJM makes when evaluating what grid upgrades are needed to connect a generator to the system safely and reliably. 

Needless to say, this level of unpredictability and variability could not be what the Commission envisioned when it required grid operators to implement “but for” cost allocation for generator interconnection over two decades ago.  Since that time, the number of projects entering the interconnection queues has grown exponentially — and so too has the variability in costs resulting from this type of analysis.  Rather than providing power plant developers with the cost information needed to make efficient siting decisions, “but for” cost allocation today too often saddles developers with unmanageable risks from volatile interconnection costs caused by factors beyond their control. 

There is a better way.  Last week, the Commission accepted a novel proposal from SPP that consolidates the transmission planning process with the generator interconnection process.[4]  Rather than continuing to use a protracted interconnection study process to determine which facilities would not be in the transmission plan “but for” the interconnecting generators, SPP’s Consolidated Planning Process identifies efficient locations to connect new generation to the grid up front and provides power plant developers with access to those locations in exchange for a fixed and transparent connection fee.  Because SPP avoids the painstaking process of identifying the “but for” transmission upgrades, SPP can complete its interconnection study process in just 9 to 10 months, which will be the fastest of any RTO/ISO.  The result: more power gets online faster because developers get cost certainty that they can take to the bank to finance their projects, which ultimately allows customers to access cheaper and more reliable energy.  And it is worth noting that SPP achieved this paradigm shift with unanimous state and stakeholder support.

RTOs/ISOs should consider implementing regionally appropriate approaches like SPP’s Consolidated Planning Process to meaningfully expedite their interconnection study processes and reduce the barriers to financing needed generation.  PJM in particular has an opportunity to include a similar approach in the holistic reforms it intends to pursue after implementing the interim solutions identified in the recent Critical Issue Fast Path process[5] and the Statement of Principles Regarding PJM[6] agreed upon by the 13 PJM state governors and the National Energy Dominance Council.  While a Consolidated Planning Process is undoubtedly a significant endeavor, it is exactly the sort of outside-the-box thinking that can help power America in the coming decades.

For these reasons, we respectfully concur.