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FERC rejects TranSource’s claims against PJM Interconnection [free access]

August 28, 2019

The Federal Energy Regulatory Commission (FERC) has reversed an administrative law judge's earlier finding that the PJM Interconnection's processing of system impact studies for transmission upgrade requests made by Transource, LLC was non-transparent and unduly discriminatory.


FERC has supported PJM and rejected the facts presented by TranSource in the contentious dispute, as they do not support the findings of undue discrimination. While FERC found that PJM made errors in processing TranSource's system impact studies in violation of its own tariff, the regulator nevertheless concluded that ‘all such errors were immaterial’.


At the same time, however, the Commission found that PJM's tariff omits key information about how it processes the type of system impact studies at issue and directed the grid operator to address the problem through a compliance filing within 45 days.


The long-running conflict dates back to 2014 when TranSource submitted three applications to PJM proposing congestion-easing transmission upgrades that would allow the merchant developer to obtain incremental auction revenue rights. Those rights entitle the holder to receive an allocation of revenues from PJM's annual financial transmission right auction, which is designed to give transmission customers another hedging mechanism to manage costs.


After signing a system impact study agreement and paying a USD50,000 deposit to hold three different interconnection queue positions, TranSource subsequently challenged study results that showed the upgrades necessary to accommodate its proposed projects would cost approximately USD1.7 billion. In a June 2015 complaint, TranSource alleged that PJM repeatedly refused to provide requested data and work papers underlying the system impact studies. Moreover, the company said it had lost its project financing due to highly inflated cost estimates.


TranSource later expanded on its allegations in an amended complaint, arguing it was not provided equal and open access by PJM to the expansion, planning, and construction of the grid operator's transmission system, or to incremental auction revenue rights.


Under its recent ruling however, FERC rejected TranSource’s claims.