Commission Watch

PJM would dictate grid expansion, even if not needed for reliability, and then push the cost of the upgrades on those who use them the most.

Chairman Pat Wood and his Federal Energy Regulatory Commission (FERC) may well have given up on attempts to impose a standard market design (SMD) on the electric utility industry, but that doesn't mean the nation's grid system operators won't try the same thing.

Witness the PJM Interconnection, one of only two certified regional transmission organizations (RTOs), which has proposed a triple-whammy of three controversial SMD policies that together will out-do anything that FERC has dared to require:

1. A regional process with total RTO control for planning and construction of so-called "economic" transmission expansion-upgrades not strictly required for the sake of reliability;
2. Mandatory participant funding for economic upgrades, with costs not rolled in across the RTO footprint, but allocated instead to smaller zones or even sub-zones of customers who benefit most from the upgrades;
3. Generous rate incentives for the transmission owners who provide grid service and who will collect a "transmission enhancement charge" (TEC) from the beneficiaries of the economic grid upgrades.

PJM acted so as to comply with a series of FERC orders from last fall and winter that had reviewed PJM's draft protocols for transmission expansion planning and had found them wanting for not going far enough to "support competition." So now PJM has come back and has given FERC everything that it asked for-and in spades.