INITIAL FERC RULING ON ARTIFICIAL ISLAND COST ALLOCATION GOOD NEWS FOR DELAWARE

​As reported last week in the News Journal, Delaware recently received good news from FERC regarding the Artificial Island cost allocation proceedings.  In response to the claims raised by the Delaware and Maryland Public Service Commissions (Docket EL15-95-000), regarding the cost allocation made by PJM as to who would pay for a new transmission line to be constructed between New Jersey and the Delmarva Peninsula, FERC determined that the cost allocation for Artificial Island filed by the PJM transmission owners may not be just and reasonable.  FERC has therefore accepted the cost allocations but delayed implementation for 5 months (subject to refund if FERC denies the cost allocation) and established a technical conference with PJM to determine whether there is a certain category of reliability projects for which the solution-based DFAX may not be appropriate and whether another cost allocation method could be established for such projects. Paragraphs 34 and 35 of FERC’s order, below, are the most significant for Delaware.  This is a fantastic initial order from FERC.
34. Our preliminary analysis indicates that the assignment of cost allocation for the proposed Tariff amendments in Docket No. ER 15-2562-000 Filing and Docket No. ER15-2563-000 have not been shown to be just and reasonable and may be unjust, unreasonable, or unduly discriminatory or preferential. Accordingly, we will accept the proposed Tariff revisions for filing, suspend them for five months, to become effective on April 25, 2016, or an earlier date set forth in a subsequent order, subject to refund, and the outcome of a technical conference in the complaint proceedings, Docket Nos. EL15-18-001, EL15-67-000, and EL15-95-000.
35. We direct staff to establish a technical conference to explore both whether there is a definable category of reliability projects within PJM for which the solution-based DFAX cost allocation method may not be just and reasonable, such as projects addressing reliability violations that are not related to flow on the planned transmission facility, and whether an alternative just and reasonable ex ante cost allocation method could be established for any such category of projects.