<The following editorial by Barron Shaw ran in papers the week of 3/6. It refers to a spreadsheet released by Transource showing how PJM ignored zones that see increased costs because of the project. That spreadsheet is here.>
The evidentiary hearings for the proposed Transource Independence Energy Connection (“IEC”) concluded last week in Harrisburg. Normally, Public Utility Commission hearings are… well, a little dull, because usually it is just a review of everything that’s already been said. But this court proceeding had a little drama as grid operator PJM made one last attempt to save their biggest project in years by introducing new evidence during the hearing.
To review, the IEC was proposed by Transource in 2017 and selected by PJM as a way to lower electricity rates in the Washington DC metro market. It would consist of two new 230kv high voltage lines running through Franklin and York counties. Crossing historic preserved farmland and pristine trout streams, the project has met with heavy resistance: only one private landowner in York County has signed an easement.
Previous newspaper columns have pointed out that local utility PPL has two parallel lines hanging half empty, and that PJM and Transource never really made an attempt to use them. PJM admitted in the testimony that it really isn’t part of their process to look for alternatives, and Transource keeps hanging on to the hope that someone will believe that those existing lines just aren’t big enough. PPL crushed that argument last week by providing testimony that though they haven’t been consulted, they are happy to upgrade, or even build the equivalent of the IEC-East on their existing right of way.
But the real issue isn’t how the line should be built, but whether it should be built at all.
So in order to improve the perceived benefits of the project, PJM took advantage of a rule change approved by FERC last month and recalculated the numbers. The rule change allows PJM to completely ignore future planned power generation plants. Instead of assuming that Virginia will finish construction on dozens of planned solar plants, PJM is going to assume that Washington DC needs Pennsylvania electricity instead. Dropping thousands of megawatts from the pool of future available power had the effect of raising the benefits of the project, because without their own generation, the DC market may find cheaper power to their north. And higher benefits are good for the IEC, right?
In their haste to introduce the new evidence, Transource neglected to make the PJM calculations confidential. In their now-public spreadsheet we can see the biggest problem with this project: all wholesale rate decreases in the DC market will be matched dollar-for-dollar by rate increases elsewhere in the grid, including a $514 million increase in Pennsylvania alone! That “giant sucking sound” you hear is cheap power headed south, and more expensive power left here to raise your rates.
So how can PJM propose a project that doesn’t really save any money, hurts Pennsylvania ratepayers so badly, and costs nearly $500 million to build?
The answer can be found at the Federal Energy Regulatory Commission (“FERC”), the entity charged with regulating PJM. FERC allowed PJM to implement a tiered system, with one set of rules for smaller projects, and one for larger projects. Delineated by voltage, the lower tier rules allow PJM to completely ignore all zones that see increases, while the higher tier rules consider the net change to system production cost. Transource realized that this created a loophole. They designed the IEC to run at the highest voltage possible in the lower tier, but carry an astonishing 24 conductors. Though run at only 230kv, the IEC has so many conductors it would have more power capacity than most 500kv lines that form the backbone of the grid. One expert witness said it carried more power than any 230kV line he had ever seen. Testimony showed that if the line were evaluated as a higher tier project, it probably would never have been proposed.
And if that isn’t gaming the system, then consider this: when PJM asked FERC to make the changes in the assumptions for future planned generation — the changes that affected the benefits last week — they didn’t provide much analysis. In fact, they only gave FERC one table of examples. Those examples showed what would happen to eight small projects with and without the proposed changes. In all eight examples, the new rules reduced and usually eliminated the need for those projects by showing the projects no benefit. PJM clearly was trying to tell FERC that they had historically been over-estimating the benefits of projects, and that the proposed rules would more accurately reflect lower benefits and result in fewer unnecessary projects. But just days after the rules were changed, the IEC showed a $250M swing the other direction. Bait and switch anyone? You can almost hear the laughter in the PJM hallways.
PJM is a cabal of utilities interested in one objective: making money. They have manipulated the rules to allow the proposal of a project that will lose hundreds of millions of dollars, destroy preserved farmland, and raise rates for Pennsylvania residents, all while ignoring existing alternatives. If nothing else, this process has convinced any objective onlooker that PJM needs tighter regulation. FERC has been too trusting, and the effects are clear.
The question before the PUC now is whether they can in good conscience approve a project that does over $500M in harm to Pennsylvania. It would seem to be an obvious answer. After all, just how much WORSE could this project be? Pennsylvania’s own Office of the Consumer Advocate (OCA), the agency charged with protecting electric consumers, has strongly opposed this project. They urge it be rejected “with prejudice” because it would open the door to similar energy drains from the state. Every local governmental entity, every local legislator, and even Governor Hogan of Maryland wants to see this project defeated. The only beneficiaries are a few generators, and they have wisely remained silent.
This case has moved far beyond the usual issues of “not-in-my-backyard.” This case affects every Pennsylvania resident. If you want to see the evidence for yourself, or if you would like to tell the PUC to reject this project, please visit www.stoptransource.org.
A decision is expected sometime this summer. Stay tuned.