IEEE Power & Energy Magazine - July/August 2016 - 70

In assessing the workload required to implement Order
1000 against the potential for benefit, a few statistics provide
insight. Over the 15-year history of the PJM RTEP, over 90%
of all reliability-based transmission projects approved by the
PJM board have been upgrades to existing infrastructure. With
respect to violations of reliability criteria at voltage levels
below 200 kV, over 99% have been resolved by upgrades to
existing infrastructure or projects within a single transmission
zone, where the costs of which are fully allocated to that zone.
Reducing the throughput in the process should focus the collective resources of developers, the transmission owners, and PJM
on those problems and solutions that have the greatest potential
to provide the most benefit to the grid and to customers while at
the same time employing the minimum of resources.
The skills necessary to execute the sponsorship model
range beyond what the traditional independent service operator planning staff would be expected to possess. As the Artificial Island project shows, PJM needed to conduct detailed
constructability reviews that entailed assessing the risks
associated with obtaining a number of permits from various
federal, state, and local authorities. In addition, in assessing
the financial aspects of projects, it has become apparent that
a simple comparison of the design and construction costs is
not sufficient to appropriately determine life-cycle costs and
the potential impact to rates. A more thorough evaluation is
necessary and requires skills that the planning staff does not
possess. In both of these cases, expertise is available in the
engineering and financial communities to assist in the effort.
The need to perform such analyses and the costs associated
with acquiring those skills from outside the PJM organization
contributed to the establishment of a proposal fee related to
the Order 1000 process, which was recently approved by the
FERC and will be implemented sometime in 2016.

Where Do We Go from Here?
Transparency is a central theme underlying many of the
issues related to competition through the Order 1000 proposal process. Competition and Order 1000 will remain a
big part of the planning process for the foreseeable future.
PJM's planning process has, from the beginning, embraced
competition among resources through market structures as a
means for those resources to solve problems on the grid and
obviate the need for transmission solutions. Order 1000 now
introduces competition among developers for the transmission solutions identified as needed through the RTEP.
The FERC has approved various approaches across the
country-from the wide-open, where virtually all issues are
subject to proposal windows, to the highly restrictive, where
very few solutions to transmission needs are subject to competition. Ensuring a fair level of competition will require further
work to improve communications and transparency. However,
competition for competition's sake is not the answer.
PJM is satisfied with the sponsorship model and continues to receive positive feedback from stakeholders. Developers contribute innovative technical solutions to the process.
july/august 2016

This is true for reliability-based issues but is even more germane to market-efficiency projects. Absent the sponsorship
model, there had not been much focus, in terms of approved
transmission projects, on the issue of chronic congestion in
the energy market. The 2014/2015 competitive solicitation
on market efficiency resulted in innovative projects that far
exceed the cost-benefit thresholds and will result in very significant congestion savings to customers.
To make the process sustainable and encourage developers
to continue generating these valuable solutions, all resources
must be focused on issues where significant opportunities
for benefits exist. These include resources from developers,
the transmission owners, and PJM. It does not make sense to
channel all reliability issues through the competitive sponsorship process with the knowledge that the process places
such heavy resource demands on the participants and only a
small portion of those issues can reasonably result in benefits
to customers.
It would be better that the collective knowledge, expertise,
and effort be focused on those areas where the application
of resources can provide dramatic benefits. The challenge
for PJM and the developer community is to identify those
opportunities and run them through the competitive process
while addressing other issues with a less work-intensive process. To that end, PJM has proposed a cutoff at 200 kV and
higher to submit issues to the competitive sponsorship process; it is also evaluating other means to pare back the range
of reliability issues submitted to competition.
Efforts to pare back the scope of the competitive process
are needed to reduce workloads where no benefits of competition are likely and focus process improvements where
customers may see those benefits. The fact that the process
is relatively new and immature causes developers to be interested in all potential projects so as to hone their skills in a
competitive environment.
As the process matures and developers become more
confident in identifying opportunities for their businesses,
efforts are expected to be channeled more appropriately into
those projects that will result in the greatest positive impact
for the transmission customers, who are ultimately paying
for the projects.

For Further Reading
FERC. (2011, July 21). FERC Order 1000, Transmission
planning and cost allocation by transmission owning and
operating public utilities.

Biographies
Steven Herling is with PJM Interconnection, Audubon,
Pennsylvania.
Frank Koza is with PJM Interconnection, Audubon, Pennsylvania.
Paul McGlynn is with PJM Interconnection, Audubon, Pennsylvania.
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