Central Transmission, part of the LS Power Group, told PJM Interconnection Oct. 10 that the PJM Board of Managers should approve its transmission line project over one proposed by Exelon’s (NYSE:EXC) Commonwealth Edison (ComEd) and assign it to Central Transmission, as its project “provides the most market efficiency benefits.”
In its letter to PJM, Central Transmission noted that PJM staff intends to recommend a new 345-kV transmission project in Illinois to solve the “stage 1A 10-year auction revenue rights (ARR)” issues identified in the northwestern part of the state.
According to PJM, ARRs are entitlements that are allocated annually to firm transmission service customers that entitle the holder to receive an allocation of the revenues from the annual financial transmission right auction.
The company said that in December 2010, PJM staff determined that Central Transmission’s Byron-Pleasant Valley 345-kV project presented the “optimal configuration from markets perspective” to solve those identified stage 1A 10 Year ARR issues. However, PJM staff now intends to recommend to the PJM board a different, incumbent transmission owner proposed project, Byron-Wayne, as the recommended alternative.
“Central Transmission believes that the board, consistent with the requirements of the PJM tariff, should reject the PJM staff recommendation and designate Central Transmission to move forward with the Byron-Pleasant Valley project as the more efficient and cost effective project,” the company said.
ComEd’s Byron-Wayne project was evaluated as an alternative to Byron-Pleasant Valley and rejected by PJM staff, the company said. Furthermore, the Byron-Pleasant Valley project passed the market efficiency test with a 2.02 benefit/cost ratio, above the 1.25 threshold required for inclusion as a market efficiency project, and should have been recommended to the board at that time and included in the 2010 regional transmission expansion plan (RTEP).
PJM did not include Byron-Pleasant Valley in the 2010 RTEP recommendation. Central Transmission also said that PJM re-evaluated the company’s projects in the 2011 RTEP and initially determined that one of the variations to Byron-Pleasant Valley 345-kV passed the market efficiency test with a 2.74 benefit/cost ratio. The Byron-Wayne 345-kV project failed with a 0.24 benefit/cost ratio, Central Transmission added.
PJM said at the last Transmission Expansion Advisory Committee (TEAC) meeting this year that from a technical standpoint the Byron-Wayne project and the Byron-Pleasant Valley project solve the ARR violation and improve stability. Therefore, the decision should come down to cost. Despite its 2010 conclusions, PJM staff recommended that the board approve Byron-Wayne instead of Byron-Pleasant Valley.
Central Transmission also said that its project is a lower cost solution compared to Byron-Wayne. The company said it estimates the cost for Byron-Pleasant Valley to be $125m to $130m, while ComEd estimated in 2011 that its project would cost $275m. “While largely unexplained, ComEd has reduced its cost estimate to $140m, which still remains $10m [to] $15m more expensive than the Byron-Pleasant Valley project,” the company said.
Additionally, Byron-Wayne is a longer transmission line and traverses a more populated area as compared to Byron-Pleasant Valley.
In its Oct. 8 letter to PJM, Exelon said ComEd believes that the board should consider all factors in deciding which project is best over the long-term and not just which project has the lowest preliminary construction estimate in the short term.
Exelon said the Byron-Wayne line provides route diversity by providing a unique west-east path across the ComEd territory.
The company also noted that because ComEd has included Byron-Wayne in its long-term plans, ComEd owns or has rights to about 70% of the property needed for the line. The Central Transmission project requires procurement of 52 miles of right-of-way and to the extent that LS Power claims it can use ComEd-owned right-of-way, it could do so only after extensive condemnation proceedings, Exelon said.
Furthermore, construction of the Byron-Wayne line will resolve current issues, as well as give PJM the ability to accommodate future load growth and new generation, particularly wind generation in western Illinois, because a second circuit can be added as needed.
Among other things, Exelon also said that while construction on Byron-Wayne requires work at two ComEd substations, under the present Central Transmission alternative, additional reliability issues would be created resulting in the additional work to be required at ComEd substations or ComEd-owned lines.
Among other things, a PJM staff whitepaper noted that stage 1A ARR feasibility analysis showed that the Byron-Wayne 345-kV project resolved all of the ARR insufficiency issues. Analysis of the other alternatives showed that they either did not resolve all of the ARR insufficiency issues or created additional violations, PJM staff said.