Commissioner James Danly Statement
July 29, 2021
Docket No. ER20-2308-001
I agree that Joint Stakeholders’ request for rehearing should be denied. I disagree, however, with the modifications the Commission makes today to the discussion in the original order rejecting the stakeholder filing.[1] Specifically, I disagree that the Consolidated Transmission Owners Agreement is ambiguous as to which party has responsibility for end-of-life transmission projects. I therefore concur in the result of today’s order.
The Consolidated Transmission Owners Agreement addresses limited delegations of authority from PJM Transmission Owners[2] to PJM itself. The PJM Transmission Owners retain the right to “maintain” their transmission facilities.[3] They retain the right to determine when facilities should be retired.[4] And they retain any rights that are not “specifically transferred” to PJM.[5]
PJM, meanwhile, is limited to “[c]onduct[ing] its planning for the expansion and enhancement of transmission facilities.”[6]
I disagree with my colleagues that these provisions are ambiguous. There is no ambiguity regarding whether the PJM Transmission Owners delegated authority over “end-of-life” or “replacement” decisions to PJM. PJM Transmission Owners retained the right to “maintain” or “retire” their facilities. While PJM Transmission Owners delegated “planning for the expansion and enhancement of transmission facilities” to PJM, a decision to replace an existing facility is not an “expansion” and would only be an “enhancement” in the limited sense of extending the useful life of the transmission facility.
The key, though, is that the PJM Transmission Owners expressly retained any rights not “specifically transferred” to PJM. We therefore should not exert ourselves to stretch “enhancement” to broadly sweep in all end-of-life replacement projects. That is precisely the sort of thing that would have been “specifically transferred” to PJM if the PJM Transmission Owners had so intended.
Accordingly, I see no need to resort to extrinsic evidence to reach the same conclusion: PJM Transmission Owners retained the right to determine end-of-life decisions, including replacement projects, because that right was not “specifically transferred” to PJM. Not only is it incorrect to resort to extrinsic evidence when the contract language is unambiguous, it opens a Pandora’s box that could undermine even further the incentives the PJM Transmission Owners have to remain in PJM. Now that we have found the Consolidated Transmission Owners Agreement to be ambiguous, we have arrogated to ourselves the power to “interpret” that agreement in the future to take away rights that the owners unambiguously reserved to themselves. I can imagine that power becoming a sore temptation down the road. While the ultimate outcome in this case is correct, the path by which the majority arrives at its decision is not. I guarantee the PJM Transmission Owners will take note.
For these reasons, I respectfully concur in the result.
[1] Compare PJM Interconnection, L.L.C., 176 FERC ¶ 61,053, at PP 13-16 (2021) with PJM Interconnection, L.L.C., 173 FERC ¶ 61,242, at PP 51-57 (2020) (December 2020 Order).
[2] The PJM Transmission Owners are identified in footnote 9 of today’s order. PJM Interconnection, L.L.C., 176 FERC ¶ 61,053 at P 4 n.9.
[3] PJM, Rate Scheds., 4.5, TOA-42, 4.5, Operation and Maintenance (1.0.0) (reservation of right to conduct maintenance).
[4] PJM, Rate Scheds., 5.2, TOA-42, 5.2, Facility Rights (1.0.0) (rights to determine retirement).
[5] PJM, Rate Scheds., TOA-42, Article 5, Parties’ Retained Rights (0.0.0), 5.6, TOA-42, 5.6 Reservation of Rights (0.0.0); see also December 2020 Order, 173 FERC ¶ 61,242 at P 51 (citing PJM Interconnection, L.L.C., 172 FERC ¶ 61,136, at PP 83, 85 (2020)) (discussing same).
[6] PJM, Rate Scheds., 6.3.4, TOA-42, 6.3.4 (0.0.0).