Commissioner Richard Glick Statement
March 17, 2020
Docket No. ER20-841-000
Dissent in Part Regarding PJM Interconnection, L.L.C.
I support the goal of mitigating the critical facilities identified pursuant to Reliability Standard CIP-014-2. As the Department of Energy explains in its comments in this proceeding, protecting against physical and cyber threats to critical infrastructure is a national priority, which the Commission itself has recognized in observing that “[p]hysical attacks to the Bulk-Power System can adversely impact the reliable operation of the Bulk-Power System, resulting in instability, uncontrolled separation, or cascading failures.”1
CIP-014-2 critical transmission stations and substations are the most critical facilities on the Bulk-Power system.2
As a result, mitigating the risk posed by those facilities can have significant regional benefits by protecting against widespread instability, uncontrolled separation, and the successive loss of system elements.3
But that is also why I dissent in part from today’s order. These projects, by their very nature, have the potential to benefit the region as a whole. That means that they should planned by PJM—the entity that accounts for the region’s needs—and their costs should be allocated regionally to all entities that benefit. Unfortunately, because this filing wedges these projects into the Supplemental Projects category, they will neither be regionally planned nor will their costs be regionally allocated. Instead, the costs of these projects will be allocated only to customers in the zone in which each project is located, rather than in a manner roughly commensurate with their benefits. Accordingly, I do not believe that PJM and the Transmission Owners’ proposal is just and reasonable and not unduly discriminatory or preferential.
I have some sympathy for the pickle that PJM and the Transmission Owners find themselves in when trying to develop these projects in a manner that is consistent with the Commission’s rules and regulations governing transmission planning. For example, the Commission has required that transmission planning processes be built on a foundation of openness, transparency, and coordination among interested parties.4
But those values lose some of their luster when it comes to planning transmission projects to mitigate the risk posed by stations and substations that are so critical to the system that they have potential to cause cascading outages throughout the region. Information about—and, indeed, the identity of—those facilities must be kept non-public to avoid serious risks to the public interest. That makes the usual transmission planning processes a bad fit for these projects.
In addition, Order No. 1000 went to great lengths to ensure that the costs of projects that provide regional benefits are shared equitably by the beneficiaries throughout the region. But one of the consequences of a project being regionally planned and having its costs regionally allocated is that the project must generally be open to competition. Whatever you think of competition—and I recognize the widely differing views on that score—it seems a bad fit with projects designed to mitigate critical facilities, whose identity and location must be kept secret.
Presumably with those tensions in mind, the PJM Transmission Owners have proposed to develop these projects as Supplemental Projects, which are planned by an individual Transmission Owner, minimally reviewed by PJM, and allocated exclusively to that Transmission Owner’s zone.5
And while that may help to ensure that confidential information stays that way, it creates an irreconcilable tension with the cost-causation principle we must follow. The United States Court of Appeals for the District of Columbia Circuit has explained that “the Commission generally may not single out a party for the full cost of a project, or even most of it, when the benefits of the project are diffuse.”6
And yet that seems to be the most likely outcome of today’s order. Again, these projects provide regional benefits by eliminating critical stations and substations that, if compromised, have the potential to cause cascading outages and other widespread reliability concerns on PJM’s system.7
As a result, their costs should be allocated regionally to entities that stand to benefit from the elimination of that threat. By making these projects Supplemental Projects, today’s order ensures that will not be the case because the costs of each project will be allocated entirely to the zone in which it is located. Under those circumstances, we cannot find that the projects’ “burden is matched with [their] benefit.”8
In my view, the better course of action would have been for PJM to plan and allocate the costs of these projects regionally, but to create whatever procedural safeguards are appropriate in light of the need to keep these critical stations and substations confidential, possibly even including an exemption from competition. I recognize that the Commission has a history of taking a rather doctrinaire approach to Order No. 1000’s requirements and that, as a result, PJM and/or the Transmission Owners may well have hesitated to seek an exemption from competition. But, in my view, it would be far better to apply our transmission planning rules more flexibly than to take an approach so strict that we elicit proposals that, at least on their face, seem to violate the cost-causation principle.
For these reasons, I respectfully dissent in part.
- 11 Department of Energy Comments at 1-2 (citing Reliability Standards for Physical Security Measures, 146 FERC ¶ 61,166, at P 5 (2014)).
- 22 PJM Transmission Owners Filing at 8.
- 33 PJM Comments at 2.
- 44 See Monongahela Power Co., 164 FERC ¶ 61,217, at P 5 (2018) (discussing Preventing Undue Discrimination & Preference in Transmission Serv., Order No. 890, 118 FERC ¶ 61,119 (2007), reh’g, Order No. 890-A, 121 FERC ¶ 61,297 (2007), reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), reh’g, Order No. 890-C, 126 FERC ¶ 61,228, order on clarification, Order No. 890-D, 129 FERC ¶ 61,126 (2009) (Order No. 890)); id. P 23 (explaining that the reforms in Transmission Planning & Cost Allocation by Transmission Owning & Operating Pub. Utils., Order No. 1000, 136 FERC ¶ 61,051 (2011), reh’g, Order No. 1000-A, 139 FERC ¶ 61,132, reh’g and clarification, Order No. 1000-B, 141 FERC ¶ 61,044 (2012), aff’d sub nom. S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41 (D.C. Cir. 2014) (Order No. 1000), were built on the foundation laid by Order No. 890).
- 55 Appalachian Power Co., 170 FERC ¶ 61,196, at PP 3-4, 6, 10 (2020).
- 66 BNP Paribas Energy Trading GP v. FERC, 743 F.3d 264, 268 (D.C. Cir. 2014); see id. at 268-69 (“[T]he cost causation principle itself manifests a kind of equity. This is most obvious when we frame the principle (as we and the Commission often do) as a matter of making sure that burden is matched with benefit.” (citing Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004) and Se. Michigan Gas Co. v. FERC, 133 F.3d 34, 41 (D.C. Cir. 1998))).
- 77 Cf. PJM Comments at 2 (contending that it “is in the public interest . . . to mitigate the risk associated with the extended loss of a significant amount of load in the event of a loss of the subject CIP-14 facilities”).
- 88 Old Dominion Elec. Coop. v. FERC, 898 F.3d 1254, 1255 (D.C. Cir. 2018) (quoting BNP Paribas, 743 F.3d at 268).