E-8: Commissioner Christie Concurrence to Order on MAOD’s Transmission Incentives

Docket No. EL23-101-000

I concur with today’s order for two basic reasons:  First, while I have repeatedly called for reforming the Commission’s practice of awarding incentives to transmission developers in seeming “check the box” exercises,[1] the costs of the incentives approved herein, like all other costs of New Jersey’s offshore wind projects, will be allocated only to New Jersey load because this Project is implementing New Jersey’s public policies.  As such, this Project is appropriately approved for cost allocation under PJM’s State Agreement Approach (SAA).[2] 

Second, the New Jersey Board of Public Utilities (NJ BPU), which selected the Project through the State Agreement Approach process, did not protest these incentives nor otherwise provide evidence for the record that indicated that these incentives are inconsistent with, or violate, its selection of Mid-Atlantic Offshore Development, LLC.[3]  

While I concur for the two reasons stated above, I would emphasize a couple of points of clarification about statements made in today’s order.  To rationalize the awarding of incentives under Order No. 679, today’s order finds that the Project, by virtue of selection through implementation of the SAA, qualifies for the Order No. 679 rebuttable presumption in favor of awarding incentives because the SAA is “a fair and open regional planning process that considers and evaluates reliability and/or congestion.”[4]  The order then finds that this implementation of the SAA evaluated whether transmission projects, including the Project, ensure reliability and/or reduce congestion.[5]  At the same time, however, the order itself accurately notes that the Project was never evaluated by PJM as a reliability or economic project that would merit inclusion in the Regional Transmission Expansion Plan (RTEP) and thus would automatically trigger regional cost allocation.[6]  PJM has made no finding that the Project is the optimal (or even less than optimal) solution to an identified reliability or economic problem.  Instead, the Project was selected by the NJ BPU using its own criteria separate from the RTEP.[7]  This process is entirely appropriate and customary for an SAA project, and this order makes no finding that this Project has any specific reliability or economic benefits.  Its purpose is to implement New Jersey’s policies on offshore wind.

Further, on the question of who is actually receiving the Project’s benefits and thus can be properly allocated costs, I note that in a prior order approving cost allocation for New Jersey offshore wind policy projects under the SAA, the Commission found:   

The PJM TOs filed Schedule 12 – Appendix C to assign cost responsibility for the New Jersey SAA Projects that NJ BPU determines are necessary to support New Jersey state law . . . . We find that Schedule 12 – Appendix C . . . is just and reasonable under [Federal Power Act (FPA)] section 205.  The Commission has previously explained that, if a transmission project is designated under the [SAA], all costs related to that transmission project “shall be recovered from customers in a state(s) in the PJM Region that agrees to be responsible for the projects” . . . . In light of the New Jersey state law, the New Jersey SAA Projects will benefit customers throughout New Jersey, and thus we find that allocating the costs of the New Jersey SAA Projects on a load-ratio share basis to all New Jersey customers is roughly commensurate with the benefits provided by those projects.[8]  

So to be clear, it is New Jersey customers who are receiving the benefits of the Project because the Project is deemed necessary by New Jersey officials to implement its own state’s public policies.  

Finally, I would emphasize that this is an excellent example of how the SAA is in use and working as intended.  New Jersey customers will appropriately pay for this Project because this Project is necessary to implement New Jersey’s public policies.  It would be unjust and unreasonable under the FPA – not to mention just grossly unfair – for the Commission to impose regional cost allocation on consumers in Ohio, Pennsylvania, West Virginia and the other PJM states without their express agreement to bear the costs of projects such as this one.  This Commission should promote voluntary cost-sharing arrangements,[9] and I see no problem whatsoever in RTOs’ assisting states in planning projects that serve their public policies – just as PJM assisted New Jersey here – as long as such states have agreed to pay for them.   

Just as the Potomac-Appalachian Transmission Highline (more commonly known as “PATH”) example offers a cautionary tale of how not to do long-term planning and regional cost allocation,[10] this case graphically illustrates why the SAA model is a proper way to cost allocate public policy projects.  And it must be preserved in any forthcoming final rule on the Transmission Planning and Cost Allocation NOPR in Docket No. RM21-17-000.[11]

For these reasons, I concur.