Commissioner Allison Clements and Commissioner Willie Phillips Joint Statement
April 5, 2022
Docket Nos. ER22-358-000, ER22-358-001
We concur with the majority’s approval of the proposed CTOA revisions to the voting rules, filed pursuant to section 205 of the Federal Power Act (FPA), because the revisions were approved by 80% of the Individual Vote under the current voting rules, and because PJM stakeholders, regardless of size, retain the ability to protest FPA section 205 filings and to file complaints pursuant to FPA section 206. However, we are writing separately to note some concerns with the changes to these voting rules, which, while not rendering them insufficient to satisfy the PJM Transmission Owners’ Section 205 obligations, are worth consideration.
The proposed changes effectively eliminate the relevance of individual votes cast by smaller, non-traditional Transmission Owners where large, incumbent Transmission Owners achieve a 95% or greater supermajority vote weighted by rate base (Weighted Vote). More specifically, under the current voting rules, for actions requiring a supermajority, even if the Weighted Vote achieves a supermajority of 95% or more, without the support of at least 50% of the Individual Vote, the proposal fails. The revisions we approve today make the Individual Vote irrelevant where Transmission Owners achieve a 95% or greater Weighted Vote.
The PJM Transmission Owners support the proposed revisions to the voting rules as necessary in light of the “proliferation of smaller, non-traditional Transmission Owners”[1] since 2006 resulting from expanded transmission ownership in PJM and the introduction of new types of transmission owners.[2] The PJM Transmission Owners maintain that the CTOA voting provisions, if not changed in response to the increase in non-traditional Transmission Owners, could make it difficult for the PJM Transmission Owners to propose Tariff changes to the Commission that protect their substantial investment in the PJM Transmission System and that fairly allocate costs among their transmission customers.[3] According to the PJM Transmission Owners, “[t]he CTOA Amendments address this concern by removing the Individual Vote majority requirement where [there is] an extreme supermajority.”[4] While the PJM Transmission Owners’ concern over their substantial investments is conceptually valid, it is not clear, based on the record before us, that the PJM Transmission Owners face a “known or reasonably anticipated”[5] problem. Since 2006, only six new non-traditional Transmission Owners with full voting rights under the CTOA have signed on.[6]
We are also concerned that the PJM Transmission Owners failed to adequately respond to the Deficiency Letter question about whether it is just and reasonable for a small number of PJM Transmission Owners with the largest transmission rate base to meet the 95% Weighted Vote threshold for approving a voting item when a majority of individual PJM Transmission Owners vote against the item. Instead, the PJM Transmission Owners dodged the question by revising it.[7]
The PJM Transmission Owners assert that the Commission’s approval of the North American Electric Reliability Corporation’s (NERC) definition of Bulk Electric System made it possible for small municipal electric systems to be eligible to have their transmission facilities integrated with the PJM Region and become PJM Transmission Owners and thus Parties to the CTOA.[8] That is an important point. If NERC has found that these facilities are part of the Bulk Electric System, we should fully recognize their individual views in the voting structure.
Finally, we note that these revisions to the voting structure may affect important issues for Transmission Owners such as rate design and future cost allocation. We encourage non-incumbent Transmission Owners to continue to protest in FPA section 205 filings should they believe any proposal fails to satisfy the just and reasonable standard, and to file complaints pursuant to FPA section 206 if this new voting mechanism proves to be discriminatory or anti-competitive.
For these reasons, we respectfully concur.
[1] Transmittal at 13.
[2] Id. at 3.
[3] Id. at 10.
[4] Id. at 3.
[5] Order P 32 n.52 (citing Cal. Indep. Sys. Operator, 124 FERC ¶ 61,271, at PP 345, 350 (2008)).
[6] PJM Transmission Owners’ Response to Answer at 10.
[7] See Deficiency Letter Response at 4-5. Based on a lack of clarity in the record, we do not know how many PJM Transmission Owners are currently required to meet the 95% threshold for Weighted Votes. We are concerned that a small group of Transmission Owners with significant net assets may be able to meet that threshold so that many smaller TOs (perhaps more than half of the 18 Transmission Owners currently eligible to vote) may receive unfavorable treatment due to this revision.
[8] Transmittal at 9-10 (citing North Am. Elec. Reliability Corp., 146 FERC ¶ 61,199 (2014)).