EL25-49-002 · 2026-06-18 · FERC
PJM co-location rehearing order
Back to sections and commentaryPDF page 1
195 FERC ¶ 61,209
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Laura V. Swett, Chairman;
David Rosner, Lindsay S. See,
Judy W. Chang, and David LaCerte.
PJM Interconnection, L.L.C.
Allegheny Electric Cooperative, Inc.
American Transmission Systems, Incorporated
Atlantic City Electric Company
Baltimore Gas and Electric Company
Delmarva Power & Light Company
Duke Energy Ohio, Inc.
Duke Energy Kentucky, Inc.
East Kentucky Power Cooperative, Inc.
Essential Power Rock Springs, LLC
Hudson Transmission Partners, LLC
Jersey Central Power & Light Company
Mid-Atlantic Interstate Transmission, LLC
Neptune Regional Transmission System, LLC
Old Dominion Electric Cooperative
PECO Energy Company
PPL Electric Utilities Corporation
Potomac Electric Power Company
Public Service Electric and Gas Company
Rockland Electric Company
Trans-Allegheny Interstate Line Company
Transource West Virginia, LLC
UGI Utilities, Inc.
Monongahela Power Company
The Potomac Edison Company
Commonwealth Edison Company
Commonwealth Edison Company of Indiana, Inc.
The Dayton Power and Light Company
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Appalachian Power Company
Indiana Michigan Power Company
Docket Nos. EL25-49-002
EL25-49-000PDF page 2
Docket No. EL25-49-002, et al.
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Kentucky Power Company
Kingsport Power Company
Ohio Power Company
Wheeling Power Company
Duquesne Light Company
Virginia Electric and Power Company
Linden VFT, LLC
City of Cleveland, Department of Public Utilities,
Division of Cleveland Public Power
City of Hamilton, OH
Southern Maryland Electric Cooperative, Inc.
Ohio Valley Electric Corporation
AMP Transmission, LLC
Silver Run Electric, LLC
NextEra Energy Transmission MidAtlantic Indiana, Inc.
Wabash Valley Power Association, Inc.
Keystone Appalachian Transmission Company
Large Loads Co-Located at Generating Facilities
Constellation Energy Generation, LLC
v.
PJM Interconnection, L.L.C.
PJM Interconnection, L.L.C.
AD24-11-001
EL25-20-001
(consolidated)
ER26-1479-000
ORDER ON REHEARING, CLARIFICATION, COMPLIANCE FILING, AND PAPER
HEARING
(Issued June 18, 2026)
On December 18, 2025, the Commission issued an order in the show cause
proceeding in Docket No. EL25-49-000, et al., pursuant to section 206 of the Federal
Power Act (FPA),1 finding PJM Interconnection, L.L.C.’s (PJM) Tariff unjust and
unreasonable because it does not contain provisions addressing with sufficient clarity or
consistency the rates, terms, and conditions of service that apply to generators serving
1 16 U.S.C. § 824e.
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Co-Located Load and Eligible Customers taking transmission service on behalf of
Co-Located Load.2
The Commission directed PJM to file, within 60 days of the date of issuance of the
order, a compliance filing to revise its Tariff to set forth specific terms and conditions
that an Interconnection Customer in PJM seeking to serve Co-Located Load must follow
to effectuate a Co-Location Arrangement. In addition, the Commission directed PJM to
submit in its compliance filing revisions to its Tariff to require that the Eligible Customer
taking transmission service on behalf of the Co-Located Load takes one of three
transmission services: (1) Network Integration Transmission Service (NITS), including a
new interim, non-firm transmission service available until all Network Upgrades
necessary to provide the requested NITS are complete (Interim NITS), (2) a new Firm
Contract Demand (FCD) transmission service, or (3) a new Non-Firm Contract Demand
(NFCD) transmission service.3 The Commission established a paper hearing to
determine the just and reasonable rates, terms, and conditions for these new transmission
services.
The Commission also found the Behind the Meter Generation (BTMG) rules in the
Tariff to be no longer just and reasonable, and the Commission directed PJM to submit in
its compliance filing revisions to its Tariff to revise the retail BTMG netting rules and to
implement a transition process for existing BTMG participants.4
2 PJM Interconnection, L.L.C., 193 FERC ¶ 61,217, at P 2 (2025) (December
Order). The December Order defined the Tariff as PJM’s Open Access Transmission
Tariff (OATT), the Amended and Restated Operating Agreement of PJM, and the
Reliability Assurance Agreement Among Load Serving Entities in the PJM Region. See
Appendix for tariff records accepted in this order.
3 Capitalized terms used but not otherwise defined in this order have the meanings
ascribed to them in the Tariff.
4 PJM defines BTMG as “a generation unit that delivers energy to load without
using the Transmission System or any distribution facilities (unless the entity that owns
or leases the distribution facilities has consented to such use of the distribution facilities
and such consent has been demonstrated to the satisfaction of the Office of the
Interconnection); provided, however, that [BTMG] does not include: (i) at any time, any
portion of such generating unit’s capacity that is designated as a Generation Capacity
Resource; or (ii) in an hour, any portion of the output of such generating unit that is sold
to another entity for consumption at another electrical location or into the PJM
Interchange Energy Market.” PJM, Intra-PJM Tariffs, OATT, § I.1 Definitions – A-B
(21.0.0) (defining BTMG).
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On January 16, 2026, Exelon and FirstEnergy5 timely filed a request for rehearing
of the December Order. On January 20, 2026, Industrials6 timely filed a request for
clarification or, in the alternative, rehearing. On January 20, 2026, Constellation Energy
Generation, LLC (Constellation) filed a request for clarification or, in the alternative,
rehearing. On January 20, 2026, PIOs7 filed a limited request for clarification. On
January 20, 2026, Joint Parties8 filed a request for clarification. On February 9, 2026,
Andrew Hinz filed a late request for rehearing.
On February 23, 2026, in Docket No. ER26-1479-000, PJM filed its second
compliance filing as directed by the December Order.
On February 23, 2026, in Docket No. EL25-49-000, PJM and the Indicated TOs9
each submitted an initial brief to address the Commission’s paper hearing questions with
5 The request for rehearing was filed only by (1) Exelon Corporation (Exelon), on
behalf of Atlantic City Electric Company, Baltimore Gas and Electric Company,
Commonwealth Edison Company, Commonwealth Edison Company of Indiana, Inc.,
Delmarva Power & Light Company, PECO Energy Company, and Potomac Electric
Power Company; and (2) FirstEnergy Service Company, as agent for its affiliates
American Transmission Systems, Incorporated, Jersey Central Power & Light Company,
Mid-Atlantic Interstate Transmission LLC, Keystone Appalachian Transmission
Company, The Potomac Edison Company, Monongahela Power Company and
Trans-Allegheny Interstate Line Company (collectively, FirstEnergy).
6 As to the request for clarification or, in the alternative, rehearing, Industrials are
the PJM Industrial Customer Coalition (PJM ICC) and the Industrial Energy Consumers
of America (IECA).
7 As to the request for clarification, PIOs are EarthJustice, Environmental Defense
Fund, and Sierra Club.
8 As to the request for clarification, Joint Parties are Eolian LP, Antora Energy
LLC, and Verrus LLC.
9 We refer to the Indicated PJM Transmission Owners that submitted briefing
jointly in the paper hearing as Indicated TOs. The transmission owners that submitted
briefing jointly in the paper hearing are: American Electric Power Service Corporation
on behalf of its affiliates, Appalachian Power Company, Indiana Michigan Power
Company, Kentucky Power Company, Kingsport Power Company, Ohio Power
Company, Wheeling Power Company, AEP Appalachian Transmission Company, AEP
Indiana Michigan Transmission Company, AEP Kentucky Transmission Company, AEP
Ohio Transmission Company, and AEP West Virginia Transmission Company; The
Dayton Power and Light Company d/b/a AES Ohio; Dominion Energy Services, Inc. on
behalf of Virginia Electric and Power Company d/b/a Dominion Energy Virginia; Duke
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respect to the new transmission services. On March 25, 2026, and on April 24, 2026,
parties submitted response briefs and reply briefs, respectively.
In this order, we address the requests for rehearing and clarification of the
December Order, PJM’s compliance filing, and the paper hearing on the new
transmission services. Pursuant to Allegheny Defense Project v. FERC,10 the rehearing
requests filed in this proceeding may be deemed denied by operation of law. However,
as permitted by section 313(a) of the FPA,11 we are modifying the discussion in the
December Order and setting aside the order, in part, as discussed below.12 In addition,
we are granting, in part, and denying, in part, the requests for clarification.
Next, we find that PJM’s compliance filing partially complies with the directives
of the December Order. As such, we accept in part and reject in part PJM’s proposed
Tariff revisions, and we direct PJM to file, within 60 days of the date of issuance of this
order, a further compliance filing.
Finally, in response to the record developed in the paper hearing, we establish as
just and reasonable certain rates, terms, and conditions for the new transmission services
directed in the December Order (i.e., Interim NITS, FCD transmission service, and
NFCD transmission service). We direct PJM to file, within 60 days of the date of
issuance of this order, a compliance filing to revise its Tariff. We also direct the PJM
transmission owners to file, within 60 days of the date of issuance of this order, a
compliance filing to revise the Tariff.
Energy Business Services, LLC for Duke Energy Kentucky, Inc. and Duke Energy Ohio,
Inc.; Duquesne Light Company; East Kentucky Power Cooperative; Exelon; FirstEnergy;
PPL Electric Utilities Corporation; Public Service Electric and Gas Company; Rockland
Electric Company; and the Southern Maryland Electric Cooperative.
10 964 F.3d 1 (D.C. Cir. 2020) (en banc).
11 16 U.S.C. § 825l(a) (“Until the record in a proceeding shall have been filed in a
court of appeals, as provided in subsection (b), the Commission may at any time, upon
reasonable notice and in such manner as it shall deem proper, modify or set aside, in
whole or in part, any finding or order made or issued by it under the provisions of this
chapter.”).
12 Allegheny Def. Project, 964 F.3d at 16-17.
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Contents
I.
Background .............................................................................................................. - 9 -
A.
February Order .................................................................................................. - 9 -
B.
December Order .............................................................................................. - 11 -
II.
Notice of Filings and Responsive Pleadings ...................................................... - 14 -
A.
PJM’s Compliance Filing ............................................................................... - 14 -
B.
Paper Hearing on New Transmission Services ............................................... - 15 -
III.
Procedural Matters ............................................................................................. - 16 -
IV.
Requests for Rehearing and/or Clarification ...................................................... - 18 -
A.
Jurisdiction ...................................................................................................... - 19 -
1. Sales for Resale in Interstate Commerce ........................................................ - 19 -
2. Retail Allocation of Commission-Jurisdictional Rates ................................... - 20 -
3. Retail BTMG................................................................................................... - 22 -
4. Retail Backup Service ..................................................................................... - 24 -
B.
Show Cause Findings ...................................................................................... - 26 -
1. Overview, Transmission Service, Regulation and Black Start ....................... - 26 -
2. Retail BTMG Netting Rules ........................................................................... - 41 -
3. Transmission Service Options for BTMG ...................................................... - 50 -
C.
Replacement Rate ........................................................................................... - 52 -
1. Transmission Services .................................................................................... - 52 -
2. Necessary Study Process for Existing Interconnection Customers ................ - 87 -
3. New Generators Serving Co-Located Load .................................................... - 95 -
D.
Informational Report ....................................................................................... - 97 -
1. December Order .............................................................................................. - 97 -
2. Request for Clarification ................................................................................. - 98 -
3. Determination.................................................................................................. - 99 -
V.
Compliance ......................................................................................................... - 99 -
A.
BTMG Rules ................................................................................................... - 99 -
1. Materiality Threshold ...................................................................................... - 99 -
2. Grandfathering and Transition Period .......................................................... - 116 -
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3. QFs and Cogeneration Facilities ................................................................... - 121 -
B.
Transmission Service .................................................................................... - 127 -
1. December Order ............................................................................................ - 127 -
2. PJM Compliance Filing ................................................................................ - 129 -
3. Pleadings ....................................................................................................... - 130 -
4. Answers ......................................................................................................... - 131 -
5. Determination................................................................................................ - 132 -
C.
Necessary Studies ......................................................................................... - 135 -
1. December Order ............................................................................................ - 135 -
2. PJM Compliance Filing ................................................................................ - 136 -
3. Pleadings ....................................................................................................... - 136 -
4. Determination................................................................................................ - 139 -
D.
Other .............................................................................................................. - 143 -
1. December Order ............................................................................................ - 143 -
2. PJM Compliance Filing ................................................................................ - 144 -
3. Pleadings ....................................................................................................... - 147 -
4. Answers ......................................................................................................... - 150 -
5. Determination................................................................................................ - 150 -
E.
Effective Date ............................................................................................... - 154 -
1. PJM Compliance Filing ................................................................................ - 154 -
2. Effective Date Pleadings ............................................................................... - 154 -
3. Determination................................................................................................ - 155 -
VI.
Paper Hearing ................................................................................................... - 155 -
A.
Rates, Terms, and Conditions for Firm and Non-Firm Contract Demand
Transmission Service .............................................................................................. - 156 -
1. December Order ............................................................................................ - 156 -
2. Nature of FCD and NFCD Transmission Services ....................................... - 157 -
3. Study Process ................................................................................................ - 171 -
4. Rates and Charges ......................................................................................... - 179 -
5. Other .............................................................................................................. - 193 -
B.
Additional Charge for Eligible Customers Taking FCD and/or NFCD
Transmission Service .............................................................................................. - 199 -
1. December Order ............................................................................................ - 199 -
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2. Initial Briefs .................................................................................................. - 200 -
3. Response Briefs............................................................................................. - 201 -
4. Reply Briefs .................................................................................................. - 204 -
5. Answers ......................................................................................................... - 206 -
6. Determination................................................................................................ - 207 -
C.
Interconnection Requirements and Operational Practices for Necessary Control
Technologies and/or Protection Systems ................................................................ - 208 -
1. Initial Briefs .................................................................................................. - 208 -
2. Response Briefs............................................................................................. - 209 -
3. Reply Briefs .................................................................................................. - 211 -
4. Answer .......................................................................................................... - 214 -
5. Determination................................................................................................ - 214 -
D.
Penalty Charge or Other Remedial Action for New Transmission Services - 218 -
1. Initial Briefs .................................................................................................. - 218 -
2. Response Briefs............................................................................................. - 220 -
3. Reply Briefs .................................................................................................. - 223 -
4. Answer .......................................................................................................... - 227 -
5. Determination................................................................................................ - 227 -
E.
Anti-Toggling Mechanisms for Firm Contract Demand Transmission Service ..... -
237 -
1. Initial Briefs .................................................................................................. - 237 -
2. Response Briefs............................................................................................. - 238 -
3. Determination................................................................................................ - 238 -
F.
Communications, Alarm, SCADA, or Other Requirements ......................... - 240 -
1. Initial Briefs .................................................................................................. - 240 -
2. Response Briefs............................................................................................. - 240 -
3. Determination................................................................................................ - 240 -
G.
Curtailment Procedures for Interim NITS and Non-Firm Contract Demand
Transmission Service .............................................................................................. - 241 -
1. Initial Briefs .................................................................................................. - 241 -
2. Response Briefs............................................................................................. - 242 -
3. Reply Briefs .................................................................................................. - 243 -
4. Answers ......................................................................................................... - 244 -
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5. Determination................................................................................................ - 244 -
H.
Rates, Terms, and Conditions for Interim NITS ........................................... - 246 -
1. Initial Briefs .................................................................................................. - 246 -
2. Response Briefs............................................................................................. - 247 -
3. Reply Briefs .................................................................................................. - 250 -
4. Answers ......................................................................................................... - 251 -
5. Determination................................................................................................ - 252 -
I.
Annual Report on New Transmission Services ................................................ - 256 -
J.
Proposed Effective Date ................................................................................... - 258 -
1. Initial Briefs .................................................................................................. - 258 -
2. Response Briefs............................................................................................. - 259 -
3. Reply Briefs .................................................................................................. - 262 -
4. Answer .......................................................................................................... - 264 -
5. Determination................................................................................................ - 264 -
K.
Additional Arguments ................................................................................... - 265 -
1. Behind the Meter Generation ........................................................................ - 265 -
2. Reliability Backstop Auction ........................................................................ - 265 -
3. Eligible Customer Requirements .................................................................. - 267 -
4. Demand Side Pathways ................................................................................. - 268 -
5. Interconnection.............................................................................................. - 269 -
6. Co-Location Arrangement with Electric Storage Resource ......................... - 270 -
I.
Background
A.
February Order
In February 2025, the Commission instituted a new proceeding in Docket
No. EL25-49-000 to examine whether the Tariff remains just and reasonable and not
unduly discriminatory or preferential without provisions addressing with sufficient clarity
or consistency the rates, terms, and conditions of service that apply to co-location
arrangements.13 The February Order defined Co-Located Load as a “‘configuration [that]
refers to end-use customer load that is physically connected to the facilities of an existing
13 PJM Interconnection, L.L.C., 190 FERC ¶ 61,115, at P 2 (2025) (February
Order).
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or planned Customer Facility on the Interconnection Customer’s side of the Point of
Interconnection to the PJM Transmission System.’”14 As in the February Order, when
referring to both the Co-Located Load and the associated generator, we will use the term
Co-Location Arrangement.
As explained in the February Order, Co-Location Arrangements are becoming
increasingly common in PJM and, since the issuance of the February Order, entities
continue to raise issues involving Co-Location Arrangements with the Commission.15
The Commission set forth, in the February Order, the principles relating to the
Commission’s jurisdiction over the matters relevant to Co-Location Arrangements.16 The
Commission also made several preliminary findings about the justness and
reasonableness of the Tariff. First, the Commission found that the Tariff appears to be
unjust and unreasonable or unduly discriminatory or preferential because it does not
contain provisions addressing with sufficient clarity or consistency the rates, terms, and
14 Id. P 3 & n.4. We note that, in the February Order, the Commission adopted
this definition from the Guidance Document that PJM developed on Co-Located Load.
See id. PJM rescinded this document pending Commission guidance in this docket. PJM
March 24, 2025 Response at 33. Prior to PJM’s transition to its new interconnection
process, PJM used the terms Interconnection Customer and Generation Interconnection
Customer. The Tariff defines Generation Interconnection Customer as “an entity that
submits an Interconnection Request to interconnect a new generation facility or to
increase the capacity of an existing generation facility interconnected with
the Transmission System in the PJM Region.” PJM, Intra-PJM Tariffs, OATT, § I.1
Definitions – G – H) (9.0.1) (defining Generation Interconnection Customer). The
Tariff’s new rules for generation interconnection, effective January 3, 2023, utilize the
terms Project Developer and Generation Project Developer. The Tariff defines
Generation Project Developer as “an entity that submits a Generation Interconnection
Request to interconnect a new generation facility or to increase the capacity of an existing
generation facility interconnected with the Transmission System in the PJM Region.”
PJM, Intra-PJM Tariffs, OATT, § VIII subpt. A 400 (Definitions G) (0.1.0) (defining
Generation Project Developer). For simplicity, in this order, and consistent with the
February Order and December Order, the Commission will use the term Interconnection
Customer to refer to both the Tariff definitions of Generation Interconnection Customer
and Generation Project Developer.
15 See, e.g., PJM Interconnection, L.L.C., 191 FERC ¶ 61,112 (2025) (accepting
necessary studies agreement). The February Order consolidated the new show cause
proceeding with a pending complaint proceeding in Docket No. EL25-20-000 involving
Co-Located Load.
16 February Order, 190 FERC ¶ 61,115 at P 66.
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conditions of service that apply to Co-Location Arrangements.17 In addition, the
Commission preliminarily found that this lack of applicable Tariff provisions raises the
potential for undue discrimination or preferential treatment.18
As to specific concerns raised regarding Co-Location Arrangements, the
Commission found that the Tariff may be unjust, unreasonable, unduly discriminatory, or
preferential because it does not specify the transmission service that Co-Location
Arrangements must take, if any, or otherwise provide a process to ensure that
Co-Location Arrangements are paying for the benefits they receive from the transmission
system consistent with cost causation principles, which provide that all
Commission-jurisdictional rates and charges must “reflect to some degree the costs
actually caused by the customer who must pay for them,” and that costs must be allocated
in a manner that is at least roughly commensurate with the benefits that entity receives.19
The Commission also found that the absence of rates, terms, and conditions of
interconnection service specific to Co-Location Arrangements, and, especially regarding
studies of the impacts of those arrangements, may render the Tariff unjust and
unreasonable or unduly discriminatory or preferential.20 Moreover, the Commission
found that the absence of rates, terms, and conditions governing the use and sale of
ancillary services and black start services by Co-Location Arrangements may render the
Tariff unjust and unreasonable or unduly discriminatory or preferential.21 The
Commission directed briefing to build a record on these issues as well as a possible
replacement rate.
B.
December Order
In the December Order, the Commission found the Tariff unjust and unreasonable
because it does not contain provisions addressing with sufficient clarity or consistency
the rates, terms, and conditions of service that apply to Interconnection Customers
serving Co-Located Load and Eligible Customers taking transmission service on behalf
17 Id. P 74.
18 Id. P 75.
19 Id. PP 74-78 (citing Midwest ISO Transmission Owners v. FERC, 373 F.3d
1361, 1368 (D.C. Cir. 2004); Ill. Com. Comm’n v. FERC, 576 F.3d 470, 476 (7th Cir.
2009)).
20 Id. P 79.
21 Id. P 82.
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of Co-Located Load.22 The Commission explained that the absence of such provisions
leaves entities unable to determine what steps they must take to effectuate Co-Location
Arrangements and creates uncertainty that has resulted in disparate treatment in PJM
because transmission owners have taken different approaches to performing the necessary
steps that apply to Interconnection Customers seeking to serve Co-Located Load through
a Co-Location Arrangement.23 The Commission found that the absence of such
provisions also introduces the risk that Co-Located Load may benefit from regulation and
black start services without contributing to cost recovery for such services.24
Specifically, the Commission found the Tariff unjust and unreasonable because
there is a lack of sufficient clarity or consistency as to the rates, terms, and conditions of
service that apply to Interconnection Customers serving Co-Located Load.25 As part of
the replacement rate, the Commission directed PJM to file revisions to the generation
interconnection procedures of the Tariff, including to require an Interconnection
Customer who will use its generator to serve Co-Located Load to specify an Eligible
Customer who will take transmission service on behalf of the Co-Located Load, and
revisions to clarify its Necessary Study process.26 The Commission also directed PJM to
revise its Tariff to clarify that an Interconnection Customer seeking to serve a
Co-Located Load with a newly interconnecting generator may: (1) request
interconnection service at a level below its maximum facility output; (2) use existing
procedures in the Tariff to accelerate the study of the interconnection service request if
the request has no cost allocation for Network Upgrades and does not require further
studies; (3) request provisional interconnection service; and (4) request Surplus
Interconnection Service.27
The Commission also found the Tariff unjust and unreasonable because it does not
include transmission services that reflect Eligible Customers taking service on behalf of
Co-Located Loads that are willing and able to limit their energy withdrawals from the
transmission system under certain conditions.28 The Commission further found the Tariff
22 December Order, 193 FERC ¶ 61,217 at P 175.
23 Id.
24 Id.
25 Id. P 176.
26 Id. PP 176, 187-192, 225-230.
27 Id. PP 176, 231-235.
28 Id. PP 177, 193.
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unjust and unreasonable because it does not address charges related to Co-Located
Loads’ use of regulation and black start services, which introduces the risk that
Co-Located Load may benefit from regulation and black start services without
contributing to cost recovery for such services and, thereby, the risk that costs may be
allocated entirely to other transmission customers and passed through to residential
customers, among others.29 The Commission found that NITS charged on a gross
demand basis is one just and reasonable transmission service option for Eligible
Customers taking transmission service on behalf of Co-Located Loads, but it is not the
only option.30 The Commission thus directed PJM to revise its Tariff to create three new
transmission services (i.e., Interim NITS, FCD transmission service, and NFCD
transmission service) that reflect that Eligible Customers taking service on behalf of
Co-Located Loads are willing and able to limit their energy withdrawals from the
transmission system under certain conditions.31 Specific to these new transmission
services, the Commission established paper hearing procedures to determine the just and
reasonable rates, terms, and conditions for such services.32
The Commission also found the existing retail BTMG netting rules in the Tariff to
be unjust and unreasonable. PJM’s existing Tariff allows load serving entities (LSE) that
provide service to loads with qualifying BTMG to reduce their costs by netting output
from BTMG in the calculation of their peak demand for the purpose of determining NITS
charges.33 The Commission explained that these retail BTMG netting rules may lead to
both reliability and resource adequacy risks because PJM, per its Tariff, is obligated to
serve transmission customers using BTMG but does not consider such customers’ full
gross load in transmission and resource adequacy planning.34 Thus, the Commission
directed PJM to revise its retail BTMG netting rules.35 In recognizing concerns about the
potential impacts on existing BTMG customers, the Commission directed PJM to
maintain the current retail BTMG netting rules for customers that fall below a new MW
materiality threshold for the amount of load at a particular electrical location that
Network Customers may net using BTMG and to implement a two-part transition process
29 Id. P 177.
30 Id. PP 195-196.
31 Id. PP 178, 200-202, 206, 208-218.
32 Id. PP 178, 194, 203, 207, 219.
33 Id. P 7.
34 Id. PP 179, 186.
35 Id. PP 179, 221.
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for retail BTMG including: (1) the establishment of a three-year transition period; and
(2) the ability to grandfather certain entities with existing contracts.36
II.
Notice of Filings and Responsive Pleadings
A.
PJM’s Compliance Filing
Notice of PJM’s compliance filing in Docket No. ER26-1479-000 was published
in the Federal Register, 91 Fed. Reg. 9849 (Feb. 27, 2026) with interventions and
protests due on or before March 16, 2026.
Timely motions to intervene were filed by American Forest & Paper Association
(AF&PA); PJM Industrial Customer Coalition (PJM ICC); Industrial Energy Consumers
of America (IECA); Monitoring Analytics, LLC, acting in its capacity as the Independent
Market Monitor for PJM (Market Monitor); LS Power Development, LLC; Enchanted
Rock, LLC (Enchanted Rock); Illinois Municipal Electric Agency; American Clean
Power Association; New Jersey Division of Rate Counsel; PJM Power Providers Group;
American Electric Power Service Corporation; Exelon Corporation; Constellation Energy
Generation, LLC (Constellation); Public Citizen, Inc.; East Kentucky Power Cooperative,
Inc.; Clean Energy Buyers Association; Edison Electric Institute; Maryland Office of
People’s Counsel (Maryland OPC); EDF Power Solutions, Inc. (EDFps); Solar Energy
Industries Association (SEIA); Advanced Energy United (AEU); Buckeye Power, Inc.;
Electric Power Supply Association; Duquesne Light Company; North Carolina Electric
Membership Corporation; New Jersey Board of Public Utilities; Appalachian Voices;
Pennsylvania Office of Consumer Advocate; Public Service Electric and Gas Company,
PSEG Power LLC and PSEG Energy Resources & Trade LLC (collectively, PSEG
Companies); Old Dominion Electric Cooperative (ODEC); National Railroad Passenger
Corporation (Amtrak); Dominion Energy Services, Inc.; Crusoe Energy Systems, Inc.
(Crusoe); Consolidated Edison Company of New York, Inc.; PPL Electric Utilities
Corporation (PPL); Rockland Electric Company; Illinois Industrial Energy Consumers;
American Municipal Power, Inc. (AMP); Grid Reform; Invenergy Renewables LLC and
Invenergy Thermal LLC (Invenergy); Data Center Coalition (DCC); Eastman Chemical
Company (Eastman); Northern Virginia Electric Cooperative, Inc. (NOVEC); Vistra
Corp. (Vistra); Mainspring Energy; Northeastern REMC; Borough of Chambersburg,
Pennsylvania; Capital Power Corporation; Eolian, L.P. (Eolian); Antora Energy, Inc.
(Antora); Calibrant Energy (Calibrant); Convergent Energy and Power (Convergent); and
Verrus, LLC (Verrus).
Motions to intervene out of time were filed by Arkon Energy Hannibal and Office
of the Illinois Attorney General.
36 Id. PP 179, 221, 223-224.
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Timely comments and/or protests were filed by Eastman; EDFps; Digital Power
Network; Vistra; Maryland OPC; AEU/SEIA; Eolian, Antora, Calibrant, Convergent,
Mainspring, and Verrus (together, Joint Parties); Calibrant, Antora, Convergent, Eolian,
and Mainspring (together, BTMG Parties); Invenergy; Energy Artisans, LLC (Energy
Artisans); DCC; PJM ICC, IECA, AF&PA (collectively, Industrials) and Amtrak
(Industrials/Amtrak); Digital Power Network; Crusoe; AMP; Appalachian Voices; and
Constellation.
On April 8, 2026, Constellation filed a motion for leave and supplemental protest
in this compliance proceeding and in Docket No. ER26-1088-000. On April 14, 2026,
Exelon filed an answer to Constellation’s motion. On April 24, 2026, Indicated TOs filed
a motion for leave to answer and answer to certain protests and comments. On May 8,
2026, the BTMG Parties and Industrials/Amtrak each filed a motion for leave to answer
and answer the Indicated TOs’ April 24 answer. On May 12, 2026, Eastman filed a
motion for leave to answer and answer the Indicated TOs’ April 24 answer. On June 3,
2026, Indicated TOs filed a motion for leave to answer and answer.
Several parties filed briefs for the paper hearing in Docket No. EL25-49-000 and
filed these submissions in this compliance proceeding as well. Specifically, in this
compliance proceeding: on March 25, 2026, Enchanted Rock filed its reply brief; on
March 26, 2026, Alliance to Save Energy filed comments; and on April 24, 2026,
Earthjustice filed its reply brief.
B.
Paper Hearing on New Transmission Services
On February 23, 2026, in Docket No. EL25-49-000, PJM and Indicated TOs each
submitted an initial brief. On March 25, 2026, response briefs were submitted by:
Market Monitor; Geronimo Power, LLC; AEU/SEIA; Constellation; Eolian, Antora,
Calibrant, Convergent, Mainspring, Verrus, and U.S. Energy Storage Coalition
(collectively, Joint Co-Location Developers); Vistra; ODEC; Enchanted Rock; Indicated
TOs; Industrials/Amtrak; NOVEC; DCC; and Alliance to Save Energy (Alliance). On
April 24, 2026, reply briefs were submitted by: Earthjustice; ODEC; PJM; Maryland
OPC; Constellation; Indicated TOs; Joint Co-Location Developers; and
Industrials/Amtrak. On May 7, 2026, Enchanted Rock filed a motion for leave to answer
and answer to PJM’s reply brief. On May 11, 2026, Constellation filed a motion for
leave to answer and answer to PJM’s and Indicated TOs’ reply briefs. On May 21, 2026,
Geronimo Power filed a motion for leave to answer and answer to PJM’s and Indicated
TOs’ reply briefs. On May 28, 2026, Indicated TOs filed a motion for leave to answer
and answer to various reply briefs and Constellation’s May 11 answer.
On December 29, 2025, American Clean Power Association filed a motion to
intervene out of time in this proceeding. On January 12, 2026, Vitol, Inc. filed a motion
to intervene out of time in this proceeding. On January 13, 2026, Pennsylvania Office of
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Consumer Advocate filed a motion to intervene out of time in this proceeding. On
January 16, 2026, Voltus, Inc. filed a motion to intervene out of time in this proceeding.
On January 16, 2026, Emerald AI submitted comments out-of-time in Docket
No. EL25-49-000. On January 26, 2026, Andrew D. Hinz filed a motion to intervene out
of time and comments. On March 20, 2026, Amtrak and AF&PA each filed a motion to
intervene out of time in this proceeding. On March 25, 2026, Calibrant, Convergent,
Verrus, and U.S. Energy Storage Coalition filed a motion to intervene out of time in this
proceeding.
III.
Procedural Matters
Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,
18 C.F.R. § 385.214 (2025), the notices of intervention and timely, unopposed motions to
intervene in Docket Nos. ER26-1479-000 and EL25-49-000 serve to make the entities
that filed them parties to these proceedings.
Pursuant to Rule 214(d) of the Commission’s Rules of Practice and Procedure,
18 C.F.R. § 385.214(d), we grant the late-filed motions to intervene in Docket
Nos. ER26-1479-000 and EL25-49-000 given these entities’ interests in the proceedings,
the early stage of the proceedings, and the absence of undue prejudice or delay.
Interventions in Docket No. EL25-49-000 are prospective only and such entities may not
challenge the December Order.
We note that Verrus did not intervene until after the December Order. When, as
here, late intervention is sought after the issuance of a dispositive order, the prejudice to
other parties and burden upon the Commission of granting the late intervention may be
substantial. Thus, movants bear a higher burden to demonstrate good cause for granting
such late intervention.37 Verrus indicates the proceeding has changed significantly with
the initiation of the paper hearing proceeding.38 We do not find this explanation to be
sufficient to meet the higher burden to show good cause for granting intervention
following a dispositive order. As discussed above, we grant Verrus’s motion to intervene
as-of the filing date (March 25, 2026); however, we dismiss it to the extent Verrus joins
Eolian and Antora in the request for clarification of the December Order.39
37 PJM Interconnection, L.L.C., 167 FERC ¶ 61,209, at P 24 (2019); PJM
Interconnection, L.L.C., 157 FERC ¶ 61,193, at P 10 (2016).
38 Reply Brief of Joint Co-Location Developers and Motion to Intervene
Out-of-Tome of Calibrant, Convergent, U.S. Energy Storage Coalition, and Verrus at 6.
39 PJM Interconnection, L.L.C., 157 FERC ¶ 61,193 at P 10; Pac. Gas & Elec.
Co., 100 FERC ¶ 61,097, at P 5 (2002).
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Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.
§ 385.213(a)(2) (2025), prohibits an answer to a protest or answer unless otherwise
ordered by the decisional authority. We accept the answers submitted in Docket Nos.
EL25-49-000 and in ER26-1479-000, as well as Constellation’s supplemental protest,
because they have provided information that assisted us in our decision-making process.
On February 2, 2026, Constellation filed a motion for leave and answer to Exelon
and FirstEnergy’s request for rehearing. On February 12, 2026, Exelon and FirstEnergy
filed an answer in opposition to that motion. On February 19, 2026, the Pennsylvania
Office of Consumer Advocate filed a motion for leave to answer and answer in support of
Industrials’ request for clarification or rehearing.40 On February 5 and March 9, 2026,
respectively, Market Monitor and PJM filed answers and motions for leave to answer
Constellation’s request for clarification or rehearing. On February 20 and March 24,
2026, Constellation filed motions for leave and answers to, respectively, Market
Monitor’s and PJM’s answers. Rule 713(d) of the Commission’s Rules of Practice and
Procedure41 prohibits an answer to a request for rehearing.42 Accordingly, we deny these
motions and we reject these answers filed by Constellation, Exelon and FirstEnergy,
Pennsylvania Office of Consumer Advocate, Market Monitor, and PJM.43
On February 9, 2026, Andrew Hinz filed a request for rehearing. Pursuant to
section 313(a) of the FPA,44 an aggrieved party must file an application for rehearing
within 30 days after the issuance of the Commission’s order; in this case, that deadline is
40 Pennsylvania Office of Consumer Advocate is not a party to this proceeding
with respect to rehearing or clarification of the December Order and therefore may not
file an answer to a request for rehearing or clarification.
41 18 C.F.R. § 385.713(d)(1) (2025).
42 Id.
43 We note that the Pennsylvania Office of Consumer Advocate’s, Market
Monitor’s, and PJM’s motions and answers responded to requests for clarification and, in
the alternative, rehearing. Because the Commission has discretion in how to characterize
pleadings and examines the substance of pleadings, we construe these pleadings as
ultimately functioning in substance to respond to requests for rehearing and thus treat
them as such. Sw. Power Pool, Inc., 182 FERC ¶ 61,083, at P 14 (2023).
44 16 U.S.C. § 825l(a).
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no later than 5:00 PM U.S. Eastern Time45 on January 19, 2026. Because the 30-day
rehearing deadline is a statutory requirement, it cannot be waived or extended.46
Therefore, we reject Andrew Hinz’s request for rehearing as untimely.
IV.
Requests for Rehearing and/or Clarification
As discussed further below, we sustain our finding that the Tariff is unjust and
unreasonable because it does not contain provisions addressing with sufficient clarity or
consistency the rates, terms, and conditions of service that apply to Interconnection
Customers serving Co-Located Load and Eligible Customers taking transmission service
on behalf of Co-Located Load.47 We also sustain our finding that the Tariff is unjust and
unreasonable because it does not include transmission services that reflect the willingness
and ability of an Eligible Customer taking service on behalf of a Co-Located Load to
limit its energy withdrawals from the transmission system under certain conditions.48 As
a replacement rate, we continue to direct PJM to establish the new transmission services
discussed in the December Order.49
We also set aside, in part, the December Order; we find that requiring Eligible
Customers taking transmission service on behalf of load with BTMG to take NITS,
without the option to instead take such alternative transmission services, would be unjust
and unreasonable for the same reasons we made the same finding in the December Order
with respect to Eligible Customers taking transmission service on behalf of Co-Located
Load. As a replacement rate, we direct PJM to revise its Tariff to extend the new
transmission services to Eligible Customers taking service on behalf of load with BTMG.
45 The Commission’s regular business hours end at 5:00 p.m., U.S. Eastern Time.
18 C.F.R. § 375.101(c) (2025); 18 C.F.R. § 385.2003(c) (2025); FERC, eFiling User
Guide (May 23, 2024), https://www.ferc.gov/media/efiling-user-guide.
46 See, e.g., City of Campbell v. FERC, 770 F.2d 1180, 1183 (D.C. Cir. 1985)
(“The 30-day time requirement of the [FPA] is as much a part of the jurisdictional
threshold as the mandate to file for a rehearing.”); Bos. Gas Co. v. FERC, 575 F.2d 975,
977-98, 979 (1st Cir. 1978) (describing identical rehearing provision of Natural Gas Act
as “a tightly structured and formal provision” and holding that “[n]either the Commission
or the courts are given any form of jurisdictional discretion”).
47 December Order, 193 FERC ¶ 61,217 at P 159.
48 Id.
49 Id. P 160.
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We also continue to find that PJM’s retail BTMG netting rules are unjust and
unreasonable.50 We continue to direct PJM to revise the Tariff’s retail BTMG netting
rules.51 We also set aside, in part, the December Order; we find that it is just and
reasonable to allow certain cogeneration Qualifying Facilities (QFs) that are Network
Customers to be able to net by using BTMG, without being subject to the new materiality
threshold, if they demonstrate that they are integrated with load such that, when their
generating facility trips offline, the load follows.
We also continue to direct PJM to clarify its interconnection procedures and
agreements to ensure that it is clear to both new and existing Interconnection Customers
how to interconnect in a Co-Location Arrangement.52
A.
Jurisdiction
1.
Sales for Resale in Interstate Commerce
a.
December Order
In the December Order, the Commission found that several aspects of Co-Location
Arrangements fall squarely within the jurisdiction of the states. In particular, the
Commission affirmed that “states have authority over their generation resource mix,
including through their siting authority” and further explained that “[t]his authority
means that which generating facilities are sited and allowed to serve Co-Located Load is
also a question of state law.”53 In addition, the Commission “decline[d] in this
proceeding to comprehensively address jurisdictional matters regarding the
interconnection of retail loads served through a Co-Location Arrangement to the
interstate transmission system.”54
b.
Request for Clarification and/or Rehearing
Constellation requests that the Commission clarify that the Commission has
jurisdiction over the wholesale sale of energy by a generator to a retail supplier even if
the retail supplier then resells that energy to a Co-Located Load. Constellation states that
50 Id. P 186.
51 Id. PP 221-224.
52 Id. P 161.
53 Id. P 169.
54 Id. P 170.
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the December Order is unclear in that it states that “states have authority over their
generation resource mix, including through their siting authority” and that “which
generating facilities are sited and allowed to serve Co-Located Load is also a question of
state law.”55 Constellation explains that generators often do not serve Co-Located Load
directly and instead sell electricity at wholesale to an entity, such as a retail supplier, that
will then engage in the ultimate retail sale to the Co-Located Load. In such
circumstances, Constellation argues that such sales for resale are exclusively within the
Commission’s jurisdiction.56
c.
Determination
In response to Constellation’s request for clarification or rehearing, we reiterate
that, where a generator sells electricity at wholesale in interstate commerce to another
entity that then resells that electricity at retail to a Co-Located Load, the generator’s sale
for resale is exclusively within the Commission’s jurisdiction.57 Thus, state authority
does not extend to the wholesale sale of energy by a generator to a retail supplier,
regardless of the specific type of ultimate retail customer. However, as the Commission
explained in the December Order, both “which generating facilities are sited” and which
generating facilities are “allowed to serve Co-Located Load” are “question[s] of state
law.”58
2.
Retail Allocation of Commission-Jurisdictional Rates
a.
December Order
In the December Order, the Commission held that “states have exclusive
jurisdiction over how the costs assigned to Eligible Customers on behalf of Co-Located
Load taking Commission-jurisdictional transmission services,” including the new
transmission services, “are allocated to individual retail consumers that are Co-Located
Load, just as states have exclusive jurisdiction over how to allocate the costs of all
55 Constellation Request for Clarification or Rehearing at 6-7 (citing December
Order, 193 FERC ¶ 61,217 at P 169) (emphasis in original).
56 Id. at 6-7 (citing 16 U.S.C. § 824(b)(1); Orangeburg v. FERC, 862 F.3d 1071,
1086-87 (D.C. Cir. 2017)).
57 Orangeburg, 862 F.3d at 1086-87 (“FERC—not state commissions—has
‘exclusive authority to regulate the . . . sale at wholesale of electric energy in interstate
commerce.’”) (quoting New Eng. Power Co. v. N.H., 455 U.S. 331, 340 (1982)).
58 December Order, 193 FERC ¶ 61,217 at P 169.
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Commission-jurisdictional rates (including for energy, capacity, and transmission) among
retail customers, including allocating costs among different classes of retail customers.”59
b.
Request for Clarification and/or Rehearing
Constellation requests that the Commission clarify that states do not have
unlimited authority over how to allocate the costs of all Commission-jurisdictional rates
and that they cannot use their authority over retail allocation to indirectly regulate the
interconnection of generators serving Co-Located Load.60 For example, Constellation
claims that a state cannot impose via the exercise of its jurisdiction over retail sales a
requirement that attempts to prohibit a transaction that the Commission says is
permitted.61 Constellation asserts that some utilities have asked their state commission
for authority to condition retail service in the state on the load’s acceptance of a
Transmission Security Agreement that calculates its security requirement based on a
gross NITS rate despite the fact that the Commission has said that other rates must be
made available.62 Constellation argues that the December Order is unclear in that it
provides that “states have exclusive jurisdiction over how to allocate the costs of all
Commission-jurisdictional rates (including for energy, capacity, and transmission) among
retail customers, including allocating costs among different classes of retail customers.”63
c.
Determination
In response to Constellation’s request, we deny clarification and sustain the
December Order. In the December Order, the Commission appropriately explained that
“states have exclusive jurisdiction over how to allocate the costs of all
Commission-jurisdictional rates (including for energy, capacity, and transmission) among
retail customers, including allocating costs among different classes of retail customers.”64
On the other hand, we note that states “may not seek to achieve ends, however legitimate,
through regulatory means that intrude on FERC’s authority over interstate wholesale
59 Id. P 167.
60 Constellation Request for Clarification or Rehearing at 8 (citing Hughes v. Talen
Energy Mktg., LLC, 578 U.S. 150, 164-65 (2016); Nantahala Power & Light Co. v.
Thornburg, 476 U.S. 953, 966 (1986)).
61 Id.
62 Id.
63 Id. at 7 (citing December Order, 193 FERC ¶ 61,217 at P 167).
64 December Order, 193 FERC ¶ 61,217 at P 167 (emphasis added).
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rates . . . .”65 While Constellation frames its request around the jurisdictional findings in
the December Order, Constellation raises a specific matter that is not the subject of and is
otherwise outside the scope of this proceeding, i.e., the terms of transmission security
agreements. We nonetheless reiterate that: (1) Eligible Customers taking transmission
service on behalf of Co-Located Load must have the option to take one of three
transmission services, i.e., NITS or Interim NITS, FCD transmission service, or NFCD
transmission service;66 and (2) while it remains just and reasonable for an Eligible
Customer taking transmission service on behalf of Co-Located Load to take NITS
charged on a gross demand basis,67 an Eligible Customer may instead choose to take
another transmission service.68
3.
Retail BTMG
a.
December Order
In the December Order, the Commission found that circumstances have changed
since the Commission approved PJM’s retail BTMG netting rules such that these rules
are no longer just and reasonable. In particular, the Commission found that PJM’s
existing retail BTMG netting rules do not limit the amount of qualifying load that a
Network Customer may net by using BTMG and do not provide any protections against
potential transmission and resource adequacy planning problems or against the costs of
maintaining sufficient resources to serve these loads being shifted onto other customers.69
The Commission concluded that PJM’s retail BTMG netting rules are no longer
consistent with cost causation principles because large loads configured in a BTMG
arrangement with significant generation will raise cost-shifting concerns compared to
loads pursuing smaller amounts of netting.70
65 Hughes v. Talen Energy Mktg., LLC, 578 U.S. 150, 164.
66 December Order, 193 FERC ¶ 61,217 at P 193.
67 Id. P 195.
68 Id. P 199.
69 Id. P 186.
70 Id.
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b.
Request for Clarification and/or Rehearing
Industrials argue that the Commission failed to explain and justify its assertion of
jurisdiction over “retail BTMG that merely offsets retail load.”71 Industrials contend that
“retail BTMG [is not within] the Commission’s jurisdiction over the transmission of
electric energy in interstate commerce” because “[b]y definition, BTMG is produced by a
generation unit ‘that delivers energy to load without using the Transmission System.’”72
Industrials assert that the Commission’s finding “necessarily entails piercing the retail
meter veil, which serves as the bright-line boundary of the Commission’s statutory
authority.”73 Industrials further maintain that the Commission failed to provide a
well-reasoned basis for the assertion of jurisdiction over the configurations of retail
customers whose BTMG is not selling wholesale power and is not using the transmission
system.74 Industrials argue that, here, “retail BTMG involves neither jurisdictional sales
nor jurisdictional transmission.”75
c.
Determination
We disagree with Industrials that the BTMG netting rules are outside of the
Commission’s jurisdiction. Industrials misunderstand the December Order as targeting
retail sales from BTMG or the delivery of energy from BTMG to load, but this is not the
case. The BTMG netting rules instead allow PJM to calculate the charges for
71 Industrials Request for Clarification or Rehearing at 39.
72 Id. at 40 (citing PJM, Intra-PJM Tariffs, OATT, § I.1 (Definitions – A-B)
(22.0.0)).
73 Id.
74 Id. at 40-41 (citing Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 475 F.3d
1277, 1280 (D.C. Cir. 2007); Detroit Edison Co. v. FERC, 334 F.3d 48, 53 (D.C. Cir.
2003)).
75 Id. at 41-42.
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transmission service in interstate commerce.76 The calculation of such transmission
charges is squarely within the Commission’s jurisdiction under the FPA.77
4.
Retail Backup Service
a.
December Order
In the December Order, the Commission required that PJM modify its Tariff to
require that an Eligible Customer taking transmission service on behalf of a Co-Located
Load take one of three transmission services: (1) NITS or Interim NITS; (2) FCD
transmission service; or (3) NFCD transmission service.78
b.
Request for Rehearing
Exelon and FirstEnergy contend that the Commission’s new FCD and NFCD
transmission services infringe on state retail authority, asserting that the states, not the
Commission, have jurisdiction to decide when and in what circumstances retail load will
be curtailed, and how utilities should charge and treat retail customers in those
circumstances.79 Exelon and FirstEnergy claim that, for example, states might require the
provision of backup service to retail customers who lost supply from their contracted
supplier, would regulate the distribution system costs associated with such service that
would be charged to the retail customer, and would regulate the costs and terms of the
backup service.80 Exelon and FirstEnergy assert that the Commission’s order appears to
create a new federal construct because it defines the extent and terms of backup service to
76 PJM, Intra-PJM Tariffs, OATT, § III, § 34.2 (Netting of Behind the Meter
Generation) (0.0.0); see December Order, 193 FERC ¶ 61,217 at P 7 (“[T]he Tariff
allows load serving entities . . . that provide service to loads with qualifying BTMG to
reduce their costs by netting output from BTMG in the calculation of their peak demand
for the purpose of determining NITS charges.”) (emphasis added).
77 Orangeburg, 862 F.3d at 1086-87 (“FERC—not state commissions—has
‘exclusive authority to regulate the transmission . . . of electric energy in interstate
commerce.’”) (quoting New Eng. Power Co., 455 U.S. at 340); Calpine Corp. v. FERC,
702 F.3d 41, 50 (D.C. Cir. 2012) (“[T]he regulation of transmission charges is
undoubtedly within FERC’s jurisdiction . . . .”).
78 December Order, 193 FERC ¶ 61,217 at P 193.
79 Exelon and FirstEnergy Request for Rehearing at 53.
80 Id.
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retail customers who lose their contracted retail power supplier.81 Exelon and
FirstEnergy argue that the Commission’s new transmission services lack the limitation in
the Commission’s wholesale demand response programs, which allow states to prohibit
retail consumers from participating in wholesale demand response.82
c.
Determination
We are not persuaded by Exelon and FirstEnergy’s assertions that FCD and NFCD
transmission services infringe on state retail authority. In the December Order, the
Commission held that Eligible Customers taking transmission service on behalf of a
Co-Located Load must have the option to take one of three transmission services:
(1) NITS or Interim NITS; (2) FCD transmission service; or (3) NFCD transmission
service.83 Exelon and FirstEnergy do not explain how FCD and NFCD transmission
services define the extent and terms of backup service to retail customers who lose their
contracted power supplier and cite no specific aspect of the December Order that does
so.84 As such, we find that Exelon and FirstEnergy fail to demonstrate that the
Commission’s replacement rate regulates the terms of retail service.85
81 Id. at 53, 55.
82 Id. at 54 (citing FERC v. EPSA, 577 U.S. 260, 275 (2016)).
83 December Order, 193 FERC ¶ 61,217 at P 193.
84 FPA section 313(a) requires that an “application for rehearing shall set forth
specifically” its grounds. 16 U.S.C. § 825l(a) (emphasis added). We follow Commission
practice, with which courts have agreed, and reject arguments, like this one, on rehearing
lacking sufficient specificity. PJM Interconnection, L.L.C., 171 FERC ¶ 61,040, at P 22
(2020); see also Ind. Util. Regul. Comm’n v. FERC, 668 F.3d 735, 736 (D.C. Cir. 2012);
LA Storage, LLC, 182 FERC ¶ 61,026, at P 25 & n.75 (2023).
85 Exelon and FirstEnergy argue that the Commission’s new transmission services
lack the limitation in the Commission’s wholesale demand response programs, which
allows states to prohibit retail consumers from participating in wholesale demand
response. Exelon and FirstEnergy Request for Rehearing at 54 (citing FERC v. EPSA,
577 U.S. at 275). The considerations that led the Commission to include that “opt-out” in
the rulemakings that led to Order Nos. 719 and 745, such as a confluence of federal and
state jurisdiction with respect to demand response, are not present in this proceeding.
Moreover, the Commission was not required to include the “opt-out” even in those
rulemakings. See Nat’l Ass’n of Regul. Util. Comm’rs v. FERC, 964 F.3d 1177, 1187
(D.C. Cir. 2020) (“But because FERC has the exclusive authority to determine who may
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B.
Show Cause Findings
1.
Overview, Transmission Service, Regulation and Black Start
a.
December Order
As relevant here, the Commission found in the December Order that the Tariff is
unjust and unreasonable because it does not contain provisions addressing with sufficient
clarity or consistency the rates, terms, and conditions of service that apply to
Interconnection Customers serving Co-Located Load and Eligible Customers taking
transmission service on behalf of Co-Located Load. The Commission also found that the
Tariff is unjust and unreasonable because it does not include transmission services that
reflect Eligible Customers taking service on behalf of Co-Located Loads that are willing
and able to limit their energy withdrawals from the transmission system under certain
conditions.86
b.
Request for Rehearing
Exelon and FirstEnergy argue that the Commission did not meet its burden under
FPA section 206 to show that the existing PJM Tariff is unjust and unreasonable.87
Exelon and FirstEnergy argue that the Commission provides no evidentiary support for
its finding that the Tariff is unjust and unreasonable because it does not contain
provisions addressing with sufficient clarity or consistency the rates, terms, and
conditions of service that apply to Interconnection Customers serving Co-Located Load
and Eligible Customers taking transmission service on behalf of Co-Located Load.88
Exelon and FirstEnergy allege that the Tariff already has provisions explaining how to
serve load in PJM and the Commission does not even mention them.89
Exelon and FirstEnergy dispute that the Constellation Complaint supports the
Commission’s finding of uncertainty.90 Exelon and FirstEnergy contend that the actual
participate in the wholesale markets, the Supremacy Clause—not Order No. 841—
requires that States not interfere.”).
86 December Order, 193 FERC ¶ 61,217 at P 177.
87 Exelon and FirstEnergy Request for Rehearing at 13.
88 Id. at 14 (citing December Order, 193 FERC ¶ 61,217 at P 175).
89 Id. at 15 (discussing and citing Tariff provisions).
90 Id.
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situation described in the Constellation Complaint giving rise to the purposed uncertainty
revealed that “any delay resulted from a decision made by Constellation in its attempt to
bypass retail service requirements and to obtain service in violation of Illinois law.”91
Exelon and FirstEnergy argue that, if any clarification was necessary, the Commission
has now clarified that Co-Location Arrangements must be properly metered and
designate and involve transmission service to an Eligible Customer. Exelon and
FirstEnergy allege that service can proceed in an orderly fashion. Exelon and
FirstEnergy argue that the Commission ignored record evidence that customers’ load
service requests proceed on a timely basis when customers take service through an
Eligible Customer.92 Exelon and FirstEnergy also maintain that Talen Energy’s recent
changes to its Co-Location Arrangement with Susquehanna Nuclear, LLC show that the
Tariff works.93
Exelon and FirstEnergy next challenge the Commission’s finding that the Tariff is
unjust and unreasonable because it does not include transmission services that reflect that
an Eligible Customer taking service on behalf of a Co-Located Load that is willing and
able to limit its energy withdrawals from the transmission system under certain
conditions.94 Exelon and FirstEnergy allege that there is no evidence that the cost of
NITS deters service or impacts data center development. Exelon and FirstEnergy also
argue that there is no evidence to support the Commission’s statement that requiring
NITS could necessitate inefficient and costly transmission buildout and costs paid by
transmission customers that may not be necessary if Eligible Customers taking
transmission service on behalf of Co-Located Loads are willing to limit their energy
withdrawals and take a transmission service that requires fewer Network Upgrades.95
Exelon and FirstEnergy maintain that charging load on a contract demand basis does not
change the physical and engineering impacts of the load.96 Exelon and FirstEnergy
acknowledge that installing systems to limit grid usage might change system impacts and
the need for upgrades, but there is nothing in the record demonstrating that such systems
are more beneficial for Co-Located Load than other loads or that such systems warrant
91 Id. at 15-16 (citing Constellation, Docket No. EL25-20-000, Complaint, Ex. 5,
attach. 1).
92 Id. at 17.
93 Id. at 17-18 (citing PJM, Docket No. ER24-2172-000, Amended ISA, attach. A,
Schedule F, Part F.4 (filed June 3, 2024)).
94 Id. at 18 (citing December Order, 193 FERC ¶ 61,217 at P 159).
95 Id. at 19 (citing December Order, 193 FERC ¶ 61,217 at P 199).
96 Id.
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the use of different ratemaking principles for Co-Located Load as compared to other
loads.97 Exelon and FirstEnergy argue that system impacts may be reduced when a load
is located near a generator, but that is true whether the load contracts with remote
generation or an abutting generator. Exelon and FirstEnergy assert that the study process
can determine how to site to reduce transmission upgrades for the customer using the
customer’s gross load.
Exelon and FirstEnergy argue that the Commission provides no support for its
statement that Co-Located Loads may be able to receive transmission service faster with
use of a new, limited transmission service product than they would if they selected NITS,
to the extent that providing NITS would require Network Upgrades that the limited
transmission service would not.98 Exelon and FirstEnergy assert that the transmission
system is affected even when no net power is withdrawn from the system.99 Exelon and
FirstEnergy contend that the Commission endorses an unsound approach by suggesting
that loads that do not withdraw from the system can be interconnected on a fast track
without studying physical impacts.
Exelon and FirstEnergy highlight the Commission’s statement that, while the
Commission finds that NITS charged on a gross demand basis is one just and reasonable
transmission service option for Eligible Customer taking transmission service on behalf
of Co-Located Loads, it is not the only option.100 Exelon and FirstEnergy state that the
Commission itself acknowledges that the existing service options are feasible and just
and reasonable, but the Commission merely wants more options. Exelon and FirstEnergy
argue that when the Commission finds a tariff not unjust and unreasonable under the first
prong of FPA section 206, as it suggests here, the Commission does not need to set a
remedy.
Exelon and FirstEnergy disagree with the Commission’s assessment that
Co-Located Loads merit a different rate based on the combination of transmission system
burdens and benefits. Exelon and FirstEnergy first state that Co-Located Loads benefit
from regulation and black start, as the Commission recognized.101 Exelon and
FirstEnergy argue that transmission interconnections provide an avenue for data center
loads to readily acquire back-up power when co-located generators are not available.
97 Id. at 19-20.
98 Id. at 20 (citing December Order, 193 FERC ¶ 61,217 at P 205).
99 Id. at 21.
100 Id. at 22 (citing December Order, 193 FERC ¶ 61,217 at P 195).
101 Id. at 30 (citing December Order, 193 FERC ¶ 61,217 at PP 209, 219).
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Exelon and FirstEnergy argue that, based solely on these uses of the transmission system,
Co-Located Loads have no greater claim to preferential rates than other similarly situated
transmission customers. Exelon and FirstEnergy argue that the Commission failed to
consider the many advantages to Co-Located Loads when they connect to the
transmission system. For example, Exelon and FirstEnergy assert that, if the project were
islanded instead of grid connected, all back-up generation would sit idled when not
needed, forgoing significant revenues from selling surplus power into the wholesale
market. Exelon and FirstEnergy also allege that it is very difficult to supply islanded
generation with black start and regulation.102
Exelon and FirstEnergy argue that the Commission failed to respond to arguments
about the unique aspects of co-location with nuclear plants. Exelon and FirstEnergy state
that a nuclear facility must be interconnected to the grid as a Nuclear Regulatory
Commission licensing obligation, and thus a Co-Location Arrangement with a nuclear
unit depends on the grid.103 Exelon and FirstEnergy assert that, in a Co-Location
Arrangement with a nuclear unit, Co-Located Load depends on services such as
regulation, voltage support, black start, and other ancillary services delivered over the
grid all the time because nuclear units cannot provide these services.104
c.
Determination
On rehearing, we sustain the Commission’s finding in the December Order that
the Tariff is unjust and unreasonable.105 First, we continue to find that the Tariff does not
contain provisions addressing with sufficient clarity or consistency the rates, terms, and
conditions of service that apply to Interconnection Customers serving Co-Located Load
102 Id. at 31.
103 Id. at 32-33 (citing Exelon, Docket No. EL25-20-000, Comments, attach. 1,
¶¶ 11-13, 16)).
104 Id. at 32 (citing Exelon, Docket No. EL25-20-000, Comments, attach. 1,
¶¶ 14-19)).
105 December Order, 193 FERC ¶ 61,217 at PP 175-177. As discussed in the
December Order, we continue to find the Tariff also unjust and unreasonable in
additional related ways—for example, we continue to find that the Tariff is unjust and
unreasonable because it does not address charges for black start and regulation service to
Eligible Customers taking transmission service on behalf of Co-Located Load. Id. P 159.
We do not interpret Exelon and FirstEnergy, however, to be disputing this finding.
Separate portions of this order address our findings in this proceeding that additional
aspects of the Tariff are unjust and unreasonable.
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and Eligible Customers taking transmission service on behalf of Co-Located Load.106
Second, we continue to find that the Tariff does not include transmission services that
reflect Eligible Customers taking service on behalf of Co-Located Loads that are willing
and able to limit their energy withdrawals from the transmission system under certain
conditions.107
Substantial evidence supports the Commission’s finding that the Tariff lacks
sufficient clarity as to the rules governing Interconnection Customers serving Co-Located
Load and Eligible Customers taking transmission service on behalf of Co-Located
Load.108 There is significant support in the record for this finding.109 In particular, PJM
recognizes that its Tariff lacks sufficient clarity in this area.110 We also find persuasive
the comments in the record from a range of stakeholders reflecting the uncertainty facing
entities seeking to effectuate Co-location Arrangements within PJM.111
106 Id. P 175.
107 Id. P 177.
108 Id. PP 175-176.
109 Id. P 176 n.376.
110 PJM March 24, 2025 Response at 32 (noting that its “Tariff provisions d[o] not
contemplate the type of arrangements at issue in this docket”); id. at 35 (“The extent to
which netting [rules under the Tariff] could . . . apply to co-located data center load is not
clear at this time.”); see also Vistra April 23, 2025 Reply Comments at 11 (arguing that
PJM has “effectively conceded” that the Tariff does not contain sufficient clarity).
111 See Constellation May 8, 2025 Answer at 3-9 (collecting record support and
concluding “[i]n sum, the record in this proceeding unequivocally supports the . . .
finding that the PJM Tariff lacks clear co-location rules”); AEU April 23, 2025 Reply
Comments at 19 (“Loads and generators pursuing [C]o-[L]ocation [A]rrangements need
clarity as to how these arrangements will be studied, and how those studies will be
evaluated. There must be a level of uniformity and detail outlining study requirements to
ensure regulatory certainty for large loads and new generation and storage resources
seeking to serve large loads. This level of uniformity is currently lacking in PJM’s
interconnection procedures and cost allocation methodology . . . .”); Electric Power
Supply Association (EPSA)/PJM Power Providers Group (P3) April 23, 2025 Reply
Comments at 2 (“EPSA and P3 agree with the Commission that PJM needs to establish
tariff provisions and rules to accommodate the array of [C]o-[L]ocated [L]oad
arrangements that will facilitate the timely and effective integration of large loads
locating in the region.”); DCC April 23, 2025 Reply Comments at 7 (“. . . [T]he
Commission should direct PJM to develop clear, enforceable tariff language that affirms
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Further, there has been significant confusion and dispute over what rules govern
Co-Location Arrangements in PJM. As the Commission found in the December Order,
the absence of clear tariff provisions creates uncertainty that has resulted in disparate
treatment of potential Co-Location Arrangements in PJM, where transmission owners
have taken different approaches to performing the necessary steps that apply to
Interconnection Customers seeking to serve Co-Located Load through a Co-Location
Arrangement, leading to no consistent understanding of entities’ responsibilities with
respect to their planned Co-Location Arrangements.112 Further, in 2024, PJM developed
a now-rescinded “Guidance Document,” which included non-binding guidance for
generators and loads seeking to enter into Co-Location Arrangements113—further
suggesting that PJM’s existing Tariff did not provide sufficient clarity resulting in a lack
of consistent understanding among stakeholders. Indeed, parties have raised varying
interpretations of the rules that apply to Co-Location Arrangements across Commission
proceedings.114
the permissibility of multiple co-location configurations, including those where load is
served directly from a generation resource located on or near the same site. Tariff clarity
is essential to reduce unnecessary disputes, avoid case-by-case confusion, and enable
transmission providers to process interconnection and load addition requests efficiently
and predictably.”).
112 December Order, 193 FERC ¶ 61,217 at P 175 & n.375 (citing Constellation,
Complaint, Docket No. EL25-20-000 (filed Nov. 22, 2024); Baltimore Gas & Electric
Company and PECO Energy Company, Petition for Declaratory Order, Docket
No. EL24-149-000 (filed Sept. 30, 2024); Constellation April 23, 2025 Reply Comments
at 4 n.4).
113 PJM, PJM Guidance on Co-Located Load (Mar. 22, 2024) (updated Apr. 17,
2024), https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/pjm-
guidance-on-co-located-load.pdf.
114 For instance, an amended ISA to which PPL was a party stated that “The
Co-Located Load is not Network Load, and it is intended that the Co-Located Load will
never consume capacity and/or energy from the PJM Transmission System.” PJM
Interconnection, L.L.C. (Susquehanna), Amended Susquehanna ISA, Docket
No. ER24-2172, Schedule F, Part F (filed June 3, 2024); see also, e.g., PJM
Interconnection, L.L.C., 189 FERC ¶ 61,078, at PP 14, 26 (2024). On the other hand,
there are allegations in the record that Exelon has delayed work on Constellation’s
requests to co-locate load with certain of its generators due to Exelon’s concerns that
such requests are not allowed under the Tariff without arranging for wholesale
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In fact, based on our review of the Tariff, the Tariff indeed does not contain
provisions specifying the rules governing Co-Location Arrangements.115 For instance,
the Tariff lacks provisions specifying: the terms and conditions for Interconnection
Customers seeking to use their generators to serve Co-Located Load;116 that an
Interconnection Customer who will use its generator to serve Co-Located Load must
designate an Eligible Customer who will take transmission service on behalf of the
Co-Located Load;117 the rules governing transmission service—including the rates,
terms, and conditions of that service—taken by an Eligible Customer on behalf of Co-
Located Load;118 and the charges for black start and regulation service to Eligible
Customers taking transmission service on behalf of Co-Located Load.119 In sum, due to
the absence of these provisions, the Tariff lacks sufficiently clear answers to important
questions about how to effectuate Co-Location Arrangements.
The finding that the Tariff is unjust and unreasonable due to the lack of sufficient
clarity is bolstered by several factors. First, the lack of sufficient clarity leaves entities
unable to determine what steps they can or must take to effectuate or administer
Co-Location Arrangements of various configurations.120 Interconnection Customers
seeking to use their generators to serve Co-Located Load have no means of knowing their
responsibilities with respect to serving Co-Location Arrangements and the terms and
conditions that apply to these arrangements.121 Without an Eligible Customer designated
to take transmission service on behalf of a Co-Located Load, the Tariff lacks a
mechanism to address and ensure proper charges for situations in which a Co-Located
Load withdraws energy from the transmission system.122 Second, an absence of
transmission or retail distribution service. February Order, 190 FERC ¶ 61,115 at PP 51,
75.
115 December Order, 193 FERC ¶ 61,217 at P 175.
116 Id. P 176.
117 Id.
118 Id.; see also, e.g., id. P 175.
119 Id. P 177; see also id. PP 159, 181-185.
120 Id. P 175.
121 Id. P 176.
122 Id. Indeed, Exelon and FirstEnergy concede that they agree that “[a]n Eligible
Customer serving a co-located load must be designated because it is the Eligible
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sufficient clarity in these circumstances creates regulatory uncertainty, thus undermining
a “central purpose” of the FPA—“predictability.”123 Third, the lack of sufficient clarity
leads here to the potential for undue discrimination, preferential treatment, or otherwise
unjustifiable disparate conduct. As discussed above, disparate treatment has occurred in
PJM, where transmission owners have taken different approaches to addressing
Co-Location Arrangements.124 Finally, the lack of sufficient clarity introduces the risk
that costs related to Co-Location Arrangements may not be allocated consistent with cost
causation principles because, for instance, Eligible Customers taking transmission service
on behalf of Co-Located Load could benefit from regulation and black start services
without contributing to cost recovery for such services, thus risking that costs may be
allocated entirely to other transmission customers and passed through to residential
customers, among others.125 In total, these factors are magnified by the facts that
Co-Location Arrangements are becoming increasingly common in PJM, entities continue
to raise issues involving Co-Location Arrangements with the Commission,126 and
Co-Location Arrangements may include large amounts of load and generation. Given
these ramifications and consistent with precedent,127 the Commission appropriately found
that the lack of sufficient clarity in the Tariff has rendered it unjust and unreasonable.
Customer that seeks and obtains transmission service and pays for it.” Exelon and
FirstEnergy Request for Rehearing at 2.
123 PJM Power Providers Grp. v. FERC, 96 F.4th 390, 401-02 (3d Cir. 2024)
(describing a central purpose of the filed rate doctrine: predictability). Ensuring
predictability ultimately supports a primary purpose of the FPA, “encourag[ing] the
orderly development of plentiful supplies of electricity . . . at reasonable prices.” Pub.
Utils. Comm’n of Cal. v. FERC, 367 F.3d 925, 929 (D.C. Cir. 2004) (quoting NAACP v.
FPC, 425 U.S. 662, 670 (1976); see EPSA, 577 U.S. at 290 (“The statute aims to protect
‘against excessive prices’ and ensure effective transmission of electric power.” (citations
omitted)).
124 December Order, 193 FERC ¶ 61,217 at P 175; February Order, 190 FERC
¶ 61,115 at P 75.
125 December Order, 193 FERC ¶ 61,217 at P 177; see also id. PP 181-185.
126 Id. P 4.
127 E.g., Invenergy Transmission LLC v. Midcontinent Indep. Sys. Operator, Inc.,
193 FERC ¶ 61,033, at P 53 (2025) (finding tariff unjust and unreasonable because it did
not address when and how certain transmission projects are incorporated into a
transmission planning model and because existing provisions lacked “sufficient
specificity and certainty”); PJM Interconnection, L.L.C., 167 FERC ¶ 61,030, at PP 22,
41, 59 (2019) (“[W]e find that the PJM Operating Agreement is unjust and unreasonable
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Notwithstanding the Commission’s findings, Exelon and FirstEnergy argue that
because the Tariff provides for NITS and point-to-point service (PTPS)—with terms
governing them—“[t]here is no inability to determine how to serve [co-located] load in
PJM.”128 Yet, the existence of provisions governing NITS and PTPS does not undermine
our findings that the Tariff both lacks sufficient clarity and does not contain provisions
specifying the rules governing Co-Location Arrangements. The applicability, operation,
and/or interpretation of the cited general provisions (among others) with respect to
Eligible Customers taking transmission services on behalf of Co-Located Load and
Co-Location Arrangements are the issues that, in part, give rise to the lack of sufficient
clarity we target here.
Next, Exelon and FirstEnergy respond to the Commission’s citation of the
Constellation Complaint by blaming “any delay” giving rise to uncertainty on
Constellation.129 But this response misunderstands the Commission’s reasoning. The
Commission cited the Constellation Complaint as one piece of evidence to demonstrate
that there is “no consistent understanding” of the rules governing Co-Location
Arrangements.130
Similarly, Exelon and FirstEnergy allege that “in 2025, [Commonwealth Edison
Company] received more than 25 customer service applications for large load service,
representing new load in excess of 20 GW” and “[t]here is no suggestion in the record
that any customer is encountering problems with those requests.”131 Beyond the fact
there is no representation that any of those applications relate to Co-Located Load, this
limited set of applications before a single Transmission Owner does not demonstrate
because it fails to provide a sufficient level of clarity regarding the permissible
components of energy market cost-based offers”); N.Y. Indep Sys. Operator, Inc.,
162 FERC ¶ 61,107, at PP 160, 173 (2018) (“We find this difference in definitions to be
unclear and, therefore, unjust and unreasonable”); Dominion Energy Mktg., Inc., v. ISO
New Eng. Inc., 155 FERC ¶ 61,121, at P 17 (2016) (“We find that [the] existing Tariff is
unclear as to whether new incremental capacity and existing capacity at the same
generating station must submit a composite offer in order to participate in [a capacity
auction]. As a result of this lack of clarity, the Tariff fails to provide adequate notice of
what the requirement is and, thus, we find the Tariff is unjust and unreasonable.”).
128 Exelon and FirstEnergy Request for Rehearing at 14-15.
129 Id. at 15-16.
130 December Order, 193 FERC ¶ 61,217 at P 175.
131 Exelon and FirstEnergy Request for Rehearing at 17.
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sufficient clarity even if those requests “proceed on a timely basis.”132 As explained
above, the Commission continues to be concerned about disparate treatment by different
Transmission Owners in this context.133
Exelon and FirstEnergy also state that in one proceeding pertaining to Co-Located
Load, a load and generator entered into a “front-of-the-meter” arrangement and thus
“conceded that PJM Network Service works . . . and is a service upon which all
customers may rely.”134 A decision in one proceeding to abandon a Co-Location
Arrangement does not undermine the Commission’s finding that there is a lack of
sufficient clarity related to Co-Location Arrangements writ large (and, in fact, might
support it).
Finally, Exelon and FirstEnergy contend that “[t]o the extent clarification was
needed, the Commission has now clarified . . . that these arrangements must be properly
metered and must designate and involve transmission service to an Eligible Customer.”135
This argument is misplaced. Exelon and FirstEnergy’s argument that the replacement
rate should be narrower—that only part of it would be sufficient—should be directed not
to the finding that the Tariff is unjust and unreasonable but to the determination of a just
and reasonable replacement rate. Further, the portions of the replacement rate that
Exelon and FirstEnergy reference—requiring proper metering and involving transmission
service to an Eligible Customer—do not resolve the Commission’s concerns as to a lack
of sufficient clarity in the Tariff. For example, the Commission found a lack of sufficient
clarity as to the terms and conditions for Interconnection Customers seeking to use their
generators to serve Co-Located Load.136
We also continue to find that the Tariff is unjust and unreasonable because it does
not include transmission services that reflect Eligible Customers taking service on behalf
of Co-Located Loads that are willing and able to limit their energy withdrawals from the
transmission system under certain conditions.137 Requiring Eligible Customers taking
132 Id.
133 See supra notes 114, 126.
134 Exelon and FirstEnergy Request for Rehearing at 17-18 (discussing the
proceedings in Docket Nos. ER24-2172-000 and ER24-2171-001).
135 Id. at 16-17.
136 December Order, 193 FERC ¶ 61,217 at P 176.
137 Id. P 177; see also S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41, 64-68 (D.C.
Cir. 2014) (explaining that to find a practice unjust and unreasonable, the Commission
need not rely on “empirical evidence” and can rely on “reasonable economic
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transmission service on behalf of Co-Located Load to take NITS, without the option to
instead take such alternative transmission services, is economically inefficient. Here, the
record demonstrates that some Eligible Customers taking service on behalf of
Co-Located Loads are willing and able to limit their energy withdrawals. With only the
current services offered, having found that Eligible Customers taking NITS will be
charged based on gross load, prospective Eligible Customers taking transmission service
on behalf of Co-Located Load would have to take a transmission service that does not
reflect the load’s willingness and ability to limit use of the transmission system—which
is an inefficient result. The Commission has long recognized that providing
differentiated service options can produce more efficient results because customers can
choose the service that is most closely tailored to their specific needs, rather than a
one-service-fits-all approach.138 Requiring Eligible Customers taking service on behalf
of Co-Located Loads to take NITS creates an unacceptable risk of more costly Network
Upgrades that would be unnecessary if such Eligible Customers were willing and
permitted to take a transmission service that reflects Co-Located Loads that are willing
propositions” “likely enough to be within the Commission’s authority” and noting that
the use of words such as “might, may, or could” does not make its determination legally
deficient (internal quotation marks omitted)).
138 See, e.g., Integration of Variable Energy Res., Order No. 764, 139 FERC
¶ 61,246, at PP 2, 22, order on reh’g & clarification, Order No. 764-A, 141 FERC
¶ 61,232 (2012), order on clarification & reh’g, Order No. 764-B, 144 FERC ¶ 61,222
(2013) (explaining that the Commission sought “to provide all transmission customers
the option of using more frequent transmission scheduling intervals within each operating
hour, at 15-minute intervals,” which will allow them “the flexibility to adjust their
transmission schedules, thus limiting their exposure to imbalance charges” and lead to
“more efficient utilization of transmission and generation resources”); Standardization of
Generator Interconnection Agreements & Procs., Order No. 2003, 104 FERC ¶ 61,103
(2003), order on reh’g, Order No. 2003-A, 106 FERC ¶ 61,220, at P 534, order on reh’g,
Order No. 2003-B, 109 FERC ¶ 61,287 (2004), order on reh’g, Order No. 2003-C,
111 FERC ¶ 61,401 (2005), aff’d sub nom. Nat’l Ass’n of Regul. Util. Comm’rs v. FERC,
475 F.3d 1277 (D.C. Cir. 2007) (explaining that “an Interconnection Customer that elects
to be studied for Network Resource Interconnection Service has the option also to be
studied for Energy Resource Interconnection Service and proceed with Network
Resource Interconnection Service or a lower level Interconnection Service whereby only
certain Network Upgrades will be completed” and finding that “[t]his option thus allows
the Interconnection Customer to avoid having to fund Network Upgrades that it does not
need”).
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and able to limit their energy withdrawals.139 We further reiterate that there is support in
the record for the foregoing analysis.140
On rehearing, Exelon and FirstEnergy dispute the Commission’s finding that the
Tariff is unjust and unreasonable because it does not include transmission services that
reflect Eligible Customers taking transmission service on behalf of Co-Located Loads
that are willing and able to limit their energy withdrawals from the transmission system
under certain conditions.141 First, Exelon and FirstEnergy argue that “there is no
evidence that the cost of paying for Network Service deters service or has any impact
whatsoever on development of data centers” because “data center development interest in
PJM is overwhelming.”142 But the Commission was not required to show that its FPA
section 206 step one findings would have a particular effect on data centers. Instead, as
explained in the prior paragraph, the Commission’s findings relate to economic and other
harms from a lack of transmission services that reflect Eligible Customers taking service
on behalf of Co-Located Loads that are willing and able to limit their energy withdrawals
from the transmission system.143 In any event, we continue to reason that requiring
Eligible Customers taking transmission service on behalf of Co-Located Load to take
NITS does have a negative impact relative to transmission services that reflect these
loads’ willingness and ability to limit energy withdrawals. These negative impacts could
include unnecessary Network Upgrade costs, which cause an unjust and unreasonable
increase in transmission rates. The assertion that “development interest” in data centers
may currently be high, or will remain high if Eligible Customers taking transmission
service on behalf of Co-Located Loads that are willing and able to limit their withdrawals
from the transmission system are required to take NITS on a gross basis, does not address
the counterfactual at issue (i.e., requiring Eligible Customers taking transmission service
on behalf of Co-Located Load to take NITS relative to transmission services that reflect
these loads’ willingness and ability to limit energy withdrawals).
Second, Exelon and FirstEnergy contend that the Commission has no evidence144
to support the risk of “costly and inefficient transmission system buildout” under NITS
139 December Order, 193 FERC ¶ 61,217 at PP 177, 199, 205.
140 Id. PP 199 & n.423, 205, 434; see also PP 160, 177-178.
141 Exelon and FirstEnergy Request for Rehearing at 18.
142 Id. at 18-19.
143 December Order, 193 FERC ¶ 61,217 at P 177.
144 Exelon and FirstEnergy Request for Rehearing at 19-20 (citing, among other
things, December Order, 193 FERC ¶ 61,217 at P 199).
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compared to “fewer Network Upgrades” and “lower Network Upgrade costs” under an
alternative service.145 To the contrary, the Commission has provided a robust rationale
for this risk, as explained above. Exelon and FirstEnergy state that “network studies are
based on physics and engineering” so NITS cannot “impose[] unnecessary transmission
upgrade costs.”146 We agree with the premise that studies are based on physics and
engineering, but not the conclusion. Many Network Upgrades are caused by the amount
of MW flow on the transmission system but certain Network Upgrades are not (e.g., they
may be caused by stability or voltage-related issues).147 Therefore, as Exelon and
FirstEnergy concede, under a transmission service designed to reflect load’s willingness
and ability to limit energy withdrawals, “if the load installs systems aimed at limiting its
use of the grid, those might change the system impacts and need for upgrades.”148
Conversely, NITS requires PJM to plan the transmission system to deliver power to
load,149 even if that load does not intend to ever withdraw power from the system, which
could result in unnecessary Network Upgrades. Exelon and FirstEnergy also claim that
“[t]he fact that a load is located near a generator may well reduce system impacts . . .
145 December Order, 193 FERC ¶ 61,217 at P 177.
146 Exelon and FirstEnergy Request for Rehearing at 19.
147 Exelon and FirstEnergy additionally contend that “even when no net power is
being withdrawn from the system . . . the transmission system is affected and needed by
the load—indeed, the Commission agreed with this proposition when it found that co-
located loads do utilize load-following based on gross rather than net load.” Id. at 19-21.
Again, we do not find that the need for Network Upgrades is based only on withdrawals;
instead, we find that reducing the amount of MW flow can lead to the need for fewer or
less costly Network Upgrades. The December Order does not promote ignoring impacts
when no net power is being withdrawn.
148 Id. at 19-20. We note that Exelon and FirstEnergy also state that “the same can
be said for similar systems applied to other loads. Nothing in the record [supports] that
such systems are more beneficial for co-located load projects than for any other load [or]
the use of different ratemaking principles when such installations are in place. To the
contrary, . . . the Commission has consistently rejected arguments that different
ratemaking should be applied even where there are physical limits to the amount of
transmission system use.” Id. We understand these arguments as directed to the
replacement rate, and thus we address them below. To the extent they are directed to the
Commission’s FPA section 206 step one finding, we disagree for the same reasons stated
below.
149 PJM, Intra-PJM Tariffs, OATT, § III, § 28.2 (Transmission Provider
Responsibilities) (1.0.0).
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regardless of whether the load has contracted with the generator it abuts, or with remote
generation.”150 This assertion ignores the fact that a new transmission service reflecting
willingness and ability to limit energy withdrawals could further reduce system
impacts—for instance through the “systems aimed at limiting [the] use of the grid” that
Exelon and FirstEnergy reference.151 We similarly disagree with Exelon and
FirstEnergy’s claim that a new transmission service would not “alter what must be
studied in assessing the physics and engineering of any proposed new configuration.”152
Studies for a customer taking a new transmission service that limits the amount of energy
that may be withdrawn would reflect that limitation.153 Such potential transmission
service could alter the level of steady-state transmission system usage studied (i.e., the
“physics”) and the design of the physical facilities, necessary control technologies, and/or
protection systems needed to effectuate that arrangement compared to a traditional
Network Customer (i.e., the “engineering”), contrary to Exelon and FirstEnergy’s
assertions.
Third, Exelon and FirstEnergy assert that the Commission contradicted itself in
finding the Tariff unjust and unreasonable in lacking alternative transmission services
because the Commission also stated that “‘it continues to be just and reasonable for an
Eligible Customer taking transmission service on behalf of Co-Located Load to elect, as
one of the required transmission services from which the Eligible Customer must choose,
to take NITS.’”154 The Commission did not find that current set of transmission service
options is just and reasonable. Instead, the Commission stated, it continues to be just and
reasonable for such an Eligible Customer “to elect” NITS “as one of the required
150 Exelon and FirstEnergy Request for Rehearing at 20.
151 Id. at 19-20. Exelon and FirstEnergy likewise claim that Co-Location
Arrangements “will have the same potential benefit regardless of whether there is a
contractual supply arrangement with a nearby generator and regardless of whether it pays
for transmission service based on net or gross load.” Id. at 21. This assertion again
misses the key distinction. Under a new alternative transmission service reflecting
willingness and ability to limit energy withdrawals, there could be fewer or less costly
Network Upgrades if the Eligible Customer can select a lower (but otherwise
satisfactory) level of demand.
152 Id. at 20.
153 Exelon and FirstEnergy state that “[t]here is simply no evidence” for an
argument that a new transmission service could speed access to service. Id. But the
Commission’s findings are not based on speeding access to service or creating “fast-track
interconnection.” Id. at 20-21.
154 Id. at 21-22 (quoting December Order, 193 FERC ¶ 61,217 at P 195).
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transmission services.”155 But it is unjust and unreasonable for that set of options to lack
the alternatives the Commission discussed.156
Fourth, Exelon and FirstEnergy argue that the Commission’s finding that the
Tariff is unjust and unreasonable because it lacks alternative transmission service options
misunderstands the benefits and burdens “to co-located projects of being interconnected
to the grid.”157 The Commission did not find, however, that Co-Located Loads could
receive no benefits from or place no burdens on the transmission system. Instead, the
Commission found that the Tariff was unjust and unreasonable because it did not reflect
the features of Co-Location Arrangements that make the existing transmission service
options unacceptable.158 An Eligible Customer taking transmission service on behalf of
Co-Located Load must be charged for the benefits received from and the burdens placed
on the transmission system—but that does not mean the status quo is not unjust and
unreasonable. Co-Located Load may be able to reduce the benefits received from and the
burdens placed on the transmission system if it is willing and able to limit energy
withdrawals. We do not dispute, and indeed continue to find, that Co-Located Loads do
receive benefits even if they have zero net energy withdrawals, specifically from
regulation and black start services.159 The Commission’s finding that the Tariff is unjust
and unreasonable does not preclude the recognition of those benefits.
Finally, Exelon and FirstEnergy maintain that the Commission’s “finding that the
existing PJM Tariff is [unjust and unreasonable] is arbitrary and capricious because the
Commission failed to consider the unique issues that attend co-location with nuclear
plants.”160 This argument is misplaced. The Commission found that the Tariff is unjust
and unreasonable for, in part, the two reasons discussed above.161 In particular, the
Commission found the Tariff unjust and unreasonable because it does not include an
option for Eligible Customers on behalf of Co-Located Loads to take transmission
services that reflect their willingness and ability to limit their energy withdrawals from
155 December Order, 193 FERC ¶ 61,217 at P 195 (emphasis added).
156 Id. P 177.
157 Exelon and FirstEnergy Request for Rehearing at 30-32; see also id.
(discussing various benefits and burdens).
158 December Order, 193 FERC ¶ 61,217 at P 177.
159 Id. P 185.
160 Exelon and FirstEnergy Request for Rehearing at 32-33.
161 December Order, 193 FERC ¶ 61,217 at PP 176, 177.
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the transmission system. The fact that a nuclear generator in a Co-Location Arrangement
might be dependent on the transmission system because that nuclear generator cannot
operate without a robust interconnection to the transmission system, or cannot load
follow, does not undermine these core findings. Exelon and FirstEnergy attempt to use
these facts to conclude that the Co-Located Load is effectively using the transmission
system in a similar manner to a load served by remote resources. We disagree because,
regardless of load following, the energy used by the Co-Located Load is provided (at
least in part) by its Co-Located Generator, not via the transmission system. Eligible
Customers on behalf of Co-Located Loads that are served by a Co-Located Generator
that is a nuclear generator should be permitted to take transmission services that reflect
that they are willing and able to limit their withdrawals from the transmission system
under certain conditions. To the extent a nuclear generator that is part of a Co-Location
Arrangement operates differently than other Co-Located Generators, that is an issue that
may be assessed in subsequent study processes, or simply by the nuclear generator itself,
as the Interconnection Customer (not the Eligible Customer) in determining whether and
how to enter into a Co-Location Arrangement.
2.
Retail BTMG Netting Rules
a.
Scope and Adequate Notice
i.
December Order
The Commission found that PJM’s retail BTMG netting rules are no longer just
and reasonable and clarified that this finding applies to all Network Load.162
ii.
Request for Clarification and/or Rehearing
Citing the Administrative Procedure Act (APA) and Commission Rule 209,
Industrials argue that changes to retail BTMG netting rules are outside the scope of the
February Order.163 Industrials assert that the February Order set the scope of the
proceeding and limited it to Co-Located Load and Co-Location Arrangements, thus
excluding BTMG. Industrials argue that no part of the February Order included the
possibility of the Commission’s BTMG netting findings in the December Order.
Industrials allege there are important distinctions between Co-Location Arrangements
and BTMG, particularly that a BTMG arrangement is a retail load-modification
162 Id. P 186.
163 Industrials Request for Clarification or Rehearing at 22 (citing 5 U.S.C. § 706;
18 C.F.R. § 385.209 (2025)); see also 5 U.S.C. § 554.
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construct, whereas a Co-Location Arrangement is a wholesale-system-impacting load
integration construct.164
iii.
Determination
We disagree with Industrials that changes to retail BTMG netting rules are beyond
the scope of this proceeding because the Commission provided adequate notice as to
those changes.
Under the APA, an agency setting a matter for hearing must provide parties with
adequate notice of the issues that would be considered, and ultimately resolved, at that
hearing.165 Under Commission Rule 209(b), “an order to show cause will contain a
statement of the matters about which the Commission is inquiring, and a statement of the
authority under which the Commission is acting. The statement is tentative and sets forth
issues to be considered by the Commission.”166
While Industrials allege that the Commission in the February Order “set the scope
of the proceeding to Co-Located Load,”167 the Commission did no such thing. The
February Order contains no finding limiting the proceeding’s scope to “Co-Located
Load.” Instead, the February Order also expressly raises, among many other topics,
relevant generation configurations168 and overall addresses issues that attend to load with
on-site or otherwise nearby generation, which logically includes BTMG.169
164 Industrials Request for Clarification or Rehearing at 22-26.
165 N. Va. Elec. Coop., Inc. v. FERC, 945 F.3d 1201, 1205 (D.C. Cir. 2019);
5 U.S.C. § 554(b)(3) (establishing notice requirement for adjudications).
166 18 C.F.R. § 385.209(b).
167 Industrials Request for Clarification or Rehearing at 22.
168 February Order, 190 FERC ¶ 61,115 at P 79.
169 Id. P 76 (discussing concerns related to generation and load being “likely to use
or benefit from the transmission system in different ways depending on how they are
configured” and giving examples such as “Network Load may co-locate with a generator
that is not a grid resource and that either serves the load as an off-grid backup or that
reduces the Network Load’s consumption during peak hours” (emphasis added)).
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In any event, Industrials themselves acknowledge that the Commission’s briefing
questions in fact specifically included BTMG.170 In particular, the Commission asked
parties to address “how co-located loads are similar to or disparate from other types of
arrangements where load and generation share the same point of interconnection (such as
Behind the Meter Generation[)].”171 This question reflects that the Commission would
consider BTMG configurations in determining a just and reasonable replacement rate.
Industrials contend that the Commission’s reference to “other arrangements” in this
question shows that retail BTMG and Co-Located Load are distinct concepts, but
Industrials’ claims are belied by their assertions in their reply comments to the February
Order that BTMG configurations and Co-Location Arrangements identically impact the
transmission system.172 And regardless of their similarity, the Commission’s briefing
question raises the subject of the treatment of BTMG. Additional briefing questions in
the February Order also sufficiently raise the subject of BTMG. The Commission
directed parties to submit briefing on transmission services, including potential changes
to the rates, terms, and conditions of NITS to accommodate Co-Location
Arrangements.173 PJM’s retail BTMG netting rules are part of PJM’s rates, terms, and
conditions for NITS.174 Finally, the Commission also asked “whether portions of the
Guidance Document may serve as a just and reasonable and not unduly discriminatory or
preferential replacement rate,”175 and that document states, “[i]f the co-located Customer
Facility elects to be designated as [BTMG], it will be allowed to net the co-located load
directly against the output of the co-located Customer Facility.”176 We thus find that the
February Order provided adequate notice that the Commission would consider PJM’s
BTMG netting rules as part of this proceeding.
The record developed in response to the February Order further reflects that
Industrials had notice and an opportunity to address changing PJM’s retail BTMG netting
170 Industrials Request for Clarification or Rehearing at 25.
171 February Order, 190 FERC ¶ 61,115 at P 88 (briefing question a.iv).
172 PJM ICC and IECA April 23, 2025 Reply Comments at 9.
173 February Order, 190 FERC ¶ 61,115 at P 88 (briefing question b.iv).
174 PJM, Intra-PJM Tariffs, OATT, § III, § 34.2 (Netting of Behind the Meter
Generation) (0.0.0).
175 February Order, 190 FERC ¶ 61,115 at P 88 (briefing question a.iii).
176 PJM, PJM Guidance on Co-Located Load (Mar. 22, 2024) (updated Apr. 17,
2024), https://www.pjm.com/-/media/DotCom/markets-ops/rpm/rpm-auction-info/pjm-
guidance-on-co-located-load.pdf.
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rules. While Industrials attempt to minimize the briefing questions as “scarcely
mention[ing]” BTMG among a large number of topics in the February Order, PJM
submitted detailed concerns that the retail BTMG netting rules were no longer just and
reasonable in direct response to the February Order.177 And parties debated the merits of
PJM’s concerns in reply comments.178 All parties, including Industrials, had an
opportunity to rebut PJM’s claims before the Commission could weigh the evidence on
this matter. As courts have explained, subsequent briefing on a topic serves as evidence
of adequate notice as to that topic.179
b.
Whether PJM’s Retail BTMG Rules Are Unjust and
Unreasonable
i.
December Order
In finding that PJM’s retail BTMG netting rules are no longer just and reasonable,
the Commission explained that circumstances had changed since the Commission
approved PJM’s rules in 2004.180 The Commission stated that PJM explains that the
BTMG netting rules were “conceived for, and [have] been implemented for, substantially
smaller loads (like a warehouse with solar panels) and not on the scale of large data
177 PJM March 24, 2025 Response at 34 (“The co-located load arrangements at
issue here, large data centers, could be viewed as similar to BTM Generation that
currently exists under PJM’s Tariff (as reflected in Ex. A, Option 3). But as explained
herein, the BTM Generation paradigm does not fit co-location arrangements particularly
well because it was not designed with large load co-location in mind.”); id. at 36-37 (“In
sum, discussions in the record regarding PJM’s BTM Generation rules raise questions
about the status of those rules. PJM is open to exploring . . . whether the 20-year-old
method of allocating costs pursuant to the BTM Generation netting rules remains
consistent with cost causation principles.”).
178 Compare AMP April 23, 2025 Reply Comments at 10 (“The record provides
no basis to revisit the current PJM Tariff provisions addressing BTMG.”), with
Northeastern Rural Electric Membership Corporation (NREMC) April 23, 2025 Reply
Comments at 5 (“Additionally, simple netting of generation against load could allow
these facilities [i.e., data centers] to avoid most, if not all, costs by netting out to zero as
the entire load is supplied by the co-located generator, despite the co-located loads
reliance and benefit from the grid. This would shift costs and burdens unfairly to other
users, violating core principles of just and reasonable ratemaking.”).
179 N. Va. Elec. Coop., Inc., 945 F.3d at 1206.
180 December Order, 193 FERC ¶ 61,217 at P 186 (citing PJM, 107 FERC
¶ 61,113 (2004) (2004 BTMG Order)).
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centers.”181 However, the Commission stated that large loads, both existing and in the
planning stages with PJM, have proliferated in recent years, and PJM has persuasively
explained the problems that could occur if Network Customers with large loads were
allowed to use the existing BTMG netting rules in the Tariff.182 The Commission stated
that, for example, PJM explains that “[a]llowing very large loads like data centers to net
is problematic because loads in this configuration do not carry reserves.”183 The
Commission stated that such loads must nevertheless be served, however, allowing them
to “lean on the PJM system when the [BTMG] is on a full or partial outage or if the load
exceeds the rating of the [BTMG].”184 The Commission emphasized that PJM’s existing
BTMG netting rules do not limit the amount of qualifying load that a Network Customer
may net by using BTMG and do not provide any protections against this potential
transmission and resource adequacy planning problem or against the costs of maintaining
sufficient resources to serve these loads being shifted onto other customers.185 The
Commission found that PJM’s BTMG netting rules are no longer consistent with cost
causation principles, because large loads configured in a BTMG arrangement with
significant generation will raise cost-shifting concerns compared to loads pursuing
smaller amounts of netting. The Commission found that PJM’s existing BTMG netting
rules may lead to both reliability and resource adequacy risks because PJM, per its Tariff,
is obligated to serve transmission customers using BTMG but does not consider such
customers in transmission and resource adequacy planning.
ii.
Request for Clarification and/or Rehearing
Industrials argue that the Commission erred by failing to address prior precedent
on cost causation and failing to demonstrate that the existing BTMG netting rules were
181 Id. (quoting PJM March 24, 2025 Response at 13).
182 Id. (citing Docket No. AD24-11-000, Large Loads Co-Located at Generating
Facilities Tr. at 9:2-3 (noting that “large data centers [] need these significant new
amounts of energy for their business”); PJM Interconnection, L.L.C., 188 FERC
¶ 61,200, at P 5 (2024) (“PJM explains that the [tariff] proposal [to allocate load
adjustments] was spurred by the recent proliferation of data centers that are contributing
to large additions of forecasted load concentrated within a specific wholesale metering
area.”)).
183 December Order, 193 FERC ¶ 61,217 at P 186 (quoting PJM March 24, 2025
Response at 36).
184 Id. (quoting PJM March 24, 2025 Response at 13 n.5).
185 Id. (citing PJM, Intra-PJM Tariffs, OATT, § III, § 34.2 (Netting of Behind the
Meter Generation) (0.0.0)).
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unjust and unreasonable.186 Industrials contend that Commission precedent established
the “actual use” principle, which holds that “actual use” of the transmission system is a
just and reasonable approach for assessing transmission charges that comports with cost
causation.187 Industrials argue that the Commission here abandons the “actual use”
principle by finding BTMG netting unjust and unreasonable.188 According to Industrials,
the December Order also “creates an unreasonable split between those who manage costs
by managing load and those who manage costs by investing in generation.”189 “In other
words,” Industrials contend, “the effect of the ‘gross load’ approach is unduly
discriminatory, because it allows ‘actual use’ to govern NITS costs for some (i.e.,
load-only customers), but not for others (i.e., those who have invested in retail
behind-the-meter generation).”190 Industrials acknowledge that “[i]f standby fees or other
charges need to be considered in accordance with cost-causation principles, the
Commission may explore those,” but argue that “eliminating altogether the assessment of
charges based on ‘actual use’ is unduly discriminatory and fails to reckon with
well-established Commission precedent.”191
186 Industrials Request for Clarification or Rehearing at 34; see also id. at 5, 19-20.
187 Id. at 35-36 (citing 2004 BTMG Order, 107 FERC ¶ 61,113, at P 4 (finding “no
transmission or distribution facilities are used to deliver energy from the generating unit
to the load”); Occidental Chem. Corp. v. PJM Interconnection, 102 FERC ¶ 61,275,
at P 14 (2003) (Occidental) (“Access charges for use of PJM’s transmission system
should be allocated to network customers based on a network customer’s actual use of
PJM’s system, consistent with the principle of cost causation.”); PJM Interconnection,
L.L.C., 167 FERC ¶ 61,268, at P 23 (2019) (PJM) (affirming Commission’s conclusion in
Occidental that Network Customers’ charges for use of PJM’s transmission system
should be allocated based on a Network Customer’s actual use of PJM’s system); ISO
New Eng., Inc., 178 FERC ¶ 61,086, at P 51 (2022) (ISO-NE) (finding just and
reasonable ISO New England Inc.’s proposal to exclude from the Monthly Regional
Network Load served by unregistered BTMG and the portion of the output of a Generator
Asset that serves load located behind the same retail customer meter and assign Regional
Network Service charges to Network Customers based on each Network Customer’s
actual use of the system)).
188 Industrials Request for Clarification or Rehearing at 35-37.
189 Id. at 37.
190 Id. at 37-38.
191 Id. at 38.
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Industrials argue that the Commission did not develop a sufficient record on which
to base its determinations on BTMG netting rules in the Tariff.192 Industrials give several
examples of “real-life facility configurations” that will face substantial harms or be
undercompensated under a “gross load” approach.193 Industrials argue that, without a
well-developed record, the Commission may not be able to fully recognize the cost
causation implications of the removal of all netting rules.
iii.
Determination
We disagree with Industrials that the Commission failed to address prior precedent
in the December Order or show that PJM’s retail BTMG netting rules were unjust and
unreasonable.194 The Commission in the December Order summarized its decision
approving PJM’s retail BTMG netting rules, including the finding in the 2004 BTMG
Order accepting the BTMG netting rules that “charges for use of PJM’s transmission
system should be allocated to network customers based on a network customer’s actual
use of PJM’s system, consistent with the principle of cost causation.”195 We recognize
that the Commission’s 2004 BTMG Order relied upon Occidental for the proposition that
NITS charges should be based on actual use,196 and that, after 2004, the Commission has
relied upon Occidental and/or the 2004 BTMG Order to support similar findings.197 But
the Commission in the December Order did not find that it is no longer just and
unreasonable to ever allocate transmission charges based on actual use. Rather, the
Commission found that PJM’s retail BTMG netting rules are no longer consistent with
cost causation principles for a specific reason, that is, because large loads configured in a
BTMG arrangement with significant generation will raise cost-shifting concerns
192 Id. at 26; see also id. at 6.
193 Id. at 27-31; see also id. at 4-5.
194 Id. at 34-38.
195 December Order, 193 FERC ¶ 61,217 at P 7 (quoting 2004 BTMG Order,
107 FERC ¶ 61,113 at P 28); Id. P 186 (citing 2004 BTMG Order, 107 FERC ¶ 61,113).
196 2004 BTMG Order, 107 FERC ¶ 61,113 at P 28 (citing Occidental, 102 FERC
¶ 61,275).
197 See PJM, 167 FERC ¶ 61,268 at P 23 (discussing Occidental for the
proposition that the Commission has found that RTOs and transmission owners must
recognize load reductions from interruptible load programs in computing billing
determinants); ISO-NE, 178 FERC ¶ 61,086 at P 51 (finding just and reasonable ISO
New England’s proposal to charge Network Customers based on actual use of the
system).
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compared to loads pursuing smaller amounts of netting.198 The Commission thus
explained that these PJM retail BTMG netting rules, while previously consistent with
cost causation principles at the time the Commission approved them, were rendered
unjust and unreasonable by a change in circumstances. In further support of its finding
that these rules are no longer just and reasonable, the Commission found that PJM’s
existing retail BTMG netting rules may lead to both reliability and resource adequacy
risks because PJM, per its Tariff, is obligated to serve transmission customers using
BTMG but does not consider such customers in transmission and resource adequacy
planning.199 The Commission orders relying on actual use principles that Industrials cite
do not reflect the problems currently posed in PJM by large loads configured in a BTMG
arrangement.200
We also disagree with Industrials that the Commission did not develop a sufficient
record on which to base its determination in the December Order on PJM’s retail BTMG
netting rules.201 As discussed above, the Commission adequately supported its findings
that PJM’s retail BTMG netting rules are no longer just and reasonable. Importantly, the
Commission relied on evidence submitted by PJM detailing problems that could occur if
Network Customers with large loads were allowed to use the existing retail BTMG
netting rules in the Tariff.202 Other parties raised similar concerns in the record.203
Industrials instead raise concerns that the Commission’s decision results in
significant economic harm to entities who have used PJM’s retail BTMG netting rules
198 December Order, 193 FERC ¶ 61,217 at P 186.
199 Id.; see PJM, Intra-PJM Tariffs, OATT, § III, § 34.2 (Netting of Behind the
Meter Generation) (0.0.0).
200 See, e.g., ISO-NE, 178 FERC ¶ 61,086 at P 8 (explaining that, decades ago,
behind-the-meter generation was typically larger on-site generation connected to
industrial load, but since then, behind-the-meter generation has evolved with increasing
amounts of widely distributed behind-the-meter generation that is below 5 MW, such as
solar photovoltaic generation).
201 Industrials Request for Clarification or Rehearing at 26-27.
202 December Order, 193 FERC ¶ 61,217 at P 186 (“For example, PJM explains
that “[a]llowing very large loads like data centers to net is problematic because loads in
this configuration do not carry reserves.”) (quoting PJM March 24, 2025 Response at 36).
203 Id. P 73 (“NREMC argues that large Co-Located Loads paired with BTMG
present significantly greater operational risks than traditional BTMG arrangements
because they lack adequate reserves.”) (citing NREMC April 23 Reply Comments at 5).
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and the Commission may not have fully recognized the cost causation implications of the
removal of all netting rules.204 We find these concerns unpersuasive for several reasons.
First, we believe Industrials’ argument concerns how the Commission fashions a
replacement rate that determines the extent to which entities may be able to continue to
rely on netting,205 not to the Commission’s finding that the existing rate in PJM is no
longer just and reasonable.
Second, as the Commission explained in the December Order in its determination
on transmission services, NITS charges based on gross load for Network Load are
roughly commensurate with the benefits received because Network Load has the right to
be served from the transmission system at any time.206 The Commission’s decision to
revise PJM’s retail BTMG netting rules may increase transmission charges for Network
Customers who have used PJM’s retail BTMG netting rules, but this change better aligns
the benefits and costs for these customers and addresses cost-shifting concerns because it
reflects the fact that they must be served even when their retail BTMG is on outage.207
Third, as discussed elsewhere in this order, we set aside the December Order in
part and permit Eligible Customers taking transmission service on behalf of load served
by BTMG to have the option to take the new transmission services set forth in the
December Order. Therefore, Eligible Customers taking transmission service on behalf of
load served by BTMG will, at minimum, not be required to take NITS on a gross load
basis but will have the option to take and be charged for different transmission services.
Fourth, we note that Industrials offer six examples involving specific BTMG
arrangements that could be financially harmed by the removal of PJM’s retail BTMG
netting rules. As discussed above, to the extent these BTMG arrangements are
financially harmed, that implicates the Commission’s decision to set a replacement rate
as to the extent to which such entities may continue to net going forward. Also, as
discussed below, we set aside the December Order in part and direct PJM to exempt
certain cogeneration facilities from revised retail BTMG netting rules where the facilities
may be integrated with load such that, when their generator trips offline, the load follows
(rather than withdrawing energy from the transmission system), as such facilities would
not present the cost shift, reliability, or resource adequacy concerns discussed in the
204 Industrials Request for Clarification or Rehearing at 27.
205 See supra Part IV.C.1.c.
206 December Order, 193 FERC ¶ 61,217 at P 198.
207 See id. P 186 (finding that PJM’s retail BTMG netting rules raise cost-shifting
concerns due to large loads configured in BTMG arrangements).
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December Order.208 To the extent that any of the facilities discussed in Industrials’ six
examples could demonstrate that they do not present such concerns, they may fall within
the exemption that we direct PJM to submit as part of the compliance filing discussed
below.209
We also disagree with Industrials that the December Order unduly discriminates
against Network Customers who manage costs by investing in generation as compared to
Network Customers who manage costs by managing load. Undue discrimination
prohibited by the FPA can occur when similarly situated customers are treated
differently.210 Here, Industrials fail to show that the December Order results in
differential treatment because Network Customers are subject to charges for NITS based
on gross load whether or not they have associated generation, with the exception of the
materiality threshold for retail BTMG discussed below. In addition, the December Order
neither addresses nor limits Network Customers’ ability to manage load, whether or not
they have associated generation.
3.
Transmission Service Options for BTMG
a.
December Order
As explained above, the Commission found that the Tariff is unjust and
unreasonable because it does not include transmission services that reflect Eligible
Customers taking service on behalf of Co-Located Loads that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions.211
The Commission found that PJM’s retail BTMG netting rules were no longer just
and reasonable, explaining that these rules may lead to both reliability and resource
adequacy risks because PJM, per its Tariff, is obligated to serve transmission customers
208 Id.
209 See, e.g., Industrials Request for Clarification or Rehearing at 27 (“Because the
manufacturing process requires steam produced for generation, the bulk of the load can
remain online only if generation is operational. If the generation goes down, the load will
largely cease as well.”).
210 Cal. Indep. Sys. Operator Corp., 193 FERC ¶ 61,117, at P 33 (2025).
211 December Order, 193 FERC ¶ 61,217 at P 193.
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using BTMG but does not consider such customers in transmission and resource
adequacy planning.212
b.
Request for Clarification and/or Rehearing
Industrials request clarification that the new transmission services must be made
available to Eligible Customers taking transmission service on behalf of load-only
customers with BTMG.213 Industrials argue that Eligible Customers taking transmission
service on behalf of load-only customers with BTMG should also be allowed to benefit
from the new transmission services.214
c.
Determination
We set aside, in part, the December Order. In addition to the finding in the
December Order that the Tariff is unjust and unreasonable as to Eligible Customers
taking transmission service on behalf of Co-Located Load, we also find that the Tariff is
unjust and unreasonable because it does not include transmission services that reflect that
Eligible Customers taking transmission service on behalf of load with BTMG are willing
and able to limit their energy withdrawals from the transmission system under certain
conditions. Requiring Eligible Customers taking transmission service on behalf of load
with BTMG to take NITS, without the option to instead take such alternative
transmission services that reflect their willingness and ability to limit their energy
withdrawals, would be unjust and unreasonable for the same reasons we made the same
finding with respect to Eligible Customers taking transmission service on behalf of
Co-Located Load.215 For purposes of this order, then, we use the term Eligible Load to
refer to Co-Located Load216 and/or load with BTMG.217 We also direct PJM to file,
within 60 days of the date of issuance of this order, a definition for Eligible Load, or
other comparable Tariff revisions to implement these directives, and to revise its
definition of BTMG to allow Eligible Customers taking transmission service on behalf of
212 Id. P 186.
213 Industrials Request for Clarification or Rehearing at 13-14.
214 Id.
215 See supra Part IV.B.1.c (discussing further the Commission’s finding in the
December Order that the Tariff is unjust and unreasonable as to Eligible Customers
taking transmission service on behalf of Co-Located Load).
216 See supra P 10.
217 See supra note 4.
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load with BTMG that are willing and able to limit their energy withdrawals from the
transmission system under certain conditions to take the new transmission services,
consistent with this order. All Eligible Customers taking one of the new transmission
services on behalf of Eligible Load will be subject to the requirements discussed below,
including, but not limited to, operational requirements such as necessary control
technologies and/or protection systems as discussed in part VI.C and penalty charges and
other remedial actions as discussed in part VI.D.
C.
Replacement Rate
1.
Transmission Services
a.
NITS
i.
December Order
As relevant here, the Commission found that NITS must be taken on a gross
basis.218
ii.
Request for Clarification
PIOs request clarification of the December Order regarding cost allocation issues.
PIOs argue that, given the unprecedented volume and scale of large load requests, the
Commission should evaluate whether existing transmission rate designs remain just and
reasonable. PIOs state that the Commission held in the December Order that Co-Located
Load taking NITS would be responsible for costs that are “roughly commensurate” with
benefits because zonal NITS rates include upgrades and operations and maintenance
costs. PIOs argue that this rate design relies on a standard assuming that load growth is
incremental and widely distributed, however, whereas discrete large-load pockets trigger
multi-million dollar reliability solutions.219
PIOs contend that a significant “payer gap” can emerge because customers pay
only in proportion to billing determinants rather than by the incremental costs that they
trigger. PIOs provide the example of a transmission project portfolio approved in the
2024 Regional Transmission Expansion Plan (RTEP) Window 1 that will cost
$5.08 billion and state that if a 1,000 MW data center represents 7% of the zone’s peak
determinants, it would contribute only $203 million and leave a $4.877 billion gap for
unrelated regional and zonal customers to pay. PIOs therefore request that the
Commission clarify how “roughly commensurate” cost allocation is evaluated when a
218 December Order, 193 FERC ¶ 61,217 at P 195.
219 PIOs Request for Clarification at 7.
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discrete driver’s pro-rata contribution is minimal compared to the infrastructure it
necessitates. PIOs also argue that the Commission should require PJM and the PJM
transmission owners to provide transparent reporting for major projects that compares
incremental cost causation against pro-rata billing determinant recovery.220
iii.
Determination
We deny the request for clarification.221 In the December Order, the Commission
found that NITS must be taken on a gross basis.222 The Commission did not address cost
allocation for Network Upgrades needed to accommodate NITS (or related reporting
requirements) and we decline to do so here, finding those issues to be sufficiently distinct
from the immediate issues in this proceeding and outside the scope of this proceeding. In
any event, we note that these issues would be better addressed in a separate proceeding in
which a record could be developed on these technical topics.223
b.
New Transmission Services
In the December Order, the Commission—having found the Tariff unjust and
unreasonable because it lacked relevant provisions with sufficient clarity and
transmission services that reflect Eligible Customers taking service on behalf of
Co-Located Loads that are willing and able to limit their energy withdrawals—addressed
a just and reasonable replacement rate.224
220 Id. at 7-8.
221 PIOs’ request for clarification is titled and presented as a request for
clarification, id. at 1, and we treat it as such, noting that it does not meet the
Commission’s requirements for requests for rehearing. 18 C.F.R. § 385.713(c)(2); Pub.
Serv. Co. of Colo., 190 FERC ¶ 61,128, at P 24 (2025).
222 December Order, 193 FERC ¶ 61,217 at P 195.
223 See Mobil Oil Expl. & Prod. Serv. v. United Distrib. Cos., 498 U.S. 211,
230-31 (1991) (“An agency enjoys broad discretion in determining how best to handle
related, yet discrete, issues in terms of procedures.”); Tenn. Valley Mun. Gas Ass’n v.
FERC, 140 F.3d 1085, 1088 (D.C. Cir. 1998) (the Commission has “broad discretion to
determine when and how to hear and decide the matters that come before it”); Stowers
Oil & Gas Co., 27 FERC ¶ 61,001, at 61,001 (1984) (“The Commission, like other
agencies, is generally master of its own calendar and procedures.”).
224 December Order, 193 FERC ¶ 61,217 at P 193.
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The Commission directed PJM to submit a compliance filing to modify its Tariff
to require that the Eligible Customer taking transmission service on behalf of a
Co-Located Load takes one of three transmission services: (1) NITS or Interim NITS,
(2) a new FCD transmission service, or (3) a new NFCD transmission service.225 The
Commission also established paper hearing procedures to determine the appropriate rates,
terms, and conditions of the new transmission services.226 The Commission stated that
Interim NITS is a new interim, non-firm transmission service, which allows an Eligible
Customer that has requested NITS on behalf of a Co-Located Load to take non-firm
transmission service that can be interrupted until the Network Upgrades necessary to
provide NITS are complete and the Co-Located Load can be designated as Network
Load.227
The Commission stated that, under the FCD transmission service, Eligible
Customers will have the right to request transmission service on behalf of a Co-Located
Load up to a specified MW quantity, i.e., the contract demand. The Commission stated
that the FCD transmission service will have the same reservation and curtailment priority
as existing firm transmission services, at the level of the contract demand. However, the
Commission stated that, unlike Network Customers, the Eligible Customer taking the
FCD transmission service on behalf of the Co-Located Load is not permitted to withdraw
energy from the PJM transmission system beyond the contract demand level.228
The Commission stated that the new NFCD transmission service will be provided
during normal operations, on an as-available basis, and curtailed during emergency
operations (i.e., it will be curtailed before existing firm transmission services and the new
FCD transmission service). The Commission stated that, under this service, Eligible
Customers may reserve transmission service on behalf of a Co-Located Load as needed
during normal, non-emergency system operating conditions. The Commission stated that
reservations under this service would be available only when there is available
transmission capacity, similar to existing non-firm transmission service options in the
Tariff.229
225 Id.
226 Id. P 194.
227 Id. P 200.
228 Id. P 208.
229 Id. P 215.
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i.
BTMG
(a)
Requests for Clarification and/or Rehearing
As to a replacement rate covering Eligible Customers taking transmission service
on behalf of load-only customers with BTMG, Industrials request clarification that the
new transmission services must be made available to those customers.230 Industrials
argue that Eligible Customers taking transmission service on behalf of load-only
customers with BTMG should also be allowed to benefit from the new transmission
services.231
(b)
Determination
As explained above, we set aside, in part, the December Order and find that the
Tariff is unjust and unreasonable because it does not include transmission services that
reflect Eligible Customers taking transmission service on behalf of loads with BTMG that
are willing and able to limit their energy withdrawals from the transmission system under
certain conditions. Consistent with this new determination, we now direct PJM to revise
its Tariff to extend the three new transmission services set forth in the December Order to
Eligible Customers taking service on behalf of load with BTMG that are willing and able
to limit their energy withdrawals from the transmission system under certain conditions.
Specifically, we direct PJM to submit a compliance filing, within 60 days of the
date of this order, to modify its Tariff to require that the Eligible Customer taking
transmission service on behalf of Eligible Load takes one of three transmission services:
(1) NITS or Interim NITS, (2) FCD transmission service, or (3) NFCD transmission
service.232 We find that it is just and reasonable for an Eligible Customer taking
transmission service on behalf of Eligible Load to elect, as one of the required
transmission services from which the Eligible Customer must choose, to take NITS for
the same reasons we made that finding with respect to Eligible Customers taking
transmission service on behalf of Co-Located Loads.233
Eligible Customers, on behalf of the Eligible Loads that they represent, may
choose the transmission services that match their preferred use of the transmission
230 Industrials Request for Clarification or Rehearing at 13-14.
231 Id.
232 They must choose at least one of the required transmission services and may
take a combination of the FCD and NFCD transmission services.
233 December Order, 193 FERC ¶ 61,217 at PP 195, 198.
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system; however, they must choose at least one of the required transmission services, and
may take a combination of the FCD and NFCD transmission services. In addition, in
instances where load with BTMG includes necessary control technologies and/or
protection systems that limit its energy withdrawals, we find that it is a just and
reasonable replacement rate to allow an Eligible Customer taking transmission service on
behalf of Eligible Load to take and be charged for new types of transmission service that
are alternatives, and not equivalent, to NITS: FCD and NFCD transmission services.234
ii.
Undue Discrimination
(a)
Requests for Clarification and/or Rehearing
Exelon and FirstEnergy argue that the Commission granted an undue preference to
Co-Located Loads in requiring new forms for transmission services.235 Exelon and
FirstEnergy charge that the Commission failed “to explain why system protection
schemes installed in [non-Co-Located Load] configurations would not provide similar
benefits and be deserving of preferential rates.”236 Exelon and FirstEnergy contend that
the totality of the burdens and benefits of grid interconnection justify charging
Co-Located Load the same rate as all other transmission customers. Exelon and
FirstEnergy assert that the Commission’s new transmission service reduces the share of
embedded costs for Co-Located Loads compared to all other users who receive the same
benefits.
Industrials request clarification that the new transmission services must be made
available to load-only customers with load flexibility, minimal retail BTMG, or no retail
BTMG.237 Industrials contend that this clarification would reduce the risk of undue
discrimination because “[m]any large load customers can curtail their load at key times
and control the amount of transmission service they use and when they use it.”238
Industrials also argue that this clarification would avoid potential cost shifts that would
occur if similarly situated customers were given different options depending only on
whether they have small generators on site. Industrials assert that this clarification would
234 See id. P 205.
235 Exelon and FirstEnergy Request for Rehearing at 36-39.
236 Id. at 38.
237 Industrials Request for Clarification or Rehearing at 13 (“Such an approach
would align with the natural gas industry’s long history of large gas consumers electing
how much service they purchase.”); see also id. at 6-7.
238 Id. at 14.
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extend the optionality of the new transmission services to retail BTMG and load-only
customers.239 Lastly, Industrials argue that this clarification could make the PJM
transmission planning process more efficient.240
(b)
Determination
As an initial matter, we dismiss the argument that the new transmission services
would be unduly discriminatory or preferential.241 First, we dismiss this argument for
lack of finality. Rule 713(b) of the Commission’s Rules of Practice and Procedure
permits requests for rehearing “of any final decision or other final order in a
proceeding.”242 A final decision is one that imposes an obligation, denies a right, or fixes
some legal relationship as a consummation of the administrative process.243 The
December Order did not make a final decision on the rates, terms, and conditions for the
new transmission services.244 Instead, the Commission found that “additional record
evidence is needed” and set these issues for paper hearing procedures.245 Setting a matter
239 Id. at 14-15.
240 Id. at 15.
241 Exelon and FirstEnergy Rehearing Request at 19-20, 30-31, 36-39, 52-53;
Industrials Request for Clarification or Rehearing at 13-14. Further, as discussed above,
we set aside the December Order, in part, and find in this order that it is just and
reasonable for Eligible Customers taking transmission service on behalf of load with
BTMG to take one of three transmission services: (1) NITS or Interim NITS, (2) FCD
transmission service, or (3) NFCD transmission service. We therefore do not address
whether it would be unduly discriminatory or preferential if the replacement rate were to
not allow Eligible Customers taking transmission service on behalf of load with BTMG
to take those services.
242 18 C.F.R. § 385.713(b); see also 16 U.S.C. § 825l(a) (stating that parties
“aggrieved by an order issued by the Commission in a proceeding . . . may apply for a
rehearing within thirty days after the issuance of such order”).
243 Reliable Automatic Sprinkler Co., Inc. v. Consumer Prod. Safety Comm’n,
324 F.3d 726, 731 (D.C. Cir. 2003) (“Final agency action ‘mark[s] the consummation of
the agency’s decision making process’ and is ‘one by which rights or obligations have
been determined, or from which legal consequences will flow’”) (quoting Bennett v.
Spear, 520 U.S. 154, 178 (1997)).
244 December Order, 193 FERC ¶ 61,217 at P 219.
245 Id.
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for paper briefing “is interlocutory: it constitutes a procedural step that does not impose
an obligation, deny a right, or fix some legal relationship as a consummation of the
administrative process.”246 Without a final decision on the rates, terms, and conditions
for the new transmission services, it is “premature” to argue or evaluate on rehearing
whether those as-yet-undeveloped services would be unduly discriminatory.247 At
bottom, “the claimed harms are based on speculation regarding potential action that the
Commission could take, rather than any action the Commission has actually taken.”248
Accordingly, because Commission action is not final and is to be succeeded by further
Commission action, we dismiss the undue discrimination argument.249
In any event, we also dismiss the undue discrimination argument for the
independent reason that it is outside the scope of this proceeding. This proceeding
addresses Eligible Customers taking transmission service on behalf of Eligible Load with
associated generation, such as through Co-Location Arrangements and BTMG
246 Algonquin Gas Transmission, LLC, 175 FERC ¶ 61,150, at PP 1, 5-8 (2021);
see also Kan. Elec. Power Coop., Inc., 181 FERC ¶ 61,017, at P 10 (2022) (finding that,
because “the Commission found that its preliminary analysis indicated that the Formal
Challenge and Complaint raised issues of material fact that could not be resolved on the
record before the Commission and are more appropriately addressed in hearing and
settlement judge procedures,” “here, Commission action is not final and is to be
succeeded by further Commission action,” thus “a request for rehearing may be
dismissed”); City of Hamilton, Ohio, 82 FERC ¶ 61,349, at 62,359 (1998) (“Setting this
matter for a trial-type hearing does not impose an obligation, deny a right, or fix some
legal relationship as a consummation of the administrative process.”).
247 Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8; see also, e.g., F.T.C.
v. Standard Oil Co. of Cal., 449 U.S. 232, 244 n.11 (1980) (Standard Oil) (explaining the
fact that a “challenge may be mooted in adjudication warrants the requirement that
[party] pursue adjudication, not shortcut it”); MediNatura, Inc. v. Food & Drug Admin.,
998 F.3d 931, 939 (D.C. Cir. 2021); CSX Transp., Inc. v. Surface Transp. Bd., 774 F.3d
25, 30 (D.C. Cir. 2014) (explaining that it is a “good sign” that action is non-final when
further agency processes may eliminate need for review).
248 Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8.
249 See, e.g., Cove Mountain Solar, LLC, 179 FERC ¶ 61,179, at P 7 (2022)
(dismissing, in part, rehearing request on finality grounds because the Commission had
established hearing and settlement judge procedures); Westlands Transmission, LLC,
177 FERC ¶ 61,175, at P 4 (2021); BridgeTex Pipeline Co., LLC, 164 FERC ¶ 61,111,
at PP 10-12 (2018); Pac. Gas & Elec. Co., 162 FERC ¶ 61,246, at PP 6-7 (2018); Talen
Energy Mktg., LLC, 158 FERC ¶ 61,077, at PP 3-4 (2017).
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arrangements.250 In an order issued concurrently, the Commission is initiating a separate
show cause proceeding in Docket No. EL26-67-000 to address, among other things,
whether the Tariff remains just and reasonable and not unduly discriminatory or
preferential without provisions addressing transmission services that reflect flexible large
loads251 that are willing and able to limit their energy withdrawals from the transmission
system under certain conditions. Accordingly, it is beyond the scope of this
proceeding—and within the scope of the separate proceeding—to argue that the new
transmission services should be extended to Eligible Customers taking transmission
service on behalf of flexible large loads. We thus dismiss this argument as outside the
scope of this proceeding.252 The Supreme Court has made clear that the Commission
“enjoys broad discretion in determining how best to handle related, yet discrete, issues in
terms of procedures.”253 The Supreme Court has “expressly approved a[] . . .
Commission decision to treat [an] issue separately where a different proceeding would
generate more appropriate information and where the agency was addressing the
question”254—as is true as to the other proceeding. As courts have further recognized,
“[w]hile the statute requires the Commission to act upon a finding that rates . . . are unjust
or unreasonable, it nowhere mandates that having made such a finding with respect to a
discrete issue, the Commission must reopen and reevaluate all other aspects of the filed
rate.”255 Here, while the Commission addresses Co-Location Arrangements and BTMG,
those findings do not necessitate that the Commission reevaluate transmission services
that Eligible Customers take on behalf of other types of load.256
250 See, e.g., December Order, 193 FERC ¶ 61,217 at P 2.
251 Flexible large loads are a subset of large loads that are not co-located with
generation but that are willing and able to limit their use of the transmission system under
certain conditions.
252 See PJM Interconnection, L.L.C., 126 FERC ¶ 61,030, at P 16 (2009); see also
La. Pub. Serv. Comm’n v. Entergy Corp., 169 FERC ¶ 61,179, at P 9 (2019); N.Y. Indep.
Sys. Operator, Inc., 127 FERC ¶ 61,042, at P 26 (2009); Union Elec. Co., 113 FERC
¶ 61,320, at P 8 (2005); Cal. Indep. Sys. Operator Corp., 113 FERC ¶ 61,133, at P 24
(2005).
253 Mobil Oil, 498 U.S. at 230-31; see supra note 226.
254 Mobil Oil, 498 U.S. at 230-31.
255 Colo. Off. of Consumer Couns. v. FERC, 490 F.3d 954, 956 (D.C. Cir. 2007).
256 Industrials Request for Clarification or Rehearing at 6-7, 13-14.
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In any event, while we dismiss the undue discrimination argument for the reasons
explained above, we address the argument below to provide clarification to the parties.
As relevant here, Industrials argue that it is unduly discriminatory for “load-only
customers with load flexibility” to not be eligible for the new transmission services.257
Industrials contend this creates undue discrimination “between customers with generation
and customers without generation,” who Industrials state “can curtail their load at key
times and control the amount of transmission service they use and when they use it.”258
We refer in this subsection to these “load-only customers with load flexibility,” as
described by Industrials, as “flexible loads.”
The Commission “has wide discretion to determine what constitutes undue
discrimination.”259 Discrimination is undue when there is a difference in rates or terms
between similarly situated entities that is not justified by some legitimate factor.260
“[D]istinct operating characteristics” can render entities not similarly situated.261 Here, a
relevant distinct operating characteristic is that Eligible Load has an associated generator
(Co-Located Generator or BTMG) as part of the Co-Location Arrangement or load
configured with BTMG, and flexible load does not. The presence of these associated
generators is a material factor in analyzing eligibility for the new transmission services.
We anticipate, based on the record here, that Eligible Customers taking transmission
257 Id. at 13-14.
258 Id. More generally, Industrials argue that the new transmission services should
be extended to all transmission customers. Id. Because we dismiss the undue
discrimination argument as nonfinal and outside of scope, we need not address the
argument that the new transmission services should be extended to all transmission
customers (an even broader, and thus less similar, category). Moreover, we have, in the
December Order and in this order, sufficiently discussed eligibility for the new
transmission services, including by explaining that it is not unduly discriminatory to limit
the new transmission services to Eligible Customers taking transmission service on
behalf of Eligible Load, such that we need not further address extending the services to
all transmission customers.
259 Mo. River Energy Servs. v. FERC, 918 F.3d 954, 958 (D.C. Cir. 2019) (citation
modified). For purposes of the undue discrimination analysis in this order, when we refer
to Eligible Customers taking transmission service on behalf of Eligible Load as not
similarly situated to Eligible Customers taking transmission service on behalf of flexible
load, we are referring to Eligible Customers only insofar as they take transmission
service on behalf of specific Eligible Loads or flexible loads.
260 Sw. Power Pool, Inc., 192 FERC ¶ 61,058, at P 175 (2025).
261 Sw. Power Pool, Inc., 193 FERC ¶ 61,198, at P 82 (2025).
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services on behalf of Eligible Loads would rely regularly in whole or in part on their
associated generators, not on the transmission system, while Eligible Customers taking
transmission services on behalf of flexible loads generally would rely entirely on the
transmission system, even as they sometimes shift the amount of energy they take. This
dynamic creates different transmission system usage, which is relevant to transmission
services, charges, and planning.262
iii.
Contract Demand
(a)
Request for Rehearing
Exelon and FirstEnergy argue that the Commission has departed from decades of
precedent that NITS is based on the entire gross load of the Network Customer, and the
Commission failed to adequately explain its departure.263 Exelon and FirstEnergy
highlight, for example, the Commission’s statement that it would be inconsistent with
cost causation principles to require Eligible Customers taking transmission service on
behalf of Co-Located Loads that limit their energy withdrawals to take NITS on a gross
demand basis.264 Exelon and FirstEnergy allege that the Commission recognized that
262 For the reasons in this Part, we also reject Industrials’ request for clarification
on this issue. Industrials Request for Clarification or Rehearing at 13-14.
263 Exelon and FirstEnergy Request for Rehearing at 22-26 (citing Nat’l R.R.
Passenger Corp. v. PPL Elec. Utils. Corp., 173 FERC ¶ 61,043 (2020) (Amtrak); Fla.
Power & Light, 113 FERC ¶ 61,290 (2005), order on reh’g, 116 FERC ¶ 61,012 (2006),
aff’d, 264 F. App’x 4 (D.C. Cir. 2008) (Florida Power & Light); Idaho Power Co.,
106 FERC ¶ 61,329 (2004) (Idaho Power); Ameren Servs. Co. v. Prairieland Energy Inc.,
131 FERC ¶ 61,125 (2010) (Ameren); Ariz. Pub. Serv. Co., 151 FERC ¶ 61,191 (2015)
(APS); Preventing Undue Discrimination & Preference in Transmission Serv., Order
No. 890, 118 FERC ¶ 61,119, order on reh’g, Order No. 890-A, 121 FERC ¶ 61,297
(2007), order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh’g,
Order No. 890-C, 126 FERC ¶ 61,228, order on clarification, Order No. 890-D,
129 FERC ¶ 61,126 (2009); Promoting Wholesale Competition Through Open Access
Non-Discriminatory Transmission Servs. by Pub. Utils.; Recovery of Stranded Costs by
Pub. Utils. & Transmitting Utils., Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996)
(cross-referenced at 75 FERC ¶ 61,080), order on reh’g, Order No. 888-A, FERC Stats.
& Regs. ¶ 31,048 (cross-referenced at 78 FERC ¶ 61,220), order on reh’g, Order
No. 888-B, 81 FERC ¶ 61,248 (1997), order on reh’g, Order No. 888-C, 82 FERC
¶ 61,046 (1998), aff’d in relevant part sub nom. Transmission Access Pol’y Study Grp. v.
FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. N.Y. v. FERC, 535 U.S. 1 (2002).
264 Exelon and FirstEnergy Request for Rehearing at 28 (citing December Order,
193 FERC ¶ 61,217 at P 199).
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these customers use the transmission system for some services, such as regulation and
black start, but for the customer not to use the system for other services makes the
customer partially integrated, contrary to Order No. 888-A.265 Exelon and FirstEnergy
contend that the Commission has consistently rejected attempts to create a new third type
of transmission service by parties whose reasons are exactly the same as the reasons the
Commission used to justify its decision to establish Contract Demand transmission
service based on net load, such as the notion that Co-Located Loads impose less burden
on the grid. Exelon and FirstEnergy argue that the assessment of NITS is not based on
actual use, that Network Customers pay the full rate but NITS charges are allocated based
on contribution to system peak.266 Exelon and FirstEnergy contend that Network Load
needs to be able to call on service regardless of actual usage and utilities have an
obligation to serve that load.
(b)
Determination
We continue to find that it is just and reasonable to charge for FCD and NFCD
transmission services based on the contract demand.267 We disagree with Exelon and
FirstEnergy’s arguments that the Commission erred in not requiring the new FCD and
NFCD transmission services be charged on a gross load basis and that this decision
violates precedent.268 As an initial matter, Exelon and FirstEnergy appear to suggest that
the charges for these services would be based “on actual use” or “on net . . . load.”269 As
explained in the December Order, however, transmission customers taking the new FCD
or NFCD transmission service would “be charged based on their contract demand
irrespective of usage.”270 We continue to find that this is a just and reasonable alignment
of costs and benefits.271 In particular, for the new FCD transmission service, because
transmission customers taking this service would agree to limit withdrawals to the
265 Id. at 24.
266 Id. at 26-29 (citing Indicated TOs June 3, 2025 Answer, Powers Decl.).
267 December Order, 193 FERC ¶ 61,217 at P 2.
268 Exelon and FirstEnergy Request for Rehearing at 22-30.
269 Id.
270 December Order, 193 FERC ¶ 61,217 at PP 211, 216 (“Eligible Customers
taking the [NFCD] transmission service on behalf of Co-Located Loads will be charged
for transmission and ancillary services on an as-reserved contract demand basis, based on
the reserved contract demand amount of transmission service (except as noted[)].”).
271 Id.
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contract demand through the mandatory implementation of necessary control
technologies and/or protection systems, PJM would only plan the transmission system,
procure generation capacity, and be obligated to provide transmission service up to that
contract demand.272 Similarly, for the new NFCD transmission service, PJM would only
be obligated to provide transmission service up to the reserved contract demand when
there is sufficient available transmission capacity to provide the requested service.273 If
the transmission customers taking the new FCD and NFCD transmission services were
charged for that service on a gross load basis, they could be charged for more load than
PJM is obligated to plan for, procure generation capacity for, or otherwise serve when
transmission capacity is available. And—because these customers would be charged
based on their contract demand irrespective of usage—they would be unable to avoid
load-ratio cost responsibility by modifying their load at a particular time.274
Exelon and FirstEnergy argue that the new contract demand transmission services
are inconsistent with Commission precedent.275 Exelon and FirstEnergy contend that the
Commission in the December Order contravened Order No. 888-A, in which the
Commission rejected the notion of Network Customers “partially integrat[ing]” or
“splitting a discrete load” because “such a split system creates the potential for a
customer to game the system thereby evading some or all of its load-ratio cost
responsibility for network services.”276 We continue to find that the new contract
demand transmission services do not violate Order No. 888-A.277 Most simply, Order
No. 888-A rejected splitting load between NITS and PTPS at the same point of
delivery.278 That kind of splitting between transmission services at the same point of
delivery remains barred under the December Order: Eligible Customers also cannot split
272 Id.; see also id. PP 215-216 (explaining that an Eligible Customer taking NFCD
transmission service may reserve service as needed when the service is available, and the
Eligible Customer will be charged on an as-reserved contract demand basis).
273 Id.; see also id. PP 215-216 (explaining that an Eligible Customer taking NFCD
transmission service may reserve service as needed when the service is available, and the
Eligible Customer will be charged on an as-reserved contract demand basis).
274 Id. P 211.
275 Exelon and FirstEnergy Request for Rehearing at 22-30.
276 Id. at 23-24 (quoting Order No. 888-A, FERC Stats. & Regs. ¶ 31,048
at 30,259) (internal quotation marks omitted).
277 December Order, 193 FERC ¶ 61,217 at P 211.
278 Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,260.
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load between NITS and FCD or NFCD transmission service at the same point of delivery.
Further, under the new contract demand services, load is neither split nor partially
integrated. Instead, load is capped at contract demand and Eligible Customers taking
transmission service on behalf of Co-Located Loads are charged for that contract
demand, irrespective of usage. Moreover, the rationale underlying Order No. 888-A—
gaming—is also not present here.279 The new contract demand transmission services will
help avoid a cost shift to other transmission customers because Eligible Customers will
not be able to reduce their load-ratio share to avoid paying transmission costs or capacity
costs because their amount of FCD transmission service is fixed.280
Exelon and FirstEnergy further argue that the Commission contravened Order
No. 888-A “[b]ecause the Commission has recognized that the [contract demand
transmission service] customers use the transmission system for some services (such as
load following and black start),” which would render those customers “partially
integrated.”281 We disagree. Receiving ancillary services, such as regulation and black
start, does not “integrate” a transmission customer into the transmission network—and
particularly not in the manner that NITS does. Specifically, Order No. 888-A clarified
that a “request for network service is a request for the integration of a customer’s
resources and loads,”282 and a PTPS customer is not integrated, as recognized by Order
279 Id.
280 December Order, 193 FERC ¶ 61,217 at P 211. We also note that the
Commission justified its findings in Order No. 888-A by discussing “several fundamental
operational problems associated with allowing partial network service.” Order
No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,260. Those operational problems are not
raised or present here because neither FCD nor NFCD transmission service are based on
the Eligible Customer’s load ratio. Further, Exelon and FirstEnergy suggest that the
December Order is inconsistent with Order No. 890. Exelon and FirstEnergy Request for
Rehearing at 25-26 (citing Order No. 890, 118 FERC ¶ 61,119, order on reh’g, Order
No. 890-A, 121 FERC ¶ 61,297, order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299
(2008), order on reh’g, Order No. 890-C, 126 FERC ¶ 61,228, order on clarification,
Order No. 890-D, 129 FERC ¶ 61,126). While they do not cite a particular portion, they
appear to be referring to a section that reiterates the already discussed portion of Order
No. 888-A. Order No. 890, 118 FERC ¶ 61,119 at P 1619 (citing Order No. 888-A,
FERC Stats. & Regs. ¶ 31,048 at 30,260-61). Our findings as to Order No. 888-A thus
apply to Exelon and FirstEnergy’s citation to Order No. 890.
281 Exelon and FirstEnergy Request for Rehearing at 24.
282 Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,260.
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No. 888-A.283 Nonetheless, PTPS customers pay for and use ancillary services, including
regulation service. Therefore, whether an Eligible Customer taking transmission service
on behalf of Co-Located Load could receive ancillary services and/or black start service
has no bearing on whether it is “integrated” as a Network Customer.
Exelon and FirstEnergy also argue that the December Order is inconsistent with
other Commission precedent.284 These cases do not undermine the December Order. In
several cited cases, Network Customers chose to take NITS and sought to receive the
benefits of NITS, specifically the right to withdraw energy from the transmission system
when their own resources were not available, while arguing that they should be charged a
lower rate based on their usage.285 For example, Amtrak relied on the transmission
system when the nearby generator was not available, and sought to maintain that
arrangement and ability to withdraw energy to meet its gross load at any time, while
paying NITS.286 Here, the new FCD and NFCD transmission services set up new
obligations and benefits—as well as charges on that new basis.287 For example, under
283 Id. at 30,259-60 (presenting binary of “fully integrated or not integrated”—with
full NITS or no NITS, respectively—in opposition to “partially integrated,” which would
include NITS and PTPS).
284 Exelon and FirstEnergy Request for Rehearing at 23-30 (citing Amtrak,
171 FERC ¶ 61,237, order on reh’g, 173 FERC ¶ 61,043 (2020); Florida Power & Light,
113 FERC ¶ 61,290, order on reh’g, 116 FERC ¶ 61,012, aff’d, 264 F. App’x 4; Idaho
Power, 106 FERC ¶ 61,329; Ameren, 131 FERC ¶ 61,125; APS, 151 FERC ¶ 61,191).
285 E.g., Amtrak, 173 FERC ¶ 61,043 at P 12 (“What Amtrak seeks to do is carve
out from network service charges the power supplied by Safe Harbor. Such an outcome
is impermissible under the PJM Tariff and inconsistent with the nature of NITS.”).
286 See id. P 13 (rejecting Amtrak’s rehearing request and explaining that “Amtrak
seeks the ability to select when it will use and pay for NITS (i.e., only when inflows
occur through PPL’s Manor Substation”)).
287 December Order, 193 FERC ¶ 61,217 at PP 208, 210, 211, 212. Indeed, the
December Order also responds to new circumstances not present in the cited cases—
namely, the proliferation of potential Co-Location Arrangements. Even if the cited cases
were controlling here, we find these new circumstances would warrant the Commission’s
decision to charge for FCD and NFCD transmission services based on the contract
demand.
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FCD transmission service, the Eligible Customer can rely on the service only up to the
level of its contract demand.288
In particular, Exelon and FirstEnergy maintain that the December Order is
inconsistent with Florida Power & Light, which they characterize as standing for the
proposition that “the gross load construct [i]s most appropriate,” “even in the case of
physical impossibility of serving the entire load.”289 As an initial matter, there is no
“physical impossibility exception”290 in the December Order because the new FCD and
NFCD transmission services are based on legally capped demand, not “physical
impossibility.”291 Specifically, while in Florida Power & Light the “physical
impossibility” was a constraint on the transmission system, which prevented the entire
load from being served by the transmission system,292 no such physical constraint on the
transmission system exists for an Eligible Customer taking FCD and/or NFCD
transmission service on behalf of a Co-Located Load. Rather, such Eligible Customers
may elect to take transmission service at a contract demand level less than the amount of
the entire load and commit to limiting their withdrawals from the transmission system to
the contract demand level. Regardless, in Florida Power & Light, the Commission only
discussed “physical impossibility” in dicta.293 In that discussion, the Commission
288 Id. We further reiterate that the absence of this type of option is unjust and
unreasonable. Id. P 177.
289 E.g., Exelon and FirstEnergy Request for Rehearing at 24-25.
290 Florida Power & Light, 113 FERC ¶ 61,290 at P 7.
291 December Order, 193 FERC ¶ 61,217 at PP 208, 210, 211, 212. To the extent
Exelon and FirstEnergy characterize their argument addressed in this Part as directed
toward our “unjust and unreasonable” findings and not the replacement rate, Exelon and
FirstEnergy Request for Rehearing at 22-23, we reject this argument based on the same
substantive reasons included in this Part.
292 Florida Power & Light, 113 FERC ¶ 61,290 at PP 7-8.
293 Id. The Commission began by generally rejecting the prospect of alternative
proposals from individual customers because of the potential administrative and undue
discrimination concerns with setting individual-customer-specific rates (but the
Commission did approve the prospect of alternative proposals from utilities). Id. P 6. In
other words, the cited adjudications, see, e.g., Exelon and FirstEnergy Request for
Rehearing at 23-25; see also id. at 27, are additionally inapposite here to the extent they
involved proceedings where only individual customers that claimed to limit their use of
the transmission system sought to alter the rates, terms, and conditions of its transmission
service and obtain rates and terms for themselves.
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nonetheless did not even rule out the prospect of considering “physical impossibility” in a
more generally applicable setting where the impossibility could be administered, verified,
and backed by technological and legal constructs—rather than on an ad hoc basis due to a
transmission customer’s mere assertions that it was particularly deserving of a
specially-designed and administered service.294
iv.
Alleged Alternatives to FCD and NFCD
Transmission Services
(a)
Request for Rehearing
Exelon and FirstEnergy contend that the Commission “fail[ed] to demonstrate that
[the new transmission services] are just and reasonable” because there are already
existing mechanisms for customers to reduce load or use other generation in order to
reduce withdrawals.295 Exelon and FirstEnergy maintain that PJM’s demand response
rules are available to Co-Located Loads and the Commission fails to explain why such
rules are inadequate here. Indeed, Exelon and FirstEnergy assert, the Commission stated
that those rules are just and reasonable for Co-Located Loads taking NITS.
(b)
Determination
We do not find Exelon and FirstEnergy’s argument availing. The mere fact that
there may be preexisting mechanisms in the Tariff to accomplish something (even
assuming that they are equivalent, which we do not) does not mean that adding an
additional mechanism is not just and reasonable. Exelon and FirstEnergy offer no
justification or citation to support the proposition that having multiple provisions targeted
at similar objectives is not just and reasonable.
Further, demand response operates differently from the contract demand
transmission services. In the first place, demand response is not a transmission service.
And demand response presents a different set of benefits and burdens—NFCD
transmission service would be curtailed earlier than demand response resources would be
called on and can be instructed to curtail without any notification (unlike most demand
response resources).296 FCD transmission service, on the other hand, is a firm
transmission service with the same curtailment priority as existing firm transmission
294 Florida Power & Light, 113 FERC ¶ 61,290 at PP 7-8.
295 Exelon and FirstEnergy Request for Rehearing at 36-37.
296 December Order, 193 FERC ¶ 61,217 at P 215; see also infra Part VI.G.4.
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services, at the level of contract demand.297 In addition, PJM would not plan for any
future load growth for either FCD or NFCD transmission service once the contract
demand level of each transmission service is established. As to Interim NITS, that
transmission service serves a different function than demand response because it allows
Eligible Customers to begin taking a limited, non-firm transmission service on behalf of
Co-Located Load before the transmission system is capable of reliably providing NITS at
their requested level.
v.
Protection Systems
(a)
Request for Rehearing
Exelon and FirstEnergy argue that the Commission’s emphasis on protection
systems is arbitrary and capricious because it is in tension with the Commission’s open
access policies. Exelon and FirstEnergy assert that generators have an interest in
designing captive arrangements where customers cannot access alternative supply, which
is contrary to the Commission’s open access policies in Order No. 888.298 Exelon and
FirstEnergy argue that generators will convert their interconnection facilities into
transmission assets and then install relay systems that make load captive to its
generation.299 Exelon and FirstEnergy view this arrangement as akin to the problem of
transmission owners using their control of transmission facilities to refuse to deliver
energy produced by competitors or to deliver competitors’ power on less favorable
terms.300
Exelon and FirstEnergy argue that the Commission erred in minimizing the fact
that protection systems can and have failed.301 Exelon and FirstEnergy point out that the
Commission recognizes that protection systems fail, and to address this risk, directed
PJM to apply a penalty rate for the new transmission services. But Exelon and
FirstEnergy allege that assessing penalties after the fact does not remediate the reliability
implications of faulty protection systems. Exelon and FirstEnergy also argue that
protection systems “do not protect the grid from real impacts that occur even when there
297 December Order, 193 FERC ¶ 61,217 at P 208.
298 Exelon and FirstEnergy Request for Rehearing at 39-40.
299 Id. at 40.
300 Id. (citing N.Y. v. FERC, 535 U.S. at 8-9).
301 Id. at 39-41.
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is consumption by a co-located customer but no net withdrawal, such as the impacts of
load and voltage spikes and oscillations.”302
(b)
Determination
We address both arguments in turn. First, the contemplated use of necessary
control technologies and/or protection systems is not inconsistent with the Commission’s
open access policies. Co-Location Arrangements are voluntary. The December Order
does not mandate that any Co-Located Load or Co-Located Generator enter into a
Co-Location Arrangement. In other words, contrary to Exelon and FirstEnergy’s
assertions, the Commission is not forcing any entity into being a captive customer, as
they would have the option to connect to the transmission system and take NITS like any
other Network Customer.
Second, we dismiss the argument regarding protection system failure and the risks
they address for lack of finality.303 The December Order did not make a final decision on
required technology and what appropriate remedies would be for failure of that
technology.304 Instead, the December Order set those issues for paper hearing
procedures.305 In any event, the Commission recognized that protection systems, like
many technologies, in rare instances can fail; accordingly, the Commission ordered paper
briefing on technical requirements to address reliability risks and remedial actions.306 We
also note that it is possible that the remedial actions could remediate the reliability
implications of such a failure. Further, whatever risks are not avoided by a facility’s
necessary control technologies and/or protection systems will be studied in the relevant
study processes.
302 Id. at 39.
303 See supra P 106.
304 December Order, 193 FERC ¶ 61,217 at P 177.
305 Id. P 178.
306 Id. P 212.
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vi.
Benefits of FCD and NFCD Transmission Services
(a)
Request for Rehearing
Exelon and FirstEnergy allege that the Commission is wrong to suggest that FCD
and NFCD transmission services will promote efficiency or change siting.307 Exelon and
FirstEnergy argue that planning and siting depend on physics and engineering of the grid,
not whether transmission service is charged on a gross or net load basis. Exelon and
FirstEnergy argue that the Commission’s decision to require FCD and NFCD
transmission services does not change how the study process should work. Exelon and
FirstEnergy warn that, “[i]f transmission providers are forced to pretend a 500 MW load
is only 50 MW, or even that it is zero . . . it will threaten reliability and resource
adequacy.”308 Exelon and FirstEnergy maintain that no loads should be taken out of the
broader planning process, and there is no support for the suggestion that regional
planning needs are reduced because of FCD and NFCD transmission services. Exelon
and FirstEnergy argue that the Commission’s decision on PJM’s retail BTMG netting
rules and the Commission’s concerns about resource adequacy and cost shifting cannot
be reconciled with the Commission’s proposed structure for the new transmission
services.309
Exelon and FirstEnergy state that the Commission failed to point to any other
tariff where these new transmission services have been required by the Commission.310
(b)
Determination
As an initial matter, we dismiss this argument for lack of finality.311 The
December Order did not make a final decision on the rates, terms, and conditions for the
new FCD and NFCD transmission services.312 Instead, the Commission found that
“additional record evidence is needed” and set these issues for paper hearing
307 Exelon and FirstEnergy Request for Rehearing at 47-48.
308 Id. at 48.
309 Id. at 48-49.
310 Id. at 36.
311 See supra P 106.
312 December Order, 193 FERC ¶ 61,217 at P 219.
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procedures.313 Without a final decision on the rates, terms, and conditions for the new
FCD and NFCD transmission services, it is “premature” to argue or evaluate on rehearing
whether those as-yet-undeveloped services would affect efficiency or siting.314
In any event, while Exelon and FirstEnergy appear to direct this argument toward
the replacement rate, we addressed these topics in our discussion of the Commission’s
FPA section 206 step one finding above. In short, we continue to find that the Tariff is
unjust and unreasonable because it does not include transmission services that reflect
Eligible Customers taking service on behalf of Co-Located Loads that are willing and
able to limit their energy withdrawals from the transmission system under certain
conditions—and that this lack of such transmission services is economically
inefficient.315 We direct the new FCD and NFCD transmission services as a just and
reasonable way to address this issue (among others). And, while siting choices can
reduce the need for Network Upgrades, that fact does not undermine our finding that
requiring Eligible Customers taking service on behalf of Co-Located Loads to take NITS
for these loads leads to an unacceptable probability of inefficient outcomes by requiring
more or more costly Network Upgrades than would potential new FCD and NFCD
transmission services.316 We similarly reiterate that the need for many Network
Upgrades are caused by the amount of MW flow on the transmission system even though
the need for certain Network Upgrades are not (e.g., they may be caused by stability or
voltage-related issues).317 Therefore, as Exelon and FirstEnergy concede, under a
transmission service that reflects willingness and ability to limit energy withdrawals, “if
the load installs systems aimed at limiting its use of the grid, those might change the
system impacts and need for upgrades.”318 Likewise, while PJM will only plan the
transmission system for FCD transmission service based on the level of contract demand
as a matter of transmission capacity, PJM will still be able to consider the gross load for
analyzing certain issues such as stability and short circuit.319
313 Id.
314 Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8.
315 December Order, 193 FERC ¶ 61,217 at P 177.
316 Id. PP 177, 199, 205.
317 See Exelon and FirstEnergy Request for Rehearing at 47-48.
318 Id. at 19-20; see also id. at 48.
319 December Order, 193 FERC ¶ 61,217 at P 210.
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The Commission’s findings related to retail BTMG netting are not inconsistent
with the findings related to the new FCD and NFCD transmission services.320 The
Commission stated that “the existing BTMG netting rules in the PJM Tariff [are] unjust
and unreasonable” because, “under the existing Tariff, loads with BTMG are not fully
accounted for in resource adequacy planning.”321 The Commission explained that
“[s]uch loads must nevertheless be served, however, allowing them to lean on the PJM
system when the [BTMG] is on a full or partial outage or if the load exceeds the rating of
the [BTMG].”322 Eligible Customers taking service on behalf of Co-Located Load will
be treated differently under FCD and NFCD transmission services—“PJM will have no
obligation to serve the Eligible Customer beyond the contract demand.”323
Exelon and FirstEnergy argue that the Commission failed to point to any other
tariff where these new transmission services have been required by the Commission.324
This argument is irrelevant because the Commission need not point to another FPA
section 206 proceeding where the Commission set an identical replacement rate in order
to set a replacement rate.
vii.
Reliability and New Transmission Services
(a)
Request for Rehearing
Exelon and FirstEnergy argue that the Commission overlooked important
reliability concerns in establishing new transmission services, including that loads impact
the system even when there is no net power draw on the system.325 Exelon and
FirstEnergy assert that gross load is being followed by resources on the grid at all times,
thus impacting the system. Exelon and FirstEnergy assert that the Commission has not
explained how reliability planning should proceed when large loads may be incentivized
to exceed their contract demand limit for transmission service. Exelon and FirstEnergy
contend that the Commission overlooked resource adequacy risks in establishing Interim
NITS. Exelon and FirstEnergy allege that it is unclear how it will be determined that
load may be served reliably and the Commission failed to give PJM guideposts to make
320 See Exelon and FirstEnergy Request for Rehearing at 48-49.
321 December Order, 193 FERC ¶ 61,217 at P 179.
322 Id. P 186.
323 Id. P 211.
324 Exelon and FirstEnergy Request for Rehearing at 36; see also id at 27, 29, 35.
325 Id. at 49-51.
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such a determination. Exelon and FirstEnergy state that it is unknown how and by what
standards load would be curtailed and whether curtailment is an adequate response to the
need to follow gross load moment-by-moment, and thus the transmission service options
cannot be just and reasonable.
Exelon and FirstEnergy argue that, as to Interim NITS, the Commission has not
accounted for reliability risks, not knowing when or how curtailments would be
implemented, as the Commission has asked for briefing on when Eligible Customers
taking this service would be curtailed.326 Exelon and FirstEnergy express concern that
future state legislation may create inconsistencies among Co-Located Load in different
states.
(b)
Determination
We dismiss these arguments for lack of finality.327 The December Order did not
make a final decision on several issues relevant to this argument.328 Instead, the
Commission found that “additional record evidence is needed” and established paper
hearing procedures on: the rates, terms, and conditions for the new transmission services;
interconnection requirements and operational practices for special protection schemes;
the communications, alarm, SCADA,329 or other requirements necessary for PJM to
monitor Co-Located Load transmission system demand status, ensure that relay settings
are consistent with special protection scheme design, and inform system operator action
in order to limit withdrawals that exceed the amount of contract demand; and the
procedures to govern circumstances under which PJM curtails an Eligible Customer
taking the three new transmission services.330 Without a final decision on these issues, it
is premature to argue or evaluate on rehearing whether the Commission overlooked
important reliability concerns in establishing the new transmission services.331 In any
event, as to the new FCD and NFCD transmission services, the December Order did not
326 Id. at 37.
327 See supra P 106.
328 December Order, 193 FERC ¶ 61,217 at P 219.
329 Supervisory Control and Data Acquisition (SCADA) is a system of remote
control and telemetry used to monitor and control the transmission system. See NERC
Glossary of Terms 42, https://www.nerc.com/globalassets/standards/reliability-
standards/glossary_of_terms.pdf.
330 December Order, 193 FERC ¶ 61,217 at P 219.
331 See Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8.
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prohibit PJM or the transmission owners from performing any particular studies that may
be necessary or mandate that the level of contract demand would be the only impact
studied. For example, when PJM or the transmission owners consider factors unrelated
to the contract demand of the Co-Located Load, the December Order did not preclude use
of the complete dynamic or EMT model of the Co-Located Load, regardless of what level
or type of transmission service the Eligible Customer has requested.
On Interim NITS, specifically, the Commission established paper hearing
procedures on “What are the appropriate procedures to govern the circumstances under
which PJM curtails an Eligible Customer taking the interim, non-firm transmission
service . . . on behalf of a Co-Located Load during emergency procedures?”332 The
Commission thus did not make a final decision on this issue either. In any event, the
Commission stated that said Interim NITS “would only be available to the extent PJM
determines that it can provide some level of interim service reliably.”333
viii.
Major Questions Doctrine
(a)
Request for Rehearing
Exelon and FirstEnergy assert that the Commission’s replacement rate violates the
major questions doctrine.334 Exelon and FirstEnergy argue that the Commission has no
authority under FPA section 206 to provide unduly preferential treatment to a certain
category of customers, but that the Commission established a replacement rate favoring
Co-Located Load without reasoned explanation.
(b)
Determination
We disagree with Exelon and FirstEnergy that the December Order violates the
major questions doctrine. The major questions doctrine applies in certain “extraordinary
cases” involving an agency action that results in a “transformative expansion” of its
authority—especially over issues of great “economic and political significance.”335 In
332 December Order, 193 FERC ¶ 61,217 at P 219.
333 Id. P 200.
334 Exelon and FirstEnergy Request for Rehearing at 52.
335 W. Va. v. EPA, 597 U.S. 697, 721, 724 (2022) (citations and quotations
omitted).
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such “extraordinary cases,” courts might “hesitate before concluding that Congress meant
to confer such authority.”336
We conclude that this proceeding is not an “extraordinary case” such that the
December Order does not implicate the major questions doctrine. In West Virginia v.
Environmental Protection Agency, the U.S. Supreme Court identified a number of
indicators that tend to identify a case as extraordinary, none of which are present here.
First, the December Order does not involve a “transformative expansion” of the FPA or a
reimagining of the Commission’s long-held interpretation of that statute.337 Instead, the
Commission acted, as it has previously, by finding that an existing practice was unjust
and unreasonable and proceeding to establish a just and reasonable replacement rate.338
Second, the December Order does not entail the use of an “ancillary” or “little-used
backwater” statutory provision.339 To the contrary, FPA section 206 is central to the
Commission’s authority over the rates for transmission service in interstate commerce.340
Third, the Commission did not in the December Order act outside of the Commission’s
typical area of “comparative expertise.”341 Indeed, the Commission’s regulation of the
336 Id. at 721 (citations and quotations omitted).
337 See id. at 724-25 (finding that an agency’s failure to invoke the asserted power
in the past indicates that the major questions doctrine might apply).
338 See, e.g., N.Y. v. FERC, 535 U.S. 1 (upholding Commission’s exercise of its
FPA section 206 authority in its landmark Order No. 888, which established the
pro forma OATT and established new transmission services); S.C. Pub. Serv. Auth. v.
FERC, 762 F.3d 41 (upholding Commission’s exercise of its authority under FPA
section 206 to remedy deficiencies in existing transmission planning practices).
339 W. Va. v. EPA, 597 U.S. at 724, 730.
340 See EPSA, 577 U.S. at 290 (“ensur[ing] effective transmission of electric
power” is one of the “core objects” of the FPA”); N.Y. v. FERC, 535 U.S. at 7 (“[Section]
205 of the FPA prohibited . . . unreasonable rates and undue discrimination with respect
to any transmission . . . subject to the jurisdiction of the Commission, and [section] 206
gave the [Commission] the power to correct such unlawful practices.”) (quotations and
citations omitted); Bldg. for the Future Through Elec. Reg’l Transmission Plan. & Cost
Allocation, Order No. 1920, 187 FERC ¶ 61,068 (2024), order on reh’g and clarification,
Order No. 1920-A, 189 FERC ¶ 61,126, at P 175 (2024) (“FPA section 206 sets forth
core Commission regulatory authority to remedy unjust and unreasonable rates, and
practices affecting rates, for the transmission of electric energy in interstate commerce.”),
order on reh’g and clarification, Order No. 1920-B, 191 FERC ¶ 61,026 (2025).
341 W. Va. v. EPA, 597 U.S. at 729.
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rates, terms, and conditions of transmission service in interstate commerce sits at the core
of the Commission’s expertise.342 Fourth, the December Order does not assert authority
in a manner of great “economic and political significance.”343 Instead, the December
Order makes important but discrete changes to the manner in which a subset of
transmission customers take and pay for certain transmission services.
In any event, Exelon and FirstEnergy argue that the replacement rate violates the
major questions doctrine only insofar as it exceeds the Commission’s jurisdiction or is
unduly discriminatory or preferential.344 As explained above, the replacement rate does
neither.
c.
BTMG
i.
Qualifying Facilities
(a)
December Order
The Commission directed PJM to revise the Tariff to revise the retail BTMG
netting rules.345 The Commission directed PJM to propose a new MW threshold for the
amount of load at a particular electrical location that Network Customers may net by
using BTMG but to otherwise phase-in the elimination of netting. Specifically, the
Commission directed PJM to allow Network Customers already using the retail BTMG
netting rules to continue to do so for a transition period of three years.346 Further, the
Commission directed PJM to grandfather entities with existing contracts for the specific
purpose of effectuating a BTMG arrangement for the current term remaining under the
existing contract.347
342 See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 49-54 (summarizing the
Commission’s history of reforms to the rates, terms and conditions of interstate
transmission service).
343 W. Va. v. EPA, 597 U.S. at 721.
344 Exelon and FirstEnergy Request for Rehearing at 52.
345 December Order, 193 FERC ¶ 61,217 at P 221.
346 Id. P 223.
347 Id. P 224.
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(b)
Request for Clarification and/or Rehearing
Industrials request clarification on whether cogeneration QFs under the Public
Utility Regulatory Policies Act of 1978 (PURPA) will be provided access to back-up and
maintenance power at just and reasonable rates and be credited for capacity based on the
reliability of their generating units.348 Industrials contend that many QFs are
cogeneration facilities, and that strong operational and financial incentives exist for
cogeneration facilities to operate efficiently. Industrials state that Commission
regulations require certain QFs to meet specified efficiency standards and thus should be
encouraged.349 Thus, Industrials argue that many QFs operate with a high capacity factor
and reliably during transmission peaks. Industrials accordingly seek clarification on
whether and how the December Order will apply to cogeneration QFs. Industrials
contend that the removal of netting rules will “directly harm large American
manufacturing facilities that have invested substantial resources into developing and
maintaining on-site generation.”350 Industrials add that removing netting rules may
contradict Commission regulations that require back-up and maintenance services for
cogeneration QFs. Further, Industrials argue that FCD and NFCD transmission services
do not appear to account for forced generation outages. For these reasons, Industrials
request that the Commission clarify that cogeneration QFs are exempt from the “gross
load” approach or that PJM must include a reasonable “Back-up Power” transmission
option that retail BTMG customers, including QFs, can purchase.351
(c)
Determination
As discussed below, in response to the Industrials’ request for clarification, we
clarify and set aside, in part, the December Order.
First, we clarify that the December Order’s replacement rate does not change any
obligation under the Commission’s PURPA regulations regarding QFs’ access to
supplementary, back-up, maintenance, and interruptible power. The replacement rate
applies only to Network Customers’ usage of NITS under the Tariff, and nothing in the
replacement rate undoes the requirement in 18 C.F.R. § 292.305(b)(1) that, as to QFs,
“each electric utility shall provide . . . Supplementary power, Back-up power,
348 Industrials Request for Clarification or Rehearing at 10; see also id. at 5.
349 Id. at 11 (citing 18 C.F.R. § 292.205 (2025)).
350 Id.
351 Id. at 11-13.
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Maintenance power, and Interruptible power.”352 While Industrials suggest that
removing netting rules may contradict Commission regulations that require back-up and
maintenance services for cogeneration QFs, Industrials do not explain how the
replacement rate results in Industrials no longer being entitled to back-up and
maintenance power under the Commission’s regulations. In addition, Industrials do not
explain why it is necessary for the Commission to adopt a change to “credit [QFs] for
capacity based on the reliability of their generating units.”353
Second, we set aside, in part, the December Order’s directive that PJM establish a
new MW threshold for the amount of load at a particular electrical location that Network
Customers may net by using BTMG.354 We find that it is just and reasonable to allow
certain cogeneration QFs that are Network Customers to be able to net by using BTMG,
and to be exempt from the new MW threshold, as discussed below. In the December
Order, the Commission found that PJM’s retail BTMG rules are no longer consistent with
cost causation principles because large loads configured in a BTMG arrangement with
significant generation will raise cost-shifting concerns compared to loads pursuing
smaller amounts of netting.355 Moreover, the Commission found that PJM’s existing
retail BTMG rules may lead to both reliability and resource adequacy risks because PJM,
per its Tariff, is obligated to serve transmission customers using BTMG but does not
consider such customers in transmission and resource adequacy planning.356 We find that
there is not sufficient reason, and nor do Industrials articulate such a reason on rehearing,
to believe that these concerns are inapplicable to cogeneration QFs categorically.
However, we recognize, based on the record, that there may be certain industrial
cogeneration QFs that may be integrated with load such that, when their generator trips
offline, the load follows (rather than withdrawing energy from the transmission system).
For example, as Industrials explain as to certain industrial cogeneration QFs, “if the
generator goes offline, the load promptly follows because the manufacturing facility
352 18 C.F.R. § 292.305(b)(1) (2025).
353 Industrials Request for Clarification or Rehearing at 10.
354 December Order, 193 FERC ¶ 61,217 at P 221.
355 Id. P 186.
356 Id. To the extent the Commission’s clarification on this issue conflicts with the
requested clarification, we otherwise disagree with Industrials’ request to the extent
Industrials request rehearing in the alternative. See Industrials Request for Clarification
or Rehearing at 2.
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cannot function without the steam output from the generation process.”357 We therefore
direct PJM, within 60 days of the date of issuance of this order, to submit on further
compliance a process to exempt certain cogeneration QFs from the new retail BTMG
netting rules if they demonstrate that they are integrated with load such that, when their
generating facility trips offline, the load follows, and they thus do not present the
reliability or resource adequacy concerns discussed in the December Order. In
developing its compliance proposal, PJM must ensure that the requirements for a
cogeneration QF to make this demonstration are not unduly burdensome.
ii.
Capacity Obligations
(a)
December Order
The Commission found that PJM’s existing retail BTMG netting rules may lead to
both reliability and resource adequacy risks because PJM is obligated to serve
transmission customers using BTMG but does not consider such customers in
transmission and resource adequacy planning.358 The Commission directed PJM to
propose a new MW threshold for the amount of load at a particular electrical location that
Network Customers may net by using BTMG.359 The Commission explained that such a
threshold should reduce the reliability and resource adequacy risks that large loads may
pose to PJM, while also allowing for Network Customers to reduce their transmission
charges in a transparent, not unduly discriminatory fashion.
(b)
Request for Clarification and/or Rehearing
Industrials seek clarification that the removal of BTMG netting rules will only be
applicable to transmission and specified ancillary services, not to capacity obligations.
Industrials represent that the determination of retail customers’ capacity tags is made by
individual electric distribution companies and that large industrial and institutional users
have a variety of configurations and approaches to meeting their capacity
requirements.360 Industrials contend that the Commission did not analyze the impact of
357 Industrials Request for Clarification or Rehearing at 11.
358 December Order, 193 FERC ¶ 61,217 at P 186.
359 Id. P 221.
360 Industrials Request for Clarification or Rehearing at 15-16.
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the BTMG rule changes on retail customers’ capacity obligations or address alternate
capacity products that a retail customer with BTMG could elect.361
(c)
Determination
We deny Industrials’ clarification request and sustain the December Order. The
Commission’s determination that PJM’s retail BTMG netting rules are no longer just and
reasonable rested on a finding that PJM’s existing retail BTMG netting rules may lead to
reliability and resource adequacy risks.362 The Commission set a replacement rate to
reduce the resource adequacy risks identified in the record.363 We recognize that
requiring PJM to revise its retail BTMG netting rules may affect capacity obligations,364
but in the absence of this reform, the resource adequacy problems arising from PJM’s
existing retail BTMG netting rules would persist because PJM remains obligated to serve
transmission customers using BTMG but under the existing rules does not consider such
customers in resource adequacy planning.365 As to Industrials’ concerns about the impact
of the retail BTMG netting rule changes on retail customers, we agree with Industrials
that the RAA provisions Industrials cite directly apply to LSEs, not retail customers’
capacity obligations,366 and we note that, as part of our replacement rate, we established a
grandfathering provision such that existing entities may be able to continue netting for
the remainder of a contract entered into for the purpose of effectuating a BTMG
arrangement.367 This grandfathering provision may also limit the impacts of the changes
to PJM’s retail BTMG netting rules upon some entities’ capacity obligations. In addition,
as discussed above, we set aside, in part, the December Order and direct PJM to revise its
Tariff to extend the three new transmission services set forth in the December Order to
Eligible Customers taking service on behalf of load with BTMG that are willing and able
to limit their energy withdrawals from the transmission system under certain conditions.
Thus, Eligible Customers taking transmission service on behalf of load with BTMG that
361 Id. at 16.
362 December Order, 193 FERC ¶ 61,217 at P 186.
363 Id. P 221.
364 See, e.g., PJM, Intra-PJM Tariffs, RAA, Schedule 8 (Determination of
Unforced Capacity Obligations) (5.3.0).
365 December Order, 193 FERC ¶ 61,217 at P 186.
366 See, e.g., PJM, Intra-PJM Tariffs, RAA, Schedule 8 (Determination of
Unforced Capacity Obligations) (5.3.0).
367 December Order, 193 FERC ¶ 61,217 at P 224.
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are willing and able to limit their energy withdrawals from the transmission system under
certain conditions may elect to take FCD and/or NFCD transmission service, which could
reduce capacity obligations in comparison to a BTMG arrangement where the Eligible
Customer elects to take NITS.368
iii.
Unlawful Taking of Private Property
(a)
December Order
In the December Order, the Commission directed PJM to revise the retail BTMG
netting rules in the Tariff.369
(b)
Request for Clarification and/or Rehearing
Industrials argue that the Commission’s BTMG findings effectuate an unlawful
taking of private property without providing just compensation, in violation of the Fifth
Amendment of the United States Constitution. Industrials contend that there is a “per se
taking[]” because “the owner is deprived of ‘all economically beneficial us[e]’ of the
property due to the government action.”370 Industrials assert that certain manufacturing
facilities with on-site generation would be “completely uneconomic.”371 Separately,
Industrials contend that there is a regulatory taking under the factors outlined in Penn
Central Transportation Co. v. New York City.372 In particular, Industrials state that the
BTMG netting findings will cause, in some instances, devastating economic impacts “but
perhaps not total deprivation.”373 Industrials also argue that the BTMG netting findings
368 Id. P 211 (“PJM will only plan the transmission system and procure generation
capacity for the contract demand—not for load growth, like it does for NITS customers—
and PJM will have no obligation to serve the Eligible Customer beyond the contract
demand.”); id. P 218 (“The new Non-Firm Contract Demand transmission service will
not include a charge for generation capacity.”).
369 Id. P 221.
370 Industrials Request for Clarification or Rehearing at 31-32 (quoting Lingle v.
Chevron U.S.A., 544 U.S. 528, 538 (2005)).
371 Id. at 32 (listing examples).
372 Id. at 33 (citing Penn. Cent. Transp. v. City of N.Y., 438 U.S. 104, 124 (1978)).
373 Id. at 33-34.
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upset investment-backed expectations and do not “promote or facilitate a public program
or public good to justify the economic interference.”374
(c)
Determination
As an initial matter, we dismiss Industrials’ argument that the Commission’s
BTMG findings effectuate an unlawful taking of private property for lack of finality.375
The December Order did not make a final decision on the applicability and design of the
revised retail BTMG netting rules.376 In particular, the Commission stated that it “ma[d]e
no finding in this order on a threshold” “for the amount of load at a particular electrical
location that Network Customers may net by using BTMG.”377 It would thus be
premature to argue or evaluate on rehearing whether those as-yet-undeveloped retail
BTMG netting rules effectuate an unlawful taking.378
In any event, the Commission has an obligation under the FPA to ensure that the
rates, terms, and conditions of jurisdictional service are just and reasonable. As the
Commission found in the December Order, circumstances have changed since the
Commission approved PJM’s retail BTMG netting rules such that these rules are no
longer just and reasonable.379 The Commission therefore is establishing a just and
reasonable replacement rate. And, as the Courts have held, in the context of setting rates,
terms, and conditions for jurisdictional service, what is just and reasonable is not a
taking.380 Instead, in establishing a just and reasonable replacement rate, the Commission
is balancing the respective rights and obligations of the parties and will determine that
374 Id.
375 See supra P 106.
376 December Order, 193 FERC ¶ 61,217 at P 221.
377 Id.
378 Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8.
379 December Order, 193 FERC ¶ 61,217 at P 186.
380 See In re Permian Basin Area Rate Cases, 390 U.S. 747, 770 (1968) (“[T]he
just and reasonable standard of the Natural Gas Act coincides with the applicable
constitutional standards and any rate selected by the Commission from the broad zone of
reasonableness permitted by the Act cannot properly be attacked as confiscatory.”)
(punctuation and citations omitted); see also N.Y. Indep. Sys. Operator, Inc., 151 FERC
¶ 61,075, at P 63 (2015).
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appropriate replacement rate through the course of the paper hearing and compliance
proceedings.381
iv.
Materiality Threshold
(a)
December Order
The Commission directed PJM to propose a new MW threshold for the amount of
load at a particular electrical location that Network Customers may net by using
BTMG.382 The Commission stated that parties would have an opportunity to comment
on PJM’s proposed threshold before we establish this replacement rate.383
(b)
Request for Clarification and/or Rehearing
Industrials seek clarification that any retail BTMG materiality threshold
implemented will be sufficiently high to permit traditional manufacturers and institutional
customers to continue to net generation, consistent with actual use of the transmission
system.384 Industrials argue that a threshold of at least 200 MW would appropriately
recognize the major energy investments most existing industrial and institutional loads
have made over decades, consistent with the “actual use” principle, without making
381 N.Y. Indep. Sys. Operator, Inc., 151 FERC ¶ 61,075 at P 63 (citing Jersey Cent.
Power & Light Co. v. FERC, 810 F.2d 1168, 1191 (D.C. Cir. 1987) (en banc) (Starr, J.
concurring) ((“Unlike garden-variety takings, the requirements of the Takings Clause are
satisfied in the rate regulatory setting when justice is done, that is to say the striking of a
reasonable balance between competing interests.”)); see also supra P 137 (describing the
materiality threshold, phase-in, and grandfathering), PP 141-142 (setting aside the
December Order in part to allow certain cogeneration QFs to continue to net).
382 December Order, 193 FERC ¶ 61,217 at P 221.
383 Id.
384 Industrials Request for Clarification or Rehearing at 16.
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uneconomic their resource adequacy contributions.385 Industrials contend that this
threshold would still address the primary concern driven by new large loads.386
To the extent the Commission does not grant clarification, Industrials argue that
the MW materiality threshold, transition period, and grandfathering provision fail to
correct the asserted defects created in the December Order.387 While Industrials
“welcome exemptions as helpful,” they describe those policies as “the exception that
proves the rule.”388 Industrials contend that the threshold could create unintended
consequences such as perverse incentives to make on-site generation projects smaller,
undue discrimination via a bright-line threshold, or a limit that is too low.389 Industrials
suggest that, rather than an arbitrary threshold, the Commission should maintain its
traditional netting approach but find alternative means to ensure that standby or backup
costs are addressed for very large loads. Industrials recommend that if the Commission
pursues a mandatory threshold, it should choose a multi-pronged threshold aligned with
the drivers of current transmission demand and the reliability risks posed.390 Specifically,
Industrials argue, the Commission should set the threshold high enough to permit
traditional manufacturers and industrial loads to continue netting—such as 200 MW.391
385 Id. at 16 & n. 23 (“We understand that industrial combined heat and power . . .
units may, in certain cases, exceed 200 MW. Given the Administration’s interest in
reshoring American manufacturing and the pressing need to keep long-established
generation units economic, 200 MW may be insufficient.”).
386 Id. at 16-17.
387 Id. at 42.
388 Id.
389 Id. at 42-43 (stating also that “[n]either a MW-based threshold nor a
grandfathering provision correct jurisdictional deficiencies” and the Commission should
“find alternative means to ensure that standby or backup costs are addressed for very
large loads”).
390 Id. at 43.
391 Id. at 43-44.
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(c)
Determination
As an initial matter, we dismiss Industrials’ argument that any retail BTMG
materiality threshold implemented will be insufficiently high for lack of finality.392 The
December Order did not make a final decision on the materiality threshold to be used in
the revised the retail BTMG netting rules.393 In particular, the Commission stated that it
“ma[d]e no finding in this order on a threshold” “for the amount of load at a particular
electrical location that Network Customers may net by using BTMG.”394 It would thus
be premature to argue or evaluate on rehearing whether that as-yet-undeveloped retail
BTMG materiality threshold be insufficiently high.395
In response to the Industrials’ arguments on rehearing regarding the MW
threshold, transition period, and grandfathering provision, we continue to find that this
three-pronged approach as to a replacement rate is just and reasonable.396 As an initial
matter, we note that Industrials primarily take issue with the Commission’s decision to
set a MW threshold, alleging it is arbitrary and may be unduly discriminatory.397 We
disagree. We recognize that no threshold may be perfect, but the Commission has
discretion in drawing administrative lines it deems necessary,398 and we continue to
believe that a threshold is not only necessary for the reasons set out in the December
Order, but also that we can exercise reasonable discretion to set a threshold consistent
with the Commission’s intent to reduce the concerns raised by PJM’s existing retail
BTMG netting rules. As the Commission explained in the December Order, “such a
threshold should reduce the reliability and resource adequacy risks [] that large loads may
392 See supra P 106.
393 December Order, 193 FERC ¶ 61,217 at P 221.
394 Id.
395 Algonquin Gas Transmission, 175 FERC ¶ 61,150 at P 8.
396 December Order, 193 FERC ¶ 61,217 at PP 221-224.
397 Industrials Request for Clarification or Rehearing at 16-17, 42-43.
398 See Vonage Holdings Corp. v. FCC, 489 F.3d 1232, 1242 (D.C. Cir. 2007) (“It
is true that an agency may not pluck a number out of thin air when it promulgates rules in
which percentage terms play a critical role. When a line has to be drawn, however, the
Commission is authorized to make a ‘rational legislative-type judgment.’ If the figure
selected by the agency reflects its informed discretion, and is neither patently
unreasonable nor ‘a dictate of unbridled whim,’ then the agency’s decision adequately
satisfies the standard of review.”) (citation and internal quotation marks omitted).
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pose to PJM, while also allowing Network Customers to reduce their transmission
charges in a transparent, not unduly discriminatory fashion.”399 The Commission also
acknowledged that such a materiality threshold “will not eliminate the risk” identified in
the December Order, but found that it “will ensure that the risk is limited.”400 As the
Commission explained in the December Order, an important part of the problem is that
“PJM’s existing retail BTMG netting rules do not limit the amount of qualifying load that
a Network Customer may net by using BTMG.”401 We also note that, as discussed
above, we set aside, in part, the December Order’s elimination of BTMG netting as to
certain cogeneration QFs. In addition, we note that above we set aside, in part, the
December Order and extend the three new transmission services set forth in the
December Order to Eligible Customers taking service on behalf of load with BTMG that
are willing and able to limit their energy withdrawals from the transmission system under
certain conditions, thereby providing such customers the option to elect to take a
transmission service that matches their preferred use of the transmission system.402
Lastly, we note that, while Industrials suggest the Commission find an alternative
approach to a mandatory threshold to ensure that standby or backup costs are addressed
for “very large loads,”403 they fail to support their request with any specificity.404
399 December Order, 193 FERC ¶ 61,217 at P 221.
400 Id.
401 Id. P 186.
402 Id. P 194 (stating that “Eligible Customers, on behalf of the Co-Located Loads
that they represent, may choose the transmission services that match their preferred use of
the transmission system”).
403 Industrials Request for Clarification or Rehearing at 43.
404 FPA section 313(a) requires that an “application for rehearing shall set forth
specifically” its grounds. 16 U.S.C. § 825l(a) (emphasis added). We follow Commission
practice, with which courts have agreed, and reject arguments on rehearing, such as this
one, lacking sufficient specificity. PJM Interconnection, L.L.C., 171 FERC ¶ 61,040
at P 22; see also Ind. Util. Regul. Comm’n, 668 F.3d at 736; LA Storage, LLC, 182 FERC
¶ 61,026 at P 25 & n.75.
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2.
Necessary Study Process for Existing Interconnection Customers
a.
Treatment of Capacity Interconnection Rights (CIRs) for
Co-Located Generators
i.
December Order
The Commission found that an existing generator may not begin serving
Co-Located Load that is not Network Load until it has de-listed its CIRs for the portion
of the generator to be designated to serve any Co-Located Load that is not receiving
NITS.405 A capacity resource’s CIRs are rights to inject generation as a Generation
Capacity Resource into the transmission system at the Point of Interconnection.406
ii.
Request for Clarification and/or Rehearing
Constellation argues that the December Order appears to require a capacity
resource to delist its CIRs even when the capacity resource remains fully capable of
serving the grid during capacity emergencies.407 Constellation explains that generators
and Co-Located Load may seek contractual arrangements in which the generator will
serve the grid rather than the Co-Located Load during a capacity emergency and the
Co-Located Load will either curtail or rely on backup generation. Constellation claims
that it would be inconsistent with PJM’s existing rules to require delisting in these
circumstances. According to Constellation, PJM’s existing rules only require a capacity
resource entering an external sale to delist its CIRs when the resource “has a financially
and physically firm commitment to an external sale of its capacity.”408
Constellation therefore seeks clarification that the December Order does not
require a capacity resource to delist its CIRs to serve a Co-Located Load that is taking
NFCD transmission service if PJM can verify that the Co-Located Load has no
contractual right to energy from the generator during a capacity emergency and that the
Co-Located Load has the ability either to curtail or draw on back-up power.409
405 December Order, 193 FERC ¶ 61,217 at P 230.
406 PJM Interconnection, L.L.C., 168 FERC ¶ 61,155, at P 7 n.15 (2019).
407 Constellation Request for Clarification or Rehearing at 3 (citing December
Order, 193 FERC ¶ 61,217 at P 230).
408 Id. at 4 (quoting PJM, Intra-PJM Tariffs, OATT, attach. DD.6 § 6.6) (emphasis
in original).
409 Id. at 4-5 (referring to “the ability to (i) interrupt and/or (ii) turn on back-up
diesels or other back-up power or draw on batteries when transmission under the
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Constellation argues that the Commission could require the Co-Located Load to disclose
information regarding its protective relay scheme and its interruptible commitment and
could impose penalties on the Co-Located Load for failure to comply with its
commitment.
To the extent that the Commission does not grant clarification, Constellation seeks
rehearing. Constellation argues that requiring a capacity resource to delist its CIRs in
these circumstances would be a failure of reasoned decision making.410 Constellation
also argues that it would be unduly discriminatory to require a capacity resource serving a
Co-Located Load to delist for entering into an interruptible commitment but not to
require capacity resources to delist before making other non-firm commitments.411
iii.
Determination
We deny Constellation’s request for clarification and sustain the December
Order’s finding that an existing generator may not begin serving Co-Located Load that is
not Network Load until it has delisted its CIRs for the portion of the generator to be
designated to serve any Co-Located Load that is not receiving NITS.412
Constellation proposes a scenario in which an Eligible Customer taking NFCD
transmission service on behalf of Co-Located Load would not be allowed to withdraw
power from the transmission system during emergency conditions and the Eligible
Customer would guarantee that it would further curtail its demand in order to allow the
Co-Located Generator to provide energy to the system. NFCD transmission service
governs when an Eligible Customer may withdraw energy from the transmission system,
but it does not govern the firmness of any bilateral agreement to supply energy between
the Co-Located Load and the Co-Located Generator. We understand Constellation’s
scenario to be one in which the Co-Located Load—when relying on the Co-Located
Generator—does not schedule its power by relying on FCD or NFCD transmission
service.
non-firm contract demand service is interrupted and the co-located generator is serving
the grid”).
410 Id. at 6 (citing Elec. Consumers Res. Council v. FERC, 747 F.2d 1511, 1513-14
(D.C. Cir. 1984)).
411 Id. (citing 5 U.S.C. § 706(2)(A); Consol. Edison of N.Y., Inc. v. FERC, 45 F.4th
265 (D.C. Cir. 2022)).
412 December Order, 193 FERC ¶ 61,217 at P 230.
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Under Constellation’s scenario, the Co-Located Generator would not be capable of
meeting its entire capacity requirement. In addition to the requirement to perform during
emergencies, Generation Capacity Resources are required to offer into the Day-Ahead
Market throughout the delivery year.413 Constellation’s proposal would allow a
Generation Capacity Resource to violate this requirement and provide an inferior
capacity product (compared to other Generation Capacity Resources) for the same
capacity payment. We thus deny Constellation’s request for clarification and sustain the
December Order.
We also reject Constellation’s argument that Generation Capacity Resources
engaged in non-firm external bilateral transactions are not required to delist their CIRs
and are comparable.414 A Generation Capacity Resource engaged in a non-firm external
bilateral transaction must still make offers into PJM’s day-ahead market.415
b.
Cost Responsibility for Network Upgrades
i.
December Order
In the December Order, the Commission required PJM to revise its Tariff to
expressly indicate that the Interconnection Customer will be responsible for the costs of
any modifications or Network Upgrades that are needed as a result of PJM’s study of the
change to the Interconnection Service Agreement (ISA) or Generation Interconnection
Agreement (GIA) to allow the existing generator to serve Co-Located Load, including to
reflect any reduction in CIRs, inclusive of all necessary Network Upgrades. The
Commission found that this change will clarify that costs associated with such
Co-Location Arrangements will not be unfairly shifted to other transmission customers.
The Commission further directed PJM to revise its Tariff to clarify that an existing
generator may not commence service to a Co-Located Load until all required Network
Upgrades, special protection schemes, and metering are in service.416
413 Under the Tariff, a capacity resource is required to offer its Installed Capacity
(ICAP) equivalent of the resource’s cleared Unforced Capacity (UCAP) into the PJM
energy markets every day if not on outage or derated. PJM, Intra-PJM Tariffs, OATT,
attach. K, app. § 1.10 (Scheduling) (46.1.1), § 1.10.1A(d).
414 Constellation Request for Clarification or Rehearing at 6.
415 PJM, Intra-PJM Tariffs, OATT, attach. K, app. § 1.10 (46.1.1), § 1.10.1A(d).
416 December Order, 193 FERC ¶ 61,217 at P 228; see also id. P 176
(summarizing same).
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ii.
Request for Rehearing
Exelon and FirstEnergy challenge the Commission’s directive that an
Interconnection Customer seeking to serve Co-Located Load using an existing generator
must bear the costs of all Network Upgrades.417 Exelon and FirstEnergy contend that the
Commission has departed, without explanation, from its policy that all transmission
customers share the embedded costs of the transmission system, including Network
Upgrade costs, consistent with cost causation principles.418 Exelon and FirstEnergy
assert that this policy is sensible because all loads benefit from the transmission network,
including Co-Located Load. Exelon and FirstEnergy argue that the Commission
acknowledges that Co-Located Load benefits from the transmission network as a whole
because the Commission found Co-Located Load relies on regulation and black start.419
Exelon and FirstEnergy contend that regulation and black start cannot be delivered in
isolation: they depend on diverse resources around the grid transmitting power over
transmission lines, on other operating reserves and voltage support services, and on
Network Upgrades. Exelon and FirstEnergy also argue that the December Order is
internally inconsistent and discriminatory because it preserves NITS as a just and
reasonable approach, but the NITS funding model conflicts with the proposed assignment
of costs to Co-Located Load.420
Exelon and FirstEnergy assert that the Commission should not erode its rolled-in
rate policy and identify several consequences of such erosion.421 First, Exelon and
FirstEnergy contend that, if Co-Located Loads need only pay for incremental investment,
they avoid paying for the broader system on which they depend, resulting in other
customers paying a forced subsidy.422 Exelon and FirstEnergy express concern that, once
a Co-Located Load fulfills its responsibility for funding certain upgrades, prohibitions on
“and” pricing mean the Co-Located Load would not be responsible for further
transmission service payments even though the transmission system requires
maintenance. Second, Exelon and FirstEnergy argue that the Commission’s approach
creates challenges akin to those in the generator interconnection space, such as the
potential for future Co-Located Load customers to trigger significant upgrades, and
417 Exelon and FirstEnergy Request for Rehearing at 42-43.
418 Id. at 42.
419 Id. at 43.
420 Id. at 44.
421 Id. at 44-47.
422 Id. at 45.
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incentives for speculative behavior and Point of Interconnection shopping.423 Third,
Exelon and FirstEnergy argue that significant up-front requirements could hinder
economic development for Co-Located Load customers that are not data centers.
iii.
Determination
We sustain the December Order’s requirement that an Interconnection Customer
will be responsible for the costs of any modifications or Network Upgrades that are
needed to allow the existing generator to serve Co-Located Load, including to reflect any
reduction in CIRs, inclusive of all necessary Network Upgrades.424 We disagree with
Exelon and FirstEnergy’s argument that the Commission created a “new paradigm” as to
Interconnection Customers’ cost responsibility for Network Upgrades needed to
accommodate modifications those customers make to their own generators.425 To the
contrary, the Commission directed PJM to revise the Tariff to expressly state that
Interconnection Customers have this cost responsibility in order to “clarify that costs
associated with such Co-Location Arrangements will not be unfairly shifted.”426 In other
words, even without this revision to improve the Tariff’s clarity, this requirement was the
preexisting one. The Tariff provides that an Interconnection Customer is responsible for
the costs of additions to the Transmission System that are required to accommodate
modifications to the generator.427 For example, apart from Co-Location Arrangements, if
an Interconnection Customer decreased the capacity of a generator due to technological
changes at that facility, the Interconnection Customer would be responsible for the costs
of Network Upgrades needed to accommodate that decrease.428 This requirement
423 Id. at 46.
424 December Order, 193 FERC ¶ 61,217 at P 228.
425 Exelon and FirstEnergy Request for Rehearing at 42-47.
426 December Order, 193 FERC ¶ 61,217 at P 228 (emphasis added).
427 PJM, Intra-PJM Tariffs, pt. IX, subpt. B, app. 2 (2.0.0), § 3.4(b) (Modification
Costs) (“Project Developer shall be responsible for the costs of any additions,
modifications, or replacements to the Interconnection Facilities and Transmission Owner
Upgrades or the Transmission System that are required, in accord with Good Utility
Practice and/or to maintain compliance with Applicable Laws and Regulations or
Applicable Standards, in order to accommodate additions, modifications, or replacements
made by Project Developer to the Generating Facility or Merchant Transmission Facility
or to the Project Developer Interconnection Facilities.”); see also, e.g., id. Attachment O,
Appendix 2, § 3.4(b) Modification Costs (0.0.0).
428 Id. Part IX.B, Appendix 2, § 3.4(b) Modification Costs (2.0.0).
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likewise applies to Interconnection Customers seeking to modify their interconnection to
serve Co-Located Load if the attendant decrease in energy injected to the transmission
system necessitates Network Upgrades. Accordingly, if the Commission had not directed
the revision at issue here, Interconnection Customers would still bear the cost
responsibility at issue—the Commission simply acted to improve the clarity of the Tariff
on this topic. Exelon and FirstEnergy thus attack a requirement in the Tariff that the
Commission approved before this proceeding and that the Commission did not change in
this proceeding.
For the same reason, Exelon and FirstEnergy are incorrect in arguing that the
Commission “depart[ed] from prior precedent” with a requirement that “differs from the
approach taken in the PJM Tariff.”429 As explained, the Commission did not change the
preexisting Tariff regime. In any event, despite their assertion, Exelon and FirstEnergy
do not include citations to precedent addressing this topic.430
Exelon and FirstEnergy also misunderstand the requirement they criticize. Exelon
and FirstEnergy characterize the Commission’s directive as ordering that “[C]o-[L]ocated
[L]oad must self-fund any needed transmission upgrades.”431 The cost responsibility at
issue, however, is limited to existing Interconnection Customers and pertains only to the
specified Network Upgrades related to their own modifications.432 In short, the
Commission did not direct that Co-Located Load would self-fund Network Upgrades.
Their criticisms of the clarification that the Commission directed to the current Tariff are
thus flawed. The Commission specifically stated that the requirement to self-fund any
needed Network Upgrades was appropriate because when “an Interconnection Customer
seek[s] to serve Co-Located Load using an existing generating facility” “existing
transmission customers” must be “protect[ed]” “from bearing the cost of Network
Upgrades required for an Interconnection Customer to begin serving Co-Located
Load.”433 Otherwise, costs could be “unfairly shifted” based on the conduct of
429 Exelon and FirstEnergy Request for Rehearing at 42, 44.
430 In the relevant section of Exelon and FirstEnergy’s rehearing request, they do
cite several cases and orders that do not address this topic. For example, Exelon and
FirstEnergy cite Coalition of MISO Transmission Customers v. FERC, 45 F.4th 1004,
1009 (D.C. Cir. 2022), for a general statement of cost causation principles and they cite
two orders regarding load-ratio share for NITS. Id. at 42-47 & nn.110-111.
431 Id. at 42.
432 PJM, Intra-PJM Tariffs, pt. IX, subpt. B, app. 2, (2.0.0), § 3.4(b) (Modification
Costs).
433 December Order, 193 FERC ¶ 61,217 at P 176 (emphasis added).
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Interconnection Customers.434 The entity responsible for causing the need for the
Network Upgrade costs is therefore the relevant Interconnection Customer, and Exelon
and FirstEnergy are incorrect to assert that a “load pays” framework should apply here.435
It is the conduct of the Interconnection Customer that triggers the Network Upgrades at
issue.
Exelon and FirstEnergy nonetheless contend that “[C]o-[L]ocated [L]oad should
be charged for the benefits it receives from the grid and for the burdens it places upon the
grid.”436 Exelon and FirstEnergy further give the example of the use of regulation and
black start services.437 The December Order appropriately addressed such use. The
December Order determined, for example, that Eligible Customers serving Co-Located
Loads that seek to rely on the transmission system to the same extent as Network
Customers will continue to be eligible to take NITS, billed on a gross demand basis;
Eligible Customers can take and pay for the new contract demand transmission services
that reflect a Co-Located Load’s ability to limit withdrawals from the transmission
system; and Eligible Customers taking transmission service on behalf of Co-Located
Load must be assessed charges for regulation and black start services on a gross demand
basis, to ensure appropriate cost recovery for such services.438 In sum, the findings we
discuss here related to Interconnection Customer cost responsibility do not disturb the
Commission’s findings addressing appropriate charges for transmission service—an
obligation on Eligible Customers not Interconnection Customers.
Exelon and FirstEnergy also argue that the Commission improperly assessed “cost
causation” because it “randomly applied” “cost responsibility” “only to cases where the
added load is served through an existing generator interconnection facility.”439 As
explained above, however, the Commission simply applied the existing Tariff. The
434 Id. P 228.
435 Exelon and FirstEnergy Request for Rehearing at 43; see also id. at 43-44
n.113 (stating that the December Order “departs from th[e] longstanding approach” of
“rolling the costs of load-driven network upgrades into transmission rates”).
436 Id. at 43; see also id. at 45-46; id. at 47 (stating that “it should not be assumed
that large loads will trigger system upgrades with costs in excess of what they would
otherwise contribute to the system if they paid traditional network rates based on their
load-share ratio”).
437 Id. at 43.
438 December Order, 193 FERC ¶ 61,217 at P 160.
439 Exelon and FirstEnergy Request for Rehearing at 44.
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Commission likewise affirmed the allocation of cost responsibility to the parties that
cause the costs—the Interconnection Customers—who do so through their conduct in
modifying their existing arrangement.440 Accordingly, we disagree with Exelon and
FirstEnergy’s assertion that these costs should instead be spread “to all network
customers.” In PJM, the costs of Network Upgrades are directly assigned to the
interconnection customer—referred to as participant funding.441 In its Order No. 2003
compliance proceeding, PJM explained that “the ‘but for’ provisions of the PJM tariff . . .
require an Interconnection Customer to pay 100 percent of the Network Upgrades that
must be made for the Interconnection Customer to connect to the PJM grid.”442 In PJM,
Interconnection Customers are also responsible for the costs of any changes to the
transmission system that are required to accommodate additions, modifications, or
replacements made by the Interconnection Customer to the generator or its
interconnection facilities.443 The Commission’s directive thus adheres to Commission
precedent and the Tariff and also does not conflict with (or change) “the Network Service
funding model.”444
We also find unavailing the “several issues” Exelon and FirstEnergy contend the
Commission’s determination created.445 We find each speculative and unsupported by
evidence. More specifically, Exelon and FirstEnergy assert that the Commission is
improperly accounting for a “benefit to other customers to include new [C]o-[L]ocated
[L]oads in the pool of payers for the existing transmission network.”446 Yet as explained
above, the December Order establishes a set of transmission service options that ensures
that Eligible Customers taking service on behalf of Co-Located Loads are allowed to
440 Indeed, Exelon and FirstEnergy acknowledge that “exiting incumbent
generators” cause the relevant costs by referring to “transmission upgrade costs they
cause by serving [C]o-[L]ocated [L]oad.” Id.
441 PJM Interconnection, L.L.C., 108 FERC ¶ 61,025, at P 20 (2004).
442 Id. P 19. PJM’s current generator interconnection rules include similar “but
for” provisions. See PJM, Intra-PJM Tariffs, pt. VIII, subpt. C, § 404 (1.0.0),
§ 404(A)(5) (Cost Allocation for Network Upgrades).
443 PJM, Intra-PJM Tariffs, pt. IX, subpt. B, app. 2, § 3.4 (2.0.0), § 3.4(b)
(Modification Costs).
444 Exelon and FirstEnergy Request for Rehearing at 44.
445 Id. at 45-47 (including argument that the Commission’s “approach creates
challenging dynamics like those we have seen in the generator interconnection space”).
446 Id. at 45-46.
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choose the transmission service that aligns with their use of the transmission system and
therefore aligns the charges for service with the benefits received. Exelon and
FirstEnergy’s conjecture that “significant up-front requirements could hinder economic
development”447 disregards the voluntary nature of Co-Location Arrangements, which
reflect an additional opportunity for developers to consider.
3.
New Generators Serving Co-Located Load
a.
December Order
In the December Order, the Commission found that the Tariff is unjust and
unreasonable because it does not contain provisions addressing with sufficient clarity or
consistency the rates, terms, and conditions of service that apply to Interconnection
Customers serving Co-Located Load and Eligible Customers taking transmission service
on behalf of Co-Located Load.448 Pertinent to new generators, the Commission directed
PJM to revise its Tariff to clarify that PJM shall consider requests for interconnection
service below the full generating capability of the generator, so that an Interconnection
Customer may request interconnection service at a level below its maximum facility
output to serve Co-Located Load;449 that Interconnection Customers seeking to use new
generators to serve Co-Located Load may use existing procedures to accelerate a new
service request if the request has no cost allocation for Network Upgrades and does not
require further studies;450 that an Interconnection Customer seeking to use a new
generator to serve Co-Located Load may request provisional interconnection service;451
and that an Interconnection Customer seeking to use a new generator to serve Co-Located
Load at an existing Point of Interconnection may request Surplus Interconnection
Service, if the existing Interconnection Customer at that Point of Interconnection has
made Surplus Interconnection Service available.452
447 Id. at 46-47.
448 December Order, 193 FERC ¶ 61,217 at P 159.
449 Id. P 232.
450 Id. P 233.
451 Id. P 234.
452 Id. P 235.
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b.
Request for Clarification
Joint Parties request the Commission clarify that a Co-Located Load may
nominate a net withdrawal limit in the same manner that it may nominate a net injection
limit when requesting new or modifying existing interconnection service.453 Joint Parties
argue that the Commission found that creating new transmission services is necessary to
ensure that Co-Located Loads pay only for the services they use and to avoid costly and
inefficient transmission system buildout, and that the same logic “should compel
complementary reforms to the generator interconnection process, because that process
also may evaluate withdrawals from the Co-Located Load and therefore may also
result—absent clarification—in ‘costly and inefficient transmission system buildout.’”454
Joint Parties argue that clarification is necessary to realize the Commission’s intent of
ensuring that Co-Located Loads do not pay for services that they do not use and do not
trigger Network Upgrades that they do not need. Joint Parties explain that, to the extent
PJM performs interconnection service study steps involving withdrawal assumptions
from both the storage facility and the Co-Located Load, those steps “must allow the
interconnection customer to provide for limits to the injection and withdrawal rights for
the generation and co-located load facilities reflecting the proposed integration of those
facilities.”455 Joint Parties clarify that they recommend against the Commission requiring
Co-Located Load be included in the interconnection study process, as the timing of the
load interconnection process may not match.456
Joint Parties argue that, without clarification, PJM may assume that the
Co-Located Load and the charging load of the storage resource create overlapping grid
impacts, when both could be managed to limit the overall withdrawal of the resource and
avoid withdrawing energy when doing so would create grid impacts that necessitate
Network Upgrades. Joint Parties explain that, while the December Order recognizes that
“co-located resources” can limit withdrawals and prevent unnecessary transmission
buildout, Joint Parties argue the order applies this logic only to transmission service and
not interconnection service.457 Joint Parties contend that not applying this logic to
interconnection service would reduce the benefits of creating the non-firm transmission
453 Joint Parties Request for Clarification at 2-3, 5 (citing December Order,
193 FERC ¶ 61,217 at P 232).
454 Id. at 3 (citing December Order, 193 FERC ¶ 61,217 at P 177).
455 Id. at 5-6.
456 Id. at 8 n.20.
457 Id. at 10 (citing December Order, 193 FERC ¶ 61,217 at P 199).
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service.458 Joint Parties request that the Commission require PJM to specify what
information about the Co-Located Load is required for the purposes of the new service
request study process, similar to the Commission’s requirement about the Necessary
Study process, to ensure that PJM does not include overlapping load and energy storage
withdrawals.459
c.
Determination
We deny Joint Parties’ request for clarification. Joint Parties’ request
misconstrues the findings in the December Order that the Tariff is unjust and
unreasonable because it does not contain provisions addressing with sufficient clarity or
consistency the rates, terms, and conditions of service that apply to Interconnection
Customers serving Co-Located Load.460 The December Order did not require PJM to
integrate into the interconnection study process operating assumptions of both a
Co-Located Load and electric storage resources that are part of a Co-Location
Arrangement. PJM has already committed to studying the electric storage resources of
Interconnection Customers as charging during off-peak periods, consistent with PJM’s
fuel-based dispatch assumptions set forth in its planning criteria.461
D.
Informational Report
1.
December Order
In the December Order, the Commission directed PJM to submit in Docket
No. EL25-49-000, within 30 days of the date of issuance of the December Order, a
detailed informational report addressing, among other things “the development of
enhanced load forecasting . . . measures to assist PJM in determining the amount of new
capacity that is needed to maintain system reliability.”462
458 Id. at 9-10.
459 Id. at 8 (citing December Order, 193 FERC ¶ 61,217 at P 227).
460 December Order, 193 FERC ¶ 61,217 at P 159.
461 PJM Interconnection, 195 FERC ¶ 61,031, at P 180 (2026) (accepting PJM’s
proposal, in relevant part, in compliance with the Commission’s Order No. 2023
interconnection reforms).
462 December Order, 193 FERC ¶ 61,217 at PP 237-239.
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2.
Request for Clarification
PIOs request clarification as to how the Commission intends to respond to or
otherwise use information provided in the record regarding PJM’s load forecasting
practices. PIOs further request that any subsequent order from the Commission address
the issues raised in the record regarding the continuing and ongoing deficiencies in PJM’s
load forecasting process. PIOs explain that PJM is using these load forecasts as inputs in
the upcoming Base Residual Auction and RTEP and argue that, without a specific
Commission directive, PJM is unlikely to timely resolve issues that PIOs allege exist with
the load forecasts.463 PIOs note that the Commission required PJM to provide an
informational filing that includes an update regarding the development of “enhanced load
forecasting” and acknowledge that the Commission stated that it “will not act on or notice
this informational [f]iling.”464
PIOs note that Commissioner Rosner submitted a letter to PJM about load
forecasting in September 2025 and take issue with PJM’s October 2025 response.465
According to PIOs, PJM’s response to this letter does not require or specify a particular
methodology for forecasting large loads, without which PIOs allege that LSEs and
Electric Distribution Companies will continue to report data with widely varying
accuracy and that load forecasts will remain uncertain. PIOs also argue that PJM’s
response fails to identify a way for PJM to address the double counting of data centers or
to enable PJM to respond dynamically to significant updates to load forecasts.466
PIOs contend that recent events have validated their concerns regarding the
accuracy of PJM’s load forecasts. For example, according to PIOs, PJM staff have
acknowledged that the 2026 forecast would likely reflect a decrease in forecasted load for
that time period in light of an update to how PJM implements load adjustments. Given
the alleged inaccuracy of PJM’s load forecasts, and because PJM uses its load forecasts
to essentially set the demand curve for capacity obligations, for reliability studies, and to
support the RTEP, PIOs question how these processes remain just and reasonable without
significant revisions to PJM’s load forecasting practices.467
463 PIOs Request for Clarification at 2-3.
464 Id. at 2 (citing December Order, 193 FERC ¶ 61,217 at P 238 & n.486).
465 Id. at 4-5.
466 Id.
467 Id. at 5-7.
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3.
Determination
We deny the request for clarification. The directive in the December Order to
PJM to file an informational report that includes load forecasting represents the
Commission’s actions in this proceeding related to load forecasting.468 The Commission
will review the informational report in its normal course and remains committed to
monitoring PJM’s load forecasting. Separately, we note that in the order that we are
issuing concurrently in Docket No. EL26-67-000, we direct PJM to show cause as to why
its Tariff remains just and reasonable without sufficiently clear and consistent Tariff
provisions that address the application process for requesting transmission service to
Eligible Customers on behalf of large loads and the study procedures for studying the
provision of transmission service to Eligible Customers on behalf of large loads,
including a non-refundable application fee and sufficient readiness requirements that
escalate at distinct phases of the study process to deter duplicative or speculative requests
for transmission service (e.g., meaningful milestones and/or financial commitments).
V.
Compliance
A.
BTMG Rules
1.
Materiality Threshold
a.
December Order
The Commission found that PJM’s existing retail BTMG netting rules were no
longer just and reasonable and directed several changes, including directing PJM to
propose a new MW threshold for the amount of load at a particular electrical location that
Network Customers may net by using BTMG.469 The Commission found that a
materiality threshold would reduce the reliability and resource adequacy risks that large
loads may pose to PJM, while also allowing for Network Customers to reduce their
transmission charges in a transparent, not unduly discriminatory fashion. The
Commission noted “as points of reference that PJM requires any generator larger than
10 MW to be individually metered and that the Commission’s definition of a small
generator is 20 MW.”470
468 December Order, 193 FERC ¶ 61,217 at PP 237-239.
469 Id. P 221. The Commission did not direct PJM to make any changes to its rules
for Non-Retail BTMG, finding that the record did not demonstrate the need for changes
given that Non-Retail BTMG is already capped. Id. P 222.
470 Id. P 221 (citing PJM Manual 14G: Generation Interconnection Requests,
Rev. 8 (eff. July 26, 2023), § 1.6.2; Standardization of Small Generator Interconnection
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b.
PJM Compliance Filing
PJM proposes to modify the existing Tariff definition of BTMG and add a new
definition for Retail BTMG to establish a materiality threshold for Retail BTMG.471 PJM
explains that the current Tariff definition of BTMG includes both Retail and Non-Retail
BTMG, but the Tariff only specifically defines Non-Retail BTMG.472 Therefore, PJM
proposes to separately define Retail BTMG as BTMG that is used to serve a retail load
served by a Network Customer located at the same electrical location, where such
generation has a cumulative nameplate rating of no greater than 50 MW.473 PJM also
proposes to clarify in the Tariff that Retail BTMG may not be part of a Co-Located Load
configuration. PJM argues that this clarification is necessary “to avoid unexpected and
unintended hybrid scenarios mixing BTMG and the new transmission service
products.”474
PJM states that the proposed materiality threshold, along with other exclusions
discussed below, will avoid the “unintended consequence of causing Retail BTMG
resources to prematurely cease operations and discontinue investment in grid-enhancing
backup generation,” which may otherwise impact system reliability.475 PJM argues that a
lower threshold of 10 or 20 MW would likely exclude Retail BTMG with limited impact
on the transmission system in comparison to Co-Located Load coming online today.
Agreements & Procs., Order No. 2006, 111 FERC ¶ 61,220, at P 1, order on reh’g, Order
No. 2006-A, 113 FERC ¶ 61,195 (2005), order granting clarification, Order No. 2006-B,
116 FERC ¶ 61,046 (2006)).
471 Compliance Transmittal at 6-7 (citing December Order, 193 FERC ¶ 61,217
at P 179).
472 Id. at 5-6 (citing PJM, Intra-PJM Tariffs, pt. I, Definitions A-B (24.0.0), Behind
The Meter Generation; PJM, Proposed Tariff, PJM, pt. I, Definitions L-M-N (52.0.0),
Non-Retail Behind The Meter Generation). PJM explains Non-Retail BTMG is BTMG
used to net load through a distribution system. PJM clarifies that no substantive changes
are proposed to the Non-Retail BTMG netting rules, but PJM does propose clarifying
Tariff edits to avoid confusion with the new retail BTMG netting rules. Id. at 7, 15-16.
473 Id. at 7.
474 Id. at 18.
475 Id. at 12.
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PJM also contends that many of the lower MW generators would not be willing to enter
the interconnection queue due to age and the potential cost of Network Upgrades.476
PJM also proposes to exclude on-site backup generation at the same electrical
location as the retail load that can only be used to serve such retail load during conditions
that may threaten the integrity or reliability of the PJM region or the regional power
system from the 50 MW materiality threshold, arguing that to do otherwise would
disincentivize retail customers from installing backup generation that would improve
reliability.477 PJM notes that the Department of Energy recently issued an order during
Winter Storm Fern directing PJM to direct backup generation resources to operate before
taking certain emergency actions.478 PJM states that exempting backup generation from
the materiality threshold will ensure this reliability tool remains available. Finally, PJM
states that a materiality threshold based on the size of the generator that may qualify as
Retail BTMG, rather than the amount of load that may net, establishes a clear and bright
line for what can continue qualifying as Retail BTMG, given that the size of a load may
fluctuate.479
PJM states that, should the Commission not accept PJM’s proposal regarding
grandfathering, discussed below, PJM requests the Commission to allow a higher interim
initial materiality threshold for the start of the transition period to avoid causing Retail
BTMG to cease operations and exacerbate the resource adequacy issues in PJM.480 PJM
states that, should the Commission take this path, PJM would commit to reviewing
additional data on the size and extent of existing Retail BTMG to inform a final
threshold.
c.
Pleadings
i.
Size of Threshold
Constellation argues that PJM’s proposed 50 MW materiality threshold for BTMG
is too high and urges the Commission to either reject it or require modifications to
476 Id. at 12-13.
477 Id. at 13 (citing US Department of Energy, Order No. 202-26-06 (Jan. 26,
2026), https://www.energy.gov/documents/doe-order-no-202-26-06-pjm).
478 Id. at 13-14 (citing US Department of Energy, Order No. 202-26-06).
479 Id. at 13-14.
480 Id. at 14-15 (noting PJM ICC’s request for a 200 MW threshold in PJM ICC’s
Request for Clarification or Rehearing, Docket No. EL25-49-000, et al., at 44).
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address undue discrimination against Co-Located Loads. Constellation argues that this
threshold will allow a significant number of loads with BTMG to take advantage of
unjust and unreasonable netting and include backup generation as offsetting BTMG, but
deny such treatment to Co-Located Load, despite there being no physical, technical, or
economic reason why a netting construct should apply differently for customers with
BTMG or with Co-Located Generators. Constellation argues that PJM has not provided
any explanation for why the proposed threshold is relevant to reducing the reliability and
resource adequacy risks that large or increasing BTMG may pose to PJM and argues that
PJM’s justifications for the threshold are unsupported.481
Other parties argue that PJM’s proposed threshold is too low.482
Industrials/Amtrak argue that a threshold of at least 200 MW would better capture the
large loads driving reliability and cost-shifting concerns, while maintaining the existing
retail BTMG netting rules that promote smaller resource adequacy investments, and
avoid economic damage to industrial, institutional, and transportation sectors.
Industrials/Amtrak argue that a 200 MW threshold is also appropriate because PURPA
defines small generation for non-cogeneration QFs as 80 MW or smaller, meaning large
generation must be greater than 80 MW. Industrials/Amtrak also argue that this threshold
would simplify the transition process by eliminating most grandfathering issues and
bolstering resource adequacy and grid efficiency, thereby avoiding inefficient
transmission investment. Industrials/Amtrak argue that a 200 MW threshold would
respect the importance of onshoring manufacturing and support Amtrak’s operations,
because Amtrak relies on more than 50 MW of retail BTMG, generated at 25 Hz, to
provide energy supply and the only black start capability to the south end of Amtrak’s
Northeast Corridor traction power system.483
Energy Artisans also support a 200 MW materiality threshold.484 Energy Artisans
argue that, for sites that exceed this higher threshold, the Commission should require
PJM to use the proposed Interim NITS because it would provide PJM with a “safety
481 Constellation Protest and Comments on Compliance Filing at 9-11.
482 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 9, 25;
Crusoe Comments on Compliance Filing at 4; Eastman Protest and Comments on
Compliance Filing at 6; EDFps Comments on Compliance Filing at 4; Energy Artisans
Protest of Compliance Filing at 1; DPN Comments on Compliance Filing at 4.
483 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 9, 25,
31, 33, 39.
484 Energy Artisans Protest of Compliance Filing at 2.
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switch” to manage reliability during peak emergencies without forcing expensive
upgrades or disconnection on industrial users.
Eastman similarly argues that, if the Commission does not maintain netting for
BTMG facilities like Eastman’s Kingsport facility, the Commission must establish a
threshold of at least 200 MW on a permanent basis. Eastman explains that its Kingsport
facility has generation with a nameplate capacity of 194 MW, but that it cannot withdraw
that amount of energy through its interconnection with Kingsport Power and could not
operate solely on electric power from the grid. Eastman argues that imposing an
arbitrarily low materiality threshold would eliminate the grid benefits that its BTMG
facilities have provided.485
Industrials/Amtrak and Eastman argue that setting the threshold too low will
increase costs for many existing loads with BTMG and make a lot of existing BTMG
uneconomic.486 Industrials/Amtrak argue that even if load with BTMG were to have that
generation participate in the PJM markets, there is no guarantee of that generation
earning sufficient revenue to make up for the loss of netting, especially as transmission
upgrades may be required to interconnect the generation. Industrials/Amtrak also argue
that setting the threshold too low will force substantial burdens on existing customers to
become Commission-regulated public utilities, secure PJM membership, and undertake
related credit and risk requirements. Moreover, Industrials/Amtrak argue, a low
threshold would remove the incentive to operate efficiently and during stressed system
conditions, as well as create additional work for PJM staff to study BTMG that must
either go through the interconnection queue or deactivate. Industrials/Amtrak contend
that retirement of existing BTMG would increase demand and transmission planning
needs in the near term, resulting in higher transmission rates.487 Energy Artisans argue
that PJM’s proposed 50 MW materiality threshold is an arbitrary cap that ignores the
capital-intensive investments made by large-scale industrial facilities.488
Industrials/Amtrak argue that BTMG can provide benefits to the transmission
system, including reducing large loads on the system, congestion, and transmission
485 Eastman Protest and Comments on Compliance Filing at 6.
486 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 7;
Eastman Protest and Comments on Compliance Filing at 6.
487 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 15,
25-26, 28.
488 Energy Artisans Protest of Compliance Filing at 1.
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system build out, as well as operating during system emergencies.489 EDFps argues that
BTMG can reduce grid congestion, avoid queue delays, lower Network Upgrade needs,
and provide economic and community benefits such as tax revenues and jobs.490
Crusoe argues that while the 50 MW threshold aligns with PJM’s definition of
large load additions, this threshold is not a bright-line test for what constitutes a
reliability risk. Crusoe contends that the materiality threshold should be flexible to
account for the fact that Co-Location Arrangements can vary significantly and should be
scaled in proportion to the load served. Crusoe argues that a lower threshold risks forcing
existing BTMG resources offline during the transition period, which would increase
burden on the grid by converting currently netted load into Network Load. Crusoe claims
that BTMG arrangements benefit the transmission system by serving load on a
streamlined basis, avoiding generator interconnection queue delays, and reducing the
need for Network Upgrades.491
Energy Artisans also contend that the 50 MW materiality threshold is unduly
discriminatory because it establishes a 50 MW nameplate cap for retail BTMG while
maintaining a 3,000 MW regional cap for Non-Retail BTMG.492 In the absence of
demonstrated negative impacts from existing BTMG configurations, Energy Artisans
claim that the 50 MW materiality threshold is a pretext for cost-shifting.
EDFps argues that PJM’s proposed 50 MW threshold is arbitrary and will
disincentivize large loads from installing their own generation and thereby stifle
innovation. EDFps contends that the threshold will instead incentivize the development
of smaller loads, as well as segmented loads close in proximity to avoid the threshold,
leading to inefficient and redundant construction of interconnection facilities. EDFps
notes that the “optimal sizing of Retail BTMG” for an artificial intelligence data center,
for example, would be higher than 50 MW and that the threshold would force new large
loads to develop grid-connected resources instead of BTMG resources.493 EDFps argues
that this threshold would result in generation going through the interconnection process
unnecessarily.
489 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 6.
490 EDFps Comments on Compliance Filing at 2, 4.
491 Crusoe Comments on Compliance Filing at 4-5.
492 Energy Artisans Protest of Compliance Filing at 2.
493 EDFps Comments on Compliance Filing at 4.
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EDFps argues the materiality threshold should instead be 100% of the load size at
the electrical location, “combined with operational safeguards and appropriate
transmission charges.”494 Specifically, EDFps proposes that retail BTMG larger than
50 MW would still be permitted to net generation against load for the purposes of energy
and capacity market settlements, but would pay transmission and/or distribution network
charges on a gross basis.495
DPN similarly argues that PJM’s proposal may be too restrictive for digital
infrastructure projects, many of which operate at scales well above 50 MW, and that
behind-the-meter configurations can provide a viable pathway to speed-to-power.
Additionally, DPN argues, the Commission should not require projects to rely on a
framework that may compound PJM’s already significant queue and study delays without
greater justification. DPN argues that the Commission should require PJM to better
justify why 50 MW is the appropriate threshold at this stage and whether a higher
threshold, at least on an interim basis, would better accommodate current uncertainty
while PJM and the Commission continue to refine their understanding of large load
impacts.496
AEU/SEIA claim that PJM’s proposal to require site-located generation to enter
the interconnection queue is unjust and unreasonable. AEU/SEIA assert that PJM
requires BTMG arrangements that exceed the materiality threshold or do not qualify for
grandfather status to transition to a Co-Location Arrangement, which entails pursuing a
full interconnection agreement with PJM. AEU/SEIA contend that there is no benefit to
subjecting these projects to the standard queue process as they do not require
deliverability and will rarely trigger Network Upgrades. AEU/SEIA requests that PJM
be encouraged to establish a streamlined, expedited process for resources that do not
intend to export to the grid, which would allow PJM to maintain visibility while
minimizing delays for non-exporting resources.497
ii.
PJM Proposal to Tie Threshold to Generator
Nameplate Rating
Several parties urge the Commission to reject PJM’s proposal to base the
materiality threshold on the amount of generation that can be netted rather than load,
494 Id. at 1-2.
495 Id. at 4-5.
496 DPN Comments on Compliance Filing at 4-5.
497 AEU/SEIA Limited Protest of Compliance Filing at 11-13.
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arguing that this proposal is inconsistent with the December Order.498 BTMG Parties
argue that the scale of the reduction in load (i.e., what PJM considers and plans for versus
what PJM may actually need to serve) determines whether the potential for resource
adequacy problems and cost shifts are problematic—not the nameplate of the generation
used to effect the load reduction.499 Similarly, Industrials/Amtrak argue that nameplate
capacity does not necessarily reflect the actual capability of BTMG, such as, for example,
a steam system where the generation output is limited by the steam system’s
capability.500
BTMG Parties further argue that such a nameplate generation-based threshold is
unjust, unreasonable, and unduly discriminatory because it would also unnecessarily
constrain commercial opportunities to serve loads with BTMG without better protecting
reliability or commensurate reductions in resource adequacy or cost-shift risks and would
treat differently BTMGs with similar resource adequacy and cost-shift impacts. BTMG
Parties argue that accepting PJM’s proposal would violate notice requirements and that
the metering, telemetry, and control capabilities already deployed for existing BTMG
resources demonstrate that BTMG can reliably comply with the operational requirements
necessary to implement a netting-based threshold.501
BTMG Parties argue that, in the alternative, the Commission should require PJM
to increase its proposed nameplate rating-based materiality threshold for retail BTMG
eligibility to 200 MW to preserve opportunities for load to realize the commercial benefit
of sizing nameplate generation above the amount of load that a retail customer seeks to
net while still achieving the Commission’s aim of limiting resource adequacy impacts
and cost-shift concerns.502
AEU/SEIA argue that PJM’s proposed threshold is inconsistent with how PJM
assesses capacity accreditation in the capacity market and lacks the necessary flexibility
to accommodate resource diversity and hybrid configurations such as storage paired with
solar. AEU/SEIA add that there are a number of reasons that, in a BTMG configuration,
498 BTMG Parties Joint Protest of Compliance Filing at 1, 4-5; Industrials/Amtrak
Joint Protest and Comments on Compliance Filing at 34-35 (citing December Order,
193 FERC ¶ 61,217 at P 179); AEU/SEIA Limited Protest of Compliance Filing at 3.
See also Earthjustice Reply Briefing at 24.
499 BTMG Parties Joint Protest of Compliance Filing at 6.
500 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 35.
501 BTMG Parties Joint Protest of Compliance Filing at 2, 6-12.
502 Id. at 2, 12-13.
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the generator’s nameplate capacity exceeds the customer’s netting. AEU/SEIA contend
that a reasonable approach would be to permit facilities to exceed 50 MW nameplate
capacity provided the customer’s netting is limited to 50 MW, and the facility uses
approved telemetry and automated system controls.503 Appalachian Voices argues that
PJM’s compliance filing is unclear as to whether it will apply the 50 MW materiality
threshold to all generation or to each individual generator at a single customer site.504
Industrials/Amtrak state that, if the Commission opts for a generation-based
materiality threshold, they support PJM’s proposal on backup generation.505
Industrials/Amtrak explain that emergency backup generation is often sized similarly to
other on-site generation to function as a full backup power source and provides additional
generation options in emergency conditions, such as the Department of Energy’s recent
statement regarding the operation of private, behind-the-meter generation during Winter
Storm Fern.506 EDFps argues that the Commission should direct PJM to clarify that
battery energy storage systems and hybrid systems functioning in a load-following,
non-exporting capacity manner during a curtailment event qualify under the “backup
generation” exception from the materiality threshold for the revised retail BTMG netting
rules and can continue to serve the load regardless of their size.507
iii.
PJM Proposal to Disqualify Network Customers
Above the Materiality Threshold
Several parties argue that the Commission should allow netting up to the amount
of the materiality threshold, rather than disqualifying a customer from netting for any
amount of load if its BTMG exceeds the threshold.508 Industrials/Amtrak argue that this
allowance would be more consistent with the December Order, reduce discrimination
concerns, and avoid incentivizing loads to reduce the size of their generation to ensure
503 AEU/SEIA Limited Protest of Compliance Filing at 4-5.
504 Appalachian Voices Limited Protest of Compliance Filing at 4 (citing
Compliance Transmittal at 11-12).
505 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 10.
506 Id. at 40-41 (citing U.S. Department of Energy, Emergency Order
No. 202-26-06).
507 EDFps Comments on Compliance Filing at 8.
508 Id. at 9, 34; Eastman Protest and Comments on Compliance Filing at 7; Energy
Artisans Protest of Compliance Filing at 2; EDFps Comments on Compliance Filing at 5.
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netting eligibility.509 Industrials/Amtrak contend that PJM’s proposal would distort
investment decisions, produce outcomes disconnected from actual system needs, harm
resource adequacy, and harm economic development opportunities in PJM.510
Energy Artisans contend that by rejecting a hybrid BTMG and Co-Location
approach, under which facilities could net up to the materiality threshold, PJM would
force large loads off of BTMG status and onto the grid.511 EDFps disagrees with PJM
that allowing netting up to the amount of the materiality threshold would lead to
additional metering costs, noting that grandfathered entities and those below the threshold
would not incur any such costs. EDFps also argues that it should be up to individual
entities whether the additional cost for metering is worth exceeding the threshold. EDFps
states that load served by a retail BTMG resource would be required to purchase NFCD
transmission service up to the amount covered by the retail BTMG and FCD transmission
service for the remainder of the load and could not lean on the system.512
iv.
Answers
Indicated TOs argue that PJM’s proposed 50 MW materiality threshold strikes the
appropriate balance between allowing continued use of retail BTMG and limitations to
ensure reliability. Indicated TOs agree with PJM that 50 MW is reasonable because it
aligns with the PJM Board’s definition of large load additions, preserves existing
treatment for smaller and longstanding retail BTMG arrangements, and avoids sweeping
in retail customers whose grid impacts are comparatively limited. Indicated TOs argue
that PJM reasonably based the threshold on generator size because generator capacity is
static.513
Industrials/Amtrak argue that the Indicated TOs fail to substantiate their position
with any evidence in support of the 50 MW threshold, and do not address any of the
arguments for a 200 MW or greater threshold. Industrials/Amtrak contend that load
under 200 MW, particularly industrial and institutional load, is not driving current
509 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 9-10.
510 Id. at 36.
511 Energy Artisans Protest of Compliance Filing at 2.
512 EDFps Comments on Compliance Filing 2, 6-7.
513 Indicated TOs April 24 Answer at 2-3.
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reliability challenges.514 Eastman contends that the Indicated TOs’ answer
inappropriately lumps together all industrial BTMG facilities, ignoring that not all loads
using BTMG create reliability and resource adequacy risks.515 BTMG Parties argue that
Indicated TOs’ defense of a nameplate-based threshold is non-responsive to the BTMG
Parties’ argument because the sole question before the Commission is compliance.516
Indicated TOs respond that PJM’s 50 MW threshold is reasonable and should be
accepted.517 Indicated TOs further argue that the Commission did not preclude a
generation-based threshold, as it provided points of reference based on generator size, not
the size of the load.518 Indicated TOs lastly allege that parties conflate the two issues of
the materiality threshold and the grandfathering provision, and that the need for an
adequate grandfathering provision is not a convincing reason to increase the size of the
materiality threshold.
d.
Determination
We accept in part, and reject in part, PJM’s compliance filing with respect to the
BTMG materiality threshold. Specifically, we accept as just and reasonable PJM’s
proposal to set the materiality threshold at 50 MW and to exclude on-site backup power
from that threshold. However, we reject PJM’s proposal to apply the threshold to the
cumulative nameplate capacity of generation that is used to serve a retail load served by a
Network Customer located at the same electrical location, rather than to the total amount
of load that can be netted at that electrical location, because this proposal does not
comply with the Commission’s directives in the December Order.519 We thus direct PJM
to file, within 60 days of the date of this order, a compliance filing to revise its proposed
514 Industrials/Amtrak Answer at 3-4 (citing Industrials/Amtrak Joint Protest and
Comments on Compliance Filing at 25).
515 Eastman Answer at 2 (citing December Order, 193 FERC ¶ 61,217 at P 107).
516 BTMG Parties Answer at 2-3.
517 Indicated TOs June 3 Answer at 3.
518 Id. at 4.
519 We therefore reject Proposed Tariff, § I.1 Definitions R-S (Retail Behind The
Meter Generation) (46.0.0) and § VIII.A 400, Definitions R (Retail Behind The Meter
Generation) (7.0.0). We accept Proposed Tariff, § I.1 Definitions A-B (Behind The
Meter Generation) (24.0.0); § III.34.2 (Netting of Retail Behind the Meter Generation)
(1.0.0); § III.34.3 (Netting of Non-Retail Behind The Meter Generation) (2.0.0); § VII.A
300, Definitions B (Behind The Meter Generation) (2.0.0); and § VIII.A 400,
Definitions B (Behind The Meter Generation) (2.0.0).
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definition of Retail BTMG in its Tariff to permit a Network Customer to net up to
50 MW of load that it is serving using BTMG at a particular electrical location.
In the December Order, the Commission explained the materiality threshold as
follows: “Such a threshold should reduce the reliability and resource adequacy risks
discussed above that large loads may pose to PJM, while also allowing for Network
Customers to reduce their transmission charges in a transparent, not unduly
discriminatory fashion.”520 Based on the record here, we find that a threshold of 50 MW
is just and reasonable and preferable to the 200 MW threshold that some commenters
propose because a 50 MW threshold will ensure that PJM plans its transmission system
and procures sufficient capacity resources to serve a greater percentage of the load that,
in the event that the BTMG that typically serves it is unavailable, PJM would be
nonetheless obligated to serve. As such, we find that PJM’s proposed 50 MW materiality
threshold is more likely to help maintain resource adequacy and reliability relative to a
larger threshold.521 Whereas Constellation argues that PJM’s proposed materiality
threshold of 50 MW is too high and unsupported, we agree with PJM that 50 MW strikes
a reasonable balance between a lower threshold, which may restrict netting more than
necessary to respond to resource adequacy concerns, and a higher threshold, which would
fail to address the resource adequacy concerns identified in the December Order.522
In response to protesters’ concerns that the proposed materiality threshold of
50 MW is too low and will result in significant economic consequences to existing
BTMG arrangements,523 we note that the Commission addressed this concern in the
520 December Order, 193 FERC ¶ 61,217 at P 221.
521 See id. P 186 (“We find that PJM’s existing BTMG rules may lead to both
reliability and resource adequacy risks because PJM, per its Tariff, is obligated to serve
transmission customers using BTMG but does not consider such customers in
transmission and resource adequacy planning.”).
522 See Vonage Holdings Corp. v. FCC, 489 F.3d at 1242; ExxonMobil Gas Mktg.
Co. v. FERC, 297 F.3d 1071, 1085 (D.C. Cir. 2002) (“We are generally ‘unwilling to
review line-drawing performed by the Commission unless a petitioner can demonstrate
that lines drawn . . . are patently unreasonable, having no relationship to the underlying
regulatory problem.’”) (citations omitted).
523 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 27-28
(alleging economic damage to retail customers); DPN Comments on Compliance Filing
at 4 (expressing concern that 50 MW risks foreclosing pathways for digital infrastructure
projects “through imposing additional barriers to utilization”); Eastman Protest and
Comments on Compliance Filing at 6 (“the proposed threshold would remove the
economic benefits that Eastman has relied on to continue operating its BTMG at the
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December Order and established separate mechanisms—a transition period of three years
for Network Customers currently using PJM’s retail BTMG netting rules and
grandfathering for certain entities in a BTMG arrangement—in recognition of the
potential impacts for existing BTMG customers of a change in the retail BTMG netting
rules.524 While we recognize the concerns raised in this record that adopting any
limitations on netting may have economic consequences for individual Network
Customers, we must balance those concerns against the Commission’s finding that PJM’s
retail BTMG netting rules are unjust and unreasonable due to the reliability, resource
adequacy, and cost-shifting concerns they create.525 As discussed above, the materiality
threshold primarily serves to reduce reliability and resource adequacy risks that large
loads may pose to PJM, and we find that PJM’s proposed 50 MW materiality threshold
strikes a reasonable balance between mitigating those risks and limiting the costs
associated with doing so.
We decline to require Eligible Customers seeking NITS on behalf of load with
BTMG to take Interim NITS for load above the materiality threshold, as Energy Artisans
request. Energy Artisans appear to contemplate taking a combination of Interim NITS
and NITS at the same Point of Delivery, which is not permitted.526 However, we note
that such customers may take Interim NITS, as discussed in Part IV.527
We also disagree with arguments that the materiality threshold should be higher to
ensure that BTMG resources have an incentive to operate efficiently.528 This concern
Kingsport facilities . . . .”); Energy Artisans Protest of Compliance Filing at 1 (“PJM’s
proposal to implement a 50 MW ‘Materiality Threshold’ for Retail BTMG is an arbitrary
cap that ignores the long-term, capital-intensive investment cycles of large-scale
industrial facilities.”).
524 December Order, 193 FERC ¶ 61,217 at PP 222-224.
525 Id. P 186.
526 Energy Artisans Protest of Compliance Filing at 2 (“For sites exceeding this
200 MW threshold, the Commission should direct PJM to utilize the proposed [Interim
NITS] under the new Part XI of the Tariff.”).
527 See supra Part IV.C.1.b.i (extending the three new transmission services set
forth in the December Order to Eligible Customers taking service on behalf of load with
BTMG that are willing and able to limit their energy withdrawals from the transmission
system under certain conditions).
528 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 7, 16,
25, 32.
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does not overcome the Commission’s finding that large amounts of netted Network Load
present reliability and resource adequacy risks. When BTMG operates during peak or
emergency conditions, it may enhance resource adequacy in the short term by lowering
the demand on the system, but when it fails to operate (which, despite any incentive to
operate, is possible), the result would be that PJM would have an obligation to serve the
load that such BTMG typically serves without having planned adequate transmission
facilities or procured sufficient capacity resources to fulfill that obligation. The
Commission found that risk unjust and unreasonable in the December Order.529
We also disagree with Energy Artisans that a 50 MW materiality threshold is
unduly discriminatory because it establishes a 50 MW cap for Retail BTMG while
maintaining a 3,000 MW regional cap for Non-Retail BTMG.530 The materiality
threshold and the cap on Non-Retail BTMG function differently—the Non-Retail BTMG
cap is a region-wide cap on the amount of load that may net using Non-Retail BTMG,531
whereas the materiality threshold for Retail BTMG is on the amount of load that may net
at a particular electrical location.532
We acknowledge EDFps’ concern that a 50 MW materiality threshold on Retail
BTMG could encourage the development of smaller loads combined with smaller
generators, and force new large loads to develop resources interconnected to the
transmission system instead of BTMG resources.533 As the Commission explained in the
December Order, the Commission eliminated retail BTMG netting to prevent large loads
from using the retail BTMG netting rules; the Commission agreed with PJM that
allowing large loads to net is problematic because such loads do not carry reserves and
are able to rely on the transmission system when the BTMG is not sufficient to meet the
load.534 EDFps’ alternative proposal would not remedy this concern because it would
continue to net BTMG for the purposes of capacity market settlements.535
529 December Order, 193 FERC ¶ 61,217 at P 186.
530 Energy Artisans Protest of Compliance Filing at 2.
531 See PJM, Intra-PJM Tariffs, OATT, § III, § 34.3 (Netting of Non-Retail Behind
The Meter Generation) (1.0.0).
532 December Order, 193 FERC ¶ 61,217 at P 221.
533 EDFps Comments on Compliance Filing at 3-4.
534 December Order, 193 FERC ¶ 61,217 at P 186.
535 EDFps Comments on Compliance Filing at 4-5.
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Further, we find AEU/SEIA’s assertion that requiring BTMG arrangements that
exceed the materiality threshold or do not qualify for grandfather status to transition to a
Co-Location Arrangement, which entails pursuing an interconnection agreement with
PJM, is unjust and unreasonable is an untimely request for rehearing of the December
Order. In the December Order, the Commission found that PJM’s existing retail BTMG
netting rules are unjust and unreasonable because they may lead to both reliability and
resource adequacy risks in PJM.536 The Commission then directed PJM to revise its retail
BTMG netting rules to establish a new MW materiality threshold for the amount of load
at a particular electrical location that Network Customers may net using BTMG and to
implement a transition process that includes the ability to grandfather certain entities with
existing contracts.537 Because AEU/SEIA’s assertion challenges the Commission’s
finding that PJM’s existing retail BTMG netting rules are unjust and unreasonable and
the related compliance directives—and not whether PJM complied with those
directives—we find that it is an untimely request for rehearing of the December Order
and dismiss it on that basis.538
However, we agree with protesters that PJM’s proposal to design the materiality
threshold for netting based on whether the “generation has a cumulative nameplate rating
of no greater than 50 MW” fails to comply with the Commission’s directive in the
December Order. Specifically, the Commission directed PJM to “propose a new MW
threshold for the amount of load at a particular electrical location that Network
Customers may net by using BTMG.”539 As such, PJM’s proposal to instead apply the
materiality threshold to the cumulative nameplate capacity of the generation used by a
Network Customer to serve retail load located at the same electrical location is facially
inconsistent with the December Order.
PJM alleges that its proposal to apply its proposed materiality threshold based on
the cumulative nameplate capacity of the generation is consistent with or superior to the
Commission’s directive to limit reliability and resource adequacy risks. In particular,
PJM alleges that its proposal is consistent with the Commission’s points of reference to
various generator sizes, as well as the recognition that BTMG is defined as a generation
unit rather than a load. We find PJM’s arguments unpersuasive. While the Commission
536 December Order, 193 FERC ¶ 61,217 at P 179 (finding that “the existing
BTMG rules may lead to both reliability and resource adequacy risks because PJM, per
its Tariff, is obligated to serve transmission customers using BTMG but does not consider
such customers in transmission and resource adequacy planning”).
537 Id. P 179.
538 Louisville Gas & Elec. Co., 185 FERC ¶ 61,120, at P 39 (2023).
539 December Order, 193 FERC ¶ 61,217 at P 221 (emphasis added).
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referenced examples of generator sizes in the December Order, those examples were in
reference to an unambiguous threshold for the amount of load that a Network Customer
may net.540 In addition, while BTMG is defined as a generation unit, that fact alone is
not a reason to propose to apply the materiality threshold to a Network Customer based
on the amount of generation at the same electrical location rather than applying that
threshold to the amount of load that may be netted at that location. Lastly, PJM avers
that, whereas load sizes can fluctuate, the nameplate capacity of a generator provides a
bright line for purposes of qualifying for netting. This argument too is unpersuasive,
because regardless of whether a Network Customer’s load increases or decreases over
time, the 50 MW materiality threshold we approve today makes clear how much of the
load at a single electrical location a Network Customer may net using BTMG.
We also agree with protesters that PJM’s interpretation of the December Order as
prohibiting any netting when a Network Customer exceeds the materiality threshold is
incorrect.541 PJM supports its interpretation by pointing to the Commission’s directive in
the December Order that PJM “maintain the current BTMG rules for customers that fall
below a new MW materiality threshold,” but PJM reads this language out of context.542
Read in full context, the Commission’s replacement rate for BTMG in the December
Order only involves setting a new materiality threshold “for the amount of load at a
particular electrical location that Network Customers may net by using BTMG,” which
the Commission further stated would “allow[] for Network Customers to reduce their
transmission charges in a transparent, not unduly discriminatory fashion.”543 Thus, we
find that the Commission’s directive in the December Order allows for netting of load up
to the newly established materiality threshold.
Moreover, the Commission expressly states that a materiality threshold “for all
BTMG should reduce the reliability and resource adequacy risks that large or increasing
540 Id. (“Although we make no finding in this order on a threshold that would be
just and reasonable, we note as points of reference that PJM requires any generator larger
than 10 MW to be individually metered and that the Commission’s definition of a small
generator is 20 MW.”) (footnotes omitted).
541 Compliance Transmittal 10-11 (“[T]he proposal is based on an interpretation of
the compliance directive that demands an ‘all or nothing’ approach to Retail BTMG
qualification—meaning that a Retail BTMG cannot both net up to a certain threshold but
still potentially have generation and load above that threshold which cannot be net”); see
Eastman Protest and Comments on Compliance Filing at 7; Industrials/Amtrak Joint
Protest and Comments on Compliance Filing at 34.
542 Compare December Order, 193 FERC ¶ 61,217 at P 179, with id. P 221.
543 Id. P 221 (emphasis added).
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BTMG may pose to PJM.”544 To use an example similar to that provided by the BTMG
Parties, PJM’s proposal would prohibit a Network Customer serving 50.1 MW of load
using BTMG from netting any load, but it would allow a Network Customer serving
50 MW of load using BTMG to net all of that 50 MW of load, even though they have
virtually identical resource adequacy impacts on the transmission system.545 We find that
this outcome would be unduly discriminatory and conflict with the December Order.546
We also note that protesters persuasively dispute PJM’s suggestion that its proposal helps
load with BTMG avoid incurring significant costs and compliance risks if their
arrangements exceed the materiality threshold.547 We agree with EDFps that Network
Customers should decide whether the costs and requirements associated with complying
with the revised retail BTMG netting rules are appropriate or cost-effective for their
business when determining whether to maintain or pursue BTMG arrangements.548
In response to EDFps’ request that the Commission clarify that electric storage
resources and hybrid resources qualify for the back-up exemption, we note that PJM’s
retail BTMG netting rules do not restrict what resources may qualify as back-up
generation, but instead specify only that the generation must be at the same electrical
location as the retail load and that it can only be used to serve such retail load during
conditions that may threaten the integrity or reliability of the PJM Region or the regional
power system.549
Accordingly, we direct PJM to file, within 60 days of the date of issuance of this
order, a compliance filing to revise its Tariff consistent with the Commission’s directive
in the December Order and our determination here. Specifically, we reject PJM’s
544 Id. P 179.
545 BTMG Parties Joint Protest of Compliance Filing at 10.
546 December Order, 193 FERC ¶ 61,217 at P 221 (“Such a threshold should
reduce the reliability and resource adequacy risks discussed above that large loads may
pose to PJM, while also allowing for Network Customers to reduce their transmission
charges in a transparent, not unduly discriminatory fashion.”).
547 See, e.g., BTMG Parties Joint Protest of Compliance Filing at 11 n.20 (“PJM
does not provide any factual support for these assertions, and these statements do not
match BTMG Parties’ experience as developers of BTMG in PJM.”).
548 EDFps Comments on Compliance Filing at 7.
549 Id., pt. VIII, Subpart A, section 400 Definitions R (definition of Retail Behind
the Meter Generation) (7.0.0).
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proposed definition of Retail Behind The Meter Generation550 and direct PJM to submit a
compliance filing modifying the Tariff to instead create a materiality threshold that
allows Network Customers to net from their Network Load up to 50 MW of load served
by using BTMG at a single electrical location.
2.
Grandfathering and Transition Period
a.
December Order
The Commission directed PJM to establish a transition period of three years for
Network Customers currently using PJM’s existing retail BTMG netting rules.551 The
Commission also directed PJM to include in its compliance filing revisions to grandfather
entities with existing contracts for the specific purpose of effectuating a BTMG
arrangement for the current term remaining under the existing contract.552 The December
Order did not direct any changes to Non-Retail BTMG.553
b.
PJM Compliance Filing
PJM proposes to modify the existing Tariff definition of BTMG and add a new
definition for Retail BTMG to implement a three-year transition period and provide the
ability to grandfather certain entities with existing contracts.554 Specifically, PJM
proposes that any existing retail BTMG with a contract that was entered into as of the
date of the December Order would be permitted to remain eligible to net against Network
Loads as Retail BTMG irrespective of the materiality threshold through the term of the
contract.555 PJM explains that this proposal could include a wide variety of contracts,
including “utility contracts, fuel contracts, maintenance contracts, and more.”556 PJM
550 PJM, Proposed Tariff, § I.1 Definitions R-S (Retail Behind The Meter
Generation) (46.0.0) and § VIII.A 400, Definitions R (Retail Behind The Meter
Generation) (7.0.0).
551 December Order, 193 FERC ¶ 61,217 at P 223.
552 Id. P 224.
553 Id. P 222.
554 Compliance Transmittal at 6-7 (citing December Order, 193 FERC ¶ 61,217
at P 179).
555 Id. at 8.
556 Id.
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further proposes that this exemption would encompass existing renewal or extension
rights recognized under any existing contracts to “avoid interference with such reliance
expectations upon which investment decisions likely have been made . . . .”557 PJM
states that if the Commission accepts its proposal, it will explore with stakeholders
whether manual language should be developed to help elaborate on what types of
agreements may qualify.558
c.
Pleadings
i.
Comments
AEU/SEIA ask the Commission to reject PJM’s proposal to transition existing
retail BTMG through December 18, 2028 and instead extend the transition period until
the effective date of PJM’s compliance filing to avoid harming projects already
underway. AEU/SEIA allege that setting the grandfathering date earlier than the
effective date for the new co-location pathways would leave a problematic gap for
projects that were moving forward in good faith and exacerbate uncertainty. AEU/SEIA
argue that any project “in process” as of the transition date should be eligible for
grandfathering if it has made significant progress toward completion though not fully
operational.559 Otherwise, AEU/SEIA allege, PJM’s proposal will result in significant
stranded assets.
Similarly, BTMG Parties argue that the deadlines for the transition period and
grandfathering eligibility will exclude retail customers that recently finalized or will
imminently finalize projects while providing limited system benefit. BTMG Parties
argue that PJM should be required to instead use the date of a Commission order acting
on PJM’s filing, or, at minimum, 180 days from the December 18, 2025 date of the
Co-Location Order (June 16, 2026), as the date from which the grandfathering and
transition period run. BTMG Parties argue that this date would better afford a workable
transition for market participants that does not penalize developers for attempting to
develop resources during a historic resource adequacy crisis in PJM.560
AEU/SEIA also ask the Commission to clarify that the types of agreements that
may qualify for PJM’s proposal include utility interconnection study agreements,
engineering, procurement, and construction contracts, and any form of binding agreement
557 Id. at 9.
558 Id. at 9 n.32.
559 AEU/SEIA Limited Protest of Compliance Filing at 7-9.
560 BTMG Parties Joint Protest of Compliance Filing at 2-3, 13-16.
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between the load and the BTMG developer.561 Otherwise, AEU/SEIA warn, developers
face the risk of delay and additional regulatory burdens that could remove projects
underway.
Industrials/Amtrak support PJM’s proposal to grandfather existing contracts,
noting that BTMG customers operate under diverse agreements, some of which renew
year to year, which should be eligible for grandfathering. Industrials/Amtrak also argue
that grandfathering rules and status should be clear, broadly construed, and easily
confirmed for existing BTMG customers to ensure stability and regulatory certainty.562
AEU/SEIA argue that PJM’s proposal is unjust and unreasonable because it is not
clear as to whether grandfathering status applies to the site itself or the generator asset.
AEU/SEIA suggest that grandfathering the generation while allowing these existing
customers to pursue additional BTMG below the materiality threshold is a logical
extension of PJM’s observation that additions below the materiality threshold would have
little or no impact. AEU/SEIA argue that clarifying that customers with grandfathered
BTMG have a “clean slate” to pursue additional BTMG up to the materiality threshold
would also allow existing customers to help address PJM’s resource adequacy and
infrastructure needs. AEU/SEIA contend that many existing customers have neither the
desire nor the economic incentive to pursue co-location and that, for smaller projects,
PJM’s full interconnection process will be too costly and complex.563 Eastman similarly
requests that the Commission require PJM’s grandfathering provision to apply to BTMG
facilities rather than the service agreement. Otherwise, Eastman argues, a BTMG facility
could lose its grandfathered status if the relevant service agreement is modified because,
for example, the facility was modified to become more efficient.564
Industrials/Amtrak argue that most BTMG differs from the large loads that the
Commission addressed in the December Order. Specifically, Industrials/Amtrak argue
that BTMG is not new, is not the cause of the changed circumstances, and does not
present the reliability risks posed by large, inverter-based loads.565 Further,
Industrials/Amtrak contend, new large loads differ from BTMG in that new large loads
do not have substantial cogeneration, do not generally operate large motors that can help
561 AEU/SEIA Limited Protest of Compliance Filing at 7-8.
562 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 10, 39.
563 AEU/SEIA Limited Protest of Compliance Filing at 9-11.
564 Eastman Protest and Comments on Compliance Filing at 7.
565 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 6-7,
13; see also Energy Artisans Protest of Compliance Filing at 1.
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with stability on the grid, can turn off and on nearly instantaneously, and can reach sizes
well beyond traditional BTMG and the 200 MW threshold proposed by
Industrials/Amtrak. Industrials/Amtrak further claim the December Order “did not find
that BTMG rules were unjust and unreasonable as used by manufacturers with
cogeneration, other QFs (which are size limited under PURPA), or even traditional
‘large’ loads with BTMG . . . .”566
ii.
Answers
Indicated TOs argue that PJM’s materiality threshold should be paired with
grandfathering provisions that appropriately recognize that customers have relied on
retail BTMG netting rules and eliminating such rules could cause financial harm.
Indicated TOs therefore propose several additions and clarifications to PJM’s proposal.
First, Indicated TOs argue that grandfathering treatment should extend to all projects that
are not yet in service and would have been eligible for retail BTMG treatment, but have
made “substantial progress towards completion.”567 Indicated TOs also argue that the
exclusion regarding existing contracts should be construed broadly to cover a wide range
of contracts and recognition of renewal rights in those contracts. Indicated TOs argue
that existing retail BTMG arrangements that have been physically in service and
operating for a significant period of time should be grandfathered to avoid disrupting
long-standing arrangements.568
BTMG Parties and Industrials/Amtrak agree with Indicated TOs that
grandfathering should extend to projects that would have been eligible for retail BTMG
treatment but for the imposition of the materiality threshold and have made substantial
progress toward completion in order to protect the investment-backed expectations of
PJM customers (and the BTMG developers) and to ensure just and reasonable rates.
BTMG Parties and Industrials/Amtrak also argue that the existing contract exception
should be construed broadly to cover a wide range of contracts.569 BTMG Parties also
argue that arrangements that have been physically in service and operating for a
significant period of time should be grandfathered.570
566 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 14
(emphasis in original).
567 Indicated TOs April 24 Answer at 3.
568 Id. at 3-4.
569 BTMG Parties Answer at 2-4; Industrials/Amtrak Answer at 6-7.
570 BTMG Parties Answer at 4.
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d.
Determination
We find that PJM’s proposed Tariff revisions comply with the directives in the
December Order.571
First, we find that PJM complies with the directive to revise its Tariff to allow
Network Customers already using the retail BTMG netting rules to continue to do so for
a transition period of three years from the date of issuance of the December Order.572
AEU/SEIA and BTMG Parties express concern that such a transition period unfairly
harms entities that were planning to finalize arrangements in order to use PJM’s retail
BTMG netting rules. But these parties did not seek rehearing of the Commission’s
decision in the December Order to establish a transition period to minimize the impact on
existing BTMG customers. In that order, the Commission explicitly directed PJM to
“allow Network Customers already using the BTMG rules to continue to do so for a
transition period of three years . . . from the date of issuance of this order.”573 Thus, we
find that AEU/SEIA’s and BTMG Parties’ arguments constitute untimely requests for
rehearing of the December Order.574 However, even if these arguments were properly
before us, AEU/SEIA and BTMG Parties offer no suggested transition period to
encompass certain potential BTMG customers in a manner that would not be arbitrary.575
Second, we find that PJM complies with the directive to revise its Tariff to
grandfather entities with existing contracts that effectuate a BTMG arrangement for the
571 See PJM, Proposed Tariff, § I.1 Definitions R-S (Retail Behind The Meter
Generation) (46.0.0) and § VIII.A 400, Definitions R (Retail Behind The Meter
Generation) (7.0.0).
572 December Order, 193 FERC ¶ 61,217 at P 223; PJM, Compliance Filing,
attach. B (defining Retail BTMG to provide “for a transition period through
December 18, 2028” for Retail BTMG “used to serve a retail load served by a Network
Customer to net load prior to December 18, 2025.”).
573 December Order, 193 FERC ¶ 61,217 at P 223.
574 See, e.g., Louisville Gas & Elec. Co., 185 FERC ¶ 61,120 at P 39; ISO New
Eng. Inc., 132 FERC ¶ 61,098, at P 12 (2010) (“The Commission has held that requests
to alter a compliance filing in a manner that differs from the order requiring the
compliance filing constitute a collateral attack on the order requiring the compliance
filing.”).
575 See BTMG Parties Joint Protest of Compliance Filing at 15 (characterizing a
“limited class of BTMG developers that were very close to finalizing their projects”).
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current term remaining under the existing contract.576 In response to concerns from
AEU/SEIA and BTMG Parties, we clarify that the Tariff proposal applies to a contractual
arrangement—for which generation used to serve retail load served by a Network
Customer to net load is the subject—“that was in effect as of December 18, 2025.”
Therefore, entities with projects that have contractual arrangements “in place, even if
they are not yet fully operational” by December 18, 2025 may qualify under the Tariff
proposal.577 In addition, in response to AEU/SEIA, we clarify that the types of
agreements that may qualify under PJM’s proposal may include engineering,
procurement, and construction contracts, and we encourage PJM, as it states in its
transmittal, to explore developing language in its manuals on what other types of
agreements may qualify.578 Moreover, in response to AEU/SEIA and Eastman, who raise
overlapping concerns about whether grandfathering applies to the generator, we clarify
that it does apply to the generator, as the Tariff proposal on grandfathering reflects.579 In
further response to Eastman, parties to an existing BTMG contract could modify the
agreement to, for example, make the facilities more efficient—provided that the
modification is not prohibited by the existing contract and does not fundamentally alter
the contractual arrangement that was in effect as of December 18, 2025. And in further
response to AEU/SEIA, we clarify that customers with BTMG within the scope of this
grandfathering provision may also avail themselves of the new materiality threshold to
net up to 50 MW of load served by a Network Customer because this threshold applies to
a particular electrical location.
3.
QFs and Cogeneration Facilities
a.
PJM Compliance Filing
PJM proposes that the new materiality threshold should not apply to any QF over
50 MW serving as Retail BTMG as of the date of the December Order. PJM
576 December Order, 193 FERC ¶ 61,217 at P 224; PJM, Compliance Filing,
attach. B (defining Retail BTMG to include “any generation used to serve a retail load
served by a Network Customer to net load if it is the subject of a contractual arrangement
(including but not limited to a bilateral agreement or interconnection agreement) that was
in effect as of December 18, 2025 through the end of the term of such agreement, which
may be renewed or extended per the terms of such agreement”).
577 AEU/SEIA Limited Protest of Compliance Filing at 7.
578 Compliance Transmittal at 9 n.32.
579 PJM, Compliance Filing, attach. B (defining Retail BTMG in part to include
“any generation used to serve a retail load served by a Network Customer to net load if it
is the subject of a contractual arrangement . . .”).
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acknowledges that the December Order does not reference PURPA, yet because the
December Order was issued against the backdrop of PURPA, “PJM interprets the
Commission’s [grandfathering] compliance directive as allowing the extension of legacy
treatment” to such facilities. PJM states that some of the QFs impacted by this exemption
are cogeneration facilities that provide economic and energy efficiency benefits.580 In
support of its proposal, PJM notes that QFs have size limitations and cogeneration QFs
must meet efficiency requirements.581 PJM explains that BTMG with existing
contractual arrangements or QF status have been in place without any known operational
issues to date, and so should be allowed to continue netting under their existing
arrangements.582
b.
Pleadings
Industrials/Amtrak argue that QFs should be eligible for retail netting for their full
load, but the eligibility should not be linked to QF status as of the date of the order.583
Industrials/Amtrak explain that, without retail netting, QFs may be denied the backup
service to which they are entitled under PURPA. Industrials/Amtrak argue that for
cogeneration QFs, “the BTMG netting construct aligns with their efficient, reliable
energy production configurations, matching the intent of Congress and the
[Commission].”584 Industrials/Amtrak argue that QFs have stronger operational and
financial incentives to operate reliably and efficiently than other generators and must
meet certain efficiency standards. However, Industrials/Amtrak note that many resources
eligible to be QFs have not maintained QF status because PURPA permits the
Commission to deem certain QFs as having sufficient market access that it removes (for
those QFs) the utility’s obligation to purchase excess power generated by the QF.
Industrials/Amtrak explain that many customers with QFs were required by this status
change to secure interconnection service and market-based rate authority to sell excess
energy into the PJM markets.585 Industrials/Amtrak argue this “history should not limit
580 Compliance Transmittal at 9-10.
581 Id. at 10 (citing 16 U.S.C. § 824a-3; 18 C.F.R. § 292.204 (2025)).
582 Id.
583 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 8, 17.
584 Id. at 8.
585 Id. at 8, 20, 22.
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the ability of retail customers with cogeneration facilities to avail themselves of retail
BTMG netting for energy production behind the retail meter.”586
Industrials/Amtrak argue that the BTMG netting rules ensure QFs have access to
backup power to which they are entitled by PURPA, at rates that are not based upon an
assumption that forced outages or other reductions in electric output by all QFs on the
system will occur simultaneously, during system peak, or both.587 Industrials/Amtrak
contend that the FCD or NFCD transmission services would not be sufficient to replace
netting, because the FCD transmission service is calculated on the maximum the load
might draw from the grid when the QF would only use the system sporadically, and
NFCD transmission service must be scheduled in advance. Industrials/Amtrak also argue
that these services do not align with the costs or risk profile of cogeneration QFs, such
that, without netting, QF customers may lose their ability to manage costs even if their
load and generation are synchronized or they never rely on transmission services,
creating a cost-causation gap.588
Industrials/Amtrak argue that exempting QFs is appropriate and consistent with
the goals of the December Order because the Commission did not address PURPA.
Industrials/Amtrak also argue that no circumstances have changed with regards to QFs,
which have been operating similarly for decades, and that PJM acknowledges that
existing retail BTMG arrangements with QFs have been in place without operational
issues. Industrials/Amtrak further argue that QFs contribute to resource adequacy and
reliability because some are limited in their use of the transmission system by the
integration between the load and generation.589
Eastman argues that the proposed changes to BTMG netting ignore the operational
realities of facilities like Eastman’s Kingsport facility, which uses its on-site electrical
generation not only to provide electric power but also steam necessary for industrial
processes at the facility. Eastman explains that if the Kingsport facility is unable to
generate power, it also cannot generate steam, which reduces the industrial output and the
need for additive power from the grid. Eastman claims that during periods of grid stress,
the Kingsport facility is more likely to support the grid than to create operational
586 Id. at 22.
587 Id. at 19.
588 Id. at 20-21.
589 Id. at 17-19, 21.
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constraints. Therefore, the Commission should allow BTMG facilities like the Kingsport
facility to continue to net.590
c.
Answer
Industrials/Amtrak note that many of the customers impacted by the change in
BTMG netting rules are QFs under PURPA, subject to efficiency standards (and for
non-cogeneration QFs, size limits).591
d.
Determination
Consistent with our determination on rehearing,592 PJM must submit a further
compliance filing that includes a process to exempt certain cogeneration QFs from the
new retail BTMG netting rules if they demonstrate that they are integrated with load such
that, when their generating facility trips offline, the load follows. We therefore reject
PJM’s compliance filing as it relates to QFs. Specifically, we reject PJM’s proposal to
exempt from the materiality threshold all QFs serving as retail BTMG as of the date of
the December Order.593 PJM has not demonstrated that all load with BTMG that is either
designated, or eligible to be designated, as a QF is meaningfully distinguishable from
load with other categories of BTMG for purposes of the concerns and directives
discussed in the December Order.
In the December Order, the Commission found that PJM’s retail BTMG netting
rules could create resource adequacy and reliability risks because PJM is obligated to
serve transmission customers using BTMG but does not consider such customers in
transmission and resource adequacy planning.594 The Commission found that PJM’s
existing retail BTMG netting rules do not limit the amount of qualifying load that a
Network Customer may net by using BTMG and do not provide any protections against
this potential transmission and resource adequacy planning problem or against the costs
of maintaining sufficient resources to serve these loads being shifted onto other
590 Eastman Protest and Comments on Compliance Filing at 5, 8.
591 Industrials/Amtrak Answer at 3, 5-6.
592 See supra Part IV.C.1.c.i.
593 Compliance Transmittal at 9; PJM, Proposed Tariff, § I.1 Definitions R-S
(Retail Behind The Meter Generation) (46.0.0) and § VIII.A 400, Definitions R (Retail
Behind The Meter Generation) (7.0.0).
594 December Order, 193 FERC ¶ 61,217 at P 186.
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customers.595 The Commission did not distinguish in its determination between load
served by QFs that are BTMG and load served by other categories of BTMG.
PJM argues that some QFs may have economic benefits and are energy efficient,
but PJM does not demonstrate that loads served by QFs that are BTMG do not cause the
concerns the Commission discussed in the December Order.596 Nor does PJM
demonstrate why these loads are not similarly situated to other loads served by other
categories of BTMG.
PJM also notes that QFs have size limitations and cogeneration QFs must meet
efficiency requirements.597 However, the Commission in the December Order directed a
materiality threshold because netting a smaller amount of load does not raise the same
level of resource adequacy and reliability concerns as netting above the threshold.598
PJM does not demonstrate why the materiality threshold should apply differently to load
served by QFs that are BTMG and load served by other categories of BTMG. Further,
efficiency requirements are not unique to QFs—other generators may have efficiency
requirements for other reasons or meet similar efficiency targets on their own. PJM has
not demonstrated why such requirements are a meaningful consideration in whether to
apply disparate treatment to load served by QFs that are BTMG and load served by other
categories of BTMG. Industrials/Amtrak similarly argue that QFs contribute to resource
adequacy and reliability because some are limited in their use of the transmission system
due to the integration between the load and generation.599 However, as
Industrials/Amtrak acknowledge, this is only true of some QFs, and above we have
recognized that a particular subgroup, cogeneration QFs, warrant different treatment.
Industrials/Amtrak also argue that it is not clear whether QFs will have access to
the FCD or NFCD transmission services.600 As discussed supra, Eligible Customers
taking transmission service on behalf of Co-Located Loads, as well as Eligible Customers
taking transmission service on behalf of a load with BTMG, may elect to take FCD
595 Id.
596 See Compliance Transmittal at 10 (broadly asserting that BTMG arrangements
with QF status have been netting within PJM without known operational issues to date).
597 Compliance Transmittal at 10 (citing 16 U.S.C. § 824a-3; 18 C.F.R. § 292.204).
598 December Order, 193 FERC ¶ 61,217 at P 221.
599 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 18-19,
21.
600 Id. at 20.
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and/or NFCD transmission services.601 While we acknowledge that Industrials/Amtrak
also argue that these new transmission services will not replace netting,602 our
determination herein to allow Eligible Customers taking transmission service on behalf of
loads with BTMG to take transmission service based on contract demand rather than
NITS should they so choose could help such Eligible Customers to manage costs if they
infrequently rely on transmission service or can reserve needed transmission service in
advance (such as when the QF that serves them is on a planned maintenance outage).
Industrials/Amtrak argue that without retail netting, QFs may be denied access to
backup service at rates that are not based upon an assumption that forced outages or other
reductions in electric output by all QFs on the system will occur simultaneously, during
system peak, or both, as required by PURPA. Under the Commission’s PURPA
regulations, the rates at which a host utility provides backup service must be just and
reasonable and (1) shall not be based upon an assumption (unless supported by factual
data) that forced outages or other reductions in output by all QFs on an electric utility’s
system will occur simultaneously, or during system peak, or both; and (2) shall consider
the extent to which scheduled outages of the QF can be usefully coordinated with
scheduled outages of the utility’s facilities.603 The Commission’s directive in the
December Order to PJM to revise its Retail BTMG netting rules implicates the terms of
the Tariff for the provision of transmission service, specifically NITS, not back-up
service. Therefore, Industrials’/Amtrak’s concern regarding backup service appears to
conflate rates for sales of back-up power and rates for transmission service, rendering the
concern misplaced. As is already the case elsewhere, such as in Midcontinent
Independent System Operator, Inc. (MISO),604 NITS transmission rates in PJM, going
forward, will be based on gross demand during the system peak. Because this directive
from the December Order has no bearing on the rates at which a host utility provides
backup service to QFs, it necessarily does not conflict with the requirement in the
Commission’s PURPA regulations that the rates for such backup service not assume all
QFs are on forced outage.
601 See supra Part IV.B.3.c.
602 Industrials/Amtrak Joint Protest and Comments on Compliance Filing at 20.
603 18 C.F.R. § 292.305(c).
604 See Midwest Indep. Transmission Sys. Operator, Inc., 106 FERC ¶ 61,073,
at P 26 (2004) (“[MISO]’s proposal to base Network Service charges for delivery of
station power on the basis of coincident-peak output is not consistent with its OATT or
with Commission precedent. Accordingly, [MISO] should include load served by
behind-the-meter generation, including station power load met through
on-site self-supply, in Network Load when it charges for Network Service.”).
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With respect to Eastman’s arguments, Eastman appears to reference a
cogeneration facility, which uses its on-site electrical generation to provide not only
electric power but also steam necessary for industrial processes at the facility.605 Because
we set aside, in part, the December Order and find that certain cogeneration QFs should
be exempted from the replacement rate upon a demonstration that they do not present the
reliability or resource adequacy concerns discussed in the December Order, Eastman’s
concern appears to be addressed.606
B.
Transmission Service
1.
December Order
The Commission directed PJM to modify its Tariff to require that the Eligible
Customer taking transmission service on behalf of a Co-Located Load takes one of three
transmission services: (1) NITS or Interim NITS, (2) a new FCD transmission service, or
(3) a new NFCD transmission service.607 The December Order set many of the terms and
conditions of these services for paper hearing procedures.608
The December Order stated that Interim NITS must allow an Eligible Customer
that has requested NITS on behalf of a Co-Located Load to take non-firm transmission
service that can be interrupted until the Network Upgrades necessary to provide NITS are
complete and the Co-Located Load can be designated as Network Load.609 The
Commission also found that this service should be temporary, available only to Eligible
Customers that have requested NITS on behalf of Co-Located Loads that cannot yet be
reliably served with NITS and only until the necessary Network Upgrades are completed
and the Co-Located Load is designated as Network Load. The December Order further
stated that Interim NITS would be optional for an Eligible Customer seeking NITS on
behalf of a Co-Located Load and only available to the extent PJM determines that it can
provide some level of interim service reliably. The Commission found that Eligible
Customers should pay the NITS rate for this service, as well as ancillary services charges
and charges for black start service, but they will not be charged for generation capacity
because, as interruptible loads, capacity will not be procured on their behalf until such
time as the Network Upgrades are in place to serve them. The Commission clarified that
605 Eastman Protest and Comments on Compliance Filing at 5.
606 See supra Part IV.C.1.c.i.c.
607 December Order, 193 FERC ¶ 61,217 at P 193.
608 Id. P 194.
609 Id. P 200.
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Interim NITS may not be combined with the FCD transmission service or NFCD
transmission service.
With respect to FCD and NFCD transmission services, the Commission found
these services should be permanent transmission services available to Eligible Customers
taking transmission service on behalf of Co-Located Load.610 The December Order
provided that the Co-Located Load must be able and willing to prevent or limit its energy
withdrawals and must be separately metered from the associated generator. The
December Order also stated that Eligible Customers taking transmission service on behalf
of Co-Located Loads may take a combination of FCD transmission service and NFCD
transmission service, but that Eligible Customers taking transmission service on behalf of
Co-Located Loads that will not withdraw energy from the transmission system must take
NFCD transmission service at 0 MW. The Commission also found that Eligible
Customers taking either service on behalf of Co-Located Load would be charged for
regulation and black start services based on gross demand, rather than the reserved
amount of transmission service.611
The Commission found that FCD transmission service should have the same
reservation and curtailment priority as existing firm transmission services at the level of
the contract demand and be charged for transmission, ancillary services, and capacity
based on the contract demand, with the exception of regulation and black start services.612
The Commission explained that PJM would only have an obligation to plan for the
Network Upgrades necessary to serve Eligible Customers taking this new FCD
transmission service on behalf of Co-Located Loads at their contract demand, and that
PJM would procure capacity for these customers and should charge them based on their
contract demand.613 The Commission further found that FCD transmission service
should have a minimum term of one year and that PJM should propose an anti-toggling
mechanism for Eligible Customers switching between FCD and NFCD transmission
services.614
With respect to NFCD transmission service, the Commission found the service
should be available during normal operation and curtailed during emergency operations,
similar to existing non-firm transmission service options. The Commission found the
610 Id. P 206.
611 Id. PP 209, 216.
612 Id. PP 208-209.
613 Id. P 210.
614 Id. P 213.
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service should be available for terms ranging from one hour to one month and charged
based on as-reserved contract demand.615 The December Order clarified that PJM should
not include NFCD transmission service loads in its transmission or resource adequacy
planning.616
2.
PJM Compliance Filing
PJM clarifies that the compliance filing only includes the organizational Tariff
changes needed to implement the Commission’s compliance directives regarding creating
new transmission services and that the majority of the changes will be determined
through the paper hearing.617 First, PJM submits several “shell” Tariff sheets, including a
new Part XI governing the new transmission services, new Attachment F-3A for the
service agreement for Eligible Customers taking NITS or Interim NITS on behalf of a
Co-Located Load, and Attachment F-4 for the service agreement for Eligible Customers
taking FCD transmission service or NFCD transmission service on behalf of a
Co-Located Load.618 PJM states that it will file the full text of these sections upon the
Commission’s decision following the conclusion of the paper hearing.619
PJM states that it further proposes modifications to Tariff Part III, governing
NITS, to clarify that an Eligible Customer taking transmission service on behalf of
Co-Located Load must take a transmission service or take steps to disconnect the load
from the transmission system.620 PJM also proposes new language clarifying that an
Eligible Customer taking transmission service on behalf of a Co-Located Load may not
take NITS or Interim NITS at the same time as FCD or NFCD transmission service.621
Finally, PJM proposes that Co-Located Load that is not served by an Eligible Customer
615 Id. PP 215-216.
616 Id. P 218.
617 Compliance Transmittal at 18-19.
618 Id. at 19-21.
619 Id. at 21.
620 Id. at 22.
621 Id. at 22-23.
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taking transmission service on its behalf “must take all necessary steps to disconnect
from the Transmission System.”622
3.
Pleadings
EDFps supports PJM’s proposed framework for the new transmission services.623
Constellation requests modifications to PJM’s proposed Tariff revisions for Interim
NITS, including: (1) replacing a load’s “option to seek” Interim NITS with an “option to
take”; (2) revising section 28.1 of the Tariff to clarify that Interim NITS is available to
Eligible Customers taking service on behalf of Co-Located Load; and (3) revising
section 29.1 of the Tariff to clarify that the required conditions to receive NITS also
apply to Interim NITS.624
Crusoe argues that PJM’s proposal in the paper hearing does not answer critical
questions such as how the initial contract demand quantity is determined, whether
contract demand quantities can be adjusted as Co-Located Load grows in phases, or how
PTPS interacts with Co-Location Arrangements where both generation and load sit on the
developer’s side of the Point of Change in Ownership.625
Crusoe supports Interim NITS as a workable, near-term solution to allow load to
operate on the transmission system while a Co-Located Generator and/or retail BTMG is
still being built and interconnected.626 Crusoe claims, however, that PJM’s proposed
approach appears to treat a new Co-Located Generator as equivalent to a Network
Resource prior to it receiving such status. On that basis, Crusoe speculates that PJM may
intend to prevent a Co-Located Generator or retail BTMG from supplying energy to
Co-Located Load during a grid curtailment event if that load is being served via Interim
NITS. Crusoe contends that this prohibition would create a disincentive to large load
customers using Interim NITS as an option for speedy interconnection.
DCC similarly alleges that PJM’s proposal to prohibit customers from relying on a
Co-Located Generator during curtailment events makes the proposal unworkable and
without practical value. DCC also requests that PJM define the trigger, scope, and
sequence of Interim NITS curtailment with respect to the operational limits identified in
622 PJM, Proposed Tariff, Part III (NITS) (4.0.0).
623 EDFps Comments on Compliance Filing at 8.
624 Constellation Protest and Comments on Compliance Filing at 18-19.
625 Crusoe Comments on Compliance Filing at 8.
626 Id. at 6.
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the study and should not be able to curtail load for unrelated, broader resource adequacy
concerns.627
Joint Parties argue that the Commission should reject PJM’s proposed Tariff
revisions that preclude retail loads served by BTMG from taking the new transmission
services and otherwise limit eligibility for the new transmission services to load that is
connecting to a generator with interconnection rights. Joint Parties argue that these retail
loads are similarly situated to Co-Located Loads in their willingness and ability to limit
their energy withdrawals from the transmission system under certain conditions.628
DCC argues that PJM’s proposal does not provide clear timelines for customers to
be transitioned from Interim NITS to NITS.629 DCC expresses concern that, without
clear timelines, Interim NITS could persist indefinitely, creating uncertainty for
customers making long-term investments.
4.
Answers
Indicated TOs argue that the Commission should reject requests to reject or defer
action on PJM’s proposal to limit the new transmission services to Co-Located Load,
because, Indicated TOs contend, the December Order limited such services to Eligible
Customers taking transmission service on behalf of Co-Located Load. Indicated TOs
argue that there is no evidence in the record to support that load-only customers should
be entitled to use the new transmission services, which Indicated TOs explain are tied to
generator-specific attributes that load-only customers do not share, such as an associated
generator, separate metering from the generator, and the ability and willingness to
prevent or limit withdrawals through the Co-Location Arrangement itself.630
Indicated TOs state they do not oppose the requested clarification that Interim
NITS customers be permitted to continue serving on-site load with a Co-Located
Generator during a curtailment event, provided that PJM implements safeguards to ensure
that any such operation does not result in unreserved use of the transmission system or
otherwise compromise reliability.631
627 DCC Comments on Compliance Filing at 6-7.
628 Joint Parties Protest of Compliance Filing at 10.
629 DCC Comments on Compliance Filing at 8.
630 Indicated TOs April 24 Answer at 6-7.
631 Id. at 7-8.
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BTMG Parties argue that the record contains ample evidence to support extending
new transmission service eligibility to all customers willing and able to limit withdrawals
from the grid, including load-only customers served by BMTG or otherwise able to
consume flexibly.632 BTMG Parties contest Indicated TOs’ claim that there is absolutely
no evidence in the record, noting that the Commission relied on Antora’s comments
explaining that its thermal battery technology provides for an inherently flexible,
low-load factor load, whether or not co-located with generation.633 BTMG Parties argue
that the ability to inject to the grid is not required to enable a load to limit withdrawals
from the transmission system, and that the Commission should require PJM to tailor new
transmission service eligibility more closely to the Commission’s justification in issuing
the Co-Location Order, namely the willingness and ability to limit withdrawals from the
transmission system under specified circumstances.634 BTMG Parties contend that if a
load is able to meet technology-neutral technical requirements to demonstrate reliable
curtailment eligibility, it should be allowed to take the new transmission services.
5.
Determination
We accept PJM’s compliance filing with respect to outlining new transmission
services in the Tariff, noting that, as discussed above in Part IV.B.3, we set aside, in part,
the December Order and direct PJM to submit further compliance to revise its Tariff to
extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions.635 We
find that PJM complies with the directive in the December Order to modify its Tariff to
require that an Eligible Customer taking transmission service on behalf of Co-Located
Load takes one of three transmission services: (1) NITS or Interim NITS, (2) a new FCD
632 BTMG Parties Answer at 8.
633 Id. at 5-6 (citing December Order, 193 FERC ¶ 61,217 at P 199).
634 Id. at 8-9.
635 Specifically, we accept Proposed Tariff, § III.28.1 (Scope of Service) (2.0.0);
§ III.29.1 (Conditions Precedent for Receiving Service) (4.0.0); § III.29.2 (Application
Procedures) (4.0.0); § III.31.6 (Annual Load and Resource Information Update) (4.0.0);
Part XI (Transmission Services Available for Eligible Customers Taking Service on
Behalf of Co-Located Loads) (0.0.0); attach. F-3A (Service Agreement for Regional
Network Integration Transmission Service And/or Interim Regional Network Integration
Transmission Service (For Co-Located Load)) (0.0.0); and attach. F-4 (Service
Agreement For Contract Demand Transmission Service (For Co-Located Load)) (0.0.0).
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transmission service, or (3) a new NFCD transmission service.636 We acknowledge
PJM’s statement that it filed on compliance only a limited number of the changes directed
in the December Order, given the number of issues set to be resolved through the paper
hearing.
However, we reject the Tariff provisions proposing that Co-Located Load that is
not served by an Eligible Customer taking transmission service on its behalf “must take
all necessary steps to disconnect from the Transmission System.”637 We find this
provision duplicative of PJM’s proposed changes to Part VIII, Subpart B,
section 403(A)(1)(r)(iv), which specify that “[t]o the extent that a Project Developer
seeks to serve Co-Located Load using its generating facility but not identify an Eligible
Customer, then the Project Developer must terminate its generating facility’s
interconnection to the Transmission System and serve the Co-Located Load fully
islanded from the Transmission System.”
We reject Constellation’s request to direct PJM to modify its proposed tariff
language such that a load has an “option to take” Interim NITS instead of an “option to
seek” Interim NITS.638 We acknowledge, as Constellation notes, that the December
Order stated that “[t]his new interim, non-firm transmission service must allow an
Eligible Customer that has requested NITS on behalf of a Co-Located Load to take
non-firm transmission service that can be interrupted until the Network Upgrades
necessary to provide NITS are complete . . . .”639 However, the December Order also
stated that Interim NITS “would only be available to the extent PJM determines that it
can provide some level of interim service reliably.”640 We accept PJM’s proposal and
clarify that Interim NITS is an option but not a right, as it is available to an Eligible
Customer taking transmission service on behalf of Co-Located Load only to the extent
that PJM determines it can be provided reliably. Constellation appears to request that the
Commission require PJM to provide Interim NITS regardless of this reliability limitation,
which would not be just and reasonable or consistent with the December Order. We
reject Constellation’s other requested clarifications on the required conditions to receive
Interim NITS as not required for PJM to comply with the December Order. Further,
because PJM proposes to create a new Tariff section governing Interim NITS,
636 December Order, 193 FERC ¶ 61,217 at P 193.
637 PJM, Proposed Tariff, Part III (General) (4.0.0).
638 Constellation Protest and Comments on Compliance Filing at 18-19.
639 December Order, 193 FERC ¶ 61,217 at P 200.
640 Id.
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Constellation has not shown why it is necessary to add details regarding Interim NITS to
the existing Tariff sections addressing NITS.641
In its comments on the compliance filing, Crusoe makes several misplaced
arguments about the illustrative tariff PJM submitted in the paper hearing.642 Crusoe
argues that PJM’s illustrative tariff does not explain how the initial contract demand
quantity is determined. It is not clear what Crusoe means, given that the purpose of FCD
and NFCD transmission services is to allow an Eligible Customer taking service on
behalf of Co-Located Load to request a specific contracted amount of transmission
service.643 The initial level of transmission service will thus be determined in the first
instance by the requesting Eligible Customer. PJM will evaluate those requests pursuant
to its study process, which we address below.644 Crusoe also argues that PJM does not
explain how PTPS interacts with Co-Location Arrangements where both the generator
and load sit on the Interconnection Customer’s side of the Point of Change in Ownership.
However, this arrangement appears to refer to PJM’s proposed change to the definition of
Co-Located Load, which we reject herein.645
Crusoe’s request for clarification as to how phased-in load will be treated under
FCD and NFCD transmission services is addressed below in Part VI.A.2. Crusoe and
DCC also make arguments about curtailment rules or procedures for Eligible Customers
taking Interim NITS on behalf of Co-Located Load, and that issue is addressed below in
Part VI.G. Finally, comments urging the Commission to reject PJM’s compliance filing
for failing to make the new transmission services available to Eligible Customers on
behalf of non-Co-Located Loads are untimely requests for rehearing. These commenters
argue for a modification of the December Order, not that PJM has failed to comply with
it.646 However, we address related arguments on rehearing of the December Order above
in Parts IV.B.3 and IV.C.1.b.ii.
641 Compliance Transmittal at 19-20.
642 Crusoe Comments on Compliance Filing at 8. To accompany its initial brief on
paper hearing, PJM submitted an illustrative tariff with proposed rates, terms, and
conditions for the three new transmission services.
643 See December Order, 193 FERC ¶ 61,217 at PP 208, 216.
644 See infra Part VI.A.3.
645 See infra Part V.D.5.a.
646 See, e.g., ISO New Eng. Inc., 132 FERC ¶ 61,098 at P 12 (“The Commission
has held that requests to alter a compliance filing in a manner that differs from the order
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Finally, we note that DCC’s concerns regarding the terms and conditions of
Interim NITS are misplaced arguments about the illustrative tariff PJM submitted in the
paper hearing and are discussed in Part VI.H.
C.
Necessary Studies
1.
December Order
The Commission directed PJM to revise the Tariff to clarify that an existing
Interconnection Customer seeking to modify its ISA or GIA to allow its generator to
serve Co-Located Load, including to reflect any reduction in its CIRs, must follow the
Necessary Study process to effectuate such Co-Location Arrangement.647 In addition, the
Commission directed PJM to add to the Tariff a description of the scope of the analysis
that it will perform as part of the Necessary Study process when an Interconnection
Customer seeks to use its existing generator to serve Co-Located Load, consistent with
PJM’s discussion of how it conducts necessary studies associated with Interconnection
Customers seeking to amend their ISAs or GIAs to use existing generators to serve
Co-Located Load, including to reflect any reduction in CIRs. The Commission found
that PJM must include a description of the information that the Interconnection Customer
must provide about the Co-Located Load for the purposes of the Necessary Study, and
that the Necessary Study process must assess any special protection scheme that is part of
a Co-Location Arrangement.648
The Commission directed PJM to revise the Tariff to indicate that the
Interconnection Customer will be responsible for the costs of any modifications or
Network Upgrades that are needed as a result of PJM’s study of the change to the ISA or
GIA to allow the existing generator to serve Co-Located Load, including to reflect any
reduction in CIRs, inclusive of all necessary Network Upgrades.649 The Commission
found that the Tariff should make clear that an existing generator may not commence
service to a Co-Located Load until all required Network Upgrades, special protection
schemes, and metering are in service.650 Finally, the Commission clarified that an
existing generator may not begin serving Co-Located Load that is not Network Load until
requiring the compliance filing constitute a collateral attack on the order requiring the
compliance filing.”).
647 December Order, 193 FERC ¶ 61,217 at P 226.
648 Id. P 227.
649 Id. P 228.
650 Id.
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it has delisted its CIRs for the portion of the generator to be designated to serve any
Co-Located Load that is not receiving NITS.651
2.
PJM Compliance Filing
PJM states that it proposes changes to Parts III and VIII of the Tariff to comply
with the Commission’s directives regarding the Necessary Study process for existing
Interconnection Customers, including clarifying that customers must enter into a
Necessary Study Agreement with PJM.652 PJM also proposes to require customers to
provide PJM with all information needed to perform the Necessary Studies, which PJM
proposes to detail in the PJM manuals.653 PJM states that a Project Developer may not
make changes to its facilities until it has completed the Necessary Study process and the
amended GIA is effective. PJM proposes that the Tariff state that Necessary Studies to
be performed include thermal, short circuit, and stability studies under various seasonal
and load conditions, as detailed in the PJM manuals, and assess any necessary control
technologies and protection systems required. Lastly, PJM states that the Tariff will
require the Project Developer to be responsible for the cost of any modifications or
Network Upgrades necessary as a result of an Interconnection Customer’s decision to
serve the Co-Located Load.654
PJM clarifies that these changes apply to all existing interconnection customers,
regardless of whether they have effective interconnection agreements issued pursuant to
Parts IV, VI, VII, or VIII of the Tariff.655 PJM states that, should an interconnection
customer not have a three-party interconnection agreement involving PJM, the customer
would need to first convert to a three-party agreement before following the Necessary
Study process.
3.
Pleadings
A number of parties have concerns with PJM’s compliance filing. Several parties
protest PJM’s compliance filing and urge the Commission to require PJM to establish
651 Id. P 230.
652 Compliance Transmittal at 24-25.
653 Id. at 25 (citing December Order, 193 FERC ¶ 61,217 at P 227).
654 Id. at 25-28.
655 Id. at 24-25.
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deadlines to complete the Necessary Study process.656 Constellation urges the
Commission to direct PJM to detail the specific provisions in the PJM manuals to which
the proposed Tariff language refers because it does not specify whether PJM is proposing
to use the existing Necessary Study process or a new process, and the existing
requirements set forth in PJM Manual 14C do not specifically reference the studies to be
performed. Crusoe and Constellation urge the Commission to direct PJM to revise the
proposed Tariff’s scope of the analysis to explicitly relate to reliability impacts only,
rather than impacts generally.657 Crusoe contends that PJM should create a clear,
published standard for what triggers the Necessary Study process.
Energy Artisans argue that PJM’s proposed Necessary Study requirements will
force industrial users to fund thermal, short circuit, and stability studies and bear the costs
of Network Upgrades, control technologies and protection systems, and redundant
metering equipment identified during these studies. Energy Artisans allege that these
requirements will force many industrial facilities to cease operations, which will lead to
higher Network Loads and exacerbate resource adequacy issues in PJM.658
Vistra and Constellation request that PJM clarify how the proposed Tariff
revisions describing the Necessary Study process would apply to interconnection
customers who have already submitted requests and are undergoing studies.
Constellation and Vistra assert that Co-Location Arrangements will face significant
delays if they must reenter the Necessary Study process.659 Vistra maintains that PJM’s
failure to include a transition mechanism is an unjustified departure from the
Commission’s approach to interconnection reform, in which the Commission has
regularly required transition mechanisms to avoid disruption and stranded investments.660
Constellation proposes to clarify that Project Developers with existing requests for
Necessary Studies for Co-Location Arrangements will be allowed to rely on the results of
those studies to the extent relevant in light of the transmission service the Eligible
656 Constellation Protest and Comments on Compliance Filing at 12, 17; DCC
Comments on Compliance Filing at 7; Crusoe Comments on Compliance Filing at 9.
657 Constellation Protest and Comments on Compliance Filing at 12-14; Crusoe
Comments on Compliance Filing at 9.
658 Energy Artisans Protest of Compliance Filing at 1-2.
659 Constellation Protest and Comments on Compliance Filing at 15; Vistra Protest
of Compliance Filing at 4, 6-8.
660 Vistra Protest of Compliance Filing at 4-5.
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Customer plans to request on behalf of the Co-Located Load.661 Constellation and Vistra
argue that requiring interconnection customers to restart the process would be
inconsistent with the filed-rate doctrine and rule against retroactive ratemaking and
would effectively penalize parties for failing to comply with rules that did not exist at the
time they acted.662
Vistra contends that PJM neither justifies its proposal to require interconnection
customers with older interconnection agreements to enter into the new pro forma GIA
nor shows how this proposal is consistent with the Commission’s directives. Vistra
suggests that this proposal is unrelated to the Commission’s compliance directives and
requests clarity about when the interconnection customer needs to enter into the new GIA
in the Necessary Study process. Vistra also asserts that PJM’s proposal could result in
disputes about whether and how provisions in the updated pro forma GIA apply to older
generators, disrupting long-standing Commission precedent. Separately, Vistra indicates
that, because PJM locates Necessary Study revisions in Part VIII, which applies to New
Service Requests on or after October 1, 2021, it is unclear whether interconnection
customers that entered the interconnection process before that date may use the
Necessary Study process.663
Joint Parties argue that PJM should be required to clarify that an existing
interconnection customer can nominate a joint withdrawal limit in the Necessary Study
process.664 Joint Parties argue that this clarification is necessary to realize the December
Order’s stated intent of ensuring that Co-Located Loads do not pay for services that they
do not use and do not trigger Network Upgrades that they do not need.665 Joint Parties
argue that PJM’s proposed Tariff revisions appear to remain silent as to how it will treat
energy withdrawals in studying Co-Located Load interconnection requests. Joint Parties
state that they seek modest clarifications from PJM that, to the extent PJM performs
interconnection study steps involving withdrawal assumptions for Co-Located Loads, an
energy storage interconnection customer will be able to specify limits to the injection and
661 Constellation Protest and Comments on Compliance Filing at 14-15.
662 Id. at 15; Vistra Protest of Compliance Filing at 4, 6.
663 Vistra Protest of Compliance Filing at 14-16.
664 Joint Parties Protest of Compliance Filing at 4-6. See also Earthjustice Reply
Brief at 22.
665 Joint Parties Protest of Compliance Filing at 4-5.
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withdrawal rights reflecting the proposed integration of the storage and Co-Located Load
facilities.666
Parties argue that PJM’s proposal for delisting CIRs may be unjust, unreasonable,
unduly discriminatory, or inconsistent with the Commission’s directives in the
December Order. Vistra claims that PJM’s proposal would require existing generators to
provide PJM with the amount of reduction to CIRs to facilitate the Co-Located Load
configuration, which Vistra argues is vague and potentially overbroad because it could be
read to require that generators include in their CIR reduction any portion of a facility that
will ever provide power to a Co-Located Load. Vistra and DCC express concern that
PJM’s proposal could require generators to delist more CIRs than necessary.667 Vistra
further contends that allowing secondary units to provide occasional, interruptible service
to Co-Located Load and to retain their CIRs would be consistent with the Tariff. Vistra
and Constellation argue that capacity resources that serve Co-Located Load on an
interruptible basis should not be required to delist CIRs.668 Vistra presents an additional
concern with PJM’s proposal for reducing CIRs, namely, that PJM fails to explain how it
will assess the impact of the reduction of CIRs.669 Vistra alleges that because PJM’s
proposal is vague on this point, PJM could, for example, improperly incorporate resource
adequacy considerations into its Necessary Study process.
4.
Determination
We find that PJM’s proposed revisions to its Necessary Study process partially
comply with the directives set forth in the December Order and therefore accept the
Tariff revisions in part, reject them in part, and direct a further compliance filing as
discussed below.
We accept PJM’s proposed revisions to Part VIII, Subpart A, section 401 and
Part IX, Subpart G of the Tariff to comply with the directives in the December Order by:
(1) adding a description of the scope of the analysis that it will perform as part of the
Necessary Study process when an Interconnection Customer seeks to use its existing
generator to serve Co-Located Load; (2) requiring the Interconnection Customer to be
responsible for the costs of any modifications or Network Upgrades that are needed as a
666 Id. at 5.
667 Vistra Protest of Compliance Filing at 8-10; DCC Comments on Compliance
Filing at 7.
668 Vistra Protest of Compliance Filing at 11; Constellation Protest and Comments
on Compliance Filing at 19.
669 Vistra Protest of Compliance Filing at 12.
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result of PJM’s study of the change to the ISA or GIA to allow the existing generator to
serve Co-Located Load, including to reflect any reduction in CIRs, inclusive of all
necessary Network Upgrades; and (3) clarifying that an existing generator may not
commence service to a Co-Located Load until all required Network Upgrades, special
protection schemes, and metering are in service.670 We also accept PJM’s proposed
revisions to Part IX, Subpart A, Form of Application and Studies Agreement to facilitate
PJM’s collection of the information necessary to perform requested Necessary Studies.671
However, with respect to Constellation’s argument that PJM’s proposed Tariff revisions
may lack clarity, we direct PJM to specify in its compliance filing what types of
additional detail about the studies will be available in the PJM manuals.
We also note in response to Constellation that, per the December Order, PJM’s
proposal seeks to clarify the existing Necessary Study process, not create a new one.672
While parties request that the Commission establish deadlines for the Necessary Study
process, we note the December Order did not include any such requirement, and our
review of these proposed Tariff revisions is limited to whether PJM complies with the
directives in the December Order.673 In response to parties’ requests regarding the trigger
and scope of the Necessary Study process, we note that the Commission in the December
Order directed PJM to clarify its study procedures for an Interconnection Customer that
will use its generator to serve Co-Located Load but did not otherwise direct changes to
the trigger or scope of the Necessary Study process. Per the Tariff, the scope of the
Necessary Study is to determine whether planned modifications to an Interconnection
Customer’s facilities “will have a permanent material impact on the Transmission System
and to identify the additions, modifications, or replacements to the Transmission System,
670 December Order, 193 FERC ¶ 61,217 at PP 227-228. We also accept the
conforming edit to the definition of Necessary Study in Proposed Tariff, § VII.A 300,
Definitions N (3.0.0) and § VIII.A 400, Definitions N (4.0.0).
671 Compliance Transmittal at 27; PJM, Proposed Tariff, pt. IX, subpt. A, (Form of
Application and Studies Agreement) (4.0.0).
672 See Compliance Transmittal at 25 (“The thrust of PJM’s proposed revisions
require any Existing Interconnection Customer that seeks to serve Co-Located Load to
follow a clarified necessary study process detailed in Part VIII of the Tariff and the
related Form of Necessary Study Agreement set forth in Tariff, Part IX, Subpart G.”).
673 See, e.g., PJM Interconnection LLC, 119 FERC ¶ 61,179, at P 12 (2007) (“The
purpose of a compliance filing is to make the directed changes and the Commission’s
focus in reviewing them is whether they comply with the Commission’s previously stated
directives.”) (citing AES Huntington Beach, LLC, 111 FERC ¶ 61,079, at P 60 & n.25
(2005)).
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if any, that are necessary, in accordance with Good Utility Practice, and/or to maintain
compliance with Applicable Laws and Regulations or Applicable Standards, to
accommodate the planned modifications.”674 Regarding Joint Parties’ requests regarding
study processes for Co-Located Loads paired with electric storage resources, we note that
the December Order did not address or otherwise direct changes as to any generator
interconnection study procedures for such resources.
We reject in part PJM’s proposed revisions to Part III of its Tariff regarding the
requirement for Interconnection Customers with effective ISAs pursuant to Part VI of the
Tariff or effective GIAs pursuant to Part VII of the Tariff to enter into a new GIA
pursuant to Part VIII of the Tariff and the pro forma GIA in Part IX, Subpart B. We
agree with Vistra that such a requirement is inconsistent with the Commission’s
recognition in the December Order that existing Interconnection Customers that seek to
modify their ISAs or GIAs must follow the Necessary Study process to effectuate a
Co-Location Arrangement.675 Interconnection Customers with effective ISAs or GIAs
must be able to modify those agreements and undergo the Necessary Study process
without entering into new GIAs.
We also agree with protesters that PJM’s proposed revisions lack clarity with
respect to how they apply to Interconnection Customers that have already executed
Necessary Study Agreements and for which PJM has already completed Necessary
Studies.676 The Commission found in the December Order that the Necessary Study
process lacked sufficient clarity and directed PJM to add the scope of the analysis it
performs as part of the Necessary Study process to its Tariff.677 However, the
Commission did not direct changes to the scope of the study, and PJM does not otherwise
demonstrate why Interconnection Customers seeking to serve Co-Located Load cannot
674 PJM, Intra-PJM Tariffs, pt. VIII.A, § 400 (Definitions N) (2.0.0) (definition of
Necessary Study).
675 December Order, 193 FERC ¶ 61,217 at P 226 (“[W]e direct PJM to submit,
within 60 days of the date of issuance of this order, a compliance filing to revise the
Tariff to clarify that an existing Interconnection Customer seeking to modify its ISA or
GIA to allow its generating facility to serve Co-Located Load, including to reflect any
reduction in its CIRs, must follow the necessary study process to effectuate such
Co-Location Arrangement.”) (emphasis added).
676 Constellation Protest and Comments on Compliance Filing at 15; Vistra Protest
of Compliance Filing at 4, 6.
677 December Order, 193 FERC ¶ 61,217 at P 227.
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rely on the results of Necessary Studies that have already been performed if the scope of
the study has not changed.
For these reasons, we direct PJM to submit a compliance filing within 60 days of
the date of issuance of this order to remove the requirement for Interconnection
Customers with existing ISAs pursuant to Part VI of the Tariff and GIAs pursuant to
Part VII of the Tariff to enter into a new pro forma GIA. We recognize that removing the
requirement for Interconnection Customers with existing ISAs pursuant to Part VI of the
Tariff and GIAs pursuant to Part VII of the Tariff to enter into a new pro forma GIA will
necessitate duplicating the appropriate Necessary Study Tariff provisions (Part VIII,
Subpart A, section 401.H.3) in those Tariff sections, and therefore we direct PJM to
include these Tariff revisions in its compliance filing. We find that this directive will
ensure that Interconnection Customers with effective ISAs or GIAs will not be required
to enter into new GIAs if they seek to modify their ISA or GIA to allow their generator to
serve Co-Located Load.
We also direct PJM to explain in its compliance filing how its changes ensure the
prohibition on Interconnection Customers serving Co-Located Loads from existing
generators until all required Network Upgrades, necessary control technologies and/or
protection systems, and metering identified as necessary are complete and in service,
applies to Interconnection Customers with currently effective GIAs, ISAs, and Necessary
Study Agreements, in addition to Interconnection Customers seeking new Necessary
Study Agreements and GIAs.
In response to Constellation’s request that the Commission clarify that
Interconnection Customers with existing requests for Necessary Studies for Co-Location
Arrangements may rely on the results of those studies to the extent relevant in light of the
transmission service the associated Eligible Customer plans to request on behalf of the
Co-Located Load, we clarify that the studies applicable to a transmission service request
for one of the new transmission services are distinct from the Necessary Study process,
which studies the modification of a generator interconnection. If an Eligible Customer
seeks to take one of the new transmission services on behalf of Co-Located Load, it must
request transmission service and follow the appropriate transmission service study
procedures as directed in this order.
With respect to Energy Artisans’ argument that requiring industrial users to bear
the costs of modifications or Network Upgrades will force industrial facilities to cease
operations and exacerbate resource adequacy issues in PJM, we dismiss this argument as
an untimely request for rehearing of the December Order’s finding that PJM’s existing
retail BTMG netting rules were no longer just and reasonable.678 We reiterate that the
678 Id. P 221; see supra P 232 & n.585.
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requirement to be responsible for costs of modifications or Network Upgrades applies
only to Interconnection Customers that seek to modify their ISA or GIA to allow their
generator to serve Co-Located Load, and this is a clarification of existing Tariff
provisions in the pro forma ISA and GIA, as explained above.679 Interconnection
Customers may choose to maintain their current ISAs or GIAs with no modifications, and
Interconnection Customers who do not wish to bear these costs may choose not to pursue
Co-Location Arrangements.
Consistent with our above discussion, we disagree with Vistra and Constellation
that capacity resources should not have to reduce their CIRs to serve Co-Located Load.680
We also reject without prejudice PJM’s proposed Tariff, Part IX, Subpart G, Form of
Necessary Studies Agreement, because PJM has proposed changes to the Cost
Responsibility section without explanation.681
D.
Other
1.
December Order
a.
Definition of Co-Located Load
In the December Order, the Commission directed PJM to adopt the definition of
Co-Located Load specified in the order: “a configuration that refers to end-use customer
load that is physically connected to the facilities of an existing or planned Customer
Facility on the Interconnection Customer’s side of the Point of Interconnection to the
PJM Transmission System.”682
b.
Generation Interconnection Procedures, pro forma GIA,
and Common Service Provisions
The Commission also directed PJM to revise its Tariff, VIII, Subpart B,
section 403 - Application Rules to add to the list of requirements for a New Service
679 Tariff, Intra-PJM Tariffs, OATT, Attachment O, Appendix 2, § 3.4(b)
Modification Costs (0.0.0); id., Part IX.B, Appendix 2, § 3.4(b) Modification Costs
(2.0.0).
680 See supra Part IV.C.2.a.iii.
681 PJM, Proposed Tariff, pt. IX, subpt. G (Form of Necessary Studies Agreement)
(3.0.0), § 15 (Cost Responsibility). Specifically, PJM proposes to raise the initial deposit
for the Necessary Studies from $25,000 to $50,000.
682 December Order, 193 FERC ¶ 61,217 at P 164.
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Request that an Interconnection Customer who will use its generator to serve Co-Located
Load must specify an Eligible Customer who will take transmission service on behalf of
the Co-Located Load.683 The Commission further directed PJM to submit revisions to
the generation interconnection procedures to specify any operational procedures or data
exchange requirements that PJM deems necessary for Co-Location Arrangements to
remedy the Tariff deficiencies, such as unique operational procedures and data exchange
requirements.684 The Commission noted that these revisions would establish a
requirement in the Tariff for the Eligible Customer to be charged for transmission and
ancillary services that the Eligible Customer must take on behalf of the Co-Located Load.
The Commission clarified that, should an Interconnection Customer wish to serve
Co-Located Load using its generator but not identify an Eligible Customer, then the
Interconnection Customer may take steps to terminate its generator’s interconnection to
the PJM transmission system and serve the Co-Located Load fully islanded from PJM’s
transmission system.685
The Commission also directed revisions to the Tariff, Part IX, Subpart B GIA to
specify that an Interconnection Customer that will use its generator to serve Co-Located
Load must specify an Eligible Customer that will take transmission service on behalf of
the Co-Located Load.686 The Commission directed PJM to add a new provision to Part I,
Common Service Provisions, of the Tariff that requires Interconnection Customers with
ISAs or GIAs executed, or requested to be filed unexecuted, prior to the effective date of
the revised generation interconnection procedures and pro forma GIA directed in this
order that wish to add Co-Located Load or are currently serving Co-Located Load to
publicly notify PJM of that addition and identify the Eligible Customer that will take
transmission service on behalf of that Co-Located Load.
2.
PJM Compliance Filing
a.
Definition of Co-Located Load
On April 16, 2026, the Commission issued an order rejecting the portion of PJM’s
first compliance filing proposing to define Co-Located Load in a manner that deviated
683 Id. P 188.
684 Id. P 188 & n.405.
685 Id. P 189.
686 Id. P 190.
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from the December Order, without sufficient explanation, by replacing the term “Point of
Interconnection” with “Point of Change in Ownership.”687
In the instant filing, PJM states that it proposes modifying the definition of
Co-Located Load directed by the Commission in the same manner as proposed in PJM’s
first compliance filing.688 PJM states that changing “Point of Interconnection” to “Point
of Change in Ownership” is consistent with or superior to the December Order’s directive
because it provides additional clarity to interconnection parties, is easier to administer,
and reduces litigation potential.689 PJM further explains “[w]hile Point of Change in
Ownership describes where a developer’s portion of the Interconnection Facilities
connect to the Transmission Owner’s portion of the Interconnection Facilities, Point of
Interconnection is a technical and physical term about ‘where’ those Interconnection
Facilities connect to the PJM Transmission System.”690 PJM states that the Commission
has broad authority to establish the replacement rate under FPA section 206 and that “one
stakeholder’s conditional protest in Docket No. ER26-1088 offers another alternative for
the Commission to consider in reliance on this Commission authority.”691 PJM explains
that “Point of Change in Ownership” will reduce litigation because parties “know what
interconnection facilities they own and can plan the connection of Co-Located Load to
such facilities accordingly” but that the protest in Docket No. ER26-1088 “does not
appear inconsistent with recognizing the principle that Co-Located Loads should only
interconnect to a Project Developer’s portion of the Interconnection Facilities.”692 PJM
notes that under the GIP, the Project Developer’s Interconnection Facilities are the
Interconnection Facilities between a Generating Facility and the Point of Change in
Ownership, and include the facilities and equipment and any modification to those
facilities and equipment that are necessary to physically and electrically interconnect the
Generating Facility.693
687 PJM Interconnection, L.L.C., 195 FERC ¶ 61,030 (2026).
688 Compliance Transmittal at 31 (citing PJM, Transmittal, Docket
No. ER26-1088-000, at 3 n.14 (filed Jan. 20, 2026)).
689 Id. at 31-32.
690 Id. at 32.
691 Id. at 33.
692 Id. at 33-34.
693 Id. at 34-35.
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b.
Generation Interconnection Procedures, pro forma GIA,
and Common Service Provisions
PJM states that it proposes the prescriptive clarifications directed in the December
Order. PJM explains that the proposed Tariff revisions comply by: (1) adding to the list
of requirements for a New Service Request that an Interconnection Customer who will
use its generating facility to serve Co-Located Load must specify an Eligible Customer
who will take transmission service on behalf of the Co-Located Load,694 (2) explaining
that if an Interconnection Customer wants to serve Co-Located Load but not identify an
Eligible Customer, then it may take steps to terminate its generating facility’s
interconnection and serve the Co-Located Load fully islanded from PJM’s transmission
system,695 (3) explaining that these requirements apply to all Interconnection Customers
requesting to interconnect generating facilities to serve Co-Located Load,696 (4) creating
a new schedule in the pro forma GIA in the form of a placeholder to specify operational
procedures or data exchange requirements as may be required,697 and (5) revising the
pro forma GIA to reflect the requirement to specify an Eligible Customer that will take
transmission service on behalf of the Co-Located Load.698
In addition, PJM states that it complies with the requirement to add a transition
mechanism for existing customers that wish to add Co-Located Load by including the
transition mechanism in (1) the definition of Co-Located Generating Facility in Part I of
the Tariff, (2) Part III (NITS), and (3) the definition of Co-Located Generating Facility699
694 Id. at 28 (citing PJM, Proposed Tariff, pt. VIII, subpt. B, § 403 (4.0.0),
§ 403(1)(r)).
695 Id. at 29 (citing PJM, Proposed Tariff, pt. VIII, subpt. B, § 403 (4.0.0),
§ 403 (1)(r); Proposed Tariff, Part III (NITS) (4.0.0)).
696 Id. (citing PJM, Proposed Tariff, pt. VIII, subpt. B, § 403 (4.0.0), § 403(1)(r);
Proposed Tariff, Part III (NITS) (4.0.0)).
697 Id. (citing PJM, Proposed Tariff, pt. IX.B (GIA), (0.0.0), Schedule O).
698 Id. (citing PJM, Proposed Tariff, pt. IX.B (GIA), (0.0.0), Schedule O).
699 PJM proposes the following definition of a Co-Located Generating Facility:
“an existing or planned Generating Facility that is physically connected to a Co-Located
Load. Any Generation Project Developer with an effective Service Agreement that plans
to use a Generating Facility to serve Co-Located Load must provide PJM and the
Transmission Owner with advance written notice to begin the Necessary Studies process
provided in Tariff, § VIII.A 401(H)(3)(b). If such a Generation Project Developer has an
effective Interconnection Service Agreement pursuant to Tariff, Part VI or a Generation
Interconnection Agreement pursuant to Tariff, Part VII, such agreement must be
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in Part VIII, Subpart A, section 400 of the Tariff. PJM asserts that these proposed
revisions to the Tariff are “superior to or consistent with the Commission’s directive
because it promotes tariff readability and usability.”700
c.
Definition of Non-Retail BTMG
PJM states that it is also seeking to avoid any inadvertent changes to the
substantive rules pertaining to Non-Retail BTMG.701 For this reason, PJM proposes to
add clarifying language in Tariff, Part III, section 34.3 providing that “The daily load of a
Network Customer does not include load served by operating Non-Retail Behind The
Meter Generation.”702 PJM states that this insertion preserves the status quo on this issue
for Non-Retail BTMG.
3.
Pleadings
a.
Definition of Co-Located Load
Constellation urges the Commission to reject PJM’s proposal to replace the term
“Point of Interconnection” in the definition of Co-Located Load with the “Point of
Change in Ownership.”703 Constellation argues that changing the specific definition of
Co-Located Load already approved by the Commission in the December Order is outside
the scope of compliance. Constellation asserts that Point of Change in Ownership is not a
defined physical point and may lead to delays or discrimination against certain
Co-Location Arrangements. Constellation states that, alternatively, if the Commission
accepts PJM’s proposed definition of Co-Located Load, it should (1) direct PJM to revise
its Tariff to provide that PJM will determine the Point of Change in Ownership if parties
cannot agree; (2) establish deadlines for parties to mutually agree to, or for PJM to
determine, the location for Point of Change in Ownership; (3) ensure that the location
selected for the Point of Change in Ownership does not eliminate the load from being
Co-Located Load unless the Project Developer and Co-Located Load desire it; and
superseded by a Generation Interconnection Agreement pursuant to Tariff, Part VIII and
the pro forma GIA in Part IX, Subpart B.” PJM, Proposed Tariff, § VII.A 300
(Definitions C) (4.0.0); § VIII.A 400, Definitions C (4.0.0).
700 Compliance Transmittal at 29-30.
701 Id. at 16.
702 Id.
703 Constellation Protest and Comments on Compliance Filing at 2.
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(4) not tolerate any discrimination or delay and use its enforcement authority or other
mechanisms to ensure non-discriminatory open access.704
Constellation asserts that recent experience has borne out the concern raised in its
initial protest that PJM’s deviation from the Commission’s definition of Co-Located
Load will allow transmission owners to effectively block Co-Location Arrangements.705
Constellation states that a transmission owner recently notified Constellation that it
would not study Constellation’s proposed design for a Co-Location Arrangement unless
Constellation agreed to transfer ownership of certain facilities to the transmission owner,
which would mean that the load would no longer be on the generator’s side of the Point
of Change in Ownership.706 Constellation argues that, by conditioning the load’s
interconnection on the transmission owner’s ownership of those facilities, the
transmission owner would prohibit Constellation’s ability to host Co-Located Load at the
site and limit the ability of the Co-Located Load to access the transmission services
adopted in the December Order.
Vistra requests that the Commission reject PJM’s use of “Point of Change in
Ownership” in its proposed definition of Co-Located Load.707 Vistra argues that PJM’s
proposed revision to the definition of Co-Located Load creates uncertainty and an
opportunity for transmission owners to unduly discriminate against certain customers.
Vistra requests that, if the Commission accepts PJM’s proposed definition, then the
Commission should direct further compliance to prevent undue discrimination.708
Energy Artisans oppose PJM’s definition of Co-Located Load and its use of Point
of Change in Ownership rather than Point of Interconnection as arbitrary and a pretext for
cost shifting.709 Energy Artisans allege that the definition “is strategically designed to
shrink the legal definition of the facility boundary, thereby capturing more load for
grid-service billing and excluding it from the BTMG actual use category.”710
704 Id. at 3-5, 7-8.
705 Constellation Supplemental Protest of Compliance Filing at 2.
706 Id. at 3.
707 Vistra Protest of Compliance Filing at 17.
708 Id. at 18-19.
709 Energy Artisans Protest of Compliance Filing at 2.
710 Id.
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b.
Generation Interconnection Procedures, pro forma GIA,
and Common Service Provisions
Invenergy argues that PJM proposes to continue operating a bifurcated study
process in which there is no requirement for generator interconnection and transmission
service request studies to be conducted in concert, on similar time frames, or using
similar study assumptions. As a result, Invenergy contends that distinct studies may
identify duplicative or unnecessary Network Upgrades. Invenergy requests that the
Commission and PJM clarify how the definition of Eligible Customer applies to
co-located generators and co-located loads.711
Constellation urges the Commission to direct PJM to revise its proposed definition
of Co-Located Generating Facility to clarify that the definition only applies to the portion
of the facility serving and physically connected to the Co-Located Load.712
c.
Definition of Non-Retail BTMG
AMP argues that PJM’s proposed revision to the definition of Non-Retail BTMG
could be construed as preventing generating units that are merely eligible for application
of the Non-Retail BTMG rules from participating in Co-Located Load configurations.
Specifically, AMP asserts that the use of the word “qualifies” in the proposed definition
of Non-Retail BTMG may exclude generation from participating in Co-Located Load
configurations even if the generator is not engaged in netting. AMP argues that this
apparently unintentional exclusion would restrict Co-Located Load from accessing
service from a broad set of PJM generators. AMP avers that revising the Non-Retail
BTMG definition is unnecessary and outside the scope of the Commission’s compliance
directives. AMP urges the Commission to reject the proposed definition of Non-Retail
BTMG or, alternatively, revise the definition to specify that the exclusion applies to
generators both qualifying as Non-Retail BTMG and being used for netting under the
Tariff.713
d.
Timing with Planned Reliability Backstop Auction
The Maryland OPC urges the Commission to defer action on PJM’s proposed
revisions until PJM announces details regarding its planned reliability backstop auction,
including specifics on how the reliability backstop auction will interact with Co-Location
Arrangements to ensure that new Co-Located Loads pay the costs of any new capacity.
711 Invenergy Comments on Compliance Filing at 3, 6.
712 Constellation Protest and Comments on Compliance Filing at 17.
713 AMP Limited Protest of Compliance Filing at 3, 5-8.
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The Maryland OPC argues that the proposed Tariff revisions fail to explain how
increased capacity costs of allowing existing generators to serve Co-Located Load, as
opposed to new generators, will be paid by Co-Located Load and not by existing
ratepayers.714
4.
Answers
In response to Invenergy, Indicated TOs argue that the Commission should not
mandate a combined interconnection and transmission study process for Co-Located
Loads and Co-Located Generators. Indicated TOs contend this goes beyond the issues
the Commission set for hearing, as well as the compliance directed, in the December
Order. Indicated TOs argue that PJM’s proposed coordinated study approach is just and
reasonable.715
Exelon argues that Constellation’s motion for supplemental protest should be
denied because it suggests that Constellation’s experience with one transmission owner
implies a universal policy. Exelon states that it is not attempting to prevent large loads,
co-located or otherwise, and their load serving entities from receiving transmission
service in Exelon’s territories. Exelon also argues that whether a transmission owner
owns certain equipment does not necessarily inform where the Project Developer’s
interconnection facilities connect to the transmission owner’s interconnection facilities.716
5.
Determination
a.
Definition of Co-Located Load
As in the Commission’s order addressing PJM’s first compliance filing with the
December Order, we reject PJM’s proposed change to the definition of Co-Located
Load.717 We note that no party, including PJM, sought rehearing or clarification of this
directive, let alone the definition, in response to the December Order. Even here, PJM
does not allege that the definition of Co-Located Load set out in the December Order is
unjust and unreasonable. Rather, PJM proposes to deviate from this definition by
replacing the term “Point of Interconnection” with “Point of Change in Ownership”
714 Maryland OPC Protest of Compliance Filing at 10-11.
715 Indicated TOs April 24 Answer at 4-5.
716 Exelon Answer at 1, 5-6.
717 PJM Interconnection, L.L.C., 195 FERC ¶ 61,030; PJM, Proposed Tariff,
§ I.1 Definitions C-D (Co-Located Load) (46.0.0); § VII.A 300, Definitions C
(Co-Located Load) (4.0.0); § VIII.A 400, Definitions C (Co-Located Load) (4.0.0).
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without sufficient explanation as to how this proposed deviation complies with the
Commission’s directive in the December Order.718
Accordingly, we direct PJM to file, within 60 days of the date of issuance of this
order, a compliance filing that revises the Tariff’s definition of Co-Located Load to use
“Point of Interconnection” instead of “Point of Change in Ownership,” consistent with
the Commission’s directive in the December Order.
b.
Generation Interconnection Procedures, pro forma GIA,
and Common Service Provisions
We accept the following of PJM’s proposed revisions to establish rules for
Interconnection Customers serving Co-Located Load as complying with the December
Order: (1) adding to the list of requirements for a New Service Request that an
Interconnection Customer who will use its generator to serve Co-Located Load must
specify an Eligible Customer who will take transmission service on behalf of the
Co-Located Load;719 (2) establishing a new schedule in the pro forma GIA that serves as
a placeholder for specifying any operational procedures or data exchange requirements
that PJM deems necessary for Co-Location Arrangements;720 (3) applying these
requirements to all Interconnection Customers requesting to interconnect their generators
to the transmission system and seeking to use those facilities to serve Co-Located
Load;721 (4) clarifying that to the extent that an Interconnection Customer wishes to serve
Co-Located Load using its generator but not identify an Eligible Customer, then the
Interconnection Customer may take steps to terminate its generator’s interconnection to
the PJM transmission system and serve the Co-Located Load fully islanded from PJM’s
718 See, e.g., PJM Interconnection LLC, 119 FERC ¶ 61,179 at P 12 (“The purpose
of a compliance filing is to make the directed changes and the Commission’s focus in
reviewing them is whether they comply with the Commission’s previously stated
directives.”) (citing AES Huntington Beach, LLC, 111 FERC ¶ 61,079 at P 60 & n.25).
719 See December Order, 193 FERC ¶ 61,217 at P 188; PJM, Proposed Tariff,
pt. VIII, subpt. B, 403 (4.0.0), § 403(1)(r).
720 See December Order, 193 FERC ¶ 61,217 at P 188; PJM, Proposed Tariff,
Part IX.B, Schedule O (0.0.0). PJM explains that it proposes to add a new schedule in the
pro forma GIA in the form of a placeholder for such information as the case may require.
Compliance Transmittal at 29. We also accept conforming changes to Tariff, Part IX.B,
GIA Appendices and Schedules.
721 See December Order, 193 FERC ¶ 61,217 at P 189; PJM, Proposed Tariff,
pt. VIII, subpt.B, 403 (4.0.0), § 403(1)(r).
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transmission system;722 and (5) revising the pro forma GIA to specify that an
Interconnection Customer that will use its generator to serve Co-Located Load must
specify an Eligible Customer that will take transmission service on behalf of the
Co-Located Load.723
However, we reject PJM’s proposed revisions to comply with the Commission’s
directive in the December Order to require Interconnection Customers with ISAs or GIAs
executed (or requested to be filed unexecuted) prior to the effective date of the revised
generation interconnection procedures and pro forma GIA directed in that order that wish
to add Co-Located Load or are currently serving Co-Located Load to publicly notify PJM
of that addition and identify the Eligible Customer that will take transmission service on
behalf of that Co-Located Load.724 Consistent with our discussion above in Part V.C.4,
we agree with protesters that PJM’s proposed revisions here go beyond the directives in
the December Order by requiring Interconnection Customers with existing ISAs or GIAs
that are currently serving Co-Located Load or wish to add Co-Located Load (and have
executed Necessary Study Agreements) to initiate a new Necessary Study process and
enter into a new GIA—which the December Order did not require.725 Therefore, while
we appreciate PJM’s intent to promote Tariff readability and usability, we find that
PJM’s language in the definition of Co-Located Generating Facility does not comply with
the December Order, consistent with our findings regarding the same language in Part III
of the Tariff.726 We further find that PJM has failed to include a general provision in the
Tariff to comply with the Commission’s directive in the December Order to require
Interconnection Customers with ISAs or GIAs executed (or requested to be filed
unexecuted) prior to the effective date of the revised generation interconnection
procedures and pro forma GIA directed in that order that wish to add Co-Located Load or
are currently serving Co-Located Load to publicly notify PJM of that addition and
722 See December Order, 193 FERC ¶ 61,217 at P 189; PJM, Proposed Tariff,
pt. VIII, subpt. B, § 403 (4.0.0), § 403(1)(r).
723 See December Order, 193 FERC ¶ 61,217 at P 190; PJM, Proposed Tariff,
pt. IX (GIA), subpt. B, Schedule O (0.0.0).
724 See December Order, 193 FERC ¶ 61,217 at P 191; PJM, Part III (NITS)
(4.0.0); § VII.A 300, Definitions C (Co-Located Generating Facility) (4.0.0); § VIII.A
400, Definitions C (Co-Located Generating Facility) (4.0.0). We note that the definition
of Co-Located Generating Facility in § I.1 Definitions C-D does not include the language
that we are rejecting here.
725 See, e.g., Vistra Protest of Compliance Filing at 4, 14.
726 See supra Part V.C.4.
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identify the Eligible Customer that will take transmission service on behalf of that
Co-Located Load, separate from the Necessary Study process.
Therefore, we direct PJM to submit a compliance filing within 60 days of the date
of issuance of this order to: (1) revise the definition of Co-Located Generating Facility to
remove the following requirement: “If such a Generation Project Developer has an
effective Interconnection Service Agreement pursuant to Tariff, Part VI or a Generation
Interconnection Agreement pursuant to Tariff, Part VII, such agreement must be
superseded by a Generation Interconnection Agreement pursuant to Tariff, Part VIII and
the pro forma GIA in Part IX, Subpart B,” and (2) add to Part III a requirement that
Interconnection Customers with ISAs or GIAs executed (or requested to be filed
unexecuted) prior to the effective date of the revised generation interconnection
procedures and pro forma GIA directed in December Order that wish to add Co-Located
Load or are currently serving Co-Located Load publicly notify PJM of that addition and
identify the Eligible Customer that will take transmission service on behalf of that
Co-Located Load.
We disagree with Constellation that PJM’s proposed definition of Co-Located
Generating Facility should only apply to the portion of the facility that is serving
Co-Located Load. Constellation claims that the definition does not recognize that the
entire facility may not serve the Co-Located Load, but Constellation has not identified
any substantive concern with that outcome. We find the proposed definition is broad
enough to capture both scenarios. Further, PJM’s proposed Tariff language recognizes
this possibility elsewhere, such as, for example, Part IX, Subpart A Form of Application
and Studies Agreement, section 2, which leaves a space for the Interconnection Customer
to list both the Co-Located Load and any requested CIRs.
With respect to Invenergy’s request that PJM perform generator interconnection
and transmission service request studies in concert, we note that the December Order did
not direct PJM to create such a new study process. Thus, we find that Invenergy’s
request is beyond the scope of this proceeding.
c.
Definition of Non-Retail BTMG
We agree with AMP that PJM’s proposed revisions to the definition of Non-Retail
BTMG may inadvertently prevent generators that could merely qualify as Non-Retail
BTMG from participating in Co-Location Arrangements, regardless of whether the
generator is being used to net. As PJM recognizes, the December Order “did not direct
any changes to Non-Retail BTMG rules.”727 PJM did not provide any justification for its
proposed changes to the definition of Non-Retail BTMG, nor did the Commission direct
727 Compliance Transmittal at 7.
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any changes to PJM’s rules for Non-Retail BTMG in the December Order.728 Therefore,
we reject PJM’s proposed revisions to the definition of Non-Retail BTMG and direct
PJM to file, within 60 days of the date of issuance of this order, a compliance filing to
revise its Tariff to remove the proposed changes, consistent with the December Order’s
determination.729
d.
Timing with Planned Reliability Backstop Auction
As discussed below, we decline Maryland OPC’s request that the Commission
defer action.730 We find that Maryland OPC’s concerns about PJM’s capacity market are
beyond the scope of this compliance proceeding, which pertains solely to PJM’s
compliance with the Commission’s directives in the December Order.
E.
Effective Date
1.
PJM Compliance Filing
PJM requests a placeholder effective date of 12/31/9998 because PJM cannot
implement the Tariff changes until the Commission sets the terms and conditions of the
new transmission services in the paper hearing.731 PJM states that it will submit a
clean-up filing proposing an effective date after the Commission issues an order on the
paper hearing.732
2.
Effective Date Pleadings
Though Vistra says it will address PJM’s proposed June 1, 2029 effective date in
its paper hearing brief, Vistra argues in its protest of the compliance filing that PJM has
not shown that its proposed effective date is just and reasonable.733 Vistra alleges that the
three-year forward capacity market schedule cannot justify a delay in the provision of
non-capacity-backed transmission service. Vistra also contends that the forecasts for the
728 December Order, 193 FERC ¶ 61,217 at P 222 (“We clarify we do not direct
PJM to change its rules for non-retail BTMG.”).
729 PJM, Proposed Tariff, § I.1 Definitions L-M-N (Non-Retail Behind The Meter
Generation) (52.0.0).
730 See supra Part VI.K.2.
731 Compliance Transmittal at 35.
732 Id. at 35-36.
733 Vistra Protest of Compliance Filing at 7.
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2027/2028 and 2028/2029 Base Residual Auctions (BRA) include the new large loads
likely to come online in that timeframe, undermining PJM’s position that the capacity
market schedule should delay the provision of firm transmission service. Vistra also
argues that PJM has not explained why it will take until 2029 to update its software to
accommodate the new curtailment logic.
DCC argues that PJM’s effective date should be earlier than June 1, 2029.734 DCC
argues that PJM should work with stakeholders to implement workable solutions in a
timely manner that ensures the transmission services can meet the immediate need within
the PJM region.
3.
Determination
As discussed below in Part VI.J, we direct PJM to submit, within 60 days of the
date of issuance of this order, a further compliance filing providing additional
information on the effective date.
VI.
Paper Hearing
The Commission directed PJM to modify its Tariff to require that the Eligible
Customer taking transmission service on behalf of a Co-Located Load takes one of three
transmission services: (1) NITS or Interim NITS, (2) FCD transmission service, or
(3) NFCD transmission service.735 With respect to the new transmission services that the
Commission required, the Commission established paper hearing procedures to determine
the appropriate rates, terms, and conditions of those transmission services.736 PJM did
not file tariff revisions in eTariff, but rather, chose to submit illustrative tariff revisions
that mirror the arguments PJM filed in its initial brief as part of that brief. The illustrative
tariff is not filed as a rate with the Commission, but we consider it as part of the record in
response to the paper hearing as we establish the replacement rate set forth below. As
discussed in detail below, as the replacement rate, we direct PJM to submit within
60 days of the date of issuance of this order, a compliance filing revising its Tariff to
include rates, terms, and conditions for the new transmission services consistent with our
findings in the below sections.
734 DCC Comments on Compliance Filing at 7.
735 December Order, 193 FERC ¶ 61,217 at P 193.
736 Id. PP 194, 203, 207, 219.
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A.
Rates, Terms, and Conditions for Firm and Non-Firm Contract
Demand Transmission Service
1.
December Order
With respect to FCD transmission service and NFCD transmission service, the
Commission found in the December Order that these transmission services should be
permanent transmission services available to Eligible Customers taking transmission
service on behalf of Co-Located Load.737 The Commission further stated that for the
Eligible Customer taking transmission service on behalf of a Co-Located Load to be
eligible for these new transmission services, the Co-Located Load must be able and
willing to prevent or limit its energy withdrawals and must be separately metered from
the associated generator.738 The Commission also stated that Eligible Customers taking
transmission service on behalf of Co-Located Loads may take a combination of FCD
transmission service and NFCD transmission service, but that Eligible Customers taking
transmission service on behalf of Co-Located Loads that will not withdraw energy from
the transmission system must take NFCD transmission service at 0 MW.739 The
Commission also found that Eligible Customers taking either transmission service on
behalf of Co-Located Loads would be charged for regulation and black start services
based on gross demand, rather than the reserved amount of transmission service.740
The Commission found that FCD transmission service should have the same
reservation and curtailment priority as existing firm transmission services at the level of
the contract demand and be charged for transmission, ancillary services, and capacity
based on the contract demand, with the exception of regulation and black start services.741
With respect to NFCD transmission service, the Commission found that the service
should be available during normal operations and curtailed during emergency operations,
similar to existing non-firm transmission service options.742
737 Id. P 206.
738 Id.
739 Id.
740 Id. PP 209, 216.
741 Id. PP 208-209.
742 Id. P 215.
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2.
Nature of FCD and NFCD Transmission Services
a.
Initial Briefs
PJM proposes to define FCD transmission service as the transfer of capacity and
energy for an Eligible Customer on behalf of a designated Co-Located Load, up to a
defined, pre-determined MW level of transmission service as requested by the Eligible
Customer and confirmed by PJM, using capacity and energy procured by PJM.743 PJM
proposes to define NFCD transmission service as a service offering the transmission of
energy for an Eligible Customer on behalf of a designated Co-Located Load, on an
as-available basis, up to a defined, pre-determined MW level of transmission service as
requested by the Eligible Customer and confirmed by PJM, using energy procured by
PJM.744
PJM states that it has conceptualized the FCD and NFCD transmission services
based on two key principles: (1) the services are designed to serve loads willing and able
to control their withdrawals from the transmission system, and (2) the services are
designed to allow PJM to maintain system reliability.745 PJM explains that, to maintain
reliability, any portion of the gross demand of the Co-Located Load not served by the
Co-Located Generator must be covered by FCD transmission service. PJM also states
that, to ensure reliability, PJM’s studies of the transmission service requests for the
Co-Located Load must capture the effects of any unscheduled energy withdrawals and
validate that such events would not jeopardize system reliability.746 PJM then asserts
that, if the Co-Located Load’s gross demand is not covered by FCD transmission service,
then the Eligible Customer must cover the remaining gross demand by applying for
NFCD transmission service. PJM further states that an Eligible Customer taking service
on behalf of a Co-Located Load must request NFCD transmission service equal to the
MW level of the Co-Located Generating Facility dedicated to serving the Co-Located
Load, so that the customer is eligible to obtain NFCD transmission service if the
Co-Located Generating Facility is on outage.747 PJM states that it anticipates that, in
practice, requests for NFCD transmission service will be at the MW level that the
Co-Located Generating Facility has dedicated to serving the Co-Located Load. PJM
states that the Eligible Customer may then, on any given day, reserve NFCD transmission
743 PJM Initial Brief at 13.
744 Id. at 30.
745 Id. at 6.
746 Id. at 6-7.
747 Id. at 9, 16.
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service up to the amount specified in the Service Agreement, but only when PJM has
determined there is available transmission capacity. If there is not sufficient capacity to
grant the request for NFCD transmission service, PJM explains the Eligible Customer
may apply for FCD transmission service for the necessary amount, or NITS to serve the
entire Co-Located Load.748 PJM maintains that its approach provides flexibility,
allowing Eligible Customers to mix and match FCD and NFCD transmission services, so
long as the combination of the two services covers the entire gross demand of the
Co-Located Load.749
PJM argues that, to prevent FCD and NFCD transmission services from adversely
impacting system reliability, it is crucial for the Eligible Customer to show and prove its
ability to limit withdrawals from the system. PJM maintains that, for FCD transmission
service to properly function, it is essential that any NFCD transmission service for the
same Co-Located Load has in place necessary control technologies and/or protective
systems approved by PJM and that can effectively limit withdrawals from the
transmission system that serve the Co-Located Load.750 PJM proposes to require Eligible
Customers taking NFCD transmission service to work with PJM and the affected
Transmission Owners to establish necessary control technologies and protection systems
for each Service Agreement to ensure reliability.751
PJM explains that FCD transmission service will have priority over NFCD
transmission service and equal priority, at the level of the contract demand, with other
firm transmission services, including NITS. PJM proposes that NFCD transmission
service be curtailed before FCD transmission service and NITS, as discussed further
below, and proposes to curtail NFCD transmission service prior to dispatching Pre-
Emergency Load Response Program resources or in response to a transfer capability
shortage.752
748 Id. at 32-33.
749 Id. at 11.
750 Id. at 15, 31.
751 Id. at 34-35.
752 Id. at 15, 34.
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b.
Response Briefs
Indicated TOs support PJM’s proposal to require Eligible Customers taking
service on behalf of Co-Located Load to take a combination of FCD and NFCD
transmission services equivalent to the entire gross demand of the Co-Located Load.753
However, a number of parties protest PJM’s proposed requirement that NFCD
transmission service be available only when the Co-Located Generating Facility is on an
outage.754 Parties argue that the December Order does not impose such a limit on this
transmission service and that PJM provides no justification for the change.755 AEU/SEIA
contend that the December Order required that NFCD transmission service be available
“as needed during normal, non-emergency system operating conditions,” and that, while
it cited the use of NFCD transmission service during an outage as one potential use case,
the December Order did not impose the limitation described in PJM’s proposed Tariff
revisions.756 AEU/SEIA claim that the practical consequences of this limitation are
significant, particularly for Co-Located Loads served by resources with variable or
intermittent output profiles, which may require supplemental grid withdrawals during any
period in which the Co-Located Generator’s output is constrained, reduced, or otherwise
insufficient to meet the full gross demand of the Co-Located Load. AEU/SEIA argue
that this gap in the availability of NFCD transmission service will force many
transmission customers to take NITS.
AEU/SEIA contend that PJM attempts to justify this restriction on operational and
planning complexity grounds, but argues that the Commission considered these
objections before the December Order and nonetheless required PJM to provide NFCD
transmission service.757 AEU/SEIA also contend that this restriction cannot be justified
on resource adequacy or reliability grounds, because NFCD transmission service is
753 Indicated TOs Response Brief at 4; Industrials/Amtrak Response Brief at 24.
754 Joint Co-Location Developers Response Brief at 6-13; AEU/SEIA Response
Brief at 5; Vistra Response Brief at 25; DCC Response Brief at 4; Constellation Response
Brief at 10.
755 Vistra Response Brief at 26; AEU/SEIA Response Brief at 5-6; Joint
Co-Location Developers Response Brief at 7; DCC Response Brief at 5; Constellation
Response Brief at 10.
756 AEU/SEIA Response Brief at 6-8 (citing December Order, 193 FERC ¶ 61,217
at PP 214-215); Joint Co-Location Developers Response Brief at 6-7.
757 AEU/SEIA Response Brief at 8-10 (citing PJM March 24, 2025 Response
at 13-15).
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designed to be curtailed before firm transmission services and is available only when
transmission capacity exists. AEU/SEIA therefore request that the Commission direct
PJM to revise and file Tariff revisions that remove the outage-only limitation and allow
for the use of NFCD transmission service on an as-available basis during normal,
non-emergency system operating conditions and subject to available transmission
capacity and appropriate curtailment priority.
Joint Co-Location Developers argue that PJM’s proposal undermines economic
efficiency, restricts competition, may threaten reliability for other customers, and is
unclear as applied to partial outages.758 Joint Co-Location Developers maintain that
PJM’s proposal is inconsistent with its other transmission service offerings, such as
PTPS, which is not designed based on whether generation is on an outage. Joint
Co-Location Developers add that PJM’s Interim NITS proposal shows PJM’s ability to
offer non-firm service during normal conditions without the need to request a reservation.
DCC argues that PJM’s proposal effectively confines NFCD transmission service
to a narrow, outage-only function and prohibits its use to address foreseeable and
manageable transmission constraints. DCC argues that PJM has not demonstrated why
NFCD transmission service that is (a) requested in advance, (b) subject to PJM approval,
(c) fully curtailable, and (d) supported by required protection and control mechanisms,
may appropriately be used to address generator outages but may not be used to address
temporary transmission constraints.759
Constellation also criticizes PJM’s view that this proposal is needed to avoid
overuse and responds that the Commission indicated that penalty charges should solve
that concern.760
Constellation also protests PJM’s proposal to require FCD transmission service for
any portion of the Co-Located Load not served by the Co-Located Generating Facility.
Constellation argues that the Commission established no such requirement, nor did the
Commission require that Eligible Customers take FCD transmission service along with
NFCD transmission service.761
758 Joint Co-Location Developers Response Brief at 8-11.
759 DCC Response Brief at 5.
760 Constellation Response Brief at 11-12.
761 Id. at 10, 12.
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DCC argues that PJM’s proposal does not provide a workable pathway for phased
development or load ramping.762 DCC argues that PJM’s proposal requires that gross
load and generation configurations be specified upfront and treats material changes in
those configurations as requiring new applications and studies while prohibiting the
mixing of NITS and Contract Demand transmission services for the same load. DCC
argues that, while PJM has acknowledged limited flexibility in certain circumstances, it
does not provide a clear or workable pathway for customers to (a) ramp load over time,
(b) transition between service constructs, or (c) seek to align transmission service with
phased project development. DCC argues that the absence of a defined ramping
framework introduces uncertainty, increases the risk of delay, and may require repeated
study cycles that are not aligned with project timelines. DCC argues that the
Commission should require PJM to establish clear rules and processes that enable
incremental load additions without triggering unnecessary re-study or requiring
customers to fundamentally restructure their service arrangements.763
Market Monitor argues that the assumption underlying NFCD transmission
service, that load pays for transmission only when it needs transmission, is untenable.764
Market Monitor states that although NFCD transmission service can only be a standby
service, the equivalent availability factor of generators in PJM demonstrates that NFCD
transmission service would have to be used regularly. Market Monitor argues that if all
or a significant part of data center users wanted to use NFCD transmission service, the
system would become unmanageable and the service would not be available consistently,
making it meaningless. Market Monitor asserts that there can be no such service as
NFCD transmission service that is fully consistent with maintaining a reliable PJM
transmission system, and all transmission customers should pay for full NITS service.
c.
Reply Briefs
PJM argues that its proposal to limit NFCD transmission service to circumstances
where the Co-Located Generator is on outage is just and reasonable, consistent with the
December Order, and otherwise appropriate. PJM argues that, if customers could take
unlimited NFCD transmission service, that would be tantamount to offering Interim NITS
permanently.765 PJM next argues that the Commission stated in the December Order that
NFCD transmission service would be available “as needed” for customers able to limit
withdrawals, which suggests the Commission did not intend for this service to be used on
762 DCC Response Brief at 6.
763 Id. at 6-7.
764 Market Monitor Response Brief at 5-6.
765 PJM Reply Brief at 6-7.
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an everyday basis.766 Moreover, PJM argues, its proposal is appropriate given the
inherent risks to the transmission system and operational complexities associated with
providing this service continuously, given the limited time period the non-firm service
will be required. PJM asserts that the transmission system is not planned and designed to
accommodate these non-firm services under North American Electric Reliability
Corporation (NERC) reliability standards.
PJM maintains that several aspects of NFCD transmission service are challenging
from a reliability perspective, given the range of requirements of NERC reliability
standards. PJM alleges that the nature of NFCD transmission service dictates that PJM
will not include this service in PJM’s long-term transmission planning and the system
will not be evaluated for potential Corrective Action Plans, nor will PJM have procured
capacity to serve this load.767 PJM also claims that, because NFCD transmission service
relies on transmission capacity that is not currently used, PJM is unlikely to be in a
position to provide this service during peaks or other times when the system is operating
under stressed conditions. PJM argues that, from a transmission planning perspective,
NFCD transmission service increases the operational risk of System Operating Limit and
Interconnection Reliability Operating Limit (SOL/IROL) exceedances by operating the
system with a reduced margin for contingency to accommodate high-volume loads.768
PJM contends that this operation increases the risk of an emergency occurring if
unexpected conditions occur. PJM argues that providing NFCD transmission service will
almost inevitably require significant adjustments to PJM’s Operating Plan to mitigate
exceedances of SOLs/IROLs each time service is provided due to the nature of the
service. PJM maintains that, by definition, NFCD transmission service involves a
customer drawing large quantities of power over transmission facilities that were not
designed to serve that load and thus will almost certainly necessitate flowing power over
various facilities near system limits.769
Indicated TOs support PJM’s proposals to restrict the use of NFCD transmission
service to periods when on-site generation is on outage and claim that the Commission
did not intend for this service to be a substitute for FCD transmission service or NITS for
the portion of on-site load that will not be served by on-site generation. Indicated TOs
argue that there is no compelling reason for NFCD transmission service to be available
766 Id. at 7 (quoting December Order, 193 FERC ¶ 61,217 at P 215).
767 Id. at 9-10.
768 Id. at 11-12.
769 Id. at 12-13.
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during non-outage conditions.770 Indicated TOs claim that limiting the use of NFCD
transmission service is necessary to ensure the reliable operation of the PJM transmission
system, particularly because of the increasing use of special protection schemes, remedial
action schemes, and other control technologies and protective systems. Indicated TOs
recommend that PJM clarify in the Tariff that an “outage” for these purposes is limited to
periods where a generator is offline due to a breakdown or maintenance issues and does
not cover other instances when a generator is not operating.771
Joint Co-Location Developers urge the Commission to reject PJM’s attempt to
limit the availability of NFCD transmission service and require PJM to establish a NFCD
transmission service product available during normal system conditions as required by
the December Order.772 Joint Co-Location Developers contend that the workable
non-firm transmission service offerings that are broadly available are fully consistent
with reliable system operation, as demonstrated in other regions that are rapidly moving
to implement non-firm transmission service offerings.773 Joint Co-Location Developers
argue that limiting the scope of NFCD transmission service scheduling to generator
outages, as PJM proposes, will increase reliance on simple withdrawal-limiting protection
systems rather than decrease it because it will increase the frequency with which a
customer will not be authorized to withdraw.774 Joint Co-Location Developers explain
that this is because withdrawal-limiting protection systems are only active when the
customer cannot withdraw, i.e., because no transmission service has been scheduled.
Joint Co-Location Developers argue that PJM should limit the arming of remedial action
schemes, or avoid installing them in the first place, and instead maximize use of
pre-contingency NFCD transmission service curtailment through scheduling, which is
similar to how Southwest Power Pool, Inc. (SPP) and Electric Reliability Council of
Texas (ERCOT) envision curtailment under the non-firm transmission services that they
are developing.775
In response to DCC’s concerns about phasing in Co-Located Load, PJM maintains
that its proposal provides a workable pathway for phased development or load
770 Indicated TOs Reply Brief at 3-4.
771 Id. at 5-6.
772 Joint Co-Location Developers Reply Brief at 10-11.
773 Id. at 1.
774 Id. at 7.
775 Id. at 8.
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ramping.776 PJM argues that the obvious path for Co-Located Load that increases over
time is NITS, a transmission service designed to accommodate load growth. If an
Eligible Customer elects Contract Demand transmission service, any change to the
contracted amount would require a new service request. PJM adds that the Eligible
Customer could elect to request Interim NITS or FCD transmission service for their full
load amount ahead of time and use that capacity as their demand increases up to the
applied for service level. PJM explains that the Commission directed PJM to offer FCD
and NFCD transmission services as an alternative to NITS; thus, it is reasonable for this
new service to not accommodate load growth as NITS does.
d.
Answer
Geronimo Power asserts that PJM’s proposed restrictions on NFCD transmission
service are inconsistent with the December Order and should be rejected.777 In response
to PJM’s and Indicated TOs’ concerns with making this service more broadly available,
Geronimo Power argues that PJM does not need to expand its transmission system or
otherwise change its operations to accommodate this load; rather, it merely needs to
allow such load to take transmission service when it is available.778 Geronimo Power
argues that the effect of PJM’s proposal will be to severely limit co-location opportunities
in PJM, because large loads will need to either co-locate with a resource that can be
called upon at all times or to take NITS or FCD transmission service that will result in the
same inefficient and costly grid buildout that the December Order sought to avoid.779
e.
Determination
As discussed below, we find that PJM’s proposal does not comply with the
Commission’s directives in the December Order and would fundamentally alter the
nature of the FCD and NFCD transmission services that the Commission directed PJM to
develop. PJM proposes to require that the Eligible Customer taking transmission service
on behalf of a Co-Located Load must take sufficient transmission service to account for
the entire gross demand of the Co-Located Load.780 PJM states that an Eligible Customer
taking service on behalf of a Co-Located Load must request NFCD transmission service
equal to the MW level of the Co-Located Generator dedicated to serving the Co-Located
776 PJM Reply Brief at 37-38.
777 Geronimo Power May 21 Answer at 4.
778 Id. at 6.
779 Id. at 7.
780 PJM Initial Brief at 6, 9.
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Load, so that the customer is eligible to obtain NFCD transmission service if the
Co-Located Generator is on outage.781 PJM also explains that any portion of the gross
demand of the Co-Located Load not served by the Co-Located Generator must be
covered by FCD transmission service.782 This proposal would tie the amount of FCD and
NFCD transmission services that an Eligible Customer can request to the size of the
Co-Located Generator, rather than allowing the Eligible Customer to select any amount,
including 0 MW for NFCD transmission service, as the Commission directed.
Specifically, the December Order stated that Eligible Customers on behalf of Co-Located
Loads would be able to take a combination of FCD and NFCD transmission services, but
that “Eligible Customers taking transmission service on behalf of Co-Located Loads that
will not withdraw energy from the transmission system must take [NFCD] transmission
service at 0 MW.”783 PJM’s proposal would do the opposite. An Eligible Customer
taking transmission service on behalf of a Co-Located Load that wished to be served
entirely by the Co-Located Generator, and not withdraw any energy from the
transmission system, would be required under PJM’s proposal to request NFCD
transmission service at a level of contract demand equal to the Co-Located Load’s gross
load.784 Moreover, contrary to PJM’s proposal, nothing in the December Order would
require an Eligible Customer taking transmission service on behalf of a Co-Located Load
to take FCD transmission service at a level of contract demand that reflects the amount of
load not served by the Co-Located Generator (or, for that matter, to take FCD
transmission service at all). In short, the December Order does not link the level of
contract demand for either FCD or NFCD transmission service that an Eligible Customer
may take on behalf of a Co-Located Load to the size of the Co-Located Generator or the
size of the Co-Located Load.
Taken together, PJM’s proposed new conditions on FCD and NFCD transmission
services mean that if PJM determines as a result of studies that it cannot accommodate a
request for NFCD transmission service, the Eligible Customer will be required to request
and take a firm transmission service (FCD transmission service or NITS) on behalf of the
Co-Located Load instead. In the December Order, the Commission directed PJM to
implement FCD and NFCD transmission services in response to a finding that the Tariff
is unjust and unreasonable because it does not include transmission services that reflect
Eligible Customers taking service on behalf of Co-Located Loads that are willing and
able to limit their energy withdrawals from the transmission system under certain
781 Id. at 9, 16.
782 Id. at 6-7.
783 December Order, 193 FERC ¶ 61,217 at P 206.
784 PJM Initial Brief at 9.
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conditions.785 PJM’s proposal does not address this finding and proposes to create FCD
and NFCD transmission services that continue to fail to recognize this flexibility.
Moreover, requiring an Eligible Customer seeking to take transmission service on behalf
of a Co-Located Load to take FCD transmission service or NITS instead of NFCD
transmission service when it does not seek to take firm transmission service would be
inconsistent with the Commission’s finding in the December Order that the lack of the
required new transmission services could result in unnecessary, costly, and inefficient
Network Upgrades, increasing Network Upgrade costs.786 While we recognize that PJM
may determine that there is insufficient available transmission capacity to fulfill a request
for NFCD transmission service,787 in that scenario, the Eligible Customer seeking to take
that service on behalf of a Co-Located Load should then be able to decide whether it
would prefer to request FCD transmission service or NITS to serve the load – in which
case it may be responsible for Network Upgrade costs – or to take 0 MW of NFCD
transmission service and thus have no contractual right to withdraw power from the
transmission system.
PJM’s proposal is also inconsistent with the December Order in that PJM proposes
to limit the amount of NFCD transmission service that may be reserved by an Eligible
Customer to a MW level equivalent to the amount of the Co-Located Generator that is on
outage.788 The December Order did not require such a restriction and instead
contemplated that NFCD transmission service would be available during “normal”
operations when there is sufficient available transmission capacity,789 providing Eligible
Customers seeking to take transmission service on behalf of Co-Located Loads the
785 December Order, 193 FERC ¶ 61,217 at P 193.
786 See id. P 177 (“[F]or Eligible Customers taking service on behalf of
Co-Located Loads that do not reserve transmission or take energy from the transmission
system but which receive only regulation and black start services, or that otherwise are
willing and able to limit their energy withdrawals from the transmission system, requiring
such Eligible Customers to take NITS on behalf of these Co-Located Loads may in some
circumstances result in costly and inefficient transmission system buildout that may not
be necessary if such Eligible Customers are willing and able to take a transmission
service that requires fewer Network Upgrades to provide, and therefore may result in
lower Network Upgrade costs, than would NITS.”).
787 See id. P 215 (stating that reservations for NFCD transmission service “would
be available only when there is available transmission capacity, similar to existing
non-firm transmission service options in the Tariff”).
788 PJM Initial Brief at 32.
789 December Order, 193 FERC ¶ 61,217 at PP 214-215.
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flexibility to request to reserve any amount of NFCD transmission service, regardless of
whether the Co-Located Generator was on outage. The Commission’s reference to
NFCD transmission service and generator outages was an example and not a threshold
requirement for an Eligible Customer to use this service.790 Regardless, because the
Commission contemplated that the service would be available during normal operations
when there is sufficient available transmission capacity, Eligible Customers seeking to
take NFCD transmission service on behalf of Co-Located Loads must be permitted to
request such service on an everyday basis. Further, contrary to the December Order,
PJM’s proposal to allow Eligible Customers taking transmission service on behalf of
Co-Located Loads to take NFCD transmission service only when the Co-Located
Generator is on outage fails to reflect Eligible Customers taking transmission service on
behalf of Co-Located Loads that are willing and able to limit their energy withdrawals
from the transmission system under certain conditions because it removes the option to
take NFCD transmission service instead of FCD transmission service for portions of the
Co-Located Load that are not served by the Co-Located Generator.
PJM argues that these changes to NFCD transmission service are necessary for
reliability, to ensure all load is studied. We disagree. Co-Located Load is, as defined in
the December Order, behind the Point of Interconnection of an interconnected generator,
and PJM would already know the size of the generator and any Co-Located Load from
the interconnection process (or Necessary Study), and possibly the transmission service
application process. While the portion of load for which the Eligible Customer does not
request transmission service would not be modeled by PJM in a transmission service
request as withdrawing energy from the transmission system, this outcome is appropriate
because the Eligible Customer is not intending to withdraw energy from the transmission
system. However, the potential impact of the Co-Located Load on the reliability of the
transmission system will still be studied as part of the Necessary Study process for the
generator interconnection modification, or as part of a New Service Request. PJM
already conducts dynamic studies for Co-Located Load, which evaluate all applicable
NERC, PJM, and transmission owner-specific contingencies and criteria, consistent with
PJM’s responsibilities to ensure system reliability.791 These studies utilize a composite
load model that includes power electronics, cooling, and lighting loads, and the impact of
the facility during this study is dependent on the physical parameters of the facility and
790 See id. P 214 (“Eligible Customers taking service on behalf of such loads may,
however, still seek to withdraw energy from the transmission system from time to time
when transmission capacity is available and not needed by firm customers. For example,
an Eligible Customer could seek a transmission reservation for a Co-Located Load in
advance for the duration of an expected outage of the associated generator.”) (emphasis
added).
791 PJM March 24, 2025 Response at 53.
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its control behavior, not the level or type of transmission service taken.792 This model is
a complete model of the facility.793 As such, PJM, as it currently does, will know the full
impact of factors unrelated to the contract demand of the Co-Located Load, including
impacts on stability margins, short circuit limits, power quality and harmonic distortion,
voltage flicker, interaction of active power electronic controls with the system (e.g.,
mitigation of oscillatory behavior), impact of STATCOMs or other reactive
compensation devices, and cyclical demand ramps in the sub-synchronous frequency
range. PJM provides no explanation why this data already available to them is
insufficient to fully study a Co-Located Load absent changes to NFCD transmission
service.
PJM also argues that providing NFCD transmission service will require
adjustments to PJM’s Operating Plan to mitigate exceedances of SOLs/IROLs each time
service is provided due to the nature of the service. While serving load using NFCD
transmission service may reduce operating margins on the transmission system, PJM has
presented no evidence that changes to PJM’s Operating Plan will be regularly needed.
However, should PJM find, based on operating experience in implementing the NFCD
transmission service, that significant and frequent manual adjustments are necessary,
PJM may consider filing an FPA section 205 filing to adjust the curtailment priority of
NFCD transmission service.
PJM also argues that, by definition, NFCD transmission service involves a
customer drawing large quantities of power over transmission facilities that were not
designed to serve that load and thus will almost certainly necessitate flowing power over
various facilities near system limits. While we acknowledge that NFCD transmission
service is designed to use available transmission capacity that is not needed by firm
transmission customers, we find that PJM’s assertion that providing such service will
necessitate flowing power over various transmission facilities near system limits is
speculative. In any case, as the Commission stated in the December Order,
“[r]eservations under this service would be available only where there is available
transmission capacity, similar to existing non-firm transmission service options in the
792 Id. We note that NERC has recommended use of the Power Electronic
Reconnecting and Ceasing (PERC1) model, which is a different model than the current
model PJM utilizes. However, the general principles are the same. See NERC, Essential
Action to Industry: Computational Load Modeling, Studies, Instrumentation,
Commissioning, Operations, Protection, and Control at 3 (2026),
https://www.nerc.com/globalassets/programs/bpsa/alerts/level-3-computational-load-
alert.pdf.
793 See, e.g., PJM, PJM Dynamic Model Development Guidelines for
Interconnection Analysis § 6, PJM Dynamic Model Development Guidelines.
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Tariff.”794 And consistent with the Commission’s findings in establishing non-firm
transmission service under its pro forma Open Access Transmission Tariff, providing
non-firm transmission service increases efficiency by allowing customers to use lumpy
transmission investment on an as-available basis and may reduce the costs for firm
transmission service customers by allowing NFCD transmission service customers to
offset the costs of that investment.795 However, we note that if PJM determines that there
may be increased operational risks associated with providing NFCD transmission service,
it may address those risks by increasing the transmission reliability margin that it uses
when studying and determining whether to grant requests for NFCD transmission service.
We recognize that the new FCD and NFCD transmission services represent a
significant change in how transmission service has been historically offered in PJM. We
also recognize that significant changes to PJM’s software may be necessary to integrate
the FCD and NFCD transmission services, including to potentially automate some
processes that are currently handled manually by operators with respect to curtailing
non-firm transmission services. However, the Commission directed the new FCD and
NFCD transmission services as the replacement rate after finding PJM’s existing Tariff
unjust and unreasonable. We therefore direct PJM to submit a compliance filing within
60 days of the issuance of this order proposing Tariff revisions to permit Eligible
Customers to elect to take FCD transmission service or NFCD transmission service
without the limitations that PJM proposes (i.e., (1) the requirement that the Eligible
Customer taking transmission service on behalf of a Co-Located Load must take
sufficient transmission service to account for the entire gross demand of the Co-Located
Load, (2) the requirement for an Eligible Customer taking transmission service on behalf
of a Co-Located Load to take FCD transmission service at a level of contract demand that
reflects the amount of load not served by the Co-Located Generator, (3) the requirement
that an Eligible Customer taking service on behalf of a Co-Located Load must request
NFCD transmission service equal to the MW level of the Co-Located Generating Facility
dedicated to serving the Co-Located Load if that portion of the Co-Located Load is not
covered by FCD transmission service, and (4) the restriction on the use of NFCD
transmission service to only those circumstances where the Co-Located Generator is on
outage). Consistent with our determination above to extend the three new transmission
services set forth in the December Order to Eligible Customers taking service on behalf
of load with BTMG that are willing and able to limit their energy withdrawals from the
794 December Order, 193 FERC ¶ 61,217 at P 215.
795 Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,272 (finding “non-firm
transmission prices should reflect the interruptibility of the service and should promote
efficient use of the transmission system”).
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transmission system under certain conditions, we further direct PJM to reflect this change
in its compliance filing.
With respect to DCC’s argument that PJM’s proposal does not provide a workable
pathway for phased development or load ramping,796 we disagree. Because FCD
transmission service is based on a reserved amount of contract demand and does not
account for load growth in the way that NITS does, Eligible Customers seeking to
increase the amount of load for which they are taking transmission service over time
should be required to submit new transmission service requests for any increases in
contract demand. As an alternative, they may request a level of contract demand in their
initial transmission service request that reflects their planned total load, even though they
may not need the full level of contract demand immediately. To the extent that neither of
these options work for a particular Eligible Customer taking transmission service on
behalf of a Co-Located Load, that Eligible Customer should consider taking NITS, which
accommodates load growth over time, as PJM suggests.797
DCC also argues that PJM prohibits the mixing of NITS and FCD or NFCD
transmission service for the same load.798 However, in the December Order, the
Commission explicitly stated that NITS cannot be combined with any of the new
transmission services.799 As such, we find that DCC’s argument is an untimely request
for rehearing of the December Order and dismiss it.800
With respect to DCC’s argument that Eligible Customers serving Co-Located
Load should be able to transition between transmission services,801 we note that Eligible
Customers taking transmission service on behalf of Co-Located Load that wish to
transition from one transmission service to another may do so through the same process
796 DCC Response Brief at 6.
797 PJM Reply Brief at 37-38.
798 DCC Response Brief at 6.
799 December Order, 193 FERC ¶ 61,217 at P 195 n.408 (“Eligible Customers
taking NITS on behalf of Co-Located Load may not combine NITS with any of the other
transmission services discussed herein.”).
800 See, e.g., ISO New Eng. Inc., 132 FERC ¶ 61,098 at P 12 (“The Commission
has held that requests to alter a compliance filing in a manner that differs from the order
requiring the compliance filing constitute a collateral attack on the order requiring the
compliance filing.”).
801 DCC Response Brief at 6.
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as any other party requesting new transmission service, with the exception of the
anti-toggling procedures discussed below in Part VI.E.
Finally, with respect to Market Monitor’s argument that NFCD transmission
service is untenable, we dismiss this argument as an untimely request for rehearing of the
December Order. We disagree that NFCD transmission service is untenable if it is not
available constantly; to the contrary, NFCD transmission service is designed to be
non-firm and as-available, meaning that it will sometimes be unavailable or curtailed. It
is possible that if, for example, a significant number of Eligible Customers taking
transmission service on behalf of Co-Located Loads were to switch to NFCD
transmission service, it would be frequently curtailed, but that is the nature of non-firm,
as opposed to firm, transmission service. Eligible Customers taking transmission service
on behalf of Co-Located Loads that do not wish to be curtailed should consider
requesting a firm transmission service instead.
3.
Study Process
a.
Initial Briefs
PJM states that it will coordinate with the affected transmission owner to complete
studies, obtain relevant data, and identify any necessary enhancements to the
transmission system to accommodate the requested level of service.802 PJM also states
that, during the study period, it may perform other studies.
PJM proposes that it notify the affected transmission owner of an application for
FCD transmission service to allow for coordination to study the potential impacts of
providing this service on the transmission owner’s system.803 PJM states that it will
determine any necessary studies to provide the requested transmission service. If studies
are needed, PJM explains, it will provide an application and studies agreement to the
Eligible Customer in which the Eligible Customer will agree to reimburse PJM for study
costs. PJM also states that it will consider the results of any transmission owner studies.
PJM proposes that, upon receiving a service request, it will coordinate with the
affected transmission owner to complete necessary studies to determine whether, and at
what level, NFCD transmission service can be reliably provided.804 PJM proposes that it
and the affected transmission owner will determine whether additional studies are
required to assess the NFCD transmission service request, and if so, which studies are
802 PJM Initial Brief at 17-18.
803 Id. at 24.
804 Id. at 32-33.
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appropriate. PJM proposes that it will provide a written explanation if it determines that
none or only a portion of the requested service can be reliably provided.
b.
Response Briefs
Indicated TOs support PJM’s proposed study processes for FCD transmission
service and state that it appropriately recognizes the role of transmission owners in
evaluating load interconnection requests.805 Indicated TOs argue, however, that the
Tariff should specify that load integration studies should be completed first and inform
the determination of whether additional studies are necessary for purposes of an Eligible
Customer’s request for transmission service on behalf of a Co-Located Load and the
interconnection of any on-site generation. Indicated TOs contend that this requirement
would maximize the speed and efficiency of the overall process and avoid potential
duplication of effort and expense as between PJM and the PJM transmission owners.
Indicated TOs state that PJM appears to contemplate that an Eligible Customer’s
initial application for NFCD transmission service would serve as a “holding” request and
that the actual reservation and use of the service would require the Eligible Customer to
make a request and PJM to determine whether or not the requested amount of service is
available.806 Indicated TOs further state that the available amount of NFCD transmission
service presumably would serve as the basis for determining the relevant charge to the
Eligible Customer. Indicated TOs request that PJM confirm these understandings and
add appropriate Tariff language. Indicated TOs also request that PJM clarify whether the
study process set forth in section 710.3 of the illustrative tariff provisions is intended to
cover only the initial service study or also subsequent determinations as to specific
reservation requests. Generally, Indicated TOs argue that more detail should be provided
as to the process for evaluating and granting requests for NFCD transmission service,
including the timelines associated with such requests, particularly with respect to forced
rather than planned outages.807 Indicated TOs also contend that PJM should specify in
Tariff language that NFCD transmission service will be available for periods from one
month to one hour in duration.
Several parties argue that PJM’s proposed study process is unjust and
unreasonable.808 Constellation argues that PJM fails to sufficiently describe its proposed
study procedures for the three new services. Vistra similarly argues that PJM’s study
805 Indicated TOs Response Brief at 5-7.
806 Id. at 4.
807 Id. at 4-5.
808 Vistra Response Brief at 31, 33-35; Constellation Response Brief at 14-15.
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process provides too much discretion to PJM and transmission owners to determine
whether studies are required, which studies to conduct, the timeline for doing so, and how
to prioritize different requests. First, Vistra asserts that PJM does not propose a
mechanism to assign customers a queue position based on the submission of a complete
application. Vistra also charges that PJM reserves to itself full discretion to determine
whether studies must be conducted and what analyses those studies will involve, and
alleges that the proposed tariff does not appear to limit the results of PJM’s analysis of
transmission service requests to the results of duly conducted studies because it states that
PJM will “consider” the results of the study procedures.809 Vistra and Constellation also
argue that PJM provides no timelines or deadlines for processing transmission service
requests. Vistra also argues that PJM provides itself total discretion to set study fees with
no parameters for setting those fees. Vistra and Constellation express concern that the
discretion in PJM’s proposal creates a risk of undue discrimination. Vistra and
Constellation argue that PJM’s proposal violates the Commission’s rule of reason policy
because the information missing from the tariff proposal significantly affects rates, is
readily susceptible of specification, and is not so readily understood as to render
recitation superfluous.810 Vistra also contends that PJM’s proposal is unclear on what it
means to ensure that non-firm transmission service can be provided “reliably,” and
requests that PJM articulate the standard.811
c.
Reply Briefs
PJM maintains that its illustrative tariff contains an appropriate amount of detail
on the study process and states that it will work with stakeholders to develop
implementation details to be set forth in the PJM manuals.812 PJM avers that the
illustrative tariff provides more than enough detail to satisfy the Commission’s rule of
reason policy. PJM alleges that its proposal builds on its existing processes for studying
requests for new transmission service requests. PJM contends that its evaluation of firm
transmission service requests will require and follow similar study procedures to what is
now required for NITS. For non-firm transmission service requests, PJM asserts that the
study approach could differ widely for each request and will depend on a number of
factors.
PJM explains that, currently, the transmission owners study in the first instance all
requests to connect new load to the transmission system. PJM states that, for each zone,
809 Vistra Response Brief at 33-34 (citing PJM, Initial Brief, attach. A § 702.3).
810 Id. at 36-37, 53; Constellation Response Brief at 15-18.
811 Vistra Response Brief at 39.
812 PJM Reply Brief at 22-23, 26, 32.
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the transmission owner studies the integration of the requested load and identifies
upgrades. PJM says that it then performs a “do no harm” analysis of how those
transmission owner-identified upgrades would affect the regional transmission system.
PJM notes that NITS can then be provided consistent with the in-service date of the
identified upgrades.813 PJM contends that the allocation of responsibilities between the
transmission owners and PJM in the current study process follows the division of rights
recently affirmed by the Commission and courts, i.e., transmission owners’ reservation of
rights over local transmission planning and PJM’s responsibility for the regional
transmission system.814 PJM claims that it maintains this division of rights in the
illustrative tariff provisions.
PJM also rejects protesters’ arguments that its proposal affords PJM and the
transmission owners inappropriate discretion. PJM argues that it seeks no more
discretion than it currently has under its existing study processes. PJM argues that its
evaluation of the transmission system to determine whether it can reliably provide the
requested transmission service requires an exercise of engineering judgment, which
inherently entails a reasonable exercise of discretion.815
PJM argues that reliability reviews inherently require PJM to make judgment calls
as the transmission provider and a NERC-designated Reliability Coordinator, and the
flexibility to determine whether new transmission facilities are reasonably likely to be
in-service fits squarely within PJM’s expertise. PJM asserts that protesters’ concerns
about the level of detail generally concern the transmission owner’s load integration
studies, which PJM argues does not inherently implicate the Commission’s jurisdiction
under the FPA.816 In response to concerns about study timelines, PJM contends that its
evaluation of any transmission service request is dependent on the load integration
studies performed by the applicable transmission owner.817 PJM asserts that it does not
813 Id. at 24.
814 Id. at 24 & n.68 (citing PJM Interconnection, L.L.C., 172 FERC ¶ 61,136,
order on reh’g, 173 FERC ¶ 61,225, at P 19 (2020), aff’d sub nom. Am. Mun. Power, Inc.
v. FERC, 86 F.4th 922 (D.C. Cir. 2023); PJM Interconnection, L.L.C., 173 FERC
¶ 61,242 (2020), order on reh’g, 176 FERC ¶ 61,053 (2021), aff’d sub nom. Am. Mun.
Power, Inc., 86 F.4th 922; Monongahela Power Co., 164 FERC ¶ 61,217, at P 14 (2018);
Appalachian Power Co., 170 FERC ¶ 61,196, at P 59 (2020)).
815 Id. at 25-26.
816 Id. at 34.
817 Id. at 28.
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have authority to dictate timelines to transmission owners to complete their studies, given
that load integration studies are a matter of local transmission planning.
PJM also alleges that concerns that PJM will reject transmission service requests
without basis are unfounded.818 PJM maintains that it will generally grant requests for
NITS and FCD transmission service, and PJM will grant Interim NITS requests
consistent with the results of any study/studies. As to NFCD transmission service, PJM
explains that, if it denies a request in whole or in part, PJM will provide a written
explanation to the customer of PJM’s reasoning for the denial, which could form the
basis for any complaint to the Commission.
Moreover, PJM argues that the illustrative tariff puts all parties on sufficient notice
as to how PJM will determine whether it can provide the requested transmission service
and the study procedures to arrive at that determination.819 PJM asserts that the
illustrative tariff provides the standard to which PJM will evaluate the requests—whether
the requested level of service can be provided reliably.
Indicated TOs concede that more detail regarding the study processes for the new
transmission services could be helpful, but they argue that commenters’ concerns as to
the potential for delays and undue discrimination are overstated. Indicated TOs contend
that it is appropriate and consistent with the Commission’s rule of reason to reference the
need to incorporate each transmission owner’s technical requirements in the Tariff while
omitting the details. Indicated TOs do not oppose making explicit in the Tariff that the
studies referred to are those that the transmission owners will conduct to integrate large
load facilities. Indicated TOs reject claims that they will use their role in the study
process to delay or deny Co-Location Arrangements or discriminate against Co-Located
Load.820
Constellation requests that the Commission deter delays and potential disputes by
(1) establishing deadlines for studies and other transmission owner approvals or
consultation requirements, and (2) require PJM’s and transmission owners’ standards,
requirements, guidance, and practices on Co-Location Arrangements to be on file with
the Commission on a standalone basis or reflected in the Tariff.821
818 Id.
819 Id. at 30.
820 Indicated TOs Reply Brief at 9-11.
821 Constellation Reply Brief at 11-12.
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PJM argues that Vistra oversimplifies the provision of non-firm transmission
service.822 PJM states that it is not the case that the transmission system has significantly
underutilized capacity to provide the envisioned services. PJM alleges that it needs to
carefully identify and manage operational risk instead of spontaneously managing
non-firm load under an increasingly stressed system. Constellation also argues that PJM
should clarify how it will determine the future and real-time availability of NFCD
transmission service, which should be based on when transmission capacity is available
and not needed by firm customers, consistent with the December Order.823
d.
Answers
Constellation argues that the Commission has jurisdiction to regulate load
integration studies in connection with jurisdictional transmission service.824
Constellation contends that the Commission should exercise jurisdiction over the load
integration studies needed to provide jurisdictional transmission service and direct that
these studies be on file, including study deadlines and violations to be studied.825
Indicated TOs argue that transmission owner processes for studying the integration
of new retail loads do not implicate the Commission’s jurisdiction, even though such
studies will be used as an input in PJM’s process for studying applications for the new
transmission services.826 Indicated TOs point out that, even as to studies for
Commission-jurisdictional services, the Commission does not require transmission
providers to file studies.827 Indicated TOs maintain that, if an Eligible Customer disputes
the outcome of PJM’s study process for the new transmission services, the customer can
seek redress through the Commission.
e.
Determination
We find that PJM’s proposal regarding study procedures for FCD and NFCD
transmission services is not sufficiently detailed to be just and reasonable, and we direct
822 PJM Reply Brief at 35-36.
823 Constellation Reply Brief at 18 (citing December Order, 193 FERC ¶ 61,217
at P 214).
824 Id. at 6.
825 Id. at 7.
826 Indicated TOs May 28 Answer at 8.
827 Id. at 9.
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PJM to file, as the replacement rate, more detailed study procedures that mirror the
existing study procedures for transmission service on compliance.828 First, with respect
to FCD transmission service, we agree with parties on briefing that PJM’s proposal is
vague and unclear. We direct PJM to file Tariff revisions on compliance to study
requests for FCD transmission service using the same process PJM uses for new service
requests for NITS, i.e., the cluster study process.829 This requirement is just and
reasonable because it will treat new firm transmission service requests similarly.
PJM contends that its proposal “has built on its existing processes for studying
requests for new transmission services . . . with additional processes necessary to study
the novel aspects of Interim NITS and [FCD and NFCD] Transmission Services.”830
PJM also states that “[e]valuation of firm service requests will require and follow similar
study procedures to what is now required for NITS.”831 However, PJM’s proposal is
lacking in detail. It is not clear whether PJM proposes to study requests for FCD
transmission service serially or through its existing cluster study process.832
Regardless, we find that it is just and reasonable to study requests for FCD
transmission service through PJM’s existing cluster study process, and we direct PJM to
file Tariff revisions on compliance consistent with this directive. We find a serial study
process for new FCD transmission service requests, rather than a cluster study as for new
NITS requests, would provide disparate treatment to FCD transmission service requests.
PJM also does not address a timeline for its study process, meaning FCD transmission
service requests could be studied more quickly or more slowly than requests in the new
services queue. PJM does not provide a reason for this difference or any explanation as
to why such requests should not be studied in the normal cluster process for new service
requests. Further, studying such requests as part of the established cluster study process
828 We discuss PJM’s proposed study procedures for Interim NITS below in
Part VI.H.
829 PJM, Intra-PJM Tariffs, OATT, § III.32.3 Initial Study Procedures (3.0.0) (“A
request for service for which a Phase I System Impact Study is required is subject to the
System Impact Study Procedures, as set forth in Tariff, Part VII or Tariff, Part VIII, as
applicable.”).
830 PJM Reply Brief at 23.
831 Id. at 26.
832 See PJM, Initial Brief, attach. A, § 712.1 (“After receiving the Application for
Firm Contract Demand Transmission Service, the Transmission Provider shall determine,
in accordance with the PJM Manuals, any necessary studies for reliably providing the
requested Firm Contract Demand Transmission Service.”).
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would address many of the concerns in the record because it would ensure Eligible
Customers have more detail, transparency, and certainty regarding the study process,
which is the primary concern of the protesters.833 Thus, we direct PJM to submit a
compliance filing within 60 days of the date of issuance of this order to revise its Tariff to
provide that it will study FCD transmission service requests using its existing process for
studying firm transmission service requests. Consistent with our determination above to
extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
further direct PJM to reflect this change in its compliance filing.
With respect to NFCD transmission service, we agree with parties arguing that
PJM’s proposal lacks specificity. PJM argues that “the study approach could differ
widely for each request, given the different nature of the risks involved, as the system
would be operated on an as-conditions-permit basis.”834 The lack of detail creates a level
of discretion that is not just and reasonable; while some amount of discretion is likely
necessary to ensure PJM is able to perform any additional studies necessary to maintain
reliability, Eligible Customers must have some understanding of the study process PJM
will use to evaluate transmission service requests. Therefore, we direct PJM to submit a
compliance filing within 60 days of the date of issuance of this order that revises its
Tariff to include study procedures for NFCD transmission service requests. We note that
the Tariff includes detailed procedures for the study of Non-Firm PTPS, which serve as a
useful reference. In particular, the Tariff provides that, following receipt of a tendered
schedule, PJM will make a determination on a non-discriminatory basis of available
transfer capability for PTPS requests, based on a specific methodology detailed in Tariff,
Attachment C.835 No party has shown why a similar process should not apply for NFCD
transmission service, and PJM has not demonstrated that having so little detail in the
Tariff regarding the process for studying requests for NFCD transmission service is just
and reasonable. PJM’s compliance filing must also include details about the term length
of NFCD transmission service, including the minimum term. Consistent with our
determination above to extend the three new transmission services set forth in the
December Order to Eligible Customers taking service on behalf of load with BTMG that
833 See PJM, Intra-PJM Tariffs, pt. VIII, § 404 (1.0.0) (providing overview of
system impact studies, including scope of studies).
834 PJM Reply Brief at 26.
835 See PJM, Intra-PJM Tariffs, OATT, §§ II.15.2, II.18.4; id. attach. C
(Methodology to Assess Available Transfer Capability).
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are willing and able to limit their energy withdrawals from the transmission system under
certain conditions, we further direct PJM to reflect this change in its compliance filing.
Indicated TOs request that the Tariff specify that transmission owner load
integration studies will be completed first and thereby inform what additional studies are
necessary. However, it is not clear from the record what these studies entail, as these
studies are not defined in either the Tariff or any of PJM’s manuals, or how transmission
owners will study the load. For example, the record indicates that Indicated TOs view a
load integration study for Co-Located Load as potentially analyzing “(i) what, if any,
upgrades are needed to accommodate the physical gross load amount behind the point of
interconnection.”836 To the extent PJM intends to permit transmission owners to study
Co-Located Load as if it were native load with NITS, that would not be just and
reasonable for FCD and NFCD transmission services. We therefore direct PJM to
specify in a compliance filing, which it must submit within 60 days of the date of
issuance of this order, how transmission owners shall participate in PJM’s study process
for Eligible Loads for FCD and NFCD transmission services and specify in detail the
related roles and responsibilities of PJM and the transmission owners in such studies. We
decline at this time to adopt Indicated TOs’ requests to incorporate further revisions to
the Tariff related to load integration studies.837
4.
Rates and Charges
a.
Initial Briefs
Indicated TOs propose that the rate for the FCD transmission service be based on
the zonal NITS rates and underlying NITS revenue requirements.838 Indicated TOs argue
that Eligible Customers taking FCD transmission service on behalf of Co-Located Load
and Network Customers should be charged the same rate because the level of service
provided to both is the same for all relevant purposes. For example, Indicated TOs argue
that both services are firm transmission services for which PJM procures capacity for the
customers. Indicated TOs argue that it would be unjust and unreasonable and unduly
discriminatory to charge FCD transmission service customers a rate lower than the NITS
rate as it would subsidize FCD transmission service customers at the expense of Network
Customers. Indicated TOs contend that it is appropriate to use the single peak coincident
demand to calculate the FCD transmission service rate because it is an annual service.
836 Indicated TOs Initial Brief at 25-26 (emphasis added).
837 Indicated TOs Response Brief at 13, 16, 19.
838 Indicated TOs Initial Brief at 6, 8-9.
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Indicated TOs propose that NFCD transmission service pay a charge for the
reserved contract demand amount multiplied by a zonal NFCD transmission service rate
determined based on the specific term of service.839 Indicated TOs propose to use the
same FCD transmission service rate for purposes of establishing the maximum rate for
NFCD transmission service. Indicated TOs argue that it is just and reasonable to use the
same maximum rate for FCD and NFCD transmission services, because the Commission
has permitted pricing Non-Firm PTPS at the rate used for Firm PTPS and because the
Commission provides flexibility to arrange and schedule NFCD transmission service.
Indicated TOs allege that NFCD transmission service is superior to Non-Firm PTPS
because PJM will re-dispatch generation prior to curtailing NFCD transmission service.
Indicated TOs propose to consider on a going-forward basis whether a discount is
appropriate for NFCD transmission service based on system conditions and use patterns.
In addition to these charges, PJM proposes to assess, for FCD transmission
service: (1) administrative service charges, (2) ancillary service charges, (3) black start
service charges based on gross demand, (4) regulation charges based on gross demand,
and (5) any redispatch costs. PJM contends that these are standard charges associated
with use of the transmission system above transmission service rates.840 For NFCD
transmission service, PJM also proposes to assess certain charges within its authority:
(1) administrative charges, (2) ancillary services charges, (3) any redispatch costs,
(4) regulation charges based on gross demand, and (5) black start service charges based
on gross demand.841
b.
Response Briefs
Several parties argue that it is just and reasonable to charge the same rate for FCD
transmission service and NITS.842 NOVEC explains that Eligible Customers are
receiving a service commensurate with NITS and should therefore pay a cost
commensurate with NITS in recognition of the Commission’s cost causation principles.
Market Monitor asserts that if customers have the option to convert from FCD
transmission service to NITS in the future, and given the long timelines in transmission
planning and the extreme lumpiness of transmission investments, PJM must plan as if all
839 Id. at 10, 11-13.
840 PJM Initial Brief at 27.
841 Id. at 36-37.
842 ODEC Response Brief at 8; NOVEC Response Brief at 6-7; Market Monitor
Response Brief at 3-4.
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Eligible Customers taking the new contract demand transmission services are Network
Customers.
Some parties also agree that it is just and reasonable to use the FCD transmission
service rate as the maximum rate for NFCD transmission service.843 NOVEC argues that
NFCD transmission service is a network-type service that bears a resemblance to NITS.
NOVEC notes that because an Eligible Customer only purchases NFCD transmission
service when reserved, transmission costs for an Eligible Customer are lower than firm
rates.
Other parties disagree that the proposed rate for NFCD transmission service is just
and reasonable.844 Vistra alleges that Indicated TOs fail to justify not offering a
discounted rate for NFCD transmission service when such a discount exists for Non-Firm
PTPS. Vistra contends that the benefit of re-dispatching generation prior to curtailment
does not justify charging a substantially higher rate for a service that is otherwise inferior.
Vistra also argues that Indicated TOs’ proposal is unjust and unreasonable and unduly
discriminatory because it would create cost shifts between classes of transmission
customers, where Eligible Customers taking NFCD transmission service on behalf of
Co-Located Load shoulder the cost of firm transmission service, despite taking non-firm
transmission service.
Joint Co-Location Developers argue that pricing NFCD transmission service at the
same rate as FCD transmission service is not consistent with cost causation principles or
the Commission’s purpose in establishing the NFCD transmission service to avoid
inefficient system buildout. Joint Co-Location Developers maintain that, as compared to
FCD transmission service, the rate for NFCD transmission service should reflect the
lesser costs caused by and lesser benefits received by customers taking this service.845
Joint Co-Location Developers claim that, in Order No. 888-A, the Commission explained
that, while in some circumstances non-firm transmission rates may be set at the firm
transmission rate level, the Commission expects that non-firm transmission rates would,
in most instances, be priced below the price cap.846
Geronimo Power states that, combined with PJM’s proposed requirement that an
Eligible Customer take NFCD transmission service for the portion of its load served by a
843 ODEC Response Brief at 8; NOVEC Response Brief at 7.
844 Vistra Response Brief at 16-17, 23-24; Joint Co-Location Developers Response
Brief at 20; Geronimo Power Response Brief at 4.
845 Joint Co-Location Developers Response Brief at 20-21.
846 Id. at 22 (citing Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,272).
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Co-Located Generator, the implication of the Indicated Transmission Owners’ proposal
appears to be that an Eligible Customer taking NFCD transmission service would be
required to pay a transmission charge equivalent to the rate paid by transmission
customers taking firm transmission service.847 Geronimo Power argues that charging
transmission customers taking NFCD transmission service the same amount as a
transmission customer taking FCD transmission service is unjust and unreasonable and
inconsistent with cost causation principles because these loads will be required to pay a
rate equivalent to customers receiving a higher level of service. Geronimo Power asserts
that non-firm transmission service should be, and often is, priced lower than firm
transmission service, such as in PJM where Non-Firm PTPS customers receive a discount
as compared to Firm PTPS customers. Geronimo Power adds that the proposed rate
would undermine the incentive for large load customers to reduce their reliance on the
grid and therefore would fail to offer a rate that would encourage the efficient use of the
transmission system, contrary to the December Order. Further, Geronimo Power states
that Indicated TOs should not set an unjust and unreasonable rate based on superior
services while they wait until they gather more data to determine the extent to which such
unjust and unreasonable rate should be reduced when charging for an inferior service.
ODEC agrees that it is reasonable for PJM to charge FCD and NFCD transmission
service customers for applicable PJM administrative charges consistent with PJM’s
charges to existing transmission customers.848
ODEC urges the Commission to direct further compliance filings in order to
ensure that rates for the new FCD transmission service are just and reasonable by
requiring the individual transmission owners to either confirm that their formula or stated
rates and metrics reporting enable direct crediting by PJM, or provide whatever revisions
are necessary in order to do so.849 ODEC states that this is important so that ODEC and
other Network Customers are not subject to paying duplicative charges for the same
revenue requirement amount. ODEC adds that it is also important because Indicated TOs
state that load-serving entities will submit metrics to PJM used to calculate transmission,
capacity, and energy charges, but such metrics may not be consistent among Indicated
TOs. ODEC explains that, while it is a load-serving entity, as a transmission customer
the metrics are provided to PJM by the transmission owners for the zones where ODEC
takes transmission service.
Constellation seeks clarification that Indicated TOs’ proposed rate for FCD
transmission service is equal to the applicable transmission owners’ NITS rate calculated
847 Geronimo Power Response Brief at 4, 6, 7-9.
848 ODEC Response Brief at 8; see also NOVEC Response Brief at 8.
849 ODEC Response Brief at 8-9.
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using that transmission owners’ coincident peak methodology, given that different
transmission owners use different methods.850
Industrials/Amtrak argue that the Commission must ensure that transmission
owners’ calculation of individual customer and zonal transmission cost allocation is
transparent, whether through an Attachment M-2 filing or another publicly transparent
and accountable method.851 Industrials/Amtrak also contend that the Commission must
provide direction on how the revenue and the billing determinants for FCD and NFCD
transmission services and Interim NITS would be incorporated into existing transmission
formula rates. Similarly, Geronimo Power states that the Commission should at a
minimum require the Indicated Transmission Owners to clarify the nature of the rates and
billing determinants that they are proposing, including whether they intend to charge the
NFCD transmission service charge on a MWh basis, which would be inconsistent both
with how transmission reservation charges are historically structured and the Tariff.852
Industrials/Amtrak argue that neither FCD nor NFCD transmission service provide
a cost-based back-up service for cogeneration QFs and similarly-situated retail
customers.853 Industrials/Amtrak contend that, because it would require payment for
service based on the contracted amount, FCD transmission service inherently assumes
that forced outages or other reductions in electric output by all QFs will occur
simultaneously, or during the system peak, or both, without any factual data to support
that assumption.854 Industrials/Amtrak aver that this is not a realistic assumption for
cogeneration QFs. Industrials/Amtrak further argue that it would not comport with cost
causation principles to require a FCD transmission service reservation for occasional
back-up power needs, particularly where the history and risk of the individual unit is
well-established or has met outside standards. Industrials/Amtrak further argue that
NFCD transmission service also falls short because it requires pre-scheduling with and
approval by PJM, which is inconsistent with back-up power’s use in the event of forced
outages, and because it is an as-available product that is subject to interruption.855
Industrials/Amtrak argue that, if the existing netting construct is no longer available, then
a firm transmission service must be available for QFs to meet the requirements of
850 Constellation Response Brief at 31.
851 Industrials/Amtrak Response Brief at 25-26.
852 Geronimo Power Response Brief at 5 n.13.
853 Industrials/Amtrak Response Brief at 16-19.
854 Id. at 17 (citing Dauphinais Aff. ¶ 44).
855 Id. at 18.
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PURPA based on actual use. Industrials/Amtrak contend that there must be a
transmission service that applies cost causation standards to occasional, unplanned use of
the transmission system.
Industrials/Amtrak argue that cost causation principles dictate that the
Commission should authorize cost-based back-up service for all transmission customers,
not only QFs.856 Industrials/Amtrak explain that there are a number of facilities that
operate on similar principles to QFs but do not maintain QF status for a variety of
reasons. Industrials/Amtrak argue that these facilities, too, must occasionally draw from
the grid, including for occasional unscheduled outages. Industrials/Amtrak argue that it
cannot be just and reasonable or comport with cost causation principles to require
facilities requiring only occasional back-up service to pay rates that are the same as FCD
transmission service or gross-based NITS. Industrials/Amtrak argue that transmission
customers should be charged based on actual use on an hourly basis and should not be
charged a standby fee.
Industrials/Amtrak explain that QFs are entitled to supplementary power, back-up
power, maintenance power, and interruptible power pursuant to Commission
regulations857 and that the rates for back-up power “[s]hall not be based upon an
assumption (unless supported by factual data) that forced outages or other reductions in
electric output by all [QFs] on an electric utility’s system will occur simultaneously, or
during the system peak, or both.”858 Industrials/Amtrak argue the NITS BTMG netting
construct meets the requirements of PURPA’s enacting regulations.
c.
Reply Briefs
In response to Constellation’s request for clarification, Indicated TOs clarify that
the zonal FCD transmission service rate will be calculated using that transmission
owner’s specific methodology applicable to Network Customers.859
NOVEC explains that because under PJM’s proposal a transmission customer
would only take and pay for NFCD transmission service when the generator was
experiencing an outage, the same rate does not equate to the same cost to the customer.860
856 Id. at 20-22, 24.
857 Industrials/Amtrak Response Brief at 14-16 (citing 18 C.F.R. § 292.305(b)).
858 Id. at 15 (citing 18 C.F.R. § 292.305(c)(1)).
859 Indicated TOs Reply Brief at 18 (citing Constellation Response Brief at 31).
860 NOVEC Reply Brief at 10-13.
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NOVEC argues that NFCD transmission service does not impose fewer costs on the
transmission system than NITS, just “imposes costs differently” and contends that the
Commission needs to be cautious to avoid providing “co-located generators a subsidized
low cost option to use the system whenever they need backup.”861 NOVEC argues that
Co-Located Load in areas where PJM can accommodate a large amount of NFCD
transmission service could end up with the best of both worlds, where they are very rarely
curtailed but pay a subsidized rate for transmission service, with the option to switch
from FCD transmission service or NITS if PJM can no longer accommodate the required
level of NFCD transmission service.
In response to arguments from Joint Co-Location Developers and Geronimo
Power about whether it is appropriate to establish NFCD transmission service rates based
on FCD transmission service rates, Indicated TOs argue that transmission owners need to
gather data on how NFCD transmission service customers are using the service and the
effect of that utilization on the transmission system.862 Indicated TOs argue that it is not
clear whether NFCD transmission service customers will cause the need for fewer
Network Upgrades, and that further analysis is needed to determine whether discounts are
appropriate. Finally, Indicated TOs contend that Joint Co-Location Developers’ concerns
that the proposed NFCD transmission service rate will discourage industrial development
are exaggerated and misplaced. NOVEC similarly argues that it is not the Commission’s
place to subsidize certain industries at the expense of customers.863
In response to Vistra’s arguments about applying the rate for zonal Non-Firm
PTPS to NFCD transmission service, Indicated TOs argue that doing so would be
unreasonable because transmission customers have used Non-Firm PTPS exclusively to
facilitate the delivery of specific generation to the PJM border—not for internal use.864
NOVEC also rejects Vistra’s argument that NFCD transmission service should receive
the same rate as Non-Firm PTPS, arguing that it would not be appropriate to allow NFCD
transmission service the same discount as Non-Firm PTPS because the two products
fundamentally differ. Indicated TOs further argue that the discounted Non-Firm PTPS
rate reflects historical use and was neither intended nor appropriate for NFCD
transmission service because NFCD transmission service is intended to be a limited,
supplemental service within PJM and does not facilitate the delivery of specific
generation to specific load over a contract path. Indicated TOs also contend that NFCD
861 Id. at 12 (citing Market Monitor Response Brief at 6).
862 Indicated TOs Reply Brief at 19-21.
863 NOVEC Reply Brief at 14.
864 Indicated TOs Reply Brief at 13, 18-19.
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transmission service is superior to Non-Firm PTPS because it has a superior curtailment
priority.
Indicated TOs reject Vistra’s argument that Indicated TOs’ proposal to credit the
revenues associated with NFCD transmission service to customers taking NITS and FCD
transmission service will create unjustified cost shifts among customer classes.865
Indicated TOs argue that these revenue credits are not subsidies but offsets that reduce
the amount paid by firm transmission service customers, which is appropriate because
transmission rates are designed to recover the fixed costs of building and maintaining the
transmission system to provide service to such customers. In the absence of such credits,
Indicated TOs argue that the transmission owners would over-recover their revenue
requirements. Indicated TOs further argue that the revenue crediting mechanism is fully
consistent with previously approved mechanisms such as section 27A, which credits
Non-Firm PTPS revenue to Network and Firm PTPS customers.
Industrials/Amtrak argue that NFCD transmission service cannot provide back-up
power because it cannot be accessed during a BTMG generation facility outage until a
request for it is submitted to and approved by PJM.866 Industrials/Amtrak further argue
that NFCD transmission service is also only available on an as-available basis and is
subject to both operational and automated interruption.867 Industrials/Amtrak explain
that, during a forced outage, a retail customer would be required to automatically curtail
load until it submits a NFCD transmission service request and PJM approves that request.
Industrials/Amtrak also argue that FCD transmission service can provide
maintenance power on a firm basis, but like back-up power, cannot do so at a cost lower
than gross load NITS because it implicitly assumes BTMG maintenance outages cannot
be scheduled to avoid peak periods.868
d.
Answer
Geronimo Power argues that Indicated TOs’ proposed rate for NFCD transmission
service is unjust and unreasonable, will disincentivize Co-Located Loads from relying on
NFCD transmission service, and lead to less efficient use of the transmission system.869
865 Id. at 31-32 (citing Vistra Response Brief at 23-25).
866 Industrials/Amtrak Reply Brief at 8.
867 Id. at 8 n.13.
868 Id. at 9 n.16.
869 Geronimo Power May 21 Answer at 8.
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Geronimo Power asserts that Indicated TOs offer no meaningful response to the question
of what is a just and reasonable rate for NFCD transmission service. Geronimo Power
argues that the mere fact that Commission policy allows PJM transmission owners to
charge up to the firm rate in some cases does not mean that doing so here is just and
reasonable.870 Geronimo Power avers that there should be little doubt that some form of
discount must be applied as to NFCD transmission service.
e.
Determination
We agree with Indicated TOs that it is just and reasonable to base the rate for FCD
transmission service on the zonal NITS rates and underlying NITS revenue
requirements871 and direct the PJM transmission owners, as the replacement rate, to
submit a compliance filing within 60 days of the date of issuance of this order that
includes Tariff revisions to effectuate this proposal. Both FCD transmission service and
NITS will provide a similar level of firm transmission service, and PJM will plan the
transmission system to ensure that it is able to provide both transmission services on a
firm basis.872
We find unjust and unreasonable PJM’s proposal to charge Eligible Customers
taking FCD or NFCD transmission services on behalf of Co-Located Loads for all
ancillary services other than regulation and black start based on total quantity of MWhs
of energy delivered to the Co-Located Load.873 In the December Order, the Commission
found that Eligible Customers taking the new FCD transmission service on behalf of
Co-Located Loads must be charged for ancillary services based on the contract demand,
with the exception of regulation and black start services.874 Similarly, the Commission
found that Eligible Customers taking the NFCD transmission service on behalf of
Co-Located Loads must be charged for ancillary services on an as-reserved contract
demand basis, based on the reserved contract demand amount of transmission service,
with the exception of regulation and black start services.875
870 Id. at 9.
871 Indicated TOs Initial Brief at 6.
872 Id. at 8-9; December Order, 193 FERC ¶ 61,217 at PP 195, 208.
873 PJM, Initial Brief, attach. A, Subpart B, §§ 714.5 & 715.4.
874 December Order, 193 FERC ¶ 61,217 at P 209.
875 Id. P 216.
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However, we find just and reasonable PJM’s proposal to charge Eligible
Customers taking FCD and NFCD transmission services on behalf of Co-Located Loads
for regulation and black start services based on gross demand, which is consistent with
the Commission’s findings in the December Order. The Commission found in the
December Order that “Eligible Customers that take the Firm Contract Demand
transmission service on behalf of Co-Located Loads must be charged for regulation and
black start services based on a gross demand basis, rather than the contract demand”
because all Co-Located Loads rely on regulation and black start services to be served
regardless of whether they are withdrawing energy from the transmission system.876
Likewise, the Commission found in the December Order that “Eligible Customers that
take the Non-Firm Contract Demand transmission service on behalf of Co-Located Loads
use and therefore should be charged for regulation and black start services based on a
gross demand basis, rather than the reserved amount of transmission service.”877
Therefore, and consistent with our determination above to extend the three new
transmission services set forth in the December Order to Eligible Customers taking
service on behalf of load with BTMG that are willing and able to limit their energy
withdrawals from the transmission system under certain conditions, we direct PJM to
submit a compliance filing within 60 days of the date of issuance of this order that revises
its Tariff to: (1) charge Eligible Customers taking FCD and/or NFCD transmission
services on behalf of Eligible Loads for all ancillary services other than regulation and
black start services based on their contract demand; and (2) charge Eligible Customers
taking FCD and/or NFCD transmission services on behalf of Eligible Loads for
regulation and black start services based on their gross load.
We also find just and reasonable PJM’s proposal to charge Eligible Customers
taking FCD and/or NFCD transmission services certain administrative charges. As PJM
explains, these are standard charges associated with use of the transmission system above
transmission service rates.878 For the same reason, we find just and reasonable PJM’s
proposal to charge Eligible Customers taking FCD and/or NFCD transmission services
redispatch costs to cover congestion-related costs, given that both of these services will
be pool-scheduled and can be served by generators redispatched to mitigate congested
transmission paths. We thus direct PJM to submit a compliance filing, within 60 days of
the date of issuance of this order, that revises its Tariff to implement these charges.
Consistent with our determination above to extend the three new transmission services set
forth in the December Order to Eligible Customers taking service on behalf of load with
BTMG that are willing and able to limit their energy withdrawals from the transmission
876 Id. P 209.
877 Id. P 216.
878 PJM Initial Brief at 27.
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system under certain conditions, we further direct PJM to reflect this change in its
compliance filing.
However, we are not persuaded that Indicated TOs’ proposal to set the maximum
rate for NFCD transmission service equal to the rate for FCD transmission service is just
and reasonable. In the December Order, the Commission was clear that NFCD
transmission service would “provide an option for Eligible Customers seeking to use the
transmission system on behalf of a Co-Located Load in this more limited manner.”879
Further, NFCD transmission service is non-firm and curtailed prior to FCD transmission
service and NITS.880 NFCD transmission service is therefore an inferior service to FCD
transmission service and NITS, and we find that the just and reasonable replacement rate
here should not charge the same maximum rate for these transmission services. We
acknowledge NOVEC’s argument that under PJM’s proposal, an Eligible Customer
would only take and pay for NFCD transmission service when the generator serving it is
experiencing an outage, so the same rate does not equate to the same cost to the Eligible
Customer.881 However, the same rate could apply to Eligible Customers taking the same
amount of FCD and NFCD transmission services.
We also find that charging the same maximum rate for both FCD and NFCD
transmission services can undermine the benefits of the new NFCD transmission service
for other transmission customers. Specifically, discounting non-firm transmission
services encourages transmission customers to use such services, which benefits all
transmission customers by maximizing use of the existing transmission system. These
benefits accrue to other transmission customers in two ways. First, the revenues related
to NFCD transmission service will become a credit to, and thus offset, the transmission
revenue requirement, which is the basis for the rates that firm transmission customers are
charged. Moreover, utilizing NFCD transmission service can avoid unnecessary Network
Upgrades, the costs of which would likely be allocated to all firm transmission service
customers.
Further, pricing NFCD transmission service at the same rate as FCD transmission
service is not consistent with cost causation principles or the December Order’s findings.
Specifically, the Commission found that requiring an Eligible Customer taking
transmission service on behalf of Co-Located Load to take NITS on a gross demand basis
would be inefficient, and could necessitate costly transmission buildout and costs paid by
transmission customers that may not be necessary if Eligible Customers taking
transmission service on behalf of Co-Located Loads are willing and able to limit their
879 December Order, 193 FERC ¶ 61,217 at P 214 (emphasis added).
880 See infra Part VI.G.
881 NOVEC Reply Brief at 10.
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energy withdrawals from the transmission system under certain conditions and take a
transmission service that requires fewer or less costly Network Upgrades to provide.882
As noted above, the Commission directed the creation of NFCD transmission service,
finding that it would provide an option for Eligible Customers taking service on behalf of
Co-Located Loads that seek to use the transmission system in a more limited manner.883
The December Order further found that Eligible Customers taking service on behalf of
Co-Located Loads should be allowed to choose the transmission service that aligns with
their use of the transmission system and therefore aligns the charges for service with the
benefits received.884 Indicated TOs’ proposal fails to comply with the directive in the
December Order by charging the same rate for FCD and NFCD transmission services; the
proposal does not align the charges for transmission service with the benefits received.
Our finding here is also consistent with Commission precedent. In Order No. 888,
the Commission determined that the rate for Non-Firm PTPS “is capped at the firm
rate.”885 In response to Order No. 888, Duquesne sought clarification that the phrase “the
non-firm rate is capped at the firm rate” does not mean the Commission is deviating from
its principles that non-firm transmission service must be priced in a manner that reflects
the interruptibility of the service and is economically efficient.886 The Commission
clarified that the Firm PTPS transmission rate represents a maximum price for non-firm
transmission service and emphasized that “non-firm transmission prices should reflect the
interruptibility of the service and should promote efficient use of the transmission system,
subject to this price cap.”887 The Commission concluded that, “while in some
circumstances non-firm transmission rates may be set at a firm transmission rate level,
the Commission expects that non-firm transmission rates would, in most instances, be
priced below the cap.”888
Thus, while the Commission recognized that the Firm PTPS transmission rate
could be a ceiling for the Non-Firm PTPS rate, the Commission also recognized that the
rates should vary based on the quality of the transmission service. Our finding here is
882 December Order, 193 FERC ¶ 61,217 at P 199.
883 Id. P 214.
884 Id. P 199.
885 Order No. 888, FERC Stats. & Regs. ¶ 31,036 at 31,743.
886 Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 at 30,272.
887 Id.
888 Id.
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consistent with Order No. 888 (i.e., that non-firm transmission service rates should
generally be priced below firm transmission service rates). Indicated TOs propose
making the exception the rule and thus fail to justify that deviation. Indicated TOs argue
that NFCD transmission service is a superior level of service compared to Non-Firm
PTPS. But, even assuming that statement is correct, it does not follow that NFCD
transmission service is therefore a similar level of service as FCD transmission service or
NITS.
We recognize that Indicated TOs state that they will consider offering discounts
for NFCD transmission service after an initial assessment period to determine whether a
discount would encourage efficient use of the transmission system. However, Indicated
TOs miss the point of not only aligning the rate with the quality of the service provided,
but also designing a rate that incentivizes efficient non-firm uses of the transmission
system. It is counterintuitive to expect charging the full rate to inform an analysis of
what discounts may be appropriate. Therefore, we find that the possibility of offering
discounts at some undefined time in the future is not sufficient to remedy our concerns
with their proposal. Under that proposal, Indicated TOs would have no obligation to
lower rates in the future and offer no transparency as to how or when that decision would
be made; moreover, they provide no compelling explanation as to why it would be just
and reasonable to charge for NFCD transmission service at the FCD transmission service
rate in the interim.
We further disagree with NOVEC’s characterization of a lower rate for NFCD
transmission service as subsidized; as discussed in the body of this order, we find that a
lower rate for NFCD transmission service is just and reasonable and consistent with cost
causation. A lower rate for NFCD, as compared to FCD, transmission service will also,
as NOVEC points out, incentivize transmission customers to use the service in areas
where PJM can accommodate a large amount of NFCD transmission service. This is
exactly the point–Eligible Customers taking transmission service on behalf of Eligible
Loads will be incentivized to take NFCD transmission service in areas where there is
excess transmission capacity, and the charges recouped from those customers will offset
the rates paid by firm transmission customers that funded the excess transmission
capacity. Otherwise, this transmission capacity would remain unused and firm
transmission customers would pay more.
NOVEC also argues that in areas where PJM can accommodate a large amount of
NFCD transmission service, Co-Located Load could end up with the best of both worlds,
where they are rarely curtailed but Eligible Customers taking transmission service on
their behalf pay a subsidized rate for transmission service, with the option to switch to
FCD transmission service or NITS if PJM can no longer accommodate the required level
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of NFCD transmission service.889 We disagree that Eligible Customers could “simply
switch” to FCD transmission service or NITS if PJM can no longer accommodate the
requested level of NFCD transmission service.890 The process to request NITS remains
unchanged, and we address the process to request FCD transmission service above. But
in either case, provision of firm transmission service will be studied, granted to the extent
it can be done so reliably, and only available following construction of any required
Network Upgrades.
With respect to Industrials/Amtrak’s argument that neither FCD nor NFCD
transmission services provide a cost-based back-up service for cogeneration QFs and
similarly-situated retail customers,891 this argument is substantively similar to the
argument the same parties raised on compliance, which is addressed supra.892
Industrials/Amtrak contend that, because it would require payment for service based on
the contracted amount, FCD transmission service inherently assumes that forced outages
or other reductions in electric output by all QFs will occur simultaneously, or during the
system peak, or both, without any factual data to support that assumption.893 However,
as noted above, this argument appears to conflate rates for sales of back-up power and
rates for transmission service, rendering Industrials’/Amtrak’s concerns misplaced.
Industrials/Amtrak further argue that it would not comport with cost causation
principles to require a FCD transmission service reservation for occasional back-up
power needs and that NFCD transmission service will not be useful for back-up power
because it must be requested in advance.894 Again, Industrials/Amtrak appear to conflate
back-up power for QFs under PURPA with the subject of this proceeding, which is
transmission service taken by Eligible Customers serving Eligible Loads. Further,
Industrials/Amtrak state that their concerns are for “whether retail customers can access
cost-based . . . back-up service”895 but, with the exception of Eligible Customers that are
retail customers taking unbundled transmission service, service available to retail
customers is neither the subject of this proceeding nor within the Commission’s
889 NOVEC Reply Brief at 12-13.
890 Id.
891 Industrials/Amtrak Response Brief at 16-17.
892 See supra Part V.A.3.
893 Industrials/Amtrak Response Brief at 17 (citing Dauphinais Aff. ¶ 44).
894 Id. at 18.
895 Id. at 11 (emphasis added).
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jurisdiction. However, to the extent Industrials/Amtrak refer to jurisdictional wholesale
transmission service when arguing that “examples exist of bespoke arrangements for
industrial and institutional customers that may require firm back-up needs,”896 we
continue to find it just and reasonable that Eligible Customers taking NITS be charged on
a gross demand basis as explained in the December Order, with limited exceptions.897
Network Load has the right to be served from the transmission system at any time, and
PJM and the transmission owners incorporate Network Load into their transmission
planning to ensure that they can fulfill their obligation to provide such service. Thus,
regardless of whether certain transmission customers that elect NITS to be able to take
transmission service on demand choose to only take such service occasionally, the system
will be planned to accommodate them at all times. We therefore continue to find that the
benefits of NITS align with charging for NITS based on gross demand. We further
reiterate that, as discussed in this order, we have set aside, in part, the December Order to
extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions.898
Therefore, we direct the PJM transmission owners to submit, within 60 days of the
date of issuance of this order, a compliance filing with the Tariff charges for NFCD
transmission service in accordance with this order. Specifically, the PJM transmission
owners must propose a lower maximum rate or non-discriminatory discounts for the
NFCD transmission service rate. Moreover, the PJM transmission owners must ensure
that their proposed Tariff revisions are transparent as to how charges will be calculated
for an individual transmission customer. Consistent with our determination above to
extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
further direct the PJM transmission owners to reflect this change in their compliance
filing.
5.
Other
a.
Initial Briefs
PJM states that any request for FCD and/or NFCD transmission service must
comply with Commission regulations for new service requests, and include several items
specific to these transmission services, such as a description of the supply characteristics
896 Id. at 12.
897 December Order, 193 FERC ¶ 61,217 at PP 186, 195.
898 See supra Part IV.C.1.b.i.
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of the Co-Located Generator and the demand characteristics of the Co-Located Load.899
Upon receiving an application, PJM will evaluate whether the requested level of Contract
Demand transmission service can be reliably provided. PJM then explains that the
Eligible Customer must meet several conditions precedent, such as certifying that it is
willing and able to limit withdrawals from the transmission system when requested by
PJM and providing PJM with an authorization or certification from its Relevant Electric
Retail Regulatory Authority (RERRA) affirming that the Eligible Customer is authorized
to provide energy to the Co-Located Load. PJM also proposes to require that certain
facilities and necessary technical arrangements must be completed prior to
commencement of requested service.
PJM next explains that, under the Service Agreement for Contract Demand
transmission service, service is presumed to continue without expiration, and that there
are several bases for termination.900 For example, PJM explains that service can
terminate on 42 months’ notice prior to the commencement of a delivery year, and PJM
argues that this is appropriate because the contract demand level under FCD transmission
service will be accounted for in PJM’s capacity market. PJM proposes circumstances
whereby PJM may terminate service for cause: (1) the Eligible Customer breaches its
obligations, such as materially changing the Co-Location Arrangement without PJM
studying it; or (2) the Eligible Customer is disqualified by failing to follow an operating
instruction to curtail or shed load, or after the misoperation, on more than one occasion,
of any necessary control technologies or required protection systems (described further
below).
PJM next proposes that the Eligible Customer designate the Co-Located Load and
the Co-Located Generator and provide the MW level of energy from the Co-Located
Generator dedicated to serving the Co-Located Load.901 For reliability purposes, PJM
states, the Eligible Customer must provide PJM with timely written or electronic notice
of material changes in the demand characteristics of the Co-Located Load or the supply
characteristics of the Co-Located Generator. PJM maintains that necessary control
technologies and protection systems for NFCD transmission service will be designed
based on the specific circumstances of each Co-Location Arrangement, and PJM’s ability
to reliably operate the system could be impaired by any material changes to the control
technologies or protection systems. PJM proposes to prohibit an Eligible Customer from
using FCD transmission service for the sale of either capacity or energy to loads other
899 PJM Initial Brief at 17-19.
900 Id. at 20-22.
901 Id. at 22-24.
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than the Co-Located Load designated in its Service Agreement or the transmission
service to third parties.
b.
Response Briefs
ODEC requests clarification regarding how PJM’s requirement that an Eligible
Customer taking transmission service on behalf of a Co-Located Load provide PJM with
an authorization or certification from its RERRA which affirms that the Eligible
Customer is authorized to provide energy to the Co-Located Load would apply to a
generation and transmission electric cooperative like ODEC.902 ODEC states that it is
unclear whether PJM intends that ODEC, as an Eligible Customer, would need to provide
certification that ODEC’s member distribution cooperatives (which are the RERRA in
Maryland and Delaware) have authorized ODEC to provide energy to the Co-Located
Load. ODEC adds that, where the state regulatory agency is the RERRA, ODEC is
unaware of a procedure whereby it would obtain authorization from the Virginia State
Corporation Commission to provide energy to Co-Located Loads.
Constellation opposes PJM’s proposal that the Eligible Customer must submit an
authorization or certification from the RERRA affirming that the Eligible Customer is
authorized to provide energy to the Co-Located Load.903 Constellation argues that, if the
generator is the Eligible Customer, it is unreasonable to require that generator to go to the
state commission for a special approval if the load is in a retail competition state.
Constellation maintains that the Eligible Customer need only show that the load will be
served by a transmission owner or licensed competitive retail supplier.
Industrials/Amtrak argue that Co-Located Load on whose behalf an Eligible
Customer takes NFCD transmission service should have firm natural gas capacity or
other adequate alternatives to be able to utilize the service. Industrials/Amtrak argue this
requirement will prevent “misuse” of NFCD transmission service “by generators who
have the ability to operate but may want to rely on the grid when it appears to be more
economical for that generator.”904 Industrials/Amtrak explain that, from a resource
adequacy perspective, policies surrounding NFCD transmission service should encourage
loads to bring their own generation.
Indicated TOs request that PJM add to section 710.1 of PJM’s illustrative tariff
provisions, as a condition precedent for receiving FCD or NFCD transmission service, a
requirement that the Eligible Customer satisfy any load-connection related requirements
902 ODEC Response Brief at 6-7.
903 Constellation Response Brief at 29.
904 Industrials/Amtrak Response Brief at 24.
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imposed by the applicable PJM transmission owner.905 Indicated TOs argue that PJM
should add language to the list of information in section 710.2 of PJM’s illustrative tariff
provisions to be provided in an application for FCD and/or NFCD transmission service to
the effect that the customer has met applicable load interconnection study obligations.
Indicated TOs request that PJM add a placeholder section for listing required control
technologies or protection systems to section 5.0 of PJM’s proposed Attachment F-4.906
Indicated TOs request that PJM clarify whether the use of “Delivery Point” in
section 710.2 subsection (iii) and subclause (i) of section 710.5 is appropriate in light of
PJM’s proposed definition of Co-Located Load, which is based on facilities located on
the same side of the Point of Change in Ownership.907
Indicated TOs contend that PJM should clarify in section 711.3 of PJM’s
illustrative tariff provisions or in PJM’s manuals what constitutes “material changes” for
purposes of the annual information updates to be provided by Eligible Customers.908
Indicated TOs argue that PJM should revise section 712.2 of PJM’s illustrative tariff
provisions to require PJM to notify the affected PJM transmission owner(s) of any
request for NFCD transmission service. Indicated TOs argue that PJM should revise
section 713 of PJM’s illustrative tariff provisions to require that notice of any curtailment
be provided not only to the Eligible Customer but also to the affected PJM transmission
owner or Electric Distribution Company.
Constellation recommends that, for Eligible Customers requesting transmission
service on behalf of Co-Located Load, if the customer facilities include an existing
generator, a certification be required that the existing generator supports the transmission
service request.909 Constellation argues that this requirement would ensure the
Co-Located Load is physically connected to the facilities of the existing or planned
Customer Facility. Alliance promotes their framework for looking at how to responsibly
enable large-load integration while preserving reliability, cost causation, and
affordability.910
905 Indicated TOs Response Brief at 18.
906 Id. at 19, 24.
907 Id. at 18-19 n.41.
908 Id. at 20-22.
909 Constellation Response Brief at 30.
910 Alliance Response Brief at 2.
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c.
Reply Briefs
In response to parties’ comments, particularly those of Indicated TOs, PJM
proposes certain revisions to its illustrative tariff language for FCD and NFCD
transmission services.911 Specifically, PJM notes that it proposes revisions to
section 711.3 to provide that the applicable transmission owner will be notified of
material changes to Co-Located Arrangements, as well as a reference to the PJM manuals
for further description of what would constitute a material change. PJM further proposes
changes to section 713.1 to provide that PJM will notify the applicable transmission
owners of any instruction to curtail Co-Located Load.
Constellation urges the Commission to deny Indicated TOs’ proposal to replace
“Delivery Point” with “Point of Change in Ownership” in PJM’s requirements for
applications for FCD and NFCD transmission services because it would risk uncertainty
or delays for parties in Co-Location Arrangements.912 Constellation asserts that the
Tariff should use “Point of Interconnection,” consistent with the definition of Co-Located
Load.
Since filing its initial brief, PJM states that it has determined that changes to
Auction Revenue Rights rules must be modified to recognize that FCD transmission
service customers will contribute towards enhancing and maintaining the transmission
system and should have the right to request Auction Revenue Rights.913 To effectuate
this modification, PJM proposes a revision to Operating Agreement, Schedule 1,
section 7.4.2(d) and includes a new Operating Agreement, Schedule 1, section 7.4.2(l) to
detail the Auction Revenue Rights rules specific to Eligible Customers taking FCD
transmission service.914
d.
Determination
We disagree with PJM that it is just and reasonable for the replacement rate to
require Eligible Customers requesting FCD or NFCD transmission service to provide an
authorization or certification from its RERRA affirming that the Eligible Customer is
authorized to provide energy to the Co-Located Load.915 PJM does not provide any
911 PJM Reply Brief at 62-63.
912 Constellation Reply Brief at 9 (citing Indicated TOs Response Brief at 19).
913 PJM Reply Brief at 65.
914 Id. at 65-66.
915 PJM Initial Brief at 18-19.
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explanation or context for proposing this requirement, and it is not clear why an Eligible
Customer would need to go through this extra step under the Tariff to prove it is
authorized to serve load. If an Eligible Customer that is not authorized to provide energy
to load attempts to do so, that would be a matter for the RERRA’s enforcement
mechanisms.
We similarly disagree with Constellation that it is necessary to require Eligible
Customers requesting FCD or NFCD transmission service on behalf of Co-Located Load
to include a certification from the Co-Located Generator, if it is an existing generator, to
ensure that the Co-Located Load is physically connected to the generator’s facilities. The
Commission already made clear that Co-Located Load must be “physically connected to
the facilities of an existing or planned Customer Facility on the Interconnection
Customer’s side of the Point of Interconnection to the PJM Transmission System.”916 If
an Eligible Customer attempts to request FCD or NFCD transmission service on behalf of
a load that did not meet the definition of Co-Located Load, that should be referred to the
Commission’s Office of Enforcement and Regulatory Accounting.
Industrials/Amtrak argue that Co-Located Load on whose behalf an Eligible
Customer takes NFCD transmission service should have firm natural gas capacity or
other adequate alternatives to be able to utilize the service.917 Industrials/Amtrak explain
that such a requirement would “avoid misuse of the [NFCD transmission] service by
generators who have the ability to operate but may want to rely on the grid when it
appears to be more economical for that generator.” The December Order contained no
such limitation and Industrials/Amtrak have failed to justify adding it here. Specifically,
the December Order stated that NFCD transmission service would reflect Eligible
Customers taking service on behalf of Co-Located Loads that may not “necessarily plan
to withdraw energy from the transmission system on a regular basis” but “still seek to
withdraw energy from the transmission system from time to time when transmission
capacity is available and not needed by firm customers.”918 The December Order thus
contemplates that NFCD transmission service would be an option for Eligible Customers
taking transmission service on behalf of Co-Located Load, not a mandate.
Indicated TOs request that the Commission direct as part of the replacement rate
requirements related to Eligible Customers satisfying requirements related to load
916 December Order, 193 FERC ¶ 61,217 at P 1 & n.3; February Order, 190 FERC
¶ 61,115 at P 3 & n.4.
917 Industrials/Amtrak Response Brief at 24.
918 December Order, 193 FERC ¶ 61,217 at P 214.
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interconnections.919 Indicated TOs have not explained why these requirements are
necessary, and so we decline to make them a part of the replacement rate at this time.
However, we agree with Indicated TOs’ request that PJM add a placeholder section for
listing necessary control technologies and/or protection systems to section 5.0 of PJM’s
proposed Attachment F-4.
We also find PJM’s proposal to allow FCD transmission service customers to
request Auction Revenue Rights in stage 2 of the allocation process to be just and
reasonable. Given the underlying design of the FCD transmission service, we find the
presumption that FCD transmission service customers contribute towards enhancing and
maintaining the transmission system on par with other Firm PTPS transmission
customers to be reasonable. PJM’s proposal provides FCD transmission service
customers an equivalent opportunity to request Auction Revenue Rights. We direct PJM
to submit a compliance filing within 60 days of the date of issuance of this order to revise
its Tariff consistent with this replacement rate. Consistent with our determination above
to extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
further direct PJM to reflect this change in its compliance filing.
B.
Additional Charge for Eligible Customers Taking FCD and/or NFCD
Transmission Service
1.
December Order
As part of the paper hearing, the Commission asked the parties:
Should the rate paid by an Eligible Customer on behalf of a
Co-Located Load taking only the new Non-Firm Contract
Demand transmission service that elects to not reserve any
amount of that service for a period of time (e.g., one month)
reflect not only charges for regulation and black start
services, but also an additional charge given that regulation
and black start services could not be provided without the
transmission system? If so, how should that additional charge
be determined?
In addition, the Commission asked:
Should the rate paid by an Eligible Customer on behalf of a
Co-Located Load taking only a de minimis amount of the new
919 Indicated TOs Response Brief at 18-19.
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Firm or Non-Firm Contract Demand transmission services
reflect not only (i) charges for regulation and black start
service and (ii) the transmission service charges for that
de minimis amount of service, but also an additional charge
reflecting that the Co-Location Arrangement is physically
connected and synchronized to the PJM transmission system?
If so, how should that additional charge be determined?
2.
Initial Briefs
Indicated TOs propose to charge a Grid Reliance Charge to Eligible Customers
taking FCD or NFCD transmission service based on the difference between either the
contract amount of FCD transmission service, or the reserved amount of NFCD
transmission service, and the customer’s gross on-site load.920 Indicated TOs explain that
the Grid Reliance Charge is designed to reflect the costs of using the transmission system
to deliver black start and regulation services, as well as the inherent benefit that all
customers receive through their synchronization to and reliance on the transmission
system. Indicated TOs state that the Grid Reliance Charge also recognizes the costs
associated with the operations, maintenance, and other activities that Indicated TOs will
need to perform for the transmission system and to accommodate the increased number
of protection schemes required for Co-Location Arrangements. Indicated TOs propose to
calculate this charge for each zone based on an average fixed percentage of the portion of
transmission depreciation and operations and maintenance expense associated with
providing grid reliance services, and to apply that percentage to each transmission
owner’s annual revenue requirement.921 Indicated TOs argue that it is appropriate to use
annual depreciation and operations and maintenance expenses because these expenses
best capture the portions of a transmission owner’s revenue requirement relating to the
ongoing reliable operation of the transmission system. Indicated TOs propose an initial
percentage of 25.8%, subject to adjustment every five years.
In further justifying the Grid Reliance Charge, Indicated TOs assert that
Co-Located Load and its associated Co-Located Generator benefit from the existence and
reliable operation of the transmission system because they are electrically connected to
the transmission system, and should contribute to paying the costs of continuing to
reliably operate the system regardless of the amount of energy withdrawn. Indicated TOs
contend that a large Co-Location Arrangement with zero MW of FCD or NFCD
transmission service still depends on the grid for the delivery of various ancillary services
and a suite of synchronization support services, such as stable frequency, inertia, stability
920 Indicated TOs Initial Brief at 14.
921 Id. at 14-16.
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services, fault current capability, and ride-through and protection coordination. Indicated
TOs argue that the Commission has long recognized that an integrated transmission
system provides broad reliability benefits to all customers of the system, and this
recognition has guided Commission decisions on ratemaking and cost allocation.922
Indicated TOs maintain that their proposed methodology for the Grid Reliance
Charge is a just and reasonable way to estimate with an appropriate level of precision the
benefits to Co-Located Load from relying on the grid while ensuring this charge can be
fairly and efficiently implemented.923 Indicated TOs state that they have included
detailed testimony on the proposed methodology, and they highlight that the allocator is
based on costs included in transmission plant and transmission operations and
maintenance FERC accounts.924 Indicated TOs contend that their proposal is
conservative in a number of respects, for example, they exclude amortization and general
plant depreciation, as well as administrative and general expenses. Indicated TOs explain
that the allocator will be multiplied by each transmission owner’s rate for NITS and FCD
transmission service, resulting in an “unadjusted” Grid Reliance Charge rate. Indicated
TOs further explain that they propose to multiply this unadjusted rate by a ratio that
accounts for the difference between the demand used to account for the NITS and FCD
transmission service rate and the gross load for Eligible Customers on behalf of
Co-Located Load, resulting in the final Grid Reliance Charge for each zone. Indicated
TOs propose to update the allocation percentage every five years to ensure rate stability
and avoid the allocators becoming stale. Indicated TOs propose to apply the revenues
from the Grid Reliance Charge as credits to NITS and FCD transmission service
customers in the relevant zone to avoid double recovery or inappropriate cost shifts.
3.
Response Briefs
a.
Basis for an Additional Charge
ODEC and NOVEC support Indicated TOs’ proposal for a Grid Reliance Charge
to be applied to customers taking FCD and NFCD transmission service.925 ODEC argues
such a charge ensures that Co-Located Loads pay their “fair share” of costs that are
commensurate with the benefits Co-Located Loads receive from the transmission system,
including the costs associated with delivery of black start and regulation services.
922 Id. at 15-16 (citing W. Mass. Elec. Co. v. FERC, 165 F.3d 922, 927 (D.C. Cir.
1999)).
923 Id. at 16.
924 Id. at 16-18.
925 ODEC Response Brief at 10; NOVEC Response Brief at 9.
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NOVEC similarly asserts that Co‑Located Load depends on the transmission system to
deliver black start and regulation services, the charges for which a delivery component is
not included. NOVEC argues that without the Grid Reliance Charge, a Co-Located Load
that reserved no FCD or NFCD transmission service would be a free rider, as it would
benefit from the payments of existing transmission customers to maintain the
transmission system without making any contribution towards it.
Geronimo Power argues that Indicated TOs have not demonstrated that their
proposed Grid Reliance Charge reflects Co-Located Loads’ actual impact on or benefits
from interconnection with the transmission system and is consistent with cost causation
principles.926 Further, Geronimo Power states that Indicated TOs have failed to
demonstrate that there is a separate delivery component to black start and regulation
services and that, if there were such a component, Indicated TOs have not explained why
it would not be unduly discriminatory to apply it only to Co-Located Loads.
Vistra argues that Indicated TOs fail to address the nuances in the Commission’s
paper hearing questions on additional charges or the actual ways that NFCD transmission
service customers might rely on the grid.927 Vistra asserts that the Commission’s
questions illustrate that customers could use NFCD transmission service in different ways
but transmission owners would impose the same charge regardless. Vistra maintains that,
while Indicated TOs argue that Co-Located Loads are all synchronized to the grid,
synchronization is not, itself, a service. Vistra alleges that, in contrast to the
Commission’s long-standing policy that transmission providers offer and price ancillary
services separately, Indicated TOs create a new service for what appears to be an
undefined ancillary service (i.e., grid reliance) to cover a suite of synchronization support
services. Vistra argues that it is not consistent with cost causation principles to impose
the same grid reliance charge for very different types of grid reliance. Vistra contends
that the Commission did not prejudge whether or when a grid reliance charge is necessary
and that the Commission could conclude no such charge is necessary for customers
taking zero MWs or a de minimis amount of the new transmission services.
Industrials/Amtrak argue that, as an as-available service, there should be no
standby fee charging NFCD transmission service customers for access to the transmission
system that is not guaranteed. Instead, Industrials/Amtrak contend that customers should
be charged based on actual use on an hourly basis.928
926 Geronimo Power Response Brief at 10-11, 13-14.
927 Vistra Response Brief at 19-21.
928 Industrials/Amtrak Response Brief at 24.
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b.
Methodology for Determining Additional Charge
NOVEC states that the proposed Grid Reliance Charge is just and reasonable
because it is limited to depreciation and operations and maintenance, and conservatively
excludes a return on rate base and associated income taxes.929 NOVEC also notes that
because revenues earned from the Grid Reliance Charge are returned to NITS and FCD
transmission service customers as a revenue credit, the structure avoids any risk of double
recovery.
Alliance argues that the additional charge question is important and should be
resolved in a way that protects other customers from unjustified cost shifts.930 Alliance
takes no position on a specific dollar figure; instead, it recommends that any additional
charge reflect the contributions of load that have efficient operations or verified load
flexibility through reductions in their cost obligations.
Regarding Indicated TOs’ argument that the Grid Reliance Charge will also cover
costs associated with the protection schemes for Co-Located Load, Geronimo Power
argues there is no reason to believe transmission owners will bear any such costs that
could not be addressed in interconnection agreements.931
Vistra argues that, even if some charge is appropriate, Indicated TOs have not
justified their proposed rate.932 Vistra contends that it is unreasonable to propose that a
customer that never takes transmission service receives benefits approximating 25.8% of
the transmission owners’ revenue requirement. Vistra highlights that only 0.5% of PJM’s
monthly total billings are related to black start and regulation charges and that, to the
extent an NFCD transmission service customer never reserves transmission service relies
on the transmission system, that reliance is for the sole purpose of receiving black start
and regulation service. As such, Vistra argues, the percentage of PJM’s total monthly
billings that relates to black start and regulation charges is a reasonable proxy for the
amount of transmission system costs that are associated with use of the grid to deliver
black start and regulation service.
Vistra also contends that Indicated TOs’ proposal conflicts with the Commission’s
transmission pricing policy because it disincentivizes efficiency and focuses on
reallocating a large share of sunk costs. Moreover, Vistra contends, Indicated TOs’
929 NOVEC Response Brief at 10.
930 Alliance Response Brief at 4.
931 Geronimo Power Response Brief at 14.
932 Vistra Response Brief at 21-23.
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proposal would create significant and unjustified cost shifts between NFCD transmission
service customers and Network Customers.933 Vistra suggests it is not clear what
transmission owners, which are major Network Customers, will do with the bill credits
and that it is not a foregone conclusion that they will pass savings onto retail customers.
Constellation contends that Indicated TOs’ proposed Grid Reliance Charge rests
on an unsound methodology that violates cost causation principles.934 Constellation
requests that the charge be recalculated based on the “minimum system” method.
Constellation asserts that Indicated TOs both exclude reasonable costs and include
unreasonable costs in the grid reliance capability operations and maintenance and provide
very little justification for their proposal. Moreover, Constellation argues that Indicated
TOs inappropriately include full depreciation costs for a variety of transmission
components that are sized to meet actual peak demand requirements of the PJM system,
even though customers paying the Grid Reliance Charge do not withdraw energy from
the PJM system. In support of the minimum system method, Constellation argues it is
designed to calculate the set of costs that a Co-Located Load that benefits from the
existence of wires but imposes no demand on the grid should share. Constellation
explains that its method involves determining the minimum size of all electricity system
components that could be used by the utility to recreate its system and connect each
customer to the grid, and then applying this fraction to each transmission owners’ NITS
rate.
4.
Reply Briefs
a.
Basis for an Additional Charge
Indicated TOs contend that being connected to the grid provides obvious benefits
in terms of the ability to access resources that are not co-located with load.935 Indicated
TOs further argue that being connected to the grid includes benefits like delivering
ancillary services and essential reliability services, such as frequency support, inertia,
voltage stability, fault current capability, ride-through and protections coordination, and
providing sufficient short-circuit capability. Indicated TOs state that they are unaware of
any existing or proposed Co-Located Load customers that are choosing to island their
load and on-site generation, and they infer from that fact that Co-Located Loads should
933 Id. at 23-25.
934 Constellation Response Brief at 25-28.
935 Indicated TOs Reply Brief at 22 (citing Joint Blazunas/Schafer/Hammer
Rebuttal Test. at 16); see also Joint Blazunas/Schafer/Hammer Rebuttal Test. at 31.
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share in the basic costs of operating and maintaining the grid upon which they rely.936
Indicated TOs further argue that an additional charge is appropriate because ancillary
services such as black start and regulation provide no value without the ability to access
the transmission system to obtain them.937
b.
Methodology for Determining Additional Charge
Indicated TOs defend their proposed methodology, arguing that it produces a more
conservative result focused on recovery of the costs necessary to support the ongoing
reliable operation of the transmission system, rather than a return on investment.938
Indicated TOs criticize Constellation’s proposal to use the “minimum system” method,
arguing that it is not used at the transmission level and lacks any correlation between the
benefits Co-Located Load receives and the electrical connection of customers. Indicated
TOs also reject Vistra’s proposed methodology, arguing that Vistra draws no connection
between the percentage of billed revenue for regulation and black start and the costs of
the transmission system to deliver those services and the benefits associated with grid
connection.
NOVEC argues that Constellation’s minimum system proposal is not cost-aligned
with the use of black start service or regulation service because black start service relies
on the existence and durability of the transmission system in a way that Constellation’s
minimum system methodology does not capture.939 NOVEC further argues that the ratio
method advanced by Vistra arbitrarily confuses the cost of black start and regulation
services with the cost of the transmission infrastructure necessary for customers to
receive them.
Joint Co-Location Developers argue that the proposed Grid Reliance Charge is
derived from an unsound methodology that violates cost causation principles.940 Joint
Co-Location Developers argue that the Commission should direct the PJM transmission
936 Indicated TOs Reply Brief at 22.
937 Id. at 22-23.
938 Id. at 24, 26-27, 29.
939 NOVEC Reply Brief at 23, 26.
940 Joint Co-Location Developers Reply Brief at 3 (citing Constellation Response
Brief at 25; Geronimo Power Response Brief at 9-15; Vistra Response Brief at 18-23).
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owners to adopt the alternate cost calculation framework proposed by Constellation,
which follows the Commission’s cost causation principles.941
Industrials/Amtrak argue that the proposed Grid Reliance Charge fails to reflect
how different customers actually rely on the transmission system and would result in
customers that take little or no energy from the grid subsidizing traditional network
customers, violating cost causation principles.942 Industrials/Amtrak argue that NFCD
transmission service should not be charged a standby fee such as the Grid Reliance
Charge, as NFCD transmission service does not provide any guaranteed availability.
5.
Answers
Constellation contends that Indicated TOs’ proposal would force customers that do
not impose demand on the transmission system to pay for transmission components sized
to serve peak load, while also arbitrarily excluding costs related to rate of return and
taxes.943 Constellation defends its proposed minimum system methodology.
Geronimo Power asserts that, while it does not oppose the concept of a grid
reliance charge, Indicated TOs continue to fail to show that it is necessary and reflects
Co-Located Loads’ actual grid impact or the transmission service they will receive.944
Geronimo Power argues that Indicated TOs’ proposal to assess a charge for the delivery
of black start and regulation service when other customers are not required to pay a
separate delivery charge is unjust, unreasonable, and unduly discriminatory or
preferential.945 Geronimo Power maintains that Indicated TOs have not demonstrated
that the purported synchronization benefits will accrue to the same degree for Co-Located
Load that is being primarily supplied by on-site generation.946
Indicated TOs respond to Constellation’s argument that the Indicated TOs’
proposed charge is based on the cost of the transmission system to serve peak demand
rather than to delivery ancillary services, arguing that the purpose of the Grid Reliance
941 Id. at 4 (citing Constellation Response Brief, attach. 1, (Testimony of Zachary
Ming), at 14-15).
942 Industrials/Amtrak Reply Brief at 11-12, 14.
943 Constellation May 11 Answer at 11-12.
944 Geronimo Power May 21 Answer at 10.
945 Id. at 11.
946 Id. at 12.
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Charge is not only to recover costs to deliver ancillary services, but to ensure Co-Located
Load customers pay their fair share of the transmission system as it exists and the
associated benefits that it provides to all interconnected customers, including essential
reliability services.947 Indicated TOs maintain that their proposed charge does so by
calculating the annual depreciation and operations and maintenance expenses that
constitute a reasonable proxy for the costs of providing those benefits. Indicated TOs
assert that Constellation’s minimum system method is only appropriate for and applicable
to distribution level service.
6.
Determination
In the December Order, the Commission sought briefing on whether the
Commission should establish an additional charge for Eligible Customers on behalf of a
Co-Located Load that elects to not reserve any amount of transmission service or only a
de minimis amount of transmission service.948 In response, parties submitted briefs
addressing a range of issues, including, among others: (1) what potential benefits
Eligible Customers that are synchronized to the transmission system might receive when
not drawing energy from the transmission system; (2) whether those potential benefits
warrant an additional charge or are adequately addressed through any transmission
service charges that the Eligible Customer is already responsible for; and (3) proposed
rates for such a charge and whether those proposed rates are consistent with cost
causation principles.
We have considered that record and conclude that it does not adequately
substantiate the need for an additional charge at this time or how such a charge should be
calculated and assessed. In particular, the record contains insufficient description of the
potential nature or magnitude of the cited benefits or the potential costs that transmission
providers or owners may incur when providing these benefits to Eligible Customers on
behalf of Co-Located Loads. For example, Indicated TOs state that, even where an
Eligible Customer has requested FCD or NFCD transmission service for 0 MW, a large
Co-Location Arrangement will still depend on the transmission system for a suite of
synchronization support services, such as stable frequency, inertia, stability services
(damping, angle stability), fault current capability, and ride-through and protection
coordination.949 However, beyond briefly listing such benefits, the record lacks
specificity regarding what these services are, what costs they involve, and how they
947 Indicated TOs May 28 Answer at 11.
948 December Order, 193 FERC ¶ 61,217 at P 219, questions 3 and 4.
949 Indicated TOs Initial Brief at 15.
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benefit Eligible Customers on behalf of Co-Located Loads. Accordingly, we decline to
establish an additional charge at this time.
Nonetheless, we recognize that the new transmission services created in this
proceeding could raise novel questions regarding application of cost causation principles,
particularly if, in practice, many Eligible Customers taking the new transmission services
on behalf of Eligible Load elect to take a de minimis or not reserve any amount of
transmission service. We believe that experience with the actual use of these new
transmission services will improve our understanding of any potential issues and inform
whether future action is needed. To the extent parties identify such issues resulting from
how Eligible Customers on behalf of Eligible Load use the new transmission services,
they may submit filings under FPA section 205 or complaints under FPA section 206, as
appropriate, and the Commission will consider the records before us at that time.
C.
Interconnection Requirements and Operational Practices for
Necessary Control Technologies and/or Protection Systems
1.
Initial Briefs
PJM states that NERC has established reliability standard requirements for the
various forms of control technologies that may be relied upon for grid stability to which
Eligible Customers are expected to adhere.950 PJM explains that the PJM manuals and,
as applicable, NERC reliability standards will contain the interconnection requirements
and operational practices needed for necessary control technologies and protection
systems to maintain system reliability if a Co-Located Load or Co-Located Generator
trips offline. PJM asserts that the NERC reliability standards form baseline
interconnection requirements and operational practices, and the PJM manuals provide
additional details and, at times, more stringent standards for remedial action schemes.
PJM describes an illustrative list of interconnection requirements and operational
practices in its brief, including NERC Reliability Standards PRC-012-2 and PRC-017-1,
PJM Manual 3, section 1.8, and PJM Manual 7, section 17.2.951
Indicated TOs do not offer a specific proposal at this time, but they highlight
concerns and key elements relating to interconnection, planning, and operational
practices for the new transmission services.952 Indicated TOs assert that it is novel to use
multiple special protection schemes/remedial action schemes to protect the grid from
large amounts of on-site load exceeding their contractual withdrawal limitations.
950 PJM Initial Brief at 56-57.
951 Id. at 57-58.
952 Indicated TOs Initial Brief at 22-26.
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Indicated TOs recommend that all special protection schemes and remedial action
schemes be fully redundant to protect against the failures of protection schemes.
Indicated TOs recommend that the Eligible Customer taking FCD transmission service,
NFCD transmission service, or Interim NITS on behalf of Co-Located Load pay for
PJM- and transmission owner-administered studies to ensure any special protection
schemes or remedial action schemes can mitigate the risks of potential failure modes.
Indicated TOs request the option to review and agree to curtailment procedures and
operational control mechanisms. Indicated TOs argue that all special protection schemes
and remedial action schemes must meet PJM and transmission owner technical criteria.
Indicated TOs state that the Commission should consider requiring more frequent
testing of special protection schemes and remedial action schemes than is currently
required by NERC reliability standards. Indicated TOs argue that they and PJM should
receive test results of protection schemes and that any inadequate special protection
schemes or remedial action schemes should be updated accordingly. Indicated TOs argue
that they and PJM should be permitted to implement and enforce reasonable limits on the
total amount of load that can be covered by special protection schemes or remedial action
schemes. Indicated TOs request that the Commission direct NERC to establish
requirements so that Eligible Customers taking FCD transmission service, NFCD
transmission service, or Interim NITS on behalf of Co-Located Loads would be
responsible for meeting relevant NERC reliability standards. Indicated TOs contend that
the Commission must strictly enforce compliance with NERC Reliability Standard
PRC-012-2 (Remedial Action Schemes), which includes nine requirements to address all
aspects of remedial action schemes. Indicated TOs also emphasize that they will need to
perform load integration studies for any Co-Located Load, as they currently do for large
load customers, which could involve analysis of whether upgrades are needed to
accommodate the physical gross load behind the Point of Interconnection.
2.
Response Briefs
Vistra opposes Indicated TOs’ request to implement and enforce limits on the
amount of load that can be covered by special protection schemes, including in certain
areas.953 Vistra expresses concern that this limit could lead to undue discrimination, and
argues that if the Commission permits such limits, the Commission must ensure
standardized and transparent guidelines are in place. Vistra contends that Indicated TOs’
proposal would violate the comparability requirement because PJM’s existing procedures
do not include location-based restrictions for remedial action schemes. Vistra also
opposes Indicated TOs’ proposal to own special protection schemes, arguing that it
would needlessly raise the cost of transmission service.
953 Vistra Response Brief at 27-28, 31.
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NOVEC states that at a minimum, PJM’s proposal to incorporate NERC reliability
standards is just and reasonable.954 NOVEC also states that the Commission should
direct NERC to establish registration requirements for Co-Located Loads so that they can
be responsible for meeting NERC reliability standards.
NOVEC states that special protection schemes should be fully redundant and that
the applicable transmission owner should be able to establish technical criteria for the
interconnection of Co-Located Load.955 NOVEC argues that transmission owners are
familiar with the operating characteristics of their own systems, and any criteria should
be flexible enough to include reasonable requirements the transmission owners believe
are necessary to protect the transmission system.
Industrials/Amtrak argue that, to the extent that special protective schemes are
required by the Commission for access to NFCD transmission service, the requirements
should account for realistic on-site constraints, such as certain load/generation
configurations that allow only a limited amount of draw from the transmission system.956
In response to PJM’s Initial Brief, Indicated TOs argue that any Eligible Customer
taking any of the new transmission services (including FCD transmission service) ought
to comply with requirements to implement necessary control technologies and protection
systems to ensure that a Co-Located Load does not exceed its specified level of
service.957 Indicated TOs therefore request that PJM add language to section 708(c) of
PJM’s illustrative tariff provisions making clear that Interim NITS, FCD transmission
service, and NFCD transmission service are contingent on the implementation of
necessary control technologies and protection systems, where applicable. Relatedly,
Indicated TOs propose to strike the phrase “only in the case of Non-Firm Contract
Demand Transmission Service” from subclause (ii) of section 710.5 of PJM’s illustrative
tariff provisions.958 Similarly, Indicated TOs contend that PJM should revise
section 713.6 of PJM’s illustrative tariff provisions so as to not limit the requirement to
establish necessary control technologies and protection systems to NFCD transmission
service.
954 NOVEC Response Brief at 16-17.
955 Id. at 17.
956 Industrials/Amtrak Response Brief at 25.
957 Indicated TOs Response Brief at 7-8, 17-18.
958 Id. at 19-20, 22.
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Indicated TOs argue that PJM should include language in the Tariff making clear
that necessary control technologies and protection systems may be required on both the
customer’s and the transmission owner’s side of the Point of Interconnection, including
in section 710.5 of PJM’s illustrative tariff provisions.959
Indicated TOs argue that it is important for PJM to work with the PJM
transmission owners and other stakeholders to develop details on the requirements
associated with control technologies and protection systems necessary to ensure that
Co-Located Loads do not exceed their relevant withdrawal limitations.960
Constellation seeks clarification that PJM only intends to apply existing
requirements in Manual 3 to Co-Location Arrangements, not to establish new
requirements solely for such arrangements.961 Constellation also seeks clarification that
PJM does not intend to restrict the use of permanent system protection schemes.
Constellation supports Indicated TOs’ first four recommendations, subject to
clarification to avoid delay and discrimination.962 For example, while Constellation
supports requiring full redundancy for special protection schemes and remedial action
schemes, Constellation argues that it is not clear what full redundancy means.
Constellation opposes the Indicated TOs’ remaining recommendations as unsupported
and discriminatory.
3.
Reply Briefs
Indicated TOs state that they agree that the transmission owner and customer each
may own the circuit breaker(s) and protection systems at their respective facilities and, in
response to Constellation, state that the number of breakers will be determined by the
transmission owner’s and customer’s design practices and budgets, as well as the
959 Id. at 8-9, 20.
960 Id. at 9.
961 Constellation Response Brief at 21.
962 Id. at 22-25. More specifically, Constellation supports, subject to clarification,
Indicated TOs’ recommendations that: (1) all special protection schemes and remedial
action schemes be fully redundant; (2) customers should pay for PJM and transmission
owner-administered studies to ensure any special protection schemes and remedial action
schemes can effectively mitigate the risks of potential failure modes; (3) transmission
owners have the option to review and agree to any customer load curtailment procedures
or operational control mechanisms; and (4) all special protection schemes and remedial
action schemes must fully meet PJM and transmission owner technical criteria. Id.
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transmission owner’s technical criteria. Indicated TOs disagree with Constellation’s
assertion that new technical criteria specific to Co-Located Load need not be added to
PJM Manual 3. Indicated TOs argue that such revisions or additions may be unavoidable
due to the technical characteristics of Co-Located Load and contend that PJM and the
PJM transmission owners should not be restricted from developing and implementing
criteria applicable to Co-Located Load as a class if warranted by reasonable technical
differences.963
Indicated TOs argue that Constellation’s request for the Commission to reject
certain recommendations made by Indicated TOs is without merit. Indicated TOs reject
Constellation’s claim that these recommendations treat Co-Located Loads differently
without legitimate basis and explain that certain transmission owners already require
protection on their facilities in certain circumstances.964
Indicated TOs argue that Vistra provides no convincing reason for the
Commission to reject Indicated TOs’ recommendation for reasonable limits on the
amount of load covered by special protection schemes/remedial action schemes in
specific geographic areas. Indicated TOs acknowledge, however, that implementing such
limitations would require the development of further details and guidelines.965
Joint Co-Location Developers argue that PJM and Market Monitor ignore the
distinction between simple withdrawal-limiting protection systems that are required by
PJM for sites taking non-firm transmission service and standard remedial action
schemes.966 Joint Co-Location Developers explain that unlike standard remedial action
schemes, which monitor and control components across the grid, simple
withdrawal-limiting protection systems monitor and control only facility-internal
components, monitoring flows, adjusting consumption or generation at the site level, and
disconnecting from the grid if necessary. Joint Co-Location Developers argue that
simple withdrawal-limiting protection systems can be relied upon much more extensively
than standard remedial action schemes without creating the same complexities and
interdependencies.
963 Indicated TOs Reply Brief at 11-13.
964 Id. at 13-14.
965 Id. at 14.
966 Joint Co-Location Developers Reply Brief at 6-7.
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Joint Co-Location Developers agree with Indicated TOs that all special protection
schemes and remedial action schemes should be fully redundant.967
Constellation argues that Indicated TOs’ recommendation that PJM impose
necessary control technologies and protection systems on both the customer’s side and
the transmission owner’s side of the Point of Interconnection for Co-Located Loads as a
default requirement is unsupported and unduly discriminatory.968 Constellation asserts
that always requiring double special protection schemes is not good utility practice and
would likely be appropriate only in rare situations.969
Constellation contends that system studies of unauthorized use should be
standardized, transparent, and based on reasonable assumptions set ahead of time to avoid
disparate treatment.970 Constellation states that PJM can use the standardized study
processes and established reliability tests in its existing generator interconnection process
and RTEP process to determine whether a special protection scheme is needed.
Constellation argues that criteria for special protection schemes should leverage
current RTEP planning criteria to develop specific criteria for Co-Located Load risks that
are reasonable and transparent.971
Constellation asserts that the special protection scheme that PJM requires an
Eligible Customer to implement should be commensurate with the risks identified in the
studies. Constellation argues that special protection schemes are not appropriate for
every situation, and PJM only requires them when studies identify actual overloads and
conditions that could cause cascading failures that PJM cannot mitigate through normal
operations.972 Constellation contends that double special protection schemes should not
be employed when other measures can maintain system reliability and real-time
monitoring can address any unexpected reliability issue.973
967 Id. at 7 n.23 (citing Indicated TOs Initial Brief at 23).
968 Constellation Reply Brief at 13-14 (citing Indicated TOs Response Brief at 8).
969 Id. at 14 (citing Kormos Aff. ¶¶ 7, 11).
970 Id. at 15.
971 Id. at 15-16.
972 Id. at 16 (citing Kormos Aff. ¶¶ 5-6).
973 Id. at 18.
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4.
Answer
In response to Constellation, Indicated TOs argue that, in order for an Eligible
Customer to take one of the new transmission services, it is necessary and just and
reasonable to require an Eligible Customer to include appropriate protection systems.974
Indicated TOs further assert that special protection schemes on the Co-Located Load
customer’s and the transmission owner’s side of the point of interconnection should not
be limited to what Constellation claims are higher-risk situations.975 Indicated TOs claim
that, without protection system redundancy, the transmission system is at risk.976
Indicated TOs reject Constellation’s assertion that PJM should use a PJM-driven study
process to evaluate special protection schemes, arguing that special protection schemes
and remedial action schemes are within the purview of the transmission owners, and PJM
is not equipped to perform these studies. Indicated TOs also allege that the cost to
implement protection systems is extremely low compared to other costs to develop and
interconnect Co-Located Load and would not be a deterrent.977
5.
Determination
We decline to direct PJM’s proposal as part of the replacement rate because it does
not require Eligible Customers taking FCD transmission service to have necessary
control technologies and/or protection systems to limit their energy withdrawals from the
transmission system to their contract demand level. We find that PJM’s proposal is
inconsistent with the directives in the December Order. In the December Order, the
Commission found that an Eligible Customer that is willing and able to limit its energy
withdrawals from the transmission system under certain conditions should be able to take
transmission services on behalf of Co-Located Load that reflect their ability to limit
withdrawals.978 The Commission stated that where a Co-Location Arrangement includes
special protection schemes that limit its energy withdrawals, it is a just and reasonable
replacement rate to allow an Eligible Customer taking transmission service on behalf of
such load to take these transmission services.979 We clarify, however, that the December
974 Indicated TOs May 28 Answer at 4.
975 Id. at 5.
976 Id. at 6.
977 Id. at 7.
978 December Order, 193 FERC ¶ 61,217 at PP 159-160.
979 Id. PP 204-205.
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Order did not limit eligibility to take the new transmission services only to Co-Location
Arrangements that include a special protection scheme.980
Based on the record here, we find it just and reasonable that, in order for an
Eligible Customer to take Interim NITS, FCD, and/or NFCD transmission services on
behalf of any Eligible Load, an Eligible Customer must have necessary control
technologies and/or protection systems, which may include a special protection scheme,
to limit its energy withdrawals to its contract demand level.981 This replacement rate is
consistent with prior Commission precedent for interconnection service, which
recognizes that these necessary control technologies and/or protection systems are
essential to enforce physical limits and ensure system reliability where an Interconnection
Customer has requested a level of service below its maximum capacity.982 Further,
consistent with the Commission’s determination in Order No. 845, nothing prevents an
Eligible Customer taking Interim NITS, FCD, and/or NFCD transmission service on
behalf of Eligible Load from proposing its own necessary control technologies and/or
protection systems for consideration, which may include a special protection scheme.983
PJM’s proposal falls short because it does not require Eligible Customers taking
FCD transmission service to have necessary control technologies and/or protection
systems to limit their energy withdrawals from the transmission system to their contract
demand level. As such, PJM would have to rely on penalties that disqualify an Eligible
Customer from taking FCD transmission service if the Eligible Customer fails to follow
established load shedding and curtailment procedures, and financial penalties for
unreserved use of the PJM transmission system, to discourage excess energy
withdrawals. However, load shedding and curtailment events for a transmission service
that will be treated as the equivalent of NITS for purposes of curtailment will be rare; and
PJM itself has stated concerns that financial penalties alone are insufficient to deter
980 Id. P 205 (“For these reasons, in these instances where the Co-Location
Arrangement includes special protection schemes that limit its energy withdrawals, we
find that it is a just and reasonable replacement rate to allow an Eligible Customer taking
transmission service on behalf of such load to take and be charged for new types of
transmission service that are alternatives, and not equivalent, to NITS.”).
981 While we will continue to use the term “special protection scheme” in this
proceeding, we reiterate that this term is equivalent to “remedial action scheme.” Id.
P 204.
982 Reform of Generator Interconnection Procs. & Agreements, Order No. 845,
163 FERC ¶ 61,043, at P 367 (2018), order on reh’g, Order No. 845-A, 166 FERC
¶ 61,137, order on reh’g, Order No. 845-B, 168 FERC ¶ 61,092 (2019).
983 Id. P 372.
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unreserved use.984 Accordingly, and consistent with our determination above to extend
the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
direct PJM to file, within 60 days of the date of issuance of this order, a compliance filing
with Tariff revisions that require Eligible Customers taking Interim NITS, FCD, and/or
NFCD transmission service on behalf of Eligible Loads, to have necessary control
technologies and/or protection systems.
We find it just and reasonable for PJM to include the interconnection requirements
and operational practices needed for necessary control technologies and/or protection
systems in the PJM manuals and, as applicable, to rely on relevant NERC reliability
standards, consistent with PJM’s current practices. Further, we find it appropriate for
PJM to develop new interconnection requirements and operational practices that
recognize the unique nature of Co-Location Arrangements and the new transmission
services. However, PJM has not, to date, actually proposed any interconnection
requirements and operational practices specific to Co-Location Arrangements, nor does
PJM indicate which of its existing interconnection requirements and operational practices
it will apply to Co-Location Arrangements. Consistent with our determination above to
extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
direct PJM to submit, as part of its compliance filing due within 60 days of the date of
issuance of this order, an explanation of what new and existing interconnection
requirements and operational practices it will apply to Eligible Customers taking Interim
NITS, FCD, and/or NFCD transmission services on behalf of Eligible Load. We agree
with Indicated TOs that it is important for PJM to work with the transmission owners to
develop specificity regarding the requirements associated with necessary control
technologies and/or protection systems necessary to ensure that Eligible Customers do
not withdraw energy from the transmission system in excess of their contract demand.
We do not agree that all parties’ recommendations to clarify PJM’s proposal are
just and reasonable, or even within the scope of this proceeding. However, we agree that
some guidance on the study and implementation of necessary control technologies and/or
protection systems would be of value. Therefore, and consistent with our determination
above to extend the three new transmission services set forth in the December Order to
Eligible Customers taking service on behalf of load with BTMG that are willing and able
to limit their energy withdrawals from the transmission system under certain conditions,
we explain several principles that PJM’s compliance filing should consider.
984 PJM Initial Brief at 50.
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First, Eligible Customers shall pay for PJM and transmission owner-administered
studies to evaluate and design necessary control technologies and/or protection systems,
consistent with their responsibilities for the costs of other studies performed as part of the
evaluation of their transmission service request. However, the scope of these studies
should be defined in the Tariff, consistent with the level of detail for other transmission
services, as discussed in Part VI.A.3.985 Furthermore, we reiterate our finding above that
an Eligible Customer taking transmission service on behalf of an Eligible Load may
propose its own necessary control technologies and/or protection systems for
consideration as part of this study, which may include a special protection scheme,
although PJM and the transmission owners retain their existing discretion regarding the
determination of what is necessary to ensure the reliability of the transmission system.
Second, if a special protection scheme is employed as necessary control
technologies and/or protection systems, then such special protection schemes
implemented must be, at minimum, fully redundant. Given questions by commenters
regarding what “redundant” specifically means, we clarify that such special protection
schemes must be able to withstand removal of part or all of one scheme due to a failure,
or to allow for maintenance on a scheme, while providing full scheme capability with a
functionally equivalent and separate scheme.986
Third, all necessary control technologies and/or protection systems, which may
include a special protection scheme, must fully meet PJM and transmission owner
technical criteria, as well as any applicable NERC reliability standards.
Fourth and finally, both PJM and the transmission owners shall have the option to
review and agree to the implementation of the Eligible Customer’s necessary control
technologies and/or protection systems as defined in the service agreement, to ensure that
it meets both PJM and transmission owner technical criteria, and is capable of limiting
withdrawals from the transmission system.
We disagree with Indicated TOs that PJM should include language in the Tariff
making clear that necessary control technologies and/or protection systems may be
required on both the Interconnection Customer’s and the transmission owner’s side of the
Point of Interconnection. PJM and the transmission owners will, as noted in the
principles above, be responsible for evaluating and designing necessary control
technologies and/or protection systems for each Co-Location Arrangement. The location
or number of devices required should be based on the engineering judgment of PJM and
985 See supra Part VI.A.3.
986 See, e.g., WECC, Remedial Action Scheme Design Guide, § 4.10 (July 2022),
https://www.wecc.org/sites/default/files/documents/meeting/2024/WECC%20RAS%20D
esign%20Guide%202022.pdf.
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the transmission owners.987 Similarly, we find that questions of ownership of these
facilities, or the potential to earn a rate of return on said facilities, are outside the scope of
this proceeding.
In response to Indicated TOs, we find that there is insufficient information in this
record to justify allowing them or PJM to implement and enforce limits on the total
amount of load that can be covered by a special protection scheme. If PJM or its
transmission owners wish to impose a specific limit, they may submit a new filing under
FPA section 205 with a sufficient showing, based on experience gained once Eligible
Customers begin taking Interim NITS, FCD, and/or NFCD transmission service on behalf
of Eligible Load. However, implementation of a special protection scheme should not be
universally required as a condition of taking these transmission services; rather, only
necessary control technologies and/or protection systems are required. If PJM or its
transmission owners wish to limit the use of special protection schemes on their system,
they can also design necessary control technologies and/or protection systems for Eligible
Customers that do not have a special protection scheme.
We decline to address NOVEC’s request that the Commission direct NERC to
establish registration requirements for Co-Located Loads. Whereas NOVEC’s request
may be availing in the context of a FPA section 215 proceeding, the instant case arises
under FPA section 206. In addition, NERC is already considering registration
requirements for large loads, including potentially Co-Located Loads, as part of its Large
Load Action Plan.988
D.
Penalty Charge or Other Remedial Action for New Transmission
Services
1.
Initial Briefs
PJM proposes different penalties where an Eligible Customer: (1) fails to follow
established load shedding and curtailment procedures; (2) relies on necessary control
987 Cf. RWE Clean Energy, LLC v. PJM Interconnection, L.L.C., 194 FERC
¶ 61,212, at P 42 (2026) (“The Commission generally allows transmission providers to
exercise their engineering judgment when conducting interconnection studies, including
deferring to transmission providers’ discretion regarding how to maintain a reliable
transmission system.”); Order No. 1920-A, 189 FERC ¶ 61,126 at P 450 (“Finally, we
clarify that the Commission generally provides transmission providers with the discretion
to use engineering judgment in designing and conducting transmission planning studies,
and we therefore decline to address Dominion’s hypothetical in the abstract.”).
988 See NERC, Large Loads Action Plan, https://www.nerc.com/initiatives/large-
loads-action-plan (last visited May 15, 2026).
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technologies or protection systems that fail more than once; and (3) makes unreserved
use of the transmission system.989 PJM argues that, where an Eligible Customer fails
once to respond to established load shedding and curtailment procedures, the customer is
disqualified automatically because of the significant reliability risk. PJM asserts that its
proposal is just and reasonable and consistent with the key principles that (1) Eligible
Customers are willing and able to control their withdrawals from the transmission system
and (2) the services are designed to allow PJM to maintain system reliability. PJM
proposes that, if the Eligible Customer is taking FCD or NFCD transmission service and
is disqualified, such customer may still take NITS or Interim NITS. PJM proposes that, if
the Eligible Customer is taking Interim NITS and is disqualified, such customer may take
NITS.990
PJM argues that when a control technology or protection scheme misoperates
there can be serious consequences.991 PJM proposes that, after one instance of
misoperation, the Eligible Customer will be prohibited from taking transmission service
or otherwise withdrawing energy from the transmission system for a period of up to
120 days from misoperation to allow for an analysis of the necessary control technology
or protection system scheme’s operational performance. PJM asserts that this proposed
pause is consistent with NERC requirements for an investigation into the operation of a
remedial action scheme992 and will allow PJM time to investigate, identify, and
implement fixes to better protect the transmission system.993 PJM proposes that, after
two instances of misoperation, the Eligible Customer will be automatically disqualified
from taking the relevant new transmission service because of the significant reliability
risks. PJM asserts that this rule properly balances the need to protect reliability against
the desire of an Eligible Customer taking service on behalf of a Co-Located Loads to take
a transmission service lesser than NITS because the Co-Located Loads are willing and
able to limit their energy withdrawals. PJM maintains that a second instance of a
misoperation makes it evident that the necessary control technology or protection system
cannot adequately protect the system from the Co-Located Load’s unreserved energy
withdrawals. PJM explains that an Eligible Customer disqualified from taking FCD or
989 PJM Initial Brief at 40.
990 Id. at 41-43.
991 Id. at 43-44. Misoperation, as contemplated by PJM, relies on and incorporates
the term as defined by NERC (e.g., PRC-004-6). See, e.g., NERC, PRC-004-6 –
Protection System Misoperation Identification & Correction (June 12, 2025),
https://www.nerc.com/globalassets/standards/reliability-standards/prc/prc-004-6.pdf.
992 Reliability Standard PRC-004-6.
993 PJM Initial Brief at 45.
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NFCD transmission service on this ground may either take NITS or Interim NITS, and
that an Eligible Customer disqualified from taking Interim NITS on this ground may take
NITS. PJM supports its proposal to permit an Eligible Customer disqualified from taking
the new transmission services to take NITS by reasoning that NITS, in and of itself,
addresses curtailment, load shed, and control technology or protection scheme
misoperation risk.994
PJM states that it supports a penalty for unreserved use in addition to the
operational penalties and intends to work with the transmission owners to explore a
financial penalty.995 PJM argues that financial penalties alone are insufficient to
incentivize Eligible Customers to comply with load shed, curtailment, and control
technology and protection system obligations. PJM asserts that many, if not most,
Eligible Customers taking service on behalf of a Co-Located Load could elect to absorb
financial penalties for unreserved use rather than follow curtailment or load shed
procedures or avoid misoperation of the protective technology or system.
Indicated TOs assert that any penalty regime should rely on both operational
consequences and complementary financial penalties.996 Indicated TOs allege that it is of
the utmost importance that Co-Located Loads respect contractual limits because
Co-Location Arrangements involve substantial amounts of load connected to the grid and
failure to respect these limits could pose severe reliability consequences for the system.
Indicated TOs support PJM’s proposal but argue that additional details must be
developed as to how operational consequences would be applied.997 Indicated TOs also
state that financial penalties could be valuable where the Eligible Customer exceeds its
contract demand, even if such deviations are mitigated by a special protection scheme.
2.
Response Briefs
ODEC supports PJM’s proposed penalty structure, including operational
penalties.998 NOVEC states that disqualification for failure to follow load shedding or
994 Id. at 45-50.
995 Id. at 50.
996 Indicated TOs Initial Brief at 19.
997 Id. at 20.
998 ODEC Response Brief at 11.
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curtailment procedures is necessary to protect the integrity of the transmission system.999
Indicated TOs request that Tariff language be included requiring that the relevant
transmission owner’s approval be obtained before service to an Eligible Customer is
reinstated following a control technology/protection system misoperation.
Constellation opposes the proposal to suspend or disqualify an Eligible Customer,
arguing it is excessive and applies regardless of fault and does not apply to Non-Firm
PTPS customers.1000 Constellation urges the Commission to follow SPP’s proposal for
Conditional High Impact Large Load Service (CHILLS) and align treatment of
unreserved use for the new services with its treatment of Non-Firm PTPS. DCC
expresses concern about PJM’s operational penalties in light of the lack of clarity around
PJM’s curtailment procedures for the new transmission services.1001 Vistra similarly
argues that PJM’s proposed operational penalties diverge from the Commission’s
directives and violate the comparability principle because the December Order does not
contemplate disqualification and, more generally, such a penalty structure exceeds what
the Commission has allowed for unreserved use of the transmission system.1002 Vistra
contends that PJM’s proposal is excessively punitive and may be unduly discriminatory
in comparison to customers that take PTPS. Vistra also alleges that PJM’s proposal also
violates the comparability requirement because it treats Co-Location Arrangements using
special protection schemes differently from any other entities using such schemes. Vistra
also points out that, if the Commission accepts transmission owners’ proposal to own
special protection schemes, then misoperation of such schemes must attach to the
transmission owner, not the Eligible Customer.
Joint Co-Location Developers argue that PJM’s proposed penalty provisions are
unjust and unreasonable because they are not “narrowly designed to balance the need to
deter conduct that is harmful to the system with the need to limit excessive and
unnecessary costs.”1003 Joint Co-Location Developers express concern that PJM’s
proposed disqualification rules will dissuade Eligible Customers from taking the new
transmission services because of the risk of stranding or undermining investments in the
999 NOVEC Response Brief at 11-12.
1000 Constellation Response Brief at 19-20. See also Joint Co-Location Developers
Response Brief at 25.
1001 DCC Response Brief at 7.
1002 Vistra Response Brief at 29-31.
1003 Joint Co-Location Developers Response Brief at 23 (quoting Mirant Kendall,
LLC, 110 FERC ¶ 61,272, at P 17 (2005)).
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new services.1004 Joint Co-Location Developers propose that PJM adopt financial
penalties sufficient to deter gaming of transmission service subscription. Joint
Co-Location Developers contend that a disqualification-based penalty is not necessary
because transmission owners can manually disconnect a facility in case of potential
severe reliability risk. Joint Co-Location Developers assert that failure to respond to
curtailment would have a similar impact from a resource adequacy perspective to a
capacity resource failing to perform during emergency events, in which case only a
non-performance charge is assessed. Joint Co-Location Developers urge that, if the
Commission adopts disqualification as a penalty, the Commission should adopt intent (or
at least fault), materiality, and repetition elements prior to disqualification to ensure
disqualification sends an actionable signal.1005 Joint Co-Location Developers suggest
that that an operational penalty is excessive for misoperation of control technologies or
protection systems because misoperation without withdrawal does not risk system
harm.1006
Indicated TOs propose a financial penalty charge structure with two components:
(1) a base penalty charge; and (2) a penalty ratchet.1007 The base penalty charge would be
assessed for any hour in which at least one five-minute interval occurs during which a
customer’s metered load at the Point of Interconnection exceeds its reserved transmission
service. The penalty ratchet would apply additional daily penalties if exceedances
occurred in more than one hour during a day, additional weekly penalties if exceedances
occurred on more than one day during a week, and additional monthly penalties if
exceedances occurred in more than one week during a month. Further, each of these
penalties would entail escalating financial liabilities for repeated penalties, which
Indicated TOs argue would reinforce the expectation that Co-Located Load customers
manage their load in a manner consistent with their reserved transmission service.
NOVEC states that a penalty for unreserved use in addition to disqualification and
pause-in-service rules is appropriate, as this penalty would be an additional deterrent that
would help make the market or other ratepayer whole if a Co-Located Load customer
exceeds its contract demand.1008 NOVEC suggests that any financial penalty should
compensate other customers for any harm caused by the Eligible Customer’s departure
1004 Id. at 24-25.
1005 Id. at 26 (citing PJM Interconnection, L.L.C., 178 FERC ¶ 61,104, at PP 60-61
(2022)).
1006 Id. at 26.
1007 Indicated TOs Response Brief at 12-13.
1008 NOVEC Response Brief at 13 (citing Indicated TOs Initial Brief at 20).
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from Co-Location requirements or, if there is no harm, be set at a level sufficient to
encourage compliance with the Tariff’s scheduling requirements.
ODEC suggests that the Commission also consider whether any protections are
needed for local utilities or transmission owners should they need to take the
extraordinary measure of disconnecting an Eligible Customer taking service on behalf of
Co-Located Loads, if the Eligible Customer’s use of the transmission system exceeds
contract demand or is called upon for load shedding and curtailment.1009 ODEC states
that, in such instance, the local utility or transmission owner should not be liable for
legal, financial, or other damages that might be experienced by an Eligible Customer.
NOVEC asserts that PJM’s penalty language should be revised to specify that when an
Eligible Customer serves multiple Co‑Located Loads, only the culpable Co‑Located Load
is disqualified rather than the Eligible Customer as a whole.1010
3.
Reply Briefs
PJM argues that monetary penalties, in place of non-monetary penalties, would
undermine the value of reliability and hand it to a single site or a class of load that may
decide to pay the penalty in place of operating as agreed to ensuring overall system
reliability.1011 PJM alleges that non-monetary operational penalties are essential to the
responsible integration of large loads. PJM maintains that its non-monetary operational
penalties represent a measured approach that balances significant reliability concerns
with the interest in integrating large loads quickly. However, PJM notes that, in response
to protesters’ concerns, PJM proposes revisions to its illustrative tariff language to add
discretion to the strict application of non-monetary operational penalties.
PJM argues that the Commission did not foreclose non-monetary penalties
because the December Order “also direct[s] parties to brief . . . any other remedial action
that PJM should take to address withdrawals in excess of the contract demand.”1012 PJM
also claims that financial penalties alone are insufficient to support reliability in light of
the volume of load that is anticipated to come online in short order and the nature of how
these new loads will seek to connect through co-location with potentially critical
generators. PJM rejects Vistra’s contention that non-monetary penalties are a departure
from Commission precedent, and responds that the Commission has long held that where
monetary penalties do not incentivize actions consistent with reliability, it may be
1009 ODEC Response Brief at 11-12.
1010 NOVEC Response Brief at 14-15.
1011 PJM Reply Brief at 40-43.
1012 Id. at 49-50 (quoting December Order, 193 FERC ¶ 61,217 at P 212).
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necessary to implement “a range of non-monetary and monetary penalties” to promote
behavior that supports and improves the reliability of the bulk power system.1013 PJM
rejects Joint Co-Location Developers’ suggestion that PJM adopt financial penalties
sufficient to deter gaming, and responds that PJM’s proposed penalty structure is not
intended to address gaming but to support reliability. In response to Joint Co-Location
Developers’ suggestion that disqualification is unnecessary because transmission owners
can manually disconnect a facility, PJM argues that it is inconsistent with reliable
operation of the transmission system to shift responsibility away from the Eligible
Customer. PJM also alleges that it and the transmission owner will become aware of an
improperly set-up protection scheme only after the misoperation incident, which will
expose the PJM system to risk. PJM adds that when a transmission owner manually cuts
load suddenly, without proper coordination, it can have disastrous and dangerous
cascading system effects.1014
Nevertheless, PJM proposes revisions to its illustrative tariff language to permit,
where appropriate, PJM to exercise discretion in determining when disqualification
penalties are appropriate based on PJM’s assessment of factors including the reliability
impact of the failure to curtail or shed load or the misoperation of control technologies or
protection system schemes. PJM adds that, with these revisions, the Eligible Customer
taking transmission service on behalf of Co-Located Load will not be held liable for the
actions of others.1015
Several parties agree that financial penalties are insufficient to ensure
reliability.1016 ODEC asserts that it does not agree that PJM’s proposed suspension and
disqualification measures are unfairly imposed regardless of fault and will make the
services unduly risky for many loads. Earthjustice argues that PJM’s operational
penalties are proportionate to the prospective harm associated with a customer’s failure to
follow curtailment orders. Earthjustice argues that, while opposing commenters note that
PJM’s proposed penalties are stricter than the penalties it has levied in other
circumstances, those comments fail to acknowledge that the stakes here are higher.
1013 Id. at 51 (quoting Rules Concerning Certification of the Elec. Reliability Org.;
and Procs. for the Establishment, Approval, and Enf’t of Elec. Reliability Standards,
Order No. 672, 114 FERC ¶ 61,104, at PP 49, 455, order on reh’g, Order No. 672-A,
114 FERC ¶ 61,328 (2006)).
1014 Id. at 52-53.
1015 Id. at 54.
1016 ODEC Reply Brief at 4-5; Earthjustice Reply Brief at 2-3, 5, 8; Indicated TOs
Reply Brief at 14-15 (citing Joint Blazunas/Schafer/Hammer Rebuttal Test. at 4).
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Earthjustice argues that PJM’s penalty proposal is appropriately designed to protect
system reliability, rather than assign fault.
Industrials/Amtrak urge the Commission to exercise caution in overly harsh
operational penalties, especially for existing retail customers who may be forced to move
from retail BTMG arrangements to Co-Location Arrangements. Industrials/Amtrak
argue that it is reasonable to pay financial penalties, but a retail customer should not be
banned from NFCD transmission service for a lone violation.1017
PJM rejects Vistra’s contention that its non-monetary penalties for misoperation of
necessary control technologies or protection systems are unduly discriminatory. PJM
alleges that NERC, Market Monitor, and PJM’s 2026 load forecast each demonstrate that
the new large loads integrating into PJM’s transmission system are not similarly situated
to traditional loads. PJM adds that disqualification penalties do not foreclose Eligible
Customers from taking transmission service entirely, and that, where Eligible Customers
demonstrate that they cannot (or are unwilling to) limit withdrawals, it is appropriate for
those Eligible Customers to take NITS.1018
Indicated TOs reject Constellation’s argument that PJM should simply adopt
financial penalties as is the case with SPP’s High Impact Large Load (HILL) process.1019
Indicated TOs argue that SPP’s HILL process is different in that, under PJM’s proposal,
Co-Located Load customers may be in the position of installing and operating their own
control technologies and protection systems. Indicated TOs further argue that PJM and
SPP are different regions with different characteristics, including topology and
proliferation of large loads. Indicated TOs also dismiss DCC’s and Vistra’s concerns
regarding Co-Located Load’s liability for penalties associated with control technologies
and protection systems operated by other parties, including transmission owners.
Indicated TOs argue that installation of redundant protection facilities by transmission
owners should not serve as an excuse for the failure of customers to properly maintain
and operate their own equipment.
NOVEC states that it generally supports Indicated TOs’ proposed financial penalty
charge structure, subject to Indicated TOs providing further information.1020 ODEC
supports financial penalties but states that PJM’s implementation of its penalties must not
subject ODEC or its member distribution cooperatives to service interruptions or
1017 Industrials/Amtrak Reply Brief at 17-18.
1018 PJM Reply Brief at 43, 45, 47.
1019 Indicated TOs Reply Brief at 15-16.
1020 NOVEC Reply Brief at 26-27.
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disqualification, or financial penalties, as a result of requiring ODEC to serve as the
Eligible Customer.1021
Indicated TOs further explain their financial penalty proposal, explaining that
when a Co-Located Load exceeds its reserved transmission service limit, which includes
any reductions based on curtailments directed by PJM, the base penalty charge will be
assessed for any hour (Exceedance Hour) in which at least one five-minute interval
(Exceedance Interval) occurs during which a customer’s metered load at the point of
delivery exceeds its reserved transmission service. Indicated TOs state that the base
penalty charge will apply to each Exceedance Hour.1022
Indicated TOs state that the base penalty charge will be calculated as the product
of the Hourly Exceedance MW, the Equivalent Hourly FCD transmission service rate,
and the number of Exceedance Intervals within the hour, where the Hourly Exceedance
MW is equal to the maximum telemetered load during the hour less the reserved
transmission service limit for the hour and where the Equivalent Hourly FCD
transmission service rate is equal to the FCD transmission service rate divided by
8,760 hours.1023 Indicated TOs explain that the FCD transmission service rate is used as
the basis for assessing the penalty because, when a customer exceeds its reserved
transmission service limit without authorization, the excess usage effectively imposes
firm-level demand on the system.
Indicated TOs state that the penalty ratchet applies escalating FCD-equivalent
transmission service rates as the frequency of unreserved transmission use increases.
Indicated TOs explain that the penalty ratchet applies daily, weekly, monthly, or annual
penalty charges depending on whether exceedances occur within the same calendar day,
week, month, or year, and that these penalty charges are equal to the Daily
FCD-Equivalent Rate, Weekly FCD-Equivalent Rate, Monthly FCD-Equivalent Rate,
and FCD Annual Rate, respectively.1024 Indicated TOs further explain that, where a daily
penalty charge is assessed, it is in addition to the base penalty charge applicable to each
individual Exceedance Hour; where a weekly penalty charge is assessed, it is in addition
to the base penalty charges and daily penalty charges; and so on.
1021 ODEC Reply Brief at 4.
1022 Indicated TOs Reply Brief at 16-17.
1023 Indicated TOs Reply Brief, Joint Blazunas/Schafer/Hammer Rebuttal Test.
at 8-9.
1024 Id. at 10-14.
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Indicated TOs propose to distribute daily, weekly, and monthly penalty revenues
on a monthly basis to Eligible Customers taking NITS or FCD transmission service that
have not been penalized during the month, as pro rata bill credits. Indicated TOs further
propose to distribute annual penalty charges on an annual basis to Eligible Customers
taking NITS and FCD transmission service that have not been penalized during the year
as pro rata bill credits.1025
4.
Answer
Constellation alleges that PJM’s reliability arguments are not persuasive, because
PJM’s example involves grid-connected load, not Co-Located Load.1026 Constellation
argues that PJM fails to explain how resource adequacy concerns justify its proposed
penalty scheme, and points out that PJM has proposed no such penalties for Connect and
Manage.1027 Constellation next argues that a four-month suspension is not consistent
with NERC requirements, as PJM claims.1028
5.
Determination
We find that it is just and reasonable to impose operational and financial penalties
on Eligible Customers taking the three new transmission services as part of the
replacement rate, given that these services are designed for Eligible Customers taking
transmission service on behalf of Eligible Loads that are willing and able to limit their
withdrawals from the transmission system under certain conditions, and there are
significant reliability risks if Eligible Customers fail to do so. However, we decline to
adopt PJM’s proposed replacement rate. First, we disagree that it is just and reasonable
to disqualify an Eligible Customer from taking any of the new transmission services after
the first instance of failing to follow a curtailment or load shedding directive, as
discussed below. We instead find that it is just and reasonable to establish an operational
penalty whereby, after the second instance of failing to follow a curtailment or load
shedding directive, PJM will terminate the transmission service agreement with the
Eligible Customer taking Interim NITS, FCD, or NFCD transmission service on behalf of
the Eligible Load. We agree with PJM that there are significant reliability risks
associated with failing to follow a curtailment or load shedding directive, but we find that
PJM’s one strike proposal is unnecessarily strict. We direct PJM to file, within 60 days
1025 Id. at 15-16.
1026 Constellation May 11 Answer at 8-9.
1027 Id. at 9.
1028 Id. at 9-10.
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of the date of issuance of this order, a compliance filing to revise its Tariff consistent
with these findings.
Second, we find that it is just and reasonable to establish an operational penalty of
suspension in service for a period of up to 120 days for an Eligible Customer taking
Interim NITS, FCD, and/or NFCD transmission service after the first misoperation of
necessary control technologies and/or protection systems given the reliability risks
associated with such misoperation. However, as above, we disagree with PJM’s proposal
regarding disqualification, and we instead find that it is just and reasonable to establish an
operational penalty whereby, after the second misoperation of necessary control
technologies and/or protection systems, PJM will terminate the transmission service
agreement with the Eligible Customer taking Interim NITS, FCD, and/or NFCD
transmission service on behalf of Eligible Load. We direct PJM to file, within 60 days of
the date of issuance of this order, a compliance filing to revise its Tariff consistent with
these findings.
Third, we find that it is just and reasonable to subject an Eligible Customer taking
any of the three new transmission services on behalf of Eligible Load to financial
penalties in any circumstance where the transmission customer uses transmission service
that it has not reserved. We thus direct the PJM transmission owners to file, within
60 days of the date of issuance of this order, a compliance filing that effectuates Indicated
TOs’ proposed framework for financial penalties for Eligible Customers taking one of the
three new transmission services that withdraw from the transmission system in excess of
their contract demand level (i.e., for unreserved use).
Before addressing each topic in turn, as an initial matter, we disagree with
protesters that operational penalties, either for failure to follow a curtailment or load
shedding directive, or for misoperation of necessary control technologies and/or
protection systems, “diverg[e] from” or were “not contemplated” in the December
Order.1029 The financial penalties that the Commission required only apply to Eligible
Customers’ unreserved use of the transmission system and are consistent with the
Commission’s directives in the December Order.1030 The Commission has previously
found that transmission customers should be subject to unreserved use penalties in
circumstances where a transmission customer uses transmission service in excess of its
1029 Constellation Response Brief at 19; Vistra Response Brief at 29.
1030 December Order, 193 FERC ¶ 61,217 at P 212 (directing a penalty rate for
excess withdrawals of energy from the transmission system by an Eligible Customer
taking FCD transmission service on behalf of a Co-Located Load); id. P 217 (directing
same as to excess withdrawals by an Eligible Customer taking NFCD transmission
service on behalf of a Co-Located Load).
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reserved capacity or if it uses transmission service where it does not have a reservation,
and as discussed further below, we find it just and reasonable that an Eligible Customer
taking any of the three new transmission services on behalf of Eligible Load incur a
financial penalty for unreserved use of the transmission system.1031 But the Commission
also directed briefing broadly on the rates, terms, and conditions of the new transmission
services, including “other remedial action[s]” in addition to financial penalties, as
pertinent to this question.1032 We find that an operational penalty for Eligible Customers
taking Interim NITS, FCD transmission service, and/or NFCD transmission service on
behalf of Eligible Load for misoperation of necessary control technologies and/or
protection systems is consistent with the December Order’s finding that Eligible
Customers may take Interim NITS, FCD transmission service, and/or NFCD transmission
service because it is the use of necessary control technologies and/or protection systems
that effectively limits their energy withdrawals from the transmission system.1033 The
Commission in the December Order also broadly sought briefing on the appropriate
procedures to govern circumstances under which PJM curtails an Eligible Customer
taking any of the three new transmission services, and we find that an operational penalty
for an Eligible Customer taking the new transmission services on behalf of Eligible Load
failing to follow a curtailment or load shedding directive is within the scope of provisions
that we can consider as part of establishing curtailment procedures for the three new
transmission services.
a.
Failure to Follow Curtailment or Load Shedding Directive
We find that it is just and reasonable to establish an operational penalty for an
Eligible Customer taking any of the new transmission services on behalf of Eligible Load
after the second instance of failing to follow a curtailment or load shedding directive.
Specifically, we find that it is just and reasonable for PJM to terminate the transmission
service agreement with the Eligible Customer taking Interim NITS, FCD transmission
service, or NFCD transmission service on behalf of Eligible Load after the second
instance of failing to follow a curtailment or load shedding directive. We direct PJM to
file, within 60 days of the date of issuance of this order, a compliance filing to revise its
Tariff consistent with this finding. PJM persuasively argues that there are significant
reliability risks associated with failure to curtail, and “financial penalties, alone, are not
sufficient to incentivize Eligible Customers to comply with Load Shed and
Curtailment.”1034 However, we agree with concerns raised in the record that PJM’s
1031 Order No. 890, 118 FERC ¶ 61,119 at P 834.
1032 December Order, 193 FERC ¶ 61,217 at P 219.
1033 Id. P 205; see supra Part VI.C.
1034 PJM Initial Brief at 41-42, 45, 50.
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proposal to disqualify an Eligible Customer taking one of the three new transmission
services on behalf of Eligible Load from continuing to take any of those services is
unnecessarily strict. When considering the need to ensure reliability is preserved, as well
as to allow Eligible Customers taking transmission service on behalf of Eligible Load to
adapt to a new transmission service paradigm, we find that, on balance, complete
disqualification is excessive because it would impose penalties on the Eligible Customer
that apply to all of its transmission service agreements, even those for which it has
followed all curtailment or load shedding directives. However, we agree with PJM that a
strict operational penalty will deter conduct contrary to the fundamental principle upon
which the new transmission services required by the December Order were based, which
is that Eligible Customers taking service on behalf of Co-Located Loads are willing and
able to limit their energy withdrawals from the transmission system under certain
conditions.1035 We therefore find, as part of the just and reasonable replacement rate, that
the transmission service agreement with the Eligible Customer taking Interim NITS, FCD
transmission service, or NFCD transmission service on behalf of Eligible Load should be
terminated on the second instance of failing to follow a curtailment or load shedding
directive. The Eligible Customer will remain eligible to take the three new transmission
services on behalf of other Eligible Loads through its other transmission service
agreements. NITS remains an option for an Eligible Customer disqualified from taking
one of the new transmission services; however, such Eligible Customer may not begin
taking NITS until all necessary Network Upgrades are completed.1036
Recognizing that we are not adopting the exact penalty framework for failing to
follow a curtailment or load shedding directive that PJM proposes, we nevertheless
disagree with many of protesters’ arguments on this matter. Joint Co-Location
Developers, for example, argue that disqualification is not necessary because
transmission owners can manually disconnect a facility. This argument supports PJM’s
premise that a financial penalty alone cannot deter the Eligible Customer taking one of
the three new transmission services on behalf of Co-Located Load from failing to control
unauthorized withdrawals; instead, it unreasonably and unnecessarily shifts the
responsibility to manage complying with the Tariff and the terms of the transmission
service from the Eligible Customer to the transmission owners. Joint Co-Location
1035 December Order, 193 FERC ¶ 61,217 at P 177 (“we also find that PJM’s
Tariff is unjust and unreasonable because it does not include transmission services that
reflect Eligible Customers taking service on behalf of Co-Located Loads that are willing
and able to limit their energy withdrawals from the transmission system under certain
conditions.”).
1036 See PJM Initial Brief at 43 (“Importantly, however, such an Eligible Customer
may take NITS, which would begin after all necessary upgrades are placed into
service.”).
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Developers also claim that disqualification is disproportionate and may not send an
actionable signal without “fault or materiality elements.” This argument is misplaced, as
PJM’s requirements for the new transmission services make the Eligible Customer’s
responsibilities clear and actionable: prior to commencement of service, the Eligible
Customer must demonstrate to PJM’s satisfaction that it can fully comply with load
shedding and curtailment procedures. Lastly, Joint Co-Location Developers suggest that
the Commission’s approval of a non-performance charge rate for capacity resources that
fail to perform in emergency events means that an Eligible Customer that fails to follow a
curtailment or load shedding directive can be sufficiently penalized through a similar
charge. Joint Co-Location Developers allege that failure to respond or perform in both
these circumstances is similar from a resource adequacy perspective. We disagree that
the two are comparable. Capacity resources are purchased to meet the needs of
transmission customers taking existing firm service, such as NITS. As PJM explains in
its initial brief, the choice to take NITS decreases the likelihood of significant issues
arising from failure to curtail.1037 By contrast, the Commission created the three new
transmission services to reflect that Eligible Customers taking transmission service on
behalf of Co-Located Load are willing and able to limit their energy withdrawals from
the transmission system under certain conditions that are different than those under which
Network Customers take NITS.1038 For these reasons, we find that it is just and
reasonable to subject Eligible Customers on behalf of such loads to a stricter penalty
regime.
We also disagree with Constellation’s suggestion that the Commission should
adopt SPP’s approach for CHILLS, which contains only penalties for exceeding the
transmission customer’s reserved capacity.1039 The Commission has permitted regional
1037 Id. at 48-49.
1038 December Order, 193 FERC ¶ 61,217 at P 2; see, e.g., id. P 208
(distinguishing an Eligible Customer’s rights under FCD transmission service in contrast
to NITS).
1039 Sw. Power Pool, Inc., 195 FERC ¶ 61,196, at 98 (2026).
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variation among RTOs/ISOs1040 and need only explain its choice and how it has chosen a
just and reasonable rate.1041
We also find that ODEC has not demonstrated a need, nor does the record
developed in this paper hearing otherwise reflect a need, to establish protections for
transmission owners if the Eligible Customer may experience damages as a result of the
transmission owner disconnecting the Eligible Customer. Lastly, with respect to Joint
Co-Location Developers’ concern that PJM’s proposed disqualification rules will
dissuade Eligible Customers from taking the new transmission services because of the
risk of stranding or undermining investments in the new transmission services, we note
that an Eligible Customer is not required to take the new transmission services and may
elect to take NITS if that transmission service option better reflects the Eligible
Customer’s use of the transmission system and risk profile.1042
1040 See, e.g., Reg’l Transmission Orgs., Order No. 2000, FERC Stats. & Regs.
¶ 31,089, at 31,073 (1999) (cross-referenced at 89 FERC ¶ 61,285), order on reh’g,
Order No. 2000-A, FERC Stats. & Regs. ¶ 31,092 (2000) (cross-referenced at 90 FERC
¶ 61,201), aff’d sub nom. Pub. Util. Dist. No. 1 of Snohomish Cnty. v. FERC, 272 F.3d
607 (D.C. Cir. 2001) (stating there is no “one size fits all” approach to RTO governance);
Offer Caps in Mkts. Operated by Reg’l Transmission Orgs. & Indep. Sys. Operators,
Order No. 831, 157 FERC ¶ 61,115, at P 147 (2016), order on reh’g & clarification,
Order No. 831-A, 161 FERC ¶ 61,156 (2017) (permitting regional variation for treatment
of incremental energy offers above $1,000/MWh that the RTO/ISO or Marketing
Monitoring Unit cannot verify prior to the start of the market clearing process);
Wholesale Competition in Regions with Organized Elec. Mkts., Order No. 719,
125 FERC ¶ 61,071, at P 62 (2008), order on reh’g, Order No. 719-A, 128 FERC
¶ 61,059, order on reh’g, Order No. 719-B, 129 FERC ¶ 61,252 (2009) (permitting
regional variation for RTOs/ISOs developing requirements for demand response
resources participating in ancillary service markets).
1041 See ExxonMobil Oil Corp. v. FERC, 487 F.3d 945, 955 (D.C. Cir. 2007) (“We
need not decide whether the Commission has adopted the best possible policy as long as
the agency has acted within the scope of its discretion and reasonably explained its
actions.”); Cities of Batavia v. FERC, 672 F.2d 64, 84 (D.C. Cir. 1982) (“[T]he billing
design need only be reasonable, not theoretically perfect.”).
1042 See PJM Reply Brief at 47 (arguing that disqualification penalties reflect that
Eligible Customers take the level of transmission service that aligns with their
demonstrated use of the transmission system).
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b.
Misoperation of Necessary Control Technologies and/or
Protection Systems
We find that it is just and reasonable to establish an operational penalty of
suspension in service for a period of up to 120 days for an Eligible Customer taking
Interim NITS, FCD, and/or NFCD transmission service on behalf of Eligible Load after
the first misoperation of necessary control technologies and/or protection systems.
However, as noted above, we disagree with PJM’s proposal regarding disqualification,
and we instead find that it is just and reasonable to establish an operational penalty
whereby, after the second misoperation of necessary control technologies and/or
protection systems, PJM will terminate the transmission service agreement with the
Eligible Customer taking Interim NITS, FCD transmission service, or NFCD
transmission service on behalf of Eligible Load. We direct PJM to file, within 60 days of
the date of issuance of this order, a compliance filing to revise its Tariff consistent with
these findings.
We agree with PJM that there are significant reliability risks associated with
misoperation of special protection schemes, and that “financial penalties, alone, are not
sufficient to incentivize Eligible Customers to comply with . . . control technology and
protection system obligations.”1043 We find that this replacement rate serves to deter
conduct contrary to the fundamental principle around which the new transmission
services created by the Commission were based, i.e., that Eligible Customers taking
service on behalf of Co-Located Loads are willing and able to limit their energy
withdrawals from the transmission system under certain conditions.1044 Moreover, we
agree with PJM that, after the first misoperation of necessary control technologies and/or
protection systems, suspension of service for a period of up to 120 days is reasonable to
allow for an analysis by PJM, and the affected transmission owner(s) as necessary, of the
operational performance of the necessary control technologies and/or protection systems.
1043 PJM Initial Brief at 41-42, 45, 50.
1044 December Order, 193 FERC ¶ 61,217 at P 177 (“we also find that PJM’s
Tariff is unjust and unreasonable because it does not include transmission services that
reflect Eligible Customers taking service on behalf of Co-Located Loads that are willing
and able to limit their energy withdrawals from the transmission system under certain
conditions.”); see id. P 205 (“We note that, in general, special protection schemes allow
Eligible Customers on behalf of Co-Located Load to effectively limit their withdrawals
from the transmission system. For these reasons, in these instances where the
Co-Location Arrangement includes special protection schemes that limit its energy
withdrawals, we find that it is a just and reasonable replacement rate to allow an Eligible
Customer taking transmission service on behalf of such load to take and be charged for
new types of transmission service that are alternatives, and not equivalent, to NITS.”).
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In response to the Indicated TOs, we find that it is reasonable that the Tariff provide that
service may resume following PJM’s approval, as well as the relevant transmission
owner’s approval of the necessary control technologies and/or protection systems for
consistency with the transmission owner’s technical standards.
However, we reject PJM’s proposal not to apply such a penalty to Eligible
Customers taking FCD transmission service on behalf of Co-Located Load, consistent
with our findings above that Eligible Customers taking FCD transmission service on
behalf of Co-Located Load must also have necessary control technologies and/or
protection systems to limit their energy withdrawals from the transmission system to their
contract demand level.1045 We also disagree with protesters’ arguments opposing PJM’s
proposal to establish an operational penalty for misoperation of necessary control
technologies and/or protection systems. Vistra suggests that PJM’s proposal unduly
discriminates against Co-Location Arrangements as compared to other entities using
special protection schemes, but this penalty proposal (which Vistra mistakenly alleges
applies only to special protection schemes) is not relevant to existing transmission
services in PJM.1046 By contrast, as discussed above, correct operation of necessary
control technologies and/or protection systems is foundational to the new transmission
services. Vistra’s separate claim that PJM’s proposal is unduly discriminatory “insofar as
it treats unreserved use of the transmission system by point-to-point customers differently
from unreserved use by customers taking these new transmission services” is misplaced.
In contrast to Eligible Customers taking Interim NITS, FCD transmission service, and/or
NFCD transmission service on behalf of Eligible Load, PTPS customers are not required
to establish necessary control technologies and/or protection systems in order to take
PTPS.1047 We also find unpersuasive Joint Co-Location Developers’ allegation that this
operational penalty is even more excessive, as compared to a penalty for failure to follow
curtailment or load shedding directives, because misoperation without withdrawal does
not risk system harm.1048 We agree with PJM that “[w]hen a control technology or
protection scheme misoperates, there can be serious consequences.”1049 Where PJM
1045 See supra Part VI.C.
1046 See PJM Initial Brief at 47 (justifying its proposal to allow that an Eligible
Customer disqualified from the new transmission services may take NITS because
“NITS, in and of itself, addresses Curtailment, Load Shed, and control technology or
protection scheme misoperation risk”).
1047 Id. at 50 (“PJM supports a penalty for unreserved use in addition to the
disqualification and pause-in-rules discussed above.”); see id. at 41 (Table 1 (Penalties)).
1048 Joint Co-Location Developers Response Brief at 26.
1049 PJM Initial Brief at 43, 45; PJM Reply Brief at 52-53.
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plans and operates the system around an assumption that necessary control technologies
and/or protection systems will work, unexpected system behavior due to misoperation
risks system reliability regardless of whether withdrawals occur, and we find that it is
reasonable not to rely only on financial penalties to mitigate these risks.
We disagree with Constellation’s suggestion that the Commission should adopt
SPP’s approach from CHILLS, which contains only penalties for exceeding the
transmission customer’s reserved capacity,1050 but not suspension or disqualification, for
the same reasons discussed above.
We agree with NOVEC that PJM’s proposed penalty language to disqualify the
Eligible Customer as a whole from taking the relevant transmission service is not just and
reasonable. Instead, we direct PJM to propose on compliance Tariff provisions providing
that, after the second misoperation of necessary control technologies and/or protection
systems pertaining to a transmission service agreement governing an Eligible Customer
taking Interim NITS, FCD transmission service, and/or NFCD transmission service on
behalf of Eligible Load, PJM will terminate the transmission service agreement. The
Eligible Customer could still take transmission service, including Interim NITS, FCD
transmission service, and NFCD transmission service, on behalf of other loads through
other transmission service agreements.
ODEC asserts that PJM’s implementation of its penalties must not subject ODEC
or its member distribution cooperatives to service interruptions or disqualification, or
financial penalties, as a result of requiring ODEC to serve as the Eligible Customer. The
Commission set a replacement rate in the December Order applicable to Eligible
Customers taking transmission service on behalf of Co-Located Load. The operational
(and financial) penalties we establish in this order apply to Eligible Customers who elect
to take the new transmission services on behalf of Eligible Load and who do not comply
with the terms and conditions of the new transmission services, including misoperation of
necessary control technologies and/or protection systems. The December Order does not
require that Eligible Customers on behalf of Co-Located Load take one of the new
transmission services and they may choose to take NITS instead. The Co-Located Load
cannot force an Eligible Customer to take a type of transmission service it does not wish
to take. As the Commission explained in the December Order, NITS remains a just and
reasonable transmission service option that an Eligible Customer on behalf of a
Co-Located Load may choose.1051
1050 Sw. Power Pool, Inc., 195 FERC ¶ 61,196 at 98.
1051 December Order, 193 FERC ¶ 61,217 at P 195.
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c.
Unreserved Use of the Transmission System
We find that it is just and reasonable to impose a financial penalty on an Eligible
Customer taking any of the new transmission services on behalf of Eligible Load for
unreserved use of the transmission system. We find that it is just and reasonable to use
Indicated TOs’ two-part penalty framework and to apply, within that framework, a
penalty rate that is twice the rate we establish in this order for FCD transmission
service.1052 Indicated TOs propose a base penalty charge for each hour in which the
Eligible Customer’s reserved service limit is exceeded at the Point of Interconnection
during at least one five-minute interval (Exceedance Hour) and a penalty ratchet when
exceedances occur repeatedly.1053 Specifically, Indicated TOs propose that, if more than
one Exceedance Hour occurs on the same day, then an additional daily penalty applies; if
exceedances occur on multiple days within the same week, an additional weekly penalty
applies; if exceedances occur in multiple weeks within the same month, then an
additional monthly penalty applies; and if exceedances occur in multiple months within
the same year, then an additional annual penalty applies.1054 We agree with Indicated
TOs that progressively increasing the consequences of repeated penalties encourages
Eligible Customers to manage their usage consistent with their reserved transmission
service limit.1055 We note that Indicated TOs submit testimony indicating that they
propose to distribute revenues collected from financial penalty charges on a monthly
basis to Eligible Customers taking NITS and FCD transmission service. However, we
find that unreserved use penalties should be distributed to all non-offending transmission
1052 See Order No. 890, 118 FERC ¶ 61,119 at P 848 (“As a result, we establish a
rebuttable presumption that unreserved use penalties no greater than twice the firm
point-to-point rate for the penalty period defined above are just and reasonable.”); id.
P 846 (basing penalty charges on the period of unreserved use and determining that, as a
general rule, more than one assessment for a given duration will increase the penalty
period to the next longest duration).
1053 Indicated TOs Response Brief at 12 (“When a Co-Located Load exceeds its
reserved transmission service limit, the base penalty charge will be assessed for any hour
in which at least one five-minute interval occurs during which a customer’s metered load
at the point of interconnection exceeds its reserved transmission service.”); Indicated TOs
Reply Brief at 16.
1054 Indicated TOs Reply Brief at 16; Indicated TOs Reply Brief, Ex.
No. PTO-0005 at 7.
1055 Indicated TOs Response Brief at 12-13; Indicated TOs Reply Brief at 17.
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customers consistent with Order No. 890.1056 We direct the PJM transmission owners
to file, within 60 days of the date of issuance of this order, a compliance filing consistent
with these findings.
E.
Anti-Toggling Mechanisms for Firm Contract Demand Transmission
Service
In the December Order, the Commission found that FCD transmission service
should have a minimum term of one year, but that PJM should propose an anti-toggling
mechanism for Eligible Customers switching between FCD and NFCD transmission
service.1057
1.
Initial Briefs
PJM proposes an anti-toggling mechanism to prevent transmission customers from
switching between FCD and NFCD transmission services by providing that the portion of
the Co-Located Load served by FCD transmission service is not eligible to be served by
NFCD transmission service for five years following the effective date of the Service
Agreement. Conversely, PJM explains, it does not bar Co-Located Load served by
NFCD transmission service from being served by FCD transmission service in future
years. However, PJM proposes an exception if there is a physical change to the
Co-Located Generator that would materially alter the MW level dedicated to the load or
to the Co-Located Load that would materially alter the MW level of its gross demand.1058
PJM argues this exception is necessary to ensure that, if an Eligible Customer materially
changes either the generation capacity or the load on a gross demand basis, the Tariff
provides flexibility to determine whether FCD or NFCD transmission service should be
taken for the new incremental portion.
PJM also maintains that its proposed 42-month notice of termination acts as an
anti-toggling device in a manner similar to the five-year commitment period applicable to
the Fixed Resource Requirement alternative in the PJM capacity market. PJM explains
that its notice period recognizes that PJM incorporates these loads in the capacity market,
1056 See Order No. 890, 118 FERC ¶ 61,119 at P 860 (“Unreserved use penalties
are assessed against transmission customers and should, therefore, be distributed to all
non-offending transmission customers, whether affiliated with the transmission provider
or not.”).
1057 December Order, 193 FERC ¶ 61,217 at P 213.
1058 PJM Initial Brief at 53-54.
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and it would unreasonably shift costs to other loads if Co-Located Loads could avoid
capacity charges incurred on their behalf by terminating service prematurely.1059
Indicated TOs propose a five-year minimum commitment period for FCD
transmission service, arguing that doing so is necessary to ensure that FCD transmission
service customers cannot trigger Network Upgrades and then cease taking service,
thereby potentially shifting costs to other transmission customers, and because it mirrors
the commitment period for loads seeking to procure their own capacity.1060 Indicated
TOs argue that, where Network Upgrades are attributable to FCD transmission service
customers, separate payment guarantees may be required to prevent Network Customers
from being left “holding the bag” if an FCD transmission service customer exits the
system before the costs of the Network Upgrades are fully paid.1061 Finally, Indicated
TOs recommend that the Commission adopt the same requirements for FCD transmission
service that apply to notices of termination for NITS, including the 42-month notice
period.1062
2.
Response Briefs
NOVEC states that it supports PJM’s five‑year minimum service commitment and
42‑month notice requirement. NOVEC asserts that the minimum service commitment
sends timely price signals to the capacity market, enhances market stability, and
minimizes upgrade‑related risks if a Co-Located Load withdraws. NOVEC notes that the
notice-of-termination period is identical to the requirements for termination of NITS and
prevents Co-Located Loads from avoiding capacity charges by prematurely terminating
their agreement.1063
3.
Determination
Except as noted below, we find PJM’s proposed anti-toggling mechanism to be a
just and reasonable replacement rate. In particular, we find that PJM’s proposal to
prohibit, for a period of five years, Eligible Customers taking transmission service on
behalf of a Co-Located Load from taking NFCD transmission service for any portion of
1059 Id. at 54-55.
1060 Indicated TOs Initial Brief at 21 (citing December Order, 193 FERC ¶ 61,217
at P 213).
1061 Id. at 21 n.50.
1062 Id. at 21 & n.52.
1063 NOVEC Response Brief at 15-16.
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Co-Located Load served by FCD transmission service will ensure that such Eligible
Customers do not attempt such a switch based on expected capacity market conditions,
consistent with the December Order.1064 We further find that PJM’s proposed 42-month
notice of termination provision applicable to FCD transmission service customers mirrors
that applicable to Network Customers and recognizes that PJM has procured capacity on
their behalf. We direct PJM to file, within 60 days of the date of issuance of this order, a
compliance filing to revise its Tariff consistent with these findings.
However, we find PJM’s proposed exceptions regarding changes to the
Co-Located Generator or Co-Located Load are not just and reasonable to the extent they
would permit Eligible Customers to decrease the level of contract demand for FCD
transmission service they take on behalf of an Eligible Load, and increase the level of
contract demand for NFCD transmission service, without being subject to the
anti-toggling provision. The Commission found that the anti-toggling mechanism should
ensure Eligible Customers taking transmission service on behalf of Co-Located Loads
cannot switch from FCD to NFCD transmission service based on expected capacity
market conditions.1065 As such, PJM’s proposal is not consistent with the December
Order, and we direct PJM to propose an anti-toggling mechanism without an exception
for Eligible Customers taking FCD transmission service on behalf of Eligible Load in a
compliance filing within 60 days of the date of issuance of this order.
We also reject Indicated TOs’ proposal for a five-year minimum commitment
period. As Indicated TOs acknowledge, the Commission required in the December Order
that the minimum term for FCD transmission service should be one year.1066 As such, we
find that Indicated TOs’ arguments in support of its proposal are an untimely request for
rehearing of the December Order.1067
1064 December Order, 193 FERC ¶ 61,217 at P 213.
1065 Id.
1066 Id.
1067 See, e.g., ISO New Eng. Inc., 132 FERC ¶ 61,098 at P 12 (“The Commission
has held that requests to alter a compliance filing in a manner that differs from the order
requiring the compliance filing constitute a collateral attack on the order requiring the
compliance filing.”).
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F.
Communications, Alarm, SCADA, or Other Requirements
1.
Initial Briefs
PJM proposes to develop telemetry requirements for Co-Located Load so that
PJM can monitor the status of demand placed on PJM’s transmission system, including
unreserved use, to ensure reliability.1068 PJM states that it still determining the scope of
the tools and requirements necessary to limit withdrawals that exceed reserved use. PJM
also proposes to develop data exchange and metering requirements for Co-Located Load
that may be similar to those applicable to generation. PJM proposes to develop the
capability to differentiate more granularly between the transmission services available to
Eligible Customers on behalf of Co-Located Load because they are prioritized
differently. PJM maintains that Eligible Customers would need to take these different
forms of transmission service on different feeders, or cables leaving substations, to
ultimately serve the Co-Located Load.
PJM next proposes to develop requirements and identify any relevant NERC rules
to ensure that relay settings are consistent with the design of the necessary control
technologies and/or protection systems, as set forth in each Service Agreement.1069 PJM
asserts that transmission owners must be heavily involved in ensuring that necessary
control technology and/or protection systems are properly designed. PJM explains that it
proposes technical requirements that must be in place prior to commencement of service
because there are significant risks introduced by the necessary control technology and
protection systems. PJM also proposes to make changes to core Markets and Operations
systems to incorporate the information provided by Eligible Customers and Co-Located
Load to ensure reliability of the PJM transmission system.
2.
Response Briefs
Indicated TOs support PJM’s proposal in its initial brief to develop telemetry
requirements and require Co-Located Load to meet such requirements in order to monitor
Co-Located Loads’ use of the transmission system.1070
3.
Determination
We decline to direct PJM’s proposed telemetry, data exchange, metering, and
relay setting requirements as the replacement rate because PJM has not provided
1068 PJM Initial Brief at 59-61.
1069 Id. at 60-61.
1070 Indicated TOs Response Brief at 10-11.
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sufficient detail to find they are just and reasonable. PJM by its own admission has not
finished determining the scope of what might be necessary to limit energy withdrawals
from the transmission system. Accordingly, and consistent with our determination above
to extend the three new transmission services set forth in the December Order to Eligible
Customers taking service on behalf of load with BTMG that are willing and able to limit
their energy withdrawals from the transmission system under certain conditions, we
direct PJM to file, within 60 days of the date of issuance of this order, a compliance filing
with Tariff revisions it deems necessary for PJM to be able to ensure that an Eligible
Customer has adequate telemetry, data exchange, and metering requirements such that
PJM may monitor the Eligible Load’s use of the transmission system, limit withdrawals,
and ensure relay settings are consistent with necessary control technologies and/or
protection systems.
G.
Curtailment Procedures for Interim NITS and Non-Firm Contract
Demand Transmission Service
1.
Initial Briefs
PJM proposes that Interim NITS and NFCD transmission service will be curtailed
before FCD transmission service and NITS.1071 PJM also proposes that it may curtail
Interim NITS or NFCD transmission service prior to dispatching the Pre-Emergency
Load Response Program or in response to a transfer capability shortage as a result of
system reliability conditions. PJM proposes that FCD transmission service be treated
equal to NITS for purposes of curtailment.1072 PJM states that it reserves the right to
curtail the three new transmission services on a non-discriminatory basis for the purpose
of making necessary adjustments to, changes in, or repairs on its lines, substations, and
facilities, and in cases where continuation of service would endanger persons or property.
PJM proposes that the Eligible Customer must shed load in accordance with previously
established procedures under the relevant Service Agreement.
PJM acknowledges that its system does not differentiate between different types of
transmission service because all load within PJM is currently served by NITS.1073 Thus,
PJM explains, core systems would need to be implemented to enable sufficient
granularity when shedding an Eligible Customer’s Co-Located Load being served by two
different levels of transmission service, i.e., both FCD and NFCD transmission services.
PJM clarifies that, assuming these core system design changes can be implemented,
Eligible Customers taking transmission service on behalf of Co-Located Load would
1071 PJM Initial Brief at 63.
1072 Id. at 64.
1073 Id. at 65-66.
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need to take different forms of transmission service on different feeders, or cables leaving
substations, to ultimately serve Co-Located Load.
2.
Response Briefs
Joint Co-Location Developers argue that PJM fails to adequately clarify when and
how NFCD transmission service and Interim NITS shall be curtailed, in particular the
curtailment trigger.1074 Joint Co-Location Developers maintain that the curtailment
trigger significantly affects rates and service and is realistically susceptible of
specification and should be included in the tariff. Joint Co-Location Developers assert
that PJM does not clarify whether and how it will determine curtailment priority among
its different classes of non-firm service, including Non-Firm PTPS, NFCD transmission
service, and Interim NITS.
Constellation argues that it is discriminatory to require different feeders and would
unnecessarily delay Co-Location Arrangements.1075 At minimum, Constellation asserts
that such a requirement should not apply in the case of Interim NITS since the
Co-Located Load is not taking both firm and non-firm service.
AEU/SEIA explain that the December Order established a curtailment hierarchy in
accordance with which Interim NITS and NFCD transmission service will be curtailed
before NITS and FCD transmission service and before pre-emergency demand response
resources are dispatched.1076 AEU/SEIA claim that PJM’s implementation of this
hierarchy is contradictory because PJM states that it “may” curtail Interim NITS and
NFCD transmission service prior to dispatching the Pre-Emergency Load Response
Program and that it “will” curtail Interim NITS and NFCD transmission service before
demand response resources are called upon to reduce load.1077 AEU/SEIA argue that this
inconsistency must be resolved because a customer considering whether to take Interim
NITS or NFCD transmission service needs to know whether curtailment before
pre-emergency demand response is a certainty or a possibility.
AEU/SEIA contend that PJM has provided no information about the conditions
that would actually trigger curtailment of Interim NITS or NFCD transmission service in
practice and that, because these are novel services, no historical curtailment data
1074 Joint Co-Location Developers Response Brief at 17.
1075 Constellation Response Brief at 29-30.
1076 AEU/SEIA Response Brief at 11.
1077 Id. (citing PJM Initial Brief at 63-64).
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exists.1078 AEU/SEIA further argue that modeling of expected curtailment frequency and
duration or examples of how curtailment would operate for a hypothetical Co-Location
Arrangement must be provided in order for customers to make informed business
decisions on the transmission service that best serves their needs. If it is not, AEU/SEIA
argue that prospective customers will default to taking NITS. AEU/SEIA request that the
Commission require PJM to develop and publish historical analysis and forward-looking
modeling of curtailment frequency and duration for Interim NITS and NFCD
transmission service, as informed by historical system conditions in PJM and broken
down by zone. AEU/SEIA also argue that PJM should set out in its reply brief how it
intends to operationalize curtailment for NFCD transmission service, including the
sequence in which Co-Located Loads will be curtailed relative to other non-firm services
and the mechanism by which curtailment instructions will be communicated and
enforced. Without this sequence, AEU/SEIA claim that neither the Commission nor
affected parties can evaluate whether PJM’s proposed curtailment framework is
consistent with the December Order’s requirement that NFCD transmission service be
available “as needed during normal, non-emergency system operating conditions.”1079
3.
Reply Briefs
Earthjustice argues that the Commission should require PJM to clarify how and
when PJM will enforce its curtailment procedures, including: (1) how PJM will
communicate its curtailment directives; (2) how and when transmission providers will
determine that load shed is necessary, which loads will be curtailed first, and at what
stage curtailments will occur; and (3) how a data center will be disqualified and the
timeline for that disqualification.1080
Industrials/Amtrak argue that many traditional large loads cannot shut off
immediately if their on-site generation trips.1081
1078 Id. at 12-14.
1079 Id. at 14 (quoting December Order, 193 FERC ¶ 61,217 at P 215).
1080 Earthjustice Reply Brief at 14, 16.
1081 Industrials/Amtrak Reply Brief at 6.
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4.
Answers
Constellation argues that PJM inappropriately attempts in its reply brief to
reinstate a curtailment criterion of a capacity/reserve shortage and that the Commission
rejected this element of PJM’s proposed Option 7 in the December Order.1082
5.
Determination
We find PJM’s proposed curtailment hierarchy for Interim NITS, FCD
transmission service, and NFCD transmission service to be just and reasonable. PJM’s
proposal to treat FCD transmission service as comparable to NITS is consistent with the
December Order,1083 as is PJM’s proposal to curtail Interim NITS and NFCD
transmission service prior to firm transmission services.1084 In addition, we find PJM’s
proposal to curtail Interim NITS and NFCD transmission service prior to deployment of
its Pre-Emergency Load Response Program, or in response to a transfer capability
shortage as a result of system reliability conditions, to be just and reasonable because it is
consistent with how Non-Firm PTPS is curtailed.1085 We disagree with Constellation that
PJM’s proposal to curtail Interim NITS during capacity or reserve shortages is
inconsistent with the Commission’s findings in the December Order that PJM’s proposed
construct for an interim transmission service was too broad and not sufficiently detailed
to direct as a replacement rate.1086 Constellation misunderstands the December Order,
which found it was not reasonable to allow the transitional period for Interim NITS to
continue until any resource adequacy challenges associated with the addition of the
Co-Located Load were addressed, and instead limited the transitional period to the time
1082 Constellation May 11 Answer at 13 (citing December Order, 193 FERC
¶ 61,217 at P 202).
1083 See, e.g., December Order, 193 FERC ¶ 61,217 at P 208 (stating that FCD
transmission service will have the same curtailment priority as existing firm transmission
services).
1084 See, e.g., id. P 201 (stating that Interim NITS “will be curtailed before existing
firm transmission services and the new Firm Contract Demand Transmission Service”);
id. P 215 (stating same with respect to NCFD transmission service).
1085 See PJM, Intra-PJM Tariffs, OATT, § II, § 14.7 (Curtailment or Interruption of
Service) (0.0.0) (describing PJM’s curtailment procedures for Non-Firm PTPS); PJM
Manual 13: Emergency Operations, Rev. 97 (eff. November 20, 2025), § 2.3.2.
1086 Constellation May 11 Answer at 13 (citing December Order, 193 FERC
¶ 61,217 at P 202).
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needed to complete any Network Upgrades identified in the study process.1087 The
Commission did not find, as Constellation alleges, that Interim NITS could not be
curtailed as a result of capacity or reserve shortages. Here, we find that PJM’s proposal
to curtail Interim NITS during capacity or reserve shortages is just and reasonable and
consistent with both the nature of the transmission service as a non-firm transmission
service for which Eligible Customers do not pay generation capacity charges, and the
need to maintain reliability.
We disagree with commenters that PJM must provide specific details in its Tariff,
such as the trigger and procedures for curtailment of Interim NITS and FCD or NFCD
transmission services, or how PJM will enforce its curtailment procedures. We find that
requiring PJM to specify the curtailment priority of these new transmission services in its
Tariff, while leaving specific implementation details in its manuals and individual service
agreements, provides transmission customers sufficient certainty as to their priority
relative to other transmission services and ensures that PJM has sufficient flexibility to
preserve system reliability in varying operating conditions.1088 We find that it is just and
reasonable and important to protect transmission system reliability to provide PJM with
sufficient operational flexibility during emergency procedures to curtail transmission
customers as needed to preserve reliability.1089
However, we find that PJM does not adequately explain its curtailment hierarchy
amongst non-firm transmission services. For example, while PJM states that it will
curtail Interim NITS and NFCD transmission service prior to deployment of its
Pre-Emergency Load Response Program, it does not detail if these transmission services
will be curtailed before or after Non-Firm PTPS, or if curtailment priority within NFCD
transmission service will be based on duration, as are curtailments for Non-Firm
PTPS.1090
1087 December Order, 193 FERC ¶ 61,217 at P 202.
1088 See PJM, Intra-PJM Tariffs, OATT, § II.14.7 Curtailment or Interruption of
Service (0.0.0) (describing PJM’s curtailment procedures for Non-Firm PTPS).
1089 See Order No. 890-A, 121 FERC ¶ 61,297 at P 566 (“If the [conditional firm
transmission] customer selects the annual hourly cap option, the transmission provider
will have the flexibility to conditionally curtail the customer for any reliability reason
during those hours, including but not limited to, the system condition(s) identified in the
system impact study.”).
1090 PJM, Intra-PJM Tariffs, OATT, § II.14.7 Curtailment or Interruption of
Service (0.0.0).
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We also find that PJM has not justified its assertion that an Eligible Customer
taking different forms of transmission service on behalf of Co-Located Load would need
to take those services on different feeders. PJM states that this requirement is based on
the need for core systems to be implemented to enable sufficient granularity when
shedding an Eligible Customer’s Co-Located Load being served by two different levels
of transmission service.1091 While we recognize that core systems will need to be
implemented, PJM provides no explanation as to why these systems could not be
sufficiently flexible as to accommodate a single feeder with two different levels of
transmission service on it. 1092
Accordingly, we direct PJM to submit, within 60 days of the date of issuance of
this order, a compliance filing to revise the Tariff to include the curtailment priorities for
Interim NITS, FCD transmission service, and NFCD transmission service consistent with
our findings above. This language must specify that FCD transmission service shall be
treated the same as NITS for the purposes of curtailment, and that Interim NITS and
NFCD transmission service will be curtailed prior to deployment of PJM’s Pre-
Emergency Load Response Program, or in response to a transfer capability shortage as a
result of system reliability conditions. PJM’s submittal must also detail the curtailment
priorities between Non-Firm PTPS, Interim NITS, and NFCD transmission service,
including how or if PJM will prioritize transmission customers for curtailment based on
duration of service. Consistent with our determination above to extend the three new
transmission services set forth in the December Order to Eligible Customers taking
service on behalf of load with BTMG that are willing and able to limit their energy
withdrawals from the transmission system under certain conditions, we further direct
PJM to reflect this change in its compliance filing.
H.
Rates, Terms, and Conditions for Interim NITS
1.
Initial Briefs
PJM proposes to model the non-rate terms and conditions for Interim NITS on
NITS.1093 PJM proposes that an Eligible Customer may take Interim NITS on behalf of
Co-Located Load until Network Upgrades are complete, and then the customer will
automatically convert to a Network Customer. PJM states that an Eligible Customer
receiving Interim NITS on behalf of Co-Located Load will receive non-firm transmission
1091 PJM Initial Brief at 66.
1092 For example, this system could assume that load on a feeder is firm up until
the Eligible Customer’s Firm Contract Demand withdrawal limit, and non-firm above
that contract demand amount.
1093 PJM Initial Brief at 67-70.
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service for the delivery of energy to Co-Located Load. PJM proposes that, upon receipt
of request, PJM will determine the amount of Interim NITS that can be reliably provided
based on the results of appropriate studies and in consultation with the affected
transmission owner. PJM proposes that, for Interim NITS, the Eligible Customer must
meet certain conditions and appropriate technical requirements. PJM proposes that the
Eligible Customer have an ongoing obligation to notify PJM of material changes in the
demand characteristics of the Co-Located Load and the supply characteristics of the Co-
Located Generator. PJM explains that the Co-Location Arrangement cannot change
during the term of the Interim NITS without discussion and possible further studies by
PJM.
PJM proposes load shedding and curtailment provisions applicable to Interim
NITS, including that prior to commencement of service, the Eligible Customer must
demonstrate its ability to comply with PJM’s load shedding and curtailment
procedures.1094 PJM proposes to require Eligible Customers taking Interim NITS to work
with PJM and the affected transmission owners to establish necessary control
technologies and/or protection systems. PJM proposes that Eligible Customers will be
assessed certain non-transmission-related rates, including: (1) administrative service
charges, (2) ancillary services charges except for regulation, (3) black start service
charges based on gross demand, and (4) any redispatch costs. PJM proposes a single
Service Agreement specific to Eligible Customers serving Co-Located Load via Interim
NITS or NITS. Indicated TOs propose to apply the NITS rate to Eligible Customers
taking Interim NITS.1095
2.
Response Briefs
Indicated TOs propose several clarifications to PJM’s illustrative Tariff
provisions.1096 First, Indicated TOs propose revisions to section 702.4 to require an
Eligible Customer to satisfy any applicable technical requirements imposed by the
relevant transmission owner. Second, Indicated TOs propose revisions to section 703.2
to clarify that both new and increased Co-Located Loads will be studied pursuant to a
new application for transmission service. Third, Indicated TOs contend that PJM should
provide additional information as to what would constitute a “material change” in the
demand characteristics of a Co-Located Load for purposes of an Eligible Customer’s
notice obligations under section 703.3. Fourth, Indicated TOs recommend that PJM
establish load shedding practice guidelines applicable to Co-Location Arrangements for
purposes of load shedding conducted under section 705.3 of PJM’s illustrative tariff
1094 Id. at 71-75.
1095 Indicated TOs Initial Brief at 5 n.13.
1096 Indicated TOs Response Brief at 13-17, 23.
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provisions. Indicated TOs explain that they are particularly concerned with automatic
load shedding schemes because of the possibility that unintentional activation of these
schemes may result in unwanted shedding of nearby customer loads in addition to the
Co-Located Load. Fifth, Indicated TOs propose revisions to section 705.5 to require that
the necessary control technologies and/or protection systems that must be approved by
PJM are also approved by and developed in accordance with the transmission owners’
interconnection standards, guidelines, and practices. Sixth, Indicated TOs assert that the
reference to the transmission owner’s cost responsibility for redispatch costs in
section 706.2 of PJM’s illustrative tariff provisions is incorrect and request that PJM
remove such reference from the filed Tariff records. Seventh, Indicated TOs propose to
correct a typo to the conditions of Part XI of the Tariff in section 2.0 of PJM’s proposed
Attachment F-3A. Last, Indicated TOs request that PJM add a placeholder section for
listing required control technologies and/or protection systems to section 4.0 of PJM’s
proposed Attachment F-3A.
Vistra argues that PJM’s study process is flawed because it provides too much
discretion to PJM and transmission owners to determine whether studies are required,
which studies to conduct, the timeline for doing so, and how to prioritize different
requests.1097 Also, Vistra contends that PJM’s proposal is unclear on what it means to
ensure that non-firm transmission service can be provided reliably, and that it is critical
customers seeking non-firm service not be held to some higher standard. Constellation
similarly argues that PJM’s proposed study procedures lack sufficient detail to prevent
delay and discrimination by transmission owners.1098 Constellation argues that PJM must
spell out the studies it will perform in the tariff, as well as the timetable for completing
the studies.
Market Monitor argues that Interim NITS is not consistent with PJM’s planning
process and poses potentially significant reliability risks due to the complexity introduced
by the necessary control technology and protection systems. Market Monitor states that
these risks mean there is not an unlimited amount of Interim NITS that can be provided,
which raises questions about which customers would be allowed to take Interim NITS if
demand exceeds supply.1099
Several parties oppose any restriction on Co-Located Loads accessing on-site
generation while using Interim NITS and being curtailed, noting that PJM’s initial brief is
not clear on whether such a requirement is being proposed. Parties argue that such a
requirement would be in violation of the December Order and significantly degrade the
1097 Vistra Response Brief at 31, 39.
1098 Constellation Response Brief at 14-15.
1099 Market Monitor Response Brief at 6-7.
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value of Interim NITS.1100 DCC argues that allowing customers to be curtailed despite
bringing their own generation does not align with the Commission’s objective to enable
more flexible and timely service arrangements for Co-Located Load.1101 DCC argues
that PJM’s proposal does not recognize an intermediate operational state in which Co-
Located Generators can operate in parallel with the grid on a limited, non-exporting or
non-market-participating basis while completing interconnection requirements.
Enchanted Rock argues that because this limitation during curtailment conditions is a
practice that affects rates and service significantly, that is reasonably susceptible of
specification, and that is not so generally understood in any contractual arrangement as to
render recitation superfluous, it must be included within the Tariff in order to be
effectuated.1102
AEU/SEIA request that the Commission direct PJM to revise its Interim NITS
proposal to explicitly allow Eligible Customers to use on-site generation to serve load
continuously, provided that the generator is new and that the Co-Located Load does not
simultaneously withdraw energy from the transmission system.1103 Joint Co-Location
Developers assert that, as long as Co-Located Generators are not capacity resources, they
should be free to serve Co-Located Loads during curtailment conditions.1104
Constellation asks the Commission to direct PJM to include a transitional
mechanism for pending large load NITS applicants so that this new service is not
unnecessarily limited to new applicants.1105
1100 See AEU/SEIA Response Brief at 20 (citing December Order, 193 FERC
¶ 61,217 at P 201); Enchanted Rock Response Brief at 7; Joint Co-Location Developers
Response Brief at 18.
1101 DCC Response Brief at 3-4.
1102 Enchanted Rock Response Brief at 7.
1103 AEU/SEIA Response Brief at 21.
1104 Joint Co-Location Developers Response Brief at 19.
1105 Constellation Response Brief at 14.
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3.
Reply Briefs
In consideration of parties’ comments, particularly those of Indicated TOs, PJM
proposes certain revisions to the illustrative tariff provisions for Interim NITS and NITS,
and the Service Agreement for Interim NITS.1106
PJM articulates several reasons why Interim NITS customers should not be
allowed to access the Co-Located Generator when PJM curtails the Co-Located Load.1107
First, PJM states that Interim NITS will be curtailed when the system cannot support it in
real time, whether with sufficient generation or transmission capacity. Second, PJM
argues that Interim NITS must be designed to allow PJM to maintain system reliability,
both from a transmission and capacity perspective, and that allowing an interruptible
customer to preclude PJM from accessing a generation resource during times of system
stress would be contrary to that objective. PJM maintains that, if the Co-Located
Generator is a capacity resource, then PJM has the first call on such resource’s energy to
meet the region’s needs. Third, PJM explains that Interim NITS is a type of NITS and is
served by the pool of resources and not any one dedicated resource. PJM asserts that
allowing an Interim NITS customer to take energy from the Co-Located Generator during
curtailment would effectively transform this service into something akin to FCD or
NFCD transmission service, where the Co-Located Generator dedicates a MW level of
output to the Co-Located Load. Lastly, PJM argues that Interim NITS is predicated on
the Co-Located Load’s willingness to curtail, and allowing an Interim NITS customer
access to the Co-Located Generator during times of system stress is contrary to this
foundational element of the December Order.1108 PJM also asserts that providing a right
to an Interim NITS customer to access the Co-Located Generator during times of system
stress is illogical when such right is not available to full Network Customers. NOVEC
urges the Commission to accept PJM’s proposal and argues that if prospective customers
find that Interim NITS is not desirable, they have the flexibility to pursue a combination
of FCD and NFCD transmission services.1109
PJM defends its process for Interim NITS to determine whether “additional studies
are needed” by arguing that the NITS study could provide sufficient information for PJM
to determine if Interim NITS can be reliably provided.1110 PJM maintains that it should
1106 PJM Reply Brief at 60-64.
1107 Id. at 16-20.
1108 Id. at 21 (citing December Order, 193 FERC ¶ 61,217 at P 201).
1109 NOVEC Reply Brief at 16.
1110 PJM Reply Brief at 27.
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not be required to provide as much detail for Interim NITS determinations as for FCD
and NFCD transmission services given that Interim NITS is derivative of the customer’s
existing NITS request and associated studies, although the illustrative tariff authorizes
PJM to perform additional studies if needed.1111
Joint Co-Location Developers argues that the Interim NITS proposal undermines
PJM’s reliability rationale for NFCD transmission service outage restrictions because
PJM has proposed to make it broadly available during normal operating conditions, and
PJM has not claimed that doing so will compromise reliability.1112
Constellation avers that PJM’s omission of any detail with respect to this study
process does not comply with the Commission’s directive to provide additional record
evidence to set the appropriate replacement rates, terms, and conditions for Interim NITS
and urges the Commission to direct PJM to file its study process for Interim NITS within
30 days.1113
4.
Answers
Constellation asks the Commission to direct PJM to revise its illustrative tariff to
clarify that large loads with pending NITS applications shall be studied for Interim NITS
at the request of the load without having to submit a separate application.1114
Enchanted Rock reiterates that PJM’s implementation of Interim NITS is
fundamentally flawed because, while an Eligible Customer takes Interim NITS on behalf
of a Co-Located Load, PJM proposes not to allow that Co-Located Load to receive any
capacity or energy from a Co-Located Generator and instead to treat the Co-Located
Generator as a capacity resource.1115 Enchanted Rock disagrees with PJM that this
limitation accords with the principles of the December Order that the new transmission
services are designed to serve loads that are willing and able to control their withdrawals
from the transmission system and to allow PJM to maintain system reliability. Enchanted
Rock avers to the contrary that allowing a Co-Located Load to take capacity and energy
from a Co-Located Generator enables that Co-Located Load to control its withdrawals
1111 Id. at 31-32.
1112 Joint Co-Location Developers Reply Brief at 9-10.
1113 Constellation Reply Brief at 12.
1114 Constellation May 11 Answer at 14.
1115 Enchanted Rock May 7 Answer at 2-3.
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from the transmission system.1116 Enchanted Rock also contends that PJM is mistaken in
its argument that the PJM region has first call on the output of a Co-Located Generator
before the Co-Located Generator has completed PJM’s interconnection study process and
received a GIA, because until that point, the Co-Located Generator is not eligible to be a
capacity resource. Enchanted Rock argues that forcing the Co-Located Generator to be
dispatched under emergency conditions during this period would be unduly
discriminatory by imposing on these Co-Located Generators obligations that are not
imposed on similarly situated generators.1117 Finally, Enchanted Rock argues that it
would be illogical that an Interim NITS customer not be allowed to rely on its non-firm
Co-Located Generator in order to remain online during emergencies when it is taking
non-firm transmission service. Enchanted Rock further contends that it would be unjust
and unreasonable for a Co-Located Load to bear the full capital and development risk of
bringing a Co-Located Generator online only for PJM to dispatch the Co-Located
Generator to serve firm Network Customers during emergencies—precisely when PJM is
serving firm Network Customers but curtailing Interim NITS customers.1118
5.
Determination
We find PJM’s proposal for Interim NITS to be just and reasonable, subject to the
clarifications directed below, and direct PJM to file, as the replacement rate, rates, terms,
and conditions for Interim NITS as detailed below on compliance. We generally agree
with PJM that the non-rate terms and conditions for Interim NITS reflect those applied to
NITS, with necessary modifications to reflect the interim and non-firm nature of this new
transmission service. We find that PJM’s proposals that an Eligible Customer taking
Interim NITS will receive non-firm transmission service for the delivery of energy to
Co-Located Load and convert automatically to a Network Customer when Network
Upgrades are complete to be consistent with the directives in the December Order.1119
We direct PJM to file, within 60 days of the date of issuance of this order, a compliance
filing revising its Tariff consistent with these findings. Consistent with our determination
above to extend the three new transmission services set forth in the December Order to
Eligible Customers taking service on behalf of load with BTMG that are willing and able
1116 Id. at 5-6.
1117 Id. at 6-8.
1118 Id. at 8-9.
1119 December Order, 193 FERC ¶ 61,217 at P 200 (stating that Interim NITS “can
be interrupted until the Network Upgrades necessary to provide NITS are complete and
the Co-Located Load can be designated as Network Load”).
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to limit their energy withdrawals from the transmission system under certain conditions,
we further direct PJM to reflect this change in its compliance filing.
We find that Indicated TOs’ proposal to apply the NITS rate to Eligible
Customers taking Interim NITS on behalf of Co-Located Load is just and reasonable and
consistent with the December Order.1120 Therefore, and consistent with our
determination above to extend the three new transmission services set forth in the
December Order to Eligible Customers taking service on behalf of load with BTMG that
are willing and able to limit their energy withdrawals from the transmission system under
certain conditions, we direct the PJM transmission owners to submit, within 60 days of
the date of issuance of this order, a compliance filing to apply the NITS rate to Eligible
Customers taking transmission service on behalf of Eligible Loads.
Consistent with our findings in Part VI.A.4, we also find just and reasonable
PJM’s proposal to charge Eligible Customers taking Interim NITS on behalf of
Co-Located Load certain administrative and ancillary services charges, and to assess
charges based on gross demand for regulation and black start service. We find PJM’s
proposal consistent with the December Order.1121 Moreover, we find it is just and
reasonable to charge Interim NITS customers redispatch costs to cover congestion-related
costs, given that Interim NITS will be pool-scheduled and can be served by generators
redispatched to mitigate congested transmission paths. Accordingly, and consistent with
our determination above to extend the three new transmission services set forth in the
December Order to Eligible Customers taking service on behalf of load with BTMG that
are willing and able to limit their energy withdrawals from the transmission system under
certain conditions, we direct PJM to submit, within 60 days of the date of issuance of this
order, a compliance filing to incorporate in the Tariff revisions to assess to Eligible
Customers taking transmission service on behalf of Eligible Loads: (1) administrative
service charges, (2) ancillary service charges, (3) black start service charges,
(4) regulation charges, and (5) any redispatch costs.
We note that only curtailment procedures were explicitly included in the paper
hearing, and Tariff provisions governing other terms and conditions for Interim NITS,
including the study process, should be filed on compliance.1122 That said, we find it is
just and reasonable to allow PJM greater discretion as to how it studies Interim NITS
1120 Id. (stating that Interim NITS customers would pay the NITS rate).
1121 Id. (stating that Interim NITS customers would pay ancillary service charges
and charges for black start service).
1122 Id. P 219.
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requests, in comparison to requests for FCD transmission service.1123 We disagree with
Vistra that PJM’s proposed study process provides too much discretion to PJM and
transmission owners. We reiterate that Interim NITS is only “available to the extent PJM
determines that it can provide some level of interim service reliably,”1124 and therefore
we find that it is just and reasonable to limit this service to situations in which PJM, in
consultation with transmission owners, grants such service based on the results of
appropriate studies. The Commission generally defers to transmission providers’
discretion regarding how to maintain a reliable transmission system.1125
We further find that Interim NITS is distinguishable from FCD and NFCD
transmission services, for which we direct PJM to provide additional detail in the Tariff
regarding the study process as discussed Part VI.A.3, because Interim NITS is a
temporary service akin to provisional interconnection service in that both services are
intended to allow a customer to temporarily use an amount of a service that can be
provided reliably until such customer may begin taking the full requested service. In
both cases, the Commission requires the transmission provider to determine if the
requested service could be provided reliably.1126 Similar to provisional interconnection
1123 See PJM, Intra-PJM Tariffs, OATT, § VIII.L 439 Provisional Interconnection
Service (0.0.0) (providing that PJM “may grant such service at its discretion based upon
an evaluation that will consider the results of available studies”); Order No. 890,
118 FERC ¶ 61,119 at P 957 (in the case that a request for long-term Firm PTPS cannot
be satisfied out of existing capacity, the transmission provider is required to identify
options for providing service but has discretion to study and offer a mix of planning
redispatch and conditional firm options for a single service request).
1124 December Order, 193 FERC ¶ 61,217 at P 200.
1125 RWE Clean Energy, LLC, 194 FERC ¶ 61,212 at P 42 (“The Commission
generally allows transmission providers to exercise their engineering judgment when
conducting interconnection studies, including deferring to transmission providers’
discretion regarding how to maintain a reliable transmission system.”).
1126 December Order, 193 FERC ¶ 61,217 at P 200 (“Moreover, this new service
would be optional for an Eligible Customer seeking NITS on behalf of a Co-Located
Load and would only be available to the extent PJM determines that it can provide some
level of interim service reliably.”); Order No. 845, 163 FERC ¶ 61,043 at P 440 (“In
response to CAISO, we clarify that ‘a certain amount of capacity already studied’ refers
to situations where, for example, available studies or additional studies as necessary
indicate that there is a certain amount of interconnection service available without the
need for additional network upgrades and the transmission provider can reliably
accommodate the interconnection service.”).
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service, we find that it is just and reasonable, in the case of this new interim transmission
service, to afford PJM greater discretion as to how it decides to study Interim NITS
requests, in comparison to requests for FCD and NFCD transmission services, and thus
we decline to direct PJM to provide more detail in its Tariff on the process for studying
requests for Interim NITS.1127 We also disagree with Constellation that it is necessary for
PJM to study requests for Interim NITS as part of the NITS process, rather than pursuant
to a separate application. On compliance, we direct PJM to file Tariff provisions to
effectuate a study process for Interim NITS, as discussed herein. Consistent with our
determination above to extend the three new transmission services set forth in the
December Order to Eligible Customers taking service on behalf of load with BTMG that
are willing and able to limit their energy withdrawals from the transmission system under
certain conditions, we further direct PJM to reflect this change in its compliance filing.
Regarding requests from parties that Interim NITS customers be allowed access to
the Co-Located Generator during curtailments, we find that it is just and reasonable to
prohibit the Eligible Customer taking Interim NITS on behalf of Co-Located Load from
drawing energy from the Co-Located Generator when the Eligible Customer is curtailed,
if the Co-Located Generator is a capacity resource. As PJM explains, capacity resources
have an obligation to serve Network Load, and this obligation is particularly important
during emergency or pre-emergency conditions when PJM needs all resources at its
disposal to maintain reliability.1128 However, in response to parties, we clarify that such a
restriction would not be applicable to an Eligible Customer taking Interim NITS on
behalf of Co-Located Load if the associated Co-Located Generator does not yet have any
interconnection service or has only provisional interconnection service. Further, this
restriction applicable to an Eligible Customer taking Interim NITS on behalf of
Co-Located Load would not be applicable if the associated Co-Located Generator is
seeking capacity resource status, but not yet obtained such status, because that Co-
Located Generator would not yet have any obligation to provide capacity under the
1127 See PJM, Intra-PJM Tariffs, OATT, § VIII.L 439 Provisional Interconnection
Service (0.0.0) (providing that PJM “may grant such service at its discretion based upon
an evaluation that will consider the results of available studies”); RWE Clean Energy v.
PJM Interconnection, L.L.C., 194 FERC ¶ 61,212 at P 42 (“The Commission generally
allows transmission providers to exercise their engineering judgment when conducting
interconnection studies, including deferring to transmission providers’ discretion
regarding how to maintain a reliable transmission system.”); Order No. 890, 118 FERC
¶ 61,119 at P 957 (in the case that a request for long-term Firm PTPS cannot be satisfied
out of existing capacity, the transmission provider is required to identify options for
providing service but has discretion to study and offer a mix of planning redispatch and
conditional firm options for a single service request).
1128 PJM Reply Brief at 18.
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Tariff. We therefore direct PJM to submit, within 60 days, a compliance filing to
incorporate the rates, terms, and conditions for Interim NITS that includes clarifications
to specify that (1) an Eligible Customer taking Interim NITS on behalf of Co-Located
Load may be served by a Co-Located Generator that is seeking capacity resource status
during a curtailment condition to the extent that Co-Located Generator has yet to obtain
interconnection service or has only provisional interconnection service, and (2) an
Eligible Customer on behalf of Co-Located Load cannot expect to be served by a
Co-Located Generator that is a capacity resource during a curtailment condition.
Consistent with our determination above to extend the three new transmission services set
forth in the December Order to Eligible Customers taking service on behalf of load with
BTMG that are willing and able to limit their energy withdrawals from the transmission
system under certain conditions, we further direct PJM to reflect this change in its
compliance filing.
We disagree with Market Monitor’s arguments that Interim NITS is not consistent
with PJM’s transmission planning process and poses potentially significant reliability
risks. As discussed above, we adopt PJM’s proposal for application and studies for
Interim NITS, which limits the amount of Interim NITS available to an Eligible Customer
seeking to take Interim NITS on behalf of a Co-Located Load to the amount that PJM, in
consultation with the affected transmission owner(s), determines can be provided reliably
to that customer while maintaining the reliability of the transmission system.
We decline to adopt Constellation’s proposal to include a transitional mechanism
for pending NITS applications. PJM’s proposal does not prohibit any NITS applicant
from also applying for Interim NITS, provided the applicant pays the additional study fee
and is subject to the technical requirements for Interim NITS. Therefore, we find such a
transitional mechanism not to be necessary.
I.
Annual Report on New Transmission Services
Having addressed the rates, terms, and conditions for each of the new transmission
services (subject to additional compliance), we now turn to our ongoing oversight of the
implementation and use of these new transmission services. As discussed in the
December Order and reiterated today, we expect that these new transmission services will
facilitate more efficient use of the existing transmission system and limit unnecessary
transmission system buildout. However, we also recognize that the new transmission
services represent new developments in the provision of transmission service in the PJM
region. These developments require effective oversight and monitoring to help ensure
the transmission services are working as intended and do not create reliability issues or
raise novel questions regarding application of cost causation principles. Transparent
information on the use of the new transmission services is also important for prospective
Eligible Customers on behalf of Eligible Loads to assess which transmission service to
request and where on the transmission system to make such requests. We conclude that
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the Commission, states, PJM market participants, and stakeholders would benefit from
additional transparency about these new transmission services, and we therefore direct
PJM to prepare an annual report, posted to its website, containing information about the
demand for and use of these new transmission services. Accordingly, we direct PJM to
submit, as part of its compliance filing within 60 days of the date of issuance of this
order, proposed Tariff provisions requiring such a report and a proposal for the
information to be included in that annual report.
As PJM considers the scope and content of that annual report, we propose that the
following information could aid the Commission, states, PJM market participants, and
stakeholders in assessing the impact of the new transmission services:
1) Data regarding each transmission service request seeking each of the new services
by transmission zone, including:1129
a. Peak gross load of the Eligible Load
b. Category of the Eligible Load
c. Type and MW of transmission service being requested
d. Type and MW of transmission service granted
e. Dates of reservation and usage (for non-firm services)
2) Total MW of each type of transmission service taken each year by transmission
zone, including:
a. Total amount of FCD transmission service taken relative to peak gross load
at the meter receiving FCD transmission service
b. Total amount of NFCD transmission service taken relative to peak gross
load at the meter receiving NFCD transmission service
c. Total amount of Interim NITS relative to peak gross load at the meter
receiving Interim NITS
1129 Some of the information we identify here is likely to be available on PJM’s
Open Access Same-Time Information System. PJM may account for that availability in
designing its proposal and addressing the potential burden associated with preparing the
annual report.
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3) Information about transmission revenues paid by Eligible Customers on behalf of
Eligible Loads for each transmission service by transmission zone, including:
a. Total revenues paid by Eligible Customers taking each service per
transmission zone
b. Percentage of each transmission owner’s total revenue requirement paid via
revenues from each new service
c. MWs of each new transmission service taken by Eligible Customers
serving Eligible Loads as a percentage of peak gross load for each
transmission owner
4) Frequency and magnitude of curtailment from the reservation of NFCD
transmission service and Interim NITS by transmission zone
5) Frequency and magnitude of denials of NFCD transmission service reservation
requests by transmission zone
J.
Proposed Effective Date
1.
Initial Briefs
PJM proposes an effective date of June 1, 2029, for the three new transmission
services. PJM advances two rationales for its proposal: (1) integration of the new
transmission services into PJM’s capacity market so that PJM can procure capacity for
Eligible Customers taking FCD transmission service on behalf of Co-Located Loads
cannot occur until 2029; and (2) necessary modifications to the PJM core markets and
operations software will take time.1130 PJM also argues that this effective date will not be
a limiting factor because Eligible Customers taking the new transmission services on
behalf of Co-Located Load and their Co-Located Generators likely will not be online
before June 1, 2029, given interconnection requirements, supply chain issues,
procurement challenges, and capacity auction timelines.1131
As to the capacity market, PJM argues that demand associated with Co-Located
Loads will significantly affect PJM’s load forecast and thus have significant implications
for the capacity market. PJM explains, however, that while the BRA for the 2028/2029
delivery year (beginning June 1, 2028) has not taken place, the load forecast and eligible
1130 PJM states this includes Real-Time Security Constrained Economic Dispatch,
Day-Ahead Market, and dispatch software. PJM Initial Brief, Horger Aff. ¶ 16.
1131 PJM Initial Brief at 79-82.
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capacity have already been determined, and it is no longer possible to implement changes
before the BRA is conducted. Therefore, according to PJM, the 2029/2030 delivery year
(beginning June 1, 2029) is the first BRA in which the effects of the new transmission
services can be considered and PJM can procure capacity for Eligible Customers taking
FCD transmission service on behalf of Co-Located Loads.1132
As to the technical implementation issues, PJM argues that implementing the
proposed curtailment priorities applicable to Interim NITS and NFCD transmission
service will require modifying PJM’s economic dispatch software and dispatch tools in
order to incorporate system automation that will avoid undesirable outcomes. PJM
further contends that work cannot begin until the rates, terms, and conditions of these
new transmission services are finalized, and that changes to these systems will be
dependent on vendor availability, the speed with which systems changes can be designed,
and interaction with other software changes.1133
2.
Response Briefs
Some parties support PJM’s proposed effective date. Market Monitor argues that
all load in PJM currently is served by NITS, and that PJM has demonstrated that it must
significantly modify core systems to address curtailing load where an Eligible Customer
takes more than one kind of transmission service on behalf of Co-Located Load.1134
NOVEC contends that entities other than PJM must also prepare for these new
transmission services by making operational adjustments and regulatory and billing
changes to ensure costs reflect cost causation principles.1135
Constellation, DCC, Joint Co-Location Developers, and Vistra oppose PJM’s
proposed effective date, and make a variety of arguments against PJM’s rationales for it
or in favor of alternative proposals for faster implementation.1136 As to arguments PJM
makes about the capacity market, Vistra contends that resource adequacy considerations
1132 Id. at 79-80 (citing Horger Aff. ¶¶ 11-13). PJM also argues that inclusion of
these services in Incremental Auctions would be inappropriate because they are
conducted to procure replacement resources and generally result in small adjustments.
Id. at 80-81 (citing Horger Aff. ¶ 15).
1133 Id. at 81; Horger Aff. ¶ 16.
1134 Market Monitor Response Brief at 8.
1135 NOVEC Response Brief at 17-18.
1136 Constellation Response Brief at 7; Joint Co-Location Developers Response
Brief at 28; Vistra Response Brief at 8-9.
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are beyond the scope of a transmission provider’s obligation to serve and that the
Commission requires transmission providers to make transmission service decisions
based on available transfer capacity.1137 Constellation, Joint Co-Location Developers,
and Vistra each criticize PJM on the basis that Interim NITS and NFCD transmission
service are not capacity-backed services such that PJM need not procure capacity on their
behalf. Joint Co-Location Developers contend that PJM does not explain why a customer
taking NITS would be reflected in capacity market demand forecast but a customer
taking FCD transmission service would not. Similarly, Vistra argues that large loads
were already included in the load forecasts for the 2027/2028 and 2028/2029 BRAs and
that some of the new large loads in the forecasts may take the new transmission services.
Joint Co-Location Developers argue that, if PJM’s concerns stem from a planning need
associated with existing capacity resources de-registering, then PJM should propose a
delayed implementation limited to particular use cases.
As to PJM’s technical implementation issues, Vistra and Joint Co-Location
Developers criticize PJM for failing to offer any specificity.1138 Vistra alleges that
previous experience, such as in PJM’s implementation of Order No. 841, suggests that
PJM should be able to implement software changes much more quickly. Vistra further
charges that the Commission should demand more support to justify delaying
implementation than PJM has provided here, as it did in prior cases such as MISO’s
implementation of Order No. 2222. Similarly, Joint Co-Location Developers argue that
curtailable products can be implemented on much faster timelines, pointing in particular
to SPP’s CHILLS and PJM’s planned Connect and Manage proposal. Vistra also argues
that PJM’s systems should already be capable of curtailing because its Tariff provides
Non-Firm PTPS. Joint Co-Location Developers assert that PJM does not explain why
additional software must be developed for FCD transmission service, which is similar to
NITS. Lastly, Joint Co-Location Developers state that their attached testimony notes that
leveraging price responsive demand modifications to security constrained economic
dispatch could allow PJM to implement faster any security constrained economic
dispatch changes for non-firm loads.
Several parties disagree with PJM that Co-Located Generators will not be online
before June 1, 2029.1139 Joint Co-Location Developers argue that there are likely to be
projects already in development that may opt to use these new transmission services.
1137 Vistra Response Brief at 7 (citing, e.g., Order No. 890, 118 FERC ¶ 61,119
at P 2).
1138 Id. at 10-12; Joint Co-Location Developers Response Brief at 29-30.
1139 Joint Co-Location Developers Response Brief at 30; Vistra Response Brief
at 9-10; Constellation Response Brief at 8.
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Vistra adds that some generators are not capacity resources, are already in the process of
de-listing, or could enter into a bilateral agreement with another generator to cover its
capacity obligation. Constellation points out that load co-locating with existing
generation could take Interim NITS.
Several parties request that the Commission make all or certain of the new
transmission services available earlier.1140 DCC argues that PJM has not demonstrated
that all elements of the proposed services must be deferred for several years, nor has it
identified opportunities for phased or interim implementation. DCC argues that the
Commission should consider whether certain components of the framework can be
implemented on an accelerated or staged basis to provide near-term benefits while
longer-term systems are developed. Joint Co-Location Developers ask the Commission
to require that FCD transmission service be available within six months of an order
accepting PJM’s filing and NFCD transmission service and Interim NITS be available at
the earliest date technically feasible.
Constellation urges the Commission to establish a separate track to approve rates
and terms for Interim NITS and make them effective no later than October 1, 2026.1141
Constellation argues that PJM offers no legitimate reason for proposing a
three-and-a-half-year delay and argues that it should not be difficult to adopt as soon as
possible. Constellation maintains that, if the Commission separates and implements
Interim NITS on a fast track, potential logistical challenges will not risk delay.
Constellation suggests that the Commission review FCD and NFCD transmission
services on a separate track and urges the Commission not to delay them until June 2029.
Vistra proposes that, even if the Commission accepts PJM’s software-based justifications,
the Commission should require PJM to immediately accommodate Co-Location
Arrangements for which software changes are irrelevant, such as where the Eligible
Customer does not reserve any amount of NFCD transmission service on behalf of
Co-Located Load.1142 Vistra asserts that, whereas PJM contends that it needs software
upgrades to apply appropriate curtailment priorities, a customer that reserves zero MWs
of transmission service has no service to curtail. Vistra contends that it is not just and
reasonable to prevent service on the basis of a software upgrade that is, at best, nominally
relevant to that service. Vistra maintains that delaying service to customers that pull no
energy from the grid is inconsistent with the December Order’s goal to remedy PJM’s
1140 DCC Response Brief at 9; Joint Co-Location Developers Response Brief
at 27-28.
1141 Constellation Response Brief at 6-9.
1142 Vistra Response Brief at 12-14.
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failure to provide transmission service reflecting a Co-Located Load’s willingness and
ability to limit withdrawals.
3.
Reply Briefs
PJM asserts that NFCD transmission service is not easy to implement from an
operations perspective, particularly at scale, and in addition to exposing the system to
higher reliability risks, will also require PJM to modify key systems.1143 PJM explains
that changes to Energy Management Systems are needed to ensure that PJM’s systems
are able to properly account for the provision of energy to Co-Located Load in the
day-ahead and real-time market. PJM contends that its Energy Management System does
not currently distinguish between different types of load, and that feature must be added.
PJM argues that it must determine how to properly model and reflect NFCD transmission
service and Co-Located Load in the different systems given that NFCD transmission
service requires the transmission system to operate on reduced contingency margins.
PJM maintains that significant modifications to the market clearing engines used in both
the day-ahead and real-time markets will be required because PJM must be able to curtail
NFCD transmission service with little to no advanced notification to respond to
significant SOL/IROL exceedances.
Separate from systems updates, PJM argues that it will still be challenging from an
operational perspective to provide NFCD transmission service.1144 PJM explains that its
systems must not only accurately reflect how this new service affects the transmission
system, but PJM must also account for this service in the Operating Plans and then
implement those plans manually when needed in real time. PJM argues that, because the
transmission system is not designed to accommodate NFCD transmission service, it will
likely trigger many more SOL/IROL exceedances for PJM to mitigate in the Operating
Plan and require operations at or near operating limits, rendering the system less flexible
to respond to unexpected changes during operations. PJM contends that it will be
imperative that loads taking NFCD transmission service can be removed from the system
as soon as possible when needed.
PJM claims it will need additional tariff language and manuals to operationalize
requests for service.1145 PJM asserts that it reserves the right to further supplement the
record in this proceeding if and when it develops such tariff language.
1143 PJM Reply Brief at 13-14.
1144 Id. at 14-15.
1145 Id. at 16.
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PJM clarifies that June 1, 2029, is the effective date for providing the new
transmission services and that, once the Commission establishes the terms and conditions
for these new services, PJM is willing to start accepting service requests and processing
service applications.1146 PJM states its intent to get a headstart on establishing the details
as to how it would implement the illustrative tariff by soon commencing discussions with
stakeholders regarding implementation details, to be stated in PJM manuals, for these
new transmission services. PJM contends that, with these clarifications, there is no need
to establish a transition mechanism for pending NITS applications, as Constellation
suggests. In response to concerns that PJM failed to provide a specific timeline for
software development, PJM contends that it cannot determine a more exact development
schedule at this time because these are new transmission services.
Some commenters continue to support PJM’s proposed effective date.1147 Other
commenters continue to criticize PJM’s proposed effective date. Joint Co-Location
Developers argue that it is unclear why PJM must delay implementation until 2029, given
that ERCOT has committed to implementation of controllable load as soon as 2027.1148
Joint Co-Location Developers further argue that PJM has provided no reason why its
system uniquely requires a longer implementation process compared to other RTOs, and
that PJM is well placed to implement changes to its security constrained economic
dispatch given the existing capability of its nodal Price Responsive Demand
implementation.
Constellation argues that PJM’s proposed effective date would impose a three- to
five-year moratorium on Co-Location Arrangements and undermines the December
Order by allowing rates found to be unjust and unreasonable to remain in place for
years.1149 Constellation asserts that PJM has devoted significant resources to such
changes and has the tools to implement new rules quickly. Constellation urges the
Commission to promptly approve the rates and terms for Interim NITS, including the
study process, by no later than October 1, 2026.
1146 Id. at 55-57.
1147 NOVEC Reply Brief at 27; Earthjustice Reply Brief at 19.
1148 Joint Co-Location Developers Reply Brief, Supp. Aff. of Andrew Levitt and
Aniruddh Mohan at 10 (citing ERCOT Large Load Interconnection Batch Study
Workshop #7 at 25 (April 9, 2026), ERCOT-Large-Load-Batch-Study-Workshop7-
20260409_v03.pptx).
1149 Constellation Reply Brief at 3-5.
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4.
Answer
Constellation opposes PJM’s requested effective date and points out that PJM
seeks to begin Connect and Manage July 1, 2027, to allow the interconnection of
non-capacity-backed loads that are potentially interruptible during capacity shortages,
unless the load brings its own generation.1150 Constellation contends that it is not
credible that PJM will take more than three years to implement Interim NITS, but less
than one year to commence Connect and Manage.1151 Constellation asks the Commission
to make Interim NITS effective no later than October 1, 2026, so that service can begin
no later than June 1, 2027.
5.
Determination
We find that PJM has not provided sufficient information for the Commission to
find that its proposed June 1, 2029, effective date is just and reasonable. We are
concerned that the proposed June 1, 2029, effective date unduly delays the availability of
the new transmission services, particularly those where PJM does not procure generation
capacity for Eligible Customers taking the transmission service on behalf of Eligible
Load, i.e., Interim NITS and NFCD transmission service. As discussed above, while
PJM will procure generation capacity in forward capacity auctions to serve Eligible
Customers taking FCD transmission service based on the contract demand level, PJM
will not consider Interim NITS or NFCD transmission service in its resource adequacy
planning. Further, we agree with Vistra and Joint Co-Location Developers that PJM’s
proposal lacks specificity. In particular, we find that the implementation details for the
software updates necessary for PJM’s economic dispatch software and dispatch tools lack
specificity. Though PJM states that it cannot determine “a more exact development
schedule” for software development,1152 the Commission generally requires more support
for the timeliness of a proposed effective date.1153 We believe that the instant order
provides PJM further clarity. We note that June 1, 2029, is approximately three years
from now, and the issues raised by this proceeding, including those pertaining to
Co-Located Load, are urgent in nature and, therefore, merit serious consideration of an
earlier effective date. Therefore, we direct PJM to reconsider its proposed effective date
of June 1, 2029. Moreover, we direct PJM to make a compliance filing, due within
60 days of the date of issuance of this order, in which PJM must explain whether it can
1150 Constellation May 11 Answer at 2.
1151 Id. at 3.
1152 PJM Reply Brief at 57.
1153 See, e.g., Midcontinent Indep. Sys. Operator, Inc., 190 FERC ¶ 61,031,
at P 163 & n.302 (2025).
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make the new transmission services available on different effective dates. In the
compliance filing, PJM should specifically discuss whether Interim NITS and NFCD
transmission service can be made effective at an earlier date for Eligible Customers
taking transmission service on behalf of Eligible Loads.
K.
Additional Arguments
1.
Behind the Meter Generation
a.
Reply Briefs
Industrials/Amtrak argue that the Commission should take the following actions:
(1) set a realistic retail BTMG threshold to focus new Co-Located Load rules on
“gridbusting” growth above 200-300 MW, not on existing industrial customers (e.g.,
consumer goods manufacturers, steel mills, chemical manufacturers, paper mills, and
pharmaceutical factories); (2) qualify all QFs for retail BTMG treatment without a date
limit, consistent with PURPA regulations; (3) set clear grandfathering rules to enable
existing, established users to avoid intensive PJM study queues, study deposits, and
processes for operations that continue to function properly.1154
PJM argues that certain parties raise issues beyond the scope of this proceeding.
PJM contends that Industrials/Amtrak improperly ask the Commission to examine
BTMG.1155
b.
Determination
Industrials/Amtrak raise issues with respect to PJM’s retail BTMG netting rules
that we address in PJM’s second compliance filing above.1156
2.
Reliability Backstop Auction
a.
Reply Briefs
Maryland OPC asserts that PJM’s proposed terms and conditions do not explain
how existing capacity resources that shift to Co-Location Arrangements with new data
centers would be treated relative to the PJM’s proposed reliability backstop procurement
(RBP). For example, Maryland OPC states that it is unclear whether capacity from
existing generators that remove themselves from the capacity market and enter
1154 Industrials/Amtrak Reply Brief at 15.
1155 PJM Reply Brief at 58-59.
1156 See supra Part V.A.
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Co-Location Arrangements with new data center load would need to be replaced with
new capacity through the RBP or in the regular BRA, and whether new data center load
that co-locates with an existing generator will be included in the cost allocation of the
RBP.1157 Maryland OPC states that if the capacity of existing generation that shifts to
serve new co-located data center load is added to the BRA, ratepayers would be saddled
with enormous costs that should be assigned to the Co-Located Load, in contravention of
the White House and PJM Governors’ Statement of Principles and the White House’s
Ratepayer Protection Pledge. Maryland OPC requests that the Commission at minimum
require PJM demonstrate how its proposal meets ratepayer protection standards set forth
in the Statement of Principles and Ratepayer Protection Pledge and defer action on the
proposed revisions until after PJM proposes tariff revisions to implement its RBP.
Maryland OPC also raises concern that PJM’s initial brief suggests PJM does not intend
for existing load to be eligible for the new transmission services.1158
b.
Determination
As an initial matter, we clarify that, contrary to Maryland OPC’s concern, PJM’s
paper hearing proposal does not restrict Eligible Customers on behalf of existing
Co-Located Load from taking the new transmission services. We decline Maryland
OPC’s request to defer action. Maryland OPC expresses concern that PJM’s paper
hearing proposal does not address how existing capacity resources that seek to serve
Co-Located Loads would be treated relative to a potential future filing by PJM to address
its reliability backstop mechanism. We find that Maryland OPC’s concerns about PJM’s
capacity market are beyond the scope of this paper hearing, which addresses the rates,
terms, and conditions for new transmission services for Eligible Customers to take on
behalf of Eligible Loads.1159
1157 Maryland OPC Reply Brief at 9-11.
1158 Id. at 8 (noting PJM’s explanation that it is unlikely that new generation will
be operational before its proposed June 1, 2029 effective date).
1159 In recognition of the goal to prevent unfair cost shifts, we also note that as part
of the President’s Ratepayer Protection Pledge, a number of computational loads have
committed to paying for “all new power delivery infrastructure upgrades to service their
data centers.” Proclamation No. 11014, 91 Fed. Reg. 11439 (Mar. 4, 2026).
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3.
Eligible Customer Requirements
a.
Response Briefs
Invenergy requests that the Commission and PJM clarify how the definition of
Eligible Customer applies to Co-Located Generators and Co-Located Loads.1160
Invenergy explains that, where a state retail choice program results in unbundled retail
access, customers may take transmission service as an Eligible Customer, and that
therefore, Invenergy believes that a Co-Located Load could qualify as an Eligible
Customer in a retail choice jurisdiction.1161 Invenergy seeks clarity as to whether, in the
context of a Co-Location Arrangement, a Co-Located Generator qualifies as an Eligible
Customer on behalf of the Co-Located Load, and whether that Co-Located Generator’s
status as an Eligible Customer depends on whether the Co-Location Arrangement is in a
retail choice jurisdiction.
b.
Reply Briefs
NOVEC argues that the Commission should consider a more definitive delineation
of who may be an Eligible Customer as well as the scope of the Eligible Customer’s
obligations. Specifically, NOVEC seeks confirmation that it cannot be required to serve
as an Eligible Customer serving Co-Located Load unless it agrees to do so.1162
NOVEC argues that the Commission cannot require LSEs to modify their retail
rates to accommodate these new services and undertake the administrative burden of
being an Eligible Customer for a Co-Located Load unless the LSE chooses to do so.
Further, NOVEC contends that it should not be subject to potential liability for the
transmission costs, much less penalties for non-compliance with the Tariff’s
requirements, if a Co-Located Load for which NOVEC is serving as Eligible Customer
fails to meet or comply with all applicable provisions.1163
Indicated TOs express support for PJM’s decision to retain the existing definition
of Eligible Customer. In response to Invenergy’s request for clarification as to how that
definition applies to Co-Located Generators and Co-Located Loads, Indicated TOs argue
that it will depend on an individual Co-Located Generator’s specific factual
circumstances. Indicated TOs contend that a Co-Located Generator is unlikely to meet
1160 Invenergy Comments at 6.
1161 Id. (citing Order No. 888, FERC Stats. & Regs. ¶ 31,036 at 31,689).
1162 NOVEC Reply Brief at 5.
1163 Id. at 7.
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the definition of an Eligible Customer for purposes of obtaining FCD or NFCD
transmission service because it is more likely to sell its output directly to the on-site load
at retail. Indicated TOs further contend that the ability of Co-Located Load or an entity
representing the load to qualify as an Eligible Customer would necessarily depend on
whether its host jurisdiction has adopted retail choice.1164
c.
Determination
With respect to Invenergy’s request, we note the Tariff defines an Eligible
Customer as (1) any electric utility or any person generating electric energy for sale for
resale, but with respect to transmission service that the Commission is prohibited from
ordering by section 212(h) of the FPA, such entity is eligible only if the service is
provided pursuant to a state requirement that the Transmission Provider or Transmission
Owner offer the unbundled transmission service, or pursuant to a voluntary offer of such
service by a Transmission Owner or (2) any retail customer taking unbundled
transmission service pursuant to a state requirement that the Transmission Provider or a
Transmission Owner offer the transmission service, or pursuant to a voluntary offer of
such service by a Transmission Owner.1165 A Co-Located Generator may serve as an
Eligible Customer if it meets the requirements of this definition of Eligible Customer.
We also clarify that nothing in this order or the December Order requires LSEs to
modify their retail rates to accommodate the new transmission services. We require PJM,
as the transmission provider, to offer these services, but we do not require LSEs to offer
them to their retail customers. In other words, we do not require any LSE to become an
Eligible Customer taking one of the new transmission services on behalf of an Eligible
Load.
4.
Demand Side Pathways
a.
Response Briefs
Alliance supports converting Options 7 and 8 from PJM’s March 2025 Answer
into enforceable tariff language. Alliance supports strong measurement and verification
of load reductions from demand response and energy efficiency in order to implement
Options 7 and 8.1166
1164 Indicated TOs Reply Brief at 6-7.
1165 PJM, Intra-PJM Tariffs, OATT, § I.1 Definitions – E-F (41.0.0).
1166 Alliance Response Brief at 5-6.
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b.
Determination
Alliance’s comments are essentially an untimely request for rehearing of the
December Order. Alliance overlooks that the December Order required PJM to create a
new interim non-firm transmission service similar to PJM’s Option 7. As part of our
determinations with respect to the rates, terms, and conditions for Interim NITS, we are
directing PJM to submit a compliance filing to revise its Tariff to implement this new
transmission service. As for PJM’s Option 8, wherein Co-Located Load that is Network
Load may participate as a demand response resource, the Commission in the December
Order did not direct any changes to PJM’s demand response rules. We reiterate, as the
Commission explained in the December Order, there is not sufficient evidence to
conclude that the existing Tariff is not just and reasonable as it relates to the existing
demand response rules.1167 Co-Located Loads that elect to be Network Load may
participate as a demand response resource under PJM’s existing Tariff to the extent that
they meet the requirements to participate as such.
5.
Interconnection
a.
Response Briefs
AEU/SEIA claim that PJM proposes to require all co-located generators to
undergo full interconnection studies, including those that have no intention of exporting
power to the transmission system.1168 AEU/SEIA argue that PJM indisputably requires
sufficient information about proposed co-located generators to reliably plan and operate
the transmission system, but that subjecting non-exporting facilities to full
interconnection studies will impose costs, delays, and administrative burden that are
disproportionate to the reliability benefits that are achieved. AEU/SEIA further argue
that this would further strain the interconnection queue to the detriment of the PJM region
and its customers.
b.
Reply Briefs
PJM argues that AEU/SEIA improperly assert that PJM should not study all
interconnecting generators.1169
1167 December Order, 193 FERC ¶ 61,217 at P 242.
1168 AEU/SEIA Response Brief at 15-16 (citing PJM Initial Brief at 82).
1169 PJM Reply Brief at 58.
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c.
Determination
We find that AEU/SEIA’s concerns about interconnection studies for Co-Located
Generators are beyond the scope of this paper hearing, which concerns the rates, terms,
and conditions of new transmission services that Eligible Customers may take on behalf
of Eligible Loads. However, we note that the Commission has approved PJM’s proposal
to comply with the directives of the December Order that, for Interconnection Customers
seeking to use new generators to serve Co-Located Load: PJM will consider requests for
interconnection service below the full generating capability of the generator, and such
Interconnection Customers may use existing procedures to accelerate a new service
request if they satisfy the criteria of the Tariff.1170
6.
Co-Location Arrangement with Electric Storage Resource
a.
Response Brief
Joint Co-Location Developers ask that PJM clarify that its transmission service
requirements for electric storage charging apply to storage co-located with load, and
exempt customers from the Maximum Facility Output where the customer’s load shape
and characteristics are inherently flexible.1171 Joint Co-Location Developers state that
PJM does not require electric storage resources to take transmission service for charging,
except where the storage charges during the zonal peak hour without being dispatched.
Joint Co-Location Developers claim that, in the context of PJM’s proposal to limit NFCD
transmission service to 100% of the Maximum Facility Output of the Co-Located
Generator, PJM appears to allow the relevant Co-Located Load to take service while the
co-located electric storage resource charges. Joint Co-Location Developers maintain that
PJM should clarify this point in its Tariff to avoid any implication that this activity is
prohibited. Joint Co-Location Developers request that PJM clarify that co-located
charging loads, like standalone electric storage resources, do not require transmission
service unless they charge during the zonal peak hour without being dispatched, and that
any withdrawals for electric storage charging at the Point of Interconnection for which
transmission service is not required do not count toward the Maximum Facility Output.
Joint Co-Location Developers request, in the alternative, that PJM remove the Maximum
Facility Output limit for loads co-located with electric storage resources.
1170 PJM Interconnection, L.L.C., 195 FERC ¶ 61,030 at P 25.
1171 Joint Co-Location Developers Response Brief at 13-14.
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b.
Reply Brief
PJM argues Joint Co-Location Developers improperly ask the Commission to
examine transmission service for charging electric storage resources.1172
c.
Determination
To the extent Joint Co-Location Developers ask the Commission to address
transmission service for electric storage resources, such request is beyond the scope of
this paper hearing, which concerns the rates, terms, and conditions of new transmission
services for Eligible Customers on behalf of Eligible Loads. However, insofar as Joint
Co-Location Developers raise concerns about PJM’s proposed requirement that an
Eligible Customer electing to take NFCD transmission service “must apply for [NFCD
transmission service] equivalent to the megawatt level of the Co-Located Generating
Facility dedicated to serving the Co-Located Load,” which Joint Co-Location Developers
refer to as the Maximum Facility Output limit, we reject PJM’s proposal above.1173
The Commission orders:
(A)
In response to the requests for rehearing, the December Order is hereby
modified and set aside, in part, as discussed in the body of this order.
(B)
The clarification requests are hereby denied in part and granted in part, as
discussed in the body of this order.
(C)
PJM is hereby directed to submit, within 60 days of the date of issuance of
this order, a compliance filing with revisions to its Tariff as described in Part IV.B.3.
(D)
PJM is hereby directed to submit, within 60 days of the date of issuance of
this order, a compliance filing with revisions to its Tariff as described in Part IV.C.1.b.i.
(E)
PJM is hereby directed to submit, within 60 days of the date of issuance of
this order, a compliance filing with revisions to its Tariff as described in Part IV.C.1.c.i.
(F)
PJM is hereby directed to submit, within 60 days of the date of issuance of
this order, a compliance filing as described in Part V.
(G)
PJM is hereby directed to submit, within 60 days of the date of issuance of
this order, a compliance filing as described in Part VI.
1172 PJM Reply Brief at 59.
1173 See supra Part VI.A.2.
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Docket No. EL25-49-002, et al.
- 272 -
(H)
PJM transmission owners are hereby directed to submit, within 60 days of
the date of issuance of this order, a compliance filing as described in Part VI.
By the Commission. Commissioner Chang is concurring with a separate statement
attached.
( S E A L )
Debbie-Anne A. Reese,
Secretary.
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Docket No. EL25-49-002, et al.
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Appendix – Tariff Record[s]
PJM Interconnection, L.L.C.
Intra-PJM Tariffs
• A-B, OATT Definitions -- A - B (24.0.0)
• L-M-N, OATT Definitions -- L -- M - N (52.0.0)
• 28.1, OATT 28.1 Scope of Service: (2.0.0)
• 29.1, OATT 29.1 Condition Precedent for Receiving Service (4.0.0)
• 29.2, OATT 29.2 Application Procedures: (4.0.0)
• 31.6, OATT 31.6 Annual Load and Resource Information Updates: (4.0.0)
• 34.2, OATT 34.2 Netting of Behind the Meter Generation. (1.0.0)
• 34.3, OATT 34.3 Netting of Non-Retail Behind The Meter Generation (2.0.0)
• 300 B, OATT 300 Definitions B (2.0.0)
• 300 N, OATT 300 Definitions N (3.0.0)
• 400 B, OATT 400 Definitions B (2.0.0)
• 400 N, OATT 400 Definitions N (4.0.0)
• 401, OATT Part VIII.A 401 Applications for Cycle Process Intro (5.0.0)
• 403, OATT Part VIII.B 403 Application Rules (4.0.0)
• IX Subpart A, OATT Part IX Subpart A FORM OF APPLICATION AND
STUDIES AGRMT (4.0.0)
• IX.B GIA Appx-Sched, OATT Part IX.B GIA Appendices and Schedules (5.0.0)
• IX.B GIA Schedule O, OATT Part IX.B GIA Schedule O (0.0.0)
• IX Subpart G, OATT Part IX Subpart G FORM OF NECESSARY STUDIES
AGREEMENT (3.0.0)
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Docket No. EL25-49-002, et al.
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• XI, OATT XI. TRANSMISSION SERVICES FOR CO LOCATED LOADS
(0.0.0)
• ATTACHMENT F-3A, OATT ATTACHMENT F-3A (0.0.0)
• ATTACHMENT F-4, OATT ATTACHMENT F-4 (0.0.0)
PDF page 275
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
PJM Interconnection, L.L.C.
Allegheny Electric Cooperative, Inc.
American Transmission Systems, Incorporated
Atlantic City Electric Company
Baltimore Gas and Electric Company
Delmarva Power & Light Company
Duke Energy Ohio, Inc.
Duke Energy Kentucky, Inc.
East Kentucky Power Cooperative, Inc.
Essential Power Rock Springs, LLC
Hudson Transmission Partners, LLC
Jersey Central Power & Light Company
Mid-Atlantic Interstate Transmission, LLC
Neptune Regional Transmission System, LLC
Old Dominion Electric Cooperative
PECO Energy Company
PPL Electric Utilities Corporation
Potomac Electric Power Company
Public Service Electric and Gas Company
Rockland Electric Company
Trans-Allegheny Interstate Line Company
Transource West Virginia, LLC
UGI Utilities, Inc.
Monongahela Power Company
The Potomac Edison Company
Commonwealth Edison Company
Commonwealth Edison Company of Indiana, Inc.
The Dayton Power and Light Company
AEP Appalachian Transmission Company, Inc.
AEP Indiana Michigan Transmission Company, Inc.
AEP Kentucky Transmission Company, Inc.
AEP Ohio Transmission Company, Inc.
AEP West Virginia Transmission Company, Inc.
Appalachian Power Company
Indiana Michigan Power Company
Kentucky Power Company
Kingsport Power Company
Ohio Power Company
Wheeling Power Company
Docket Nos. EL25-49-002
EL25-49-000
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Docket No. EL25-49-002, et al.
- 2 -
Duquesne Light Company
Virginia Electric and Power Company
Linden VFT, LLC
City of Cleveland, Department of Public Utilities,
Division of Cleveland Public Power
City of Hamilton, OH
Southern Maryland Electric Cooperative, Inc.
Ohio Valley Electric Corporation
AMP Transmission, LLC
Silver Run Electric, LLC
NextEra Energy Transmission MidAtlantic Indiana, Inc.
Wabash Valley Power Association, Inc.
Keystone Appalachian Transmission Company
Large Loads Co-Located at Generating Facilities
Constellation Energy Generation, LLC
v.
PJM Interconnection, L.L.C.
PJM Interconnection, L.L.C.
AD24-11-001
EL25-20-001
(consolidated)
ER26-1479-000
(Issued June 18, 2026)
CHANG, Commissioner, concurring:
In today’s order, the Commission addresses rehearing requests and the paper
hearing and compliance record regarding the rates, terms, and conditions through which
Co-Located Loads may take transmission service from the PJM Interconnection, L.L.C.
(PJM) system. I write separately to address the Commission’s resolution of the
“minimum charge” issue raised in my concurrence to the December Order,1 which I
believe provides a reasonable path forward based on the record before us.
In its December Order, the Commission asked two briefing questions regarding
establishing an additional charge for Eligible Customers on behalf of a Co-Located Load
that elects not to take any amount of transmission service or only a de minimis amount of
1 PJM Interconnection, L.L.C., 193 FERC ¶ 61,217 (2025) (December Order)
(Comm’r Chang, concurring).
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Docket No. EL25-49-002, et al.
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transmission service.2 At that time, I wrote separately to emphasize my concern that the
implementation of our rules around the new transmission services could risk cost shifting
if those loads take little or no transmission service and thereby do not contribute to
paying for the transmission system costs. Broadly, I remain vigilant about the impacts on
consumers as the Commission continues to respond to new challenges from large and Co-
Located Loads.
In today’s order, the Commission concludes that the record does not adequately
support either the need for an additional charge at this time, or how such a charge should
be calculated and assessed. In so doing, the Commission acknowledges the complexity
of (1) documenting the benefits that accrue to Co-Located Loads paying little or no
transmission service from the grid, and (2) designing a charge that corresponds to those
benefits.
As explained in my concurrence to the December Order, because the Commission
does not require a Co-Located Load to take any specific amount of the new transmission
services, it creates the possibility that the load could pay little or nothing towards the
costs of the transmission system, notwithstanding potential benefits it receives from that
system. If this fact pattern occurs, particularly on any significant scale, it may result in
problematic cost shifts to other transmission customers. However, if Co-Located Loads
do, in fact, take meaningful transmission service via an existing service or one or both of
the new contract demand services, they would pay transmission charges that contribute to
the recovery of the transmission system’s capital and operations and maintenance costs.
Therefore, whether underlying concerns around cost shifting actually manifest will
ultimately depend on how the new transmission services will be used.
So, today’s order reasonably concludes that insights from concrete experience
with the use of these new transmission services will help inform whether further action
would be needed to address cost shifting issues. Given the challenges demonstrated in
the record with articulating or documenting the specific benefits associated with being
synchronized to the PJM system, and designing a rate (including conditions under which
and the parties to whom it will be charged) that is commensurate with those benefits, I
am persuaded that continued monitoring of this issue is appropriate.
Furthermore, as part of a broader recognition that implementing the new
transmission services represents a significant development in PJM, the Commission
directs PJM to prepare an annual report that includes critical information about how these
services are being requested and used, as well as how loads using the services contribute
toward transmission owners’ revenue requirements.3 The annual reports will provide
2 December Order, 193 FERC ¶ 61,217 at P 219, questions 3 and 4.
3 PJM Interconnection, L.L.C., 195 FERC ¶ 61,209, at PP 580-81 (2026).
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Docket No. EL25-49-002, et al.
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information that helps the Commission, the states, market participants, and stakeholders
monitor the impacts of these new transmission services, including assessing whether the
potential cost shift concern discussed above and in my prior concurrence actually occurs.
If it does, I stand ready to consider Federal Power Act section 205 filings or section 206
complaints (including sua sponte action by the Commission) to address those cost shifts.
For these reasons, I respectfully concur.
________________________
Judy W. Chang
Commissioner