EL26-67-001 · 2026-07-17 · Maryland Office of People's CounselOHIO CONSUMERS' COUNSELDELAWARE DIVISION OF THE PUBLIC ADVOCATE ,OFFICE OF THE ILLINOIS ATTORNEY GENERAL ,

The Maryland Office of People's Counsel, et al. submit Request for Rehearing of the 06/18/2026 Order

UNITED STATES OF AMERICA 
BEFORE THE 
FEDERAL ENERGY REGULATORY COMMISSION 
 
 
PJM Interconnection, LLC 
AEP Appalachian Transmission 
Company, Inc., et al. 
 
 
) 
)   Docket No. EL26-67 
) 
) 
) 
 
Request for Rehearing and Clarification of the  
Joint Consumer Advocates  
 
The Maryland Office of People’s Counsel (“MPC”), the Ohio Consumers’ 
Counsel (“OCC”), the Delaware Division of the Public Advocate (“DPA”), and the 
Office of the Illinois Attorney General (“IOAG”) (collectively, the Joint Consumer 
Advocates or “JCAs”) respectfully request rehearing and clarification of certain 
determinations in Section III.B, “Cost Shifting Risk Among Transmission Customers,” of 
the Commission’s Order Instituting Proceeding under Section 206 of the Federal Power 
Act (the “Order”).1 The Order recognizes that the PJM Open Access Transmission Tariff 
(the “PJM Tariff”) spreads the costs of Network Upgrades driven by large-load 
interconnections to transmission customers that “neither caused the need for nor benefit 
commensurately from” those upgrades in violation of the Federal Power Act (“FPA”).2 
We agree with and enthusiastically support the Order’s transparency directives because 
 
1 PJM Interconnection, et al., 195 FERC ¶ 61,211 (2026) (“Order”). MPC filed its motion to intervene in 
this proceeding on July 1, 2026. The OCC filed its motion to intervene on July 9, 2026. The DPA filed its 
motion to intervene on July 8, 2026. The IOAG filed its motion to intervene in the proceeding on July 7, 
2026. See (doc-less) Motions to Intervene of MPC, OCC, DPA, and IOAG, respectively, in Docket No. 
EL26-67. 
2 Order at PP 79, 81.

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they should expose these cost shifts to state regulators and consumers. But the cost shifts 
identified by the Order do not originate at the retail level, and the responsibility to cure 
them cannot lie with state regulators. They are imposed by the PJM Tariff, which only 
this Commission may reform. 
Just and reasonable rates, whether at wholesale or retail, must protect customers 
from bearing costs they did not cause and from which they do not benefit. The Order 
finds that the PJM Tariff fails to meet that standard. It is arbitrary and capricious and 
contrary to the FPA for the Commission to conclude that the PJM Tariff is inconsistent 
with the cost causation and beneficiary principles but then fail to remedy the elements of 
the tariff that violate those principles. We respectfully request rehearing on the 
Commission’s finding that it “must act to address the risk of cost shifting among 
transmission customers” but not actual cost shifts among transmission customers that are 
guaranteed by the PJM Tariff.3 
We agree with the Commission that, if implemented properly, “additional cost 
transparency measures . . . will give state public utility commissions . . . the information 
necessary to allow them to understand which transmission costs are caused by which 
transmission customers . . . .”4 But identifying a transmission cost alone and mapping it 
to its cause is not self-implementing authority to reallocate a charge set by the PJM 
Tariff. The Order’s further finding that transparency will allow state regulators to “sub-
 
3 Id. at P 68 (emphasis added).  
4 Id. at P 70 (emphasis added).

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allocate these costs to the appropriate retail customers . . . as they see fit . . .”5 assumes 
flexibility under the PJM Tariff and the FPA.6 The PJM Tariff fixes the charges each 
transmission customer pays, and a state cannot move costs from one transmission 
customer to another. The cost shifts identified by the Order occur between transmission 
customers, including those transmission customers whose assets straddle state lines, 
beyond the jurisdiction of a state commission. The Commission’s finding is arbitrary and 
capricious because it does not consider how the PJM Tariff confines states to incomplete 
protection and exposes even those limited measures to legal challenges that transmission 
owners and customers have raised and continue to press today. 
We also agree with the Commission that cost recovery agreements are necessary 
to ensure that Eligible Customers serving large loads timely pay “the costs incurred to 
provide them with the requested transmission service, including the costs of any needed 
Network Upgrades . . . .”7 But the Order describes two different measures of that cost 
responsibility without choosing between them. The Order preliminarily finds that a cost 
recovery agreement should be keyed to the level of transmission service the Eligible 
Customer requests on behalf of the large load while also finding that the Eligible 
Customer, “as opposed to other transmission customers” must be ultimately responsible 
for the costs of any needed Network Upgrades.8 Those two measures diverge whenever 
the Network Upgrade costs exceed the Network Integration Transmission Service 
 
5 Id. 
6 See id. at P 26 (outlining how PJM Transmission Owners bill Eligible Customers for transmission 
service). 
7 Id. at P 81. 
8 Id. at PP 80–83.

4 
 
(“NITS”) charges attributable to the large load, which they will do, routinely and 
significantly. We therefore respectfully request that the Commission clarify the standard 
it will apply to cost recovery agreements filed in response to the Order: An agreement is 
just and reasonable only if it requires the Eligible Customer to pay the full cost of the 
Network Upgrades needed to accommodate the large load. 
We also respectfully request clarification that transmission owners must promptly 
credit revenue received under cost recovery agreements to the other transmission 
customers in the same PJM Transmission Zone. Collection from the Eligible Customer 
serving the large load and protection of other transmission customers are two separate 
problems, and a cost-recovery agreement addresses only the first. Crediting revenues 
against the revenue requirement does not return the shifted costs to the customers who 
bore them.9 A credit must be immediate to ensure that it flows to transmission customers 
who paid the higher rate when the Network Upgrade entered the revenue requirement. 
Because the Order’s stated objective is to ensure that Eligible Customers, “as opposed to 
other transmission customers,”10 are ultimately responsible for Network Upgrade costs, 
we respectfully request that the Commission clarify that transmission owners must 
immediately credit cost-recovery agreement revenue to other transmission customers. 
A request for rehearing and clarification is appropriate now. Although much of the 
Order is expressly preliminary, we are concerned that it also may be construed to contain 
 
9 Id. at P 84 (stating that the Commission expects that payments will be “appropriately credited toward 
transmission owners' transmission revenue requirements . . .”). 
10 Id. at P 80.

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final determinations about jurisdiction and a definitive statement about the scope of the 
Commission’s duty to address the risk of cost shifting among transmission customers.11 
Assuming they are final, these determinations would “fix[] some legal relationship as a 
consummation of the administrative process” and are proper subjects of rehearing.12 We 
seek rehearing only of those determinations that could be read as final. Waiting would 
create risk without corresponding benefit. Challenges raised later in this proceeding, 
following a Commission order on filings by PJM and the transmission owners, could be 
dismissed as collateral attacks on the Order, jeopardizing our ability to press these 
arguments on appeal. 
Our clarification requests, which do not depend on the finality of any 
determination, ask the Commission to resolve ambiguities in the manner we request as 
soon as possible. Delay imposes costs on the very customers that this proceeding seeks to 
protect. Each Network Upgrade added to a transmission owner’s revenue requirement 
while these questions remain open embeds another cost shift, and every cost-recovery 
agreement negotiated against an unsettled standard invites the disputes the Commission 
could resolve today. 
 
 
11 The Commission’s final jurisdictional findings are at PP 45, 47, 68, and 70. Findings about the 
Commission’s duty to mitigate only risks of cost shifts are in P 68. 
12 MISO, et al., 188 FERC ¶ 61,211 at P 12 (2024) (citing Reliable Automatic Sprinkler Co. v. Consumer 
Prod. Safety Comm’n, 324 F.3d 726, 731 (D.C. Cir. 2003)).

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I.  
Statement of Issues and Specifications of Error 
Pursuant to Rule 713(c) of the Commission’s Rules of Practice and Procedure, we 
request rehearing on the following: 
1. To the extent the Order’s determination of the scope of the Commission’s duty 
under the FPA constitutes a final determination, the Commission erred by 
recognizing a duty to address the risk of cost shifting among transmission 
customers while failing to remedy the actual cost shifts the PJM Tariff 
guarantees, and by failing to explain why its duty does not extend to those 
actual cost shifts. It is arbitrary and capricious and contrary to the FPA for the 
Commission to find that transmission customers “neither caused the need for 
nor benefit commensurately from” Network Upgrades for large loads but fail 
to order a remedy to the PJM Tariff that prevents those unjust and 
unreasonable cost shifts. See 5 U.S.C. § 706(2)(A); Motor Vehicle Mfrs. Ass’n. 
of United States, Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 43 
(1983) (agency must “examine the relevant data and articulate a . . . rational 
connection between the facts found and the choice made”); Ill. Commerce 
Comm’n v. FERC, 576 F.3d 470, 476–77 (7th Cir. 2009) (summarizing cost 
causation and beneficiary pays principles). 
2. To the extent the Order’s findings regarding state authority over retail cost 
allocation constitute final determinations, the Commission erred by finding that 
transparency will enable state regulators to sub-allocate Network Upgrade 
costs to retail customers “as they see fit,” without considering that the PJM

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Tariff fixes the charges each transmission customer must pay. Order at P 70. 
The Commission likewise erred in concluding that its approach “respect[s] the 
cooperative federalism approach established under the FPA,” because it could 
assign to states a redistribution of FERC-set charges or could invite states to 
approve transmission rates that conflict with the PJM Tariff. Id. While a state 
utility commission may allocate charges paid by a particular Eligible Customer 
among retail ratepayers, states may be limited in whether and how they may re-
allocate transmission charges among transmission customers. In this context, it 
is arbitrary and capricious and contrary to the FPA for the Commission to 
conclude that “state regulators can use [] information” about Network Upgrade 
costs “to protect residential and small commercial customers by incorporating 
those costs into the retail rates as they see fit given their authority to set rates 
for different classes of retail customers.” Order at P 70. See 5 U.S.C. § 
706(2)(A); Motor Vehicle Mfrs. Ass’n. of United States, Inc. v. State Farm 
Mut. Automobile Ins. Co., 463 U.S. 29, 43 (1983) (agency must “examine the 
relevant data and articulate a . . . rational connection between the facts found 
and the choice made”); Mississippi Power & Light Co. v. Mississippi ex rel. 
Moore, et al., 487 U.S. 354, 371 (1988) (“States may not alter FERC-ordered 
allocations . . . by substituting their own determinations of what would be just 
and fair.”).

8 
 
To the extent the Commission concludes that either determination is preliminary 
rather than final, we reserve the right to raise these issues in response to compliance 
filings and at subsequent stages of this and related proceedings. 
We further request clarification of the following: 
3. We respectfully request that the Commission clarify the standard it will apply 
to assess cost-recovery agreements. We urge the Commission to adopt a 
straightforward test: agreements that do not protect transmission customers 
from cost shifts due to Network Upgrades for large loads are unjust and 
unreasonable. Just and reasonable cost-recovery agreements will “ensure that 
Eligible Customers . . . are ultimately responsible for . . . the costs of any 
needed Network Upgrades.” Order at PP 70, 80.  
4. We respectfully request that the Commission clarify that transmission owners 
must immediately credit revenue received under cost-recovery agreements to 
the transmission customers in the PJM Transmission Zone. Credits against the 
transmission owner’s revenue requirement in a later year flow to whichever 
customers are in the Zone at that time and in that year’s peak-load shares, not 
to the customers who bore the cost shift when the Network Upgrade entered 
the revenue requirement. To achieve the Commission’s stated objective of 
ensuring that Eligible Customers, “as opposed to other transmission 
customers,” are ultimately responsible for Network Upgrade costs, the 
Commission should confirm that transmission owners must immediately credit

9 
 
all revenue collected under cost-recovery agreements to transmission 
customers. Order at PP 80, 84. 
II. 
Illustration: The PJM transmission tariff spreads Network Upgrade 
costs to all transmission customers in the relevant PJM transmission 
zone. 
 
Because our requests for rehearing are about the PJM Tariff, we illustrate how the 
tariff operates with a hypothetical about Network Upgrade costs. Our hypothetical 
application of the PJM Tariff illustrates its mechanics in raising transmission charges for 
existing transmission customers due to Network Upgrades needed to accommodate a new 
large load locating in their PJM Transmission Zone. The outcome, contrary to the Order’s 
intent, is a cost shift to customers other than the large load causing the Network Upgrade.  
Our hypothetical emphasizes that the total amount paid by each Eligible Customer 
for transmission service is fixed by the PJM Tariff.13 The costs of Network Upgrades a 
transmission owner identifies as needed to accommodate load additions are added to the 
transmission owner’s revenue requirement. The PJM Tariff spreads these costs across all 
transmission customers in the relevant transmission zone, including across state lines for 
multijurisdictional zones and to municipal and cooperative utilities located within the 
zone.14  
 
13 See Order at PP 25–26.  
14 Id.; see also Supplemental Comment of FirstEnergy Service Company, Docket No. RM26-4 (Jun. 5, 
2026) (“Under the Federal Energy Regulatory Commission’s current rules, when a utility constructs new 
high-voltage transmission lines and substations to connect a single new data center, the cost of that 
infrastructure is spread across all customers in the surrounding region. Ordinary families and small 
businesses see their electric bills rise to support facilities that were built to serve the new data center 
facilities.”).

10 
 
Importantly, our hypothetical below assumes for simplicity purposes that large-
load Network Upgrades are designated by the transmission owners as Supplemental 
Projects under the PJM Tariff. Although outside the scope of our hypothetical, we 
highlight the Commission’s understanding that Network Upgrades for large loads that are 
planned through PJM’s Regional Transmission Expansion Plan as baseline projects are 
regionally cost-allocated pursuant to Schedule 12 of the PJM Tariff, which spreads their 
costs throughout PJM to transmission customers who neither benefit from nor caused 
those upgrades.15 In such situations, the cost-shifting that occurs under our hypothetical 
increases significantly, as the hybrid cost allocation methodology for regional high-
voltage baseline projects allocates 50 percent of these costs across the full PJM footprint 
on a load-ratio basis and the other 50 percent using its power-flow based DFAX 
methodology.16  
Our hypothetical PJM Transmission Zone has an annual zonal transmission 
revenue requirement of $300 million per year. It has three Eligible Customers:17   
1. DistributionCo is the transmission-owning utility serving provider-of-last-
resort load in a retail-choice state with a coincident peak of 1,500 MW.  
 
15 See Order at P 72 (noting that Network Upgrades for large loads may contribute to regional 
transmission needs that are addressed through the regional plan and regionally cost allocated); id. at PP 
79, 81 (stating that transmission customers “neither caused the need for nor benefit commensurately 
from” Network Upgrades for large loads). 
16 MPC has pending before the Commission a complaint challenging PJM’s hybrid cost allocation 
methodology, as impacted by large loads, for regional baseline projects, including the $22 billion in costs 
for the last three RTEP windows. Md. Off. of People’s Couns. v. PJM Interconnection, LLC, Docket No. 
EL26-63-000.   
17 Note that the PJM Tariff uses the term Network Customer. To stay consistent with the Order, we use 
the term Eligible Customer. The Commission appears to treat them as equivalent. See Order at P 26 (“The 
demand charges for NITS, which are charged to the relevant Network Customer (i.e., the Eligible 
Customer) . . .”).

11 
 
2. RetailCo is a competitive retailer with a coincident peak of 1,000 MW.  
3. Muni is a municipal utility with a coincident peak of 500 MW. 
The NITS rate is computed by dividing the revenue requirement by the peak load 
of 3,000 MW (1,500 + 1,000 + 500), yielding $100,000 per MW-year.18 While these 
figures are illustrative and fictitious, they are roughly in line with actual PJM annual 
zonal transmission revenue requirements and NITS rates.19  
The Hypothetical PJM Transmission Zone: 
 
NITS Rate 
Peak Demand 
NITS Charges 
DisCo 
$100,000 / MW-yr 
×   1,500 MW 
=   $150 M 
RetailCo 
$100,000 / MW-yr 
×   1,000 MW 
=   $100 M 
Muni 
$100,000 / MW-yr 
×   500 MW 
=   $50 M 
Next, we compute that the NITS rate increases by 5 percent for all three 
transmission customers when a 200 MW large load takes service.  
A new 200 MW large load will purchase energy from RetailCo. This new large 
load will increase RetailCo’s peak demand by 200 MW. The transmission owner 
identifies Network Upgrades of Supplemental Projects needed to accommodate the new 
200 MW large load. Using utility industry estimates about costs of Network Upgrade 
 
18 See Order at P 26 (summarizing the methodology for computing the NITS rate and NITS charges for an 
Eligible Customer). 
19 In 2025, eight out of the 20 PJM Transmission Zones had annual zonal revenue requirements between 
$200 and $500 million. NITS rates in these Zones were lower than our $100,000 per MW-year 
hypothetical rate, although two Zones in this range had NITS rates above $80,000 per MW-year. Three 
other Zones, each of which has an annual revenue requirement exceeding $800 million, charge NITS rates 
higher than $100,000 per MW-year. The highest rate in the region exceeds $180,000. See PJM, Annual 
Transmission Revenue Requirements (ATRR) and Network Integration Transmission Service (NITS) 
Rates (Jun. 1, 2025).

12 
 
costs in PJM, we assume that Network Upgrades cost $232 million for the 200 MW 
load.20 The transmission owner designates these Network Upgrades as Supplemental 
Projects under the PJM Tariff.21  
Consistent with current practice in PJM, the transmission owner adds the $232 
million in Network Upgrade costs to its revenue requirement.22 To convert the $232 
million in total capital costs to an annual revenue requirement, we adopt utility industry 
estimates of weighted-average cost of capital, O&M, and depreciation that were filed in 
Docket No. RM26-4.23 That yields a first-year revenue requirement of approximately 
$32.5 million.24 We add $3.2 million as an income tax allowance.25 The $232 million in 
Network Upgrade costs therefore adds $35.7 million to the annual revenue requirement in 
 
20 See Supplemental Comments of WIRES to the Advanced Notice of Proposed Rulemaking, Docket No. 
RM26-4 (Mar. 30, 2026). At page 15, the whitepaper by Concentric Energy Advisors “assume[s] a large 
load’s network upgrade cost contribution of approximately $1.16 million per MW,” which “is derived by 
dividing approximately $23.3 billion of network upgrades identified on the PJM website as supporting 
large load interconnections by an estimated 20 GW of projected large load additions from 2025 to 2030.” 
The report notes that Network Upgrade costs for an individual large load are generally not publicly 
available. Id.  
21 The whitepaper cited in the preceding note (the source of the $232 million figure) includes in its 
Network Upgrade cost estimate both regionally cost-allocated projects and Supplemental Projects 
assigned to a single PJM Transmission Zone. Id. at 22, n.21. For simplicity, we assume that all Network 
Upgrade costs are Supplemental Projects and therefore assigned to a single PJM Transmission Zone. 
22 Order at P 79 (“When a transmission owner constructs Network Upgrades to accommodate an Eligible 
Customer’s request for transmission service on behalf of a large load, those transmission costs will be 
included in the transmission owner’s transmission revenue requirement.”); see also supra n. 14. 
23 Supplemental Comments of WIRES to the Advanced Notice of Proposed Rulemaking, Docket No. 
RM26-4 (Mar. 30, 2026) at 22 (using 8% as the weighted-average cost of capital (WACC), 20-year 
straight-line depreciation, and 1% of initial capital costs for annual O&M spending).   
24 The calculations are as follows: 
• 
$232 M × 8% WACC = $18.6 M 
• 
$232 M / 20 year straight-line depreciation = $11.6 M 
• 
$232 M × 1% O&M = $2.3 M 
25 We assume a 50-50 debt-equity split. A 50-50 structure with 10.5% ROE and 5.5% cost of debt blends 
to 8% WACC (0.5 × 10.5 + 0.5 × 5.5 = 8.0%). The equity return = 50% × $232M × 10.5% = $12.2M. 
To compute the tax allowance, we assume a 21% federal income tax rate (t) multiply the equity return by 
[t ÷ (1 − t)], yielding a $3.2 M tax allowance.

13 
 
the first year. For simplicity, we round up to $36 million. We compute the new annual 
zonal revenue requirement and NITS rate, as follows.26 
New Annual Zonal Revenue Requirement = 
$300 M (initial revenue requirement) + $36 M (Network Upgrades) = $336 M 
New Zonal Peak Load = 
3,000 MW (initial peak load) + 200 MW (new large load) = 3,200 MW 
New NITS Rate = 
$336 M / 3,200 MW = $105,000 per MW-Year. 
The Hypothetical PJM Transmission Zone after adding a 200 MW Large Load: 
 
NITS Rate 
Peak Demand 
NITS Charges 
∆ 
DisCo 
$105,000 / MW-yr 
×   1,500 MW 
=  $157.5 M 
+$7.5 M 
RetailCo 
$105,000 / MW-yr 
×   1,200 MW 
=  $126 M 
+$26 M 
Muni 
$105,000 / MW-yr 
×   500 MW 
=  $52.5 M 
+$2.5 M 
 
Because RetailCo’s peak demand increases by 200 MW, it sees the largest 
increase in transmission charges. The remaining $10 million in annual revenue 
requirement increase is distributed between DisCo and Muni. Assuming the large load 
pays the NITS rate, it would be charged $21 million ($105,000 per MW-yr × 200 MW) 
by RetailCo. Other customers of RetailCo would be responsible for the remaining $5 
million in higher charges billed to RetailCo under the PJM Tariff. Overall, 42 percent of 
 
26 See Order at P 26 (summarizing the methodology for computing the NITS rate and NITS charges for an 
Eligible Customer).

14 
 
the increase in the annual zonal revenue requirement in the first year is allocated to 
entities other than the large load ($15 million / $36 million). 
This hypothetical presents what we believe is the likely outcome in most 
situations. We acknowledge, however, that, theoretically, it is possible to construct an 
example in which a new customer, which is larger than the 200-MW new customer used 
in the hypothetical but has similar or lower upgrade costs, could decrease the zonal 
transmission rate. Such a situation is not likely because a larger customer is likely to need 
more substantial upgrades, causing higher zonal transmission rates, consistent with the 
hypothetical above. Regardless, in any situation where the cost of the upgrades for adding 
a new customer, relative to the size of that customer, results in the zonal transmission rate 
decreasing, that potential benefit would inure only to the customers in the same zone. If 
the upgrade is a Regional Transmission Expansion Plan (“RTEP”) baseline project and 
costs are allocated to other zones not hosting the large load (as they are under the existing 
PJM Tariff), the revenue requirement for those non-host zones would increase, and unless 
those non-host zones have sufficient data center load growth themselves, the higher 
revenue requirement will increase rates for all customers in those zones. 
III. 
Requests for Rehearing 
A. 
By failing to remedy a transmission tariff that facilitates systemic and 
predictable cost shifts, the Commission has not met its obligation to 
ensure that transmission rates are just and reasonable. 
 
The Order fails to remedy the unjust and unreasonable PJM Tariff. As illustrated 
above, the PJM Tariff inevitably shifts costs caused by transmission customers serving a 
large load to other transmission customers. The Order recognizes that these other

15 
 
transmission customers “neither caused the need for nor benefit commensurately from” 
those upgrades.27 The PJM Tariff is therefore unjust and unreasonable because it is 
“guaranteed to overcharge” transmission customers by “shift[ing] a grossly 
disproportionate share of the[] costs” of Network Upgrades onto transmission customers 
who do not benefit commensurately from and do not cause those facilities.28 It is arbitrary 
and capricious and contrary to the FPA for the Commission to conclude that it “has a 
duty to address the risk of cost shifting among transmission customers”29 while failing to 
remedy the actual cost shifts the PJM Tariff guarantees due to Network Upgrades for 
large loads.30 
We are concerned that the Commission’s conclusion about the scope of its 
obligation under the FPA is a final determination, not a preliminary finding. In Paragraph 
68 of the Order, the Commission asserts, without qualification, that it has a “duty” and a 
“responsibility” to “address the risk of cost shifting among transmission customers” in 
order to ensure just and reasonable transmission rates.31 The Commission anchors this 
duty-scope determination between uncontroversial statements of black-letter law about its 
 
27 Order at PP 79, 81. 
28 Ill. Commerce Comm’n v. FERC, 756 F.3d 556, 561, 565 (7th Cir. 2014). 
29 Order at P 68 (“The Commission has a duty to address the risk of cost shifting among transmission 
customers that may result in unjust and unreasonable transmission rates.”); id. (“To fulfill its 
responsibility to ensure that transmission rates are just and reasonable, the Commission must act to 
address the risk of cost shifting among transmission customers . . ..”) 
30 Our request for rehearing targets cost shifts due to Network Upgrades designated as Supplemental 
Projects or that are included in the Regional Transmission Expansion Plan and cost allocated pursuant to 
Schedule 12. See Order at P 72 (“Network Upgrades needed to accommodate a new transmission service 
request or designation of new network load may be designated as local transmission facilities (i.e., 
Supplemental Projects) or contribute to regional transmission system needs and be addressed by a 
Required Transmission Enhancement in the RTEP.”). 
31 Order at P 68 (emphasis added).

16 
 
exclusive jurisdiction over transmission rates.32 This juxtaposition could signal that the 
Commission treats its conclusion about the scope of its duty as no less settled than its 
uncontested jurisdictional authority. 
In subsequent paragraphs, the Commission consistently frames the harm it has a 
duty to address as a risk, not a certainty.33 The Commission erred by limiting its duty to 
mitigating the risk of cost shifting without explaining why its duty does not extend to 
eliminating actual cost shifts guaranteed by the PJM Tariff. As our hypothetical 
illustrates, the NITS rate increases for all transmission customers in the PJM 
Transmission Zone that host a Network Upgrade needed for a large load. Transmission 
charges increase for all customers regardless of whether the large load that caused the 
upgrade fails to materialize, breaches its agreement, or performs as anticipated. That cost 
shift is not mitigated by transparency measures or cost-recovery agreements aimed at 
revenue shortfalls. The Commission’s silence on why its duty to ensure just and 
reasonable transmission rates does not reach actual, guaranteed cost shifts renders the 
Order arbitrary and capricious and inconsistent with the FPA. 
Transmission rates must reflect the costs of providing transmission service.34 
While the Commission need not “allocate costs with exacting precision,”35 the 
 
32 Id. 
33 See, e.g., id. at P 77 (“may result in unjust and unreasonable rates”); at P 79 (“could result in cost 
shifting”); id. (“may lead to unjust and unreasonable increases”); id. (“If, however, the Eligible Customer 
takes less transmission service than anticipated . . . or fails to materialize at all . . .”). 
34 See Ala. Elec. Co-op., Inc. v. FERC, 684 F.2d 20, 27–28 (D.C. Cir. 1982); K N Energy, Inc. v. 
FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992). 
35 Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1369 (D.C. Cir. 2004).

17 
 
Commission’s allocation must be reasonably and adequately explained.36 The 
Commission cannot look the other way when a transmission tariff embeds cross subsidies 
for the benefit of particular customers.37 The Order fails to explain why the Commission 
has concluded that it “has a duty” to address certain risks of cost shifts but no obligation 
to remedy actual, inevitable, and significant cost shifts that are fixed by the PJM Tariff.38  
The Commission’s longstanding approval of rolled-in pricing for a transmission 
owner’s integrated local network is not relevant here. In general, all transmission 
customers in a particular PJM Transmission Zone pay for local Network Upgrades 
because they all “receive the benefits that are inherent in [ ] an integrated system.”39 In 
the Order, the Commission distinguished Network Upgrades for large loads from other 
local projects, concluding that transmission customers do not cause upgrades for large 
loads and do not benefit commensurately from those upgrades and therefore should not 
pay for them.40 Having found that cost allocation of Network Upgrades for large loads 
must consider who caused and benefits from those upgrades, the Commission must find 
that the PJM Tariff is unjust and unreasonable because it allocates those costs on a 
 
36 See Pac. Gas & Elec. Co. v. FERC, 373 F.3d 1315, 1322 (D.C. Cir. 2004); Sithe/Indep. Power 
Partners, L.P. v. FERC, 285 F.3d 1, 4–5 (D.C. Cir. 2002); Ill. Commerce Comm’n v. FERC, 576 F.3d 
470, 477–78; Ill. Commerce Comm’n, 756 F.3d at 565.  
37 See Elec. Consumers Res. Council v. FERC, 747 F.2d 1511, 1516 (D.C. Cir. 1984) (finding that the 
Commission did not “even attempt[] to explain” the cross-subsidies embedded in an approved rate). 
38 See Order at P 68. 
39 Otter Tail Power Co., 12 FERC ¶ 61,169, 61,420 (1980). 
40 See Order at PP 79, 81 (citing Midwest ISO Transmission Owners, 373 F.3d at1368; Ill. Commerce 
Comm’n, 576 F.3d at 476).

18 
 
postage stamp basis without considering that the benefits accrue to the large loads that 
caused those Network Upgrades.41 
Our argument is not backwards looking and does not cherry pick a “small 
selection of transmission projects.”42 Unlike the retrospective complaint the Commission 
addressed in Kentucky Public Service Commission, our request is forward looking and 
targets cost shifts that are hardwired into the PJM Tariff. These cost shifts are systemic, 
foreseeable, unending, and significant, and likely to grow.43 And unlike in that 
proceeding, the Commission has now itself found that non-large load transmission 
customers neither cause nor benefit commensurately from Network Upgrades for large 
loads. Having made that finding, the Commission cannot maintain a transmission tariff 
that ignores it.  
“Here we’re talking about the allocation of the huge costs of building [ ] 
transmission lines that do not provide uniform benefits to all the [customers] in the 
[Zone] in which the lines are built.”44 The PJM Tariff is unjust and unreasonable because 
it arbitrarily spreads those costs to all transmission customers on a postage stamp basis.45 
 
41 See Ill. Commerce Comm’n, 576 F.3d at 475–76; Ill. Commerce Comm’n, 756 F.3d at 561–65. 
42 Ky. Pub. Serv. Comm’n v. AEP, et al., 193 FERC ¶ 61,110, P 57 (2025).  
43 See Order at P 6 (noting “unprecedented current and expected growth of large loads seeking to 
interconnect to the transmission system”); id. at PP 8–9 (discussing large loads in PJM). 
44 Ill. Commerce Comm’n, 756 F.3d at 559. 
45 See Ill. Commerce Comm’n, 576 F.3d at 475–76; Ill. Commerce Comm’n, 756 F.3d at 561–65.

19 
 
B. 
The Commission failed to rationally connect Network Upgrade cost 
transparency to state authority over retail cost allocation and 
arbitrarily and capriciously ignored the PJM Tariff’s legal and 
practical limitations. 
  
Rather than remedying unjust and unreasonable cost shifts embedded in the PJM 
Tariff, the Commission concludes that states can “sub-allocate” transmission charges to 
“appropriate retail customers” who are the cost causers and beneficiaries of the relevant 
transmission spending.46 As just discussed, the PJM Tariff is unjust and unreasonable 
regardless of how transmission costs are allocated by states. The Commission offers no 
limiting principle that might prevent it from ignoring transmission cost shifts entirely, 
based on the premise that states can address any deficiency in the PJM Tariff through 
retail cost allocation.47 We respectfully request rehearing on the Commission’s 
conclusion that its remedy “respect[s] the cooperative federalism approach established 
under the FPA.”48 
We also respectfully request rehearing on the Commission’s finding that 
transparency requirements in the PJM Tariff about Network Upgrade costs will allow 
states to “sub-allocate” transmission charges “as they see fit.”49 To the extent this reflects 
a final conclusion, the Commission’s finding is arbitrary and capricious and contrary to 
the FPA because it ignores substantial legal and practical obstacles that may prevent 
states from protecting retail ratepayers from the costs of Network Upgrades due to large 
 
46 Order at P 70. 
47 Fed. Power Comm’n v. Texaco, 417 U.S. 380, 394 (1974) (stating that the Federal Power Commission 
may not “simply choose not to regulate rates.”). 
48 Order at P 70. 
49 Id.

20 
 
loads. Transmission owners and customers have attacked state efforts to re-allocate 
transmission charges set by the PJM Tariff as contrary to the FPA and Commission 
orders.50 If a state can overcome threshold legal objections, it can only offer retail 
ratepayers partial protection. Network Upgrade costs are spread regionally, across state 
lines zonally, and to municipal and cooperative utilities. A state cannot reach beyond its 
borders to reallocate transmission charges billed to transmission customers in other states. 
We are concerned that the Order’s relevant determinations could be construed as 
not preliminary. In Paragraph 70, the Commission finds that a “benefit” of additional 
transparency about Network Upgrades is that states “can use that information to protect 
residential and small commercial customers by incorporating those costs into the retail 
rates as they see fit . . .”51 This determination builds upon Commission findings about 
“aspects of the process for integrating large loads onto the transmission system [that] fall 
squarely within the Commission’s exclusive jurisdiction” and about state authority over 
retail cost allocation.52 Request for rehearing is appropriate now because the 
Commission’s determinations may be construed as not preliminary, and they fail to 
consider how its orders and the PJM Tariff constrain state authority to “sub-allocate” 
transmission charges. 
In PJM, retail choice states have adopted two models for recovery of transmission 
charges at retail. State efforts to sub-allocate transmission charges in a way that departs 
 
50 See, e.g., Reply Brief of Commonwealth Edison Co., Ill. Com. Comm’n Docket Nos. 25-0677, 25-0679 
(Nov. 18, 2025) at 28-37. 
51 Order at P 70. 
52 Order at PP 45–49, 69.

21 
 
from the PJM Tariff have been challenged under both models. It is arbitrary and 
capricious for the Commission to conclude that states may sub-allocate charges without 
considering how the PJM Tariff affects retail allocation. 
Under the first model of transmission cost recovery at retail, each retail supplier 
separately pays the charges assessed by the PJM Tariff. Returning to our hypothetical, 
this model requires each of the three transmission customers to pay its own NITS 
charges.  
The Hypothetical PJM Transmission Zone after adding a 200 MW Large Load: 
 
NITS Rate 
Peak Demand 
NITS Charges 
∆ 
DisCo 
$105,000 / MW-yr 
×   1,500 MW 
=  $157.5 M 
+$7.5 M 
RetailCo 
$105,000 / MW-yr 
×   1,200 MW 
=  $126 M 
+$26 M 
Muni 
$105,000 / MW-yr 
×   500 MW 
=  $52.5 M 
+$2.5 M 
Assuming that a state’s utility commission has retail cost allocation authority over 
each of the three transmission customers, the state commission could sub-allocate charges 
paid by a particular transmission customer among retail ratepayers taking service from 
that transmission customer.  
In an ongoing proceeding before the Illinois Commerce Commission, transmission 
owner Commonwealth Edison (an Exelon subsidiary), however, has argued that the 
Illinois Commerce Commission may not “reallocate transmission costs between ComEd 
and [competitive retailers] without effectively attacking the underlying

22 
 
FERC-jurisdictional rate design.”53 ComEd argues that “the way that transmission costs 
are allocated between transmission customers is a question subject to FERC’s exclusive 
jurisdiction” and therefore cannot be modified through sub-allocation by a state.54 Under 
ComEd’s legal theory, Illinois is powerless to remedy the transmission costs shifted to 
Disco and Muni by the PJM Tariff. 
ComEd further argues that Illinois law prevents the Illinois regulators from sub-
allocating transmission costs paid by a competitive supplier.55 Thus, under ComEd’s 
legal arguments, all retail ratepayers in ComEd’s PJM Transmission Zone taking service 
from a competitive supplier will immediately face higher transmission costs due to 
Network Upgrades for large loads, and the state will be powerless to protect them. 
Delaware, Maryland, New Jersey, Pennsylvania, and the District of Columbia are 
retail-choice jurisdictions that have adopted similar approaches to retail transmission cost 
recovery. Other transmission owners have filed arguments that echo ComEd’s 
preemption claims.56 
 
53 Commonwealth Edison Co., Response to the Joint Non-Governmental Organizations’ Motion for 
Clarification, Docket Nos. 25-0677, 25-0679 (Apr. 24, 2026) at 6. 
54 Id. at 4. 
55 Id. at 4–5 (citing various provisions of Illinois law about ICC authority over competitive retailers). 
56 See, e.g., Joint Comments of FirstEnergy Pennsylvania Electric Co., et al., Pa. Pub. Util. Comm’n 
Docket No. M-2025-3054271 (Dec. 22, 2025) at 8–9 (“the Commission is preempted from directing what 
cost-allocation method or ratemaking approach should be used for the costs of such [transmission] 
facilities or upgrades to such facilities.”); Comments of the Energy Association of Pennsylvania (EAP), 
Pa. Pub. Util. Comm’n Docket No. M-2025-3054271 (Dec. 22, 2025) at 3–4, 9 (“Transmission cost 
allocation, network upgrade determinations, and rate recovery mechanisms are governed by FERC-
approved tariffs and established federal precedent, not through the PUC. . . . Pennsylvania EDCs and their 
affiliated transmission companies cannot implement cost allocation methodologies that conflict with 
FERC-approved tariffs and orders.”) (EAP’s members include several PJM Transmission Owners).

23 
 
Under the second model, a transmission owner recovers transmission charges from 
all of its retail distribution ratepayers through a non-bypassable rider, including 
ratepayers served by competitive suppliers. Ohio has adopted this model. In 2015, the 
Public Utilities Commission of Ohio (“PUCO”) approved a non-bypassable rider filed by 
transmission owner AEP that recovers transmission costs for all of its retail ratepayers, 
including ratepayers who are served by a competitive supplier.57 A state statute 
authorizes PUCO to approve such a rider.58 
This model, too, has been attacked as inconsistent with the PJM Tariff. Shortly 
after the PUCO approved the rider, an alliance of Ohio industrial consumers filed a 
complaint at this Commission arguing that PUCO’s approval is inconsistent with the PJM 
Tariff and Order No. 888.59 Because AEP’s non-bypassable rider used different billing 
determinants than the PJM Tariff, they argued that PUCO’s order forces customers to 
obtain transmission services at rates, terms, and conditions different than those provided 
by the PJM Tariff.60 The industrial consumers claimed that because this Commission 
asserted jurisdiction over “retail transmission in interstate commerce,” PUCO may not 
approve different rates, terms, and conditions than those offered by the PJM Tariff 
without Commission authorization.61  
 
57 See In re Application of Ohio Power Co., 180 Ohio St. 3d 556, 558–59 (2025) (summarizing history of 
AEP’s rider). 
58 Id. at 561 (pointing to OHIO REV. CODE ANN. § 4928.05). 
59 Complaint of the Industrial Energy Users-Ohio, Docket No. EL16-10 (Nov. 15, 2015). 
60 Id. at 3.  
61 Id. at 7 (quoting Order No. 888, Promoting Wholesale Competition Through Nondiscriminatory 
Transmission Services by Public Utilities, 61 Fed. Reg. 21,540, 21,625 (May 10, 1996)); see also Order at 
P 45 (reiterating the Commission has exclusive jurisdiction over unbundled retail transmission service).

24 
 
Six weeks after it filed the complaint, the industrial consumers moved for 
voluntary dismissal based on an unspecified “change in circumstances.”62 The Office of 
the Ohio Consumers’ Counsel urged the Commission to reject that request, claiming that 
the complaint articulated a “clear potential for Ohio retail customers to either pay twice 
for transmission services in PJM or to be denied direct access to PJM’s transmission 
system” and that dismissal may lead Ohio ratepayers to “pay more for transmission 
services than the filed rate authorized under the PJM Tariff.”63 Before any other parties 
filed substantive responses, the Commission granted the industrial consumers’ request for 
voluntary dismissal.64 The legal questions raised by the complaint remain unresolved. 
Even if the second model for retail transmission cost allocation survives legal 
attack, the PJM Tariff prevents state regulators from sub-allocating transmission charges 
“as they see fit.”65 The Order recognizes that Network Upgrades for large loads include 
projects that are included in PJM’s RTEP and regionally cost allocated pursuant to 
Schedule 12 of the PJM Tariff.66 Schedule 12 distributes costs of an individual project 
across multiple PJM Transmission Zones. A state cannot reach beyond its borders to sub-
allocate charges that the PJM Tariff assigns to transmission customers in other states.67  
 
62 Motion to Dismiss Complaint Without Prejudice, Docket No. EL16-10 (Dec. 22, 2015). 
63 Response to Industrial Energy Users-Ohio’s Motion to Dismiss Complaint by the Office of the Ohio 
Consumers’ Counsel, Docket No. EL16-10 (Jan. 6, 2016) at 3. 
64 Industrial Energy Users-Ohio v. The Ohio Power Company and PJM, 154 FERC ¶ 61,047 (2016) 
(letter order). 
65 Order at P 70. 
66 Order at P 72. 
67 See, e.g., Miss. Power & Light Co. v. Miss. ex rel. Moore, 487 U.S. 354, 371 (1988) (“States may not 
alter FERC-ordered allocations . . . by substituting their own determinations of what would be just and 
fair.”).

25 
 
Similarly, a state cannot protect ratepayers from costs of Network Upgrades 
designated as Supplemental Projects in a PJM Transmission Zone that spans more than 
one state. It appears that the following seven zones include substantial territories in at 
least two states: American Electric Power (AEP), Allegheny Power Systems (AP), 
American Transmission Systems, Inc. (ATSI), Delmarva Power & Light (DP&L), 
Dominion, Duke Energy Ohio and Kentucky (DEO&K), and Potomac Electric Power 
(PEPCO). These seven multi-state Zones comprise 52 percent of PJM’s peak load.68 Two 
other Zones (EKPC and JCP&L) have small protrusions into a second state. Because 
large loads occupy small geographic footprints, even these modest extensions into a 
second state could enable significant cost shifts that a state commission would be 
incapable of remedying. Thus, across more than half of PJM, retail sub-allocation cannot 
undo cost shifts that have already occurred among transmission customers through the 
PJM Tariff. 
 
Source: PJM 
 
68 See PJM Network Service Peak Loads (NSPL) for 2026. Note that we did not include EKPC and 
JCP&L because each is nearly entirely within a single state. That said, there could be significant loads in 
the small portion of the zone in a second state, which could exacerbate interstate cost shifts that a state 
could not address.

26 
 
In addition, states may be unable to re-allocate charges assessed through the PJM 
Tariff on municipal or cooperative utilities. For instance, the Ohio model only reaches 
retail ratepayers who take distribution service from the utility subject to PUCO’s 
rate-regulation authority. Municipal and cooperative utilities are outside that authority. 
IV. 
Requests for Clarification 
A.  
The Commission should clarify that a just and reasonable 
cost-recovery agreement requires the Eligible Customer to pay the full 
incremental cost of Network Upgrades needed to accommodate the 
large load. 
 
 
The Order preliminarily finds that a cost-recovery agreement should be based on 
the level of jurisdictional transmission service requested by the Eligible Customer on 
behalf of a large load.69 The Commission also finds that such Eligible Customers should 
be “ultimately responsible for the costs incurred to provide [them with requested] 
transmission service, including the costs of any needed Network Upgrades.”70 These two 
measures will diverge when the cost of Network Upgrades exceeds the NITS charges 
attributable to the large load’s forecasted demand.  
Our hypothetical illustrates the gap between the two approaches. A cost-recovery 
agreement that requires RetailCo to pay only the NITS rate based on the large load’s 
forecasted demand will yield $21 million in the first year ($105,000 NITS rate × 200 MW 
demand). That falls $15 million short of the $36 million increase in the annual zonal 
revenue requirement caused by the Network Upgrades the transmission owner identified 
 
69 Order at P 83. 
70 Order at P 80; see also PP 66, 77.

27 
 
to accommodate the large load. Under such an agreement, the other transmission 
customers in the zone and RetailCo’s other retail customers absorb the $15 million 
difference in the first year alone, with comparable shortfalls recurring for the life of the 
assets. 
Because the Commission identified two approaches to cost-recovery agreements, 
we respectfully request that the Commission clarify that just and reasonable 
cost-recovery agreements will require Eligible Customers taking service on behalf of a 
large load to pay the full incremental cost of Network Upgrades. Transmission customers 
will bear the costs of any delay in clarifying the governing standard.  
 
B.  
The Commission should clarify that transmission owners must 
immediately credit revenue received under cost-recovery agreements to 
the other transmission customers in the zone. 
 
 
Collection from the large-load cost-causer and protection of the non-causers are 
two separate issues, and a cost-recovery agreement only addresses the first. The 
Commission’s stated objective is to ensure that Eligible Customers serving a large load, 
“as opposed to other transmission customers . . . are ultimately responsible for . . . the 
costs of any needed Network Upgrades.”71 A remedy that fixes only what the Eligible 
Customer must pay, without requiring those payments to flow to the customers onto 
whom the costs were shifted, cannot achieve that objective. 
The Order says that the Commission “expect[s]” that payments “will be 
appropriately credited toward transmission owners’ transmission revenue requirements 
 
71 Order at P 80.

28 
 
consistent with the Commission’s cost-of-service regulations.”72 Crediting payments 
against the revenue requirement prevents the transmission owner from over-collecting, 
but it does not, by itself, protect other transmission customers from cost shifts. Only 
immediate crediting of the full incremental costs will prevent transmission customers 
from subsidizing the large load. Any later credit from a cost recovery agreement 
payment, by contrast, would reduce the revenue requirement, and thus the NITS rate, in 
whatever future year the payment is received and credited, divided across the zonal peak 
load in that year, which may include different customers, different peak-demand shares, 
and a new revenue requirement that has changed due to unrelated factors.  
We therefore respectfully request that the Commission clarify that transmission 
owners must immediately credit all revenue received under cost-recovery agreements to 
transmission customers in the relevant zone. Transmission customers will bear the costs 
of any delay in clarifying the governing standard. 
 
CONCLUSION 
The Order correctly finds that the PJM Tariff shifts the costs of Network Upgrades 
for large loads to transmission customers that neither caused nor benefit from them. We 
respectfully request that the Commission grant rehearing and clarification, as discussed 
herein, to protect transmission customers as soon as possible from unjust and 
unreasonable cost shifts. 
[signature page follows] 
 
72 Order at P 84.

29 
 
Respectfully submitted, 
MARYLAND OFFICE OF 
PEOPLE’S COUNSEL  
 
David S. Lapp 
People’s Counsel 
William F. Fields 
Deputy People’s Counsel 
/s/ Philip L. Sussler 
Philip L. Sussler 
Senior Assistant People’s Counsel 
 
6 St. Paul Street, Suite 2102 
Baltimore, MD 21202 
Telephone: (410) 767-8150 
davids.lapp@maryland.gov 
william.fields@maryland.gov 
philip.sussler@maryland.gov 
OFFICE OF THE OHIO  
CONSUMERS’ COUNSEL 
 
Maureen Willis 
Ohio Consumers’ Counsel 
/s/ Angela O’Brien 
Angela O’Brien            
Deputy Consumers’ Counsel 
  
65 East State Street, Suite 700 
Columbus, OH 43215 
Telephone: (614) 466-9531 
angela.obrien@occ.ohio.gov  
 
 
DELAWARE DIVISION OF THE 
PUBLIC ADVOCATE 
 
/s/ David T. Crumplar 
David T. Crumplar (#5876) 
Deputy Attorney General 
820 N. French Street 
Wilmington, DE 19801 
Telephone: 302-577-8400 
David.crumplar@delaware.gov  
Counsel to the Delaware Division of the 
Public Advocate 
OFFICE OF THE ILLINOIS 
ATTORNEY GENERAL 
 
Susan L. Satter 
Chief, Public Utilities Bureau  
/s/ Kimberly B. Janas 
Kimberly B. Janas 
Counsel to the Attorney General 
Scott Metzger 
Senior Assistant Attorney General 
Andrew Obeso 
Assistant Attorney General 
Office of the Attorney General 
115 South LaSalle, 25th Floor 
Chicago, IL 60603 
Telephone: (312) 636-2307 
Kimberly.Janas@ilag.gov 
Scott.Metzger@ilag.gov 
Susan.Satter@ilag.gov 
Andrew.Obeso@ilag.gov

30 
 
Certificate of Service 
 
Pursuant to Rules 206 and Rule 2010 of the Commission’s Rules of Practice and 
Procedure, 18 C.F.R. § 385.206 and 18 C.F.R. § 2010, it is hereby certified that, on this 
17th day of July 2026, a copy of the foregoing has been served upon the Parties and 
Intervenors in this Proceeding.   
 
Respectfully submitted, 
/s/ Philip L. Sussler 
Philip L. Sussler       
 
 
Senior Assistant People’s Counsel