On April 6, 2012, FERC granted a petition for declaratory order filed by PJM Interconnection LLC (“PJM”) regarding the allocation of costs associated with phase angle regulators (“PARs”) installed within the Midwest Independent Transmission System Operator, Inc. (“MISO”). The PARs were installed to mitigate the effects of the Lake Erie loop-flow problem, which is a multi-regional flow problem. PJM’s petition sought advice from FERC on how PJM should proceed in recovering PAR costs from its own members. On December 30, 2011, FERC ordered revisions to the MISO tariff to ensure recovery of such costs.
FERC declined to provide detailed guidance on the methodology PJM should use to recover PAR costs from its own members. However, FERC noted that a number of potential methods exist. FERC suggested that “PJM could propose to allocate costs using a flow-based distribution factor methodology model modified to include parameters similar to those used [in MISO].” Or, PJM could “attempt to demonstrate that the PARs costs are properly considered ‘PJM costs’ that should be borne by all PJM participants” on a fully socialized basis. FERC also noted that whatever method PJM chooses, PJM is required to make a section 205 filing under the Federal Power Act detailing the allocation procedure in a manner commensurate with the benefits.
A copy of the order is available here.