On June 16, 2015, the Commission denied a complaint filed by Public Service Electric and Gas Company (“PSEG”) against PJM Interconnection, L.L.C. (“PJM”) in which PSEG contended that PJM did not comply with certain rules of its Open Access Transmission Tariff (“OATT”) in conducting a competitive solicitation for transmission solutions to the “Artificial Island”— a term that refers to the transmission and generation infrastructure associated with a nuclear complex that includes the Salem 1, Salem 2, and Hope Creek nuclear generating units.  In denying PSEG’s complaint, the Commission found that: (i) PJM was not required to follow its Order No. 1000 procedures in its Artificial Island solicitation; and (ii) PJM complied with its pre-Order No. 1000 OATT rules in conducting the solicitation.

PJM originally identified operational performance issues associated with the Artificial Island during the course of its 2012 and 2013 transmission planning cycles.  After a solicitation process in which PJM received 26 proposals from seven different applicants, PJM awarded the project to LS Power.  On January 29, 2015, PSEG filed a complaint with the Commission in which it alleged, among other things, that when conducting the Artificial Island solicitation, PJM violated its OATT rules established under Order No. 1000 by: (i) unilaterally making technical modifications to each submitted proposal; and (ii) allowing LS Power to modify its proposal by adding a construction cost cap over a year after the proposal window closed.

In denying PSEG’s complaint, the Commission found that, as a threshold matter, PJM was not bound by its Order No. 1000 OATT provisions in conducting the Artificial Island solicitation.  The Commission noted that when it accepted PJM’s Order No. 1000 rules, it also approved an effective date for those rules of January 1, 2014—eight months after the Artificial Island solicitation commenced.  The Commission found that, while PJM had previously stated in the Order No. 1000 proceedings that it would implement the new Order No. 1000 solicitation process “to the extent feasible and practicable” before January 1, 2014, this statement did not bind PJM to the Order No. 1000 rules prior to the effective date approved by the Commission, as PSEG contended.

The Commission also disagreed with PSEG’s assertion that the formal tariff process that became effective on January 1, 2014 was triggered when PJM reevaluated the proposed Artificial Island projects in 2014, noting that in Order No. 1000, the Commission recognized that the new rule was “likely to fall in the middle of ongoing planning cycles,” and therefore required each region “to determine at what point a previously approved project is no longer subject to reevaluation and, as a result, whether it is subject to the requirements of Order No. 1000.”  The Commission determined that PJM’s continuing evaluation of the Artificial Island project proposals after January 1, 2014 was part of PJM’s original or initial evaluation, and was therefore governed by the pre-Order No. 1000 OATT rules.

The Commission also found that PJM’s application of its pre-Order No. 1000 transmission planning process to the Artificial Island solicitation was just and reasonable, and noted that nothing within that pre-Order No. 1000 process prohibited any of the actions PJM took with respect to the Artificial Island solicitation at any stage.  The Commission observed that stakeholders were allowed multiple avenues of participation in the process, and were provided with opportunities to make comments and recommendations “every step of the way.”

Lastly, the Commission found that the technical modifications that PJM made to the proposals were not unduly discriminatory because they were applied universally to all applicants, where relevant.  Similarly, the Commission found that the when PJM received a letter from LS Power proposing a construction cost cap, it invited all of the finalist project sponsors to make further submissions to confirm their costs as well, and therefore did not act in an unduly discriminatory manner.

A copy of the Commission’s order may be found here.