On September 14, 2016, FERC denied a Federal Power Act (“FPA”) Section 206 complaint filed by Vineland Municipal Electric Utility (“Vineland”) alleging that Atlantic City Electric Company (“ACE”) applied unauthorized weather normalization adjustments to Vineland’s capacity peak load contribution, which increased the capacity charge PJM Interconnection, LLC (“PJM”) assessed to Vineland during the 2015-2016 delivery year by 18.6 percent, or $1.6 million. In denying the complaint, FERC validated ACE’s application of the weather normalization adjustment and precluded Vineland from receiving refunds requested for past adjustments.
Vineland is a municipal utility located in the ACE Transmission Zone (“ACE Zone”) within PJM. Vineland receives transmission service under the PJM Tariff, subject to the terms of an interconnection agreement (“IA”) with ACE. The IA requires that ACE transmit Vineland’s load values to PJM. Additionally, ACE applies a weather normalization adjustment to Vineland’s load values in accordance with the PJM Reliability Assurance Agreement to which Vineland is a party. PJM uses the load values and adjustments transmitted by ACE to calculate the capacity charges for Vineland.
In the complaint filing, Vineland claimed that ACE’s application of the weather normalization adjustment violated the IA and the PJM Tariff. Specifically, Vineland argued that it was not subject to the weather normalization adjustment because it is a wholesale customer. According to Vineland, ACE’s authority to impose the weather normalization adjustment derives from ACE’s retail Supplier Operations Manual, which the Commission had previously found to be inapplicable to Vineland. Moreover, Vineland alleged that ACE applied the adjustment without providing Vineland with notice and obtaining consent as required by the IA. ACE responded – and PJM agreed – that the weather normalization adjustment is required for all load serving entities within the ACE Zone under the PJM Reliability Assurance Agreement. ACE stated further that for the past six years Vineland has consented to weather normalization adjustments without objection.
In denying Vineland’s complaint, FERC found that the “PJM Reliability Assurance Agreement, accepted by the Commission as the filed rate and to which Vineland is a party, requires weather normalization to be factored into the calculation of each party’s Locational Reliability Charge.” Further, FERC rejected Vineland’s argument that it had not received proper notification of the weather normalization adjustments. FERC found that the notice and consent provisions of the IA are limited to Vineland’s capacity peak load contribution values, and not the weather normalization adjustment as Vineland claimed. Instead, FERC explained that the weather normalization is actually performed by PJM, and ACE merely applies the adjustment to agreed-upon load values.
The Order Denying Complaint is available here.