On May 28, 2019, FERC issued an order approving Commonwealth Edison Company’s (“ComEd”) proposal to modify its formula transmission rate (“Formula Rate”) to recover its portion of the costs to construct, operate, and maintain the Superconductor Cable Development Project (the “Project”).  FERC also approved ComEd’s request for a transmission rate incentive to recover 100 percent of its prudently incurred costs if the Project is cancelled or abandoned for reasons outside ComEd’s control (“Abandonment Incentive”).  FERC found that the Project is properly treated as transmission plant, and thus eligible for recovery in ComEd’s Formula Rate and that the Commission’s approval of ComEd’s requested Abandonment Incentive is appropriate for the Project, which reflects an innovative use of an advanced technology that will improve system reliability.

ComEd is building the Project pursuant to the Resilient Electric Grid Program of the United States Department of Homeland Security (“DHS”).  The Project is a Supplemental Project under PJM Interconnection, L.L.C.’s (“PJM”) Open Access Transmission Tariff, which allows ComEd to recover its portion of the Project costs from transmission customers in the ComEd Zone of PJM.  ComEd reports that the purpose of the Project is to increase grid resilience in the downtown Chicago business district by increasing the redundancy of three existing substations, and to provide voltage support to relieve thermal overloads under severe contingencies.

FERC found that the Project is properly treated as transmission plant, as opposed to a distribution facility.  In rendering its determination, FERC noted that the Project will convert two substations from radial feeders into a looped network, thus providing bi-directional flows and voltage support and relief from thermal overloads, which are typical functions of transmission facilities.  FERC further noted that although the Project would nominally operate at a significantly lower voltage than conventional transmission facilities, superconductor cables have no resistance and no heat losses and can operate at dramatically lower voltages than traditional transmission facilities of similar capacity.

FERC also indicated that because the Project is supported by DHS as an innovative technology to improve reliability, and the results of the installation of the technology have the potential to benefit dense urban centers around the country, granting ComEd’s requested Abandonment Incentive is appropriate.  FERC stated that the Abandonment Incentive should encourage completion of the Project, which is likely to create unique and special challenges for ComEd due to risk factors beyond the company’s control, including the risks inherent in using a novel transmission technology and the risk that ComEd’s partners could abandon the Project, especially if costs become prohibitive.

Click here to read the full order.