PJM reaffirms Transource plan's value

Public interest has grown recently in the proposed Transource electric transmission project designed to improve the efficient flow of low-cost electricity across the border of Maryland and Pennsylvania.

As deliberations occur at the state level, it is important for the public to understand the purpose of the project and the role of our company, PJM Interconnection, in its planning.

PJM is the independent organization assigned by the Federal Energy Regulatory Commission to operate and plan for improvements to the electrical grid that serves 65 million consumers over an area of 13 states and the District of Columbia. Our territory ranges from New Jersey down to North Carolina and west to Illinois.

We don’t own the interstate transmission system or make a profit from it. But we maintain the reliability of the system and ensure that there’s enough power and reserves to keep the lights on, the air conditioners running, and businesses humming.

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Similarly, we’re responsible for making sure the transmission system is efficient, economical and equitable. After all, it would not be fair for customers in one area to consistently pay higher prices than others do simply because the system’s design prevented some customers from accessing the lowest-cost electricity.

For many years, some customers in the Mid-Atlantic region, those in areas of Maryland, Northern Virginia and the District of Columbia, have had to pay comparatively higher prices than customers in other areas have, because bottlenecks in the interstate transmission system have not allowed an efficient flow of the lowest cost power into the zone.

PJM staff recognized this persistent problem, sought solutions and determined that the Transource proposal -- two new high-voltage lines to let additional cheaper electricity flow into the constrained area -- would be the most cost-effective approach to relieving the bottlenecks. In 2016, under the authority of the Federal Energy Regulatory Commission, the PJM Board of Managers approved this market efficiency project.

In identifying the problem and designating Transource as the developer to solve it, PJM performed the duty it was assigned by the federal government.

Designated transmission developers, not PJM, are responsible for selecting the siting and obtaining the necessary state and local approvals for construction of their projects. PJM is responsible for identifying the needs and designating solutions. Applications for the Transource project are now under consideration by the Maryland Public Service Commission and the Pennsylvania Public Utility Commission.

PJM recently completed its annual review of the Transource project. Our thorough analysis of the many factors that go into benefits and costs concluded that the benefits continue to justify the costs. The analysis considered factors such as recent load and congestion forecasts, current cost estimates, power flow projections, topology, interregional modeling, future fuel prices and generation interconnections. As a result of the findings, the project will remain in PJM’s long-term Regional Transmission Expansion Plan.

To be included in the plan, the benefit/cost ratio must be at least 1.25, meaning the benefits must outweigh the costs by at least 25 percent. Our recent analysis found that the project’s current benefit/cost ratio is 1.42. The project is estimated to save consumers $866.2 million over 15 years in congestion costs.

There are additional benefits to the project, however, that extend beyond the economics.

During our recent review, PJM found that the Transource project also will address significant reliability issues that are emerging on the regional transmission system, including the potential overload of a key high-voltage line that carries electricity across the Pennsylvania-Maryland border. Without the additional transmission capacity provided by the Transource project, the system could face serious violations of federal reliability standards, which would require additional measures to address.

PJM recognizes that many stakeholders’ interests intersect on this project and, in fulfilling our federally mandated role, we believe it’s important that those stakeholders understand the project’s purpose and benefits. The interstate high-voltage transmission system is a shared resource, and consumers including homeowners, tenants, businesses and industrial plants throughout the PJM footprint benefit from a robust network that provides reliable and affordable electricity across the region.

Steve Herling is vice president for planning at PJM Interconnection.