Life in the PJM Snake Pit

Keryn did some digging into the always fascinating PJM Transmission Expansion (Why “expansion?”  Why not “improvement?”) Advisory Committee and found the latest transmission squabble.  As Keryn points out, the whole thing is pretty funny because FirstEnergy is now whining that PJM is being “arbitrary and capricious.”  Yeah, pretty funny.

The squabble involves PJM’s TEAC awarding a project to install Static VAR Compensators  (SVCs) at two high voltage substations, one owned by Dominion Virginia Power and the other by FirstEnergy.  In 2011, PJM had awarded contracts for the SVCs to an independent company called Primary Power, LLC.  Then, in 2012, PJM took one of the SVC jobs away from Primary Power and gave it to Dominion.  Keryn has a great account of the whining that is going on among these companies, including links to their letters of protest at PJM.

I don’t know the facts of the situation, because this is the first time I have seen anything about it.  Keep in mind, however, that PJM is a cartel, dominated by its largest power company members, including FirstEnergy and Dominion.  One of the purposes of a cartel is to limit entry of new competitors into a particular market, such as the market for installing SVCs on the PJM system.

Here is Primary Power’s story about what happened:

(3) The OI [PJM’s Office of Interconnection] did select two of the SVC projects sponsored by Primary Power – the Mt. Storm/Petersburg SVC and the Meadowbrook/Rio SVC – and, consistent with the Primary Power Order, the OI recommended designating Primary Power to construct the projects at the November 3, 2011 TEAC meeting.

(4) Almost a month after the OI’s November 2011 recommendation to designate the SVCs to Primary Power, certain PJM incumbent transmission owners, including Dominion and First Energy, submitted last minute complaints to this Board challenging the OI’s process and asking the OI to consider alternatives to designating the SVCs to Primary Power.

(5) The Board approved several other SVC projects without any further evaluation, but postponed a final determination of the Primary Power SVCs.

(6) The OI requested additional input of the Mt. Storm/Petersburg SVC designated to Primary Power, which Primary Power readily and timely provided. Primary Power’s input included extensive technical analysis. Dominion claimed that it has an “alternative” SVC project, which was essentially the same facility proposed by Primary Power, but moved less than 25 miles away to a Dominion owned substation. Dominion suggested this new “alternative” without any meaningful analysis.

(7) Notwithstanding the extensive additional analysis provide by Primary Power supporting the technical capability of the SVC project at the proposed site, which was recommended by the OI at the November TEAC meeting, at a special TEAC meeting held by telephone on January 30, 2012, the OI reversed its recommendation and handed the Primary Power-sponsored SVC to Dominion.

This is only Primary Power’s side of the story, so we have to take it with a grain of salt, but this sure looks like the behavior of a cartel designed to protect one of its members against unwanted intrusion by an outsider.  Elsewhere in its complaint letter, Primary Power claims that Dominion never showed interest in the Mt. Storm/Petersburg SVC project until after the project was awarded to Primary Power.

We know, from our experience in TrAIL and PATH, just how “arbitrary and capricious” PJM’s TEAC can be.  We also know, from past accounts of PJM corruption, how PJM protects its favored members like FirstEnergy and Dominion.  Primary Power’s account of the current situation seem to fit with PJM’s past behavior.

This controversy is also interesting in light of PATH expert Hyde Merrill’s recommendations in his East Virginia testimony.  Static VAR Compensators are used to generate reactive power to stabilize voltage on inherently unstable high voltage AC transmission systems.  Here is Merrill’s assessment of PJM/AEP/FirstEnergy’s claims that PATH was needed to eliminate voltage instability on PJM’s system:

PJM’s claimed vulnerability to widespread voltage collapse was identified for the first time in April 2009, long after the line had been approved based on alleged 500-kV thermal violations. Now, PJM maintains that PATH is required to prevent alleged voltage collapse. However, PJM has admitted that installing 2,000 Mvars of capacitors would eliminate these voltage issues. And Company witnesses have admitted that the PATH project itself entails installation of 1,750 Mvars worth of new capacitors. In other words, PJM has identified a need to install new capacitors with or without the PATH line in service. So why not install PJM’s 2,000 Mvars of capacitors, costing $40 million, instead of the planned-for 1,750 Mvar and the $1.8 billion PATH project?

Merrill refers to “capacitors” in his testimony, but SVCs accomplish essentially the same purpose in terms of stabilizing voltage.

On the one hand, it makes sense to install SVCs at high voltage substations where 500 kV lines are connected.  On the other hand, this small incident brings into sharper focus just what is wrong with building a bigger and bigger transmission grid.  Both the Mt. Storm and the Meadowbrook substations are connected to the newly constructed TrAIL line.  While, as Hyde Merrill pointed out, SVCs were needed in the PJM system anyway, could it also be that TrAIL’s new capacity also contributed to the potential for more voltage instability as more and more AC power was moving through the system at those points, increasing the need for reactive power reinforcement?

George Loehr, another grid and reliability expert who testified in the East Virginia PATH case, has said repeatedly that the new “deregulated” system has far more bureaucracy and management costs than our old state-regulated power industry.  Our brave new world of power company cartels and FERC incentives, ushered in by the Clinton administration, the electricity industry and the speculators like Enron and Goldman Sachs, is now largely controlled by cartels such as PJM, where rate payers and the democratic process are completely excluded.

Welcome to the PJM snake pit, where the paperwork is never-ending, the costs are always hidden, and the whining never stops.

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