Dive Brief:
- The Federal Energy Regulatory Commission’s effort to create a framework for data centers to connect to the grid in the PJM Interconnection fails to adequately protect other consumers from data center-driven transmission costs, according to five state ratepayer advocates.
- The advocates contend that FERC’s “show cause” order issued to PJM and five other grid operators last month is flawed because it doesn’t address the cost allocation of network upgrade costs caused by data centers, according to filings at the agency on Friday.
- Ratepayer advocates from Delaware, Illinois, Maryland and Ohio asked FERC to respond as quickly as possible. “Each network upgrade added to a transmission owner’s revenue requirement while these questions remain open embeds another cost shift, and every cost-recovery agreement negotiated against an unsettled standard invites the disputes the Commission could resolve today,” they said.
Dive Insight:
FERC in late June said that grid operators’ rules for interconnecting large loads like data centers to the grid appear to be unjust and unreasonable, in part because other consumers may be paying for data centers’ transmission costs.
The agency gave PJM and other major grid operators 60 days to respond to their show cause orders. However, within 45 days, they can request 90-days extensions.
Ratepayer advocates from the four PJM states, plus the Pennsylvania Office of Consumer Advocate, in a separate filing, honed in on the transmission portion of PJM’s show cause order, saying it leaves existing consumers on the hook for some data center-driven transmission costs.
“It is arbitrary and capricious and contrary to the [Federal Power Act] for the Commission to conclude that it ‘has a duty to address the risk of cost shifting among transmission customers’ while failing to remedy the actual cost shifts the PJM tariff guarantees due to network upgrades for large loads,” the Delaware, Illinois, Maryland and Ohio ratepayer advocates said.
They asked FERC to clarify that cost-recovery agreements between data centers and transmission providers are just and reasonable only if they require the customer to pay the full cost of the network upgrades needed to accommodate the large load.
Even with cost-recovery agreements, PJM’s regional cost allocation rules may cause cost shifts, according to Pennsylvania’s ratepayer advocate.
“Unjust and unreasonable wholesale transmission cost shifts from large loads in PJM can manifest through unjust and unreasonable cost allocation of both [Regional Transmission Expansion Plan] projects and supplemental projects, not just by speculative large loads failing to pay their existing share under existing cost allocation methods,” the Pennsylvania ratepayer advocate said.
The five ratepayer advocate offices noted that states have a limited ability to “sub-allocate” transmission costs to specific customers, in part because some PJM zones cross state borders.
FERC failed to “consider how the PJM tariff confines states to incomplete protection and exposes even those limited measures to legal challenges that transmission owners and customers have raised and continue to press today,” the Delaware, Illinois, Maryland and Ohio ratepayer advocates said.
PJM runs the grid and wholesale power markets in 13 Mid-Atlantic and Midwestern states and in the District of Columbia.
