The PJM Interconnection’s board on Monday approved a roughly $5 billion package of transmission projects that the grid operator says are needed in response to data center load growth and power plant retirements.
The projects, selected through PJM’s regional transmission expansion planning window 3 procurement, referred to as W3, are set to be built by Dominion Energy, FirstEnergy, Exelon, PPL, NextEra Energy, Transource and Public Service Electric & Gas.
The board declined to adopt a request by the Maryland Office of People’s Counsel that the vote be delayed to give stakeholders more time to review the plan. “The W3 procurement is unique, proportionally huge (in cost and scope of transmission facility expansion) and, accordingly, truly unprecedented,” David Lapp, Maryland people’s counsel, who represents ratepayers, said in a Friday letter to the board, noting stakeholders had only 18 days to review PJM’s plan.
The W3 transmission projects are in response to planned data centers in Virginia and Maryland with 7,500 MW of load and more than 11,000 MW of announced generation retirements in PJM’s footprint, according to the grid operator.
PJM said it selected the projects based on four main factors: their ability to meet system needs through 2028; their ability to expand to meet system needs beyond 2028; their use of existing rights of way; and their cost and schedule risks.
The W3 projects add to the $627 million of projects approved in October 2022 to support the Dominion Data Center Alley project and $786 million approved in July to support the retirement of Talen Energy’s Brandon Shores power plant in Maryland, according to PJM, which operates the grid and wholesale power markets in 13 Mid-Atlantic and Midwest states and the District of Columbia.
The three groups of projects — totaling about $6.4 billion — have sparked concerns by state utility regulators and others that PJM’s transmission planning processes are “siloed” and “reactive,” possibly leading to inefficient solutions.
In his letter to PJM’s board, Lapp, Maryland’s ratepayer advocate, said PJM’s planning processes need changes so stakeholders can better understand the grid operator’s decisions.
PJM, for example, failed to adequately explain what is driving the need for the W3 projects, making it impossible for the public to understand how their costs should be shared and whether the cost allocation will be “just and reasonable,” according to Lapp.
“The major beneficiaries of the W3 projects (presumably, the retail electric distribution companies directly interconnecting with the data centers) will see increased sales to support the additional costs associated with expanded service for the data centers, while some substantial portion of the costs will be visited on all other end-use electric customers in the PJM footprint who will pay, but not be similarly benefitted,” Lapp said.
“The PJM process for W3 has been deficient in a critical dimension — consultation and engagement with the many affected public stakeholders — notwithstanding the extensive effort conducted by PJM to date,” Lapp said, noting that the process the grid operator followed “nominally conforms” with its procedural rules.
Lapp called on PJM to extend its public consultation process for the W3 projects by six months or more to give stakeholders time to evaluate the grid operator’s underlying analysis, methods and data.