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PJM Seeks RTO Status, Owners Pledge Grid Upgrade

PJM Seeks RTO Status, Owners Pledge Grid Upgrade

In seeking FERC certification as a regional transmission organization (RTO) last week, PJM Interconnection LLC and its nine transmission owners claimed the regional independent system operator (ISO) already possessed the characteristics and functions required by the Commission's Order 2000 to qualify as an RTO.

"Indeed, PJM already has in place the functions that Order 2000 allows other RTOs several more years to implement. For PJM, the Commission resolved most of the issues raised by Order 2000 nearly three years ago when PJM became an ISO.PJM clearly meets all of the characteristics of an RTO," the group said its RTO compliance filing submitted last Thursday

In addition to citing the independence of its governance structure and the absence of any financial interest by PJM employees in the regional power market, the group touted the "scope and configuration" of PJM, noting it is the "largest centrally dispatched control area" in North America and third largest in the world.

As part of the filing, PJM's nine transmission owners proposed a "transmission enhancement package" that contains "concrete commitments" on their part to upgrade the PJM-directed grid. They also seek a rate moratorium on existing zonal transmission rates through Dec. 31, 2004, authorization to defer cost recovery of capital investments in new transmission projects until after the rate moratorium, accelerated depreciation of new transmission investments until the close of the rate freeze, confirmation that risk adjusted rates of return for new transmission investment within PJM are appropriate, and an extension of the current deadline for the phase-in of system-wide PJM rates during the rate suspension period.

In related action, power marketer Morgan Stanley Capital Group Inc. urged FERC to eliminate the bid cap in the PJM to coincide with the expiration of temporary bid caps in the New York and New England ISOs this month. Also, it proposed that the installed capacity (ICAP) requirement and deficiency charge be eliminated in PJM [RL01-3].

Transactions in the Pennsylvania-New Jersey-Maryland market were valued at $1.8 billion in 1999, the PJM reported. The PJM administers about 8% of the nation's electric power, with pooled generation capacity of more than 58,000 MW. It has more than 190 members, and serves about 22 million customers in the Mid-Atlantic region.

The PJM transmission owners include Baltimore Gas and Electric, Conectiv Power Delivery (Atlantic City Electric Co. and Delmarva Power & Light), GPU Energy (Jersey Central Power & Light, Metropolitan Edison and Pennsylvania Electric Co.), PECO Energy, PPL Electric Utilities Corp., Potomac Electric Power Co., Public Service Electric and Gas, UGI Utilities Inc. and Allegheny Electric Cooperative.

Susan Parker

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