Federal Agency Says NJ Must Bear Full Cost of $1.2B Transmission Line

BPU argues reliability upgrade mandated by regional grid operator benefits New Jersey and New York, but FERC says Garden State must foot the bill

The Federal Energy Regulatory Commission has denied a bid by New Jersey officials to overturn a decision in a multistate dispute concerning who gets saddled with the costs of a $1.2 billion transmission upgrade.

In a decision rendered last Thursday, the federal agency denied a complaint by the New Jersey Board of Utilities in a case state officials argued unreasonably left ratepayers here bearing the cost of a reliability upgrade mandated by the regional grid operator, PJM Interconnection.

In its complaint, the BPU argued the Bergen-Linden transmission project not only addressed reliability issues in northern New Jersey but also benefits other suppliers in the grid operated by the New York Independent System Operator — providing additional capacity from PJM into that system.

The case stems from a trend in which utilities across the nation are being pressed to modernize an aging power grid that faces multiple issues. These stem from the premature retirement of coal and nuclear power plants and a growing shift to renewable energy and other sources of distributed energy.

FERC referees fight

The federal agency ended up as the referee in the dispute between the BPU; and NYISO; Consolidated Edison; PJM; two transmission operators, Linden VFT and Hudson Transmission Partners; and the New York Power Authority.

Initially, the cost of the transmission upgrade was allocated among ConEd, the two transmission operators, and Public Service Electric & Gas, which built the transmission infrastructure. Essentially, all parties in the case sought to avert sharing the costs by terminating previous agreements tapping power from the new transmission line, with the exception of PSE&G.

In its complaint, BPU argued that the reliability issues the new transmission line addressed were driven by power transfers to New York, a point disputed by the other contesting parties.

By avoiding paying for a portion of the transmission upgrade, New Jersey officials contended the actions by PJM and the other parties resulted in unjust, unreasonable, and unduly discriminatory rates for its ratepayers. The BPU also sought a refund for ratepayers.

Next steps

A spokesman for the BPU said the agency was disappointed by the decision and is reviewing the decision to determine its next steps.

New Jersey Division of Rate Counsel director Stefanie Brand also expressed displeasure with FERC’s decision. “We are essentially being asked to be the backstop for New York without them paying for it,’’ Brand said.

But FERC ruled that since the Bergen-Linden project was planned by PJM, and without a voluntary commitment to share cost responsibility by the other region, it is just and reasonable for the costs to be allocated solely within that region.

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