Opinion ID: 187082
Heading Depth: 2
Heading Rank: 3

Heading: But For Facilities

Text: Because FERC reasonably determined that Petitioners' interconnection facilities are Network Upgrades and that Petitioners are GICs, it was reasonable for the Commission to apply the cost responsibility provisions in Section 37.2 of the Tariff. Section 37.2 of the Tariff assigns to the Interconnection Customer 100 percent of the costs of the minimum amount of . . . Network Upgrades necessary to accommodate [an Interconnection Customer's] Interconnection Request and that would not have been incurred under the Regional Transmission Expansion Plan but for such Interconnection Request, net of benefits resulting from the construction of the upgrades. . . . Interpreting Section 37.2 in light of the provision's language and the relevant policy considerations, FERC found that it determines cost responsibility based not on electrical integration (whether the facilities operate as transmission facilities) or ownership, but rather on whether the connection facilities would have been built for another purpose or enable the system to avoid certain expenditures. Order Denying Rehearing, 116 FERC at 61,701. To read the provision to allow GICs to recoup interconnection costs through transmission revenue would undermine the Commission's policy to promote efficient interconnection and enhance overall economic efficiency and defeat the purpose of Order No. 2003 to treat generation interconnections built by transmission owners differently from other generation interconnections. Order Rejecting Rate Filings, 114 FERC at 61,962. FERC found no evidence that Petitioners' interconnection facilities would have been built but for their need to connect to the transmission grid. Order Denying Rehearing, 116 FERC at 61,705. Because Section 37.2 assigns to the GIC 100 percent of the costs of interconnection when facilities would not have been built but for the interconnection request, FERC denied Petitioners' request to recoup these expenditures through transmission revenue. Id. On appeal, Petitioners make several allusions to services their transmission facilities now provide to the grid, but they still point to no evidence in the record that the PJM Transmission System would have built facilities to provide these services in the absence of Petitioners' need to connect to the grid. While Petitioners contend that FERC refused to acknowledge the benefits of increased reliability and flexibility to the grid their facilities provide, Petitioners' Br. at 26, the presence or absence of these purported benefits is not controlling. The allocation of costs under Section 37.2 depends on the grid's demonstrated need for interconnection facilities, not the incidental services or benefits any given interconnection facility may provide once it is built. The same reasoning applies to explain why the future cost of a $200,000 wave trap replacement and other unquantified costs associated with complying with TOA regulations, Request for Rehearing of Old Dominion Elec. Coop., at 26, Docket No. ER06-497-000 (Apr. 17, 2006), are not evidence that the facilities would have been built but for their interconnection request. FERC adequately responded to this argument, asserting that these costs resulted from [Petitioners'] choice to build and own these facilities[,] not from any demonstrated need by the system. Order Denying Rehearing, 116 FERC at 61,702. And while the 500 kV capacity of their substation and transmission lines more than doubles the maximum output of their generation units, this additional capacity is not evidence that the PJM Transmission System would have added facilities such as these absent Petitioners' need to interconnect. FERC reasonably attributed this extra capacity to the need for the interconnection facilities to match the transmission capacity of the grid so as not to adversely affect the reliability of the grid. Order Denying Rehearing, 116 FERC at 61,705. Because Section 37.2 requires evidence that facilities would have been built but for a GIC's need to interconnect for the GIC to receive any credit towards interconnection construction costs, FERC reasonably assigned to Petitioners 100 percent of interconnection costs and denied their rate filing for reimbursement of these costs.