Overview
On December 13, 2024, PJM Interconnection, L.L.C. (“PJM”), filed with the Federal Energy Regulatory Commission (“Commission”) a modification to Part VII of its Open Access Transmission Tariff (“Tariff”), adding provisions to enable a one-time reliability-based expansion of the eligibility criteria for Transition Cycle #2 to allow a limited number of additional resources to enter the existing cycle without impacting its timely completion. PJM’s revisions result from its Reliability Resource Initiative (“RRI”), which seeks to address resource adequacy concerns stemming from significant load growth, accelerated resource retirement, and the lower reliability values of certain intermittent resources in its existing queue. PJM’s tariff reforms propose a one-time process whereby 50 resources will be selected based on a scoring process that takes into account reliability, viability, and availability criteria and added to Transition Cycle #2. PJM represents that this expansion of the queue will not impact the study schedule for Transition Cycle #2.
Proposed Tariff Revisions
Scoring Criteria. While an unlimited number of projects can apply, PJM will select just 50 to join Transition Cycle #2 based on scoring criteria. PJM explains that the RRI scoring criteria aim to identify projects: (1) capable of providing substantial quantities of needed Unforced Capacity with substantial reliability value, (2) able to provide Capacity from resources with high reliability value to maximize the resource adequacy yield from RRI Projects, (3) located in geographic areas with scarce Capacity, (4) with potential for near term construction and commercial operation (i.e., 2028-2031), (5) possessing proper permits, siting, financing, major equipment and/or an engineering and procurement agreements, (6) uprating projects already in commercial operation such that they can advance already sited projects, and (7) unlikely to require major Network Upgrades. The scoring criteria take into account a project’s Capacity Interconnection Rights, Maximum Facility Output, and ELCC Class Rating, according to the formula set forth in the proposed tariff revisions. PJM states that the scoring criteria design attempts to target RRI Projects that can best address its resource adequacy needs and enter the interconnection process as soon as possible.
Special Restrictions on RRI Projects. PJM proposes to impose special requirements on RRI Projects that do not apply to other Generation Interconnection Requests to ensure RRI Projects are available when needed. RRI Projects must be offered as a Generation Capacity Resource into the Reliability Pricing Model Auction or committed to a Fixed Resource Requirement Plan for a minimum of 10 Delivery Years from the project’s commercial operation date and will not be permitted to change their Maximum Facility Output, Capacity Interconnection Rights, or fuel type from their application through the conclusion of the 10th Delivery Year. RRI Projects also agree to waive their right to the one-year extension of milestone dates typically available in other PJM interconnection agreements.
Application Process. The proposed reforms require Project Developers to complete an Application and Studies Agreement and provide, in addition to the usual Study and Readiness Deposits, an additional RRI Deposit of $4,000/MW. The RRI Deposit is returned if the project is not one of the 50 selected. The application deadline for RRI Projects will be announced at least 30 days in advance of the deadline.
Proposed Justification for Commission Acceptance
PJM admits that its tariff revisions proceed from an abbreviated stakeholder process, but states that they are necessary to add additional reliability projects to Transition Cycle #2. PJM articulates this is the only way to timely study RRI Projects, which will be able to interconnect approximately 18 months sooner than they otherwise would in Cycle #1 under the new generator interconnection rules. PJM notes that the RRI process would be limited to the Transition Period, and thus a one-time event. PJM asserts that any potential impacts on existing Transition Cycle #2 projects are speculative, and highlights safeguards such as the 50-project cap on eligible RRI Projects, and the required scoring criteria prioritizing reliability. However, PJM specifically declined to “hold harmless” the existing projects in Transition Cycle #2, which may ultimately be impacted by the expansion of the queue to the additional 50 RRI Projects.
PJM requested an effective date of December 14, 2024, and Commission action on the filing by February 11, 2025. PJM represented that if the Commission does not act by February 11 or issues a deficiency notice, PJM will not be able to commence the RRI process without delaying Transition Cycle #2 and will be forced to withdraw its filing. Comments are currently due by January 6, 2025.
PJM’s filing is accessible here. Please do not hesitate to reach out with any questions.