FERC Agrees with Governor Markell: Artificial Island Cost Allocation to Delaware Not “Just and Reasonable”

Governor Markell thanks PSC and Public Advocate for their advocacy and FERC for its close review of PJM’s proposed cost allocation for the project; looks forward to a “technical conference” to identify a more just sharing of the costs.

Wilmington, DE – In a ruling favoring Delaware residents and businesses, late Tuesday the Federal Energy Regulatory Commission (FERC) concluded that power grid manager PJM’s plans to impose on Delaware residents the cost of constructing a more than $100 million transmission line from the nuclear facilities at Artificial Island across the Delaware River “have not been shown to be just and reasonable, and may be unjust, unreasonable, or unduly discriminatory or preferential.”

“This FERC decision is an important first step to protect Delawareans from a significant electric rate increase,” said Governor Jack Markell, who opposed PJM’s plan to force Delaware residents to bear unreasonably high costs for a power line project that mainly benefits businesses and consumers in other states.

“I want to thank the FERC for its review and very sensible conclusion that the costs of a project designed to maximize power production and improve reliability in New Jersey should not fall entirely on Delaware and Maryland consumers. I also want to thank the Delaware Public Service Commission’s members and staff and the Delaware Public Advocate for their efforts to reduce the costs that might have been imposed on Delawareans.

“This issue is not over. FERC’s staff will be conducting a technical conference to develop an alternative, and I look forward working with FERC and Delaware’s utility regulators on a more just sharing of these costs.”

Power grid manager PJM proposed the Artificial Island Project as a means of generating maximum power from the nuclear power generating units at Artificial Island and improving the reliability of area transmission lines. After an extensive review of various alternatives, PJM proposed the construction of a 230 kV power line from Artificial Island to Red Lion in Delaware as the technically superior means of accomplishing those goals. As a result of PJM’s tariff rules, more than $100 million in costs associated with the construction of that line would have been borne by residential, commercial and industrial consumers in Delaware, including customers of Delmarva Power & Light Company, Delaware Municipal Electric Corporation, and the Delaware Electric Cooperative.

“The State Chamber of Commerce and the Delaware Manufacturing Association are pleased that FERC will undertake a review of PJM’s proposed rate allocation for the Artificial Island Project,” said Richard Heffron, President of the Delaware State Chamber of Commerce. “As we have stated, along with Governor Markell and others, Delaware rate payers, including businesses of all sizes, should not be penalized with undue transmission costs that don’t provide them with direct benefits.”

Governor Markell opposed the allocation of those costs to Delaware electricity users in a July 10 letter to the PJM Board of Managers and in an August 20 submission to the FERC, which approves PJM cost allocations.

Today’s FERC order directs the FERC staff to establish a “technical conference” to explore whether projects like Artificial Island should be funded by an alternative allocation that does not impose costs entirely on the recipients of the electricity generated by these kinds of reliability projects.