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PJM Interconnection puts $2 billion PATH line on hold

The three-year effort to prove the need for a new, $2.1 billion regional high-voltage power line ground to a halt on Monday after the companies behind it pulled their applications to build the line.

PJM Interconnection, which regulates the power supply in Maryland and 12 other states and the District of Columbia, called for a halt to the efforts to build the Potomac-Appalachian Transmission Highline (PATH) line from West Virginia to Maryland. The controversial 275-mile long power line was to have connected the Amos Substation in West Virginia to the proposed Kemptown substation near Frederick. The board of directors of PJM said Monday the outlook for a slower economic recovery led it to the decision to suspend efforts to build PATH.

“Recent dramatic swings in economic forecasts and evolving public policies [particularly with respect to renewable energy] are adding greater uncertainty to our planning studies,” Terry Boston, PJM president and CEO, said in a statement. “Uncertainty about generation retirements, particularly in response to potential changes in environmental regulations, may also be diminishing the robustness of the current planning criteria.”

PATH is a joint venture of Allegheny Energy Co. and American Electric Power Co. The venture had been strongly opposed by local governments and other groups. The companies were tasked with building the765-kilovolt line after analysis conducted in 2007 showed it was needed by 2015 to ensure the area met federal reliability standards.

The companies have already spent an estimated $120 million in capital costs on PATH. FirstEnergy spokesman Todd Meyers said Allegheny’s share of the costs were about $91 million, and the company was allowed to recover that from ratepayers.

The announcement comes after the merger between FirstEnergy and Allegheny Power received its final approval on Friday. The surviving entity, FirstEnergy, had planned to move forward with the project pending approval from Maryland, Virginia and West Virginia regulators.

“As recently as December, PJM said PATH was the preferred solution to address the generation problem,” Meyer said. “It’s somewhat disappointing, but the numbers have changed.”

The PJM board did not say how long it would suspend the efforts, but did say the project was not being abandoned. Instead, PJM said it would continue its analysis but it is off the list of projects for this year.

“While we are certainly disappointed by the suspension of PATH and the uncertainties created by the PJM planning process, we do support a thorough and detailed analysis of the need for the project,” American Electric Power CEO Michael G. Morris said in a statement. “We remain convinced that the project will be needed and plan to move forward with it when PJM completes its review.”

The Maryland Public Service Commission on Friday approved an extension of the hearing over the project pending the results of PJM’s analysis. Bryan Moorhouse, special counsel to PSC Chairman Douglas R.M. Nazarian, said the application to withdraw the project had been received and would be reviewed.

Opponents of the projects have been numerous in all three states that would have been affected. Critics of the project include local governments and organizations like the Coalition Against Kemptown Electric Substation (CAKES), a citizens group opposed to the plan to build a new substation in the Mount Airy and Monrovia neighborhoods. The Sierra Club, another opponent of the project, welcomed the news the project had been shelved.

“We feel vindicated that PJM is started to be on the same page with us on this,” said Abigail Dillen of Earthjustice, the attorney representing the Sierra Club in its opposition to PATH. “It seems that the PJM saw the reality that with the upgrades already approved there is no justification for building this line.”

The Sierra Club opposed the project on grounds that the line would lead to greater pollution and to an increase in the number of power plants using coal.

“The idea was they wanted to build a brand-new superhighway for coal-fired power to the cities of the East Coast, and that was pretty troubling,” Dillen said. “From the beginning we’ve said this line isn’t needed, we have clean energy that’s working and we feel PJM is, in this case, agreeing with us.”

News of the project’s suspension did not have a negative impact on shares of FirstEnergy, which closed at $38.30, up $1.08 in New York Stock Exchange trading on Monday.

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