DOVER, Del. — The Federal Regulatory Commission on Thursday granted a rehearing sought by Delaware and Maryland officials over planned cost allocations for a $278 million regional electric transmission line project.
The two states sought the rehearing after FERC in 2016 denied their complaint alleging that the cost-sharing formula used by regional grid operator PJM Interconnection was unfair.
The project calls for construction of a 230-kilovolt line from the Artificial Island nuclear complex in southern New Jersey to Delaware in order to improve system reliability.
Delaware and Maryland officials have argued that ratepayers on the Delmarva peninsula would pay more than 90 percent of the cost for a project that mostly benefits New Jersey. They have urged FERC to consider two alternative cost methodologies that would bring the cost share for Delmarva ratepayers to about 7 to 10 percent.
The commission declined to embrace either of the proposed alternative formulas, or a hybrid cost-allocation method proposed by Exelon. Exelon is the parent company of Delmarva Power and co-owner, along with Public Service Electric & Gas Co., of Artificial Island.
The commission did conclude, however, that it would be “unjust and unreasonable” to apply PJM’s proposed cost allocation to facilities that address stability-related reliability issues, including the Artificial Island project. The commission said it was establishing procedures to develop additional information to help it deter mine a just and reasonable cost allocation, with responses due in 60 days.
In a statement, PJM described the Artificial Island project as “unique,” and driven by the need to ensure system stability.
“FERC has decided it needs additional information and PJM welcomes the opportunity to work with all parties to resolve the matter,” the company said.
In a joint statement, Govs. John Carney of Delaware and Larry Hogan of Maryland welcomed the commission’s decision.
“Under the current cost allocation, residents and businesses in Delaware and Maryland would fund the vast majority of the project through higher electric bills, while receiving few direct benefits,” the statement read. “As we have said all along, that is a bad deal for the residents of our states. We are pleased FERC has granted a rehearing.”
In November, the governors sent a letter to FERC stating that they were not opposed to the project itself but disagreed with requiring Delmarva residents to shoulder the cost burden.
In February, Carney signed legislation unanimously passed by the General Assembly aimed at giving the Delaware Public Service commission more leverage in the Artificial Island controversy. The bill requires any entity seeking to begin the business of an electric transmission utility in Delaware to first obtain the approval of the PSC. In deciding whether to grant certification for the project, the commission would be required to consider several factors, including the impact on Delaware’s economy and the benefits to the state’s ratepayers.