UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION

PJM Interconnection, L.L.C. ) Docket Nos. ER21-460-000 ) EL20-56-000

MOTION FOR LEAVE TO ANSWER AND ANSWER OF PJM INTERCONNECTION, L.L.C.

PJM Interconnection, L.L.C. (“PJM”), pursuant to the Federal Energy Regulatory

Commission’s (“Commission”) procedural rules,1 submits this Motion for Leave to

Answer and Answer to the December 14, 2020 Joint Protest and Motion to Reject of

Indiana Municipal Power Agency (“IMPA”) and Buckeye Power, Inc. (“Buckeye”),2 and the December 14, 2020 Comments of American Electric Power Service Corporation

(“AEP”).3

The Commission should deny IMPA’s and Buckeye’s motion to reject PJM’s

November 23, 2020 filing4 to comply with the Commission’s September 17, 2020 order5 in this proceeding. Contrary to their arguments, the Compliance Filing’s revisions6

1 18 C.F.R. §§ 385.212, 385.213. 2 Indiana Municipal Power Agency’s and Buckeye Power, Inc.’s Joint Protest of and Motion to Reject PJM Interconnection, L.L.C.’s Compliance Filing, Docket No. ER21-460-000 (Dec. 14, 2020) (“IMPA/Buckeye Motion/Protest”). 3 Comments of American Electric Power Service Corporation, Docket No. ER21-460-000 (Dec. 14, 2020) (“AEP Comments”). 4 PJM Interconnection, L.L.C., Compliance Filing, Docket No. ER21-460-000 (Nov. 23, 2020) (“Compliance Filing”).

5 Ind. Mun. Power Agency v. PJM Interconnection, L.L.C., 172 FERC ¶ 61,243 (2020) (“September 17 Order”).

6 The Compliance Filing submitted proposed revisions (“Compliance Revisions”) to the Amended and Restated Operating Agreement of PJM Interconnection, L.L.C. (“Operating Agreement”) and the PJM Open Access Transmission Tariff (“Tariff”)6 to comply with the directives in the September 17 Order. For ease of reference, this Answer refers to the Operating Agreement when describing revisions that are incorporated into both the Tariff, Attachment K-Appendix and the parallel provisions of the Operating Agreement, Schedule 1.

1 explicitly disavow any interpretation that PJM’s station power provisions determine whether a retail sale of station power has occurred, and add provisions for PJM’s receipt of meter data for the express purpose of reflecting Market Seller’s purchases of energy at retail to meet their station power needs. While further details may be warranted to implement the proposed Compliance Revisions’ overarching directives (including any necessary changes to Market Participants’7 current practices and arrangements), such practical implementing details are best developed through the PJM stakeholder process, and provide no basis for rejecting the Compliance Filing. Such implementing details could appropriately consider AEP’s suggestions (in its Comments) regarding accounting for energy sales and provision of telemetered data to Load Serving Entities (“LSEs”).

I. MOTION FOR LEAVE TO ANSWER

IMPA and Buckeye’s pleading includes a motion under Commission Rule 212, which PJM is permitted to answer under Commission Rule 213. Although Commission

Rule 213(a)(2) does not generally permit answers to protests,8 the Commission permits answers for good cause shown, such as when an answer contributes to a more accurate and complete record or provides useful information that assists the Commission’s deliberative process.9 This Answer will aid the Commission’s decision-making process by showing that the Compliance Filing satisfies the directives of the September 17 Order, and that there

7 Capitalized terms used, but not defined, in this Answer have the meanings provided for such terms in, as applicable, the Tariff or Operating Agreement.

8 18 C.F.R. § 385.213(a)(2). 9 See, e.g., N.Y. State Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 158 FERC ¶ 61,137, at P 29 (2017) (accepting answers because they provided information that assisted in the Commission’s decision- making process); Colonial Pipeline Co., 157 FERC ¶ 61,173, at P 23 (2016) (same). 2 is no basis for rejecting the filing. PJM therefore, to the extent necessary, asks that the

Commission accept this Answer.

II. ANSWER

A. Background.

The September 17 Order addressed a petition for declaratory order and complaint filed by IMPA and the City of Lawrenceburg, Indiana (“the City”) against PJM, AEP, and

Lawrenceburg Power, LLC (“the Plant”) concerning a dispute between the City and the

Plant over the extent to which the City was providing retail electric service to the Plant.10

The September 17 Order granted the Petition only to the extent of “clarify[ing] that the

Commission does not have jurisdiction over the supply of station power,” and “den[ied] all other related relief requested by Petitioners.”11 The Commission nonetheless found that the station power provisions of the Operating Agreement and the Tariff “may be unjust, unreasonable, unduly discriminatory, or preferential” because those provisions “can be read to, and indeed [have] been relied on by certain PJM generators to assert the right to, determine whether a retail sale of station power has occurred and avoid the retail purchase of station power.”12 The September 17 Order directed PJM to eliminate this ambiguity, and suggested specific language changes to that effect.13 The September 17 Order also directed that “PJM should consider whether it has sufficient information to implement

10 Complaint and Petition for Declaratory Relief of the Indiana Municipal Power Agency and the City of Lawrenceburg, Indiana, Docket No. EL20-30-000 (Mar. 6, 2020) (“Petition”).

11 September 17 Order at P 88.

12 Id. at P 107.

13 Id. at PP 107, 108.

3

[Operating Agreement, Schedule 1,] section 1.7.10(d), and if not, propose revisions to its

Tariff to require generation and transmission owners to provide sufficient information.”14

On November 23, 2020, PJM submitted the Compliance Filing, proposing the

Compliance Revisions to satisfy the September 17 Order’s directives. In response to the

Commission’s notice of the Compliance Filing, the IMPA/Buckeye Motion/Protest asked the Commission to reject the Compliance Filing, and the AEP Comments suggested two areas for further Operating Agreement or Tariff revisions.

B. The Commission Should Deny the Motion to Reject.

Rejection of the Compliance Filing would be warranted only in the atypical case where such filing is “a patent nullity”15 or where deficiencies in the filing are so significant as to warrant immediate rejection.16 More narrowly, the Commission will reject proposed changes in a compliance filing that go beyond the compliance directives of the relevant order.17 Neither consideration warrants rejection of the Compliance Filing. Far from alleging the Compliance Filing is a nullity, IMPA/Buckeye concede the Compliance

Revisions include the two specific language changes proposed by the September 17

Order.18 In practical effect, the IMPA/Buckeye Motion/Protest seeks not rejection of those

14 Id. at P 108.

15 Mun. Light Boards v. FPC, 450 F.2d 1341, 1347 (D.C. Cir. 1971) (addressing Federal Power Act (“FPA”) section 205, 16 U.S.C. § 824d, filing).

16 Columbia Gulf Transmission Co., 86 FERC ¶ 61,130, at 61,450 (1999). NRG v. FERC, 862 F.3d 108 (D.C. Cir. 2017) has arguably expanded the grounds for denial or rejection of an entire filing under FPA section 205, but that precedent is not applicable to the FPA section 206 compliance filing at issue here. See 16 U.S.C. § 824e.

17 See, e.g., PJM Interconnection, L.L.C., 155 FERC ¶ 61,157, at PP 303-304 (2016).

18 IMPA/Buckeye Motion/Protest at 17 (Compliance Revisions “largely track[] the September 17 Order’s directive in paragraph 108”).

4 changes, but far more extensive revisions, not specifically identified in the September 17

Order, to the station power provisions in Operating Agreement, Schedule 1, section

1.7.10(d). As shown below, their added changes are not required, and should not be directed. Moreover, as also shown below, none of PJM’s proposed Compliance Revisions go beyond the September 17 Order’s directives.

1. The Compliance Filing complies with the September 17 Order.

a. The Compliance Revisions leave no doubt that the station power provisions do not govern or determine retail service.

As directed by the September 17 Order, PJM revised Operating Agreement,

Schedule 1, section 1.7.10(d) to clearly state that PJM “is not responsible for determining

Relevant Electric Retail Regulatory Authority-jurisdictional retail rates,” and that “the monthly netting provision in section 1.7.10(d)(i) above does not determine whether a retail sale of station power has occurred in a month.”19 These changes closely track the

Commission’s directives that PJM’s proposed Compliance Revisions “should clarify that the monthly netting provision in section 1.7.10(d)(i) of the Tariff does not determine whether a retail sale of station power has occurred” in a given month, and “should make clear that PJM has no responsibility for the determination of any state-jurisdictional retail rates.”20

These revisions explicitly eliminate the ambiguity identified in the September 17

Order, i.e., that “the PJM Tariff’s self-supply monthly netting provision can be read to, and indeed has been relied on by certain PJM generators to assert the right to, determine

19 Compliance Filing, proposed Operating Agreement, Schedule 1, section 1.7.10(d)(iv).

20 September 17 Order at P 108.

5 whether a retail sale of station power has occurred and avoid the retail purchase of station power.”21 That ambiguity was the stated basis for the September 17 Order’s finding that the station power provision “may be unjust, unreasonable, unduly discriminatory, or preferential” justifying the new FPA section 206 proceeding in Docket No. EL20-56-000

“to address this concern.”22

The Compliance Revisions thus use the Commission’s own specific formulation of revised tariff language to address the very concern that prompted the FPA section 206 proceeding. IMPA/Buckeye’s claims that the Compliance Revisions are ambiguous on this point depend on ignoring these explicit disclaimers; those claims therefore are not credible. No Market Participant or stakeholder could review that language and conclude— in direct opposition to that language—that PJM does determine retail rates, or that

Operating Agreement, Schedule 1, section 1.7.10(d) does determine whether a retail sale occurred in any given month. The possibility for misreading the pre-existing version of this section as governing or determining retail service, as cited by the September 17 Order, is thus eliminated by the Compliance Revisions.

b. The Compliance Revisions make explicit provision for recognizing, and deferring to, any retail service arrangements.

In response to the September 17 Order’s suggestion to revise Operating Agreement,

Schedule 1, section 1.7.10(d) to address information needed to implement the provision, the Compliance Filing added language for PJM to use and rely upon data submitted to PJM

“that reflect the Market Seller’s purchase of energy at retail to meet its Station Power

21 Id. at P 107.

22 September 17 Order at P 107.

6 needs.”23 The revision makes clear that PJM is to rely on that data “notwithstanding any provision of subsection (d)(i) or (d)(ii) to the contrary.”24 In short, where there is a retail service arrangement in place, it governs.

This revision elevates to the Tariff the manual provisions which the September 17

Order favorably cited as PJM’s existing practice to recognize and accommodate retail service,25 which the September 17 Order recognized was needed for certain PJM billing adjustments, including: “(1) adjustment to spot market energy billing (for third-party supply of station power); and (2) adjustment to non-firm point-to-point transmission service billing (for remote self-supply of station power).”26

These Compliance Revisions therefore make clear that the station power provisions accommodate and defer to retail service. By elevating this provision from the manual to the Operating Agreement, moreover, this meter-reporting accommodation more clearly becomes a requirement, as opposed to an option. Notably, a Relevant Electric Retail

Regulatory Authority (“RERRA”) can decide whether or not it chooses to rely on PJM monthly netting for its retail service determinations—as IMPA/Buckeye expressly acknowledge,27 and as, in PJM’s understanding, some RERRAs currently do. Coordination of (1) PJM transmission determinations, with (2) state retail service

23 Compliance Filing, proposed Operating Agreement, Schedule 1, section 1.7.10(d)(iv).

24 Compliance Filing, proposed Operating Agreement, Schedule 1, section 1.7.10(d)(iv).

25 September 17 Order at P 7 (explaining that “Manual 28 clarifies that ‘[i]f a superseding arrangement for the treatment of station power exists between a generation owner and the applicable electric distribution company (EDC) in whose service territory the generator resides, then net station power consumption (i.e., negative net generation MW) is not reported to PJM for settlements purposes.’”

26 Id. at n.15.

27 IMPA/Buckeye Motion/Answer at 11 n.38.

7 determinations, and with the (3) unchanged principal that one unit may serve not only itself but other units that have the same owner, all remain appropriate and productive uses of the station power provisions.

c. The Compliance Revisions appropriately clarify that the revisions do not change existing provisions recognizing that a Market Seller can serve itself from its own (i.e., not an affiliate’s) facilities.

The Compliance Revisions include a clarification that they do not “limit[ ] a Market

Seller’s ability to simultaneously self-supply energy from one generation facility owned by such Market Seller to a different generation facility owned by the same Market Seller.”28

Contrary to the IMPA/Buckeye Motion/Protest, this clarification is not outside the scope of the Compliance Filing. This clarification is intended only as a form of savings clause regarding the intent and effect of the Compliance Revisions, and is not intended to go beyond any authority provided in the pre-existing provision. The September 17 Order did not address or change the rule that a Market Seller can supply its needs from its own facilities, as that condition does not describe a sale of any sort, retail or wholesale. The existing provisions that address use of generation from facilities owned by the Market

Seller itself, and not any third party, describe conditions before a sale of any sort has occurred.

The sole purpose of this clarification in the Compliance Revisions is to eliminate any doubt that those pre-existing provisions—not addressed by the September 17 Order— are changed by the other Compliance Revisions.29 In the Compliance Filing transmittal

28 Compliance Filing, proposed Operating Agreement, Schedule 1, section 1.7.10(d)(iv).

29 Such clarifying revisions are permissible in a compliance filing. See, e.g., PJM Interconnection, L.L.C., 173 FERC ¶ 61,134, at P 44 (2020) (“The Tariff language merely requires that the IMM be open and transparent about its findings and methodology with the Market Seller and PJM. This neither changes the 8 letter, moreover, PJM made clear that this provision is intended to accommodate any netting period chosen by a retail regulator to determine retail service at the generator.30 In other words, if a retail regulator determines that daily netting, for example, determines whether one unit at a site is fulfilling station power needs, this clarification is intended to honor that same rule as to any other unit or directly-owned generation of the same Market

Seller.

2. IMPA/Buckeye’s proposal goes beyond what is needed to eliminate the retail service ambiguity, and would be needlessly disruptive.

IMPA takes issue with, and appears to seek to change, much of the existing language of Operating Agreement, Schedule 1, section 1.7.10(d), suggesting, for example, that PJM should entirely re-write this provision to track station power provisions that the

Midcontinent Independent System Operator, Inc. effected through an FPA section 205 filing.31 PJM submits that this is not only unnecessary for purposes of this compliance filing, but also needlessly disruptive.

IMPA’s additional far-reaching changes are unnecessary because, as shown above, the clarifying provisions essentially drafted by the Commission and added via the

Compliance Filing eliminate the ambiguity that prompted the Commission to open the present FPA section 206 proceeding. With that added language, all affected parties are

IMM’s role nor exceeds the scope of the compliance directive. . . . The proposed Tariff language merely clarifies this role, which is squarely within the scope of the May 2020 Order compliance directive”).

30 Compliance Filing, transmittal letter at 5-6 (“this clarification does not purport to establish netting among a Market Seller’s multiple generation facilities on a monthly basis at odds with retail service netting determinations.”).

31 IMPA/Buckeye Motion/Protest at 5-6 & 11 n.38.

9 unquestionably on notice that Operating Agreement, Schedule 1, section 1.7.10(d) does not determine retail service.

Beyond that essential clarification, there are a number of practical implementation changes that should be considered and addressed, which IMPA/Buckeye’s approach essentially ignores. The Tariff must consider, beyond IMPA’s or Buckeye’s particular circumstances, how to accommodate retail service, and how to support transitioning any

Market Sellers to formal retail service arrangements that do not presently have such arrangements. Given that broader view, entirely discarding the current provisions, as

IMPA/Buckeye seem to suggest, would be chaotic and disruptive. The simple mathematical fact is that there may be times when a Market Seller requires more energy than it is producing, and thus absent other arrangements, may be effectively taking energy from PJM.

Rather than attempt in this proceeding, to address that circumstance in any state or jurisdiction in the PJM Region where it may arise, PJM submits that the better approach would be to allow PJM to work with its stakeholders to address the various practical questions that may arise with such a transition, and file with the Commission, under FPA section 205, any resulting tariff revisions.

C. AEP’s Comments Do Not Require Changes to the Compliance Revisions.

AEP confirms it is not protesting the Compliance Filing, but suggests that

Operating Agreement, Schedule 1, section 1.7.10(d) would be “less confusing” if it was rewritten to discuss only transmission charges.32 In support, AEP argues that, entirely apart from whether station power is considered wholesale or retail, a monthly netting period for

32 AEP Comments at 2.

10 energy sold or purchased by a Market Participant in a regional transmission organization violates the Commission’s accounting rules.33

AEP’s suggested revisions are outside the scope of the compliance filing. The

Petition did not raise this accounting issue. The Commission did not consider or decide whether its accounting rules dictate any netting requirements, and the September 17 Order did not direct PJM to make any changes to its station power provisions to address any

Commission accounting rules. Accordingly, the Commission should decline to require any changes in this proceeding to address AEP’s accounting concerns. That resolution would be without prejudice, however, to AEP raising this concern in the PJM stakeholder process.

AEP has one other suggestion: add the local LSE to the list of parties in the

Interconnection Service Agreement that are required to receive telemetered metering data.34 AEP acknowledges that this is “perhaps not an issue for this compliance filing,” and “respectfully requests that PJM address this situation.”35 PJM agrees that this is not an issue for this compliance filing, but also agrees it is a constructive suggestion that could be productively addressed in the PJM stakeholder process.

33 AEP Comments at 3 (citing Accounting and Financial Reporting for Public Utilities Including RTOs, Order No. 668-A, 115 FERC ¶ 61,080, at P 16 (2006)).

34 AEP Comments at 4-5.

35 AEP Comments at 5.

11

III. CONCLUSION

PJM asks that the Commission accept and consider this answer, and accept the

Compliance Revisions as proposed in the Compliance Filing.

Respectfully submitted,

/s/ Paul M. Flynn Craig Glazer Paul M. Flynn Vice President–Federal Government Policy Wright & Talisman, P.C. PJM Interconnection, L.L.C. 1200 G Street, N.W., Suite 600 1200 G Street, N.W., Suite 600 Washington, D.C. 20005-3898 Washington, D.C. 20005-3898 (202) 393-1200 (phone) (202) 423-4743 (phone) (202) 393-1240 (fax) (202)393-7741(fax) [email protected] [email protected]

James M. Burlew Senior Counsel PJM Interconnection, L.L.C. 2750 Monroe Boulevard Audubon, PA 19403 (610) 666-4345 (phone) (610) 666-8211 (fax) [email protected]

Attorneys for PJM Interconnection, L.L.C.

December 29, 2020

12

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the foregoing document upon each person designated on the official service list compiled by the Secretary in this proceeding.

Dated at Washington, D.C., this 29th day of December 2020.

/s/ Paul M. Flynn Paul M. Flynn Wright & Talisman, P.C. 1200 G Street, N.W., Suite 600 Washington, D.C. 20005-3898 (202) 393-1200 [email protected]

Attorney for PJM Interconnection, L. L.C.

13