Lawmakers press PJM and utilities on supplemental transmission projects, oversight and rate impacts

Committee leaders questioned regional grid operator PJM and investor-owned utilities on how so-called supplemental or local transmission projects are planned, reviewed and ultimately paid for during a session of the Education, Energy, and the Environment Committee.

Jason Stanek, Executive Director of Government Services at PJM, told senators PJM distinguishes large regional "baseline" projects — which PJM identifies and competitively procures — from supplemental projects that transmission owners self-identify. "We do not review [supplemental projects] for need," Stanek said, describing PJM’s role as performing a "do no harm" analysis to ensure a local project will not adversely affect the broader grid. He added there is pending litigation at FERC questioning whether supplementals should receive the same level of review as baseline projects.

That division of roles matters because cost recovery for transmission is governed by FERC, not state regulators. Rob Lemming, Vice President of Regulatory Affairs and Strategy at Pepco Holdings, said FERC evaluates rate filings and prudency in public, evidentiary proceedings that include data requests and hearings in which Maryland stakeholders — the Public Service Commission (PSC) and the Office of People's Counsel among them — can participate. "These filings are fully public," Lemming said, describing the discovery and settlement steps that typically follow formula-rate updates.

John Frane, BGE’s vice president for regulatory policy and strategy, explained that FERC’s prudency and rate-review typically occurs after spending has occurred and assets are placed in service and that many formula-rate updates result in settlements or adjustments rather than formal disallowances. He said Maryland’s multiyear plan process provides earlier, state-level transparency for distribution work and some transmission elements by requiring annual project-list updates and discovery.

Senate President Ferguson expressed sharp skepticism about how visible the supplemental process has been to the public and even to people inside affected organizations. "I have been truly flabbergasted by how many people had heard of supplemental transmission projects for the first time," he said, pressing for clearer disclosure of project scope and cost. Ferguson also raised whether FERC-authorized returns on transmission investments were higher than PSC-authorized returns on distribution investments; Frane replied that BGE’s FERC transmission return under a formula rate settlement is 10% versus a 9.5% PSC-authorized return for distribution.

Committee members probed how costs are allocated. Lemming said most transmission-zone costs are allocated across a transmission owner’s footprint via network integrated transmission service charges so that large new loads (for example, a data center) pay based on use and do not unduly subsidize other customers. On the question of whether PJM’s "do no harm" review evaluates alternatives or cost-effectiveness, Stanek said it generally does not review need or cost-effectiveness for supplementals except when a larger baseline project could more efficiently substitute; in that case PJM can subsume the project into a baseline.

Lawmakers asked for more written detail and follow-up; the panel agreed to provide figures and examples. The committee’s exchanges highlighted a recurrent tension: PJM and transmission owners describe public stakeholder forums and formal filings, while several senators said the process feels opaque and urged tighter state oversight and clearer, earlier public notice.

The committee did not take formal action. It plans further follow-up and deeper review of specific projects and filings described in testimony.