Delaware Public
Service Commission

The Artificial Island Project

The Artificial Island Project (“AI Project” or “Project”) consists of electric transmission facilities determined to be necessary to address the reliability and stability of the generating units located at the Artificial Island Nuclear complex in Salem, NJ. The transmission facilities include a transmission line across the Delaware River that would connect to a newly built substation in the Silver Run area near Odessa, Delaware in southern New Castle County.

The need for the AI Project was identified in 2013 by PJM Interconnection (“PJM”), the operator of the Mid-Atlantic’s high-voltage regional electric system. On July 29, 2015 PJM staff recommended a project to its Board of Directors in the Artificial Island Recommendation Whitepaper (“AI Whitepaper”) . For the AI Project, the PJM Board approved a solution originally submitted by LS Power (AI Whitepaper at 3), which consists primarily of a new lower-voltage (230 kV) transmission line across the Delaware River from Salem to Silver Run (Map 6.1. AI Whitepaper at 35). The approved Project, originally costing $275M, requires primary construction of the 230 kV transmission line by LS Power, additional construction by Pepco Holdings (“PHI”) (The parent company of Delmarva Power & Light) in Delaware and substation and interconnection facilities by Public Service Electric & Gas Company (“PSE&G”) in New Jersey. LS Power is responsible for building the transmission line which crosses the Delaware River and for constructing a new substation in Delaware at Silver Run. Estimated construction costs for LS Power are subject to a “cap” at $146M and have not changed since approved by the PJM Board. PHI is responsible for interconnecting this new line and substation into the existing bulk electric system in Delaware and the cost estimate for their construction responsibility has also remained unchanged at $2.5M. PSE&G is responsible for associated work mainly at their Salem substation. The original cost estimates for PSE&G’s work was approximately $137M. Since approved by the PJM Board the cost estimates for PSE&G’s portion of the work have been “updated” resulting in a staggering $135.3M increase, or 98.7%.

The method for determining who pays for these upgrade costs is a technical procedure called “Solution-Based DFAX” which is essentially an engineering analysis of the flow of electrons on a transmission facility (For a detailed explanation go to PDF page 245 of our complaint). Applying Solution-Based DFAX to the AI Project resulted in the assignment of 90% of the Project’s costs to the Delmarva Peninsula, while the Peninsula receives only 10% of the Project’s economic benefits. The increase in cost stemming from PSE&G’s updated cost estimates alone will cost the Delmarva Peninsula an additional $107M. The estimated total costs for the entire project is now approximately $410.5M and the Delmarva Peninsula will be required to bear about $354M (or 86%) of those costs. Based on Delaware Public Service Commission Staff analysis, the inclusion of the AI Project’s costs could lead to an increase in transmission rates (not the overall bill) for Delmarva Peninsula ratepayers (including municipal and Delaware Electric Co-Op customers) of about 53%. For Delmarva Power customers who pay for transmission on a “per kW” basis, it could mean an increase of about $4/month or $1.43/kW on the Transmission Capacity Charge. These new transmission costs may have “a significant direct negative impact on customers,” as Governor Markell stated in his letter supporting the Delaware Public Service Commission. Furthermore, the resulting cost distribution is “not sustainable for Delaware [electricity] users” and “could seriously impact their pocketbooks” as Senators Carper and Coons, and Representative Carney similarly noted in their letter of support.

The jurisdiction for the determination and approval of the cost responsibility and cost recovery is with the Federal Energy Regulatory Commission (“FERC”). The Delaware Public Service Commission is exhausting all possible avenues to appeal this unjust, unreasonable, unduly discriminatory and arbitrary allocation of costs to the Delmarva Peninsula. On August 28, 2015 the Delaware PSC filed a protest and a complaint with the FERC regarding the allocation of costs for the AI Project. The protest and complaint of the Delaware PSC were denied by the FERC and the unreasonable allocation of costs was approved by orders dated April 22, 2016. In opposition, the Delaware PSC filed a request for rehearing on May 23, 2016. The initial complaint and request for rehearing filed against the FERC in Docket EL15-95 opposing the allocation of these costs enjoys wide-spread support from groups throughout the Peninsula and beyond including: Governor Markell, Senators Carper and Coons, Representative Carney, The Maryland Public Service Commission, The Delaware Division of the Public Advocate, The Maryland’s Office of People’s Counsel, Old Dominion Electric Cooperative (affiliated with Delaware Electric Co-Op), The Delaware Municipal Electric Corporation (an organization comprised of the various Delaware municipal electric companies), The Easton Utilities Commission, The Chemical Industry Council of Delaware, Eastern Shore of Maryland Educational Consortium, The Delaware State Chamber of Commerce and The Delaware Manufacturing Association.

Supporting Documents


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