Virginia has a problem with data centers.  It created tax exemptions to draw them in.  Northern Virginia is situated near a bloated federal government that needs a place to store all its data.  And "data center alley" was born.  It has since reached outlandish proportions, and more data centers are being approved every day.  Data center sprawl is a serious problem.

Perhaps the biggest problem for the largest concentration of data centers in the world is powering them all.  Data centers use huge amounts of electricity, and as new technology created more ways for data centers to burn electricity, it soon became impossible to power them with the electricity available.  Couple this with state "clean energy" policy that prohibits the building of any new fossil fuel generation, and you've created a recipe for disaster.

This disaster recently manifested as PJM's 2022 Window 3 transmission plan.  Regional grid operator and planner PJM Interconnection was tasked with finding a solution to the closing of 11,000 MW of existing fossil fuel generation in Virginia and Maryland combined with 7,500 MW of new data center load in Northern Virginia.  PJM did the only thing it knows how to do... create new electric extension cords across the region that will import electricity to data center alley from fossil fuel generators in other states.  The only two states in PJM that export electricity are Pennsylvania and West Virginia, where coal is still king.  Pennsylvania produces electricity mainly from natural gas and nuclear, with a significant amount of coal still in its mix.  West Virginia's electricity mix is over 90% coal.

The new extension cords are 3 new 500kV transmission lines pumping electricity to data center alley from Pennsylvania and West Virginia.  It's bad enough that the new extension cords will plow through communities in other states, expanding transmission easements and cutting new ones, but PJM also expects electric customers in other states to pay for a significant share of the cost of these new extension cords.  What do Pennsylvania and West Virginia get from this?  New transmission lines, property destruction and devaluation.  They don't get any electricity... that's all going to Northern Virginia.

When approving this destructive (and unlikely to actually happen) transmission plan, PJM selected the cost allocation scheme that spreads the costs of the projects as widely as possible across its region.  The thinking there is that spreading the $6B cost among as many people as possible won't be noticed by individual electric consumers.  If PJM allocated the costs solely to the causers of the new transmission lines (the state of Virginia) then the rate increases they cause will be very noticeable.  In fact, it may be so noticeable that businesses and residents may begin to leave Virginia for neighboring states where electricity is more affordable.

PJM is complicit with the State of Virginia to cover up its data center disaster by inflicting new transmission on other states instead of the state that caused it.  Sure, Virginia is being allocated a huge chunk, but not all.  Another huge chunk is still being spread among all PJM consumers as far away as Illinois, Indiana, Ohio, New Jersey, Kentucky, Tennessee, North Carolina, Maryland, Pennsylvania and West Virginia.  This is because PJM selected the cost allocation scheme that allocates 50% of the cost of the new projects to everyone in the region based on their peak load percentage from the prior year.  An area that uses a lot of electricity gets a bigger share, for instance electric customers in Northern Illinois are paying a larger share of this 50% than electric customers in Virginia that will actually use the electricity piped in on the new extension cords.  Why is anyone in any state other than Virginia paying for this new data center transmission?

The other 50% of the costs are allocated based on cost causation, with load areas at or near the data centers paying a higher percentage.  However, the load areas near the data center are enormous.  The Dominion zone where the data centers are being built also consists of customers in all parts of Virginia, plus some in North Carolina.  The Allegheny Power zone contains customers at/near the data centers, but it also spreads to cover a huge chunk of West Virginia and Pennsylvania.  Why are consumers hundreds of miles from the data centers paying so much money to build extension cords for Virginia's new data centers?  This isn't fair.

PJM's cost allocation schemes are part of its FERC-approved tariff.  However, PJM must receive FERC approval for each individual collection of transmission projects to ensure they have chosen the correct cost allocation scheme for the projects.  PJM filed to spread the costs across the region back in January, which opened a 30-day comment period.

While lots of entities intervened in the FERC docket for this cost allocation, only 3 comments were received.  That's right... only 3 entities thought this was unfair.  Two of them are residential ratepayers, and the other is the Maryland Office of People's Counsel.

I filed these comments.  I asked FERC to open an investigation into the justness and reasonableness of PJM's cost allocation and took the position that the "clean energy" policies of Virginia and Maryland caused the retirement of 11,000 MW of baseload generation in their states.  Also, only Virginia is responsible for the 7,500 MW of new data center load.  West Virginians should not be paying for these new transmission lines.  Being the "power house" for the electric supply for Virginia's data centers ties West Virginia into many more years of coal-fired electricity production.  Even if West Virginia wanted to close those old, dirty plants, they cannot because Virginia needs the power for their data centers.

Pennsylvania electric consumer Barron Shaw filed these comments.  Barron's comments are similar and underscore the way Pennsylvania and West Virginia are being used to power some of the wealthiest companies in the world.  People in Pennsylvania and West Virginia get little to no benefit from these companies or their new extension cords and will actually end up paying higher power prices in their own states as all the "cheap" electricity is sucked out of their own states to power a wealthier economy in Northern Virginia.  It's basic supply/demand.  Plenty of power makes cheap electricity prices.  When so much power is exported that electricity becomes scarce, prices rise.

Those two comments are probably understandable to the average reader.  However, the Maryland Office of People's Counsel also filed comments and expert testimony purporting that PJM picked the wrong allocation scheme and should have used the one that allocates all the costs to the state responsible.  PJM's other cost allocation scheme is called the "State Agreement Approach" and is used when a state agrees to shoulder the entire cost of transmission made necessary by its public policies.  SAA has been used for New Jersey's offshore wind planning.  PJM planned new transmission to support NJ offshore wind, and NJ agreed to pay for it.  Maryland OPC believes PJM must break down the suite of transmission projects to determine which ones are for other reasons, and which ones are for the data centers.  Once this breakdown is made, Virginia should be charged for the entirety of the data center portion.  Maryland's filing is probably a hard read if you don't speak FERC though, so read at your own risk.  It may seem like you're reading a foreign language.

Now it's up to FERC to decide... should electric consumers in other states be charged for Virginia's data center extension cords?  Maybe if Virginia had to shoulder the entire cost of its data center debacle it would have to realize that approving a whole bunch of new data centers comes at a cost.  Outrageous electricity prices in Virginia are the consequence of out-of-control development.  PJM is helping Virginia avoid the true cost of its policies and shuffling costs off onto other states that had no part in approving the data centers and certainly will not see any benefit from them.  PJM also selected new transmission projects that put most of the burden on other states.  PJM could have selected the proposal that kept new transmission lines in Virginia by connecting to AEP's 765kV transmission system west of Richmond.  But it did not.  PJM is complicit in Virginia's irresponsible energy policies and therefore responsible for the energy crisis that is the logical result of continued data center development.  Why, PJM, why?  

PJM won't be successful in getting all these new transmission lines built in other states, and certainly not by their projected "need" dates in 2027.  What then?  Will the lights go out?  PJM made the wrong choice and we're all going to have to pay.

What does "collaboration" mean?

NextEra, one of the utilities assigned to build PJM's coal-fired transmission extension cord from West Virginia to the data centers has been bandying that word about, but I don't think they know what it actually means.  If they actually do know what the word means, then they must be intentionally rebuffing concerned citizens while pretending they are "collaborating."  Either way, it's disingenuous.  And it will be the root cause of future project delay... and ultimate failure.

MidAtlantic Resiliency Link partner NextEra has begun its "collaboration" with a shell of a website.  The website says:

The website includes a form at the bottom if you "have questions."  This seems to be the only avenue for a concerned citizen to begin "collaborating" with NextEra.

​So, I did.

This is what I'm talking about. 

It's a conceptual point-to-point connection from coal-fired generators to data centers that has not been subject to the "routing" lens.  You can see a bigger version here on slide 41.  When routed directly from generator to load, this line does not cross Jefferson County, WV and does not require a new 500kV transmission line across Loudoun County.  So, is it even being considered?  Yes or No?

NextEra's reply sounded like it was written by a Magic 8 Ball.

MARL Team members?  How many were crowded around the keyboard typing that reply?

Yes or no?  Can I get an answer here?  I tried again:

And here's the reply from "the Team."

Is that a yes?  I don't think so.  If the answer was simply "yes" then none of that other stuff was necessary.  So, this must mean the answer is actually "no"?  But our slippery "Team" can't actually "collaborate" with anyone to answer a very simple and basic question.  How is any "collaboration" happening when inquiries are met with total nonsense and local communities are being rebuffed from participating in the routing process?  

So, I tried one last time to appeal to "the Team's" strategic thinking (such as it may be):

Well, I guess I must have hurt "Team's" fee-fees because I haven't heard from them at all this week.

I guess I'm going to have to "collaborate" with myself to answer my own questions.  No big deal, I've been doing this for more than 15 years now.

Who are the “stakeholders” if they are not local communities, regulators and landowners?

Perhaps they are greedy elected officials, lobbyists, the data centers, other corporations with tons of money, astroturf front groups, hired advocates, environmental and other special interest groups whose agenda can be directed with generous donations, and other entities nowhere near the proposed route.  Why would any of these "stakeholders" have an interest in the route of the project?  It's not going to be in their backyard.  In fact, they may only be "stakeholders" in order to make sure it doesn't end up impacting any of their own interests and, instead, impacts yours.

What are the technical specifications of the project?

I think the technical specifications of the project are to connect over 10,000MW of coal-fired electric generators in the Ohio Valley to data center alley via a new 500kV electric transmission project.  Of course, this has no correlation to routing... the project could go anywhere and still make the connection.  But it's supposed to sound official and you're not supposed to question a statement like this because you're supposed to be dumb.

​What are the economic needs of the project?

This one is easy!  Let's refer to PJM's Constructability and Financial Analysis Report for this project.  NextEra bid that it could complete MARL for $683.5M.  PJM's analysis of project cost put the project more in the neighborhood of $1.2B, a 30% increase.  But, hang onto your wallet... NextEra included a contingency budget of 14%.  NextEra also offered some cost control promises.  NextEra's Return on Equity is capped at 9.8%.  Its equity share is capped at 45%.  These numbers are important because the ROE is the amount of interest NextEra earns on the capital costs of MARL for the next 40 years while we slowly pay them back for the project (think mortgage, or car loan, where you finance a big purchase over time).  NextEra can only contribute 45% of project costs that will earn that 9.8% ROE, the other 55% of project costs will have to be debt, which we repay at its own interest rate.  NextEra offered a "soft cap" on its expenditures that promises any expenses that exceed the estimate earn no return at all -- 0%.  However, regardless of any of these provisions, NextEra's earnings cannot be lower than 7 or 7.5%.  Then NextEra promised a schedule guarantee that the project would be completed by its June 2027 deadline.  For each month the project is delayed past then, NextEra's ROE falls 2.5 basis points, with a maximum drop of 30 points.  What is a basis point?  100 of them make up 1 percent of the ROE.  Therefore, a 9.8% ROE contains 980 basis points.  

Wow, we're just going to be saving buckets of money here!  Or maybe not.  Anyhow, all this is relevant to know that NextEra must control its costs.  It cannot make any routing changes that increase its costs such as different routes, different structures, different land acquisition.  NextEra is also sensitive to staying on schedule.  If "collaborating" with you delays things, then your opinion doesn't matter.

What are the “regional reliability needs” criteria of the route?

This is pretty nonsensical.  Regional reliability needs are rooted in technical specifications and inservice date.  The "Team" is just repeating itself and trying to make it sound like something different.

Yesterday, I was reading a news article about MARL and I ran across the same ridiculous phrases that populated. my own email exchange with "the Team."  Maybe "the Team" is nothing more than an automated robot choosing from a list of approved phrases to respond to inquiries that are used by many big companies.  If so, is it programmed to "collaborate" or simply to pretend?

Do you trust NextEra?  I don't.  NextEra can't answer a simple question.  Much of what they said is meaningless gibberish.  Trust is first and foremost and NextEra has already blown it.  Of course, gaining the trust of a public that suspects NextEra wants to take their property and construct a huge transmission line on it is an uphill battle to begin with, but hiding behind "the Team" and refusing to answer a simple question with a straight up answer destroys whatever trust ever might have existed.  Get your information elsewhere.

True "collaboration" on developing a project route means that impacted communities should be participating in the route development and evaluation process.  However, they are not.  Instead, NextEra is developing the route all on its own, using its own criteria, and will only "collaborate" with the community to show them the finished route selections and accept their feedback.  None of the routes are proposed by impacted communities.  Impacted communities are estranged from NextEra's actual routing process.  This isn't "collaboration."  It's route consultation by fait accompli.

And that never works.  Impacted communities want to know what problem is being solved and to be active collaborators in developing the solution.  Keeping them in the dark until the route is selected is not "collaboration."  It's a route developed in a silo.  And it's a recipe for project delay and failure.