[00:00:01] Speaker 01:
Case number 23-1089 et al.

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Hecate Energy LLC petitioner versus Federal Energy Regulatory Commission.

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Mr. Street for the petitioner, Ms.

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Gow for the response, Ms.

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Warren for the interviewer.

[00:00:16] Speaker 04:
Mr. Street, good morning.

[00:00:17] Speaker 00:
Good morning and may it please the court.

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Petitioner Hecate Energy wants to add renewable resources to the electric grid and is willing to pay network upgrade costs

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in order to participate in PJM's expedited process for interconnection.

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Everyone agrees that the purpose of the expedited process is to identify projects that can smoothly progress to interconnection without dropping out or clogging up the queue.

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FERC acted arbitrarily when it approved PJM's $5 million upgrade cost threshold for two reasons.

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First, FERC lacked substantial evidence for a cost-based cutoff

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because it relied exclusively on PJM's say so, that even if taken as true would not support it.

[00:01:05] Speaker 05:
It relies on the say so, but wasn't this a very lengthy, robust transaction amongst the operators?

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It certainly was a heavily negotiated Q reform overall.

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But for the part that is being challenged here, which is the $5 million threshold, the sole basis for FERC's acceptance of that threshold as opposed to other things

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was PJM's statement that in its experience, the $5 million threshold helped to identify projects that were more likely to have complex studies and more likely to drop out of the queue.

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They gave no evidence of that.

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And of course, they had ready access to that evidence.

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So there was nothing.

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Didn't they say a majority?

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I'm glad you mentioned that, Your Honor, because I think when you drill down to look at the specifics,

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Uh, factual assertions that underlie PJMs.

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allusion to evidence and experience.

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They actually are quite revealing.

[00:02:05] Speaker 00:
You alluded to the majority, and what they actually said, which is reflected at paragraph 65 of the commission's order, is that they said a majority of projects with network upgrades over $5 million do not proceed to completion.

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But that data point is totally unilluminating without knowing what the comparator is, without knowing whether projects with network upgrades under $5 million

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proceed or fail out at a similar level.

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So I'm afraid that all they're saying is we have this experience that something is true.

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But when you look at what they're actually saying, they're not comparing some things above the $5 million to other things below the $5 million.

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And that's what's necessary to sustain the $5 million cutoff.

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Can I ask you one other question that is, is the expedited process still due to run out in about four months?

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It is due to complete around January 2025 is my understanding.

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Yes.

[00:03:07] Speaker 04:
And there's no, as far as, well I'll ask the FERC lawyer then.

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Go ahead.

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Right.

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And the comparator would be the other process that we're currently in, which is running much longer than that.

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She had a question about standing, in particular, redressability.

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And that's just how can we be confident that Hecate's injury would be redressed if PJM, let's say, resubmitted its proposal and eliminated the expedited process entirely?

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So it seems like there's a number of things that PGM could do that wouldn't benefit Hecate.

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So the test is whether a relief from this court would likely alleviate the injury.

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It doesn't have to be something this court is confident of or likely to alleviate.

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And we think that it's highly likely here because this is just one piece of the overall puzzle.

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And there's no reason to think, especially now that the expedited process has proceeded to a certain extent, that PJM is just going to throw out the entire expedited process.

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I mean, that would be totally irrational.

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I think this court would vacate in part, just like it did in the consolidated Edison case, the $5 million threshold.

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PJM is not going to throw out their whole Q reform.

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It's not going to throw out its whole expedited process.

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It's going to have discretion to craft some way to let Hecate into the expedited process.

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And then it will fix the problem that this court will have identified.

[00:04:40] Speaker 05:
But in NRG, isn't it also this court's jurisprudence that you're not supposed to modify the proposal that's being presented to us, that that's not our job?

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Yes, this court is not in the business of directing any particular outcome.

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But what it would say is that the $5 million threshold is unduly discriminatory, is arbitrary, and capricious.

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It would be up to the commission and PJM to fix that problem in whichever way they want.

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Of course, the most rational and direct way of doing that would be to just eliminate that threshold and to let Hecate or others in that can progress through the queue.

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In our case, because we're willing to put up

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The total amount of the network upgrade costs that are assigned to us, which is the main the main reason that projects drop out of the queue is because companies get assigned some massive amount of network upgrade costs to say we don't want to pay that we're going to drop out of our spot in the queue.

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Or we're going to haggle over who gets assigned what percentage of the network upgrade costs with all the other participants.

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You seem confident that the expedited process would not be something they get rid of, but that's just not a guarantee of any sort.

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And I understand that your earlier comments were suggesting that we shouldn't be concerned about that particularly, but I'm trying to make the point that if you send it back, we don't have the ability to make them only carve that out.

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Wouldn't it kind of go back to the drawing board and have an opportunity for stakeholders to reconvene, et cetera?

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So I'm not sure this is all that different than most FERC petitions for review, where particular aspects are challenged.

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And when this court vacates a particular aspect of a FERC order, I mean, yeah, theoretically, the agency could go back to the drawing board and throw everything out.

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But typically, what it does is fixes the problem that this court identifies.

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And where the stakeholder process is completely done, where we're already

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a little ways into the expedited process.

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It's inconceivable to me.

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I mean, you can ask PJM, but it's inconceivable to me.

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They're just going to throw out the entire expedited process and start over rather than just fix the particular problem with it that this court identified.

[00:06:50] Speaker 04:
But the expedited process is about to run out.

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Right.

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Well, it is 2020 it is underway and that's their current projection that it will finish then and the alternate in which heckity is currently participating as a result of the order will not finish until 2026.

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So we think if there is a vacature and remand or remand

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The commission and PJM can fix that problem and can craft some way to put a heck of T into an expedited process that will make it better off than it would have been if it were just in the slower transition process.

[00:07:26] Speaker 05:
Do you have any data points or anything that projects that are in the transition cycle one absorb higher network costs than those are in the expedited process?

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I don't think focusing us on that $5 million cap.

[00:07:39] Speaker 00:
Well, they do just because that's the PJM threshold and PJM has said if you're over 5 million, you go into the transition cycle.

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And our point is that's not a rational way to divide which projects go into the expedited process and which go into the transition cycle.

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And if you think about it, that's because if you have a project that's assigned $2 million in network upgrade costs, but there's questions about the financing, or there's going to be haggling among a lot of parties over who's going to cover that $2 million, that's going to be slow to progress.

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And that's going to require a lot of negotiations and haggling that could cause the project to drop out completely.

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But if you've got something that's at 6 million or 8 million, but the financing is confirmed and you've got a sponsor of the project who's willing to say I'll pay the whole check for the network upgrade costs.

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Well, that's going to progress through the process quickly.

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There's not going to be a need for negotiation.

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And that's exactly the kind of project that should be in the expedited process.

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And I think the key point here is we've talked about the lack of substantial evidence, the lack of verifiable data, the fact that their data points don't even support a comparison above and below the 5 million.

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But I think FERC's decision not to address or evaluate at all the alternatives that were proposed is also fatal.

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Because if you think about it, this is an undue discrimination case.

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And the best way to determine whether something unduly or one key way to determine whether something unduly discriminates is whether there's another alternative that's readily available, that's less discriminatory, but also satisfies the regulatory objectives.

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And I think I would especially direct this court's attention to its consolidated Edison opinion in 2022.

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I think this case is similar to that.

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And that was a case where

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The commission accepted PJM's proposal for allocating network upgrade costs among utilities that were using a new upgraded facility.

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And the court didn't just look at PJM's test in a vacuum.

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It didn't say, well, yeah, on their face, these parties are differently situated.

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Instead, the court compared PJM's test to a readily available alternative that more fairly allocated the costs based on the relative use of the new facilities.

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And so at page 283 in the opinion, the court faulted the commission for giving, quote, justifications for a threshold keyed to the relative size of the zone rather than to the relative use of the facility.

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So the court's comparing PJM's test to an alternative that more closely tracks the regulatory goals.

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And if you apply that approach here, I think even if you were to think in a vacuum, the $5 million threshold sort of roughly tracked which projects are most likely to progress through the queue, we don't know if it's unduly discriminatory until we look at whether there's an alternative.

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And Hecate's minor tweak to that $5 million cap would more accurately identify projects that would get through the interconnection process

[00:10:47] Speaker 06:
Can you just articulate for us what you envision would be the minor tweak?

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What would be the rule that the distinguishing line that they would draw?

[00:10:57] Speaker 00:
Yes, Hecate's proposal was if a project is assigned above $5 million in network upgrade costs, then it could enter the expedited process so long as the sponsor of the project, Hecate in this case, is willing to put up the $5 million or more itself.

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to guarantee that it would pay that amount rather than squabble over how the costs are allocated.

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And that would guarantee, number one, it would guarantee that the project has financing, which is a major reason.

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More than five million.

[00:11:28] Speaker 00:
Correct, correct, yes.

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The whole cost.

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It would put up the whole cost that was assigned to it, which in this case is everything above five million or above, whatever that amount would be.

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So that clears up the financing problem, which causes a lot of projects to drop out of the queue.

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Because they've got their finance.

[00:11:44] Speaker 05:
So why is there a pay to pay scheme?

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Because it wasn't just that.

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It was also that the five million or less projects are supposedly less complicated and require less study.

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Yes.

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So I think there's one major problem.

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There's two major problems with that.

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Number one is the substantial evidence point, which is just PJM is just telling us that.

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They have no data to back that up.

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And that's in the face of industry commenters who said, no, that's just not the case.

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The amount of network upgrade costs does not determine how complicated the studies are.

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Because if you've got one party that's willing to foot the bill, there's not going to be a lot of complicated studies about who gets allocated what.

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I think the second problem

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Uh, with that is that, uh, we have alternatives that keep the $5 million cap.

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So even if you think the $5 million cap has some value in weeding out more complicated projects, then we've got the cure for that that we presented to FERC, which is if it's over $5 million and

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you got a company willing to foot all of those costs, that makes those just as likely, if not more likely, than the ones below $5 million to get quickly through the process.

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What do we do with that over 80% of the stakeholders approved this project?

[00:12:59] Speaker 06:
And only 30% favored the rule that you're proposing.

[00:13:03] Speaker 00:
Well, I think this court reviews the commission's order and the commission's reasoning.

[00:13:08] Speaker 00:
I'm not aware, and I don't think my friends have cited any case where the court sort of applies a, you know,

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doesn't have to be, it can be a little more arbitrary because a lot of stakeholders approved it or it can be a little more discriminatory.

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I just don't think that's practically the way this court reviews rulemaking.

[00:13:25] Speaker 05:
First sworn statements and PJMs experience balanced together and stakeholders.

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Your honor, I'm not at all disputing that PJMs experience could have value.

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Of course it could.

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If it had come in and said, look, we've got all of this data that tells us how quickly projects progress through the queue and when they drop out.

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And here's the ones above five million.

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You know, there's 50 and 30 of them dropped out.

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Here's the ones below five million.

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You know, 40 out of 50 made it through.

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We'd have a much harder case.

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I'd be having a much harder time making this argument.

[00:14:02] Speaker 00:
But they didn't do that.

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They just said, in our experience, this.

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And then when they came down to give actual data, as Judge Henderson pointed out, all they said was a majority of projects above five million drop out.

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but they didn't tell us whether a majority or minority or whatever the percentage is of projects below five million dropout.

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So that doesn't tell us anything about whether that's a good dividing line.

[00:14:25] Speaker 04:
I do want to ask one thing, and I'm not minimizing your position, but

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If the expedited process is due to expire in January of 2025, and you've said, I think, that if you're not in the expedited process, it'll be 2026, are we just talking about a year's delay?

[00:14:47] Speaker 04:
I know that can mean a lot, but is that what we're basically talking about?

[00:14:51] Speaker 00:
Well, I think you're right to say that can mean a lot, and that's certainly enough to show redressability in standing.

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I would say we're talking about at least that amount.

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And I think it's important to remember that PJM has under-projected things many times in the past, to say the least, with respect to the timelines.

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And so right now, they're telling us those dates.

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I'm not impugning that or doubting that.

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I'm just saying that's what they're currently telling us.

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And we would much rather be in the expedited process that does look more firmly like it's set for a particular end date.

[00:15:26] Speaker 04:
This whole transition.

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period ends when?

[00:15:30] Speaker 04:
2027?

[00:15:30] Speaker 00:
Well, I don't know.

[00:15:33] Speaker 00:
I don't know.

[00:15:33] Speaker 00:
I think they're saying that transition cycle number one.

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I'm going outside the record.

[00:15:39] Speaker 00:
Okay.

[00:15:40] Speaker 04:
I'll ask him.

[00:15:41] Speaker 00:
Yeah.

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I mean, I think in the rehearing order, FERC said that transition cycle number one was set to conclude in early 2026.

[00:15:51] Speaker 05:
And then just the Honeywell case that does allow the agency to rely on representations for those uniquely qualified to provide that information.

[00:15:59] Speaker 05:
Do you have anything to say against that?

[00:16:01] Speaker 00:
I have nothing to say against it, certainly president of this court.

[00:16:04] Speaker 00:
But I think the difference there is what they said were facts that could be verified and tested.

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And here, we don't have access to all the data that PJM has.

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The commission is well known for requesting data to be able to evaluate the assertions of a utility.

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But it didn't do that here.

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It could have asked PJM for that data about projects above $5 million and below $5 million in order to test it.

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And then I think Judge Child's

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The most revealing part to me is what I was mentioning to Judge Henderson.

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When you look at the specifics of what they think illustrates their experience, it's this a majority above five million dropout.

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The other thing that PJM mentions, I think they mentioned it in their proposal.

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I'm not sure the commission relied on it.

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They also relied on the fact that of the total amount of projects, only 10% are assigned network upgrades over $5 million.

[00:17:02] Speaker 00:
But that just tells us that projects with that type of network upgrades are rare.

[00:17:07] Speaker 00:
It doesn't tell us how many of those proceed to completion vis-a-vis how many projects with network upgrades under $5 million proceed to completion.

[00:17:17] Speaker 04:
All right.

[00:17:17] Speaker 04:
We'll give you a couple minutes to reply.

[00:17:19] Speaker 00:
Thank you.

[00:17:21] Speaker 04:
L.

[00:17:52] Speaker 02:
Make please the court.

[00:17:54] Speaker 02:
Angela Gao for the commission.

[00:17:56] Speaker 02:
I wanted to start where we left off with redressability.

[00:18:04] Speaker 02:
FERC, as your honors mentioned, would necessarily have to reject the proposal in its entirety on remand.

[00:18:11] Speaker 02:
And it's completely speculative that Hecate would get the ultimate relief that it wants.

[00:18:18] Speaker 02:
It hypothesizes that once FERC rejects the proposal,

[00:18:21] Speaker 02:
PGM will submit a new 205 proposal.

[00:18:25] Speaker 02:
But even assuming that PGM does, as Judge Childs mentioned, who knows what that proposal would look like?

[00:18:32] Speaker 02:
It could entirely eliminate the expedited process.

[00:18:36] Speaker 02:
It could use a different threshold that still somehow excludes Hecate's project, or it could narrow the expedited process as well.

[00:18:47] Speaker 02:
The point is, all of this is simply guesswork.

[00:18:51] Speaker 02:
And that's not enough for adjustability.

[00:18:53] Speaker 02:
Hecate has to show that it's likely, rather than just merely speculative, that its injuries will be redressed.

[00:19:00] Speaker 06:
What about Mr. Street's concern that it's one thing to rely on PJM's expertise, another thing to rely on PJM's expertise when it gives only one side of a comparison.

[00:19:12] Speaker 06:
Bigger projects drop out.

[00:19:16] Speaker 06:
Do we know the rate of dropping out of below 5 million projects?

[00:19:20] Speaker 06:
And if not, does that concern FERC?

[00:19:23] Speaker 06:
And if not, why not?

[00:19:24] Speaker 02:
Well, I'd want to point out first that the $5 million threshold has a proven track record.

[00:19:31] Speaker 02:
It was historically used since 2008 for a very similar purpose as it's used here, which is to identify network upgrades that have significant costs and have more complicated cost allocation issues and would take a longer time to process.

[00:19:50] Speaker 02:
PGM's statements, they're actually empirical observations based on their 30 plus years of experience in processing these interconnection requests.

[00:20:02] Speaker 02:
They're also not just theoretical.

[00:20:05] Speaker 02:
They are observations that PGM has made that projects with below cap upgrades are fairly straightforward and simple to process.

[00:20:15] Speaker 02:
whereas projects with above-cap upgrades are more complex and time-consuming.

[00:20:21] Speaker 02:
And with regard to the point that there needs to be a comparative value to balance statements against, I think that goes more towards Hecate's point that the commission didn't address certain alternatives in its analysis, and that's unnecessary in a Section 205 proceeding.

[00:20:46] Speaker 02:
In section 205, FERC is required to limit its inquiry to the confined proposal at hand, and it's not allowed to move on to alternatives that PGM itself didn't propose.

[00:21:00] Speaker 06:
Can you explain what the logic is of saying that more complex and likely to drop out projects or proposals

[00:21:16] Speaker 06:
would benefit from the cluster-based approach, whereas simpler projects that are more likely to proceed wouldn't.

[00:21:26] Speaker 06:
Just a little bit more sort of just concrete understanding of the cluster-based approach and why it's particularly appropriate to the larger project.

[00:21:36] Speaker 02:
Sure.

[00:21:37] Speaker 02:
Above CAP projects, they have costlier network upgrades and therefore more significant impacts on the grid.

[00:21:44] Speaker 02:
These projects have complex studies and cost allocation issues.

[00:21:48] Speaker 02:
You can imagine the larger a network upgrade is, the more projects are going to be responsible for sharing the costs of that project and

[00:21:59] Speaker 02:
The task of dividing up who pays how much is one that's often hotly debated and more time consuming to get through.

[00:22:10] Speaker 02:
Also, these projects just inherently take more time to process due to the cost allocation issues as well as the more complicated studies that they require and

[00:22:21] Speaker 02:
Because of these costly network upgrades, they're also at higher risk of withdrawing from the queue and triggering the need for re-studies.

[00:22:30] Speaker 06:
So all of that seems to sidestep Hecate's position, which is there's no study about who pays if we're going to pay for the whole thing.

[00:22:39] Speaker 06:
What is missing there?

[00:22:41] Speaker 06:
I mean, I take it that the ISO system doesn't just exempt from planning.

[00:22:50] Speaker 06:
transmission upgrade projects that would be fully paid, or does it?

[00:22:55] Speaker 06:
And if it does, does that mean that there's never any cost passed on?

[00:23:00] Speaker 06:
It's just a little hard to appreciate, given what Hecate is arguing about its willingness to carry the cost, if the complexity that you're describing is about cost allocation.

[00:23:14] Speaker 02:
My understanding of Hecate's alternative is that it's proposing to cover its share of the cost of a network upgrade that's over $5 million.

[00:23:24] Speaker 02:
But that doesn't guarantee that other projects that are also responsible for the same network upgrade are going to fork over the money.

[00:23:30] Speaker 02:
And the longer that process draws out over who is responsible for paying what, that just contributes to the delay in already existing backlog in PGM's interconnection system.

[00:23:43] Speaker 02:
So this is why projects that are simpler, easier to process, or what you could consider as clean projects.

[00:23:51] Speaker 02:
They have minimal impact on the grid, very little, if any, network upgrades required, and can be studied and completed very quickly.

[00:23:59] Speaker 02:
That's why they're more suited for the expedited process, which still uses the legacy rules serial cost allocation procedures.

[00:24:08] Speaker 02:
Those are the procedures in which

[00:24:10] Speaker 02:
If a project decides to withdraw because it feels that the costs are too high, that would be extremely disruptive and trigger iterative restudies for the remaining projects in the queue.

[00:24:21] Speaker 02:
Now for projects that are more complicated above $5 million, it makes sense that they're being allocated to this cluster based system.

[00:24:29] Speaker 02:
Because it's been improved to withstand a lot of the drawbacks under the legacy rules.

[00:24:36] Speaker 02:
It will it discourages late stage withdrawals and also minimizes their disruption to the remaining projects by setting all the projects together.

[00:24:47] Speaker 02:
makes the process much more efficient.

[00:24:50] Speaker 02:
So it's reasonable that the threshold pairs inefficient serial roles with low cap projects that are low risk with simple cost allocations, while also pairing the improved cluster-based roles in transition cycle one with the above cap projects that are more complex and have a higher risk of withdrawal.

[00:25:08] Speaker 05:
So if you've got data that's showing that less than 10% of your projects with the network upgrade costs are exceeding the five million lead to project completion, is your concern more about the queue or achieving a higher rate of interconnection?

[00:25:24] Speaker 02:
So I would say it's both.

[00:25:27] Speaker 02:
The broader goal of interconnection reform is to get more generators on the market, which means more completed interconnection projects.

[00:25:37] Speaker 02:
The goals of this specific reform filing by PGM is to deal with the incredible backlog that it has in its interconnection queue right now.

[00:25:45] Speaker 02:
And that has to balance two competing goals.

[00:25:48] Speaker 02:
The first is to transition as quickly as possible to this efficient cluster-based system in procedures.

[00:25:56] Speaker 02:
And the second is the need to respect the priority to the extent possible

[00:26:01] Speaker 02:
of older projects that are already in the existing queue.

[00:26:04] Speaker 02:
So the expedited process by identifying projects that PGM believes based on their 30 plus years of experience are clean, easy, faster process, it can get through the backlog quicker and move towards that transition faster.

[00:26:22] Speaker 06:
Can you help me understand in this case,

[00:26:28] Speaker 06:
whether there's a meaningful difference between the factors and analysis that goes to unduly discriminatory and the factors analysis that go to just and reasonable.

[00:26:41] Speaker 06:
It sort of seems like maybe it's all one and the same as applied here.

[00:26:47] Speaker 02:
So I believe there is substantial overlap.

[00:26:52] Speaker 02:
I can't say for a certain matter whether they are completely co-extensive.

[00:26:57] Speaker 02:
But it is true that under Section 205 in the just and reasonable standard, FERC only needs to find that the proposal fits within a zone of reasonableness.

[00:27:11] Speaker 02:
And that means that the proposal doesn't have to be the least discriminatory option.

[00:27:16] Speaker 02:
It doesn't have to be less discriminatory than what Hecate is proposing or other alternatives.

[00:27:22] Speaker 02:
It just has to be not unduly discriminatory within that zone of reasonableness.

[00:27:28] Speaker 02:
And that's exactly why, as the commission explained, it didn't need to proceed to continue evaluating alternatives after it had already found that PGM's proposal was just reasonable under Section 205.

[00:27:41] Speaker 06:
So if there's a valid reason for treating projects

[00:27:45] Speaker 06:
below and above the five million threshold differently.

[00:27:49] Speaker 06:
Does that, in your view of the law, that would resolve just and reasonable, but wouldn't it also resolve unduly discriminatory?

[00:27:58] Speaker 02:
Yes.

[00:27:59] Speaker 02:
Yes, I believe that's correct.

[00:28:02] Speaker 02:
The threshold is only unduly discriminatory if it treats similarly situated projects differently for no discernible reason.

[00:28:12] Speaker 02:
But here, there is a discernible reason.

[00:28:14] Speaker 02:
And as more of a fundamental matter, these projects are not similarly situated.

[00:28:21] Speaker 02:
As we've discussed, projects above and below the threshold are vastly different in terms of how quickly and easily PGM can get through them in the interconnection queue.

[00:28:32] Speaker 02:
I'll also mention that

[00:28:35] Speaker 02:
Examples and hypotheticals that Hecate has come up with in its brief, that's just the natural consequence of having a cutoff.

[00:28:43] Speaker 02:
There's no perfect administrative line drawing, no perfect classifications.

[00:28:48] Speaker 02:
And that's okay under Section 205 because once again,

[00:28:52] Speaker 02:
FERC doesn't need to approve the least discriminatory option or one that's less discriminatory than other alternatives, so long as what it has approved is not unduly discriminatory and is within the zone of reasonableness.

[00:29:04] Speaker 06:
And I think cities of Bethany... Just to help me out, can you give an example of a case in which something is just unreasonable, but nonetheless unduly discriminatory?

[00:29:14] Speaker 06:
I'm just trying to...

[00:29:15] Speaker 02:
I actually do not know of a case.

[00:29:17] Speaker 02:
I believe that there is significant overlap.

[00:29:21] Speaker 02:
I don't know if I can say for certain that they're completely co-extensive, but I believe that if the proposal is just and reasonable, then I can't think of a case where it was somehow unduly discriminatory.

[00:29:36] Speaker 04:
All right.

[00:29:36] Speaker 04:
I do want to ask you one question.

[00:29:38] Speaker 04:
Do you anticipate making your target date of January 25

[00:29:43] Speaker 04:
2025 on the expedited process.

[00:29:47] Speaker 02:
I believe that PGM is on track to meet that target date.

[00:29:51] Speaker 02:
And I'm glad that you brought that up because it comes back to the point that at this stage, we can't turn back time.

[00:29:59] Speaker 02:
The expedited process, it's already been ongoing for several months and is by PGM's latest updates that have been filed in the FERC docket and also posted publicly on its website on track to be finished by at the latest January, 2025.

[00:30:14] Speaker 02:
Most projects in the exodite process are actually in the last stage, which is negotiating their interconnection service agreements.

[00:30:22] Speaker 02:
So because the exodite process will soon be over, it's unclear how Hecate would achieve its ultimate relief of entering its project into that process when it will no longer exist in a few months.

[00:30:36] Speaker 05:
And quickly to the transition cycle matters.

[00:30:41] Speaker 05:
Do they absorb higher cost by being studied in the cluster versus the serial allocation?

[00:30:48] Speaker 02:
So I don't think we can say that this cost allocations are different, but I don't know.

[00:30:57] Speaker 02:
The methods are different, but I don't know how that impacts the resulting costs.

[00:31:03] Speaker 02:
And perhaps PGM can speak more to that.

[00:31:06] Speaker 02:
But I will also say the alleged or the injury that Hecate's alleged is not any difference in cost allocation methods.

[00:31:15] Speaker 02:
It's the delay that they say that their project is suffering.

[00:31:18] Speaker 02:
Uh, which, you know, absent these reforms that led to the $5 million threshold, um, it's project would most likely be even worse off in the queue.

[00:31:31] Speaker 02:
Uh, so the fact that, um, he could, he hasn't, uh, you know, sought to expedite, um, you know, this, uh, it's appeal in any way is, is telling, um, I also wanted to return to,

[00:31:52] Speaker 02:
Uh.

[00:31:55] Speaker 02:
The substantial evidence point.

[00:31:58] Speaker 02:
This court has previously rejected arguments that FERC's determination is unsupported simply because it lacks what some may call actual evidence.

[00:32:07] Speaker 02:
And that's in, for example, Excel energy, where this court explained that it's perfectly legitimate for FERC to rely on generic factual predictions and base its findings on basic economic theory.

[00:32:17] Speaker 02:
In that case, FERC was not obligated to show actual evidence to support a determination

[00:32:22] Speaker 02:
when it was simply making the kind of reasonable prediction about the market, it regulates to which courts ordinarily defer.

[00:32:34] Speaker 02:
In here, that's reinforced by the fact that the $5 million is, again, as mentioned, a historical metric that BGM has used to successfully identify projects that are more complicated and time consuming.

[00:32:52] Speaker 02:
And it demonstrates to the Commission that this threshold used in this context of PGM's latest reforms would also most likely be effective for that purpose while being just and reasonable and not unduly discriminatory.

[00:33:07] Speaker 02:
And finally, I'd like to return to a point that Judge Childs have raised about the lengthy stakeholder process.

[00:33:15] Speaker 02:
It's completely correct that this package of reforms was carefully constructed through a very extensive stakeholder process in which stakeholders were shown different alternative proposals.

[00:33:29] Speaker 02:
And it was the $5 million threshold that won overwhelming stakeholder support.

[00:33:34] Speaker 02:
It was a very carefully negotiated key component of the proposal.

[00:33:37] Speaker 02:
Hecate is essentially trying to do an end run around this process in direct opposition to the goals of interconnection reform in Order 2003 and also the 2008 Interconnection Order.

[00:33:50] Speaker 02:
In both of those orders, the Commission emphasized that independent operators like PGM need to be given flexibility to shape

[00:33:59] Speaker 02:
their interconnection procedures in the ways that best address their regional needs.

[00:34:03] Speaker 02:
And instead of imposing any general rules or procedures that all operators had to follow, it wanted operators to engage in the stakeholder process and work with its constituents to find the best possible solution.

[00:34:19] Speaker 06:
Just as one question of, frankly, something that confused me, and your expertise might help me walk it through, in the commission's explanation of its denial of Hecate's request, and I'm looking at JA 605, it's paragraph 30, the commission says that the 5 million threshold is not discriminatory

[00:34:42] Speaker 06:
Because removing requests that cause a relatively low level of network upgrades, quote, should marginally improve the processing of the remaining transition internet connection customers,

[00:34:57] Speaker 06:
by reducing the total number of interconnecting requests and the transition serial and cluster studies, thus marginally reducing both their complexity and the total number of entities that might withdraw during the transition process and trigger the need for re-study.

[00:35:12] Speaker 06:
So this is saying you take out the simpler requests and process them first.

[00:35:17] Speaker 06:
That's going to speed up the processing of more complex requests.

[00:35:22] Speaker 06:
And why does that?

[00:35:24] Speaker 06:
speed them up.

[00:35:24] Speaker 06:
It seems clear that it would speed up the processing of the simpler request.

[00:35:27] Speaker 06:
But then is it also the cluster studies?

[00:35:29] Speaker 06:
Is the efficiency?

[00:35:32] Speaker 02:
So it speeds them up in two ways.

[00:35:35] Speaker 02:
First, by getting rid of the easier projects and finishing them quickly and first.

[00:35:44] Speaker 02:
That, in turn, improves the processing of the remaining projects by reducing the total number of projects that still are left in the backlog.

[00:35:52] Speaker 06:
Except by putting them

[00:35:54] Speaker 06:
later.

[00:35:55] Speaker 06:
Go ahead.

[00:35:56] Speaker 06:
You have a separate queue for them.

[00:35:57] Speaker 06:
Go ahead.

[00:35:57] Speaker 02:
In a separate queue, but still, fewer number of projects in that queue reduces the complexity because there's fewer project-project interactions, fewer cost allocation disputes.

[00:36:07] Speaker 02:
And second, it reduces the likelihood of withdrawal and restudy for the projects that remain when you make the process simpler and limit the number of projects that remain to be studied.

[00:36:21] Speaker 06:
isn't that because or at least first reason that's because of the cluster approach, the additional cluster approach for the more complex programs?

[00:36:33] Speaker 02:
It's partially based on the cluster based rules that do make processing these projects more efficient and I can

[00:36:44] Speaker 02:
resolve some of the concerns, but it's also by virtue of just narrowing down the projects that are left.

[00:36:51] Speaker 06:
So the passion says that removing the request and putting them in the expedited queue will quote reduce the total number of interconnection requests in the transition serial and cluster studies.

[00:37:05] Speaker 06:
The transition serial is the

[00:37:08] Speaker 06:
And the cluster studies are so and transition cycles one and two both use the cluster base.

[00:37:16] Speaker 06:
That's correct.

[00:37:17] Speaker 06:
So the transition serial is the expedited queue.

[00:37:20] Speaker 02:
Yes, that's correct.

[00:37:21] Speaker 02:
And I think there, the commission's actually referring to

[00:37:26] Speaker 02:
a comparison to a situation in which PGM could have just omitted having an expedited process altogether.

[00:37:32] Speaker 02:
And then you can imagine that groups for each transition cluster would have included a greater number of projects within them, increasing their complexity and increasing the risk of withdrawal and re-study.

[00:37:47] Speaker 06:
So really, the 5 million threshold is sorting where do we apply cluster-based and where do we not.

[00:37:55] Speaker 02:
I believe, yes, from the projects that were in older Q windows, it's just trying to determine which projects are faster and easier to process using a serial process versus those that are more complicated and should be reserved for using in the cluster process.

[00:38:14] Speaker 06:
Great.

[00:38:14] Speaker 06:
That's helpful.

[00:38:18] Speaker 04:
Thank you.

[00:38:19] Speaker 04:
Thank you.

[00:38:27] Speaker 03:
Good morning.

[00:38:39] Speaker 03:
Wendy Warren for PJM Interconnection LLC.

[00:38:43] Speaker 03:
May it please the court.

[00:38:45] Speaker 03:
I'd like to start right where Judge Pollard left off because you hit it on the head.

[00:38:54] Speaker 03:
Let me back up.

[00:38:55] Speaker 03:
Recall that this is all about moving from serial process, which means we study one project, then we move to the next project, then we move to the next project.

[00:39:05] Speaker 03:
We study them in a serial fashion.

[00:39:07] Speaker 03:
We allocate the costs in a serial fashion.

[00:39:11] Speaker 03:
And that was very slow.

[00:39:13] Speaker 03:
The proposal was to move to the cluster-based.

[00:39:16] Speaker 03:
And there's two things about clusters.

[00:39:18] Speaker 03:
You do one study.

[00:39:20] Speaker 03:
If you've got 300 projects, you do one study.

[00:39:24] Speaker 03:
Well, you do it three times, but you do one study.

[00:39:26] Speaker 06:
Tell us just a little more.

[00:39:28] Speaker 06:
Okay.

[00:39:29] Speaker 06:
What is being studied and how can you get away with one study?

[00:39:33] Speaker 06:
How does that compare with what happened in the past?

[00:39:35] Speaker 03:
So what the first step is you build a model of all the transmission lines that are already there.

[00:39:42] Speaker 03:
Even a little more general than that.

[00:39:43] Speaker 03:
You're studying.

[00:39:45] Speaker 03:
You're studying in the first round is system impact, which is this generator.

[00:39:50] Speaker 03:
If I interconnected here,

[00:39:54] Speaker 03:
and I'm not an electrical engineer, so I'll be really simple.

[00:39:56] Speaker 03:
If I plug this generator in.

[00:39:58] Speaker 06:
Luckily I am, so.

[00:39:59] Speaker 03:
Oh, good.

[00:40:02] Speaker 03:
Maybe you can explain it.

[00:40:04] Speaker 03:
So if you plug it in here, what reinforcements do I need to make around it?

[00:40:11] Speaker 03:
Do I need to upgrade, make this line carry more power?

[00:40:15] Speaker 03:
Do I need to put another circuit breaker here?

[00:40:18] Speaker 03:
So that's what we're talking about when we talk about network up.

[00:40:21] Speaker 03:
is the reinforcements that we need to make to plug that generator in.

[00:40:28] Speaker 03:
So you build your model of everything, and then in the serial study, you start with load flow.

[00:40:35] Speaker 03:
What does that generator plugging in there?

[00:40:38] Speaker 03:
And you study, you build the whole model, but you look at just that generator.

[00:40:42] Speaker 03:
What does their project do to the flows of electricity on the system?

[00:40:47] Speaker 03:
And how much is it going to cost

[00:40:50] Speaker 03:
Or what's the impact?

[00:40:51] Speaker 03:
What do we need to build?

[00:40:53] Speaker 03:
The second round of the system impact study, this is now in the current process, but it was true in the old one.

[00:41:01] Speaker 03:
You start looking at really more detailed things like short circuit and stability of the system.

[00:41:07] Speaker 03:
And those aren't, you don't necessarily have to study that for every project, because some projects don't cause those problems.

[00:41:15] Speaker 03:
The last study is a facility study, which is where the transmission owner that

[00:41:20] Speaker 03:
they're plugging into tells them how much it's going to cost exactly.

[00:41:25] Speaker 03:
I mean, everything before is just kind of an estimate.

[00:41:28] Speaker 03:
Now we're getting down to, you know, dollars and cents and specific equipment.

[00:41:33] Speaker 06:
So- You're talking about how much the upgrade will cost.

[00:41:36] Speaker 03:
How much the upgrade will cost.

[00:41:38] Speaker 03:
And so when PJM was talking about where, you know, we're meeting with the stakeholders talking about, we're going to go from this really slow, inefficient serial process

[00:41:50] Speaker 03:
to this new process where we put everybody together.

[00:41:53] Speaker 03:
We do that load flow study one time.

[00:41:57] Speaker 03:
We have a model with everybody in it and we run it once.

[00:42:00] Speaker 06:
So how do you cluster?

[00:42:02] Speaker 06:
That seems like that becomes the really key thing.

[00:42:04] Speaker 03:
You cluster by time.

[00:42:06] Speaker 06:
Time of?

[00:42:07] Speaker 03:
You open an application window.

[00:42:09] Speaker 03:
You say, we will be taking applications.

[00:42:12] Speaker 03:
Right now, PJM is taking applications for transition cycle number two.

[00:42:18] Speaker 03:
And that window ends in December.

[00:42:20] Speaker 03:
And then we will know how many projects are in transition cycle number two.

[00:42:25] Speaker 06:
So it's not, I mean, it's geographic to the extent that PJM is geographic.

[00:42:29] Speaker 06:
Right.

[00:42:30] Speaker 06:
It's just all the things that are on the table as possibly going to be done.

[00:42:34] Speaker 06:
Let's look at them all together.

[00:42:35] Speaker 06:
Right.

[00:42:36] Speaker 06:
And figure out if we were to do them all, what, how they interact, how they interact, what they require, what we need to do to, to reinforce the system.

[00:42:48] Speaker 03:
And so,

[00:42:50] Speaker 03:
But here's the second part about clustering.

[00:42:54] Speaker 03:
Instead of assigning the cost of, instead of saying project one, your network upgrade costs are $4 million.

[00:43:02] Speaker 03:
Project two, your network upgrade costs are $3 million.

[00:43:06] Speaker 03:
You just lump it all together.

[00:43:08] Speaker 03:
You studied everyone together and you say the cost of the upgrades for this 300 projects is going to be

[00:43:17] Speaker 03:
you know, five billion and they each take a share of that.

[00:43:22] Speaker 03:
So you eliminate a lot of the things Mr. Street was talking about the haggling, the projects dropping out because their costs are too high.

[00:43:30] Speaker 03:
OK, but now.

[00:43:31] Speaker 06:
In that sense, it recognizes that there's not one simple cause, that things are interactive.

[00:43:38] Speaker 06:
And therefore, if you're doing this serial, you're losing all kinds of things.

[00:43:42] Speaker 06:
You're losing efficiencies.

[00:43:43] Speaker 06:
You're also losing externalities that each proposal, that may be associated with each proposal.

[00:43:50] Speaker 06:
So when you put them all together and kind of look at it all and say, if we were to do all of this, what would be the cost and how would it be fair to allocate them?

[00:43:58] Speaker 03:
Right.

[00:43:59] Speaker 03:
But so now imagine you're a stakeholder, you're meeting with PJM and your fellow stakeholders, and you have a project that has been under study for two or three years, and you know what your network upgrades cost, and they're low.

[00:44:17] Speaker 03:
You're only responsible for a million dollars in network upgrade costs.

[00:44:22] Speaker 03:
And so you say, I don't want to go into that transition process.

[00:44:26] Speaker 03:
I don't wanna go to the new process.

[00:44:28] Speaker 03:
because I'm going to have to pick up a share of everybody else's costs.

[00:44:33] Speaker 03:
I like what I'm hearing right now.

[00:44:35] Speaker 03:
I want this.

[00:44:37] Speaker 03:
I like cereal for this project.

[00:44:40] Speaker 03:
And so this was the goal of the expedited process was there were projects out there.

[00:44:46] Speaker 03:
They'd already been studied.

[00:44:48] Speaker 03:
They knew they were below.

[00:44:50] Speaker 03:
We knew the network upgrades were below $5 million.

[00:44:55] Speaker 03:
So they were simple.

[00:44:57] Speaker 03:
we could do it quickly because they'd already been studied.

[00:45:01] Speaker 03:
And it was more a matter of cleaning out, you know, we're going, we've got a backlog of, and I think it was at least 1500 projects.

[00:45:12] Speaker 03:
We had a backlog.

[00:45:14] Speaker 06:
What can we get out quickly?

[00:45:16] Speaker 06:
And are those, they're almost done.

[00:45:17] Speaker 06:
They're getting close to it.

[00:45:17] Speaker 03:
They're almost done and they'll be done by December.

[00:45:21] Speaker 06:
So here's my question.

[00:45:22] Speaker 06:
When, when Hecate says, look, we'll pay our portion

[00:45:28] Speaker 06:
I'm imagining, well, maybe that creates distortions if you imagine that as compared to the cluster system, where the cluster system is saying, well, maybe what you're being asked to pay for is a different actual physical infrastructural solution than what would be chosen

[00:45:52] Speaker 06:
as a result of a cluster study for all the interconnections.

[00:45:57] Speaker 06:
Is that part of the issue or not really?

[00:45:59] Speaker 03:
That may be part I can't speculate as to what Hecate's interest is exactly.

[00:46:04] Speaker 06:
I'm thinking more of what's PJM's interest in this.

[00:46:07] Speaker 06:
PJM's.

[00:46:08] Speaker 06:
Well, why wouldn't you have five million threshold asterisk unless you're willing to just be assessed and pay whatever we ask you?

[00:46:18] Speaker 03:
So the goal of the five million was to identify projects that were almost done and could be done quickly.

[00:46:27] Speaker 03:
Quickly.

[00:46:29] Speaker 03:
That was the key metric, or that was a key metric.

[00:46:34] Speaker 03:
The asterisk will pay

[00:46:39] Speaker 03:
I was interested to hear Petitioner talk about the the worry was dropping out.

[00:46:46] Speaker 03:
That was not the worry.

[00:46:47] Speaker 03:
The worry was these projects are almost done.

[00:46:49] Speaker 03:
They're not dropping out.

[00:46:51] Speaker 03:
They have low network upgrade costs.

[00:46:54] Speaker 03:
They want to get this done and they want to get it done quickly.

[00:46:57] Speaker 03:
And so let's get them.

[00:46:59] Speaker 03:
It wasn't even.

[00:46:59] Speaker 03:
Yes, it was getting projects out of the

[00:47:03] Speaker 03:
Transition cycle cues clusters, but it was really they're almost done.

[00:47:07] Speaker 03:
Let's get them Clean up get them done and then we can move on to the transition cycle and by the way And this I think is really critical some of the questions you were asking and and the answers were not not correct If The court were to decide that

[00:47:30] Speaker 03:
this $5 million threshold is unjust and unreasonable, unduly discriminatory.

[00:47:36] Speaker 03:
If it goes back to FERC, if FERC, well, one possibility is we have to start all over.

[00:47:45] Speaker 03:
And it's not guaranteed that at that point, PJM would do an expedited process because, well, we'll get into that in a minute, but it's not guaranteed that we would do it because at this point we're three years on.

[00:48:01] Speaker 06:
and almost done with the, I mean, that's gonna phase out and everything's gonna be by clusters?

[00:48:06] Speaker 03:
Yes, this is the last serial cluster and it was the last serial cluster because the people in it liked it or last serial queue.

[00:48:14] Speaker 03:
Thank you.

[00:48:15] Speaker 03:
Queue, sorry.

[00:48:16] Speaker 03:
But, oh no, but that's critical because the only thing that was serial, is serial about it is the cost allocation.

[00:48:24] Speaker 03:
They are only paying their own costs.

[00:48:25] Speaker 03:
They're not spreading it across the cluster.

[00:48:28] Speaker 03:
They're being, they were studied as a cluster.

[00:48:31] Speaker 03:
That took place last year or early this year.

[00:48:34] Speaker 03:
It started, the expedited process started July of 2023.

[00:48:39] Speaker 03:
And at that point there was a single study.

[00:48:46] Speaker 03:
If, as Mr. Street said, we just put, let's just put Hecate and a couple of their friends back in.

[00:48:54] Speaker 03:
We'd have to go back and redo the entire expedited process study.

[00:48:59] Speaker 03:
People who

[00:49:01] Speaker 03:
currently have, either they've currently finished all their studies, they're only waiting for one study, or they might even have an interconnection agreement that's on file with the commission.

[00:49:11] Speaker 03:
We'd have to throw that all out, let's start over again.

[00:49:15] Speaker 03:
And what that would do would be to delay the expedited process, certainly, which would push back TC1, which would push back TC2, which would push back

[00:49:30] Speaker 03:
eventual arrival at the new process, which is all we really wanted to get to in the first place.

[00:49:36] Speaker 06:
I have a kind of unrelated question, which is the relationship between stakeholder support and PJM's authority.

[00:49:45] Speaker 06:
Could PJM submit to FERC proposed forms that are approved by only a third of its stakeholders?

[00:49:58] Speaker 03:
I don't think it can.

[00:50:02] Speaker 03:
I don't think I've seen that.

[00:50:05] Speaker 03:
Well, the board of PJM can decide to file something, even if that was not the option chosen by the stakeholders.

[00:50:17] Speaker 06:
And what limits that?

[00:50:19] Speaker 06:
What controls it?

[00:50:23] Speaker 03:
It depends what area of the tariff we're talking about.

[00:50:28] Speaker 03:
If it's, for example, transmission rates, that implicates certain rights of the owners of the transmission assets to file changes to those.

[00:50:40] Speaker 03:
PJM can't change that.

[00:50:42] Speaker 03:
If it's interconnection planning and that's, that's within PJM's two or five.

[00:50:49] Speaker 03:
Yeah.

[00:50:52] Speaker 05:
Just quickly, with respect to the transition one cycle and the transition two cycle, if a generator drops out, explain that process of how the costs are observed at that time.

[00:51:05] Speaker 03:
So transition cycle one and two are, they're done by, and all the future under the new rules, it's three phases.

[00:51:15] Speaker 03:
And for example, transition cycle one just finished, just passed through,

[00:51:22] Speaker 03:
Phase one, which was they did a system impact study that looked at all the load flows for the whole cluster and then said, here's what we're looking at for everybody.

[00:51:36] Speaker 03:
Do you want to move forward?

[00:51:37] Speaker 03:
If you want to move forward, you need to give us some technical specifications on your equipment.

[00:51:45] Speaker 03:
You need to put down a certain study deposit.

[00:51:47] Speaker 03:
You need to put down kind of earnest money.

[00:51:52] Speaker 03:
They're called readiness payments.

[00:51:54] Speaker 05:
What I'm really trying to get at is, will Hecate absorb costs for the generators that drop out?

[00:52:02] Speaker 03:
Everybody who stays in the cluster could absorb costs, but the readiness payments that I had just started mentioning, those protect the people who stay in against the people who withdraw.

[00:52:20] Speaker 03:
So as you move through the phases, you have to put up more and more money, more earnest money, more skin in the game.

[00:52:28] Speaker 03:
The later you drop out, the more money you leave in the pot to help build all the things for the entire group.

[00:52:36] Speaker 03:
That's under the new system and the two transition cycles.

[00:52:43] Speaker 06:
In terms of redressability, I thought you might have said that you had two points of what would happen if this were remanded to the commission.

[00:52:51] Speaker 03:
And I'm not sure you got to... So, well, the other one was that, and I slipped it in, but the real problem here is we can't just put Hecate back in and finish up.

[00:53:04] Speaker 03:
We've got 300 projects that are almost done.

[00:53:07] Speaker 03:
If we add Hecate in, everybody has to go back to the beginning.

[00:53:15] Speaker 04:
All right.

[00:53:15] Speaker 04:
Thank you.

[00:53:16] Speaker 04:
Thank you.

[00:53:20] Speaker 04:
All right.

[00:53:21] Speaker 04:
Mr. Street, why don't you take two minutes?

[00:53:26] Speaker 00:
Thank you, Your Honor.

[00:53:26] Speaker 00:
There's a lot to respond to there.

[00:53:28] Speaker 00:
With the court's indulgence, I'll try to briefly hit four points.

[00:53:32] Speaker 00:
First, a FERC.

[00:53:35] Speaker 00:
trying to articulate a basis for the $5 million threshold says that there was a track record for that threshold.

[00:53:41] Speaker 00:
And they asserted that it was previously used to identify more complicated projects.

[00:53:47] Speaker 00:
That is not in the orders at all, and that's not accurate.

[00:53:50] Speaker 00:
The $5 million threshold was used to determine whether the costs could be allocated across different queue windows under the old process.

[00:53:58] Speaker 00:
Had nothing to do with whether the projects were more likely to be complicated, more likely to proceed to completion, or more likely

[00:54:04] Speaker 00:
to clog up the queue.

[00:54:07] Speaker 00:
So they're really arguing, well, we use $5 million for apples over here, so therefore it makes a lot of sense to use $5 million for oranges over here.

[00:54:15] Speaker 00:
The commission also argued that

[00:54:19] Speaker 00:
the $5 million threshold identified projects that would have more complicated cost allocations.

[00:54:25] Speaker 00:
But I didn't hear a persuasive answer for why if a company is willing to pay all of the network upgrades that are assigned to it, that doesn't solve those complicated cost allocation problems.

[00:54:37] Speaker 00:
And the real key, I guess, is FERC didn't address Hecate's argument in that respect in its order.

[00:54:44] Speaker 00:
It's made attorney argument this morning about why equity's proposal to pay all of the cost allocations somehow doesn't solve the complicated cost allocation problems, but that's not in the order.

[00:54:55] Speaker 00:
And that's why the commission has to grapple with alternatives to determine whether something is unduly discriminatory.

[00:55:03] Speaker 00:
So let me turn to that and some of Judge Pillard's questions about how discriminatory can something be?

[00:55:09] Speaker 00:
How much is the overlap with just and reasonableness?

[00:55:12] Speaker 00:
The commission is citing and PJM is citing cases in its brief that say in just and reasonable cases, the commission cannot select some other alternative.

[00:55:24] Speaker 00:
But our point is that in an undue discrimination case,

[00:55:28] Speaker 00:
You don't know whether something is unduly discriminatory unless you compare it to the available alternatives.

[00:55:33] Speaker 00:
You won't find a case that says in an undue discrimination case, the commission doesn't have to look at alternatives.

[00:55:40] Speaker 00:
They would have cited that it would have been on page one of their brief.

[00:55:43] Speaker 00:
In fact, what we have

[00:55:45] Speaker 00:
relied on to this court is the consolidated Edison case, pages 282 to 283.

[00:55:49] Speaker 00:
I come back to that again, because that was an undue discrimination case.

[00:55:54] Speaker 00:
The court didn't just say something was just or reasonable.

[00:55:58] Speaker 00:
It looked at whether the dividing line or the test closely tracked the regulatory objectives.

[00:56:05] Speaker 00:
And when the court found that there was some alternative that directly tracked the regulatory objectives, it vacated the commission for failing to look at that.

[00:56:14] Speaker 00:
So I think the key with undue discrimination is, is it pointless discrimination?

[00:56:19] Speaker 00:
Is there something else out there that's readily available that the commission could look at?

[00:56:24] Speaker 00:
And at a bare minimum, I would say, even if the failure to look at alternatives doesn't substantively undermine, directly require vacature of the $5 million,

[00:56:36] Speaker 00:
threshold at least administrative law 101 is the commission has to respond to major comments and major objections to their approach.

[00:56:46] Speaker 00:
And they say in the background of their order, Hecate and the other commenters made these proposals.

[00:56:52] Speaker 00:
And then when they get to the reasoning of their order, they don't say anything about them.

[00:56:55] Speaker 00:
So I think we're exactly in the situation that we were in in the California Public Utilities Commission case from 2021 that I believe Judge Henderson authored, where you have no substantial evidence for the central test that the commission used.

[00:57:11] Speaker 00:
You've got commenters pointing out, hey, there's these other options.

[00:57:14] Speaker 00:
There's no evidence.

[00:57:17] Speaker 00:
And the commission is just silent in the face of that objection.

[00:57:21] Speaker 00:
Finally, I want to turn back to Remedy.

[00:57:26] Speaker 00:
The argument that the commission would have to throw everything out that it approved.

[00:57:31] Speaker 00:
It would just have to completely vacate everything is just completely contrary to consolidated Edison.

[00:57:37] Speaker 00:
That was again involving network upgrade costs.

[00:57:40] Speaker 00:
There were six or seven challenges.

[00:57:42] Speaker 00:
The court accepted two or three of them and it vacated only as to those two or three unduly discriminatory tests.

[00:57:50] Speaker 00:
And there's no reason to think the commission therefore is going to throw out the entire

[00:57:54] Speaker 00:
order.

[00:57:55] Speaker 00:
Now turning to PJM's argument.

[00:57:57] Speaker 00:
that, oh, maybe they will throw out the entire expedited process.

[00:58:03] Speaker 00:
There's no way they can make an accommodation for Hecate.

[00:58:06] Speaker 00:
I guess the number one thing I would have to say to that is, that's attorney argument this morning.

[00:58:11] Speaker 00:
That's not even in their brief.

[00:58:13] Speaker 00:
I mean, PJM didn't even argue lack of redressability.

[00:58:16] Speaker 00:
The commission did, but it didn't argue about this impossibility of giving Hecate relief.

[00:58:21] Speaker 00:
It was more about having to go back to the stakeholders

[00:58:26] Speaker 00:
So I think that based on the record that the court has, there is going to be a period of time where Hecate could be accommodated.

[00:58:33] Speaker 00:
And at the very least, Hecate is entitled to a remand or a remand with vacatur for the commission to do its job.

[00:58:40] Speaker 06:
Is Hecate in a class of one?

[00:58:43] Speaker 06:
I mean, if PGM were to propose a rule, supplemental rule, it sounds like you're asking for, that would say, oh, the serial treatment transition rule should also apply to self-funding projects.

[00:59:02] Speaker 06:
And maybe there's some other way to define largeness or complexity other than cost.

[00:59:09] Speaker 06:
I don't know.

[00:59:09] Speaker 06:
But if they just were to say self-funding projects should also be in a serial treatment, and then would there be a cluster study with respect to them?

[00:59:21] Speaker 06:
Would only Hecate be in that category because nobody else objected?

[00:59:29] Speaker 00:
My understanding, first of all, is that that would be up to PJM to craft that in the first instance.

[00:59:35] Speaker 06:
But I'm just thinking, what are you envisioning?

[00:59:37] Speaker 06:
Is it permissible?

[00:59:39] Speaker 00:
So I guess there's two questions embedded there.

[00:59:41] Speaker 00:
One, is Hecate a class of one?

[00:59:43] Speaker 00:
I'm not sure about that.

[00:59:44] Speaker 00:
I mean, that's the only one that I'm aware of, which I think goes to the argument that this is somehow going to bring in a huge new class of projects that's going to slow down the queue.

[00:59:53] Speaker 00:
I mean, I think to the extent there's only one that we know about that's come forward, I think that does undermine that point.

[00:59:59] Speaker 00:
But I think my understanding is that there is a way that because Hecate is willing to pay all of the network upgrade costs assigned to it, that there can be a solution where as part of the study, in other words, there's gonna be a study that determines the allocation of network upgrade costs, right?

[01:00:17] Speaker 00:
That's what's being done in the transition cycle.

[01:00:20] Speaker 00:
And Hecate is saying, we're willing to pay those.

[01:00:23] Speaker 06:
So there's- They've been assigned to it through what process?

[01:00:28] Speaker 00:
Well, right.

[01:00:29] Speaker 00:
So it's based on the assignment.

[01:00:32] Speaker 00:
My understanding is the initial assignment is being done

[01:00:37] Speaker 00:
as part of determining which projects get into the queue or get into the new process.

[01:00:46] Speaker 00:
And so that's going to be an initial assignment.

[01:00:49] Speaker 00:
And that's how the commission says they're going to, or PJM says they're going to determine whether something goes into the queue or into the transition cycle is whether you're assigned more than $5 million of network upgrade costs.

[01:01:00] Speaker 00:
And we're saying,

[01:01:02] Speaker 00:
We heard from PJM, well, there are these projects with small network upgrade costs that, let's say $1 million.

[01:01:10] Speaker 00:
And they say, oh, we like that.

[01:01:11] Speaker 00:
We want to stay in the expedited queue.

[01:01:14] Speaker 00:
We don't want to go try our luck over here.

[01:01:16] Speaker 00:
And our point is, yes, we've been assigned more than $5 million.

[01:01:23] Speaker 00:
But we also want to stay in the queue, and we're willing to pay that.

[01:01:28] Speaker 06:
But I'm just saying that when she described those who were in the serial processing, they did in effect a cluster study for all of them and did allocation.

[01:01:38] Speaker 06:
And you weren't part of that.

[01:01:41] Speaker 00:
No, I don't think that's what she said.

[01:01:44] Speaker 00:
I'm sorry if I'm misstating.

[01:01:48] Speaker 00:
So the legacy process, which includes the expedited process, is a serial process.

[01:01:55] Speaker 00:
So in other words,

[01:01:57] Speaker 00:
Based on the queue position, queue position one is studied.

[01:02:03] Speaker 00:
Then that's determined whether that can go to an interconnection agreement.

[01:02:06] Speaker 00:
Queue position two is studied.

[01:02:07] Speaker 00:
Queue position three is studied.

[01:02:09] Speaker 00:
The clusters only come in in the transition phase.

[01:02:13] Speaker 00:
And I think that's set out in the background sections of the brief.

[01:02:19] Speaker 00:
And our point is we want to go through that queue process

[01:02:23] Speaker 00:
And whatever we're assigned, if it's $5 million, if it's $10 million, we're willing to pay that because we think and we know the Q process is going to be faster because of the limited number and that it will get done before the transition cycle can complete.

[01:02:39] Speaker 00:
So we'll ask that the court vacate and remand.

[01:02:42] Speaker 04:
I can't let you go without asking you.

[01:02:45] Speaker 04:
Do you know how the name Hecate was

[01:02:50] Speaker 04:
I mean, I looked it up, maybe it's the goddess of darkness.

[01:02:55] Speaker 04:
I think it's interesting that an energy company is actually kind of whimsical.

[01:03:00] Speaker 00:
Yes.

[01:03:01] Speaker 00:
So the goddess of the crossroads is how we prefer to characterize that.

[01:03:06] Speaker 00:
I'm not sure of all of the details of its origin, but that is where we are.

[01:03:12] Speaker 00:
As a renewable company, we're looking to help the country steer on the crossroads towards greener energy and connect our process as quickly as we can to achieve that goal.

[01:03:22] Speaker 04:
Thank you.

[01:03:23] Speaker 00:
Thank you.