Hogan, Delaware governor protest cost split on power line from N.J.

Gov. Larry Hogan joined with Delaware's governor to protest a federal decision that hurts ratepayers in their

Gov. Larry Hogan joined with the governor of Delaware on Wednesday to protest a federal decision they say will saddle their states' ratepayers with the costs of a power line project that mostly benefits New Jersey.

The two governors — Hogan, a Republican, and Jack Markell, a Democrat — called on the Federal Energy Regulatory Commission to reverse an April decision on allocating the costs of a power line across the Delaware River to the nuclear plants on Artificial Island on the New Jersey side of the river.

Hogan met with Markell at Harpoon Hanna's, a restaurant at the line between Ocean City and Fenwick Island, Del., for lunch and a news conference. He called the ruling on how to split up the costs of the project "a terrible decision."

"This is a mistake," Hogan said. "It is unreasonable, and it is not fair for the hard-working ratepayers of Maryland and Delaware."

Hogan said ratepayers in Maryland and Delaware will bear about 90 percent of the costs of the $272 million power line, while 90 percent of the benefits will go to New Jersey.

Under the federal ruling, most of the cost will be borne by customers of Delaware's Public Service Electric & Gas and by Delmarva Power & Light, which is owned by Exelon and serves many customers on Maryland's Eastern Shore.

The governors called on the federal agency to reverse its decision, and hinted at other, unspecified action if it won't budge.

"We are going to use every tool at our disposal to reverse this regrettable and unfortunate decision," Hogan said.

Paula Carmody, who heads the Maryland Office of People's Counsel, said "the normal avenue" is to appeal to the federal courts.

Carmody, whose agency represents residential ratepayers, said the federal energy agency appears to have insisted on using a formula that doesn't apply in this case.

"You really shouldn't be sticking with a formula that ends up with this outlier kind of result," she said.

But the Federal Energy Regulatory Commission ruled that its application of the formula was not "unjust, unreasonable, unduly discriminatory or preferential," and that the formula was highly reliable though not perfect for allocating costs.

In a 3-1 ruling, the commission said the formula was reliable for apportioning benefits such as reliability over the long term instead of just focusing on short-term power flow.

Commission spokesman Craig Cano declined to comment on the merits of the case. He said parties to the case have requested a reconsideration and that a review of their petitions is now underway. Once the decision is issued, he said, it could be challenged in court.

Commissioner Cheryl A. LaFleur, the sole dissenter, agreed with Carmody that the commission applied its preferred formula too rigidly. That formula, she said, was a "poor fit for the types of projects at issue in these proceedings."

Markell urged the commission to take speedy action on reconsidering the matter.

"It is imperative that FERC resolve this issue without delay and before the project moves too far along," he said. "Planning for construction is already underway, and uncertainty about electric costs can impact economic development."

The projects involves construction of a 230-kilovolt transmission line by the PJM power grid — which serves utilities in the Midwest and East Coast — to help stabilize and increase the power output of the three nuclear power plants on Artificial Island.

A spokeswoman for the Maryland Public Service Commission said the regulatory agency does not have a solid estimate on how much ratepayers in Maryland would be affected.

Spokeswoman Tori Leonard said Delaware utility regulators estimated that if the PJM cost allocation isn't changed, state's customers would pay $1 to $3 more per month, while the impact on Marylanders would be less.

Leonard said about 250,000 Maryland customers would be affected, including roughly 200,000 who get their electricity from Delmarva Power and others who are supplied by the smaller Choptank, Easton and Berlin co-ops. There are also about 300,000 Delmarva customers in Delaware.

The dispute puts Hogan at odds with New Jersey, where Republican Gov. Chris Christie had been a close political ally until earlier this year.

Hogan endorsed Christie's candidacy for president, but refused to follow along when Christie dropped out and threw his support behind Donald Trump. Hogan has said he would not vote for Trump.

Christie's office referred questions to the New Jersey Board of Public Utilities.

Greg Reinert, a spokesman for the board, said New Jersey also has concerns with the way the federal agency allocates costs for electric transmission projects, and has disputed its methods in previous cases.

"However," he said, "in this particular case we cannot agree with the states of Delaware and Maryland."

mdresser@baltsun.com

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