{"document":{"slug":"rehearing-er26-3380-indicated-pjm-tos","title":"Request for Rehearing of the Indicated PJM Transmission Owners of the September 29, 2026 backstop order (TO exit amendment)","issued":"2026-10-29","accession":"20261029-5265","docket":"ER26-3380-001","group":"Rehearing of FERC's PJM Reliability Backstop Procurement order","filer":"Indicated PJM Transmission Owners","kind":"request for rehearing","file":"sources/originals/20261029-5265_Indicated PJM Transmission Owners' Request for Rehearing.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20261029-5265","sha256":"eaf4067ca474db69aaa33c7ac8209e64599f3e6823949dff2471cfd5ddb87019","pages":10,"tokens":2502,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":174,"text":"UNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \n \n \n \nPJM Interconnection, L.L.C. \n  \n \n) \n) \n) \n) \n) \n) \n) \n) \n) \n) \nDocket No. ER26-3380-000 \n \nREQUEST FOR REHEARING OF THE  \nINDICATED PJM TRANSMISSION OWNERS \nPursuant to Federal Power Act (“FPA”) section 313(a)1 and Rule 7132 of the Rules of \nPractice and Procedure of the Federal Energy Regulatory Commission (“FERC” or \n“Commission”),3 the Indicated PJM Transmission Owners4 respectfully request rehearing of \nthe Commission’s September 29, 2026 order in this proceeding (the “Order”).5   \n \n1  16 U.S.C. § 825l(a).  \n2  See 18 C.F.R. § 385.713 (2026). \n3  18 C.F.R. § 385.211 (2026). \n4  The Indicated PJM Transmission Owners are American Transmission Systems, Inc., Mid-\nAtlantic Interstate Transmission, LLC, Trans-Allegheny Interstate Line Company, Keystone \nAppalachian Transmission Company, Jersey Central Power & Light Company, Monongahela \nPower Company, and The Potomac Edison Company (collectively, “The FirstEnergy \nTransmission Companies”) and Duquesne Light Company.  The FirstEnergy Transmission \nCompanies are separately filing a rehearing request raising other issues.   \n5  See PJM Interconnection, L.L.C., 196 FERC ¶ 61,245 (2026) (“Order”)."},{"page":2,"startToken":174,"endToken":446,"text":"2 \nThe Indicated PJM Transmission Owners are hopeful that PJM6 will submit a revised \nsection 205 filing that supersedes its earlier section 205 filing and may moot the need for \nrehearing of the Order.  The Indicated PJM Transmission Owners submit this rehearing request \nout of an abundance of caution to preserve their rights in this fast-moving and dynamic \nproceeding. \nAs discussed below, the Commission should grant rehearing of the Order as follows: \n• The Order is erroneous, arbitrary and capricious, fails to engage in reasoned decision-\nmaking, and is unsupported by substantial evidence because it did not definitively reject \nPJM’s Exit Amendment on cost-causation grounds. \n• The Order is erroneous, arbitrary and capricious, fails to engage in reasoned decision-\nmaking, and is unsupported by substantial evidence because it did not definitively reject \nPJM’s Exit Amendment on the basis that PJM exceeded its FPA section 205 filing \nauthority.  \nI. \nBACKGROUND \nOn July 31, 2026, after a truncated CIFP review process and without proper notice to \nthe TOs, PJM filed its RBP proposal with the Commission under FPA section 205, with a \nproposed effective date of September 29, 2026.  The RBP proposal included an Exit \nAmendment that would establish new prerequisites to a TO exiting PJM and impose new fees \non exiting TOs.  The Indicated PJM Transmission Owners submitted a Protest opposing this \nExit Amendment.  This Protest was not brought on by any present desire to exit PJM; rather, \n \n6  Defined terms used herein shall have the same meaning as in the Indicated PJM Transmission \nOwners’ Protest.  See Protest of the Indicated PJM Transmission Owners, PJM \nInterconnection, L.L.C., No. ER26-3380-000 (filed Aug. 21, 2026)."},{"page":3,"startToken":446,"endToken":728,"text":"3 \nit challenged PJM’s deviation from agreed-upon CTOA processes and relevant Commission \nprecedent in how PJM adopted the Exit Amendment and with respect to its substance. \nOn September 29, 2026, the Commission issued its Order, accepting PJM’s RBP \nproposal for filing, “suspended for five months, effective February 28, 2027, subject to refund \nand the outcome of the further procedures ordered in this proceeding.”7  The Commission \nidentified three aspects of PJM’s proposal that may be unjust and unreasonable—“cost \nallocation, [TO] exit rules, and LSE collateral requirements”8—but “f[ound] that the other \naspects of PJM’s RBP proposal are just and reasonable.”9  The Commission ordered further \nbriefing and a paper hearing pertaining to the aspects identified as potentially unjust and \nunreasonable, and suggested that, “following the paper hearing, the Commission may need to \ndirect significant modifications to certain aspects of PJM’s proposal.”10   \nAs to the Exit Amendment in particular, the Commission found that PJM “fails to \nexplain why Transmission Owners—who are not the buyers for which PJM procures capacity \nunder the RBP—should be responsible for RBP Charges,”11 and that the Exit Amendment \n“may be inconsistent with the cost causation principle.”12  But the Order did not reject the \nconcept of an exit fee outright, and instead proposed that “a just and reasonable approach could \nrequire LSEs in an exiting Transmission Owner’s zone to pay RBP exit fees commensurate \nwith their cost allocation under the RBP, to prevent cost shifts to other LSEs in the PJM \n \n7  Order, 196 FERC ¶ 61,245 at P 215(A). \n8  Id. P 24. \n9  Id. P 23. \n10  Id. PP 24–25. \n11  Id. P 178. \n12  Id. P 179."},{"page":4,"startToken":728,"endToken":1014,"text":"4 \nRegion.”13  The Commission did not address the Indicated PJM Transmission Owners’ \nargument that PJM’s Exit Amendment was not the sort of matter that PJM could unilaterally \nfile with the Commission under PJM’s governing agreements. \nAs explained herein and for the reasons set forth below, the Commission should grant \nrehearing and definitively reject the Exit Amendment both as violative of cost-causation \nprinciples and as an ultra vires submission filed in excess of PJM’s unilateral filing authority. \nII. \nREQUEST FOR REHEARING \nA. \nStatement of Issues and Specification of Errors \nThe Indicated PJM Transmission Owners submit the following Statement of Issues and \nSpecification of Errors pursuant to Rule 713(c)(1)-(2) of the Commission’s Rules of Practice \nand Procedure.14 \n• The Order is erroneous, arbitrary and capricious, fails to engage in reasoned decision-\nmaking, and is unsupported by substantial evidence because it did not definitively reject \nPJM’s Exit Amendment on cost-causation grounds.  16 U.S.C. § 824d(a)–(b) (all rates \nand charges “shall be just and reasonable,” and no public utility shall “subject any \nperson to any undue prejudice or disadvantage”); KN Energy Inc. v. FERC, 968 F.2d \n1295, 1300 (D.C. Cir. 1992) (rates must “reflect to some degree the costs actually \ncaused by the customer who must pay them”); Ill. Com. Comm’n v. FERC, 576 F.3d \n470, 476–77 (7th Cir. 2009) (“FERC is not authorized to approve a pricing scheme that \nrequires a group of utilities to pay for facilities from which its members derive no \nbenefits, or benefits that are trivial in relation to the costs sought to be shifted to its \n \n13  Id. P 181 (emphasis added). \n14  18 C.F.R. § 385.713(c)(1)–(2) (2026)."},{"page":5,"startToken":1014,"endToken":1283,"text":"5 \nmembers.”); Duquesne Light Co., 122 FERC ¶ 61,039 at PP 89–94 (2008) (holding the \nwithdrawing entity responsible for capacity PJM had procured because it “understood \nthat PJM was procuring capacity on its behalf and therefore should be obligated to pay \nfor that capacity”). \n• The Order is erroneous, arbitrary and capricious, fails to engage in reasoned decision-\nmaking, and is unsupported by substantial evidence because it did not definitively reject \nPJM’s Exit Amendment on the basis that PJM lacked authority under its governing \ndocuments to file the Exit Amendment unilaterally.  See CTOA § 8.5.1 (amending the \nCTOA requires a two-thirds majority vote of the TOs); id. § 7.5.1(iv) (TOs hold \n“unilateral and exclusive” rights to make an FPA section 205 filing concerning “any \nprovisions governing the recovery of transmission-related costs incurred by the \n[TOs]”); id. (requiring detailed advance notice to the TOs of any filing that “relates to \nor affects . . . [the] provisions governing the recovery of transmission-related costs”); \nNew England Power Generators Ass’n v. FERC, 881 F.3d 202, 210 (D.C. Cir. 2018) \n(Commission must “respond meaningfully to the arguments raised before it”) (quoting \nTransCanada Power Mktg. Ltd. v. FERC, 811 F.3d 1, 12 (D.C. Cir. 2015)). \nB. \nArgument \n1. \nThe Exit Amendment Violates Cost-Causation Principles \nThe Order’s preliminary conclusion that the Exit Amendment may violate cost-\ncausation principles should have been stated finally and definitively, instead of being left open \nfor decision after a paper hearing.  Under cost-causation principles, rates must “reflect to some \ndegree the costs actually caused by the customer who must pay for them,” and costs must be"},{"page":6,"startToken":1283,"endToken":1616,"text":"6 \nallocated in a manner at least roughly commensurate with benefits.15  As the Order recognized, \nPJM proposes to procure RBP capacity “on behalf of LSEs,” and “the beneficiaries of the RBP \nare the LSEs on whose behalf PJM will procure capacity through the RBP.”16  TOs “are not \nthe buyers for which PJM procures capacity under the RBP,” and PJM “fails to explain why” \nthey “should be responsible for RBP Charges.”17  The Commission’s precedent points the same \nway: the Commission has found it just and reasonable to impose generation capacity costs on \nLSEs located within an exiting TO’s zone, not on the TO as such.18   \nAlthough the Commission expressed preliminary agreement with the argument that the \nExit Amendment violates cost-causation principles, the Commission should not have left the \nissue open, but instead should have definitively and finally ruled that the Exit Amendment \nviolates cost-causation principles.  The Commission should grant rehearing and issue that final \nruling now. \n2. \nPJM Lacked Authority To File The Exit Amendment \nThe Order summarized the Indicated PJM Transmission Owners’ filing-rights \nchallenge, and PJM’s brief response, but the Order did not resolve this issue.19  The Indicated \nPJM Transmission Owners respectfully request that the Commission address that challenge \nnow and sustain it.  PJM lacked filing authority for three independent reasons. \n \n15  Order, 196 FERC ¶ 61,245 at P 179 (quoting KN Energy Inc. v. FERC, 968 F.2d 1295, 1300 \n(D.C. Cir. 1992), and citing Ill. Com. Comm’n v. FERC, 576 F.3d 470, 477 (7th Cir. 2009)). \n16  Id. PP 178–79. \n17  Id. P 178; see Protest of the Indicated PJM Transmission Owners at 8–10. \n18  Order, 196 FERC ¶ 61,245 at P 178 (citing Duquesne Light Co., 122 FERC ¶ 61,039 at PP \n89–94); see also id. P 169 (summarizing Indicated PJM Transmission Owners’ showing that, \nin Duquesne, the Commission found Duquesne responsible for capacity charges “only in the \ncontext of Duquesne’s role as an LSE”). \n19  Id. PP 166–67."},{"page":7,"startToken":1616,"endToken":1990,"text":"7 \nFirst, the Exit Amendment amends the CTOA, which already addresses an exiting \nTO’s obligations,20 and which may be amended only with the supporting vote of the TOs.21  \nThe Exit Amendment adds new obligations to exit that have no counterpart in PJM’s governing \ndocuments, which “do not contain an exit fee.”22  And the Exit Amendment makes those \nobligations preconditions to exit: each payment obligation must be satisfied “prior to” the TO’s \nexit from PJM.23  Thus, the Exit Amendment constitutes an amendment of the CTOA—the \nexisting version of which permits an exit only once the preconditions in sections 3.2 and 3.4 \nhave been met.24  PJM cannot avoid the CTOA’s amendment procedures by casting a change \nto the core terms of the CTOA as an amendment to the OATT, rather than to the CTOA.   \nSecond, to the extent the Exit Amendment imposes costs on TOs in their capacity as \nTOs, this is a matter of recovery of transmission-related costs—which falls within the TOs’ \nexclusive filing rights.25  \n \n20  Id. P 166 (noting “the existing CTOA requirements in sections 3.2 and 3.4 governing an \nexiting Transmission Owner’s obligations”). \n21  CTOA § 8.5.1; Protest of the Indicated PJM Transmission Owners at 5–6; see Order, 196 \nFERC ¶ 61,245 at P 166.  \n22  Id. P 168. \n23  Proposed Tariff, attach. DD, § 18.7(a)–(b). \n24 Pursuant to CTOA section 3.2, “[a]ny Party may withdraw from” the CTOA if it meets three \npreconditions: (1) securing alternative arrangements for comparable transmission service; (2) \nobtaining FERC approval to withdraw; and (3) “if its Transmission Facilities do not comprise \nan entire Control Area,” satisfying all applicable NERC and Applicable Regional Reliability \nCouncil standards for operating a Control Area or being included within an existing one.  \nCTOA § 3.2 (“Withdrawal From This Agreement”).  Pursuant to section 3.4, a withdrawing \nTO remains liable for obligations it incurred, that were incurred on its behalf, or that arose \nunder the CTOA before the withdrawal’s effective date.  Id. § 3.4 (“Obligations After \nWithdrawal, Transfer, or Assignment”). \n25 CTOA § 7.5.1(iv); Protest of the Indicated PJM Transmission Owners at 6–7; see Order, 196 \nFERC ¶ 61,245 at P 166."},{"page":8,"startToken":1990,"endToken":2249,"text":"8 \nThird, even if the Exit Amendment somehow does not concern recovery of \ntransmission-related costs, at a minimum it “relates to or affects” provisions governing \nrecovery of transmission-related costs, and PJM therefore was required to provide the TOs \nwith 45 days’ notice before filing the Exit Amendment.26  PJM did not do so, opting instead \nfor a truncated CIFP review process that provided a constantly moving target and no adequate \nnotice.27 \nBecause PJM failed to fulfill any of these procedural prerequisites, PJM exceeded its \nauthority in unilaterally submitting the Exit Amendment as a section 205 filing.  The sole \nmechanism by which PJM could have filed this proposal would have been pursuant to section \n206—but PJM failed to do so, or to carry the associated burden of showing that the current exit \nprovisions are unjust and unreasonable.  \nThe Order’s suggestion that exit obligations might instead be placed on LSEs28 does \nnot moot this challenge.  The Order did not adopt that modification; rather, it accepted the Exit \nAmendment as filed, anticipated that modifications may be directed after the paper hearing, \nand encouraged PJM to submit a new filing.29  The Commission should grant rehearing and \nhold that PJM lacked authority under section 205 to file the Exit Amendment. \n \n26  CTOA § 7.5.1(iv); Protest of the Indicated PJM Transmission Owners at 7–8; see Order, \n196 FERC ¶ 61,245 at P 166. \n27  Protest of the Indicated PJM Transmission Owners at 8. \n28  Order, 196 FERC ¶ 61,245 at P 181. \n29  Id. PP 25, 28, 215(A)."},{"page":9,"startToken":2249,"endToken":2417,"text":"9 \nIII. \nCONCLUSION \nFor the foregoing reasons, the Indicated PJM Transmission Owners respectfully \nrequest that the Commission grant rehearing of the Order and definitively reject PJM’s \nproposed Exit Amendment.  \nDated:  October 29, 2026 \nRespectfully submitted, \n/s/ Evan K. Dean \n \n \n \nEvan K. Dean \nManaging Counsel, Transmission Rates & \nServices \nFirstEnergy Service Company \n341 White Pond Drive \nAkron, Ohio 44320 \nTelephone: 330-620-9585 \nedean@firstenergycorp.com \n/s/ Sanford I. Weisburst \n \n \nSanford I. Weisburst \nMatthew Meyer \nMadeleine Fleming \nQUINN EMANUEL URQUHART \n& SULLIVAN, LLP \n295 Fifth Avenue, Ninth Floor \nNew York, New York 10016 \nTelephone: 212-849-7000 \nsandyweisburst@quinnemanuel.com \nmatthewmeyer@quinnemanuel.com \nmadeleinefleming@quinnemanuel.com \n \n/s/ Anthony Alden \n \n \n \nAnthony Alden \nQUINN EMANUEL URQUHART  \n & SULLIVAN, LLP  \n865 S Figueroa St, 10th Floor \nLos Angeles, CA 90017 \nTelephone: 213-443-3000 \nanthonyalden@quinnemanuel.com \nCounsel for the FirstEnergy Transmission Companies \n \n \n/s/ Michael Brechlin  \n \n \nMichael Brechlin  \nManager Asst GC - Regulatory Law State \nRegulatory \nDuquesne Light Company  \nNova Place \n100 South Commons, Suite 118 \nMail Drop OGC-L1 \nPittsburgh, PA 15212 \nTelephone: 412-393-6431 \nmbrechlin@duqlight.com \n \n \nCounsel for Duquesne Light Company"},{"page":10,"startToken":2417,"endToken":2502,"text":"10 \nCERTIFICATE OF SERVICE \nI hereby certify that I have caused the foregoing document to be served upon all the \nparties listed on the official service list for the above-referenced proceedings, pursuant to the \nrequirements of Rule 2010 of the Commission's Rules of Practice and Procedure. \nDated at New York, N.Y., this 29th day of October, 2026. \n/s/ Sanford I. Weisburst \n \n \nSanford I. Weisburst \nQUINN EMANUEL URQUHART \n& SULLIVAN, LLP \n295 Fifth Avenue, Ninth Floor \nNew York, New York 10016 \nTelephone: 212-849-7000 \nsandyweisburst@quinnemanuel.com"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":2,"endAt":963,"startToken":0,"endToken":319},{"p":2,"at":963,"title":"I. Background","method":"PDF bookmark","endPage":2,"endAt":967,"startToken":319,"endToken":320},{"p":2,"at":967,"title":"BACKGROUND","method":"printed heading","endPage":4,"endAt":512,"startToken":320,"endToken":805},{"p":4,"at":512,"title":"II. Request for rehearing","method":"PDF bookmark","endPage":4,"endAt":540,"startToken":805,"endToken":809},{"p":4,"at":540,"title":"A. Statement of Issues and Specification of Errors","method":"PDF bookmark","endPage":5,"endAt":1294,"startToken":809,"endToken":1218},{"p":5,"at":1294,"title":"B. Argument","method":"PDF bookmark","endPage":5,"endAt":1308,"startToken":1218,"endToken":1220},{"p":5,"at":1308,"title":"1. The Exit Amendment Violates Cost-Causation Principles","method":"PDF bookmark","endPage":6,"endAt":1007,"startToken":1220,"endToken":1442},{"p":6,"at":1007,"title":"2. PJM Lacked Authority To File The Exit Amendment","method":"PDF bookmark","endPage":9,"endAt":3,"startToken":1442,"endToken":2250},{"p":9,"at":3,"title":"III. CONCLUSION","method":"PDF bookmark","endPage":9,"endAt":9,"startToken":2250,"endToken":2251},{"p":9,"at":9,"title":"CONCLUSION","method":"printed heading","endPage":10,"endAt":4,"startToken":2251,"endToken":2418},{"p":10,"at":4,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":10,"endAt":557,"startToken":2418,"endToken":2502}]}