{"document":{"slug":"rehearing-er26-3380-novec","title":"Request for Rehearing and Clarification or Alternative Request for Rehearing of Northern Virginia Electric Cooperative, Inc.","issued":"2026-10-29","accession":"20261029-5264","docket":"ER26-3380-001","group":"Rehearing of FERC's PJM Reliability Backstop Procurement order","filer":"Northern Virginia Electric Cooperative","kind":"request for rehearing","file":"sources/originals/20261029-5264_ER26-3380_EL26-108 NOVEC Request for Rehearing.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20261029-5264","sha256":"3fa98ca4fddc31c8e7bc5d394499c4751325801298848c0719bb04aeb594a959","pages":19,"tokens":6238,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":290,"text":"UNITED STATES OF AMERICA \nBEFORE THE \nFEDERAL ENERGY REGULATORY COMMISSION \n \n \n) \n \nPJM Interconnection, L.L.C. \n) \n) \nDocket Nos. ER26-3380-000 \n                   EL26-108-000 \n \n) \n \n \nREQUEST FOR REHEARING AND CLARIFICATION OR ALTERNATIVE REQUEST \nFOR REHEARING OF NORTHERN VIRGINIA ELECTRIC COOPERATIVE, INC. \n \nPursuant to section 313(a) of the Federal Power Act (“FPA”)1 and Rule 713 of the Rules \nof Practice and Procedure of the Federal Energy Regulatory Commission (“FERC” or the \n“Commission”),2 Northern Virginia Electric Cooperative, Inc. (“NOVEC”) respectfully seeks \nrehearing and clarification, or alternative request for rehearing, of the Commission’s September \n29, 2026, order (“RBP Order”) in Docket Nos. ER26-3380-000 and EL26-108-0003 on PJM \nInterconnection, L.L.C.’s (“PJM”) proposed Reliability Backstop Procurement.4 The RBP Order \nfound that certain aspects of PJM’s proposal were just and reasonable, but found that others did \nnot appear to be just and reasonable, and directed further briefing through a paper hearing on \nalternatives that may be just and reasonable.5 NOVEC respectfully urges the Commission to \ngrant rehearing of its decision finding the RBP to be just and reasonable, and to clarify that all \naspects of cost allocation associated with the RBP is within the scope of the paper hearing that \nthe Commission ordered to be conducted. Should the Commission’s clarification restrict the \nscope of the paper hearing, then NOVEC seeks rehearing of any limitations imposed on the \nscope of the paper hearing insofar as cost allocation associated with RBP is concerned. \n \n1 16 U.S.C. § 825l(a). \n2 18 C.F.R. § 385.713. \n3 PJM Interconnection, L.L.C., 196 FERC ¶ 61,245 (2026) (“RBP Order”). \n4 PJM Interconnection, L.L.C., Reliability Backstop Procurement, Docket No. ER26-3380-000 (July 31, 2026) \n(Accession No. 20260731-5214) (“RBP Proposal”). \n5 RBP Order at P 2."},{"page":2,"startToken":290,"endToken":769,"text":"2 \n \nI. \nSTATEMENT OF ISSUES AND SPECIFICATIONS OF ERROR \nNOVEC submits the following Statement of Issues and Specifications of Error pursuant \nto Rules 713(c)(1) and 713(c)(2)6 of the Commission’s Rules of Practice and Procedure: \n1. The Commission erred by not considering and requiring the voluntary, stakeholder-\nendorsed subscription model. FERC must engage in reasoned decision-making. See \nEmera Me. v. FERC, 854 F.3d 9, 27 (D.C. Cir. 2017). Reasoned decision-making \nrequires FERC to “respond to objections and address contrary evidence in more than \na cursory fashion.” Trans. Agency of N. Cal. v. FERC, 628 F.3d 538, 543-44 (D.C. \nCir. 2010) (“TANC”). Further, FERC is required to consider “reasonable alternatives” \nto the Commission’s decision. Am. Gas Ass’n v. FERC, 593 F.3d 14, 19 (D.C. Cir. \n2010); see also Laclede Gas Co. v. FERC, 873 F.2d 1494, 1498 (D.C. Cir. 1989). The \nCommission did not respond to or consider NOVEC’s argument, which advocated for \nthe adoption of the voluntary framework as an alternative to the RBP filed by PJM. \n \n2. The Commission erred by not rejecting the as-filed RBP framework because the RBP \ndistorts market signals that the capacity market needs to operate and unduly \ndiscriminates against Load Serving Entities (“LSE”) serving new large loads by \nimposing a capacity surcharge on them. The fact that PJM presumes or expects that \nthe LSEs will, in turn, pass these charges through to their data center customers does \nnot alter the fact that PJM’s tariff would impose charges on some – but not all – LSEs \nbased on the nature of the retail load they are serving. PJM has no authority to base its \ntariff rates and charges on the character of retail service provided by LSEs. As a \nresult, the Commission’s decision is arbitrary and capricious, unsupported by record \nevidence, and inconsistent with the FPA and the Commission’s regulations. See 5 \nU.S.C. § 706; Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. \nCo., 463 U.S. 29, 43 (1983) (quoting Burlington Truck Lines v. United States, 371 \nU.S. 156, 168 (1962)); ANR Storage Co. v. FERC, 904 F.3d 1020, 1024 (D.C. Cir. \n2018). \n \n3. If the Commission does not clarify that all aspects of the design for cost allocation of \nthe RBP are within the scope of the paper hearing and that NOVEC is not foreclosed \nfrom advocating for alternative designs for cost allocation, the Commission erred by \nnot addressing NOVEC’s arguments with respect to cost allocation, see Trans. \nAgency of N. Cal. v. FERC, 628 F.3d 538, 543-44 (D.C. Cir. 2010). By approving an \napproach for cost allocation that does not recognize other causes of the capacity \ndeficit that PJM is seeking to address, the Commission has improperly sanctioned \n \n6 18 C.F.R. § 385.713(c)(1)-(c)(2)."},{"page":3,"startToken":769,"endToken":1173,"text":"3 \n \nsubsidization of capacity for some customers at the expense of RBP buyers. That is \nnot consistent with the Commission’s cost-causation principle and should be set \naside. KN Energy, Inc. v. FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992); El Paso Elec. \nCo. v. FERC, 76 F.4th 352 (5th Cir. 2023) (“El Paso”). As a result, the Commission’s \ndecision is arbitrary and capricious, unsupported by record evidence, and inconsistent \nwith the FPA and the Commission’s regulations. See 5 U.S.C. § 706; Motor Vehicle \nMfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) \n(quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)); ANR \nStorage Co. v. FERC, 904 F.3d 1020, 1024 (D.C. Cir. 2018). \n \nII. \nREQUEST FOR REHEARING AND REQUEST FOR CLARIFICATION OR \nALTERNATIVE REQUEST FOR REHEARING \nA. \nThe Commission should require PJM to adopt the voluntary stakeholder RBP \nframework. \n \nWhile it may be easy and expedient to attribute the current capacity shortfall solely to \ngrowth of large loads, which has been the most visible development in recent years, the causes of \nthe present shortfall pre-date and are not solely due to the buildout of data centers. Until recently, \nPJM’s interconnection queue was a serial process that struggled to interconnect the volume of \ngeneration-interconnection requests,7 which was coupled with the early retirement of capacity \nresources due in part to states’ environmental policies.8 The PJM stakeholders proposed a \nvoluntary framework for the RBP that recognized the contribution of load growth to the capacity \nshortfall without the issues attendant to PJM’s proposed RBP.9 Unlike PJM’s mandatory \napproach, which would impose all obligations and consequences of the capacity shortfall onto \nrelatively few LSEs, as if they are to be deemed responsible for the shortfall, the voluntary RBP \nwould allow large loads to fulfill their obligations under the Ratepayer Protection Pledge without \n \n7 PJM, Interconnection Reform Tariff Filing, Docket No. ER22-2110-000, at 4 (June 14, 2022) (Accession No. \n20220614-5081).  \n8 NOVEC, Protest, Docket No. ER26-3380-000, at 11-12 (Aug. 21, 2026) (Accession No. 20260821-5307) \n(“NOVEC Protest”) (citing IMM, 2023 State of the Market Report for PJM Volume I at 1 (March 14, 2024) \n(https://www.monitoringanalytics.com/reports/pjm_state_of_the_market/2023.shtml)).  \n9 NOVEC, Motion for Leave to Answer and Answer, Docket No. ER26-3380-000, at 5-9 (Sep. 23, 2026) (Accession \nNo. 20260923-5149) (“NOVEC Answer”)."},{"page":4,"startToken":1173,"endToken":1481,"text":"4 \n \ncreating undesirable consequences for the Transmission Owners, Electric Distributors, and LSEs \nwho happen to serve those large loads. \n \nUnder the voluntary RBP framework, interested developers would have the option to \nsubscribe to pay the RBP costs or accept an interruptible form of transmission service.10 This \nprovides the flexibility necessary for choosing how to manage the uncertainty risk created by \nPJM’s intent to assign 15-year financial obligations to forecasted conditions that have not yet \ncome into existence, which is a critical and necessary aspect of the framework that needs to be \nincluded in any methodology approved for assigning RBP obligations – a component that PJM \nwas asked to include in the proposal it filed, but that it declined to incorporate. To be just and \nreasonable, the RBP must include the ability to proactively and preemptively choose \ninterruptible service rather than accept a capacity obligation. The voluntary RBP framework \nachieved a clear consensus during stakeholder discussions as the only proposal endorsed out of \nmore than a dozen considered.11 The voluntary RBP framework is just and reasonable because, \nunlike PJM’s proposal, it preserves the ability of LSEs to control their level of RBP obligations \nwhile providing sufficient incentives for large load to participate in the process. \n \nNOVEC challenged PJM’s decision to ignore the stakeholder consensus and file the \nRBP.12 PJM specifically represented that the Commission could exercise its authority under \nNRG13 and “modify and/or sever any element of the proposed Tariff and RAA language to the \nextent necessary and permitted under section 205 of the FPA and NRG Power Marketing, LLC v. \nFERC, where such modification and/or severance is consistent with PJM’s overarching \n \n10 NOVEC Protest at 25.  \n11 Id. at 24-25.   \n12 Id. at 24-26; NOVEC Answer at 5-9. \n13 NRG Power Mktg., LLC v. FERC, 862 F.3d 108 (D.C. Cir. 2017) (“NRG”)."},{"page":5,"startToken":1481,"endToken":1855,"text":"5 \n \nobjectives in this filing.”14 Thus, the Commission had the option to modify the RBP Proposal to \nmake it voluntary, in line with the stakeholder proposal.15 \n \nThe Commission’s orders must be supported by reasoned decision-making and cannot \nrely on a “bare conclusion” without explanation.16 The Commission must “respond to \nobjections…in more than a cursory fashion.”17 The Commission neglected to address NOVEC’s \narguments that PJM should be required to adopt the voluntary, subscription-based model in lieu \nof the RBP Proposal. The Commission neglected even to acknowledge NOVEC’s argument. The \nonly reference to the voluntary, subscription-based model that was approved by the stakeholders \nappears in paragraph 12 of the Commission’s order, where the Commission describes the \nbackground to the RBP Proposal.18 The Commission is further required to consider reasonable \nalternatives to its decision.19 Because the Commission did not address NOVEC’s arguments, it \ndid not engage in reasoned decision-making. \n \nAs NOVEC set forth in its pleadings, the RBP Proposal is not just and reasonable \nbecause it imposes an unreasonable and excessive collateral obligation on RBP buyers; the \nproposed cost allocation is not just and reasonable because it does not recognize other causes of \nthe capacity shortfall and because it results in NOVEC and other RBP buyers potentially \nsubsidizing other capacity customers; the RBP framework is not just and reasonable because it \nrequires too many MWs to offset each RBP buyers’ pro rata share of the RBP Target; and the \n \n14 RBP Proposal at 3 (internal citation omitted). \n15 Even if the Commission did not believe it had that authority, it did have the authority to reject the RBP with \nguidance on what might constitute a just and reasonable proposal.  \n16 Emera Me. v. FERC, 854 F.3d 9, 27 (D.C. Cir. 2017).  \n17 TANC, 628 F.3d at 543-44. \n18 RBP Order at P 12.  \n19 Laclede Gas Co. v. FERC, 873 F.2d 1494, 1498 (D.C. Cir. 1989) (“[W]here a party raises facially reasonable \nalternatives to FERC’s decision . . . the agency must either consider those alternatives or give some reason, within \nits broad discretion . . . for declining to do so.”) (internal citation omitted); see also Am. Gas Ass’n v. FERC, 593 \nF.3d 14 (D.C. Cir. 2010)."},{"page":6,"startToken":1855,"endToken":2201,"text":"6 \n \nRBP improperly relies on potentially flawed load forecasts which were not designed to allocate \ncosts in this manner.20 While the RBP’s final design remains subject to the outcome of a paper \nhearing, the overall framework is not just and reasonable, and it should have been rejected or \nmodified to address its deficiencies. In support of that result, NOVEC presented the reasonable \nalternative of adopting the voluntary, subscription-based framework that a supermajority of PJM \nhad voted in favor of adopting, as it would address all the flaws that NOVEC identified. NOVEC \nrespectfully submits that the Commission should set aside its order, consider the proposed \nalternative, and require PJM to adopt the voluntary, subscription-based model version of the \nRBP approved in the PJM stakeholder process.  \nB. \nThe RBP distorts the Reliability Pricing Model (“RPM”) price signals and unduly \ndiscriminates against LSEs serving large loads. \n \nThe RBP is a fundamental departure from how the RPM operates. The RPM is designed \nto procure capacity for all customers using a market structure where the price signals sent by the \nauction’s outcome encourage generation to enter (or exit) the market in response to demand.21 \nThe RPM is operated “to ensure that enough capacity is procured, at a reasonable cost, to \nmaintain reliable grid operations.”22 The RPM is intended to allow generators providing capacity \nan opportunity to recover their fixed costs while giving customers the opportunity to procure the \nleast-cost option for capacity as a service. Thus, the auction clearing price (“ACP”) varies from \nyear to year based on the supply present in the market for the series of auctions for each year, the \ndemand from load, and the costs of providing the service, which are a blend of the clearing \nprices for the auctions in each year’s series. Generators do not receive a firm price from year to \nyear, but neither do capacity buyers. All are exposed to the potential for significant price \n \n20 See NOVEC Protest; NOVEC Answer.  \n21 See NOVEC Answer at 4-5.  \n22 PJM Interconnection L.L.C., 190 FERC ¶ 61,084, P 3 (2025)."},{"page":7,"startToken":2201,"endToken":2622,"text":"7 \n \nvolatility, which is the point. Although customers can choose to procure bilateral capacity as a \nway to hedge that volatility, it is not required, and a completely satisfactory way to procure \ncapacity has always been solely through the RPM.23 \n \nExcept for those utilities with a Fixed Resource Requirement (“FRR”) plan, all utilities in \nPJM rely on the RPM, in some measure, to procure the capacity they must maintain. NOVEC’s \nown experience has led it to largely rely on the PJM markets for capacity and energy.24 Virginia \ninitially deregulated the electric industry to introduce retail competition but subsequently \nreregulated it.25 The legacy of these events, along with the establishment of the RPM, led \nNOVEC to rely on the RPM to supply its capacity.  \n \nIn contrast to the RPM, the RBP is a cost-based rate that provides a fixed and certain \namount of revenue for capacity for whichever is shorter: 15 years or the life of the resource. It \nemploys a contract-for-difference mechanism where the RBP Resource bids into the RPM as a \nprice-taker and is compensated for the shortfall between its PJM-accepted contract price and the \nACP. In addition to providing a long-term price guarantee, the RBP further differs from the RPM \nin that it imposes costs and obligations of providing that long-term price guarantee on only a \nsubset of LSEs that provide retail service to large loads that were identified in a single 2026 \nLoad Adjustment. For all other LSEs that are or will be providing retail service to large loads \nthat materialize later than the forecasts on which PJM premised its RBP Proposal, there are no \n \n23 PJM Business Practice Manual No. 18 at § 1.2.1 (“Under RPM, each LSE that serves load in a PJM Zone during \nthe Delivery Year shall be responsible for paying a Locational Reliability Charge equal to their Daily Unforced \nCapacity Obligation in the Zone multiplied by the Final Zonal Capacity Price applicable to that Zone. LSEs may \nchoose to hedge their Locational Reliability Charge obligations by directly offering and clearing resources in the \nBase Residual Auction and Incremental Auctions or by designating self-supplied resources (resources directly \nowned or resources contracted for through unit-specific bilateral purchases) as self-scheduled to cover their \nobligation in the Base Residual Auction.”). \n24 NOVEC does own a small biomass facility, but its load dwarfs its generation capacity. See NOVEC’s Halifax \nCounty Biomass Electric Generating Facility (https://www.novec.com/About_NOVEC/SBE.cfm).  \n25 Appalachian Power Co. v. State Corp. Comm’n, 284 Va. 695 (2012)."},{"page":8,"startToken":2622,"endToken":2959,"text":"8 \n \nadditional charges and collateral requirements, even if the capacity shortfall persists. For them, \nthe rules of RPM are unchanged. For the first time ever, PJM has proposed and the Commission \nhas approved a paradigm that sets different terms of service for some LSEs but not others. \n \nThere are two principal consequences of the RBP apart from the issues NOVEC raised \nrelating to cost allocation: \n1. \nThe RBP distorts the RPM market by suppressing the capacity price and \ninterfering with price formation. \n \nThe RBP suppresses the capacity price, which is the result whenever some generation \nmust bid into the market as price-takers.26 The suppressed capacity price mutes the market signal \nfor non-RBP generation to enter the RPM, which risks compounding the RPM’s inability to \nprocure new generation.27 The Commission responded to concerns about requiring RBP \nResources to offer into the RPM Auctions as price-takers “because the requirement will likely \nsuppress RPM prices, leading to premature generator retirements and artificial shortages” by \nreasoning that the Commission has “consistently found that Regional Transmission \nOrganizations and Independent System Operators can reasonably require resources that are \ncompensated outside of the capacity market because they are needed to maintain reliability to \noffer as price-takers in capacity auctions to avoid double procurement, even at the risk of price \nsuppression.”28 \n \n26 New Jersey Board of Public Utilities v. FERC, 744 F.3d 74, 85 (3d Cir. 2014) (describing how offering capacity \n“at artificially low prices that are sure to clear the auction...crowd[s] out other capacity that is priced at a higher, \ncost-based rate, and thus result[s] in a lower overall clearing price.”).  \n27 NOVEC Answer at n.53 (“It goes without saying that in addition to the price depressive effect benefiting other \ncustomers, it also distorts the PJM capacity market signals by altering the price signals being sent. The Commission \nshould not lose sight of the fact that a cost-based intervention is not going to solve the problems with PJM’s market \nstructure.”). \n28 RBP Order at P 53."},{"page":9,"startToken":2959,"endToken":3333,"text":"9 \n \n \nThe Commission relied solely on its prior orders authorizing the inclusion of reliability-\nmust-run (“RMR”) units as price-takers in the supply stack for RPM,29 but having RBP \nResources bid as price-takers is not the same as having RMR units bid as price-takers. The RMR \ncases the Commission relies on in the RBP Order make this point effectively and demonstrate \nwhy the RBP should be rejected as unjust and unreasonable. Unlike the RBP, which would \ndisrupt price formation for 15 years, Commission precedent “has emphasized that RMR \nagreements should be of a limited duration so as to not perpetuate out-of-market solutions that \nhave the potential, if not undertaken in an open and transparent manner, to undermine price \nformation.”30 An RMR should only be “entered into in the first place as a last-resort measure.”31 \nCapacity markets “are designed to achieve resource adequacy in the region” and the Commission \nemphasized the need to make “market rule changes before pursuing an RMR agreement.”32 \n \nThe RBP is distinct as a matter of duration, exigency, and scale. The RBP contracts are \neach to last a decade and a half (i.e., 15 years), during which time the RBP will suppress the \ncapacity price and interfere with price formation, hindering the entry of unsubsidized generation \ninto the market. In terms of exigency, while NOVEC agrees that the capacity shortfall is an issue \nthat must be addressed, PJM has not made an effort to seek changes to market rules before \nintroducing out-of-market payments and has not shown that there is an immediate, specific need \nfor the RBP. In comparison, when FERC approved the contested settlement on the Brandon \nShores and Wagner RMRs and allowed the inclusion of the uneconomic units as price-takers in \nthe RPM,33 it was in the context of PJM informing the Commission in supporting comments that \n \n29 PJM Interconnection, L.L.C., 196 FERC ¶ 61,098, P 21 (2026).  \n30 N.Y. Indep. Sys. Operator, Inc., 150 FERC ¶ 61,116, P 2 (2015) (emphasis added). \n31 N.Y. Indep. Sys. Operator, Inc., 155 FERC ¶ 61,076, P 33 (2016).  \n32 N.Y. Indep. Sys. Operator, Inc., 161 FERC ¶ 61,189, P 63 (2017).  \n33 H.A. Wagner, LLC, 191 FERC ¶ 61,098 (2025)."},{"page":10,"startToken":3333,"endToken":3747,"text":"10 \n \ndeactivating Brandon Shores would cause “nearly 600 reliability violations, including severe \nvoltage drop and thermal violations across seven distinct PJM zones (particularly under N-1-1 \ncontingency conditions), which could in turn lead to a widespread voltage collapse in Baltimore, \nMaryland and the immediately surrounding areas (e.g., the BGE, APS, ME, PPL, PECO, PEPCO \nand DOM Zones)” with a similar observation for Wagner.34 And the scale of the RBP dwarfs the \nRMR tariffs with respect to both the amount of capacity involved and the duration of the \ncommitments to that capacity. The RBP auction and the related Qualifying RBP Offset UCAP \nMW would have committed PJM to somewhere between 6,831.3 MW and 9,033.2 MW for a full \n15 years. Far from supporting the RBP Proposal’s acceptance, the Commission’s RMR precedent \nactually warrants rejection of the RBP due to the disproportionate, lasting impacts on the RPM’s \nability to send accurate price signals. \n \nThe RBP, with its out-of-market payments, attaches a traditional cost-of-service model to \nPJM’s market paradigm, both implying that the RPM has failed and potentially triggering a \nfailure of the RPM. In order for markets to work, investors must have confidence that they will \nhave an opportunity to earn a return, and that confidence requires a degree of certainty. The RPM \nhas been anything but certain in recent years. As NOVEC noted in its protest, PJM sought a price \ncap rather than allow the RPM to clear at the price the PJM Tariff would otherwise have \nprovided to spur the entry of new generation.35 As that price cap expires (assuming it is not \n \n34 PJM, Comments in Support of Joint Offer of Settlement, Docket Nos. ER24-1787-001 and ER24-1790-001, at 2 \n(Feb. 14, 2025) (Accession No. 20250214-5153).  \n35 See NOVEC Protest at 14. As PJM stated: “The practical consequence is that the capacity market, working as \ndesigned, will need to print prices at or above the administrative Net CONE for an extended period in order to attract \nentry of new supply. But as the paper’s analysis in the following sections makes clear, those prices – while \neconomically necessary – will collide with the political and affordability realities of a system where much of the \nnative load appears not to have been hedged against capacity price cycles of the magnitude now being observed.”  \nPJM, Powering Reliability Through Market Design: Addressing Rising Demand and Constrained Supply, and \nStimulating Investment to Support Durable Reliability at 23-24 (May 6, 2026) (20260506-powering-reliability-\nthrough-market-design.pdf) (“PJM Report”)."},{"page":11,"startToken":3747,"endToken":4101,"text":"11 \n \nextended again), PJM’s new solution is to single out some LSEs to pay new generation to enter \nthe market directly and with no commercial risk, which will also suppress the price. Because \nthere is an intervention on every occasion available to lower the price, investors will begin – if \nthey have not already, as PJM’s insistence on the need for the RBP in the first place suggests \nthey might have – to incorporate expectations that they will not receive the ACP into their \ninvestment decisions, which creates a negative feedback loop causing investors to avoid entering \nthe market no matter how high the ACP rises in anticipation of an intervention to again reduce \nthe revenue they receive. PJM itself has identified this problem, commenting that “[t]his is the \nessence of the credibility trap: The signal that is required to attract investment is the same signal \nthat triggers the intervention that undermines it.”36 The RBP is a further sign that the RPM’s \nprice signals cannot be trusted — and worse, it creates an incentive for investors to wait out the \nordinary process and only enter when PJM has volunteered captive customers for a fixed rate, \n15-year contract.  \n2. \nThe RBP sanctions undue discrimination against LSEs that serve large loads \nand must be rejected under the FPA. \n \nThe RBP constitutes undue discrimination against LSEs that serve large loads. As the \nCommission explained in its order on the Interim Resource Adequacy Service (“IRAS”), \n“[h]istorically, PJM’s capacity market has treated all load taking NITS comparably, procuring \ncapacity on its behalf regardless of retail customer class or whether the load is new or \nexisting.”37 The RBP means PJM will no longer be treating all LSEs equally in terms of capacity, \nand will now be singling out certain of those LSEs that serve large loads to take on an additional \ncharge and possibly38 a burdensome collateral obligation. Just as the Commission observed in the \n \n36 PJM Report at 24.  \n37 PJM Interconnection, L.L.C., 197 FERC ¶ 61,019, P 94 (2026) (“IRAS Order”).  \n38 NOVEC recognizes that the Commission has set the collateral obligation for further procedures."},{"page":12,"startToken":4101,"endToken":4439,"text":"12 \n \nIRAS Order, PJM is distinguishing between different LSEs taking NITS for purposes of \nprocuring capacity and “fails to provide sufficiently detailed evidence to support why Electric \nDistributors and LSEs using NITS to serve New Large Loads should not be treated comparably \nto Electric Distributors and LSEs using NITS to serve equivalent quantities of load growth.”39 \n \nDiscrimination is not undue when the entities are not similarly situated such that there is \ngood cause for the different treatment.40 In this case, the only reason that PJM gave for the \ndisparate treatment is the general assertion that the “zones/areas and LSEs can be said to have \ncaused the resource adequacy shortfall reflected in the 2028/2029 Delivery Year BRA” because \nthey have new large loads.41 Although the Commission seemingly accepted PJM’s rationale for \ndiscrimination with respect to the RBP, the Commission made the opposite finding in the IRAS \nOrder, commenting that: \nWe note PJM’s explanation that New Large Loads have unique \ncharacteristics compared to traditional load growth and are the primary \ncause for the resource adequacy shortfall, assertions with which some \ncommenters agree, but we find that PJM’s generic references to these retail \ncustomer characteristics without more detail are insufficient evidence to \ncounter the current resource adequacy construct in PJM, i.e., that PJM will \nprocure sufficient capacity to serve all NITS load in the PJM Region. \nTherefore, we find that, in its current filing, PJM did not adequately support \nits proposal to treat Electric Distributors and LSEs differently based on the \ncharacteristics of their retail customers.42 \nThe Commission cannot simultaneously maintain two opposing, contrary points of view and yet \nmeet its obligation to engage in reasoned decision-making. When the Commission reconsiders \nRBP in conjunction with the arguments raised by NOVEC about the other causes of the capacity \n \n39 IRAS Order at P 94.  \n40 Tenaska Clear Creek Wind, LLC v. FERC, 108 F.4th 858, 868 (D.C. Cir. 2024).  \n41 RBP Proposal at 103.  \n42 IRAS Order at P 94 (internal citation omitted)."},{"page":13,"startToken":4439,"endToken":4756,"text":"13 \n \nshortfall which the Commission did not address in its order,43 NOVEC respectfully submits that \nthe record before it demands rejection of the RBP Proposal due to undue discrimination against \nLSEs serving large loads as retail customers.  \nC. \nThe Commission should clarify that all aspects of the RBP’s cost allocation are \nsubject to further proceedings. In the alternative, the Commission erred by \napproving a framework for cost allocation that does not comport with the cost-\ncausation principle. \n1. \nRequest for Clarification \n \nNOVEC respectfully requests that the Commission dispel any ambiguity as to the scope \nof the paper hearing and clarify that the Commission has set all issues concerning cost allocation \nfor further procedures, and that it is not limiting those procedures to considering a variation of \nPJM’s proposal to assign the costs entirely to LSEs serving large loads as retail customers. The \nCommission found “that PJM’s proposed RBP cost allocation method may be unjust and \nunreasonable.”44 However, FERC also states in the RBP Order that allocating RBP costs to \nElectric Distributor zones/areas based on a snapshot of load growth between 2026/2027 and \n2028/2029 “may be just and reasonable, because it reasonably assigns costs to those responsible \nfor the near-term capacity shortfall.”45 The Commission then comments that “relying on Load \nAdjustments to measure load growth” may be inconsistent or not reflect forecasted or actual \ngrowth of large loads and thus the method may be unjust and unreasonable.46 \n \nThat discussion, and the commentary in paragraphs 155 and 156, could create the \ninference that the Commission is only willing to consider variations on PJM’s proposal and is \nnot willing to explore a methodology for cost allocation that reflects true causation. Even that \n \n43 Which also rendered the Commission’s order not the product of reasoned decision-making. TANC, 628 F.3d at \n543-44. \n44 RBP Order at P 153.  \n45 Id. P 154. \n46 Id."},{"page":14,"startToken":4756,"endToken":5069,"text":"14 \n \nconclusion is challenged by the Commission’s statement that: “Having found that PJM’s \nproposed method for allocating RBP costs among Electric Distributor zone/areas may be unjust \nand unreasonable, and because we are ordering paper hearing procedures to examine a \nreasonable cost allocation method, we decline to further address arguments raised in the protests \nrelated to PJM’s proposed cost allocation method at this time.”47 The final statement suggests \nthat the Commission intends for the paper hearing to encompass all alternative methodologies for \ncost allocation.48 NOVEC respectfully requests that the Commission confirm this interpretation \nand clarify that the Commission has not ruled out any methodologies for cost allocation and has \nnot yet rejected NOVEC’s arguments. \n2. \nAlternative Request for Rehearing \n \nIf the Commission does not grant the foregoing request for clarification, NOVEC \nrespectfully seeks rehearing of the Commission’s order with respect to cost allocation. At the \noutset, the Commission’s order, if final for purposes of rehearing, is deficient under TANC \nbecause the Commission stated that it declined to “to further address arguments raised in the \nprotests related to PJM’s proposed cost allocation method at this time.”49 The Commission must \nset aside the order and fully address NOVEC’s arguments regarding cost allocation.50 \n \nBut even if the Commission were to address NOVEC’s arguments on cost allocation, the \nRBP Proposal as filed must be rejected because it violates the Commission’s cost-causation \nprinciple. The FPA requires the Commission to ensure that all rates charged are just and \nreasonable.51 Over time, the Commission and the courts “have added flesh to these bare statutory \n \n47 Id. P 157.  \n48 NOVEC notes that adopting the voluntary, subscription-based model with an interruptible form of transmission \nservice would eliminate the need to consider alternative methodologies to allocate costs.  \n49 RBP Order at P 157. \n50 TANC, 628 F.3d at 543-44. \n51 16 U.S.C. §§ 824d, 824e."},{"page":15,"startToken":5069,"endToken":5537,"text":"15 \n \nbones, establishing what has become known in Commission parlance as the ‘cost-causation’ \nprinciple.”52 The principle requires that all approved rates reflect to some degree the costs \nactually caused by the customer who must pay them, and the courts “evaluate compliance with \nthis unremarkable principle by comparing the costs assessed against a party to the burdens \nimposed or benefits drawn by that party.”53 While adhesion to the cost-causation principle does \nnot require “exacting precision,”54 the Commission must have an “articulable and plausible \nreason” to believe that the benefits are roughly commensurate with costs.55 In the final analysis, \nthe Commission is “not authorized to approve a pricing scheme that requires a group of utilities \nto pay for facilities from which its members derive no benefits, or benefits that are trivial in \nrelation to the costs sought to be shifted to its members.”56 \n \nThe cost-causation principle ensures that rates are just by preventing subsidization by \nensuring that costs and benefits correspond to each other.57 The statutory mandate that rates be \njust cannot “be sacrificed…for some separate policy interest.”58 It is axiomatic that those that \ncause a cost, benefit from it as well.59 NOVEC explained in its protest and in its answer that \nthere are two causes to the shortfall: load growth associated with large loads, but also the early \n \n52 K N Energy, Inc. v. FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992). \n53 Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1368 (D.C. Cir. 2004); see also Old Dominion \nElectric Cooperative v. FERC, 898 F.3d 1254, 1255 (D.C. Cir. 2018). \n54 Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1371 (D.C. Cir. 2004). \n55 Illinois Commerce Commission v. FERC, 576 F.3d 470, 477 (7th Cir. 2009). \n56 Id. at 476; see also Entergy Arkansas, Inc., Initial Decision, 142 FERC ¶ 63,017, P 114 (2013) (“The cost \ncausation principle dictates this result. Unlike the network customers, the point-to-point customers did not ask \nEntergy to expand the WPP to permit them to participate, thereby causing Entergy to incur costs. Nor do the point-\nto-point customers derive benefits from the WPP… Consequently, allocating any of the WPP expenses to point-to-\npoint customers would be neither just nor reasonable.”), aff’d, Entergy Arkansas, Inc., Opinion No. 532, 148 FERC \n¶ 61,059 (2014). \n57 El Paso, 76 F.4th at 361 (citing Transmission Planning & Cost Allocation by Transmission Owning & Operating \nPublic Utilities, Order No. 1000-A, 139 FERC ¶ 61,132, P 578 (2012); BNP Paribas Energy Trading GP, 743 F.3d \nat 268; Nat’l Ass’n of Reg. Util. Comm’rs., 475 F.3d at 1285).  \n58 El Paso, 76 F.4th at 361. \n59 Illinois Commerce Commission v. FERC, 576 F.3d 470, 476 (7th Cir. 2009)."},{"page":16,"startToken":5537,"endToken":5869,"text":"16 \n \nretirement of existing generation due to policies enacted by states in PJM’s footprint, and the \ninability to bring replacement generation online.60 Despite that fact, the RBP allocates all costs to \nLSEs serving large loads, a result inconsistent with the cost-causation principle. \n \nNOVEC is also compelled to reiterate that the rest of PJM market participants will \nbenefit from RBP Resources funded by NOVEC and other LSEs serving large loads in a more \ndirect sense. Requiring RBP Resources to bid into the market as price-takers suppresses the \ncapacity price. The suppressed capacity prices benefit other capacity customers who benefit from \na reduced capacity price. The suppressed capacity price can also harm RBP Buyers, who are \nresponsible for a contract for difference: because RBP Buyers have to fund (or receive) the \ndifference between the RPM clearing price and the fixed RBP price, a suppressed capacity price \nmeans they may pay more when they are forced to true-up the RPM ACP to the RBP, and they \nmay get a lower payment in years where the RPM exceeds the RBP price. Essentially, NOVEC \nand other RBP Buyers would be subsidizing the rest of the capacity market, a result that is not \nconsistent with the cost-causation principle. And after the first 15-year period, the generation \nwill remain available to the capacity market – a clear benefit, even if difficult to quantify at this \ntime.  \n \nTo be clear, NOVEC is not taking the position that load growth is not responsible for \nmost of the costs. NOVEC is not taking the position that the Commission must perfectly allocate \ncosts between the LSEs serving large loads and the rest of PJM. NOVEC is concerned that the \nprinciple in the Ratepayer Protection Pledge, which is meant to only hold “traditional” customers \nharmless, is being applied in a way that is inconsistent with the cost-causation principle because \nthe RBP’s cost allocation does not reflect any recognition of the benefits drawn by other capacity \n \n60 NOVEC Protest at 11-14; NOVEC Answer at 9-11."},{"page":17,"startToken":5869,"endToken":6097,"text":"17 \n \ncustomers, not even the direct impact on capacity prices. The Commission need not perfectly \nmatch benefit and burden, but it cannot ignore them. Further, the permanence of the \nmethodology risks an unjust result, as there is no ability to reconsider or adjust it in light of new \ncircumstances to avoid burdensome and untenable financial obligations. As it stands now, the \nRBP Proposal sacrifices the statutory mandate that rates be just, which requires the prevention of \nsubsidization by ensuring that costs and benefits correspond to each other, for the policy interest \nof attempting to ensure in so much that FERC’s jurisdiction allows that data centers pay any and \nall costs associated with serving their needs. The statute does not allow that result. Thus, if the \nCommission does not grant clarification, it should set aside its order and reject the RBP with \nguidance. \nIII. \nCONCLUSION \nWHEREFORE, for the foregoing reasons, NOVEC respectfully requests that the \nCommission grant its request for rehearing and require PJM to adopt the voluntary stakeholder \nframework. In the alternative, NOVEC requests that the Commission grant rehearing, set aside \nits order, and reject the RBP without further procedures. NOVEC further requests clarification \nthat all issues relating to the methodology to allocate the costs of the RBP Resources are within \nthe scope of the paper hearing, or in the alternative grant rehearing with respect to cost \nallocation."},{"page":18,"startToken":6097,"endToken":6159,"text":"18 \n \n \nRespectfully submitted, \n \n  //s// Alan I. Robbins \n \nAlan I. Robbins \nDebra D. Roby \nThomas B. Steiger III \nPeter E. Colvin \nWashington Energy Law LLP \n900 17th Street. N.W., Suite 500-A  \nWashington, D.C. 20006 \nTel: (202) 326-9313 \nEmail: arobbins@washingtonenergylaw.com \ndroby@washingtonenergylaw.com \ntsteiger@washingtonenergylaw.com \npcolvin@washingtonenergylaw.com \n \nCounsel to Northern Virginia Electric Cooperative, Inc. \n \nDated: October 29, 2026."},{"page":19,"startToken":6159,"endToken":6238,"text":"CERTIFICATE OF SERVICE \nI hereby certify that I have this day served the foregoing document upon each person \ndesignated on the official service list compiled by the Secretary of the Federal Energy \nRegulatory Commission in ER26-3380 and EL26-108. \nDated at Washington, D.C. this 29th day of October, 2026. \n \n  //s// Jessika Dziechciowska  \n \nJessika Dziechciowska \nEnergy Practice Analyst \nWashington Energy Law LLP \n900 17th Street, N.W., Suite 500-A \nWashington, D.C. 20006 \nTel: (202) 326-9308  \nEmail: jdziechciowska@washingtonenergylaw.com"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":2,"endAt":5,"startToken":0,"endToken":291},{"p":2,"at":5,"title":"I. STATEMENT OF ISSUES AND SPECIFICATIONS OF ERROR","method":"printed heading","endPage":3,"endAt":740,"startToken":291,"endToken":902},{"p":3,"at":740,"title":"II. REQUEST FOR REHEARING AND REQUEST FOR CLARIFICATION OR","method":"printed heading","endPage":3,"endAt":836,"startToken":902,"endToken":915},{"p":3,"at":836,"title":"A. The Commission should require PJM to adopt the voluntary stakeholder RBP","method":"printed heading","endPage":6,"endAt":816,"startToken":915,"endToken":1980},{"p":6,"at":816,"title":"B. The RBP distorts the Reliability Pricing Model (“RPM”) price signals and unduly","method":"printed heading","endPage":13,"endAt":246,"startToken":1980,"endToken":4477},{"p":13,"at":246,"title":"C. The Commission should clarify that all aspects of the RBP’s cost allocation are","method":"printed heading","endPage":17,"endAt":888,"startToken":4477,"endToken":6011},{"p":17,"at":888,"title":"III. CONCLUSION","method":"printed heading","endPage":17,"endAt":894,"startToken":6011,"endToken":6012},{"p":17,"at":894,"title":"CONCLUSION","method":"printed heading","endPage":19,"endAt":0,"startToken":6012,"endToken":6159},{"p":19,"at":0,"title":"CERTIFICATE OF SERVICE","method":"printed heading","endPage":19,"endAt":546,"startToken":6159,"endToken":6238}]}