The Sponsorship Model: Competitive Construction of Transmission Facilities in PJM Interconnection

In July 2011, the Federal Energy Regulatory Commission (FERC) issued Order 1000, which instituted a competitive process for the construction of transmission facilities in the United States. Heretofore, transmission projects were identified by the regional planning entity or the transmission owner via a regional or local planning process and built by the incumbent owner, with costs allocated via existing transmission tariffs. In Order 1000, the FERC contemplated a process of competitive solicitation, with construction and operations responsibility being assigned to the selected winner regardless of whether or not it was the incumbent. The FERC's expressed goal was to use competition to keep transmission rates just and reasonable.