Chapter 77 Unprecedented Obstacles

Governor DeWine's efficiency was even higher than Mr. Mu had anticipated. Less than a week after he returned from Columbus regarding the power grid expansion, there was movement from the Public Utilities Commission.

The commission's approval documents were delivered directly to Mr. Mu's office—a thick stack, with every page stamped and signed by the person in charge.

This was the taste of power, and it was intoxicating as hell!

Although Governor DeWine was nearing the end of his term, he had been deeply entrenched in Ohio for decades, and the heads of those departments were all his people.

Mr. Mu flipped through the stack of documents and casually handed them to Jessica for filing.

He picked up his coffee cup, took a sip, and leaned back in his chair in a good mood. This money was well spent!

The hurdle of the Public Utilities Commission had been much easier than he had imagined; Governor DeWine's old face still carried weight in Columbus.

However, things were not going as smoothly with PJM.

When Dan Miller called from Cincinnati, Mr. Mu was on the third floor of the Morris Building reviewing the hotel's construction progress report.

The photos sent by Robert showed that the foundation of the main building was nearly complete. Workers at the site were working in three shifts, and the roar of excavators, cranes, and concrete mixers continued day and night.

But the news Dan brought was like a bucket of cold water poured over Mr. Mu's head.

"Mr. Mu, I've contacted PJM." Dan's voice came through the receiver. "The situation is not very optimistic."

"Be specific." Mr. Mu put down the report in his hand and sat up straight.

"Let me explain what PJM is first, so it's easier for you to understand what follows." Dan paused, as if organizing his thoughts.

"The PJM Interconnection is the largest regional transmission organization in the United States, covering thirteen states from Illinois to New Jersey, plus Washington, D.C., with a total population of over sixty-five million."

"Sixty-five million people?" Mr. Mu's brow furrowed slightly.

"Sixty-five million people, including Ohio." Dan's tone sounded somewhat helpless.

"PJM is a regional transmission organization authorized by the federal government, responsible for managing the wholesale electricity market across the entire region while ensuring the reliable operation of the power grid."

"It doesn't own any transmission assets itself; the lines still belong to the various power companies, but how they are operated, dispatched, and expanded must all follow PJM's coordination."

"In other words, does PJM control how I use electricity?" Mr. Mu asked.

"It doesn't control how you use electricity; it controls how the power grid is built." Dan explained patiently.

"PJM controls over eighty thousand miles of transmission lines, more than six thousand substations, serves nearly one hundred seventy-seven thousand megawatts of generation capacity, and has over nine hundred ninety customers."

"The entire system transmits nearly eighty billion kilowatt-hours of electricity annually, with annual settlement amounts exceeding thirty-nine billion dollars."

Mr. Mu rubbed his temples. This number was much larger than he had imagined—not just by a little, but by an entire order of magnitude.

He had only heard the name PJM before, but he had never seriously researched what it actually was.

Now it seemed that this oversight might come with a price.

"Who gave PJM its authority?" Mr. Mu asked.

"The Federal Energy Regulatory Commission, FERC." Dan replied. "According to FERC's authorization, PJM fulfills eight major functions, ranging from transmission service charges to market monitoring."

"But the core powers it holds over our project are twofold. First, PJM is responsible for the transmission expansion planning for the entire region. Any new substation or newly erected transmission line with a voltage exceeding one hundred kilovolts must go through PJM's regional transmission expansion planning process."

"Second, PJM is responsible for the grid interconnection approval for all power generation facilities and loads. Without PJM's approval, your new substation cannot connect to the main grid."

"This is a hard legal requirement that the State Government cannot coordinate around."

"FERC's jurisdiction is higher than the Public Utilities Commission. The Governor can persuade people in the state to nod in agreement, but he cannot persuade PJM because PJM's rules are at the federal level."

Mr. Mu fell silent. He had previously bet all his chips on Governor DeWine, thinking that if he handled the Governor, he had handled all the approvals.

But now he realized that the Governor's reach did not extend to PJM.

PJM is not an agency of Ohio; it covers thirteen states. Its board of directors is composed of stakeholders from various states, and its decisions must comply with the regulatory framework of the Federal Energy Regulatory Commission.

"Regarding the PJM approval process you just mentioned, how exactly does it work?" Mr. Mu asked.

"The process is very complex, but the core consists of three steps." Dan's voice became more formal, as if he were giving a professional report.

"The first step is needs assessment."

"PJM conducts a fifteen-year long-term load forecast every year to determine where there will be power shortages or transmission bottlenecks in the entire region. If our project is deemed necessary and urgent, it can go through a fast-track channel."

"If it is deemed a routine demand, it has to be scheduled into the normal RTEP cycle, which is PJM's Regional Transmission Expansion Plan."

"The normal RTEP cycle is twenty-four months, starting from the previous year's demand analysis and ending with the board's approval in the second year."

"And that's just the planning stage. Afterward, there are site selection, environmental impact assessments, and public hearings. Every step could be delayed indefinitely."

Mr. Mu wanted to curse; twenty-four months meant two years, but he had less than one year.

"The second step is solution comparison and selection," Dan continued.

"If PJM confirms the expansion need, they won't directly approve our proposal. Instead, they will invite all members to submit general proposals through an open bidding process."

"PJM will comprehensively evaluate all proposals based on multiple dimensions such as technical feasibility, economic viability, environmental impact, and social acceptance to select the optimal solution."

"This evaluation process itself takes several months, and the evaluation results are not controlled by any single member."

"In other words, even if we submit a proposal, PJM might choose someone else's?" Mr. Mu asked.

"Yes, it is entirely possible." There was a hint of helplessness in Dan's tone.

"Moreover, PJM's internal decision-making mechanism is very complex. Major decisions involving the Regional Transmission Expansion Plan must be reviewed by the Transmission Expansion Advisory Committee."

"This committee is composed of over a hundred members, including transmission owners from various states, power generators, load-serving entities, and state regulatory agencies."

"Any major decision must reach a consensus within the committee before being submitted to the PJM board for approval."

"The board consists of eleven independent directors whose appointment and removal are decided by the PJM Members Committee, unaffected by any external political forces."

"The Governor has no way to have a say at this table."

"What about the third step?" Mr. Mu asked.

"The third step, which is also the most troublesome, is cost allocation."

"For transmission projects within the PJM region, costs are not borne by a single project party but are shared by all users across the entire region."

"According to PJM's cost allocation methodology, every transmission project must undergo a rigorous economic benefit analysis."

"PJM will only approve the project if the social benefits it brings exceed the costs, and then the costs are shared proportionally by all users in the entire region."

"But our project is different. The original intention of the Oxford Town expansion is to satisfy the needs of your own hotel and future development, not to supply cheap electricity to the entire region."

"Strictly speaking, this project might be classified by PJM as a local load-serving project, which means that most of the costs would need to be borne by users in Oxford Town, rather than shared across the entire region."

"If PJM makes this determination, not only will you not be able to profit from the grid interconnection, but you will instead have to pay out of your own pocket to build the substation and lines, while also paying PJM's interconnection service fees."

"Annually?" Mr. Mu was stunned for a moment.

"Annually." Dan's answer was crisp. "PJM's interconnection service fee is calculated based on the substation's access capacity; the larger the capacity, the higher the fee."

"With your hotel project and future development plans, the scale of the substation will be at least over one hundred megavolt-amperes, and the annual interconnection service fee will not be less than several million dollars."

Mr. Mu hung up the phone and sat motionless in his chair.

He had previously thought that handling the Governor meant handling all the approvals, but now he realized that his understanding of PJM was far too shallow.

Governor DeWine could help him knock open the door to the Public Utilities Commission, but the door to PJM could not be opened by power alone.

Even if Governor DeWine wanted to interfere in PJM's affairs, his reach didn't extend that far. What was even more fatal was that PJM's current situation was already quite dire.

Dan also mentioned some background information on the phone: the PJM system was facing unprecedented pressure.

On one hand, the speed of load growth was far exceeding expectations. The explosive growth of AI data centers had caused electricity demand to skyrocket, and forecasts for the next few years showed that peak load growth would reach thirty-two gigawatts.

On the other hand, there was a contraction on the generation side. A large number of old coal-fired power plants and nuclear power plants were retiring, while new power generation projects had been backlogged in PJM's interconnection queue for several years.

The dual squeeze on both supply and demand sides had caused PJM's interconnection queue to become congested to the point of being unmanageable.

"There are now over sixteen hundred projects in the queue. From submitting an application to officially signing an interconnection agreement, it takes an average of three to five years."

"Some large projects have even waited seven years without seeing any movement." These were Dan's exact words...

Three to five years—he couldn't even wait one year. Mr. Mu leaned back in his chair and closed his eyes.

His mind was a mess. This stumbling block called PJM was more troublesome than any obstacle he had encountered before.

Regarding the Water Plant, he could throw money at it, pave the way with connections, and apply pressure with public opinion.

Regarding the power plant, he could take a shortcut using Governor DeWine's connections.

But PJM was different. It was a federal-level agency with its own set of operating rules, and it operated on a completely different logic from the State Government's way of playing the game.

He needed a new solution, but he hadn't thought of one yet.

His phone lit up. It was a message from Victoria: "The hotel funds have arrived, and construction is proceeding normally."

"Regarding the power company, I have recalculated the expansion budget. Excluding PJM interconnection fees, the total investment is around one hundred twenty million dollars."

"If we need cooperation from PJM, the budget will need to increase by at least thirty percent."

Mr. Mu looked at the message, his brows furrowed tightly, and he did not reply.

He placed his phone face down on the table, picked up the cup of coffee that had gone completely cold, and took a sip.

Bitter. It was bitter as hell!

But this time, it wasn't the bitterness of the coffee...