1. Newsleader August 11, 2015
Tariff helps bring revenue into city
BY LORI TEPINSKI Staff writer
ROCHELLE Earlier this month, Rochelle Municipal Utilities announced the successful
integration with the regional transmission operator PJM. This is the final step in
concluding the activities that are required by the Federal Energy Regulatory Commission
(FERC) regarding the annual transmission tariff.
In June, RMU received an FERC tariff for its 20 miles of 138kV transmission assets that
before this tariff were paid for by customer rates.
The tariff allows for $1.2 million per year starting this month, in operational revenue
requirements which essentially comes into RMU as credits towards its' transmission
expenditures.
Next year this tariff will increase to $1.7 million per year. Over a 30-year period the net
present value of these credit streams amount to tens of millions of dollars . City manager,
Dave Plyman, explained this is the first time there has ever been any transmission tariff
revenue received during the history of RMU.
"Every month we make a payment to PJM for transmission , now we are getting some
money back, based on the value of our transmission and the value we bring to the
region," said Plyman. "We took what was essentially just a cost item, the only revenue we
were receiving was the revenues paid by our customers." As Plyman noted, the
transmission tariff is not something that most other cities have, due to the fact that those
cities grids are not interconnected.
'This is very unusual because most cities are radially fed, like a bicycle spoke, and are
not interconnected ," said Plyman. "We are not aware of any utility around here that has
successfully made a tariff application, so we have cut a new path by doing this."
History
Power is generated in power plants located in different parts of the country. Power is
conveyed through the grid by high voltage lines. The U.S. is divided into different regions.
Rochelle is located within the region of transmission assets coordinated by PJM
Interconnection, which is a regional transmission organization that coordinates the
movement of wholesale electricity in all or parts of Illinois and several other states in the
country.
"All of the costs involved with the transmission of the electrical energy from the plant
to the distributions systems are coordinated by PJM and those costs are allocated back
out to the end consumers," explained Plyman. "Rochelle is charged transmission costs."
Plyman explained that about 45 years ago, Rochelle attached to the grid, and the first

2. transmission line was built along Steward Road. The Caron Road substation was built, and
a transmission line was built south of Steward along Steward Road to another transmission
line that was owned by ComEd.
In 1995, a second transmission line was built by the city, along with a new substation
built. The two substations became interconnected, which meant that grid power was able
to flow through Rochelle.
After the windstorm in November 2013, an engineering study was performed. Plyman
said at that time, the idea of Rochelle being eligible for a transmission tariff surfaced,
and further studying was pursued.
In 2012, the city began implementing a GIS system , which involved updating property
assets into a computer system.
"Our GIS, then with the updated property assets, allowed us to come up with a new
valuation of replacement cost for our system. We hired Baker Tilly and Sargent & Lundy
to go over all of our data and so we were able to put together an application for a tariff
using up-to-date property asset records," explained Plyman.
In December of 2014, the Utility Advisory Board approved the recommendation from
RMU staff to proceed with a transmission tariff application to the FERC.
Since this approval, RMU staff and consultants have completed the FERC
TariffApplication, which had shown that due to RMU's interconnect to the grid, assets
have the potential to generate yearly revenue of $1.2 million. With an additional
investment, the revenue has the potential to grow further. The revenue is intended to
fund the investments.
Dan Westin, Business and Financial Analyst for the city, explained that the project has
involved many steps, and gives credit to the assistance from over 100 people in many
organizations.
"These people are in organizations such as government regulatory entities such as FERC,
reliability oversight institutions such as NERC and Reliability First, Engineering Firms such
as Gridforce, Power Systems Engineering, Sargent & Lundy, accounting firm Baker Tilly,
training entities such as SOS International, PJM's personnel in all disciplines, Com Ed's
personnel in Network Design and Operations, further regulatory and tariff guidance,
Boardman and Clark, Bethel Electric Rate consulting and of course all of the personnel in
RMU's Generation Plant as well as transmission and distribution, advanced
communications and admin," said Westin.
Operator services agreement
At their meeting in July, city council authorized Plyman to sign a Transmission System
operator services agreement between RMU and Gridforce Energy Management, LLC at a
monthly cost of $20,000 for one year.
"RMU generation plant personnel are being trained in Transmission Operations
procedures and will be supported fully in achieving this certification," said Plyman.
"Approval of this agreement provides a ramp-up for them to have a solid operation in
place for full reliability management of Rochelle's role in the Bulk Electrical System."
Also approved during the July 13 council meeting, was the purchase of security door

3. access equipment and installation at the RMU Generation facility from Rock River Service
in the amount of $21,049.
In order to meet the North American Electric Reliability Corporation (NERC)
requirements, a higher degree of control room security needs to be installed.
"The tariff cost basis includes expenses incurred for provisioning the transmission
system so this improvement in control room security is covered by the tariff calculations,"
said Plyman.