PJM finalized its Transitional Cluster 2 (TC2) Phase 2 results and the shift from Phase 1 is hard to ignore.
Total network upgrade cost allocation dropped from approximately $12 billion to approximately $1.7 billion, a reduction of roughly 86%. At the transmission-owner level, the numbers are even more striking:
- Dominion fell from approximately $4.6 billion to $300 million.
- AEP dropped from $2.16 billion to approximately $337 million.
- ATSI fell from $1.41 billion to under $50 million.
PJM Queue Attrition Is Part of the Story, Not All of It
The easy explanation is queue attrition. But that's not the full picture.
In Phase 2, PJM incorporated recently approved 2025 Window 1 baseline upgrades into its cases. Two projects stand out. The first is a bipolar ±525 kV HVDC link from Heritage to Mosby in Virginia (b4053) — approximately $3.79 billion in cost with 3,000 MW of transfer capability.
The second is a 765 kV development in Ohio under modified proposal 570 (b4068). These baseline investments can relieve upgrade obligations that TC2 projects were previously funding, and that dynamic can be clearly observed in the steep cost reductions across the affected territories.
The reallocation isn't uniform, though. Public Service Electric & Gas (PSE&G) held flat at $38.4 million, while Baltimore Gas & Electric (BGE) and Ohio Valley Electric Corporation (OVEC) went from zero in Phase 1 to $22 million and $38 million in Phase 2, respectively. That's a critical reminder: individual project exposure can move against you even in a cycle where total costs fall sharply.
What This Means for Developers in PJM
Understanding TC2 Phase 2 requires more than tracking who has withdrawn from the queue. Developers must have insight into which baseline topology changes made it into the base case, how constraints reallocate across zones, and which projects inherit or shed upgrade obligations as a result.
At EPE, we go beyond queue attrition studies when assessing positions for our clients. A project that looked costly in Phase 1 can become a strong position in subsequent phases if you understand the drivers well enough to see it coming. Our modeling captures these dynamics so developers can see their cost exposure and its key drivers before PJM's numbers land.
If the Phase 2 results raised more questions than they answered for your TC2 positions, let's talk. Contact our team of experts using the form below.
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