The PJM Interconnection LLC is urging the Federal Energy Regulatory Commission to reject a series of complaints filed by power generation owners seeking relief from nonperformance charges tied to a severe December 2022 winter storm.
The widespread cold event, also known as Winter Storm Elliott, caused the unexpected loss of more than 23% of PJM's generation capacity. Following the storm, PJM said it expects to levy between $1 billion and $2 billion in penalties to generators that failed to perform as expected.
Under PJM's forward capacity market construct, generators with capacity supply obligations are subject to penalties when they are unable to produce power during grid emergencies. Those penalties go into a bonus pool that compensates overperforming generators.
PJM in April secured FERC approval for an extended repayment option to help mitigate the charges. But FERC has yet to decide at least 12 separate complaints filed by generation owners requesting some form of relief.
PJM says generators are responsible for fuel purchase decisions
In a May 30 response, PJM pushed back on assertions that its actions in the days and hours leading up to the storm forced gas-fired power plant operators to scramble to purchase fuel.
Earthrise Energy Inc. subsidiary Lincoln Generating Facility LLC, which operates the gas-fired Lincoln Energy Center in Illinois, argued in an April complaint (EL23-59) that the facility should be excused from nonperformance charges. The gas plant would have been able to procure gas and respond to PJM's emergency dispatch instructions if PJM had given earlier notice that the facility was needed, according to the company.
But PJM urged FERC to reject that reasoning.
PJM's tariff "is explicit that a capacity resource's nonperformance is not excused if the capacity resource was unavailable for dispatch for reasons other than a PJM-approved planned or maintenance outage," PJM said.
Moreover, the grid operator noted that its 13-state Mid-Atlantic footprint has "hundreds of gas-fired generators, taking service from a mix of more than 24 interstate pipelines, each with its own particular operating tariff, scheduling, and curtailment rules and practices."
"Deciding for capacity market sellers whether and when they should be buying gas is not the PJM operators' job — and the commission has an excellent opportunity here to make that abundantly clear to any who have not yet received that message," PJM said.
For similar reasons, PJM urged FERC to reject a complaint (EL23-60) filed by ArcLight Capital Partners LLC, the ultimate owner of the gas-fired Parkway Generation Keys Energy Center in Maryland, and another complaint (EL23-57) filed by Rockland Capital LP, the ultimate owner of the gas-fired Lee County Generating Station in Illinois.
PJM also asked FERC to reject a separate complaint (EL23-56) filed by a coalition of Talen Energy Corp. entities. Long notification plus startup times at the affected Talen facilities — unit 2 of the Montour plant and Martins Creek 3 and 4 in Pennsylvania, and units 1 and 4 of the Herbert A. Wagner plant in Maryland — "were the sole reason PJM did not dispatch the Talen generators," PJM said.
In response to the complaints, Constellation Energy Generation LLC, which owns nuclear and gas-fired capacity in PJM, filed a protest urging FERC to reject efforts to fault PJM.
The 12 separate complaints "raise many excuses, but a common theme is to seek absolution from the commission by blaming PJM," Constellation said. "Another common theme is to claim that it would not have been economically feasible to procure fuel. The tariff does not allow for such excuses."
Sierra Club sides with solar generation owner
In a separate protest, the Sierra Club agreed that gas-fired generators should not be excused from penalties due to fuel supply issues. But the environmental group also sided with SunEnergy1, a solar generation owner who argued in a complaint (EL23-58) that four of its capacity resources in North Carolina and Virginia should not be penalized for failing to produce power at night.
Under PJM's capacity accreditation rules, solar resources already have their capacity values discounted to account for their intermittency, the Sierra Club noted.
"Moving forward, the commission should require PJM to reform its capacity performance rules to align capacity accreditation and penalties," the group said. "Where capacity accreditation already devalues a resource to account for its inability to generate electricity under certain circumstances, that same inability should not be grounds for a penalty."
In a May 26 answer, PJM noted it intends to revise its capacity performance rules through a fast-track review with stakeholders. But that ongoing effort does not justify waiving the charges for SunEnergy1, PJM said.
SunEnergy1 chose to offer and commit its four solar projects in PJM as capacity resources knowing that they "were incapable of performing when it is dark," PJM said. "SunEnergy1 made that choice, and took on that risk."
In its own comments, Vistra Corp. asked FERC to clarify any legitimate ambiguities identified by the complainants on a prospective basis.
"Vistra requests that such ambiguities be addressed in a manner that clarifies all parties' (not just complainants') rights and obligations on a prospective — not retroactive — basis and without fundamentally altering, or undermining the effectiveness of, the capacity performance framework," the generation owner said.
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