Exelon Corp. President and CEO Calvin Butler defended the company's position on Aug. 1 that colocating datacenters with power plants will negatively impact utility customer reliability and affordability.
In June, the utility company and American Electric Power Co. Inc. asked the Federal Energy Regulatory Commission to hold a hearing or deny a proposed interconnection service agreement between PPL Corp. and Talen Energy Corp.'s 2,494-MW Susquehanna Nuclear plant in Pennsylvania.
Exelon and AEP maintain that putting a datacenter behind the meter would still require the facility providing the power to its operator, Amazon.com Inc., to incur system charges from PJM Interconnection LLC and force ratepayers to bear another $58 million to $140 million per year in transmission system costs. The colocated load would likely still need to draw from the broad PJM transmission system in the event of an outage at the nuclear plant, Exelon and AEP said.
Talen has responded that the "behind-the-meter configuration" requires the datacenter to pay delivery facility costs, calling on FERC to reject the utilities' challenge.
"This demand is coming either way, right, whether it's colocated or not," Butler said on Exelon's second-quarter 2024 earnings call. "That's going to require investment, and our focus is making sure the investment gets done for the needs of our customers and that everyone has a fair and equitable allocation of the cost of using the grid."
Exelon subsidiaries Baltimore Gas and Electric Co. and Pepco Holdings LLC filed similar comments with the Maryland Public Service Commission, which must study and make recommendations about colocated generation in compliance with Maryland's Senate Bill 1, signed in May.
"To pretend the end-use customer in a colocation arrangement is not a retail customer — or, perhaps, not load at all — that does not depend upon or affect the electric grid, as some proponents do, threatens reliability failures," the Exelon utilities told the commission in a July 26 filing (Maryland PSC Administrative Docket PC61). "The joint Exelon Maryland utilities support colocation of large load, such as datacenters, when properly regulated. But colocated load cannot be allowed to evade paying for the costs of grid services that it uses."
Constellation Energy Corp., whose 1,816-MW Calvert Cliffs nuclear plant in Maryland could be tapped by a hyperscaler for a colocation deal, said in a separate July 26 filing with the PSC that behind-the-meter generation does not "burden" the grid or shift costs to utility ratepayers.
"Until recently, there was no question that new customers would be able to continue using colocation as a self-build alternative, but then utilities began to worry about losing the potential rate base from interconnection facilities for large datacenter customers and urged the legislature to restrict those customers' options in Maryland," the independent power producer stated.
"The utility response is clear: new datacenters should have no other choice than to use utilities' wires to serve their load," Constellation continued. "But the datacenter does have another choice. It can look to neighboring states, none of which preclude colocation as an option."
Exelon's Butler responded on the earnings call that commenting on its customers' behalf is "good policy."
"We just want all customers to have a voice in that process because otherwise, we as the utility will be the ones looking back and saying, 'Where were you at in that discussion and representing us?'" he said. "And that's important because if you do this in a vacuum, then you have to react to the things that have happened already."
As Exelon pushes back against colocation in Maryland, it is already signing datacenter deals in Illinois subsidiary Commonwealth Edison Co.'s territory.
"We have over 5 gigawatts in what we call the engineering phase where datacenters have paid us to start engineering their projects," ComEd CEO and President Gil Quiniones said. "Some of them actually have made deposits so that we can order large equipment like transformers and breakers, and then behind that we have another 13 gigawatts in what we call prospects."
Exelon reported second-quarter adjusted earnings of $472 million, or 47 cents per share, compared with $408 million, or 41 cents per share, in the second quarter of 2023. The S&P Capital IQ consensus normalized EPS estimate for Exelon in second-quarter 2024 was 39 cents. The company reaffirmed both 2024 and long-term guidance.
