The Federal Energy Regulatory Commission on Tuesday rejected a waiver request from American Electric Power utilities that would have allowed them to sell up to 750 MW in an upcoming “incremental” capacity auction.
AEP’s request failed to address a concrete problem — one of the criteria FERC uses when considering waiver requests — because the PJM Interconnection has adequate capacity for the incremental auction across most of its footprint, the commission said in its decision.
The AEP utilities are Fixed Resource Requirement entities that supply their own capacity and don’t participate in PJM’s capacity market. In early November, AEP asked FERC for a waiver from a 1,300-MW cap on how much capacity its utilities can sell in PJM’s market.
In part, AEP argued that the waiver would help address PJM’s resource adequacy needs while reducing fuel charges for its customers.
PJM supported AEP’s waiver request. It was opposed by Monitoring Analytics, PJM’s market monitor, and the PJM Power Providers Group, which represents independent power producers. The parties in opposition said it appeared the AEP utilities — Appalachian Power, Indiana Michigan Power, Kentucky Power and Wheeling Power — were trying to offload capacity they acquired to serve data centers that didn’t materialize.
FERC appeared to echo that rationale in its decision. Given that AEP failed to show that PJM needs its capacity to maintain grid reliability, “AEP’s remaining problem is simply that AEP finds itself with excess capacity … because of its own business decisions that led to the procurement of more capacity than it needed,” FERC said.
Typically, PJM holds annual base capacity auctions three years in advance of a delivery year. It then holds incremental auctions for that delivery year to reflect changes in supply and demand forecasts. The next incremental auction is set to be held later this month for the 2026/2027 delivery year.
PJM has lowered its peak demand forecast and its “average accredited unforced capacity” has increased, leaving the grid operator with an additional 2,630 MW compared to its 2026/2027 base residual auction, FERC said. Unforced capacity is a measure of how much installed capacity a resource can historically deliver.
Also, PJM is not seeking to procure capacity in the “Rest of RTO” zone, where the AEP utilities are located, the agency said.
Last month, FERC Chairman Laura Swett said she intended to more closely scrutinize requests for waivers from agency-approved rules and requirements.
“I believe the commission has been overly generous over time in granting waivers,” Swett said at the agency’s Jan. 22 open meeting. “While waivers are appropriate and extremely useful in the right circumstances, I believe that they should be deliberately limited.”
In some cases, tariff waiver applicants are seeking permission to avoid certain requirements due to issues that are their own fault, Swett said.
