Editor’s note: This story was updated with comments from PJM.
The Federal Energy Regulatory Commission should reject the PJM Interconnection’s directive to Exelon utilities to make $785 million in transmission upgrades to handle Talen Energy’s planned closure of a coal-fired power plant, according to the Maryland Public Service Commission and the state’s ratepayer advocate.
PJM failed to consider non-transmission alternatives or other options to the planned “grid solutions package” and a possible three-and-a-half-year reliability must-run contract for Talen’s 1,282-MW Brandon Shores plant, which the company plans to shutter by June 1, 2025, the PSC said in a filing to FERC on Monday.
“PJM’s process for the approval of the Grid Solutions Package is flawed and lacking in the transparency that should apply to regulated electric utility investments of the very large magnitudes involved,” the Maryland Office of People’s Counsel, which represents residential utility ratepayers, said in a filing last week. The OPC called for a competitive solicitation for at least some of the planned upgrades.
PJM on Aug. 11 asked FERC to approve the cost allocation for 25 transmission upgrade projects identified in an update to the grid operator’s Regional Transmission Expansion Plan, or RTEP. The transmission projects appear to mainly be given to Exelon utilities, such as Baltimore Gas and Electric, according to the OPC.
Besides violating the Federal Power Act, PJM’s response to Talen’s plan to retire its Brandon Shores power plant near Baltimore highlights flaws in the grid operator’s planning processes, especially around power plant retirements, according to the PSC and OPC.
The power plant’s retirement was foreshadowed long before Talen told PJM about its decision in April, given the plant’s age, its low capacity factors and Talen’s financial troubles, according to the OPC.
“Yet … PJM does not appear to have done any pro-active review of the transmission or non-transmission alternatives to the plant’s deactivation,” the OPC said, noting Baltimore Gas and Electric was assigned $534 million transmission projects, which would increase its FERC-regulated rate base by 35%.
Maryland ratepayers also face “an unknown, but presumably very large,” RMR charge so Talen will keep the Brandon Shores plant running until the planned grid upgrades are finished, according to the OPC.
PJM improperly invoked the “immediate need” designation for the planned transmission projects and failed to comply with a required public comment and consultation process, the OPC said.
The planned transmission projects will likely receive inadequate prudency and cost reviews, according to the OPC.
“The Federal Power Act’s mandate that rates be just and reasonable, in this particular context, supports requiring that PJM, assisted by independent third-party experts, conduct a consolidated review and scrutiny of the costs over the duration of the projects’ design, permitting and construction, accessible to public review,” the OPC said.
PJM disagrees with many of the OPC’s assertions, according to Jeffrey Shields, a spokesperson for the grid operator.
“There is simply no mature technology that can alleviate the need to build transmission to make up for the loss of a nearly 1,300 MW thermal generating plant — even if the generator were replaced by an equivalent amount of solar energy due to the difference in operational characteristics between the two types,” he said.
Also, Shields said that before April, PJM had no clear indication that the plant would close and, in fact, had been informed the plant would switch to fuel oil and continue operating.
PJM notified stakeholders of the Brandon Shores planned retirement and reviewed the needed transmission upgrades and their costs during “multiple” Transmission Expansion Advisory Committee public stakeholder meetings, according to Shields.
“PJM will continue to work with Maryland, BGE and the plant owner to fulfill our obligation to keep power flowing to the residents of Maryland,” he said.
Meanwhile, the PSC urged FERC to direct PJM to conduct its reliability assessment and transmission upgrade approval process for the Brandon Shores retirement in a more holistic manner and with consideration of state policies.
The PSC said it could order non-wholesale assets, such as energy storage, to possibly offset the need for the PJM-approved transmission upgrades.
“By focusing primarily on an immediate transmission solution, the RTEP process — as applied in this instance — precludes consideration of viable alternatives, with the prospect of exposing Maryland ratepayers using the transmission facilities to unreasonable costs,” the PSC said.
It is unclear what alternatives PJM considered instead of entering into an RMR contract with Talen, according to the PSC.
The agency urged FERC to direct PJM to revise its RTEP process “in the interest of achieving reliability in a holistic, timely and cost effective manner.”