Brief:
Efforts are underway as Constellation Energy, Calpine, and Public Service Enterprise Group strongly challenge the Federal Energy Regulatory Commission (FERC) to turn down the sweeping proposals set forth by Exelon utilities. These proposals aim to adjust tariffs to incorporate co-located data centers alongside power plants.
Calpine, in a filing on Wednesday, expressed that the ramifications of such changes would reverberate beyond data centers, extending to commercial and industrial entities, and possibly affecting residential customers associated with public power providers. “If accepted, the filings would impose sweeping, unsupported policy changes on the PJM [Interconnection] market without adequate stakeholder input,” it cautioned.
Conversely, Monitoring Analytics, the monitoring entity for PJM, has rallied in support of Exelon’s proposals from Baltimore Gas and Electric and others, asserting that such measures would ensure that co-located loads remain accountable under FERC or state regulations and don’t evade the requisite charges for transmission and distribution systems.
Insight:
The contention surrounding the classification and treatment of co-located loads has escalated into a significant flashpoint within the PJM sphere, particularly after Exelon and American Electric Power contested an amended interconnection service agreement. This agreement would facilitate Talen Energy in supplying power to an Amazon data center sourced from Pennsylvania’s Susquehanna nuclear power plant, a matter currently under FERC’s scrutiny.
Adding to the unfolding drama, Exelon’s subsidiaries, BGE and PECO Energy, recently implored FERC to declare that the interconnection of end-use loads sits squarely within the realm of state jurisdiction rather than federal oversight.
In a bold move, the utilities under the Exelon banner—including Atlantic City Electric, BGE, Commonwealth Edison, Delmarva Power & Light, PECO, and Potomac Electric Power—filed identical proposals in late August at FERC pertaining to the intricacies of co-located loads. Their objective? To stipulate that any loaded connection with their systems must either qualify as "network load" or involve the appropriate point-to-point transmission service.
These utilities argue that co-located loads ought to contribute their fair share towards the costs associated with the transmission network, as well as other charges typically levied on network users—such as ancillary services and the administrative fees applied by PJM and FERC.
Monitoring Analytics echoed these sentiments, proclaiming that the existing proposals governing co-located loads could result in discriminatory treatment, potentially paving the way for significant alterations to the PJM markets that would impose undue costs upon other market participants.
Among the ranks opposing Exelon’s moves are Constellation, PSEG, Vistra, the Retail Energy Supply Association, large industrial energy users, and the PJM Power Providers Group, among others. Constellation, an independent power producer, vehemently criticized Exelon’s tactics, terming them as "procedurally improper” and a “blatantly discriminatory attempt” to obligate co-located loads in its service territories—particularly data centers—to become its transmission service customers, regardless of whether they actually utilize such services.
The accusations extend to asserting that Exelon’s attempt falls under Section 205 of the Federal Power Act, a statute that, according to Constellation, cannot justify changes to existing PJM rates. Even if such a rate change were permissible, Exelon has failed to furnish compelling evidence to substantiate its justification, Constellation contended.
Furthermore, Constellation asserted that fully isolated co-located loads do not draw from the grid. “Basic engineering confirms that this load is not relying on the grid,” they pointed out, arguing that fundamental cost causation principles indicate these loads shouldn’t incur charges for services they do not utilize.
Others, including Voltus, Bloom Energy, Old Dominion Electric Cooperative, Advanced Energy United, and the Solar Energy Industries Association, also voiced serious concerns about the implications of Exelon’s proposals. They emphasized the need for collaboration among utilities, generator owners, large customers, and grid operators to fully comprehend the ramifications of co-location before drawing conclusions.
AEU and SEIA highlighted the pressing nature of this discourse, pointing out that FERC is organizing a technical conference on November 1 to delve deeper into the dynamic of co-located loads. They warned that without a comprehensive understanding of the facts, Exelon’s proposed revisions might stifle co-location agreements, inadvertently undermining potential advancement initiatives.