Calpine, Constellation Energy Generation, LS Power and generator trade groups on Tuesday asked the Federal Energy Regulatory Commission to order settlement talks to resolve issues surrounding the PJM Interconnection’s rules for colocating data centers at power plants.
FERC should declare that PJM’s colocation rules should be replaced because they lack adequate clarity or consistency on the rates, terms or conditions of service, according to the joint filing by the Electric Power Supply Association; the PJM Power Providers Group, or P3; Calpine; Cogentrix Energy Power Management; Constellation; and LS Power.
The request for 90 days of settlement talks is in response to FERC’s review of PJM’s colocation rules that was launched by a “show cause” order on Feb. 20.
“The Commission should direct parties to this settlement process to identify an acceptable replacement rate that reasonably establishes the services, if any, used by co-located loads, and allocates any costs to such loads (or the generator serving them) consistent with cost causation principles,” the companies and trade groups said.
PJM and transmission owners appear to expect that FERC will order settlement talks, according to the companies and trade groups. In responses to FERC’s show cause order, PJM offered alternate approaches to colocation that would need stakeholder input and PJM transmission owners said they “anticipate the potential for further discussion regarding possible changes to tariffs,” the companies and trade groups noted.
“An attempt to settle these disputes is clearly worth the effort,” the companies and trade groups said. “There is value to a prompt resolution of these heavily contested co-location issues to ensure that the United States does not fall behind in the Artificial Intelligence revolution.”
Colocation arrangements where large loads such as data centers are sited at power plants are becoming popular, but clarity about the rules for the practice is needed, according to P3 President Glen Thomas. “It’s going to help those deals get done and it's going to provide confidence to both sides that they understand the regulatory framework in which they have to consummate that deal,” he said Wednesday.
A settlement between parties would benefit all sides, according to Thomas. “Everybody is struggling with the uncertainty of these relationships right now,” he said. “Getting that certainty is going to be incredibly beneficial for everyone.”
In its show cause order, FERC asked PJM and stakeholders to explain why the grid operator’s colocation rules are just and reasonable or to offer rules that would pass agency muster. FERC established a comment schedule that enables the agency to issue a response by June 20.
The outcome of FERC’s review could set a precedent for colocated load in the power markets the agency oversees.
Talen Energy, Constellation Energy and PSEG Power, a Public Service Enterprise Group subsidiary, are among the companies that are considering hosting data centers at their nuclear power plants in PJM.
