The PJM Interconnection urged the Federal Energy Regulatory Commission to dismiss eight complaints seeking to eliminate or reduce penalties for power plants failing to meet their capacity obligations during Winter Storm Elliott, according to filings released Tuesday and Friday by the agency.
The disputes center on about $1.8 billion in pending penalties PJM issued after numerous power plants failed to provide electricity during two days in late December. A share of those penalties flows to generators that overperformed during that period.
In response, several generators have have sought bankruptcy and others filed complaints asking FERC to reverse the fines.
All the complaints should be rejected, according to PJM’s responses to generators in Illinois, Nautilus power plants, Talen Energy Marketing, a group of gas-fired power plant owners, SunEnergy1, Parkway Generation Keys Energy Center, Lee County Generating Station and Lincoln Generating Facility.
The complaints about PJM’s emergency actions during Winter Storm Elliott are an after-the-fact challenge that fundamentally conflicts with the core purpose of the capacity performance framework adopted after the 2014 polar vortex when many power plants failed to run, the grid operator said.
The complaints rely on “misread cherry-picked language” in a PJM manual and impose “irrational constraints” on the grid operator’s use of emergency actions that defy “good utility practice,” PJM said in response to some of the complaints.
During Winter Storm Elliott, PJM avoided rolling blackouts and was able to help neighboring systems that were shedding load, despite “unexpected and extraordinary performance failures” by the companies filing the complaints and other generators, the grid operator said.
“These failures could have had life and death consequences had events played out differently,” PJM said. “PJM operators preserved reliability while contending with unprecedented difficulties and uncertainties that were exacerbated by complainants’ non-performance.”
Capacity resources accept the risk of non-performance charges when they take “substantial” capacity payments to be available to run, according to PJM, which operates the grid from New Jersey to Illinois.
PJM urged FERC to reject arguments that its emergency actions during Winter Storm Elliott were invalid or that there was no emergency or that certain power plants weren’t needed to address the emergency.
“The regulatory process will rapidly unwind with perpetual litigation and reliability will be undermined, should the commission choose to disregard the real-time flexibility regional transmission organizations (RTOs) must have to manage emergencies and to substitute its judgment with the luxury of perfect hindsight,” PJM said.
Also, given criticism of PJM’s aid to its neighbors, granting the complaints would chill cooperation between neighboring systems in emergencies, the grid operator said in some of its responses.
Long-running issues are being addressed in several venues related to the lack of synchronization between the natural gas nomination cycles and real-time power plant dispatch, according to PJM.
“This lack of synchronization is not new and existed at the time these unit owners submitted their bids into the capacity base residual auction,” the grid operator said. “This case is not the forum to resolve those issues nor should the system operators be required to serve as fuel managers for approximately 800 gas, diesel and coal-fired generators in the PJM region.”
Other parties also urged FERC to reject the complaints, including Brookfield Renewable Trading and Marketing, which owns power plants that overperformed during the winter storm, Constellation Energy Generation, Public Service Electric and Gas and affiliated companies, and the Sierra Club.
PJM board rejects plan to change penalty framework
Meanwhile, PJM’s board last week rejected a proposal approved by two committees that would have reduced penalties for failing to provide power during grid emergencies. The proposal would have changed the capacity penalty rate, penalty stop-loss and penalty triggers.
PJM plans to ask FERC to approve changes to its rules for penalty triggers, but not the penalty rate or stop-loss level, the board said in a May 23 letter.
“PJM articulated concerns that the endorsed changes to the penalty rate and stop-loss may contribute to reliability concerns absent additional paradigm enhancements such as stricter winterization, testing and fuel security requirements, due to the reduced incentive for generators to respond in emergencies,” the grid operator said.
