By Rory D. Sweeney
FERC dismissed concerns from several stakeholders last week in approving the Ohio Valley Electric Corp.’s integration into PJM (ER18-459, ER18-460).
The commission said OVEC and PJM had satisfied the Operating Agreement requirements for integrating the company, rejecting objections by stakeholders including American Municipal Power, the Ohio Consumers’ Counsel and the Public Utilities Commission of Ohio. The protesters expressed concern that OVEC’s integration will result in significant upgrade costs and increase the existing generation oversupply without providing more load for PJM generators to serve. (See OVEC Integration not up for Debate, PJM Says.)
The commission also accepted grandfathering of several power agreements and delivery commitments.
OVEC, which is headquartered in Piketon, Ohio, owns 2,200 MW of generation capacity but will have no load after a U.S. Department of Energy contract ends sometime before 2023. The company was created in 1952 to service a uranium enrichment plant near Piketon that ceased operations in 2001. The department ended the 2,000-MW contract in 2003 but maintains a load that can be 45 MW at its maximum but is generally less than 30 MW.
The company’s two coal-fired generating plants — the 1.1-GW Kyger Creek in Cheshire, Ohio, and 1.3-GW Clifty Creek in Madison, Ind. — are already pseudo-tied into PJM, and its eight “sponsors” can sell their portions of the output into the RTO’s markets. The generation would become internal to PJM following membership, eliminating the pseudo-ties.
The commission said it didn’t buy members’ arguments that a cost-benefit analysis should be required prior to integrating OVEC — a request which the OCC also made separately to PJM — because there’s no precedent for it and the benefits to consumers from RTO membership “outweigh” integration costs. The commission said those benefits are “increased efficiency for transmission planning and generation investment, reduced transaction costs, improved grid reliability, limited discriminatory practices and improved market operations.”
It also said concerns about future costs aren’t warranted because those costs will be allocated based on PJM’s Tariff and OVEC’s sponsor companies will continue to pay for OVEC’s share. The order noted that PJM’s studies indicated no transmission upgrades will be required to integrate OVEC. “With the exception of a single deliverability violation, which OVEC has committed to remedy, the existing equipment and facilities are adequate,” the commission said.
PJM’s Independent Market Monitor had raised concerns about OVEC’s aging plants becoming eligible for reliability-must-run contracts if they decide to shut down, but the commission said the issue is beyond the scope of the integration request.