Several generation owners and PJM are progressing toward an agreement regarding the non-performance charges the RTO assessed in its allegation the generators failed to meet their capacity obligations during the December 2022 winter storm, according to the settlement judge mediating the deliberations (EL23-53, et al.).
Judge Matthew J. Vlissides Jr. wrote in a Sept. 1 status report that a “majority of the participants indicated that they reached a settlement in principle” as of the previous day’s conference and he recommended terminating the process without holding further meetings. (See FERC Sends Elliott Complaints Against PJM to Settlement Judge.)
“These participants represent that they are finalizing the settlement materials and anticipate filing the settlement package by late September 2023,” he said.
East Kentucky Power Cooperative spokesperson Nick Comer said EKPC is pleased the parties have reached a settlement in principle but wouldn’t comment further until the terms have been filed with the commission. PJM declined to comment.
The companies involved in the settlement procedures include Essential Power (EL23-53), Aurora Generation (EL23-54), the Coalition of PJM Capacity Resources (EL23-55), Talen Energy (EL23-56), Lee County Generating Station (EL23-57), SunEnergy1 (EL23-58), Lincoln Generating Facility (EL23-59), Parkway Generation Keys (EL23-60), Old Dominion Electric Cooperative (EL23-61), Energy Harbor (EL23-63), Calpine (EL23-66), Invenergy (EL23-67) and EKPC (EL23-74).
PJM stated the penalties from Winter Storm Elliott total about $1.8 billion, though during stakeholder meetings it has said it’s likely some percentage of generators will default on the penalties. To reduce the impact to those companies, PJM filed to extend the payment period for non-performance charges to nine months, which FERC approved in April. (See “FERC Approves Alternative Billing Schedule,” PJM: Elliott Nonperformance Penalties Total More Than $1.8B.)
The commission established the settlement judge procedure June 5 to see if the parties involved in a dozen complaints could reach an agreement within 60 days and extended the process an additional month on Aug. 14 after Vlissides wrote a progress report finding the parties were “significantly progressing” toward settlement.
PJM asked the commission to establish a settlement judge in April, arguing that while it maintains the penalties are valid, a faster resolution could support the long-term health of the capacity market and result in more consistent settlement outcomes.
“The capacity market also is designed in large measure to signal the need for new capacity resource investment, and the expectations of the financial and investment community accordingly are an important backdrop to the operation of this market,” PJM said in its earlier filings. “Timely, consensual resolution of these disputes thus could, potentially, help support the long-term health of the resource adequacy construct in the PJM region.”
The complaints argued PJM improperly declared emergencies in regions where it was not warranted and continued to export to other balancing authorities in contravention of its tariff and the RTO had not provided generators with the required notifications they were expected to be available to allow them to procure fuel.
