FERC on Jan. 31 granted American Electric Power waivers to alter the capacity obligation calculation for four of its vertically integrated utilities in PJM to not include load growth outside their territories (ER24-545).
In its Dec. 4 request, the company said its AEP Ohio affiliate, which participates in PJM’s Reliability Pricing Model (RPM), had submitted a forecast large load addition of about 1,860 MW largely attributed to data centers expected to be constructed in its footprint. Under PJM’s approach to allocating capacity obligations, AEP said the majority of the responsibility to procure the capacity to serve that load would fall on other affiliated utilities in the AEP transmission zone that participate in the fixed resource requirement (FRR) alternative to RPM. The company estimated that 1,039 MW of the increase would be allocated to Appalachian Power, Indiana Michigan Power, Kentucky Power and Wheeling Power.
“The AEP FRR entities seek this waiver so the forecasted peak load increase associated with the projected large load additions will appropriately remain in the PJM region reliability requirements addressed by the BRA [Base Residual Auction] for delivery year 2025/2026, instead of being shifted to the AEP FRR entities. The waiver will allow the AEP FRR entities’ customers to avoid rate impacts caused by the procurement of capacity not needed to serve them,” the company said in its request.
The company asked permission to excise the base zonal FRR scaling factor from the calculation of the FRR utilities’ capacity obligations, resulting in an equation that multiplies the obligation peak load by the forecast pool requirement (FPR). That would assign the entirety of the capacity obligation for the 1,860 MW to the electric distribution companies within the AEP zone.
FERC said in its order that the waiver “will allow the AEP FRR entities to avoid procuring unneeded capacity for purposes of its FRR capacity plan for the 2025/2026 delivery year.”
PJM commented that so long as the forecast large load additions are entirely within EDCs participating in the RPM, the waiver has merit, but it requested that the commission confine its approval to the issue at hand, as stakeholders are considering changes to how capacity obligations associated with forecast large load additions are split between FRR and RPM entities within the same transmission zone. The problem statement stakeholders are considering, jointly brought by AEP and Dominion Energy, states that high load industries are resulting in concentrated pockets of growth, often within single EDC regions.
“There is stakeholder support for revising the [Reliability Assurance Agreement] to eliminate this impact of the base zonal FRR scaling factor, which seems to be a relic of a time in which increases to load forecasts were more generally experienced across a transmission zone, as opposed to being concentrated within a single EDC’s service area,” AEP argued in its request.
