The dispute between Exelon and Constellation Energy continues to play out in FERC, as the latter and others have protested a series of filings from the former’s utilities seeking to implement new rules for co-locating data centers at power plants in their territories (ER24-2894).

“Pepco supports the opportunity for end-use load customers to co-locate where it can be done without threatening reliability. Because the new loads are end-use customers, state law, rather than the [Federal Power Act], determines the retail rate treatment of these arrangements,” the Exelon subsidiary said in its proposal, submitted in August along with those of its five sister utilities.

Ahead of the deadline for comments on the proposals, Exelon petitioned FERC on Sept. 30 for an order declaring that PJM’s generator interconnection procedures under Order 2003 apply only to end-use generation, not load. (See related story, Exelon Asks FERC to Weigh in on Co-location Dispute with Constellation.)

Exelon’s utilities argue in their filings it’s important that co-located customers bear their fair share of the costs of transmission service they use and of the interconnection facilities. Even data centers on the generator side of the meter impose similar needs on PJM when it comes to ancillary services and RTO monitoring and administration, they said.

The changes would require any co-located data centers to pay their share of the cost of transmission services, ancillary services and other PJM charges. Exelon also initially said it would be required to meter the “gross load” of the end-use customer, but it removed that language after a protest from the Natural Resources Defense Council saying that could impact backup generation many customers use.

Constellation argues in its protest that any data centers that might connect to its nuclear plants in PJM — and in Exelon utility territories — would not take any service from the grid. They would be separated from the grid by redundant protective relays and other equipment that prevent them from ever taking energy off the grid or relying on other grid services.

“Exelon’s request should be rejected for what it is: another attempt by a monopoly utility to preserve and increase its market share at the expense of competition and economic development, including the critical and urgent national security need for artificial intelligence and data centers,” Constellation said.

Even with the clarification preserving netting arrangements, Constellation said Exelon’s rules are as “clear as mud.” The filings leave out details of the services the utilities would provide to “fully isolated co-located loads” and do not explain the rates it would charge them.

They would change the definition of network integration transmission service (NITS) in PJM and require every customer “synchronized” to the grid to become Exelon’s transmission customers, Constellation argued. “This would force office buildings, grocery stores and even homes across the Exelon footprint to become transmission customers under the PJM tariff.”

Exelon should have made the proposal under FPA Section 206 because only PJM itself can file changes to its rules under Section 205, Constellation said. Even if the changes were filed correctly, the lack of any description or justification of the rules means Exelon has failed to meet its burden of proof, it argued.

“Exelon wants to require its interconnection customers to be its transmission customers, but the commission has always recognized a distinction between the two services, and it should not allow Exelon to eliminate that distinction here through its control over interconnection services,” Constellation said. “Nor should the commission usurp a state’s authority to determine what is and is not a retail sale.”

Constellation filed affidavits with its protest from two experts: former PJM Vice President of Planning Steven Herling, and market design expert Roy Shanker.

Herling analyzed the engineering and equipment of co-located load and explained why the load is not relying on grid services.

“Protective relays prevent the load — be it data center, hydrogen electrolyzer or otherwise — from taking electricity off the grid,” he said. “Yet Exelon seeks to classify all fully isolated co-located load as network load. Basic engineering confirms that this load is not relying on the grid. Basic cost-causation principles dictate that this load should not pay for services it does not take.”

Herling said co-located loads have transformers to measure any flows between the grid, and the behind-the-fence customer can automatically trip circuit breakers if any such flows are detected. That can happen if the nuclear plant trips offline, or lower their output, unexpectedly and would “trip the load from the grid” in 0.05 seconds.

Exelon has protested an existing deal that Talen Energy wanted to expand with a data center at its Susquehanna Nuclear Plant. (See Talen Energy Deal with Data Center Leads to Cost Shifting Debate at FERC.)

The debate in the Talen proceeding led to FERC scheduling a technical conference on the issue for Nov. 1. The issues around data centers also are being taken up by state regulators, with the Virginia State Corporation Commission on Oct. 2 announcing a technical conference for December and the Maryland Public Service Commission recently holding a hearing. (See With Three Mile Island Restart, Debate Continues on Co-located Load in PJM.)

Data centers are particularly important to the modern economy, and their recent proliferation in Northern Virginia shows that only allowing them to connect through the grid can lead to significant delays, Constellation said.

While FERC has rules against generators withholding power, they can sell to any willing customer — including engaging in off-system bilateral sales.

“The commission cannot allow Exelon to exercise monopoly power or force all generators to live and die by RTO market prices,” Constellation said.

FERC has worked to correct “the excesses of transmission monopoly” through its 30 years of policies supporting open access, Constellation argued, while Exelon’s play is to quash a competitive alternative it believes threatens its bottom line. It is not just data centers; Constellation is using its LaSalle nuclear plant in Illinois to directly power hydrogen electrolyzers under the U.S. Department of Energy’s hydrogen hubs program.

The gross metering proposal would be a huge blow to that hydrogen effort, as well as to facilities such as batteries and pumped storage that withdraw more energy from the grid than they inject, Constellation said.

Other Parties Weigh in on the Issues

Exelon’s filing drew about a dozen responses from other stakeholders, with Advanced Energy United and the Solar Energy Industries Association urging the commission to either reject them or set them for hearing, so that the issues around co-location can be worked out in a general way.

“These new arrangements raise jurisdictional considerations that require a full analysis of implications based on the unique structure of the arrangement,” the organizations said. “The industry and the commission itself are still exploring the electrical, economic and legal implications of these arrangements.”

The lack of understanding around the issue could lead to unintended consequences if Exelon’s proposal were to go into effect before it is examined in a more general way such as at the technical conference next month, AEU and SEIA said.

Calpine also argued that the issue was too novel to be decided now and that Exelon’s proposal could impact industrial facilities and potentially even residential customers.

“The commission’s actions here will impact the nation’s ability to build vital data infrastructure that is critical for national security and economic development,” the company said. “This attempt to circumvent a policy discussion of national significance must be rejected.”

Old Dominion Electric Cooperative also wants to see FERC address the issues on a generic, or at least regional, basis — not ad hoc, transmission owner by transmission owner. The co-op uses behind-the-meter generation, including in Exelon’s territory, and it had urged the commission to reject the initial filing with its language about gross load because that could eliminate the longstanding netting of load it does for customers served by distributed generation.

“ODEC submits that such a piecemeal, TO-by-TO approach to these issues is inefficient and could lead to disparate treatment of co-located load and behind-the-meter generation throughout the PJM region,” the co-op said. “For [load-serving entities] like ODEC that have load in several PJM transmission zones, this disparate treatment can have real impacts on ODEC’s costs for transmission, ancillary service and PJM administrative charges, as well as ODEC’s ability to invest in generation resources and participate in demand response programs.”

Voltus, a virtual power plant provider, said that Exelon’s filings appear to be an attempt to get around FERC’s more general look at the issue with the November conference.

“Exelon provides no quantification of the size or number of facilities that are set to be built with the current tariff in effect, nor the timing of their construction,” Voltus said. “Without these details, Voltus does not understand Exelon’s need to move so expeditiously.”

Public Service Enterprise Group filed a protest arguing that Exelon’s proposal threatens New Jersey’s solar goals, saying it would harm the 90,000 BTM generation customers in its territory by making their service more expensive, and the same could be said for any qualifying facilities.

“The Exelon companies attempt to carve out from ‘all load’ BTMG, QFs and retail net metering arrangements,” PSEG said. “However, they make no effort to explain or justify why it is just and reasonable and not unduly discriminatory for co-located load to be treated differently than BTMG.”

PSEG also made the argument that while the filings claim to only apply to six Exelon utilities, they would modify general terms and conditions of PJM’s tariff, and Exelon lacks that authority. BTMG arrangements have been part of PJM’s rules for two decades, and Exelon’s proposals would threaten that activity, with the RTO’s tariff saying the load of a network customer “does not include the load served by operating” BTMG, PSEG argued.

“The central characteristic of a BTMG configuration is that it provides for the delivery of power from the generator to the co-located load ‘without using the transmission system,’” PSEG said.

The typical rooftop solar customer on PSEG’s system gets an annual bill of $59 from its service charge, but the firm estimated that under Exelon’s proposal, that would balloon to $419/year — a 700% increase. PSEG also estimated that it would impact several university campuses with BTMG by raising their network transmission charges by millions of dollars.

Exelon’s late revisions would carve out traditional BTMGs, but PSEG said that only compounds the filings’ legal flaws.

“As amended, the Exelon filings are unduly discriminatory and preferential in proposing fundamentally different treatment for BTMG arrangements, QFs and retail net metering arrangements on the one hand and co-located load arrangements on the other hand,” PSEG said.

Exelon’s proposal did win outright support from PJM’s Independent Market Monitor, who said in a filing that current proposals for co-located load would provide for “discriminatory treatment” for such customers and impose costs on other consumers.

“Such arrangements between generation owners and co-located loads are not private bilateral arrangements that can ignore the applicable requirements of the PJM” tariff, Monitoring Analytics said. “The core result for co-located load proposals is avoiding the costs assigned to transmission and distribution customers under both state and federal regulation.”

The deals would allow large co-located customers to avoid paying transmission and distribution charges, as well as any regulation by state commissions.

“The core assertion underlying such co-located arrangements, that a co-located load at a power plant can be isolated from the grid, is an illusion,” the Monitor said. “It is not possible to be off the grid. Both the power plant at which the co-located load is sited and the co-located load itself depend on the grid and cannot exist or function without the grid. In addition, the co-located load will continue to rely on the grid for a range of ancillary services including frequency control, reactive, spinning reserves, reserves in general, black start and PJM administrative functions.”