FERC to Oversee Winter Storm Elliott Settlement Talks
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The PJM Interconnection has imposed a whopping $1.8 billion in penalties against power generators that underperformed during Winter Storm Elliott in December 2022. This action resulted in complaints from 13 of these companies, aimed at trying to overturn or at least reduce the fines. Now, the Federal Energy Regulatory Commission (FERC) has been brought in to help negotiate a swift resolution.
Why PJM Claims Power Generators Underperformed During Winter Storm Elliott
PJM is not happy that nearly 25% of its capacity was inoperable at times during Winter Storm Elliott. But the companies on the receiving end, including Calpine, Energy Harbor, Invenergy, and LS Power, disagree. They claim that the loss of capacity was at least partially PJM’s fault due to poor forecasting as well as exports to other regions.
As you can probably guess, both sides have dug in their heels, and in fact it is likely that both sides have culpability. Therefore, what we’re looking at is a stalemate that could last for years. This is why the FERC was brought in to help, in the hopes that a settlement can be reached quickly to avoid a lengthy back and forth litigation scenario.
And, based on the timeline, it certainly seems like the resolution could be negotiated sooner rather than later. The parties have 60 days to reach an agreement, a timeframe that could be extended by an additional 30 days as long as the discussions prove fruitful. This would mean that the target resolution date is either early August or September 2023.
I’ll be watching this one closely because I think the broader implications are huge. Power companies, be it generators, distributors or utilities, can only do so much in terms of emergency preparedness and storm recovery. While I don’t know the full scope of the details related to Winter Storm Elliott, close to $2 billion worth of penalties seems excessive and would set a bad precedent in the future. Let’s hope the parties can agree on something a bit more reasonable.
