Exelon Corp. and American Electric Power Co. Inc. protested PPL Corp.'s interconnection service agreement with Talen Energy Corp.'s Susquehanna Nuclear facility, saying the colocation of an Amazon.com Inc. datacenter campus at the nuclear plant site would harm reliability and raise other customers' rates.
The utility companies, on behalf of their subsidiaries operating in the PJM Interconnection LLC, told the Federal Energy Regulatory Commission on June 24 (ER24-2172) that the proposed 480 MW of colocated load would likely still need to draw from broad PJM transmission system "in response to small adjustments in electric demand." Any backup generation needs during outages would also require siphoning off capacity that PJM depends on until a "'replacement capacity' arrangement" could be implemented, they said.
"Should large quantities of load rush to co-locate with generation on terms that bear even a resemblance to the [interconnection service agreement] at issue here, PJM capacity markets will have steadily decreasing volume as the capacity resources flee to serve load that uses and benefits from — but does not pay for — the transmission system and the ancillary services that keep the system running," the filing noted.
If the agreement stands, ratepaying customers would bear another $58 million to $140 million per year in transmission system costs, according to AEP and Exelon.
"We have no objection to co-location per se, but such load should pay its fair share of system use and other charges, just like other loads and customers," they said.
The utility companies asked FERC to either conduct a hearing or reject the agreement because "it is not unreasonable to believe the industry may take guidance from the outcome of this proceeding."
Talen responded on June 27 that "nearly all the issues raised by Exelon and AEP are not subject to FERC oversight, because transmission is not implicated," and that PJM "itself filed the application for FERC approval."
Since Talen sold the datacenter campus to Amazon Web Services Inc. for $650 million, other independent power producers operating multi-unit nuclear plants have begun considering similar colocation deals, with generation assets totaling nearly 22 GW poised to take advantage of soaring electricity demand.
Analysts at Guggenheim told clients June 26 that the filing is not an "insurmountable risk" given the datacenter build-out's enormous demand for power and "the potential attractiveness of zero carbon interconnections."
BMO analysts wrote that "the protest could present ... in the worst case incremental economic cost risk to current and future potential colocation transactions impacting [Talen], [Constellation Energy Corp.], [Public Service Enterprise Group Inc.] and [Vistra Corp.]"
As for FERC, "we think the agency has limited power to actually block the transaction," Rob Rains, senior energy analyst with independent research firm Washington Analysis, told clients.
