Power plant owner seeks windfall from Maryland customers for continued operations, OPC tells federal agency
BALTIMORE – A generation company’s proposal would saddle Baltimore Gas and Electric customers with hundreds of millions in excess costs to keep fossil-fueled power plants running while new transmission lines are built, the Office of People’s Counsel said in a protest filed today at the Federal Energy Regulatory Commission. FERC should reject the proposal of Talen—the owner of the Brandon Shores and Wagner coal- and oil-powered electric generation plants near Baltimore—because it violates FERC precedent and would lead to unjust and unreasonable rates, OPC’s filing said.
“Talen’s proposal would give it an undue windfall for the continued operation of old and polluting fossil-fueled electric power plants,” said Maryland People’s Counsel David Lapp. “These plants have profited from participating in the competitive power market for decades, but now Talen wants to be paid for old, sunk investments as though the plants had never participated in the market. Its proposal is fundamentally unfair to customers and must be rejected.”
Talen’s proposed cost recovery—subject to FERC’s approval—relates to its notifications last year to PJM, the regional market operator, that it intends to retire the power plants on June 1, 2025. That notice caused PJM to conduct a reliability analysis that determined whether the plants—totaling about 2,000 megawatts, a substantial portion of Maryland’s electric power generation—are needed to maintain electric system reliability.
PJM’s solution to the reliability issue is a new transmission project to cost about $800 million, to be paid for primarily by Baltimore Gas and Electric customers. OPC previously challenged PJM’s transmission solution for not being competitively procured and for failing to consider the availability of less costly alternatives. That challenge was unsuccessful.
Because the new transmission lines will take several years to complete, PJM asked Talen to keep the power plants running in the interim until the construction of new transmission is complete. Talen’s filing that OPC is protesting represents Talen’s proposed rates—totaling about $215 million per year—for keeping the plants running while the new transmission is being built.
Most of the costs—74 percent—to keep the plants operational will fall to BGE customers, while 7 percent will be borne by Maryland customers of Pepco and Southern Maryland Electric Cooperative, with lesser amounts to other Maryland electric utility customers.
Granting Talen its requested compensation would damage the structure and design of the competitive electric power market, OPC’s filing pointed out. The excessive compensation Talen seeks would incentivize other power companies to prematurely retire and similarly benefit by recovering from captive utility customers sunk costs that were long ago written off as unrecoverable, OPC said.
“Talen would condition electric system reliability on its being paid for investments made long ago that it had no expectation to recoup,” Lapp said. “Talen can be fully compensated for remaining in service without receiving windfall profits.”
OPC’s filing was joined by Southern Maryland Electric Cooperative. The Maryland Public Service Commission filed its own protest of the Talen filing.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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