Fossil fuel plant owner failed to justify $774 million in proposed costs, federal agency says in ruling on OPC protest
BALTIMORE – The Federal Energy Regulatory Commission this week agreed with the Office of People’s Counsel that the owners of the Brandon Shores and H.A. Wagner coal- and oil-fired plants near Baltimore have failed to demonstrate that their plan to place more than $774 million in costs into customer rates complies with federal law.
FERC said the power plants—subsidiaries of Talen Energy Corporation—failed to demonstrate that the cost recovery plan met the “just and reasonable” legal standard and that the resulting rates “may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful.” FERC’s order responded to a May 16, 2024, filing of OPC, joined by Southern Maryland Electric Cooperative. The Maryland Public Service Commission filed a separate protest.
FERC’s decision relates to the Talen subsidiaries’ notifications last year to the regional market operator, PJM, that effective June 1, 2025, both plants would be retired. That notification triggered a PJM review as to whether the plants were needed for system reliability. PJM’s determination that the plant is needed for reliability allowed the Talen subsidiaries to propose a plan to recover its costs through a FERC-approved “cost-based” rate rather than through the competitive market.
Talen’s proposal would have the power plants continue operating until the transmission line solution to the PJM-identified reliability impacts is complete and operational. OPC challenged the transmission project as deficient, but FERC denied OPC’s challenge. While PJM predicts that the new transmission will be complete by the end of 2028, the time period could be longer, in which case the costs of continuing to operate the power plants could be even higher. Under the cost-based recovery that the Talen subsidiaries propose to keep the plant running, customers would pay $215 million per year while the transmission solution is being built. BGE customers would pay about 75 percent of those costs, with much of the remainder paid for by other Maryland utility customers.
In this week’s order, FERC concluded that OPC raised issues regarding the proposed cost recovery to keep the power plants available that were important enough to be addressed at an evidentiary hearing.
“FERC’s decision vindicates our concerns that Talen failed to show that its proposal is fair to customers and that a thorough analysis is needed before imposing these extraordinary costs on customers,” said Maryland People’s Counsel David S. Lapp. “We look forward to demonstrating the unreasonableness of Talen’s proposed cost recovery as the case moves forward.”
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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