OPC asks federal regulators to reject cost proposal for keeping Baltimore-area power plants available to support data centers
BALTIMORE – Federal regulators should deny a request from Talen Energy to charge customers more than $360 million to keep the Brandon Shores and Wagner power plants online for two additional years, the Office of People’s Counsel said in a filing last week with the Federal Energy Regulatory Commission (FERC). The added costs will bring the total costs for the so-called “reliability-must-run” (RMR) arrangements for the plants to more than $1 billion over six years, nearly half of which is inflated and unlawful, OPC said.
In a separate FERC filing on the same day, OPC responded to a request from regional transmission operator, PJM Interconnection LLC., to extend the inclusion of the power plants in the PJM capacity market auctions during the two additional years sought by Talen, and to credit the resulting revenues against the cost of the RMRs. The additional period of operation of the RMR units is based on PJM’s determination that the units will be needed to maintain reliable service even after completion of the Brandon Shores Deactivation Transmission Projects, which PJM determined in 2023 would be sufficient to allow Brandon Shores to retire. OPC’s comments point out that the underlying driver of PJM’s extension request is forecasted data center energy-demand growth.
“The extension of the RMR arrangements under the current terms means more windfall profits for Talen,” said Maryland People’s Counsel David S. Lapp. “While credits from market revenues will lessen the burden on the Maryland customers who are responsible for paying for most RMR costs, all PJM customers—including Maryland customers—will still pay Talen far more than the lawfully required cost of keeping the units on-line.”
The various filings relate back to the 2023 Talen announcement of its intention to retire the Brandon Shores and Wagner power plants by June 1, 2025. The retirement notices triggered a PJM reliability analysis, which found the plants were needed to maintain electric system reliability for four years until the completion of the Brandon Shores Deactivation Transmission Projects, planned for December 2028. PJM’s new filing says the RMRs must now continue for two more years—past completion of the Brandon Shores Deactivation Projects—until the 2031 completion of other data center-driven transmission projects. PJM’s filing hints that further extensions may follow.
RMR arrangements require customers to pay the owner of RMR plants “out-of-market” costs—costs that don’t result from competitive processes. Under the Federal Power Act, those payments are supposed to be based on the actual costs of maintaining the power plants’ availability. But in 2025, FERC approved a settlement that allows Talen to be paid at least $83 million, annually, above its actual costs, as determined by FERC technical staff. OPC, along with PJM’s Independent Market Monitor, opposed the settlement and are now challenging the legality of the settlement in federal court.
Talen’s filing proposes to extend the RMRs for an additional two years under the same payment terms as the initial four years that OPC is challenging in federal court, even though most of the fixed investment costs would be entirely recovered under the initial settlement, OPC’s filing explains. As a result, the RMR payments sought by Talen for two additional years are inflated even beyond the initially inflated terms, and they must be reduced to be just and reasonable as required by law.
In the separate filing addressing PJM’s submittal, OPC supported extending the PJM capacity market treatment of the RMR arrangements for two more years as long as the continued operation of the power plants is needed to support system reliability. Such treatment is necessary to avoid customers paying twice for the power plants’ capacity: once, through the RMR charges and, a second time, through payments for capacity procured by PJM through its annual capacity market auction. But the continued need for the plants is “occasioned by the explosion in data center load growth occurring outside the BGE Zone,” OPC said. With new drivers of the RMRs, PJM must assign the RMR costs away from the BGE Zone to comply with the law, OPC added.
OPC’s submission pointed out that PJM’s filing provides few details on the RMR cost drivers and further highlights “the inadequacy of PJM’s planning structure for addressing generator deactivations.” PJM identified the transmission projects initially needed for retirement as “immediate need,” excusing them from competitive solicitation and foreclosing timely consideration of cost-effective alternatives. PJM assigned the projects to BGE and its owner Exelon, and after just about 18 months, Exelon doubled its initial cost estimates for the projects to over $1.5 billion.
“The extension of the RMRs is yet another example of the significant impacts of forecasted data center growth,” Lapp pointed out. “Now that the RMRs are needed to support data centers, PJM should be revisiting who pays for their costs.”
For more on OPC’s advocacy at FERC and PJM, including regarding data centers, visit OPC’s website.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers in 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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