The Federal Energy Regulatory Commission on Nov. 1 rejected an amended Interconnection Service Agreement among PJM, Susquehanna Nuclear LLC and PPL Electric Utilities tied to data center in Pennsylvania.
The Amended ISA calls for modifying an existing ISA to increase the amount of co-located load from 300 megawatts to 480 MW and to make revisions related to the treatment of this co-located load.
The Amended ISA relates to Susquehanna’s 2,520 MW nuclear generating facility located in Luzerne County, Pennsylvania, which consists of two 1,260 MW units interconnected to the PJM transmission system. PJM filed, and the Commission accepted, the first ISA for Susquehanna and PPL in 2015.
Earlier this year, Talen Energy announced that it had entered into a $650 million agreement with Amazon Web Services for the sale of a data center campus to AWS that will be powered by the Susquehanna nuclear power plant.
In its order, FERC said that PJM “has not demonstrated that the proposed non-conforming provisions in the amended ISA are necessary deviations from” FERC’s pro forma ISA due to specific reliability concerns, novel legal issues, or other unique factors. “Accordingly, we reject the Amended ISA.”
In accordance with FERC Order No. 2003, the Commission requires interconnection agreements that do not conform to the transmission provider’s pro forma interconnection agreement to be filed with the Commission, it noted.
The Commission analyzes such non-conforming filings to ensure that operational or other reasons make a non-conforming agreement necessary.
FERC has recognized that non-conforming interconnection agreements may be necessary in a small number of extraordinary circumstances.
“The Commission recognizes that non-conforming agreements may be necessary for interconnections with specific reliability concerns, novel legal issues, or other unique factors,” it said.
“Thus, a transmission provider seeking a case-specific deviation from its pro forma interconnection agreement bears a high burden to justify and explain that its changes are not merely ‘consistent with or superior to’ the pro forma agreement, but are necessary changes.”
FERC found that PJM has failed to meet the high burden to demonstrate the non-conforming provisions are necessary.
“For example, PJM insists that the proposed amendments were developed to address the circumstances of this particular interconnection and that approval could thus be limited to these circumstances,” FERC said.
“However, significant aspects of the proposed non-conforming provisions rely heavily on a generally applicable document, the PJM Guidance Document. This raises questions regarding whether PJM intends to offer these terms to all similarly situated interconnection customers.”
FERC concluded that these provisions demonstrate that PJM “has not met its burden to show that these provisions are necessary for any interest unique to the interconnection of the Susquehanna Customer Facility. Indeed, the record indicates that other parties are interested in pursuing similar arrangements wherein a large load co-locates with an existing generator. Therefore, we find that the proposed non-conforming provisions that mirror provisions that PJM has included in the PJM Guidance Document, do not meet the requisite standard.”
FERC Chairman Dissents
FERC Chairman Willie Phillips dissented from the order “because it is a step backward for both electric reliability and national security.”
The amended Interconnection Service Agreement among PJM, Susquehanna Nuclear, LLC and PPL, “represents a ‘first of its kind’ co-located load configuration that presents precisely the sort of specific reliability concerns, novel legal issues, and other unique factors that should have justified the filing of a non-conforming interconnection agreement,” he wrote in his dissent.
“I would have accepted the Amended ISA and also required PJM to submit regular informational filings to provide transparency into the arrangement’s operations over time, including certain of the issues in dispute, such as back-up service,” he said.
“That approach would also have allowed PJM to go through a further stakeholder process for tariff revisions and decide on generic next steps regarding these important issues in the months ahead. In failing to accept the agreement, we are rejecting protections that the interconnected transmission owner says will enhance reliability while also creating unnecessary roadblocks to an industry that is necessary for our national security,” wrote Phillips.
Electric reliability “is the Commission’s job number one. And I believe that PJM addressed those issues comprehensively in its filing.”
He said that PJM supports its application with a detailed analysis of the reliability implications of adding an incremental 180 MW on top of the already-allowed-for 300 MW, and concludes that up to 480 MW, no transmission upgrades are required.
“In addition, the application adds several important, reliability-based belts and suspenders. Those include installing a protection scheme to ensure that the Co-Located Load separates in the event of loss of generation output to ensure no power flows from transmission facilities to the Co-Located Load, providing certain generator shutdown and automatic tripping data to PPL, and notifying PJM and PPL in the event of any equipment malfunction,” Phillips wrote.
“In short, I believe that these measures would have improved the reliability picture while also not prejudging future filings or foreclosing Commission flexibility in the future.”
Phillips also said that the order also creates a national security risk.
“There is a clear, bipartisan consensus that maintaining U.S. leadership in Artificial Intelligence (AI) is necessary to maintaining our national security. Maintaining our nation’s leadership in this ‘era-defining’ technology will require a massive and unprecedented investment in the data centers necessary to develop and operate those AI models. And make no mistake: access to reliable electricity is the lifeblood of those data centers. I am deeply concerned that in failing to demonstrate regulatory leadership and flexibility we are putting at risk our country’s pole position on this critically important issue. That is simply unacceptable,” he said.
“I do not mean to suggest that these issues are easy. To the contrary, they are complex and require us to wrestle with a host of challenging, multifaceted issues,” he wrote, noting that FERC held a technical conference on Nov. 1 “to build a record on how the Commission should address similar issues going forward.”
But the technical conference “casts a far wider net than the matter that is before us today and was never intended to defer judgment on this application, which I believe has thoughtfully and creatively addressed the factors that justify approval of these non-conforming provisions.”
Phillips said that at the end of the day, he is concerned that the arguments the Commission relies on to reject the Amended ISA “lead it to miss the forest for the trees. We are on the cusp of a new phase in the energy transition, one that is characterized as much by soaring energy demand, due in large part to AI, as it is by rapid changes in the resource mix.”
Ensuring reliable and affordable supplies of electricity “throughout the coming period of increasing demand and changing supply will require pragmatic leadership that facilitates that transition. If we instead throw up roadblocks to that transition, as I am concerned today’s order does, we will only deprive our country of the resources needed to ensure our continued economic prosperity and national security.”
Commissioner Christie Concurrence
“I join this order because PJM has failed to meet its burden of proof on this record. I emphasize that PJM’s filing is rejected without prejudice,” wrote FERC Commissioner Mark Christie in a concurrence.
“Speaking for myself, I have an open mind about the many serious issues pertinent not just to this particular proposal, but also to the issues that may be relevant to other co-location proposals. The specific co-location arrangement proposed here may make sense and be acceptable under the Federal Power Act, but on this record that claim simply has not been proven.”
He said he was concurring to make a number of points.
First, co-location arrangements of the type “presented here present an array of complicated, nuanced and multifaceted issues, which collectively could have huge ramifications for both grid reliability and consumer costs,” he said.
“Indeed, this Commission has already acknowledged the importance and complexities of these issues, which is why we held a technical conference to explore them. That technical conference was timely and necessary, as these co-location arrangements are a fairly new phenomenon that entails huge ramifications for grid reliability and consumer costs. Given these ramifications, the Commission truly needs to ‘get it right’ when it comes to evaluating co-location issues,” he said.
He said that were FERC to approve the proposal at this time, “we would be setting a precedent that would be used to justify identical or similar arrangements in future cases.”
Talen Energy Responds
In response to the order, Talen Energy said it believes FERC erred “and we are evaluating our options, with a focus on commercial solutions. We believe this ISA amendment is just and reasonable and in the best interest of consumers. FERC’s decision will have a chilling effect on economic development in states such as Pennsylvania, Ohio, and New Jersey.”
It noted that the existing ISA allows for 300 megawatts of co-located load at Susquehanna, and development of the first phases of the Amazon Web Services data center campus can proceed using those 300 megawatts while Talen continues to pursue approval of the amended ISA.
“Contrary to the Commission’s ruling, Talen’s co-location arrangement with AWS is part of the solution to issues raised on November 1 at the FERC technical conference on large co-located load,” Talen Energy said.
“It brings service to the customer quickly and without expensive transmission upgrades necessary to serve large-load demand. But our direct-connect configuration is just one of several commercial solutions to the demand of large loads, and we are exploring other solutions as we move forward.”
The data center economy “will require an all-of-the-above approach to satisfy the increased demand, including co-location such as Talen’s arrangement with AWS, hybrids that co-locate primary power behind the meter while using grid power for back-up, and front-of-the-meter connections to utility transmission. Talen looks forward to the continued dialogue.”
