On May 23, 2024, FERC issued an Order denying Lackawanna Energy Center LLC’s (“Lackawanna”) complaint against PJM Interconnection, L.L.C. (“PJM”) alleging that PJM failed to reimburse Lackawanna for lost opportunity costs (“LOC”) incurred following allegedly improper curtailment orders from PJM during a 2023 transmission line outage. Lackawanna argued that PJM’s curtailment of its generation output violated the Federal Power Act and the PJM Tariff, which typically allow for LOC payments when generator output is reduced due to transmission constraints or reliability issues. FERC dismissed all claims raised in the complaint.
On February 17, 2022, in Docket No. ER21-1802-000, FERC accepted a PJM proposal to disqualify generators from LOC payments if they are instructed to reduce output to prevent desynchronization caused by transmission system “stability limits” (“Stability Limits Filing”). FERC reasoned that such instructions do not result in lost opportunities for generators, since they are already motivated to adhere to stability limits to avoid equipment damage—even if they already have safety equipment installed to adhere to stability limits. As such, LOC payments for stability constraint scenarios were considered unnecessary.
In its complaint, Lackawanna contended that PJM’s withholding of LOC payments violated the Tariff and filed rate doctrine. As for the latter, Lackawanna claimed that PJM failed to properly notify Lackawanna that it was a stability-limited generator and that the FERC-approved Tariff changes were not reflected in the currently effective eTariff record or on PJM’s website. As to the former, Lackawanna argued that the “stability limitation” exemption from LOC payments is inapplicable because Lackawanna was not curtailed due to a “stability limitation.” Lackawanna also argued, among other things, that PJM’s definition of “stability limitation” is ambiguous. According to Lackawanna, the definition of “stability limitation” implies that stability limitation-related curtailments (1) be “temporary” (i.e., less than the 23 days that Lackawanna was curtailed), (2) are intended to protect generators that do not already have stability limit-related protection equipment installed, and (3) should not be utilized to mitigate system harms due to subsequent contingencies, as Lackawanna understood PJM’s intent to be.
PJM denied Lackawanna’s allegations regarding LOC eligibility and notice. PJM argued that Lackawanna’s facility was subject to stability limitations during the relevant time period, and such limitations were imposed to ensure system integrity and prevent damage to generating facilities. With regard to defining “stability limitation,” PJM denied that its ambiguity and argued that, regardless, the Tariff clearly states that “[a] Market Seller of a unit . . . that is reduced using a generator output constraint to honor a stability limitation is not eligible for credits . . . .” Further, PJM contended that the February 17 Order approved this language when it determined that there is no lost opportunity when units are backed down for stability limitations.
In the May 23 Order, FERC dismissed Lackawanna’s complaint. FERC found that the PJM Tariff does not provide for LOC payments where generator output is reduced to honor a stability limitation. FERC also rejected Lackawanna’s arguments regarding notice and the definition of “stability limitation,” finding that PJM’s actions were consistent with the Tariff. FERC found that, among others, (a) the 23-day outage was temporary, as neither the Tariff nor the Stability Limits Filing caps the number of days a generator may be curtailed due to stability limits, (b) the definition does not include an exemption for generation owners that have installed equipment to protect against transient instability, and (c) the 23-day outage was not a contingency, as the outage was not unexpected. FERC thus concluded that the Tariff provision preventing LOC payments for stability limitations is just and reasonable. Finally, FERC rejected Lackawanna’s filed rate doctrine argument, noting that, notwithstanding that the relevant language was missing from FERC’s eTariff system (due to overlapping PJM filings that inadvertently revived previously approved language), the February 17 Order accepting PJM’s Stability Limits Filing still stands. Nonetheless, the May 23 Order went on to direct PJM to submit a compliance filing within thirty days to restore the language in the Tariff providing that stability-limited generators are not eligible for LOC payments, thereby ensuring that the rate on file is accurately reflected in eTariff.
A copy of FERC’s Order, issued in Docket No. EL24-64-000, can be found here.
