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FERC Approves PJM $1.25 Billion Winter Storm Elliot Settlement With Non-Performing Natural Gas, Other Electricity Generators

On December 20, the PJM Interconnection announced the Federal Energy Regulatory Commission approved a $1.25 billion Winter Storm Elliot Settlement with 81 settling parties.

The settlement results in a market-wide reduction of non-performance charge assessments from an estimated $1.8 billion to an estimated $1.25 billion

The Commission’s order concludes extensive litigation arising from the loss of more than 40,000 MW of generation during Winter Storm Elliott, circumstances that required PJM to take multiple Emergency Actions on Dec. 23–24 to preserve system reliability in the PJM region, while also helping to avoid service interruptions in neighboring regions.

PJM reported non-performance by natural gas-fired electric generation accounted for 70% of the total outages, coal 16% and the remainder were oil, nuclear, hydro, wind and solar. Read more here.

“PJM appreciates the cooperation of its Members who participated in the FERC-supervised settlement proceedings and reached this consensus-based resolution, allowing the PJM stakeholder community to focus on improvements and solutions going forward,” said Christopher O’Hara, Sr. Vice President and General Counsel.

The list of settling parties includes: Ad Hoc Committee of Certain Noteholders of Talen Energy Corp. Aurora Generation, LLC; Brunner Island, LLC; Calpine Corporation; Camden Plant Holding, L.L.C.; Clean Energy Future – Lordstown, LLC; Competitive Power Ventures Holdings, LP; CPV Power Holdings, LP18; East Kentucky Power Cooperative, Inc.; Elwood Energy LLC; Energy Harbor LLC; Essential Power OPP, LLC; Essential Power Rock Springs, LLC; H.A. Wagner LLC; Hickory Run Energy, LLC; Invenergy Nelson, LLC; Jackson Generation, LLC; Lakewood Cogeneration, L.P.; Lanyard Power Holdings, LLC; Lee County Generating Station, LLC; Lightstone Marketing LLC; Lincoln Generating Facility, LLC; LSP University Park, LLC; MC Project Company LLC; Montour, LLC; Orion Power Holdings, LLC; Parkway Generation Keys Energy Center LLC; Parkway Generation Operating LLC; Parkway Generation Sewaren Urban Renewal Entity LLC Red Oak Power, LLC; Rockford Power, LLC; Rockford Power II, LLC; South Field Energy LLC; SunEnergy 1, LLC; Talen Energy Marketing, LLC; University Park Energy, LLC.

PJM said it does not plan to provide participant-specific estimates of the reduced non-performance charges and bonus performance credits in advance of the settlement reports that will be published in the Market Settlements Reporting System shortly before the monthly billing statement is issued.

Under PJM’s Capacity Performance requirement, generators that receive payments through the PJM Capacity Market are subject to non-performance charges when they fail to perform when asked by PJM to run to maintain grid reliability.

During Winter Storm Elliott, generators that failed to perform were assessed significant performance charges. Non-performance charges paid by underperforming generators are distributed as performance payments to generators that over-perform.

PJM has an FAQ on the settlement available that describes what happens next to implement the settlement.

Click Here for a copy of the FERC order. Click Here for the Settlement Agreement.

Also visit PJM’s Winter Storm Elliot Information webpage for more background.

Related Articles - Natural Gas & Grid Reliability:

-- PJM Makes Multiple Reliability-Focused Improvements To Prepare For Winter To Deal With 70% Natural Gas, Other Generator Nonperformance In 2022 [PaEN]

-- PJM Interconnection Reports Higher Percentage Of Natural Gas-Fired Electric Generation Outages Than Originally Thought During Winter Storm Elliott - 70% [PaEN]

-- New NERC Winter Reliability Assessment Finds Elevated Risk Of Blackouts In Extreme Weather Conditions; Natural Gas Supplies Still Vulnerable To These Conditions With 'Devastating Consequences' [PaEN]

-- PJM Interconnection Formally Files Changes To Electric Capacity Market Rules With FERC Based Largely On Unreliability Of Natural Gas-Fired Power Plants During Winter Storm Elliot [PaEN]

-- Federal Energy Regulatory Commission, NERC Final Report On Winter Storm Elliott Says Legislative Action Needed To Establish Reliability Rules For Natural Gas Infrastructure [PaEN]

-- S&P Global: Federal Inquiry Finds Same 3 Causes Driving U.S. Electric Generation Outages In Extreme Cold - Reliability Of Natural Gas System Remains A Concern [PaEN]

-- Senate Hearing: Wholesale Electricity Prices Too Low To Support Coal, Natural Gas Power Plants In Market; Natural Gas Reliability Issues Will Continue [PaEN]

-- Senate Hearing On Electric Grid Reliability: Natural Gas Continues To Have Reliability Problems; Renewables Aren’t Coming Online Fast Enough; Energy Office To Be Proposed [PaEN]