The PJM Interconnection and most other participants in settlement talks have tentatively resolved complaints over $1.8 billion in penalties for not delivering power during Winter Storm Elliott late last year, according to a Friday filing at the Federal Energy Regulatory Commission.
Details of the settlement are confidential and will be made public in a late September filing at FERC, Jeffrey Shields, PJM spokesman, said Monday.
Power plant owners facing non-performance penalties include Calpine, Energy Harbor, Invenergy and LS Power. Companies such as Constellation Energy, Public Service Enterprise Group and Vistra have asked FERC to reject the complaints and uphold the fines.
A majority of participants in settlement talks overseen by a FERC administrative law judge on Aug. 31 indicated they had reached an agreement in principle, Matthew Vlissides Jr., an agency ALJ, said. Starting in late June, 16 in-person settlement conferences were held, he said.
FERC in early June approved a request by PJM to hold the settlement talks aimed at resolving pending complaints over the non-performance penalties. PJM argued that resolving the disputes that could last years could help avoid market disruptions, defaults and bankruptcies.
At the peak of Winter Storm Elliott in late December, 24% of the PJM’s generating capacity was unexpectedly offline, with gas-fired power plants making up about 70% of the unplanned outages, the grid operator said in a mid-July report.
Heritage Power reorg plan ‘not confirmable’: PJM
In related action, PJM on Aug. 30 urged FERC to delay approving ownership changes to Heritage Power, a GenOn subsidiary that is subject to Winter Storm Elliott penalties and is seeking to reorganize in bankruptcy. Heritage Power, which owns about 2,290 MW in PJM, filed for bankruptcy in January, partly because of reduced capacity prices, lower energy margins and increased costs, according to the company.
Heritage Power and J. Aron & Co., a Goldman Sachs Group subsidiary, asked FERC to approve their application by Oct. 6. A judge for the U.S. Bankruptcy Court for the Southern District of Texas has scheduled a hearing on Oct. 4 to confirm the reorganization plan.
The reorganization plan contains “defects” and “is not confirmable” by the bankruptcy court, according to PJM. Under the plan, Heritage Power Marketing — an affiliated company and PJM member — claims to be able to assume its PJM agreements and maintain good standing with the grid operator without curing defaults arising from non-performance penalties, PJM said.
Heritage Power Marketing owes PJM $29.3 million in Winter Storm Elliott charges, according to a claim at the bankruptcy court.
“Until there is clarity as to Heritage Marketing’s assumption of its responsibilities consistent with the PJM Governing Agreement, there remain substantial questions concerning whether the transaction is in the public interest,” PJM said.
