posted on Friday, December 21, 2007 11:10 AM by Tracy Davis

No Free Pass for Absconding Duquesne Light, Say PJM and Capacity Suppliers

In December 4, 2007 pleadings to FERC, PJM Interconnection and several PJM member utilities and power suppliers did not oppose Duquesne Light's right to exit PJM’s organized market, but did ask the agency to impose conditions on Duquesne’s withdrawal.  Among those conditions, they asked that Duquesne be required to hold other PJM participants harmless and satisfy all of its PJM contractual agreements, including its existing forward capacity obligations. 

Rising capacity costs were one of the primary reasons Duquesne sought to leave PJM in the first place.  Duquesne applied to FERC in early November for approval to leave PJM and to join the Midwest Independent Transmission System Operator (MISO).  In its filing, Duquesne explained that PJM's reliability pricing model (RPM) has drastically increased its capacity costs—from the $1-$5/MW-day range to over $100/MW-day.  Duquesne also asked that FERC confirm that the utility will not be liable for any RPM-related costs for deliveries that occur after it leaves PJM.

In its December 4 response, PJM argued that Duquesne should be required to “uphold the commitment and obligations it has assumed and [ensure] that other parties do not unfairly shoulder the cost of those obligations.”  PJM also laid blame on Duquesne itself for the Western Pennsylvania utility's unhappiness with the new capacity market, suggesting that Duquesne had relied solely on PJM's capacity auction instead of contracting bilaterally for other sources of capacity.  The Pennsylvania Office of Consumer Advocate asked FERC to ensure that Duquesne's departure does not injure other PJM load servers.  Others, including several PJM capacity suppliers, attacked Duquesne's filing as inadequately supported to justify the drastic measure of leaving PJM.