EPSA supports Calpine effort to be compensated for unused gas

The Electric Power Supply Association (EPSA) on Dec. 17 filed comments with the Federal Energy Regulatory Commission in support of a Nov. 12 request by Calpine Energy Services LP (CES) for a one-time, limited waiver of certain provisions of the PJM Interconnection Open Access Transmission Tariff related to a buy of natural gas in an emergency situation that was never used.

CES requested this limited waiver to allow it to be reimbursed for fuel losses that were incurred by CES as a result of PJM’s designation of two generation facilities owned and operated by CES’ affiliates as needed for PJM Conservative Operations during last winter’s polar vortex, and PJM’s subsequent decision not to dispatch those units.

“As explained by CES, the company acted in good faith to procure natural gas to ensure that the designated generation facilities were able to comply with the PJM dispatch instructions,” wrote EPSA. “Due to PJM’s cancellation of the scheduled generation in the late evening of Sunday, January 26, 2014, CES was unable to resell the gas it had purchased and was instead forced to park the gas on interstate natural gas pipelines, which resulted in a loss of over $3.3 million to CES. EPSA urges the Commission to grant the CES Waiver Request to ensure that CES is not penalized for its good faith efforts to comply with PJM’s dispatch instructions in the interest of system reliability. As detailed in the Waiver Request, CES satisfies the Commission’s standards for granting a waiver, and in doing so, the Commission would send a broader message to generators that they will be permitted to recover legitimate, verifiable costs for their efforts to help ISOs/RTOs maintain reliability.”

EPSA added: “EPSA has previously commented in support of compensating a generator for its costs incurred in responding to a PJM dispatch instruction, and reiterates its position in supporting the CES Waiver Request. When a generator is directed by an ISO/RTO to prepare its units to run, and the generator complies with the directive, the generator should be permitted to recover its prudently incurred, legitimate costs. In this instance, CES complied with the RTO direction to be available to run for two units designated as needed for Conservative Operations, and this was undertaken during a period in which other significant reliability-related alerts, warnings, actions and general operating constraints and conditions were in place for PJM, as well as the natural gas pipelines located in the PJM region, including the pipelines on which CES has parking agreements.

“EPSA also notes that the current misalignment of the electric and natural gas markets from a scheduling and procurement standpoint, and the potential effect on electric reliability – particularly in an extreme weather scenario – is highlighted by the CES Waiver Request. While EPSA recognizes there is a pending [notice of proposed rulemaking] and related proceedings to consider the electric and gas scheduling issues, the CES Waiver Request demonstrates the difficulties faced by generators in making commitments across these markets and timelines, and the need for the Commission to ensure meaningful improvements are achieved.”

The two plants involved in this matter are: the Hay Road Energy Center, a 1,130-MW facility located in Wilmington, Delaware; and the Bethlehem Energy Center, a 1,130-MW facility in Bethlehem, Pennsylvania.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.