Tenaska companies file complaint against PJM over synchronized reserve issues

Affiliates of Tenaska Energy on Nov. 3 filed a complaint against PJM Interconnection with the Federal Energy Regulatory Commission regarding PJM’s “arbitrary and retroactive determination in October 2014 that certain categories of generating facilities were ineligible to provide (or, in PJM’s terms, were ‘deselected’ from providing) Tier 1 Synchronized Reserve beginning on October 1, 2013 and after-the-fact billing adjustments to take away the associated revenues for the period October 1, 2013-July 1, 2014.”

The complaint was filed by the Tenaska Fund I Entities and the Tenaska Fund II Entities.

  • The Tenaska Fund I Entities are: Big Sandy Peaker Plant LLC and Wolf Hills Energy LLC.
  • The Tenaska Fund II Entities are: Crete Energy Venture LLC, Lincoln Generating Facility LLC and Rolling Hills Generating LLC.

The complaint added: “PJM’s actions clearly violate the Tariff, the filed rate doctrine and the rule against retroactive ratemaking, and were unjust, unreasonable, and unduly discriminatory in contravention of the requirements of the [Federal Power Act]. The Commission should order PJM to rescind the deselections and to refrain from implementing similar measures in the future without first obtaining Commission authorization under Section 205 of the FPA.

“At a minimum, if PJM is going to be allowed to deselect entire categories retroactively, it should be required also to make the exception for individual units that can demonstrate an ability to provide Tier 1 Synchronized Reserve available retroactively, not just prospectively as it has done.”

Each of the Tenaska Fund I Entities is an exempt wholesale generator that owns or leases and operates generation facilities in the PJM market.

  • Big Sandy leases and operates an approximately 300 MW (summer rating) natural gas-fired facility located in Wayne County, West Virginia; and
  • Wolf Hills owns and operates an approximately 250 MW (summer rating) natural gas-fired facility located in Washington County, Virginia.

Each of the Tenaska Fund II Entities is an EWG that owns and operates generation facilities in the PJM market.

  • Crete owns and operates an approximately 300 MW (summer rating) natural gas-fired facility in Crete, Illinois;
  • Lincoln owns and operates an approximately 623 MW (summer rating) natural gas-fired facility in Manhattan, Illinois; and
  • Rolling Hills owns and operates an approximately 825 MW (summer rating) natural gas-fired facility in Vinton County, Ohio.

The complaint noted that through a proposed transaction which may be consummated while this complaint is pending, all of the membership interests of the Tenaska Fund II Entities would be acquired by Eastern Generation LLC, a wholly owned indirect subsidiary of ArcLight Energy Partners Fund VI LP.

Said the complaint: “As Jason Behrens, Vice President of Tenaska Capital Management LLC, explains in the affidavit provided as Attachment A hereto (the ‘Behrens Affidavit’), in early June 2015, Complainants received preliminary invoices showing billing adjustments that would deprive them of the entirety of their payments for Tier 1 Synchronized Reserve for the period October 1, 2013–July 1, 2014. Complainants learned in follow-up communications with PJM that these billing adjustments were not based on any sort of analysis of whether individual resources did or did not provide Tier 1 Synchronized Reserve. Instead, PJM simply presumed that entire categories of resources had not provided Tier 1 Synchronized Reserve, including all resources in the combustion turbine (‘CT’) class.

“As a result of the deselection of all CTs, the Tenaska Fund I and Tenaska Fund II Entities have seen negative adjustments to their invoices for Tier 1 Synchronized Reserve provided during the period October 1, 2013-July 1, 2014 totaling $1,133,139 and $734,284, respectively. In addition, their CTs remained deselected from July 1, 2014 until, as discussed below, Complainants learned of the categorical deselection of CTs and obtained prospective exceptions on June 26, 2015. Despite the CTs being deselected, the Tenaska Fund I Entities received a small amount of Tier 1 Synchronized Reserve compensation when certain of their CTs actually responded during Synchronized Reserve Events during these months. They and the Tenaska Fund II Entities were not, however, compensated during these months on any of the other occasions when the conditions for Tier 1 Synchronized Reserve compensation were met.”

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.