FERC okays NRG Midwest request related to Avon Lake 7 coal unit retirement

The members of the Federal Energy Regulatory Commission on June 16 approved an April 18 filing by NRG Power Midwest LP of its FERC Rate Schedule No. 2 (Revised Reactive Rate Schedule). 

NRG Midwest, part of NRG Energy (NYSE: NRG), sought to adjust its revenue requirement for reactive supply and voltage control service (Reactive Service) to reflect the deactivation of the coal-fired Unit 7 at the Avon Lake facility in Ohio, for which it receives Reactive Service compensation. NRG Midwest also requested a one-time waiver of the 90-day prior notice requirement set forth in Schedule 2 of the PJM OATT to facilitate the deactivation of Avon Lake Unit 7, which was scheduled for April 16, 2016.

Said the June 16 FERC order: “In this order, we accept the Revised Reactive Rate Schedule for filing, to become effective April 16, 2016, as requested, direct NRG Midwest to repay PJM any payments, with interest, NRG Midwest received for providing Reactive Service from Avon Lake Unit 7 on or after April 16, 2016, as discussed below, and grant the Waiver Request. We also institute a proceeding pursuant to section 206 of the FPA in Docket No. EL16-72-000 regarding the justness and reasonableness of NRG Midwest’s reactive power rate for its fleet in the American Transmission Systems, Incorporated (ATSI) Zone of PJM, establish a refund effective date, and establish hearing and settlement judge procedures.”

Schedule 2 of the PJM OATT, which covers Reactive Service, provides that PJM will compensate owners of generation and non-generation resources for maintaining the capability to provide reactive power to PJM. Schedule 2 requires that at least 90 days before deactivating or transferring a resource receiving compensation for reactive supply and voltage support, the resource owner either: submit a filing to terminate or adjust its cost-based rate schedule to account for the deactivated or transferred unit; or submit an informational filing explaining the basis for the decision by the Reactive Service supplier not to terminate or revise its cost-based rate schedule.

NRG Midwest stated that it currently owns and operates the following generation facilities: Niles, Avon Lake (Units 7, 9, and 10), and New Castle (Units 3, 4, and 5, as well as two additional diesel-fired generators) (collectively called the “NRG Midwest Units”). NRG Midwest noted that the NRG Midwest Units have a combined generation capacity of approximately 1,106 MW.

NRG Midwest asserted that, on Dec. 1, 2015, it provided notice to PJM of its intent to deactivate Avon Lake Unit 7, effective April 16, 2016, due to modifications that would be required to comply with the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards. NRG Midwest explained that the notice also indicated that NRG Midwest intends to convert Unit 7 from an electric generating unit to an auxiliary boiler for Avon Lake Unit 9 start-up.

NRG Midwest stated that, by letter dated Dec. 30, 2015, PJM Interconnection notified NRG Midwest that Avon Lake Unit 7 would not be needed for system reliability past its deactivation date. NRG Midwest stated that if the retroactive effective date it requests is granted, and to the extent PJM has paid revenue to NRG Midwest, it will refund to PJM the revenue amount associated with Avon Lake Unit 7 together with interest calculated in accordance with Section 35.19a of the commission’s regulations or adopt PJM’s preferred refund method to account for any overpayment.

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.