AEP, Exelon ask FERC to scrutinize Amazon/Talen data center deal

AEP and Exelon argue in a June filing with FERC that the interconnection service agreement (ISA) filed between PJM and plant operator Susquehanna Nuclear would allow the data center to derive benefits from the transmission system without paying for them.

But Talen is fighting back in its effort to proceed with its $650 million data center campus sale to Amazon Web Services, announced in March.

“The rapid emergence of artificial intelligence and data centers has fundamentally changed the demand for power and leads to an inflection point for the power industry. Talen’s co-location arrangement with AWS brings one solution to this new demand, on a timeline that serves the customer quickly,” the Texas-based company said in a statement.

A closer look: AWS is looking to develop around 15 data centers in a 1,600-acre site adjacent to the Susquehanna plant. The company has minimum contractual power commitments with Talen at the site that ramp up in 120-MW increments over several years, with a cap at 480 MW. The cloud provider also has two 10-year extension options tied to nuclear license renewals and a 10-year power purchase agreement from the Susquehanna site, in Berwick, Pa.

To facilitate the sale, the PJM Interconnection asked FERC last month to amend Susquehanna’s behind-the-meter configuration from 300 MW to 480 MW. Under the agreement, data center energy would not be classified as network load and would be exempt from transmission fees.

AEP/Exelon argues: The arrangement in question is an “end run around the PJM stakeholder process” and the cost shift from this arrangement could be as high as $140 million per year. Their filing asks FERC to either hold a hearing on the matter or reject the ISA.

“It is apparent that this unsupported filing has huge financial consequences that should not be imposed on ratepayers without sufficient process to determine and evaluate what is really going on,” the companies said in their filing. “Because there is no precedent for this type of ISA, it is not unreasonable to believe the industry may take guidance from the outcoming of this proceeding, which reinforces the need for the result here to be both legally and factually sound.”

“The co-located load should not be allowed to operate as a free rider, making use of, and receiving the benefits of, a transmission system paid for by transmission ratepayers,” the filing adds. “We have no objection to co-location, per se, but such load should pay its fair share of system use and other charges, just like other loads and customers.”

Talen argues: The filing from AEP and Exelon is “an unlawful attempt to hijack this limited interconnection service agreement amendment proceeding that they have no stake in and turn it into an ad hoc national referendum on the future of data center load,” Talen rebutted in its FERC filing.

“[AEP/Exelon’s] factual recitations in the protest are demonstrably false. The legal positions are demonstrably infirm. And nearly all the issues raised by Exelon and AEP are not subject to FERC oversight, because transmission is not implicated,” Talen added in a statement.

About Susquehanna: Texas-based Talen is the majority (90 percent) owner and operator of the Susquehanna plant through its subsidiary, Susquehanna Nuclear. Allegheny Electric owns the other 10 percent.

The plant’s two General Electric 1,257 MW boiling water reactors began operation in 1983. Unit 1 is licensed to operate until 2042 and Unit 2 until 2044.

Susquehanna Nuclear officials said delaying the project with AWS through a FERC hearing process would “have an unmistakable chilling effect on future development and generator retention.”

About PJM: PJM is the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia.