Talen Energy Defends Interconnection Agreement for Amazon Data Center

A protest at the Federal Energy Regulatory Commission by American Electric Power and Exelon to an interconnection service agreement that would facilitate providing power directly from a nuclear power plant to an Amazon data center is a “misguided attempt to stifle this innovation,” Talen Energy said on Thursday (June 27).

Talen in March said it had agreed to sell a planned data center campus in Pennsylvania to Amazon.com’s cloud computing unit, Amazon Web Services, for $650 million. Talen intends to sell power to AWS from its 2,228 MW stake in the nearby Susquehanna nuclear power plant.

To facilitate the sale of power to the co-located data center, the PJM Interconnection earlier this month asked FERC to approve an amended interconnection service agreement, or ISA, among the grid operator, Susquehanna Nuclear and PPL Electric Utilities.

AEP and Exelon – on behalf of their utilities – on Monday challenged the ISA, in part because they claim it could cause an up to $140 million annual shift in transmission costs onto PJM ratepayers.

The facts in the utility companies’ protest are wrong and the legal positions in it are “demonstrably infirm,” Talen said. “Nearly all the issues raised by Exelon and AEP are not subject to FERC oversight, because transmission is not implicated.”

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PPL, a regulated utility, agrees that Talen has the right to sell power directly to AWS and signed an ISA amendment that gives PPL reliability assurances, Talen said. PJM also agrees the ISA is appropriate, according to the Houston-based independent power producer.

“We will move with dispatch to resolve this matter quickly at FERC,” Talen said.

It doesn’t appear that the protest by AEP and Exelon poses a significant risk to the ISA, according to ClearView Energy Partners. “Therefore, we also do not think this protest will halt the growing interest in data centers to co-locate with generation facilities,” the research firm said in a note to its clients on Thursday.

The AEP and Exelon claims about potential cost shifts from the ISA arrangement appear to be mainly based on whether power from PJM’s market would ever serve as “backup” power if the Susquehanna plant couldn’t deliver electricity to the data center, ClearView analysts said.

“The ISA suggests this would not happen,” they said. “Consequently, we are skeptical the commission would reject the filing, or that FERC would necessarily grant the request for a full-blown administrative hearing.”

This article originally appeared in Utility Dive.