FERC Approves Winter Storm Elliott Settlement Agreement

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The Federal Energy Regulatory Commission approved an uncontested, comprehensive settlement package that resolves all complaints regarding non-performance charges arising from Winter Storm Elliott in December 2022. The approved settlement resulted from expedited talks requested by PJM in order to swiftly resolve the complaints.

At its Dec. 19 Open Meeting, the Commission approved (PDF) the settlement package between PJM and 81 other settling parties regarding non-performance charges assessed by PJM during Winter Storm Elliott. “The order approves the settlement as fair, reasonable and in the public interest,” FERC stated in its summary of the order.

The Commission also found that “the sole entity filing comments opposing the settlement is not a party to the proceedings and that the settlement is therefore uncontested.”

PJM has posted an FAQ (PDF) that explains some of the anticipated next steps and milestones regarding implementation of the now-approved settlement package.  Additional information can be found on the Winter Storm Elliott Information page.

The Commission’s order concludes extensive litigation arising from the loss of more than 40,000 MW of generation during Winter Storm Elliott, circumstances that required PJM to take multiple Emergency Actions on Dec. 23–24 to preserve system reliability in the PJM region, while also helping to avoid service interruptions in neighboring regions.

“PJM appreciates the cooperation of its Members who participated in the FERC-supervised settlement proceedings and reached this consensus-based resolution, allowing the PJM stakeholder community to focus on improvements and solutions going forward,” said Christopher O’Hara, Sr. Vice President and General Counsel.

Under PJM’s Capacity Performance requirement, generators that receive payments through the PJM Capacity Market are subject to non-performance charges when they fail to perform when asked by PJM to run to maintain grid reliability. During Winter Storm Elliott, generators that failed to perform were assessed significant performance charges. Non-performance charges paid by underperforming generators are distributed as performance payments to generators that over-perform. Overwhelmingly supported by all parties, the settlement results in a market-wide reduction of non-performance charge assessments from an estimated $1.8 billion to an estimated $1.25 billion, which in turn trim performance payments.