FERC Opens Investigation into PJM Continuing to Pay Deactivated Power Plants for Reactive Power; Refers Behavior to Enforcement

FERC has opened a section 206 investigation into whether PJM's current tariff allows deactivated power plants to continue to receive compensation for reactive power.

FERC directed PJM to revise its tariff to provide that a generation or non-generation resource owner will no longer receive reactive power capability payments after it has deactivated its unit and to clarify the treatment of reactive power capability payments for units transferred out of a fleet, or to show cause why PJM should not be required to do so.

FERC's investigation was prompted by two instances, as well as postings on the PJM website, "that suggest PJM continues to pay generation and non-generation resources for Reactive Service after units have deactivated."

"The PJM Tariff neither explicitly states that reactive power payments will cease when a generation or non-generation resource owner has deactivated a unit such that the unit is no longer capable of providing the service, nor does the PJM Tariff explain whether and how the reactive power payments are adjusted when a unit is transferred from a fleet," FERC said.

"Paying for a service required under the Tariff where, as in the cases discussed above, the generation or non-generation resource owner is no longer capable of providing that service is unjust and unreasonable," FERC said.

"Given that some generation and non-generation resource owners apparently continued to receive payments for Reactive Service after their units were no longer capable of providing that service, we have referred such concern to the Commission’s Office of Enforcement for further examination and inquiry as may be appropriate," FERC said.