Why an old PA plant will be costing customers

Electricity customers across a broad swath of the country will bear the costs of running an outdated fossil fuel power plant in Pennsylvania that federal energy regulators pulled back from the brink of retirement earlier this year.

The Federal Energy Regulatory Commission (FERC) last month approved a plan that allows PJM Interconnection to recover its payments to the plant’s owner, Constellation Energy, from electricity users across its 13-state territory.

Environmental and renewable energy advocates and stakeholders in the regional electric grid opposed the system-wide cost sharing plan, arguing that it would unfairly raise electricity bills in areas that see little benefit from the old plant remaining online. 

The groups, including the Sierra Club and Natural Resources Defense Council (NRDC), say the U.S. Department of Energy (DOE) claim of an emergency as the reason for keeping the plant online doesn’t exist. 

The agency last month extended its order requiring the plant in suburban Philadelphia and another in southwest Michigan to keep operating for a total of 180 days beyond their planned shut down dates. 

Opponents warn that it will add to soaring energy costs for consumers and prevent badly needed new electricity generators from connecting to the grid. The groups say the regulatory interventions used to keep the plant running and spread out the costs will be used in the future as U.S. Energy Secretary Chris Wright executes the administration’s fossil fuel-first energy policy.

Wright, a former oil drilling and mining company executive, has described the future of coal as “long and bright.”

“There are like 40 coal plants that are supposed to close this year, and our biggest impact is going to be to stop the closure of most of those,” Wright said in July during a visit to the National Energy Technology Laboratory in Morgantown, West Virginia.

In an MSNBC interview in June, he said peak electricity demands and growing consumption are driving the need to keep older power plants running.

The Trump administration and other Republicans, including Pennsylvania U.S. Sen. Dave McCormick have framed the continued use of coal and other fossil fuels as crucial to developing artificial intelligence technologies superior to China’s.

“We need to stop digging the hole, keep working power plants open today, and do everything we can in the regulatory framework to allow new capacity to be added to our grid so we can lead in the AI race,” Wright said in the interview.

Rachel Gleason, executive director of the Pennsylvania Coal Alliance, said fossil fuel generation remains essential to electric reliability in the commonwealth. The commonwealth’s net electricity generation decreased from 39% in 2013 to about 5% in 2023, according to the U.S. Energy Information Agency.

She noted two of the commonwealth’s remaining “workhorse” coal power plants, the Keystone Generating Station in Armstrong County and the Conemaugh Generating Station in Indiana County, each capable of producing more than 1,500 megawatts, were essential during recent spells of arctic cold and a June heatwave.

“Keeping all of the available capacity we need online rather than prematurely shuttering it will be essential for energy security, grid reliability, and mitigating price pressures that will otherwise continue to escalate for ratepayers,” she said.

Environmental groups noted in a filing opposing PJM’s cost sharing plan that while it called on Constellation’s Eddystone Generating Station in Delaware County to run during the June heatwave, it wasn’t because of a shortage of electricity. PJM exported power to other regional systems in the midwest and New York during that time.

In their protest of PJM’s cost allocation plan for Eddystone, the groups said the plant’s generators ran less than 1% of the time from 2020 to 2023.

“There is no need for this plant to continue operating,” Jessi Eidbo, senior advisor at the Sierra Club, said. “We’re waiting for a compelling reason and one is not emerging.”

The cost of keeping Eddystone online, estimated at nearly $70 million annually according to a report by the power industry consulting firm Grid Strategies, may not be noticeable when it’s spread across PJM’s 65 million customers, Greg Wannier, senior counsel at the Sierra Club, said. But prolonging the life of more gas, oil and coal plants that operators are ready to shut down will cause costs to mount, he said.

“The Trump administration has made very clear that they are going to issue an order to every coal plant that is going to retire in the next few years,” he said. “Were they allowed to do that for four years, the cost for consumers very quickly would go up.”

The Grid Strategies study projected the cost of keeping retiring power plants online to be between $3 billion and $6 billion nationwide by 2029.

Watchdog agencies in each state have warned of the potential impact on consumers.

Since the DOE issued the initial order for Eddystone, the Pennsylvania Public Utilities Commission has been involved in the stakeholder process PJM launched to determine how to allocate the cost of keeping the plant in operation, Chairman Stephen DeFrank said in a statement to the Capital-Star. He noted Pennsylvania doesn’t have an energy shortage and exports power to neighboring states.

“Our concern is making sure Pennsylvania families and businesses are not forced to shoulder the cost of power shortages in other states,” DeFrank said. “While the added expense from Eddystone may be modest right now, if this becomes a pattern with larger plants, the price tag for consumers could grow quickly — and those costs should fall more heavily on the regions that actually need the extra power.”

Michigan Attorney General Dana Nessel is challenging the DOE’s order to keep the Campbell plant running in federal court. Her office also intervened in a request by the plant’s owner, Consumers Energy Co. to recover the cost, arguing that the DOE exceeded its authority and that requiring electric utility customers to pay is unjustified.

A spokesperson for Pennsylvania Attorney General Dave Sunday didn’t respond to questions about the DOE and FERC’s actions on the Eddystone plant. The DOE also didn’t respond to the Capital-Star’s questions.

PJM said in a statement that it has documented its concerns about demand growth and power plant retirements leading to serious ramifications for reliability and affordability. It called the agency’s recent order extending the Eddystone plant’s operation, “a prudent, time-limited step.”

Constellation, which emphasizes its role in accelerating a transition to a clean energy economy, said it’s working with the DOE and PJM “to meet the need for power at this critical time when America must win the AI race.” 

Constellation and PJM did not respond to questions about the cost of keeping the Eddystone plant operational.

Wannier, the Sierra Club attorney, said because Eddystone and Campbell’s retirements were already planned, the plants were not part of the auction processes  their respective grid operators used to establish the prices for generating capacity. 

Jon Gordon, director of the electricity industry group Advanced Energy United, said that puts their owners in an advantageous position to negotiate an agreement to be ready to run when needed.

“It’s really the most expensive way to meet resource needs for ratepayers,” Gordon said.

Ready to retire

Eddystone Generating Station in Delaware County was built in the late 1950s and burned coal, initially. Standing on the Delaware River waterfront about two miles from Philadelphia International Airport, its brightly illuminated smokestacks were a landmark on the suburban skyline for decades. Its location, on the border of the city of Chester, is close to one of the poorest communities in the commonwealth.

The original coal-fired units were retired about 15 years ago, but two 380 megawatt oil- or natural gas-burning units installed in the late 1960s remain operational, along with four smaller oil burning units used only during peak demand, according to Constellation. (A single megawatt for an hour is roughly the amount of electricity used by 500 to 1,000 homes for the same amount of time.)

Constellation had planned to retire the plant at the end of May following a lengthy process in which it sought and received approval from PJM. The regional grid operator, which manages the supply of electricity across its territory from New Jersey to Illinois, determined that taking Eddystone out of service would not affect reliability of the power grid.

In an emergency order on May 30, the Energy Department used its authority under the Federal Power Act to direct PJM and Constellation to ensure that Eddystone was ready to run for 90 days beyond its retirement date. In the order, Wright cited growing concern that “available generation capacity may fall short of required reserves” in an extreme scenario.

The order cited a May 2 news release from PJM that stated despite concerns about future capacity, “adequate resources” were available to meet the grid’s demand during the summer, when electricity use peaks. During a heat wave, on July 23, the grid’s electricity load reached 160,560 megawatts, its highest since 2006.

The DOE in May also ordered PJM counterpart Mid-Continent Independent System Operator, which runs the grid for 15 states and Manitoba, to ensure that the coal-fueled J.H. Campbell Power Plant in Michigan remains available for operation for 90 days past its planned retirement.

Last month, the DOE extended the orders requiring both Eddystone and Campbell to remain ready to produce power through mid-November.

Casey Roberts, an attorney at the NRDC working to oppose the emergency orders, said it’s clear the Trump administration is using the DOE’s emergency powers to put its energy policy into effect. 

Exploding demand

On the day he was inaugurated, President Donald Trump signed an executive order titled “Unleashing American Energy” encouraging domestic energy exploration and production to establish the United States as a “global energy leader.” It called for the elimination of policies that would burden domestic energy development and revoked a dozen Biden administration orders on clean energy and climate change mitigation.

Roberts said the orders to keep Eddystone and Campbell running differ from those issued by the DOE over the previous two decades. 

Section 202(c) of the Federal Power Act gives the Department of Energy authority to order actions by electric generators or grid operators in response to sudden increased demand or shortage of electricity.

Eidbo, of the Sierra Club, noted that between 2000 and 2022, the DOE used its Section 202(c) power only a dozen times. This year it has issued seven orders, four of which relate to Eddystone and Campbell. 

The other three involve an extreme weather event in North Carolina and ongoing reliability issues in Puerto Rico. 

“Those are all really focused. They have a strong factual basis. There is a short-term emergency,” Roberts said, noting the orders for Eddystone and Campbell point to future conditions in which there could be a shortfall. “Neither of these regions have an ongoing adequacy crisis.”

Demand for electricity is growing as a result of increased electrification of transportation and industry but primarily due to the proliferation of data centers housing computer equipment to run internet streaming services, cloud computing and power artificial intelligence. 

PJM predicts that its peak demand will grow by about 70,000 megawatts to 220,000 megawatts by 2040. 

New generating capacity has been slow to come online because of a backlog of new projects waiting for PJM approval to connect to the grid.

As a result, PJM has negotiated its own deals with power plant operators to keep older plants online to meet capacity demands. In January it reached an agreement with Talen Energy to operate two Maryland oil- and natural gas-fired plants past their retirement dates. 

Gordon, of Advanced Energy United, said on-demand generation saved the day during heatwaves this summer. Gleason, the executive director of the Pennsylvania Coal Alliance, said coal fired generation more than doubled from 14.5 gigawatts to 31 gigawatts.

From the industry’s perspective, Gordon said, the concern about future capacity is a problem of PJM’s own making.

“PJM has just utterly failed in this process to get new projects online,” Gordon said.

The queue for new projects has been closed since 2022. While FERC has ordered PJM to make changes to make the process faster and more transparent, nearly 9,300 requests are pending, mostly for renewable energy sources, according to the utility information tracking website interconnection.fyi.

Electricity customers in PJM’s territory saw their electric bills spike this summer as a result of the tightening market. Gov. Josh Shapiro filed a complaint with FERC late last year claiming the higher costs were unjustified because new projects would not come online in time to meet the demand. It resulted in a settlement that capped the rate for this past summer’s auction, but prices still jumped nearly 22%.

Gordon said that’s a clear economic signal for producers to build new power plants, solar and wind farms and battery storage facilities. But the Trump administration’s energy policy, including a permitting freeze, elimination of tax credits and stop-work orders for wind projects, is getting in the way, he said.

“You have this administration striking down wind to keep these plants running,” Gordon said, “which doesn’t make a whole lot of sense.”