AEP gets deadline waiver for self-supply decision

OREANDA-NEWS. Utility holding company American Electric Power (AEP) will have another month to decide if it will use 13,000MW of its own capacity to supply four utilities in the PJM Interconnection under a deadline extension federal regulators approved last week.

AEP requested the extension because of uncertainty about whether capacity those utilities use for self-supply could incur new penalties under reforms PJM has proposed for its capacity market. AEP affiliates Appalachian Power, Kentucky Power, Wheeling Power and Indiana Michigan Power have historically opted out of PJM's capacity market and instead relied on their own vertically integrated generation.

The utility company without the extension would have been required to notify PJM if that capacity would be used for self-supply by an 11 March deadline, about two months before the start of the grid's next forward capacity auction.

But AEP said it was unreasonable to expect that it could make that decision without knowing if the Federal Energy Regulatory Commission (FERC) would approve PJM's proposed market reforms that would create new financial penalties for capacity non-performance.

PJM procures systemwide capacity obligations through an auction, three years in advance of an annual planning period. The major change proposed by PJM involves a so-called "no excuses" approach that applies to all capacity, including self-supply capacity, meaning that generating resources that fail to come on line when dispatched face severe penalties.

FERC on 27 February waived the upcoming notification deadline for AEP but said the company would have to decide whether to opt out by 10 April at the latest. The commission said giving the company an open deadline could have left other groups without enough time to prepare for the auction.