FERC Denies Reliant Complaint on PJM Unit Payments

WASHINGTON -- - The Federal Energy Regulatory Commission has rejected a complaint by a unit of Reliant Resources Inc. alleging that the Northeast's power grid operator, PJM, failed to fairly compensate plant owners for their costs.

Reliant had asked FERC to require the PJM Interconnection LLC to revise the way it calculates how much plant owners can charge when the grid operator requires it to rein back output to relieve grid congestion.

Houston-based Reliant complained that it was not getting adequate compensation for running its plants.

In an order, FERC said Reliant did not prove it was unable to recover its fixed and variable costs from operating its plants, and denied its complaint.

FERC Commissioner William Massey said FERC was trying to maintain a "mysterious, somewhat magical balance" between offering incentives to build new generation and keeping prices from reaching unreasonable levels.

Under PJM's rules, plant owners get a fixed, flat rate for their power that is not tied to market prices under certain conditions when power lines are congested.

However, FERC did order PJM to reexamine its rate mechanism and explain its current plant compensation rules to the commission by the end of September.

PJM operates a power grid spanning Pennsylvania, New Jersey, Delaware, Maryland, Ohio, Virginia, West Virginia and the District of Columbia.