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Exelon and AEP protest interconnection agreement for Amazon data center at Susquehanna nuclear plant

The utilities argue the proposal could unfairly shift costs to ratepayers and impact market operations and reliability, according to a FERC filing.
Exelon and AEP protest interconnection agreement for Amazon data center at Susquehanna nuclear plant
(Talen Energy owns a large majority of the Susquehanna Nuclear Station in Salem Township, Pennsylvania. Source: Talen Energy.)

Exelon and American Electric Power (AEP) are protesting a proposal that would result in the co-location of an Amazon Web Services (AWS) data center at Talen Energy’s Susquehanna nuclear plant in northeast Pennsylvania.

In a filing to the Federal Energy Regulatory Commission (FERC) Monday, the parties said the proposed Interconnection Service Agreement (ISA) raises unresolved questions and could result in unfair cost burdens on ratepayers and negatively impact market operations and reliability.

The challenge was first reported by Utility Dive.

Most notably, Exelon and AEP asserted the pending ISA between PJM Interconnection, Susquehanna Nuclear and PPL Utilities would allow the data center to derive benefits from the transmission system without paying for them. Under the ISA as proposed, the parties said the co-located data center would not be classified as “network load” and therefore would not be required to pay PJM transmission fees.

“How can a load that is synchronized to the transmission system and which might draw power from the transmission system be anything other than Network Load?” the parties said in the filing.

Citing previous unplanned outages at the Susquehanna station that led to unintended power withdrawals from the PJM system, such as one from November 2023, Exelon and AEP questioned how such a withdrawal of power would be properly metered and accurately billed if or when it does occur.

“The co-located load should not be allowed to operate as a free rider, making use of, and receiving the benefits of, a transmission system paid for by transmission ratepayers,” Exelon and AEP said. “We have no objection to co-location per se, but such load should pay its fair share of system use and other charges, just like other loads and customers.”

We reported in March that AWS agreed to acquire Talen Energy’s 960 MW data center campus connected to the Susquehanna plant for $650 million. Talen Energy would supply power for the campus directly through a fixed-price power purchase agreement (PPA).

Through that agreement, AWS would have contractual power commitments that would ramp up in 120 MW increments over several years, starting in 2025. Amazon’s cloud platform would also have a one-time option to cap power capacity commitments at 480 MW.

Under the agreement, and separate from powering the campus, Talen would receive additional revenue from AWS related to the remaining power that Susquehanna sells to the PJM wholesale market.

In early June, PJM requested FERC’s approval for an amended ISA that would permit Talen to sell 480 MW to the data center, an increase from the 300 MW under the original ISA, “without a material impact on the Transmission System.”

According to a declaration attached to Exelon and AEP’s protest (see protest filing linked above), the ISA could result in the data center avoiding transmission costs of up to $140 million per year, shifting these costs to PJM customers.

Exelon and AEP argued that given the increasing development of data centers, the implications of this case are important. They claimed if this co-located load was permitted to avoid significant costs, other generators and large consumers might pursue similar arrangements.

“Should large quantities of load rush to co-locate with generation on terms that bear even a resemblance to the ISA at issue here, PJM capacity markets will have steadily decreasing volume as the capacity resources flee to serve load that uses and benefits from—but does not pay for—the transmission system and the ancillary services that keep the system running,” the parties said. “This will harm existing customers.”

Exelon and AEP are calling on FERC to set a hearing to address these issues described or, alternatively, for the ISA to be rejected. The filing parties argue that the ISA lacks sufficient justification and fails to meet the standards required for non-conforming agreements.

We reached out to the parties involved in the proposed Susquehanna Interconnection Service Agreement, asking them to comment on Exelon and AEP’s challenge.

A spokesperson from Talen Energy sent us this statement, asking us to use it in full:

“The rapid emergence of artificial intelligence and data centers has fundamentally changed the demand for power and leads to an inflection point for the power industry.  Talen’s co-location arrangement with AWS brings one solution to this new demand, on a timeline that serves the customer quickly.  We believe powering the data center economy will require an all-of-the-above approach, which includes both metered and behind-the-meter solutions.  

Exelon and AEP’s protest of the Susquehanna ISA is a misguided attempt to stifle this innovation by interfering with an ISA amendment agreed to and supported by all impacted parties – which Exelon and AEP decidedly are not.  The factual recitations in the protest are demonstrably false.  The legal positions are demonstrably infirm.  And nearly all the issues raised by Exelon and AEP are not subject to FERC oversight, because transmission is not implicated.  Fundamentally, Talen has the right as a competitive generation company to contract with AWS to sell long-term, committed power.  PPL, as the regulated utility that has an actual stake in this ISA, agrees that Talen has the right to sell power directly to AWS and signed an ISA amendment that gives PPL reliability assurances.  PJM agrees the ISA is appropriate, and itself filed the application for FERC approval.

We will move with dispatch to resolve this matter quickly at FERC.”

A spokesperson with PJM Interconnection, prefacing that the regional transmission organization (RTO) generally doesn’t have a lot to say on pending FERC filings, referred us to its latest guidance document on co-located loads.

Susquehanna Unit 1 has been in operation since 1983 and delivers about 1,257 MW. Unit 2, which has the same power capacity, was commissioned two years later.

According to the International Energy Agency (IEA), electricity consumption from data centers, artificial intelligence (AI) and the cryptocurrency sector could double by 2026. Data centers project to be significant drivers of growth in electricity demand in many regions.

According to a study released by EPRI, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used.