PJM stakeholders skeptical over OVEC integration
As PJM Interconnection works to accommodate the Ohio Valley Electric Corp.’s request to join the regional transmission organization, stakeholders are expressing concerns about how potential generation or transmission upgrade costs for OVEC assets would be allocated.
“Our overarching concern is there could be short-term capital expenditure for transmission upgrades that PJM consumers would have to bear,” Ed Tatum, vice president of transmission at American Municipal Power, said in a Wednesday phone conversation.
Another PJM stakeholder expressed concern about who would pay system upgrade costs if OVEC were to join, during a Tuesday special meeting of the Markets and Reliability Committee. The meeting was webcast.
Committee Chairwoman Suzanne Daugherty explained at the meeting that PJM does not study hypothetical outcomes. The system operator does not study the impacts of generator retirements until they receive a retirement notice, she said.
The same goes for reliability-must-run contracts, Daugherty added, saying existing RMR contract rules would apply.
The skepticism arises from the fact that OVEC is a small utility with almost 70-year-old assets that serve a very small load. “I don’t see anyone else like OVEC in our PJM family,” Tatum said at the meeting.
PJM says it is following all established rules and procedures for admitting new members and ensuring they can reliably connect to the system. PJM does not expect to do any different studies than they have for other new members, Daugherty said.
OVEC will be integrated as a separate new zone within PJM, but the system operator has not integrated a zone with little or no load before, Tatum said.
OVEC IS COLD WAR LEGACY
OVEC and its subsidiary Indiana-Kentucky Electric were formed in 1952 to provide power to uranium enrichment facilities near Portsmouth, Ohio, owned by the Atomic Energy Commission, a US Department of Energy predecessor.
OVEC owns and operates two coal-fired power plants: the 1,300-MW Clifty Creek Generating Station along the Ohio River in Jefferson County, Indiana; and the 1,086-MW Kyger Creek Generating Station on the Ohio River in Gallia County, Ohio.
Brian Chisling, OVEC’s corporate attorney said at the Tuesday meeting that the company has no plans to retire the units.
OVEC’s integration within PJM presents a unique situation where OVEC has roughly 2,200 MW of aging fossil generation capacity with less than 45 MW of load. At its peak, OVEC’s load was near 2,000 MW, but the uranium enrichment facility consuming the power closed in 2001 and the utility’s contract with the DOE terminated in 2003.
OVEC now sells the full volume of its power output at cost to its eight electric utility and cooperative owners, the largest being American Electric Power, Buckeye Power and Duke Energy Ohio, with roughly 40%, 18% and 9% respective equity interests.
PJM AN ‘OPEN PARTY’
PJM is required to notify its members when a new transmission operator wants to join, which it did at an October 26 Markets & Reliability Committee meeting. The potential new member is required to submit an application agreement and PJM’s president is obligated to accept that agreement if all requirements are met, Daugherty explained.
When asked by a PJM stakeholder what triggered the utility’s decision to join, Chisling simply said OVEC had been thinking about it for a while and decided to join.