Utility Firms Challenge Amazon's Nuclear Power Deal with Talen Energy at FERC

Utility Firms Challenge Amazon's Nuclear Power Deal with Talen Energy at FERC
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Utility firms American Electric Power (AEP) and Exelon have formally objected to Talen Energy's nuclear power deal with Amazon, submitting their concerns to the Federal Energy Regulatory Commission (FERC). This controversy stems from Amazon's purchase of a nuclear-powered datacenter from Talen Energy in March. The agreement allows Amazon to draw 480 MW from Talen's 2.7 GW nuclear plant in Susquehanna, Pennsylvania, with potential to increase to 960 MW in the future.

The Susquehanna plant also supplies power to PJM Interconnection, the regional grid operator. Talen and PJM revised their interconnection service agreement (ISA) to accommodate Amazon's datacenter, which has angered AEP and Exelon. They argue that Talen and Amazon are benefiting unfairly at the expense of other PJM ratepayers. The revised ISA ensures the datacenter has priority access to power, potentially disadvantaging PJM's customers during outages and leading to higher costs.

The ISA stipulates that in case of a reactor outage, the datacenter would still receive power from the remaining reactor, leaving less electricity for PJM customers. AEP and Exelon express skepticism about the practicality of this arrangement and demand clarification. They contend that Amazon's datacenter, although not directly connected to PJM, still benefits from the grid, thus should share the financial responsibility of maintaining it.

AEP and Exelon highlight a loophole in the ISA, noting that the co-location of the datacenter with the nuclear plant allows it to avoid being considered "in-network," despite its synchronized power load with PJM. They insist that the datacenter should pay its fair share for system usage like other PJM customers.

The two utility companies have called for FERC to hold a hearing or reject the new ISA outright. Talen, however, refutes the complaint, claiming the objections are baseless and that the transmission system is not affected.

The outcome of this dispute could have significant implications for the datacenter and energy industries. FERC's decision on the ISA might set a precedent, influencing how future agreements are handled. Datacenter power consumption is projected to double by 2030, necessitating new power sources and raising questions about who will bear the costs. AEP has already suggested higher tariffs for datacenters in Ohio.

Amazon has not commented on the matter.