PJM Market Monitor Opposes PECO Energy Company's Transmission Security Agreement with Amazon

Strategic Insights -

PJM Interconnection's Independent Market Monitor has submitted comments to the Federal Energy Regulatory Commission (FERC) regarding PECO Energy Company's Transmission Security Agreement (TSA) with Amazon Data Services. The agreement aims to ensure that Amazon's data center load is served reliably, but the Market Monitor argues that it does not address the capacity to serve the load without imposing significant economic costs on other PJM customers.

Key Takeaways:

  • The Market Monitor recommends that the TSA not be approved unless PECO can demonstrate that the new data center load can be served reliably and without imposing increased capacity costs and energy costs on all PJM customers.
  • The TSA does not address the impacts of interconnecting large new data center loads on generation capacity reliability and associated capacity and energy costs for the entire PJM system.
  • The Market Monitor believes that PJM has the authority to ensure resource adequacy and to take measures necessary to ensure resource adequacy.
  • The TSA includes a Mobile Sierra clause, which would require application of the public interest standard if the TSA is challenged in the future.
  • The Market Monitor recommends removing the Mobile Sierra clause and retaining the ordinary just and reasonable standard.
  • The Commission has the opportunity to provide guidance to Load Serving Entities (LSEs) and PJM on their authority to take actions necessary to ensure that LSEs and PJM can meet their reliability obligations.
  • The Market Monitor believes that LSEs like PECO should not be permitted to agree to interconnect large new data center loads that cannot be served reliably.
  • The Market Monitor has calculated the impact on capacity market costs that affect all customers, which would be $16,603,301,829 for the 2025/2026 and 2026/2027 Basic Resource Plan Assessments (BRAs.

Statistics:

  • $16,603,301,829: The combined total increase in capacity market revenues for the 2025/2026 and 2026/2027 BRAs.
  • 2025/2026 and 2026/2027 BRAs: The time periods for the capacity market revenue increases.
  • Scenario 88 and Scenario 4: The scenarios in which the capacity market revenue increases were calculated.
  • PECO: The Load Serving Entity (LSE) that entered into the TSA with Amazon.
  • Amazon: The data services provider that is the subject of the TSA.
  • PJM: The reliability organization that operates the grid and is responsible for ensuring that resources are adequate to meet load.

Sources:

  • Federal Energy Regulatory Commission (FERC) docket ER25-3492-000.
  • Monitoring Analytics, LLC, Analysis of the 2025/2026 RPM Base Residual Auction-Part G (June 3, 2025).
  • Monitoring Analytics, LLC, Analysis of the 2026/2027 RPM Base Residual Auction-Part A (October 1, 2025).
  • PJM Critical Issue Fast Path--Large Load Additions.
  • PJM Manual 20A Resource Adequacy Analysis.
  • Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348, 355 (1956).