Federal energy regulators endorse cost apportionment strategies for power stations ordered by the Department of Energy to operate beyond their scheduled closure dates.

The Federal Energy Regulatory Commission (FERC) has approved cost recovery for Consumers Energy and Constellation Energy to comply with U.S. Department of Energy (DOE) orders to continue operating power plants they had planned to retire.

The J.H. Campbell generating facility in Michigan, with a capacity of 1,560 MW, will remain online due to FERC's decision. Consumers Energy co-owns the plant with Wolverine Power Supply Cooperative and the Michigan Public Power Agency, holding a 4.8% stake.

The DOE, under its Federal Power Act section 202(c) authority, has ordered Consumers Energy to run the J.H. Campbell plant until Aug. 21, and Constellation to run its Eddystone units in Pennsylvania until Aug. 28. As a result, expenses related to operating these units will be spread across the PJM Interconnection's footprint, and the costs of keeping the Campbell plant operational will be shared across the Midcontinent Independent System Operator's northern and central regions.

In response, Michigan's attorney general and a coalition of groups, led by the Sierra Club and Earthjustice, have sued to overturn the DOE's emergency order on the Campbell plant. Parties can challenge the prudency of the costs of running the Campbell plant under the DOE order when Consumers seeks to recoup them.

Furthermore, FERC said parties may take appropriate steps to preserve arguments that if the DOE order were to be modified, then the commission should require refunds or otherwise revisit its approach to matters that DOE referred to the commission in connection with the DOE order. FERC dismissed calls to wait on issuing the cost allocation decision until after the litigation is settled.

The search results do not provide the name of the person who filed the application to challenge in court the costs claimed by Consumers Energy and Constellation Energy related to complying with the DOE orders.

Meanwhile, the cost of keeping these power plants operational could grow significantly. A report from Grid Strategies estimates that, depending on how many power plants DOE orders to keep running under its Federal Power Act section 202(c) authority, the cost to ratepayers could grow to $5.9 billion in 2028.

Amidst these developments, utilities are increasingly harnessing distributed energy resources, including virtual power plants, which can draw on everything from smart thermostats to large-scale batteries. These resources could potentially offer a more sustainable and cost-effective alternative to traditional power plants in the future.

However, the orders can be extended, and both Consumers and Constellation will need to return to FERC for approval to recoup their costs. The future of these power plants and the associated costs remains uncertain, as the litigation unfolds.

Federal energy regulators endorse cost apportionment strategies for power stations ordered by the Department of Energy to operate beyond their scheduled closure dates.