On July 11, 2025, the D.C. Circuit upheld PJM Interconnection L.L.C.’s (“PJM”) assessment of $12 million in penalties against Energy Harbor, LLC (“Energy Harbor”) for failing to perform when called upon by PJM during a major winter storm in December 2022. The D.C. Circuit held that PJM-approved maintenance at Energy Harbor’s coal-fired generation facility, the W.H. Sammis Plant (“Sammis Plant”), was not the sole cause of the Sammis Plant’s nonperformance, and therefore Energy Harbor was not excepted from penalties under PJM’s Open Access Transmission Tariff (“OATT”).
In order to ensure sufficient power supply to meet demand, PJM employs a Capacity Market: through competitive auctions, PJM contracts with generation companies that commit to produce up to a set amount of electricity when called upon during a given time period at a specific price. Under the OATT, PJM may charge penalties against generation owners that have committed generation capacity to PJM’s Capacity Market but underperform during a declared emergency period relative to the generator’s Expected Performance. The OATT measures Expected Performance as a generator’s capacity under ideal conditions as adjusted for its historical performance and the average performance of all committed generators within PJM’s grid. However, PJM’s OATT also creates an exception from nonperformance penalties “to the extent” that a generator was unavailable “solely” because the generator was on a PJM-approved maintenance or planned outage.
In December 2022, PJM declared an emergency period due to severe weather conditions during a winter storm affecting much of PJM’s geographic footprint. During the emergency period, the Sammis Plant was on a PJM-approved maintenance outage that reduced the plant’s output capacity. However, the plant experienced additional unexpected failures that further reduced its actual output below Expected Performance levels. As a result, PJM assessed approximately $12 million in nonperformance penalties against Energy Harbor. Energy Harbor filed a complaint with FERC, arguing that PJM had violated its OATT in assessing the penalties because the Sammis Plant’s nonperformance was due to its PJM-approved maintenance outage. FERC held that PJM did not violate its OATT, and Energy Harbor appealed to the D.C. Circuit.
The D.C. Circuit upheld the $12 million nonperformance penalties, holding that the Sammis Plant did not underperform “solely” because of its PJM-approved maintenance outage. The court explained that the Sammis Plant, even under the maintenance outage, had sufficient capacity to meet its Expected Performance during the emergency period but only fell short due to the further unexpected outages. The court reasoned that the unexpected outages accounted for the entirety of the Sammis Plant’s performance shortfall, so the PJM-approved maintenance outage was not the sole cause of nonperformance. The D.C. Circuit also held that, under PJM’s OATT, eligibility for excusal from nonperformance penalties considers the entire generating facility, rather than individual generating units.
The D.C. Circuit’s full opinion, issued in Case No. 24-1092, can be accessed here.
