Talen Energy, Other Parties Reach Reliability Must Run Settlement Agreement for Brandon Shores and H.A. Wagner Power Plants

Rhea-AI Summary

Talen Energy (NASDAQ: TLN) has reached a 'reliability-must-run' (RMR) settlement agreement with PJM Interconnection and other parties to extend operations of its Brandon Shores and H.A. Wagner power plants until May 31, 2029, beyond their scheduled May 2025 retirement dates. The agreement aims to maintain grid reliability in Baltimore until transmission upgrades are completed.

The settlement, pending FERC approval, will provide fixed payments of $312/MW-day ($145 million annually) for Brandon Shores and $137/MW-day ($35 million annually) for H.A. Wagner, including performance incentives of $5 million and $2.5 million respectively. Fuel costs and variable operations expenses will be separately reimbursed.

Under the agreement, both plants will not be considered capacity resources but will be part of the capacity market supply stack, with offer prices dependent on PJM's pending Section 205 proceeding.

Positive

• Secured $180 million in annual fixed payments for operating two power plants
• Additional revenue from fuel costs and variable operations reimbursement
• Four-year extension of operations beyond scheduled retirement dates
• Performance incentives worth $7.5 million included in the agreement

Negative

• Agreement subject to FERC approval and potential contest by PJM Independent Market Monitor
• Plants will not have capacity resource status or obligations

Agreement maintains critical infrastructure, reliable electricity in Baltimore and protects Maryland consumer rates.

HOUSTON, Jan. 27, 2025 (GLOBE NEWSWIRE) -- Talen Energy Corporation (“Talen”) (NASDAQ: TLN) announced today that it, PJM Interconnection, L.L.C. (“PJM”), and a broad coalition of the Maryland Public Service Commission, Maryland customers, electric utilities, and Sierra Club have agreed on the terms by which Talen will operate its Brandon Shores and H.A. Wagner power plants until May 31, 2029, beyond their scheduled May 31, 2025 retirement dates. The agreement, colloquially called a “reliability-must-run” or “RMR” agreement, is intended to provide the power necessary to maintain grid and transmission reliability in and around the City of Baltimore until necessary transmission upgrades to provide reliable power to the area from other sources are complete.

The settlement, which must be approved by FERC and may be contested by the PJM Independent Market Monitor, will provide fixed payments to Talen at $312/MW-day ($145 million annually) and $137/MW-day ($35 million annually) to operate Brandon Shores and H.A. Wagner, respectively. These figures include a $5 million performance incentive for Brandon Shores and a $2.5 million performance incentive for H.A. Wagner. The settlement will separately reimburse Talen for fuel costs and variable operations and maintenance expenses.

Several recent FERC proceedings related to future PJM base residual capacity auction parameters include questions about how to treat RMR generation resources in the capacity markets. Under the terms of the settlement, Brandon Shores and H.A. Wagner will not be considered capacity resources and will not have separate capacity obligations or be subject to capacity performance penalties. The settling parties have, however, agreed that PJM will consider the Brandon Shores and H.A. Wagner plants to be part of the capacity market supply stack. The “offer” price for the plants in upcoming auctions will depend on the outcome of PJM’s pending Section 205 proceeding, which proposes to include RMR resources administratively in supply as price-takers.

“This RMR agreement is an important milestone in the collective efforts of PJM, Talen, the Maryland Public Service Commission, and other representatives of Maryland consumers to ensure the reliable supply of electricity to the people of Baltimore and its surrounding area,” said Mac McFarland, President and Chief Executive Officer of Talen. “Talen is pleased to do its part to help provide critical infrastructure with an RMR structure that simultaneously creates reliable electricity in Baltimore and protects Maryland consumer rates.”

About Talen

Talen Energy (NASDAQ: TLN) is a leading independent power producer and energy infrastructure company dedicated to powering the future. We own and operate approximately 10.7 gigawatts of power infrastructure in the United States, including 2.2 gigawatts of nuclear power and a significant dispatchable fossil fleet. We produce and sell electricity, capacity, and ancillary services into wholesale U.S. power markets, with our generation fleet principally located in the Mid-Atlantic and Montana. Our team is committed to generating power safely and reliably, delivering the most value per megawatt produced and driving the energy transition. Talen is also powering the digital infrastructure revolution. We are well-positioned to capture this significant growth opportunity, as data centers serving artificial intelligence increasingly demand more reliable, clean power. Talen is headquartered in Houston, Texas. For more information, visit https://www.talenenergy.com/.

Investor Relations:
Ellen Liu
Senior Director, Investor Relations
InvestorRelations@talenenergy.com

Media:
Taryne Williams
Director, Corporate Communications
Taryne.Williams@talenenergy.com

Forward-Looking Statements

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FAQ

What is the value of Talen Energy's RMR agreement for Brandon Shores and Wagner plants?

The RMR agreement provides fixed payments of $145 million annually for Brandon Shores ($312/MW-day) and $35 million annually for H.A. Wagner ($137/MW-day), totaling $180 million per year, plus separate reimbursements for fuel and operational costs.

How long will TLN operate the Brandon Shores and Wagner plants under the new agreement?

The agreement extends the operation of both plants until May 31, 2029, beyond their originally scheduled May 31, 2025 retirement dates.

What performance incentives are included in TLN's RMR settlement?

The settlement includes performance incentives of $5 million for Brandon Shores and $2.5 million for H.A. Wagner, totaling $7.5 million.

Will TLN's Brandon Shores and Wagner plants participate in PJM's capacity market?

While the plants will not be considered capacity resources, they will be part of the capacity market supply stack, with offer prices dependent on PJM's pending Section 205 proceeding.