Federal regulators approved an $180 million annual deal over their own staff’s objections—and Maryland customers may be paying twice for the same power plants.
By Michael Phillips | MDBayNews
Every Baltimore Gas and Electric customer — 1.2 million households and businesses across Baltimore City and ten central Maryland counties — is now paying for two coal-and-oil power plants in Anne Arundel County at a rate that Maryland’s ratepayer advocate says was inflated 86 percent above what FERC’s own technical staff calculated the plants actually cost to run. The Federal Energy Regulatory Commission approved the deal anyway, over that advocate’s formal objection.
The plants, Talen Energy’s Brandon Shores and H.A. Wagner generating stations near Baltimore, were supposed to retire in 2025. PJM Interconnection, the regional grid operator, determined the region couldn’t survive their closure without transmission upgrades that won’t be finished until at least 2028 — and possibly 2031, an extension now under federal review. So PJM ordered the plants to keep running under a “reliability-must-run,” or RMR, arrangement, with the cost passed directly to BGE customers.
Maryland ratepayers are effectively paying twice for the same two power plants.
That much is undisputed. What’s drawn less attention is exactly how much Maryland ratepayers are paying above what federal regulators’ own staff say is justified — and how a second, largely invisible mechanism means customers are effectively charged twice for the same two power plants.
The Numbers FERC’s Own Staff Calculated
Talen initially asked FERC for $215 million a year to keep the two plants running: $175.4 million for Brandon Shores, $40.3 million for Wagner. After a contested settlement process, Talen, PJM, the Maryland Public Service Commission and other parties agreed to a discounted rate of $180 million a year — $145 million for Brandon Shores, $35 million for Wagner — filed with FERC on January 27, 2025.
FERC’s own Trial Staff — not an advocacy group, but the commission’s internal technical reviewers — ran the numbers independently. In an affidavit filed by Trial Staff witness Michael B. Healy, FERC’s staff calculated a properly cost-based rate of $68.1 million for Brandon Shores and $29.2 million for Wagner — a combined $97.3 million a year.
That’s a gap of roughly $83 million a year — or, as OPC’s own filing calculates it, 86 percent — between what FERC’s own staff determined the plants actually cost to operate and what FERC ultimately approved.
That’s a gap of roughly $83 million a year — or, as OPC’s own filing calculates it, 86 percent — between what FERC’s own staff determined the plants actually cost to operate and what FERC ultimately approved. Over the full RMR term, the Maryland Office of People’s Counsel calculates that gap at more than $300 million.
FERC approved the higher, $180 million rate on May 1, 2025 (Docket Nos. ER24-1787 and ER24-1790; order published at 191 FERC ¶ 61,098). Maryland’s ratepayer advocate had asked FERC to reject it.
“Wagner Will Do Just That”
The Maryland Office of People’s Counsel, which represents residential ratepayers before FERC by state statute, argued in filings that Talen secured the higher rate by threatening to shut the plants down — a move OPC’s attorneys characterized as an improper exercise of market power, not a negotiation.
In its cover letter accompanying the settlement filing, Talen told FERC: “Failure by the Commission to approve the Offer of Settlement would result in not only collapse of the settlement process but also the permanent deactivation of the Wagner facility before the completion of the transmission upgrades that PJM has stated are critically needed. Wagner cannot, and will not, be in a position where it continues to operate its facility, contrary to its wishes, yet does not know the rates, terms, or conditions of such service. The Commission has been clear that it cannot force Wagner to run. Absent approval of the Offer of Settlement, however, Wagner will do just that.”
“Failure by the Commission to approve the Offer of Settlement would result in… the permanent deactivation of the Wagner facility…” — Talen Energy
OPC’s rehearing request, filed May 30, 2025, called this framing a “false alternative,” noting that Talen had already elected cost-of-service compensation when it first filed for RMR status in April 2024 — meaning FERC, not Talen, was always going to set the final rate regardless of the settlement’s outcome. OPC’s filing argues that rewarding the threat “sanctions Talen’s exercise of market power” and would encourage other aging plant owners across the PJM region to make similar demands.
“Talen is essentially using its market power because PJM has said we need to have these plants until a transmission solution is built. These companies have a lot of leverage in these negotiations.” — David Lapp, Maryland Office of People’s Counsel
David Lapp, the head of Maryland’s Office of People’s Counsel, put it more plainly to the Bay Journal in April 2025: “Talen is essentially using its market power because PJM has said we need to have these plants until a transmission solution is built. These companies have a lot of leverage in these negotiations.”
The Second Bill: Inflated Auction Prices
The direct RMR charge is only half the story. Because plants operating under RMR status don’t count as available supply in PJM’s annual capacity auction — the mechanism that sets prices utilities pay generators to guarantee future power — removing roughly 2,000 megawatts of Brandon Shores and Wagner capacity from that supply pool helped push the BGE zone to the maximum allowable auction price in the 2025/2026 delivery year, while most of the rest of the PJM region cleared lower.
PJM’s own Independent Market Monitor calculated that excluding the two plants from the 2025/2026 auction’s supply stack inflated PJM-wide auction revenues by 41.2 percent — $4.29 billion — compared to what the auction would have cleared at had the plants been counted as available supply. OPC’s filings separately allege Talen benefited from that inflated clearing price across its other PJM generating assets, though this outlet is not reporting a specific dollar figure for that portion of the claim.
In effect: Maryland ratepayers paid the direct RMR fee to keep the plants running, and paid again through capacity auction prices that were higher because those same plants weren’t counted as supply…
FERC later ordered that RMR units like Brandon Shores and Wagner be included in the supply stack for future auctions — but only prospectively, starting with the 2026/2027 delivery year. The 2025/2026 auction, the first and most expensive year of the RMR arrangement, got no correction. OPC’s rehearing filing notes the promised revenue credit “would not mitigate the ratepayer impact of the excess compensation resulting from the contested settlement — about $83 million — during the first year of the RMR arrangement.”
In effect: Maryland ratepayers paid the direct RMR fee to keep the plants running, and paid again through capacity auction prices that were higher because those same plants weren’t counted as supply — with the credit meant to offset that second charge arriving a year too late to help.
What Talen Told Investors
While telling FERC the settlement represented a bare-bones recovery of operating costs, Talen described the same deal differently to Wall Street. According to a Bank of America Securities research note from March 2025, cited in OPC’s rehearing filing, Talen told analysts it expected the RMR agreement to deliver “+$110 million/year in EBIDTA [sic]” — pure profit margin above costs, not cost recovery.
“+$110 million/year in EBITDA.” — Talen investor guidance, as cited in OPC’s filing
Talen’s own initial FERC filing had claimed approximately $92 million a year in operating and administrative expenses for the two plants combined — meaning the company’s own numbers, laid alongside its investor guidance, suggest the settlement rate was designed to generate substantial profit rather than simply keep the lights on.
Talen CEO Mac McFarland struck a different public tone after FERC’s approval: “We appreciate FERC’s approval of this important agreement, which will help to ensure the reliable supply of electricity to the people of Baltimore and its surrounding area. Talen is pleased to help provide critical infrastructure with an RMR structure that simultaneously creates reliable electricity in Baltimore and protects Maryland consumer rates.”
The Political Debate Is Happening Somewhere Else
While the RMR settlement and capacity auction price spikes have driven the largest, least visible cost increases on Maryland utility bills, the public political fight over affordability has focused almost entirely on a smaller, more visible line item: the EmPOWER Maryland surcharge.
State Del. Matt Morgan (R-St. Mary’s), chair of the Maryland Freedom Caucus, argued on social media in response to Gov. Wes Moore’s claims of energy-affordability progress that “any cost savings achieved have come from reducing the Empower MD fee,” and called for eliminating the program entirely and refunding ratepayers.
“Any cost savings achieved have come from reducing the Empower MD fee.” — Del. Matt Morgan
The underlying premise checks out, as far as it goes. The Utility RELIEF Act, signed into law in May 2026, projects roughly $150 a year in household savings, and both Democratic leadership and independent reporting confirm that figure comes primarily from a $100 million state downpayment that temporarily covers the EmPOWER surcharge, combined with a scaled-back greenhouse-gas reduction target for the program through 2029. House Speaker Joseline Peña-Melnyk has argued other provisions in the law — restrictions on rate-hike justifications, a pause on forecasted-spending rate cases — will add further savings over time. One of those has already materialized: the day after the legislative session ended, Pepco cut $8.6 million from a pending rate increase, citing the law’s new temporary ban on using forecasted rather than actual spending to justify rate hikes, according to the Maryland Office of People’s Counsel. Most of the law’s other savings, though, remain harder to quantify and haven’t yet shown up broadly on customer bills. So Morgan’s claim that realized savings so far trace mainly back to the EmPOWER rollback is accurate, even if it’s not the only source of relief in the law.
Divided evenly across BGE’s roughly 1.2 million electric customers, the $180 million annual RMR payment… works out to approximately $150 per customer per year — in the same range as the entire EmPOWER savings Annapolis spent a legislative session negotiating.
His call to eliminate the program entirely goes further than the evidence supports. Maryland’s Energy Administration and independent efficiency researchers estimate EmPOWER has saved ratepayers roughly $4 billion since 2009, and a March 2026 analysis by the American Council for an Energy-Efficient Economy projected the current EmPOWER cuts would save customers about $640 million over three years but add back $1.2 billion in additional infrastructure costs over the following decade — a net cost, not a net savings, if the cuts become permanent elimination rather than a temporary rollback.
One of these costs was debated publicly in Annapolis. The other was approved through a federal rate case most Marylanders have never heard of.
What’s largely absent from this fight is any public reckoning with the RMR settlement’s cost by comparison. Maryland’s Office of People’s Counsel estimates the RMR charge and the capacity-auction price inflation it triggered together add roughly $250 a year to a typical BGE household’s bill starting in mid-2025 — more than the entire $150-a-year savings Annapolis spent a legislative session negotiating. One of these costs was set through a public legislative process with competing bills, floor votes and a governor’s signature. The other was set through a federal rate case most Marylanders have never heard of, over the formal objection of the state’s own ratepayer advocate, and is now under FERC’s active consideration for a further extension to 2031.
What’s Next
The RMR arrangement currently runs through May 31, 2029, tied to the completion of transmission upgrades PJM says are required before the plants can retire. As of June 2026, Talen and PJM have asked FERC to extend the arrangement through May 31, 2031, citing continued reliability needs — driven, according to Lapp, largely by data center growth rather than the original transmission timeline. Maryland’s Office of People’s Counsel is contesting that extension request and separately continues to press a related challenge at the U.S. Court of Appeals for the Fourth Circuit (Maryland Office of People’s Counsel v. FERC, No. 25-1561).
The RMR charge alone has been estimated at roughly $60 a year for a typical BGE household. Combined with the capacity auction price effects described above, Maryland’s Office of People’s Counsel puts the total impact at approximately $250 a year per household.
Sourcing
This article draws on primary filings in FERC Docket Nos. ER24-1787 (H.A. Wagner LLC) and ER24-1790 (Brandon Shores LLC), including: Talen’s Joint Offer of Settlement and cover letter (Jan. 27, 2025); the Maryland Office of People’s Counsel’s Protest of Contested Settlement (Feb. 18, 2025) and Request for Rehearing (May 30, 2025), including the affidavit of FERC Trial Staff witness Michael B. Healy; FERC’s order on contested settlement, 191 FERC ¶ 61,098 (May 1, 2025); and PJM Independent Market Monitor analysis cited therein. Additional figures on capacity auction impacts are drawn from Maryland OPC’s “Bill and Rate Impacts of PJM’s 2025/2026 Capacity Market Results” (August 2024), which estimates a combined household impact of approximately $250 a year from RMR and capacity auction effects together; the $60-a-year RMR-only estimate is drawn from Bay Journal reporting (April 2025) citing OPC. The David Lapp quotation is drawn from Bay Journal reporting (April 2025). The Talen CEO statement and RMR term dates are drawn from Talen Energy press releases (Jan. 27 and May 1, 2025). The extension request and 2031 timeline are drawn from Maryland Matters reporting (June 2026). Figures on the Utility RELIEF Act and EmPOWER Maryland surcharge changes are drawn from Maryland Matters, the Baltimore Banner, WYPR, and Maryland Daily Record reporting (March–May 2026), the American Council for an Energy-Efficient Economy’s March 2026 analysis, and EmPOWER program savings figures cited by the Maryland Energy Administration, the U.S. Department of Energy, and BGE, originating from ACEEE’s “Maryland Benefits” research. The Pepco rate-reduction figure is drawn from Maryland Matters reporting citing the Maryland Office of People’s Counsel. Del. Matt Morgan’s title, party and district (29A, St. Mary’s County) are drawn from the Maryland General Assembly’s official member directory; his statement is drawn from his public social media post responding to Gov. Wes Moore.
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