The Federal Energy Regulatory Commission on Monday denied a national energy company’s bid to increase electricity rates around Baltimore to pay for outgoing power plants to remain online.

Talen Energy Corp., owner of the Brandon Shores and H.A. Wagner coal- and oil-fired plants in Anne Arundel County, will instead enter settlement discussions with the Office of People’s Counsel of Maryland ahead of a potential “trial-type evidentiary hearing” in front of an administrative law judge. The company had been looking to pass more than $774 million in costs on to customers, according to the Office of People’s Counsel.

“FERC’s decision vindicates our concerns that Talen failed to show that its proposal is fair to customers and that a thorough analysis is needed before imposing these extraordinary costs on customers,” Maryland People’s Counsel David S. Lapp said. “We look forward to demonstrating the unreasonableness of Talen’s proposed cost recovery as the case moves forward.”

In April 2023 Talen filed to close the power plants by mid-2025. In response, regional electric grid operator PJM Interconnection determined that the plants needed to stay open until at least 2028 to ensure a reliable supply of electricity across Maryland.

Talen, which is based in Houston, then proposed to keep the plants open by passing significant costs on to customers. The Office of People’s Counsel said in an April federal filing that the proposed cost recovery plan would amount to about $215 million per year, and about three-quarters of that would fall to BGE customers with the rest shouldered by customers of Pepco, the Southern Maryland Electric Cooperative and others.

The payment arrangement could have added an estimated $5 a month for as long as it takes PJM to replace the power supply, according to the Office of People’s Counsel, an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.

“Talen, Brandon Shores, and Wagner should not be asked to [run the plants] without fully recovering all costs, the investments needed to maintain the plants, and a fair return of and on equity,” Talen said in its proposal.

In the ruling, the regulatory commission said the corporation’s proposed rates “may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful,” as a potential violation of the Federal Power Act. The regulatory commission also said Talen calculated its proposed rates by inflating the market value of the plants and including taxes and expenses.

“We find that the Applicants’ filings raise issues of material fact that cannot be resolved based on the record before us and that are more appropriately addressed in the hearing and settlement judge procedures ordered,” FERC wrote in its order Monday.

PJM says it expects by 2028 to complete a nearly $800 million transmission upgrade to make up for the closures of the two plants, which generate about 2,000 megawatts, a substantial portion of the state’s electric power.

In January 2022, the Maryland Public Service Commission, which objected to Talen in its own filing to the commission, preliminarily approved plans to transition the plants from burning coal to mostly burning oil, although environmentalists raised concern about switching from one fossil fuel to another.