The Federal Energy Regulatory Commission yesterday approved Duquesne Light Co.'s request to withdraw from PJM Interconnection, the regional organization that manages the transmission of Duquesne Light's electricity, on the condition that the company pay for electricity that PJM has ordered from generators for the next three years.

Morgan K. O'Brien, Duquesne Light president and chief executive officer, said the approval of the request to withdraw was "good news," but called FERC's requirement "disappointing."

"Duquesne Light customers will be paying for PJM capacity through 2011, long after the company has left PJM," he said. "These costs could exceed $100 million annually for all of our customers."

In its filing with the Federal Energy Regulatory Commission, PJM said Duquesne Light was obligated to pay for electricity that has been reserved for its service area. PJM contracted with suppliers for the electricity in an auction held in October.

Yesterday's FERC decision flatly denies Duquesne Light's request, made in a Nov. 8 filing, that it not be liable for capacity costs after withdrawing from PJM effective May 31.

The decision falls in line with the stance taken by FERC since August, when Duquesne Light first asked to withdraw from PJM. According to that request, the withdrawal would have been effective Jan. 1, and the company asked to be excluded from the auction scheduled for Oct. 1. On Sept. 28, FERC issued an order dismissing Duquesne Light's request.

When the Oct. 1 auction was held, PJM reserved 3,000 megawatts for Duquesne Light's service area for the 2009 delivery year, which runs from June 1, 2009, through May 31, 2010.

Duquesne Light said it wanted to leave PJM because the organization did not seek the lowest price from suppliers. It plans to join the Carmel, Ind.-based Midwest ISO regional transmission organization.