States want more time to craft responses to complaint over ISO-NE fuel security proposal
New England states have asked the Federal Energy Regulatory Commission for more time to respond to generators’ complaint challenging the regional grid operator’s plan to keep certain natural gas-fired units online for fuel security.
ISO New England in a May 2 filing (ER18-1509) told FERC that Exelon’s planned retirement of its Mystic Generating Station in Massachusetts at the end of May 2022 posed “unacceptable fuel security risks” that could lead to rolling blackouts during the 2022-23 and 2023-24 winters.
The grid operator thus sought tariff waivers for an out-of-market remedy, in the form of a cost-of-service agreement with Exelon, to keep Mystic Units 8 and 9 operating for at least an additional two years beyond Exelon’s proposed retirement date. The units at issue do not rely on pipeline gas but are fueled by “onsite” LNG from the Distrigas import terminal. Current tariff language allows ISO-NE “to retain retiring resources to resolve local transmission security issues, [but] it does not contemplate retention to address reliability risks related to fuel security,” the grid operator said.
$642 MILLION IN PRICE SUPPRESSION POSSIBLE IN FCA 13
The New England Power Generators Association filed a complaint (EL18-154) May 23 that steered clear of the underlying issue of retaining resources for their fuel security benefits as it blasted ISO-NE’s proposed arrangement for the Mystic units to be entered into forward capacity auctions slated to commence in February 2019 and February 2020 as price takers. This means the units’ 1,400 MW of capacity would be offered into FCA 13 and FCA 14 for the 2022-23 and 2023-24 commitment periods, respectively, at a price of zero, ensuring they clear the market.
“This proposed treatment would render the ISONE tariff unjust and unreasonable and unduly discriminatory against every resource relying upon the capacity auctions for a just and reasonable rate,” NEPGA argued.
Retention of the Mystic units in this manner could suppress prices during FCA 13 by as much as $642 million and displace up to 1,285 MW of economic generation, “with the potential for even greater displacement and price suppression in FCA 14” and subsequent auctions, the group added.
NEPGA said commission action is needed to ensure ISO-NE accounts for resources’ fuel security benefits in a way that avoids price suppression and reflects the actual operating costs of units bid into capacity auctions — in this case the Mystic units’ retirement de-list price, as mitigated.
FERC set a June 6 deadline for interested parties to intervene or protest the complaint.
But the New England States Committee on Electricity — an ongoing, cooperative effort by the offices of the six New England governors to address the region’s energy needs in a comprehensive fashion — said that would not be enough time to adequately respond to the complaint.
It pointed to the complexity of ISO-NE’s proposal and the “substantial implications for [forward capacity market] pricing and the capacity costs that consumers ultimately pay” in its request for a 14-day extension to June 20.
