Split FERC decision orders New England fuel security changes

Source: Sam Mintz, E&E News reporter • Posted: Saturday, July 7, 2018

In yet another late night split decision, the Federal Energy Regulatory Commission Monday  gave New England’s grid operator a new pathway to keeping two natural gas units open for purposes of fuel security.

The decision earned uncommon dissents from a commissioner on each side of the aisle, including Democrat Richard Glick, who warned that it could lead to a “parade of uneconomic generators” seeking cost-of-service payments “under the guise of fuel security.”

Instead of granting ISO New England Inc.’s request for a waiver of its tariff to keep the two units at the Mystic Generating Station in Boston running, FERC opened a new proceeding and preliminarily found the grid operator’s tariff unjust and unreasonable because it does not address specific regional fuel security concerns.

The FERC order instructs ISO-NE to submit interim revisions within 60 days that provide for a short-term, cost-of-service agreement for the plant.

New England’s gas infrastructure has limited capacity during winters, which combined with a slowed growth in pipeline development in the Northeast has led to concerns about reliability.

Exelon Generation Co. has sought to retire the Mystic plant, but ISO-NE has argued that losing Units 8 and 9 there would present “unacceptable fuel security risks,” leading to violations of reliability standards and load shedding, or rolling blackouts, by the winters of 2022 through 2024.

In denying the initial request, FERC said that the waiver is an “inappropriate vehicle” for allowing the units to receive cost-of-service payments because such waivers are typically used for transmission constraints rather than fuel security concerns.

“Although ISO-NE attempts to frame its filing as a request for waiver of existing ISO-NE Tariff provisions, its request effectively creates an entire process that is not in the ISO-NE Tariff in order to allow for a cost-of-service agreement to meet regional fuel security concerns,” the order states.

But the solution that FERC proposed led to worries from two commissioners and other observers.

In a partial dissent, Glick called FERC’s 60-day “show cause” order to ISO-NE a “rush to judgement.”

“As the Commission itself recognizes, the concern underlying today’s order will not manifest itself for at least four years, even under conservative assumptions,” Glick said.

“Instead of rushing to install new tariff provisions years before the fuel security concern may arise, the Commission, ISO-NE, and stakeholders should engage in a thorough process to evaluate potential fuel security problems and identify durable solutions rather than another series of band-aids,” he said.

Republican Commissioner Robert Powelson, who is departing FERC in mid-August, also dissented in part, saying that New England should decide on a course of action with its stakeholders rather than pushing through quick changes to its tariffs.

“The reliability concerns identified … could materialize in the 2024 and 2025 delivery years, more than five years from today. This is more than enough time for stakeholders in the region to address the problem through the standard processes,” he said.

The New England Ratepayers Association said the grid operator has “chosen to drink from a poisoned chalice.”

ISO-NE “will now be under tremendous political pressure to choose winners and losers in energy markets. Now all of their decisions will become political footballs,” the advocacy group said in a statement.

This is the second time in less than a week that FERC has issued a typically rare split decision — on Friday, the agency came out with proposed changes to PJM Interconnection’s capacity market that the two Democrats dissented from (Energywire, July 2).