The New England Power Generators Association (NEPGA) told the Federal Energy Regulatory Commission on Aug. 6 that while it is sympathetic about a delayed repowering of the Salem Harbor power plant, ISO New England should not be carving out an exemption for that one project.
The association on Aug. 6 filed a motion to intervene and comments on a July 11 request by ISO-NE to make tariff revisions intended to allow a new resource that cleared in the Forward Capacity Auction (FCA) to defer its Capacity Supply Obligation by one year, should it satisfy certain conditions. ISO-NE’s proposed tariff revisions are intended to address the asserted urgent need for relief for a single Market Participant from the tariff provisions governing new entry in the Forward Capacity Market, and will almost certainly be removed from the tariff once ISO-NE and NEPOOL stakeholders consider future tariff changes, the association noted.
NEPGA said it strongly believes in the need to ensure that new entry that clears on a market basis through the FCA can reach commercial operation. “At the same time, NEPGA also recognizes the need to ensure that the market must be reflective of the realistic timeline of developing, financing an constructing a new generation resource in New England. Notwithstanding the single Market Participant (Footprint Power) driving ISO-NE’s proposal, it is not clear that the current lead time between the primary FCA and the Capacity Commitment Period is inadequate. In any event, ISO-NE’s proposed Tariff changes are not the proper vehicle to address these critical issues at this time should some incongruity exist. Given their narrow applicability and likely limited duration, the relief ISO-NE seeks from the existing Tariff revisions should come from the beneficiary of the proposed Tariff changes, Footprint Power, in the form of a request for a waiver from the ISO-NE Tariff.”
NEPGA said it therefore requests that the commission deny ISO-NE’s proposed tariff revisions because ISO-NE is improperly seeking through a tariff change what Footprint Power should seek through a request for waiver.
Though generic in name, ISO-NE’s proposed tariff changes are timed to meet the needs of a single resource that cleared in FCA 7, Footprint Power, but is at risk of not becoming commercial by the FCA 7 Capacity Commitment Period, the association wrote. “If approved, the Tariff changes will also likely remain in effect for only a limited period of time, given that they mute the incentives for a resource to become commercial in time to satisfy their Capacity Supply Obligation in their first Capacity Commitment Period. Should the issue that ISO-NE is attempting to address with this Tariff change be more widespread and/or represent a fundamental change in the time new resources need to reach commercial operation in New England, a broader-based FCM reformmay be necessary. ISO-NE, in fact, has recognized that this basic question requires further consideration and proposes to engage in broader NEPOOL stakeholder discussions to consider future Tariff changes to the Tariff changes ISO-NE filed in this proceeding.”
The association added: “Though not identified by name in ISO-NE’s filing, Footprint Power’s 674 MW generating facility at the Salem Harbor site in Salem, Massachusetts, which cleared in FCA 7 is widely understood to be the intended beneficiary of ISO-NE’s proposed Tariff changes. Because it cleared in FCA 7, Footprint Power holds a Capacity Supply Obligation for the Capacity Commitment Period beginning June 1, 2016.”
Massachusetts Attorney General backs ISO-NE request
The Massachusetts Attorney General filed Aug. 6 comments in favor of the ISO-NE request, without citing Footprint Power, saying: “Two of the Massachusetts capacity zones within the ISO-NE control area suffer from insufficient capacity. It is undisputed that new generation resources are needed for reliability in Massachusetts in particular and in New England in general. Further, as established by the testimony of Robert Ethier, a one-year deferral provides a far more efficient and timely solution to a delayed project needed for reliability than developing an entirely new substitute project.”
The New England Power Pool (NEPOOL) Participants Committee, made up of utilities and power producers in the region, said in Aug. 6 comments that it takes no position on the ISO-NE request, adding: “In brief, ISO-NE’s CSO Deferral Proposal, motivated in part by ISO-NE’s desire to be able to address circumstances like those presented by the Footprint Power project in the Northeast Massachusetts (NEMA)/Boston capacity zone, would change the FCM rules to allow, under specific circumstances, a resource that has been assigned a CSO in a prior Forward Capacity Auction (‘FCA’) to request a one-year deferral of its CSO. As proposed, if ISO-NE determines that such a new resource is needed for reliability but is delayed in achieving commercial operation, then the Market Participant with that CSO may file with the Commission a request to defer its CSO for one year. In seeking the deferral request from the Commission, the holder of the CSO would be required to demonstrate that the deferral is critical to its resource’s ability to achieve commercial operation and that the reasons for the deferral are beyond its control.”
The Massachusetts Department of Public Utilities said in its Aug. 6 comments: “The MA DPU supports ISO-NE’s proposed Rule Changes for two main reasons. First, the Rule Changes are necessary for reliability in New England and the viability of the FCM. Second, the MA DPU has an interest in the adoption of these changes for their local reliability benefits because we anticipate that these Rule Changes will apply to a new capacity resource with a CSO for the Northeast Massachusetts/Boston Capacity Zone (‘NEMA/Boston’).”
The state agency added: “ISO-NE has pointed out that at least one new capacity resource with a CSO very likely needed for reliability, Footprint Power, will not be in service at the beginning of its Capacity Commitment Period and, without the Rule Changes, will not get financing to become commercial for the following Capacity Commitment Period. … Footprint Power is the first entirely new, large-scale generation resource, other than renewable projects that have other sources of funding, to be built in New England with revenues provided solely from the ISO-NE wholesale markets. In order to provide confidence to lenders and other developers that new generation can be built in New England, it is important that Footprint Power come to fruition. As New England continues to lose significant existing generation resources, it will become increasingly important that the viability of the FCM be proven.”
Air permit appeal is the last remaining issue
The MA DPU noted that the gas-fired Salem Harbor repowering project of Footprint has gotten all needed approvals, but is now being held up by a prevention of significant deterioration (PSD) air permit appeal filed in February at the federal Environmental Appeals Board (EAB) by four local citizens.
“For the past five months (and counting), Footprint Power has been prevented from moving forward with construction,” the agency wrote. “Beyond the prohibition on construction while the PSD appeal is pending, the EAB appeal has also had the effect of delaying the completion of the project’s financing. Project financing typically depends on the resolution of significant regulatory and permit issues, such as the matter now pending before the EAB.”
Footprint Power Salem Harbor Development LP in an Aug. 1 brief filed at EAB again urged the board take quick action. The board recently had EPA file a brief on one narrow issue in the air permit. In its Aug. 1 brief, Footprint supported EPA’s brief on that subject, noting that: “All other state and local permits are final and non-appealable. This proceeding represents the sole remaining permitting issue preventing construction of the Facility. Footprint respectfully requests that the Board expedite its resolution of this appeal.”