The Federal Energy Regulatory Commission on Dec. 5 granted a break to Footprint Power Salem Harbor Development LLC related to the timing of its gas-fired repower project, and the ISO New England capacity auction process.
On Oct. 7, Footprint filed a request for a one-year deferral of its Capacity Supply Obligation obtained in ISO-NE’s seventh Forward Capacity Auction (FCA 7) for the Capacity Commitment Period beginning on June 1, 2016. FERC on Dec. 5 granted Footprint’s request to defer its Capacity Supply Obligation until June 1, 2017.
Footprint in 2012 bought the venerable, oil- and coal-fired Salem Harbor Power Station in Massachusetts and now plans to repower it with two state-of-the art,efficient, low-emission, quick-start natural gas turbine generators; two steam-turbine generators; and two heat-recovery steam generators. It will have an aggregate capacity of 674 MW and be located on a roughly 20-acre portion of the 65-acre Salem Harbor site. Footprint explains that about half of the output of the facility will be available within 10 minutes, and the entire output of the facility will be available within another 30 minutes.
The facility cleared in merit in FCA 7, representing the first time an unsubsidized and uninstalled resource cleared in ISO-NE’s Forward Capacity Market (FCM). Footprint also stated that it exercised its ability under the ISO-NE Tariff to lock-in its capacity revenues for a period of five years. Footprint contends that this provision is intended to make it possible for a merchant resource to obtain financing based on revenues to be received in the FCM. Footprint explains that, at that time, five years of capacity market revenue was viewed as the minimum time necessary for lenders to be willing to finance a new merchant project. After clearing in FCA 7, Footprint states that it had 39 months to obtain all necessary permits, secure financing arrangements and complete construction of the plant, a process that had never been tested for a new plant not subsidized or sponsored by a state.
Some parties had protested the deferral request, but FERC ruled for Footprint. “Although Protestors and Ratepayer-Residents assert that the Facility is not actually needed for reliability, the Reliability Report demonstrates that the Facility is needed to solve local reliability issues within the NEMA/Boston capacity zone,” FERC wrote. “Moreover, we note that the Facility is better situated to address reliability concerns in NEMA/Boston than other alternatives, such as Exelon’s proposed project, because Footprint’s Facility has already cleared an FCA and completed the lengthy permitting process.”
Exelon had said that it has a project that could, if cleared in the FCA10 auction, help address reliability issues for the FCA 8 capacity commitment period through participation in the annual reconfiguration auction for FCA 8.
FERC also found that Footprint has demonstrated that it has failed to achieve commercial operation on time due to factors beyond its control, mainly having to do with a crucial prevention of significant deterioration (PSD) air permit.
“Specifically, as supported by the Mass [Attorney General] and Massachusetts [Department of Public Utilities], the delay caused by the appeal of the PSD permit was beyond Footprint’s control. Although Footprint initially submitted an application for the permit before FCA 7 was conducted, the PSD permit appeal was not resolved until September 2, 2014, when the [federal] Environmental Appeals Board dismissed the appellants’ petition for review. At the time Footprint cleared FCA 7, it could not have known that it would take over two years for the permit to be issued. This permit and appeal process delayed the financing of the Facility and therefore delayed Footprint’s ability to begin construction. Ratepayer-Residents’ claim that there is no evidence that Footprint has negotiated certain bilateral agreements, and that such failure might have contributed to the delay, is speculative and unpersuasive.”