FERC okays waiver for RC Cape May related to stalled repowering project in N.J.

The members of the Federal Energy Regulatory Commission on Sept. 11 approved an Aug. 3 application by RC Cape May Holdings LLC for a waiver of a PJM Interconnection policy related to its stalled project for a coal-to-gas repowering of the B.L. England power plant in New Jersey.

The approved waiver is of the must-offer requirement PJM’s Open Access Transmission Tariff. Specifically, RC Cape May sought a waiver of the requirement to offer the B.L. England plant’s output in the Reliability Pricing Model Incremental Auctions pertaining to the 2017/2018 delivery year.

A capacity market seller may seek approval for an exception to the must-offer requirement in the PJM Reliability Pricing Model auction by submitting a written request to the Independent Market Monitor (IMM) and the PJM Office of Interconnection, provided it can establish that the resource “is reasonably expected to be physically unable to participate in the relevant auction.”

In April 2014, the commission granted a waiver to the PJM Tariff to relieve RC Cape May of the obligation to offer the station’s output in the May 2014 Base Residual Auction pertaining to the 2017/2018 delivery year.

RC Cape May states that the repowered station is considered an Existing Generation Capacity Resource because RC Cape May offered the expected output of the planned repowered station into the Reliability Pricing Model Base Residual Auction for the 2016/2017 delivery year as a Planned Generation Capacity Resource and that the offered capacity cleared in that Base Residual Auction.

As a result, RC Cape May states that it is a Capacity Market Seller as to this station, which subjects RC Cape May to a must-offer obligation for the station’s capacity for the 2017/2018 Base Residual Auction and all subsequent Reliability Pricing Model Auctions, absent receipt of a waiver or exception to the must-offer requirement.

RC Cape May todl FERC that it does not expect the station to be available to provide capacity in the 2017/2018 delivery year, and thus the circumstances that necessitated the waiver granted in the 2014 Waiver Order have not changed. RC Cape May states the station remains unable to provide such capacity because South Jersey Gas Co. has not received all of the permits required to construct a 22-mile, twenty-four-inch-diameter natural gas high pressure transmission pipeline necessary to serve the repowered station.

RC Cape May states that, while the New Jersey Board of Public Utilities approved of the pipeline construction plans, the New Jersey Pinelands Commission has not done so. RC Cape May further states that it anticipated having to make an additional waiver request, to the extent the status quo remained at the time the Incremental Auctions were set to occur and informed the commission of such probability.

Relocated gas pipeline should solve the roadblock problem

RC Cape May also explains that the regulatory barriers to constructing the pipeline have not been fully removed, and thus prevent the station from being in service for the 2017/2018 delivery year. RC Cape May explains that on May 21, South Jersey Gas informed the Pinelands Commission that it would relocate the interconnect station for the pipeline to an area outside of the Pinelands forest area to address concerns. RC Cape May states that the Pinelands Commission has not yet acted on the amended application. RC Cape May also explains that on July 22, the New Jersey Board of Public Utilities issued an order approving South Jersey Gas Co.’s petition to relocate the pipeline interconnection outside of the Pinelands forest area. RC Cape May states that despite this progress, it does not expect that the pipeline and station will be operational for the 2017/2018 delivery year.

Said the Sept. 11 FERC waiver approval: “We find good cause to grant the request for waiver. The Commission has previously granted requests for waiver of tariffs in situations where, as relevant here: (1) the applicant has been unable to comply with the tariff provision at issue in good faith; (2) the requested waiver is of limited scope; (3) the waiver would remedy a concrete problem; and (4) the waiver would not harm third parties or have other undesirable consequences.

“We find that the requested waiver satisfies the aforementioned conditions. RC Cape May’s attempt to obtain all necessary approvals and permits including final approval of the construction of the gas pipeline was made in good faith. The lack of final approval and execution of the Memorandum of Agreement between the Pinelands Commission and the New Jersey Board of Public Utilities was beyond RC Cape May’s control. RC Cape May’s request is also limited in scope because it seeks a waiver of section 6.6(g) of Attachment DD to the PJM Tariff for the Incremental Auctions of one delivery year only, and the waiver would be applicable only to RC Cape May. RC Cape May’s request remedies a concrete problem by avoiding the requirement that RC Cape May offer capacity into delivery year 2017/2018 that it cannot reasonably provide, and which PJM cannot rely on for reliability planning purposes. We further find that granting the waiver will have no undesirable consequences for PJM nor any other third parties. Finally, we note that no party filed in opposition to the requested waiver.”

The B.L. England plant currently utilizes three generating units using coal and oil. B.L. England is required to comply with several air quality standards for air pollutant emissions under the federal Clean Air Act and applicable state rules. As a result, the plant owner agreed with the New Jersey Department of Environmental Protection to repower B.L. England to natural gas or shut down. As a result, B.L. England ceased using one of its coal generating units in May 2014. Following consultation with the U.S. Environmental Protection Agency, a second amended consent order was entered effectively giving the company to May 1, 2017, to repower B.L. England or shut down.

An RC Cape May contact is: James Maiz, Rockland Capital LLC, 24 Waterway Avenue, Suite 800, The Woodlands, TX 77380, Tel: 281.863.9006, Fax: 281.863.9055, james.maiz@rocklandcapital.com.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.