Uncertainty surrounds ISO-NE capacity auction following gas-fired power plant order

Following a DC Circuit Court of Appeals ruling against the participation of the 650-MW, natural gas-fired Killingly Energy Center in ISO New England's 16th capacity auction, the ISO said Feb. 7 it will calculate the auction results with and without the power plant.

Forward Capacity Auction 16 "began as scheduled" Feb. 7, following the DC Circuit Court of Appeals Feb. 4 order staying the Federal Energy Regulatory Commission's Jan. 4 order terminating the Killingly's capacity supply obligation, the ISO said in an update posted to its website.

The combined-cycle, gas-fired power plant is being developed by Florida-headquartered NTE Energy in Killingly, in the far eastern portion of Connecticut. The plant would use ultra-low sulfur diesel fuel as a backup and construction had been expected to begin in 2021, according to the developer's website.

Killingly had received a capacity obligation in ISO-NE's 2019 FCA 13 which procured resources for 2022-23. Commercial operations at the power plant are expected to begin in 2024, according to NTE.

A resource that is planned or under construction may qualify to offer capacity into an FCA if the project sponsor provides the information needed to allow ISO-NE to evaluate the feasibility of the resource achieving commercial operation by the start of the associated capacity commitment period, according to the Jan. 3 FERC order (ER22-355).

Among other things, the project sponsor must provide a critical path schedule that includes the dates by which a number of project development milestones are expected to occur. Under its tariff, ISO-NE may seek to terminate a resource's capacity supply obligation if one or more of several conditions are satisfied.

Specifically, the CSO can be terminated if the date by which a resource will have achieved all its critical path milestones, including commercial operation, is more than two years after the beginning of the capacity commitment period for which the resource first received a CSO.

ISO-NE stated that this trigger for termination of Killingly's CSO had been met and FERC accepted the filing effective Jan. 4.

NTE appealed FERC's Jan. 3 order and sought a stay of FERC's decision both at FERC and the DC Circuit. FERC has yet to rule on the appeal.

Capacity auction details

ISO-NE said it is complying with the court's order and will allow Killingly to participate in FCA 16, but at the auction's conclusion, the ISO will calculate results with and without Killingly.

"These results will have unique prices and quantities cleared, with one set of prices and quantities that include Killingly and a second set of prices and quantities that do not include Killingly," the grid operator said.

Following the conclusion of FCA 16, should FERC confirm Killingly's capacity obligation termination, the ISO said it will adjust the auction results to reflect the removal of the Killingly project.

The ISO plans to keep the auction results confidential until there is "greater certainty" about Killingly's status, the grid operator said.

This approach will protect the commercially sensitive information that might otherwise be revealed as part of the auction finalization process and will allow the ISO to conduct the auction "in a timely fashion, consistent with the requirements of its tariff, while addressing the uncertainty created by the recent court order," the ISO said.

"After due consideration, the ISO is confident that this approach will ensure the integrity of the auction while also complying with the DC Circuit Court of Appeals order," the grid operator said.

NTE did not return a request for comment. ISO-NE did not address what was meant by greater certainty regarding Killingly's status and it is unclear how long the capacity auction results will remain confidential.