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ISO-NE fuel security program will take effect due to lack of FERC quorum

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ISO-NE fuel security program will take effect due to lack of FERC quorum

An ISO New England program to pay resources that keep fuel or another form of potential energy on hand during the winter will go into effect by operation of law because the Federal Energy Regulatory Commission lacked a quorum to act on the grid operator's proposal.

The unusual development was announced by the federal power regulator in an Aug. 6 notice. FERC requires at least three voting members for a quorum, which suggests that at least two of the body's four sitting members recused themselves from acting on the proposal.

A FERC spokesman declined to provide additional details about why the commission lacked a quorum

The ISO-NE's proposal dates back to August 2018 when the regional transmission organization committed to working with stakeholders on a market-based solution that could price fuel security benefits into future-forward capacity auctions. Facing a continued shift away from nuclear, coal- and oil-fired power plants, the grid operator has been warning about reliability threats posed by a generation mix with a high concentration of interruptible natural gas-fired plants and intermittent renewables that depend on just-in-time fuel deliveries or favorable weather conditions.

To address the issue, the ISO-NE on March 25 proposed to create an interim program to pay resources that maintain "inventoried energy." The program would be in place for the 2023-2024 and 2024-2025 winters, which are covered by Forward Capacity Auctions 14 and 15 and aims to stave off generator retirements and act as a bridge until the grid operator can implement a long-term fuel security solution. The plan would work by providing incremental revenue to resources with inventoried energy that can be converted into electric energy during cold spells, thus reducing the amount of revenue those resources need to recover through the capacity market.

In a May 8 deficiency letter, FERC staff asked the ISO-NE a series of questions, including one that centered on the issue of whether the grid operator's analysis of its proposal was adequate. The ISO-NE submitted its response on June 6, asserting that any further analysis was unnecessary.

Advocacy groups previously had derided the fuel security proposal as a regional copy of U.S. Energy Secretary Rick Perry's September 2017 failed fuel-secure resilience proposal, which FERC unanimously rejected in January 2018. In addition, utilities such as Exelon Corp. criticized the ISO-NE's proposed program's out-of-market, administratively determined pricing mechanism.

Without a quorum, however, the program will go into effect.

"The ISO will move forward with implementation of the short-term program as we continue working on the long-term, market-based solutions to the region's energy security challenges," ISO-NE spokeswoman Marcia Blomberg said Aug. 6 in an email.

Under the Federal Power Act, tariff filings go into effect by operation of law if FERC allows 60 days to pass without issuing an order accepting or denying proposed changes.

The four sitting members of the five-person commission are evenly split along party lines, with outgoing Democratic Commissioner Cheryl LaFleur set to leave at the end of August.

LaFleur, the former CEO of Waltham, Mass.-based National Grid USA, has said she plans to continue working in the energy sector when she departs the commission. Commissioner Bernard McNamee, who before being confirmed to the FERC position in December 2018 helped develop and heavily promoted the Trump administration's coal and nuclear subsidy proposal as U.S. Department of Energy general counsel, has committed to consult with ethics officials on whether his participation in grid reliability matters warrants his recusal.

"Any written statement explaining the views of a commissioner with respect to ISO-NE's filing will be added to the record of the commission," FERC said in its Aug. 6 notice. (FERC docket ER19-1428)