The New England Power Generators Association wants federal regulators to stop ISO New England from having Exelon Corp. bid its two Mystic Generating Station units into the next capacity auction at a price of zero dollars, which it alleged would severely suppress the resulting auction clearing price and exacerbate fuel security concerns.
In a Federal Power Act Section 206 complaint filed with the Federal Energy Regulatory Commission, the New England Power Generators Association, or NEPGA, noted that ISO-NE's recent request to be allowed to sign a reliability must-run agreement with Exelon to keep its Mystic River 8 and 9 units operational for two more years would also require the utility to bid those units' approximate 1,400 MW of combined capacity in the grid operator's next two capacity auctions as "price takers."
Bidding the two units at a price of zero as a price taker guarantees the units will clear the auction. However, NEPGA said it would also drive down the clearing price and decrease the revenues NEPGA's member companies and other generators receive from the ISO-NE's forward capacity auction to be held in February 2019 by between $214 million and $642 million.
"Treating the Mystic units and other generation resources retained to maintain fuel security as price-takers in forward capacity auctions will artificially suppress prices, lead to additional premature retirements and cost-of-service agreements, and exacerbate existing fuel security concerns in the ISO-NE market," NEPGA said.
More specifically, NEPGA said allowing the Mystic River units to bid in at zero would potentially displace between 1,050 MW and 1,285 MW "of otherwise economic resources in the form of premature retirements and deterred new entry, including the new resources ISO-NE is relying upon to help replace retiring generation."
"This capacity must instead be offered at its retirement price, as mitigated," NEPGA maintained. It offered a market-based solution modeled on a mechanism the commission recently approved for the ISO-NE designed to accommodate state-sponsored out-of-market entry without suppressing capacity auction prices.
FERC, wholesale market operators and the Trump administration more broadly have all been grappling with whether and how to prevent older and less efficient nuclear and fossil-fuel generation from retiring in the face of cheap natural gas prices.
But Exelon blamed the downfall of the Mystic units, which were brought online in 2003 and use natural gas, on market flaws that prevent it from earning the revenues needed to keep them running. Exelon has also been in a legal fight with the City of Everett, Mass., over a soon to be expiring property tax break at the site of the Mystic units. (FERC docket EL18-154)
