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ISO-NE proposes market revisions, transmission changes addressing fuel security

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ISO-NE proposes market revisions, transmission changes addressing fuel security

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Exelon Corp.'s gas- and oil-fired Mystic Generating Station in Middlesex, Mass.
Source: Fletcher6/Wikipedia

The ISO New England proposed to clarify that resources retained in its forward capacity market auctions for fuel security reasons will not be retained for other reasons once a two-year maximum retention period ends.

The grid operator filed the proposed tariff revision Oct. 11 with the Federal Energy Regulatory Commission along with proposed changes to its competitive transmission planning process aimed at addressing the region's winter fuel security woes.

The filings come after FERC in December 2018 accepted the grid operator's proposal to retain Exelon Corp.'s natural gas-fired Mystic River 8 and 9 combined-cycle units for fuel security reasons for the commitment period covered by the region's 14th forward capacity auction via a cost-of-service contract. That development was met with dismay among competitive generators after Exelon unsuccessfully attempted to delist the units from the 12th forward capacity auction, or FCA 12, in 2018 and subsequently announced plans to retire them in FCA 13.

On top of the need to retain the generating capacity that would be lost with the Mystic units, the ISO-NE said the cost-of-service arrangement was justified by concerns that allowing the units to close could jeopardize the continued financial viability of the adjacent Everett LNG terminal, owned by Exelon subsidiary Exelon Generation Co. LLC, by causing that facility to lose its biggest customer.

The cost-of-service agreement for Mystic River 8 and 9 expires May 31, 2024, but Exelon expressed hope in June that the ISO-NE "will appropriately recognize that Mystic 8 and 9 and the Everett LNG facility provide a cost-effective solution for meeting regional reliability and fuel security requirements as part of its fuel security compensation proposal."

However, following a stakeholder process within the New England Power Pool, or NEPOOL, the ISO-NE submitted a joint Oct. 11 filing (FERC docket ER20-89) proposing to eliminate a clause in its operating agreement that "contemplates the potential retention of a resource for more than two years after it has been retained for fuel security purposes."

While the ISO-NE's current capacity market rules prohibit resources from being retained for fuel security beyond June 1, 2025, the revision "removes doubt about whether the ISO would retain a resource for longer than the two-year maximum retention period that is set forth in the fuel security reliability retention tariff provisions, should another reliability issue arise that could be resolved by the retention of the resource," the grid operator explained.

The ISO-NE added that removing the potential for additional retention will help ensure that the grid operator prioritizes the use of competitive processes including "long-term market design changes to address fuel security."

Competitive transmission solicitation

In a related Oct. 11 joint filing (FERC docket ER20-92), the ISO-NE and NEPOOL proposed a package of changes to its rules covering transmission planning in advance of the grid operator's first competitive transmission solicitation set for December. In that solicitation, the ISO-NE will issue a request for proposals seeking solutions to transmission needs including challenges posed by the impending retirements of Mystic 8 and 9.

Among various changes, the grid operator proposed to clarify that selected transmission project developers may propose solutions that include an upgrade on a different transmission owner's existing system. The proposed revisions would also require the inclusion of estimated installed costs, a description of the project's financing, and any cost containment or cost cap measures as part of the first phase of the proposal.

The ISO-NE asked FERC to approve the proposed changes by Dec. 10, saying it plans to issue its request for proposals shortly after receiving a commission order in the proceeding.