The results of the ISO New England's most recent forward capacity auction have taken effect by operation of law due to the lack of a voting quorum at the Federal Energy Regulatory Commission.
Usually a rare occurrence, the development marks the second time in less than two months that a tariff filing involving the ISO-NE has automatically gone into effect as FERC continues to deal with recusal issues. In August, the grid operator's winter fuel security program went into effect by operation of law under similar circumstances. Under the Federal Power Act, tariff filings become effective if FERC allows 60 days to pass without acting on them.
A notice the agency issue Sept. 25 did not specify why the commission lacked a three-member voting quorum in the more recent case. However, the cause could be tied to Commissioner Richard Glick's recusal from matters involving his former client, Iberdrola SA subsidiary Avangrid Inc.
In a Sept. 13 statement, Glick said he had been under the impression that he should be recused from proceedings in which Avangrid participated until February 2018, two years from the date he left the company. But Glick explained that he was given the wrong interpretation of the Trump administration's ethics pledge, which requires executive branch officials, including those at independent agencies such as FERC, to recuse themselves from matters involving former clients for two years from the date of their appointment.
On Sept. 18, Glick issued another statement announcing that he will not seek an ethics waiver from the White House to participate in matters involving Avangrid, effectively stalling a decision from FERC on the PJM Interconnection's proposed capacity market overhaul (FERC dockets EL16-49; EL18-178). Glick said his recusal from matters involving Avangrid will be effective until Nov. 29., two years from the date he was sworn in as a FERC commissioner.
In addition to the PJM capacity market proceeding, Avangrid also has moved to intervene in the contested ISO-NE capacity auction docket but did not file substantive comments in that proceeding.
Questions on Killingly Energy Center
The ISO-NE's most recent forward capacity auction, or FCA, was held Feb. 4 for the June 2022 through May 2023 commitment period. That auction, FCA 13, produced a clearing price of $3.80/kW-month.
FCA 13 was the grid operator's first auction to be run under its "competitive auctions with sponsored policy resources," or CASPR, rules, a new two-step construct to accommodate state-subsidized and state-procured energy resources. CASPR's secondary substitution auction allows resources interested in retiring to transfer their capacity supply obligations to new state-sponsored resources that did not clear in the primary auction.
The results of FCA 13 were protested by various stakeholders, including offshore wind developer Vineyard Wind LLC, the Massachusetts Attorney General's Office, and the New England Power Generators Association.
Particularly relevant in this case is the concern expressed by a group of generators that FCA 13 produced the lowest clearing price in six years while simultaneously securing 837 MW of new generation, including 631-MW from NTE Energy's natural gas-fired Killingly Energy Center project in Connecticut.
On June 6, FERC staff requested additional information relating to the ISO-NE Internal Market Monitor's review of the Killingly Energy Center's requested offer price. The ISO-NE responded June 28 by providing materials enclosed in a confidential attachment, but FERC staff informed the grid operator July 25 that its submittal was deficient in part because it did not include a nondisclosure agreement that could potentially allow interested parties to access the privileged information.
The ISO-NE on July 26 asked the commission to waive the section of its regulations requiring the inclusion of nondisclosure agreements in such proceedings, arguing that the information in the attachment includes "highly confidential, non-public, proprietary business and competitively-sensitive commercial information."
In the absence of FERC action on that filing, however, the FCA 13 results became effective in accordance with ISO-NE's requested date of June 28. The results of the auction still can be challenged in federal appeals court under a 2018 amendment to the Federal Power Act, which states that any such inaction by FERC "shall be treated as an order ... for purposes of rehearing and court review." The statute also requires commissioners to issue written statements explaining their views with respect to the resulting changes.
A similar situation played out in 2014 when a deeply divided FERC accepted the results of ISO-NE's controversial eighth forward capacity auction by operation of law, even though those results were tainted by allegations of market manipulation. At the time, however, no avenue for challenging that acceptance was available. (FERC docket ER19-1166)
