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Energia elétrica

Footprint rejects FERC staff allegations of misleading ISO-NE on fuel supply

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Footprint rejects FERC staff allegations of misleading ISO-NE on fuel supply

Destaques

First show-cause order under new chairman

Footprint strongly rejects staff's claims

Washington — Footprint Power is fighting back against allegations that it submitted false and misleading supply offers to ISO-New England in June and July 2013, arguing the grid operator always knew the limitations of its Salem, Massachusetts, power plant.

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"The commission should reject enforcement's proposal to proceed to court to impose excessive sanctions for alleged violations that did not occur, that lack any motive, that caused no harm, and that are so distant in time that they are now out of reach under the statute of limitations," Footprint said in a filing last week.

The Footprint proceeding (IN18-7) features the first show-cause order in an enforcement case issued by the commission since Chairman Kevin McIntyre took the gavel in December. The fuel-security issue at play in this case may be closely watched by market players, regulators, policy makers and others against the backdrop of Trump administration efforts to bolster at-risk nuclear and coal-fired power generation in the name of grid resilience.

In June, FERC ordered Footprint to prove why it should not disgorge $2 million in capacity payments and pay $4.2 million in civil penalties for allegedly submitting false and misleading supply offers to ISO-NE when it lacked the fuel to operate Salem Harbor Unit 4, a 437 MW oil-fired unit.

By June 26, Salem Harbor had less than a day's worth of fuel and Footprint didn't receive additional fuel until the end of July, FERC staff alleged. In the midst of mid-July heat wave, the plant could only run for a few hours before asking the ISO to reduce its capacity, FERC staff alleged.

Footprint is now bluntly rejecting staff's claims. "Enforcement's allegations are false and misleading; Footprint's offers were not," the company said in its response to the show-cause order.

First, enforcement overstated ISO-NE's operational expectations, Footprint said, arguing ISO-NE knew it was operationally and legally impossible for the plant to run for 24 hours at maximum output because of start-up and air emissions limitations. "Those restrictions were fully appreciated by ISO-NE and, on most of the days at issue, worked as binding constraints before fuel levels ever came into play," Footprint said.

Second, enforcement understates the amount of fuel available, which was pivotal for the last nine days when fuel levels were running low. Salem Harbor 4 was "an aging, lumbering machine," but the operators knew the plant like the backs of their hands and were able to adjust the oil tank to keep pulling out oil until more fuel was extracted than enforcement said was possible, Footprint said.

But enforcement staff never talked to the operators about start-up limitations, emissions limits or estimates of available fuel, and never asked ISO-NE whether the grid operator was actually misled, the company said. "It is incongruous, if not ironic in the classical sense, for enforcement to allege that Footprint did not perform due diligence about fuel-supply calculations when enforcement failed to perform its own due diligence before making that allegation (among others) in the first place."

Enforcement's allegations are also time-barred, because it exceeded the five-year statute of limitations, Footprint said, adding that enforcement never claimed that the alleged conduct harmed reliability or changed prices.

Enforcement seems to be saying that a generator can only offer output in amounts that are empirically demonstrated to be feasible, a policy approach that could boost prices and encourage behavior that could be seen as physical withholding, the company said. And enforcement seems to say that Footprint should have been aware that losing capacity payments could be a sanction in an investigation, even though that is not in the tariff, Footprint argued.

"If that is indeed enforcement's position, then Kafka is in control and compliance is a crapshoot," Footprint said. "Enforcement becomes a prosecutor of non-existent laws, retroactively imposing whatever rules suit its imagination, even if those imaginary rules contradict the rules actually in place," the company said.

--Kate Winston, kate.winston@spglobal.com

--Edited by Matt Eversman, newsdesk@spglobal.com