FERC Thwarts ISO-NE’s Attempt to Keep Mystic Gas Units Online
The Federal Energy Regulatory Commission (FERC) on July 2 denied ISO-New England’s (ISO-NE’s) request for a tariff waiver to keep two gas-fired units—a total capacity of 1,700 MW—at Exelon’s Mystic Generating Plant in Boston, Massachusetts, running to address “fuel security risks.” The commission instead gave the grid operator a year to submit permanent tariff revisions that will improve its market design and better address regional fuel security concerns.
In a petition for waiver of multiple provisions of its tariff filed with FERC on May 1, ISO-NE argued that the loss of the units, part of Exelon’s 2,000-MW Mystic plant, presents “unacceptable fuel security risks,” that could deplete the ISO’s 10-minute operating reserves. Loss of the units could also instigate load shedding (for between 1 to 8 hours) during New England winters of 2022–2023 and 2023–2024, it said.
Shuttering the units would also mean that the Everett Marine Terminal (known as Distrigas), which Exelon is in the process of acquiring from its current owner ENGIE North America, would lose its biggest customer, “substantially diminishing its financial viability” and putting the regional reserve depletion and load shedding at further risk. That’s problematic for New England’s generation fleet, which relies primarily on fuels imported from elsewhere in the U.S. or abroad, especially in the winter, when fuel for nearly half the region’s generating capacity may become inaccessible due to priority demand for natural gas from the heating sector, the ISO said.
Exelon in March said it planned to retire the four-unit gas-fired plant when its capacity obligations expire in May 2022 unless it received a two-year reliability must-run (RMR) contract to recover full cost of service. The company later estimated it would need an annual fixed revenue requirement of about $219 million for capacity commitment period 2022/2023 and nearly $187 million for 2023/2024.
Under its current tariff, ISO-NE may retain retiring resources to resolve local transmission security issues. The tariff waiver, which ISO-NE said it requested “only as a last resort,” is unprecedented because it effectively seeks to retain resources for reliability risks related to region-wide fuel security. It sought to exempt Mystic 8 and 9 from the tariff’s local reliability review requirement for two forward capacity auctions. The waiver would have also allowed ISO-NE to enter into a cost-of-service agreement with Exelon to retain Mystic 8 and 9 for a two-year term (2022–2024).