Energy cos do not need $40 mln incentive for ‘status quo’ – court


  • New England grid operator can’t pay coal and nuclear generators for steps they’re already taking
  • DC Circuit upholds FERC’s approval of other parts of winter-fuel security plan

June 21 – A federal appeals court has zapped electric-grid operator ISO-New England’s two-year plan to minimize winter blackouts by paying nuclear, coal, biomass, and hydroelectric power generators some $40 million in annual incentives to stockpile three days’ worth of fuel on site.

The US Court of Appeals for the District of Columbia Circuit said that federal regulators should have rejected that portion of the Inventoried Energy Program because those four sectors already maintain at least a three-day inventory as standard operating procedure.

The program “is designed to compensate these market participants for maintaining the status quo, not incent them to change their behavior to further improve cold weather fuel security in New England,” Circuit Judge Robert Wilkins wrote for the panel.

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The court upheld the Federal Energy Regulatory Commission’s approval of the rest of the program, under which ISO-New England could pay as much as $108 million a year to generators that rely on oil, natural gas, refuse, and wind or solar power with sufficient battery storage.

The Sierra Club and the Union of Concerned Scientists, the states of Massachusetts and New Hampshire, and a group of municipally-owned electric utilities all sought to invalidate the entire order, but consider Friday’s ruling a significant win.

“We filed this appeal to ensure that New England customers aren’t overpaying power generators,” and Friday’s opinion “will save customers millions of dollars on their electric bills,” Chloe Gotsis, a spokeswoman for Massachusetts Attorney General Maura Healey, said in an email.

Casey Roberts of the Sierra Club said the decision “sets aside the most egregious aspect” of the incentive program, while John Coyle of Duncan & Allen, who represented the municipal objects, called it “a big step in the right direction.” Each said it should affect future winter-reliability proposals by ISO-New England and FERC’s review of them.

FERC declined to comment. The agency last week unveiled two notices of proposed rulemaking intended to assess and address extreme-weather threats to the bulk power transmission system.

ISO-New England had no immediate response. It created the Inventoried Energy Program after Exelon announced it would retire two oil- and gas-fired generators that served Boston by 2024. The grid operator hoped the incentives would minimize supply-related disruptions in the 2023-2024 and 2024-2025 winters, as well as “reduce generator retirement risks.”

FERC approved the program in 2020 over the dissent of now-Chairman Richard Glick, who called the incentives for nuclear, coal, biomass, and hydroelectric generators “an utter waste of consumers’ money.”

Circuit Judge Gregory Katsas joined Wilkins’ opinion on Friday. The third panel member, then-Circuit Judge Ketanji Brown Jackson, did not participate in the disposition.

The lead case is Belmont Municipal Light Department, et al., v. Federal Energy Regulatory Commission; ISO-New England, intervenor; US Court of Appeals for the District of Columbia Circuit, No. 19-1224.

For New England Consumer-Owned Systems and other municipal petitioners: John Coyle and Ashley Bond of Duncan & Allen

For New Hampshire and Massachusetts: Christopher Aslin, New Hampshire Attorney General’s Office; Christina Belew, Massachusetts Attorney General’s Office

For Sierra Club and Union of Concerned Scientists: Casey Roberts of Sierra Club; Devin McDougall of Earthjustice

For FERC: Robert M. Kennedy of FERC

For ISO-New England, intervenor: Michael Thompson of Wright & Talisman; Maria Gulluni of ISO-New England

For New England Power Generators Association, intervenor: Paul Hughes of McDermott Will & Emery

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