N. England power reliability program under fire
The ISO New England control room in Holyoke manages energy transmission throughout Massachusetts.
The U.S. Court of Appeals' Washington, D.C. circuit last week asked New England grid operator ISO-NE to ensure that the rates of its inaugural winter reliability program were just and reasonable.
In doing so, the appeals court partially sided with TransCanada Power Marketing and the Retail Energy Supply Association, which in 2014 filed a legal challenge of the Federal Energy Regulatory Commission's approval of ISO-NE's 2013-2014 reliability program — its first such program.
The reliability program, which has continued since 2013,addresses concerns about the region's overreliance on natural gas for electricity generation. It provides financial incentives to the owners of dual-fuel or oil-fired generators to keep sufficient oil supplies on hand for the coldest months of the year.
ISO-NE had originally estimated that the program would cost between $16 million and $43 million, but as winter 2013 approached, it proposed paying nearly $79 million for approximately 2 million megawatt hours it had out to bid. ISO-NE said earlier this year that the inaugural program cost $66 million.
TransCanada and RESA argued that FERC did not have enough evidence to determine how much of the program's cost — which is borne by "load-serving entities" like TransCanada — was attributable to profit and risk mark-up.
The appeals court agreed, and in its Dec. 22 decision remanded the case to FERC "so that it may either offer a reasoned justification for the [approval] order or revise its disposition to ensure that the rates under the program are just and reasonable."
In September, FERC approved ISO-NE's reliability programs through winter 2018. The updated plans allow for more types of generators to participate, including coal, nuclear, biomass and hydro.
FERC has already approved a new reliability incentive structure that takes effect in June 2018.
The 2014-2015 reliability program was expected to cost less than $50 million, ISO-NE said earlier this year.
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