Commonwealth Magazine

Commonwealth Magazine

in decision Posted at 10 p.m. Friday night, the Federal Energy Regulatory Commission has given the New England power grid operator two more years to come up with a system for integrating subsidized clean energy into the region’s electricity markets.

Environmental activists were urging FERC not to grant the postponement, but the committee voted 4-1 to approve it. The five commissioners issued separate statements in which they explained their votes, indicating a split between them.

Richard Gleick, the commission’s chair, said he reluctantly agreed to the two-year delay and criticized ISO-New England, the area’s power grid operator, for being slow.

In his favorable opinion, he wrote, “ISO-New England could and should have done better.”

Commissioner James Danley, the lone defector, warned that the decision would eventually undermine New England’s electricity markets. “I object because market price design cannot be fair and reasonable if it is not competitive, nor can it be competitive when states are allowed to manipulate prices freely,” he wrote, referring to state support for wind farms. “The proposed rate does just that and is therefore clearly unfair and unreasonable.”

The nebulous issue of how electricity markets are managed is attracting attention because it is another example of tension between those eager to abandon fossil fuels in an attempt to deal with climate change and those who are wary of doing so too quickly for fear of market turmoil.

ISO-New England oversees the electricity wholesale markets in the region. In one of those markets, the future capacity market, ISO-New England predicts how much electricity the area will need three years into the future and then encourages power generators to bid to supply it. Power plant operators use the promise of this future revenue to build, maintain and operate their plants.

The future capacity market is under pressure because states like Massachusetts, which operate out of the market, have ordered utilities to purchase wind and hydroelectric power offshore, with payers charging the projects cost. States have pushed for offshore wind purchases to comply with state laws dealing with climate change.

The challenge for ISO-New England is how to integrate price-payer-backed renewable energy projects into the future capacity market without undermining it. Allowing renewable energy projects to market may put pressure on other generators needed for system reliability in the future. Keeping renewable energy projects out of the market may mean that the market may buy more energy than it actually needs.

Since 2013, ISO-New England has adopted what it calls a minimum bid price rule – allowing supported projects to bid in the futures capacity market but at an unsubsidized discretionary cost. This approach puts all generators on an equal footing, but it may be ineffective from a market point of view. Many renewable resources are built that aren’t allowed to come to market anyway, so consumers end up paying for capacity they don’t really need. Much of this electrical energy continues to be generated using fossil fuels.

In its proposal to FERC, ISO-New England said it intended to come up with better pricing rules by 2025 while offering exemptions from the lower price rule for 700 MW of renewable resources – 300 MW next year and 400 MW. the following year. The exemptions are expected to include offshore wind farms that will soon come online in the capacity market.

(700 MW total is a significant commitment, equivalent to projects with a production capacity of 2,000 MW. Nameplate capacity is the amount of electricity a project could theoretically provide under optimal weather conditions; 700 MW is the amount of electricity projects that can be connected at any given time.) )

Four FERC commissioners agreed to ISO-New England’s proposal in a Friday night decision.

Glick said in his favorable opinion that no one would argue that New England’s changing resource mix requires a new approach to meeting energy reliability.

“The correct — and in my opinion, the only fair and reasonable — way to do this is by designing wholesale electricity markets to ensure reliability in light of this changing resource mix rather than trying to roll back the resource mix clock,” Glick wrote. “It is not the role of the commission to choose one type of resource over another, or to guess the wisdom of decision-making about a country’s resources. Instead, we must ensure, in a resource-neutral manner, that wholesale electricity markets procure the services needed to maintain the lighting and balance of the grid.

Danley, in his opposition, insisted that markets could not function properly if some subsidized resource were given an unfair advantage.

“This scheme will fail,” he wrote. “This demand will breach reliability. All-in-one modified payer costs will increase significantly. Combined with the Commission’s draft natural gas pipeline policy statements, which appear geared toward discouraging—if not outright banning—the development of new natural gas pipelines, the region New England seems very vulnerable. And New England is not alone. With every passing day, with every pipeline delayed, with every order undermining price signals in the markets, we are approaching disaster. And when that happens, my colleagues will have presided over a catastrophic foreseeable failure. Avoid it. Perhaps then they will stop accommodating the non-economic policies of states and will instead act, consistent with our legal obligations, to ensure that our markets are fair, reasonable and can function as intended.”

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editorAnd the UK Parliament

Around Bruce Muhl

Bruce Muhl is Editor UK Parliament magazine. Bruce came to UK Parliament From Boston GlobeHe has spent nearly 30 years in a variety of positions covering business and politics. He covered the Massachusetts State Building and served as GlobeHead of the Government House Office in the late eighties. as reported by GlobeThe Spotlight team won the Loeb Award in 1992 for covering conflicts of interest in the state’s pension system. hold a position GlobePolitical editor in 1994 and covered consumer issues in the newspaper. in UK ParliamentBruce helped launch the magazine’s website and wrote on a wide range of issues with a particular focus on politics, tax policy, energy and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Around Bruce Muhl

Bruce Muhl is Editor UK Parliament magazine. Bruce came to UK Parliament From Boston GlobeHe has spent nearly 30 years in a variety of positions covering business and politics. He covered the Massachusetts State Building and served as GlobeHead of the Government House Office in the late eighties. as reported by GlobeThe Spotlight team won the Loeb Award in 1992 for covering conflicts of interest in the state’s pension system. hold a position GlobePolitical editor in 1994 and covered consumer issues in the newspaper. in UK ParliamentBruce helped launch the magazine’s website and wrote on a wide range of issues with a particular focus on politics, tax policy, energy and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

Melissa Berchard, Director of Clean Energy and Grid Repair at the Acadia Center, released a statement saying that the minimum bid base has served for years as a subsidy for fossil fuel generators, and that support will now continue for several more years thanks to the FERC decision.

By contrast, Dan Dolan, president of the New England Generators Association, applauded FERC’s decision to scrap the floor-price rule in a way that mitigates “the reliability and financial risks that may arise from abrupt changes in market designs.”

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