Dive Brief:

• Federal regulators have allowed ISO New England to cancel a capacity supply obligation (CSO) contract that was supporting Invenergy's delayed plans to develop its 900 MW gas-fired facility in Burrillville, Rhode Island.
• The Federal Energy Regulatory Commission concluded that allowing the Clear River Energy Center to retain the contract, despite being years behind schedule, would have "undesirable consequences" for New England's system planning and the pricing in the region's Forward Capacity Market (FCM).
• Opponents of the project say New England's request to cancel the project is proof the new gas-fired generation is unnecessary. Invenergy officials say development of the plant will continue, despite FERC's decision.

Dive Insight:

As development of Clear River fell behind schedule, Invenergy covered the project's capacity commitments in two forward capacity auctions (FCA). But with commercial operations still years off, federal officials say canceling the contract is appropriate to avoid skewing the market.

The decision illustrates the complicated, years-long process of planning for and developing new generation resources, and interconnecting them with the grid.

Clear River was originally planned to begin commercial operations in June 2019, and ISO-NE granted Clear River Unit 1 a CSO in early 2016, for the June 1, 2019 to May 31, 2020 Capacity Commitment Period. Since then, Invenergy has covered the Clear River capacity auction for the 2019-2020 and 2020-2021 commitment periods.

In its request to cancel the contract, ISO New England told FERC that it includes Existing Capacity Resources in capacity requirement calculations for the FCA, as well as in system planning studies, and has included Clear River in these processes since the project cleared the auction.

FERC noted that Installed Capacity Requirements are "a key parameter in setting capacity demand in each FCA," and including Clear River in the calculations "risks misrepresenting capacity availability for the associated delivery years."

That, in turn, would mean the FCA could send incorrect market signals for the value of capacity, FERC explained, "and therefore procure an economically inefficient quantity of capacity overall and/or in certain capacity zones."

The commission also said continuing to account for Clear River as an Existing Capacity Resource could "skew the results of interconnection studies and transmission planning studies," which could "create a barrier to other new resources" if their interconnection is impacted by Clear River’s operational status and associated transmission upgrades.

And if inaccurate inputs are used in transmission planning studies, FERC said that could "call into question the accuracy and integrity of those studies, including any transmission issues or potential solutions they identify."

By FERC's order, ISO New England's request to terminate the CSO for the 2021-2022 capacity commitment period became effective Nov. 19.

Opponents of the project cheered ISO New England's request to cancel the contract, arguing it shows the plant is unnecessary. In September, the Conservation Law Foundation called the request "proof positive" that "Invenergy's plant is simply not needed. ... It's time for Invenergy to admit defeat and withdraw its permit application."

The company disagrees. Invenergy told the Associated Press that loss of the contract will not "impact the future of the project or Invenergy's commitment to Rhode Island."