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Commissioner Neil Chatterjee Statement
July 2, 2018
Docket Nos. ER18-1509-000, EL18-182-000
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Concurrence on ISO New England Waiver Request Regarding Mystic Units 8 and 9

“Since early in my tenure at the Commission, I have consistently voiced my support for evaluating the resilience of the nation’s bulk power system in light of significant changes within the energy sector. When the Commission unanimously concluded that bulk power system resilience, including fuel security, is an issue worthy of careful examination, it highlighted the centrality of the RTOs/ISOs in that effort.1 As such, the January Order identified ISO-NE’s then-pending effort to evaluate the fuel security risks within its footprint as exemplary of the type of RTO/ISO-led, proactive measures on resilience that the Commission had in mind.2

“I am encouraged that the Commission is responding to ISO-NE’s evaluation of its fuel security risks by directing “prompt, proactive, and decisive measures” similar to what I called for in my concurrence to the January Order.3 ISO-NE’s Operational Fuel-Security Analysis is robust, painting a dismal picture of the effects on bulk power system reliability in Boston and the surrounding area should Mystic Units 8 and 9 retire. I believe the aggressive deadlines specified within today’s order should position ISO-NE to deploy timely measures to address the concerns identified in its analysis.

“But even more importantly, today’s order signals the Commission’s endorsement of ISO-NE’s proposed two-pronged approach to addressing those fuel security concerns. ISO-NE has concluded that its existing market-based, reliability-centered framework is unable to ensure adequate fuel security.4 In particular, fuel security risks beyond the control of market participants may demand near-term, out-of-market support until any long-term, market-based solutions that are identified as necessary can be implemented. Similar logic animated my preference for the consideration of interim out-of-market measures to support at-risk, resilience-critical generation resources pending the conclusion of the Commission’s resilience proceeding in Docket No. AD18-7-000.5 As underscored by today’s order, had a majority of my colleagues supported that position, we could by now have measures in place to address near-term fuel security and resilience risks in ISO-NE and other RTOs/ISOs.

“Nevertheless, I appreciate the Commission’s willingness to consider ISO-NE’s conclusion that the near-term fuel security risks it has identified demand interim out-of-market measures to support particular generation resources. I understand that this may be a difficult position for some to endorse. Indeed, I share my colleagues’ preference for market-based, fuel-neutral approaches to ensuring resilience within FERC-jurisdictional organized markets. But, in supporting today’s order, I acknowledge that ISO-NE has not lightly arrived at its conclusion that interim measures to support these particular generation resources are necessary. Further, I emphasize that any interim measures undertaken will occur in parallel with ongoing efforts to develop fuel-neutral, market-based approaches to ensure long-term fuel security within the region.

“Finally, I also commend other RTOs/ISOs that have undertaken or will undertake similar proactive efforts to evaluate and address fuel security and other elements of resilience within their footprints. Timely completion of those initiatives should ensure that market-based (rather than out-of-market) mechanisms are implemented soon enough to preserve any at-risk, resilience-critical resources identified.

“For the reasons stated above, I respectfully concur.”






                                               

    1 Grid Reliability and Resilience Pricing & Grid Resilience in Regional Transmission Organizations and Independent System Operators, Order Terminating Rulemaking Proceeding, Initiating New Proceeding, and Establishing Additional Procedures, 162 FERC ¶ 61,012 (2018) (January Order).
    2 See id. at P 28 & n. 44.
    3 Id. (Chatterjee, Comm’r, concurring).
    4 See ISO-NE May 1, 2018 Petition for Waiver at 4 (explaining that ISO-NE’s tariff permits financial support to retain retiring resources to resolve transmission security issues — but not the reliability risks associated with fuel security); 16 n. 37 (noting that pay-for-performance’s effectiveness in addressing fuel security concerns has been restricted by government action limiting the utility of duel-fuel capability and resistance to natural gas transportation infrastructure).
    5 See January Order, 162 FERC ¶ 61,012 (Chatterjee, Comm’r, concurring) (“[C]urrent RTO/ISO market design mechanisms are intended to incent generation resource owners to manage the fuel supply risks they can control — not the spectrum of fuel supply risks beyond their control.”).
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