Latest / News•Feb 23, 2022

New England takes a detour on grid reform; griping ensues

It was a shocker.

Katie Dykes, Connecticut’s commissioner of the Department of Energy and Environmental Protection, earlier this month got onboard with a two-year delay for a key component of her pet project — reforming the New England electric grid.

Definitely a shocker.

For nearly a decade, Dykes has railed against the operator of the grid, ISO-New England, and the way it purchases power, saying it hinders the build out of renewable energy, which comes from a source that is not depleted when used, such as wind or solar power. But after building regional momentum to change that dynamic, Dykes blinked.

Instead of ending a year from now, a key rule for acquiring future power for the grid will end three years from now, with agreement from Dykes.

Not that Dykes voted for the delay. But she didn’t vote against it either. “Not opposing” was the official disposition.

“It’s a long way from not opposing to supporting,” she explained several days after the decision.

But renewable energy advocates around the region are nothing short of appalled and point fingers straight at ISO-NE, which they say changed its mind at the very last minute and played an often-used trump card — that reliability of the grid would be at stake if the rule changed next year.

“As someone who has responsibility for meeting state policy goals and assuring that we’re doing so in an affordable, reliable way, I can’t just outright dismiss the ISO’s rationale for this preference, i.e., reliability,” Dykes said. “And that’s why we didn’t oppose.”

Francis Pullaro, executive director of RENEW Northeast, a group uniting renewable energy and environmental advocates, said the states were put in a difficult position.

“They don’t know what the ISO needs. They’re not looking at the system like the ISO is. I can be sympathetic to that. I have my own perspective,” he said. “No one’s going to call me if the system collapses, right? It’s a sensitive topic.”

Meet the MOPR

The rule in the cross-hairs is called the minimum offer price rule, universally referred to in the energy world as the MOPR.

Once a year, the ISO runs what’s called a forward capacity auction. It’s a low-price-wins auction to determine what generating resources will go into its Forward Capacity Market, the power it plans to have available three years in advance. It gives the ISO the security that power will be there, and it provides a commitment to potential new power sources so they can get financed and built.

The MOPR is a key component, setting the lowest price that a resource can offer in the forward capacity auction.

Mainly, the power projects want to recoup their construction costs. Many, if not most, renewable and clean energy resources have state-sponsored contracts and other sorts of subsidies, so part of those costs are already covered. But under the MOPR, they have to factor the entire cost into their bid, not just the uncovered portion.

Because renewable energy is still more expensive than traditional fossil fuel power — though costs are coming down — renewables are rarely chosen at auctions because they can’t bid low enough. Dykes advocates a broad overhaul of how the ISO runs the grid, but the MOPR comes in for particular criticism. She and others have argued repeatedly that the rule advantages natural gas, preventing states from meeting their renewable energy and greenhouse gas emissions mandates and costing ratepayers extra money.

A little more than two years ago, after threatening to pull out of the capacity market, Dykes corralled all the New England states into a group to map out reforms for the ISO. They called it the New England Energy Vision. First up was getting rid of the MOPR.

Discussions began in May of last year. At the table: the ISO; the states — through the New England States Committee on Electricity (NESCOE), which represents the six New England governors’ electricity interests; and dozens of other energy stakeholders through the advisory group the New England Power Pool — NEPOOL.

On Jan. 11, the NEPOOL markets committee approved the only plan on the table: ending the MOPR beginning with the capacity auction in February 2023. That put the MOPR one vote away from termination.

About two weeks later, the ISO released a memo in advance of the final vote. The memo supported a plan offered by two fossil fuel power generators that would delay the end of MOPR until 2025, effectively putting off more meaningful and cost effective renewable energy entries to the grid until three years after that — 2028.

On Feb. 3, the NEPOOL participants committee went with that alternative, called a “transition,” by a narrow margin. The next day, Dykes, along with all the other NESCOE states except New Hampshire — which doesn’t want to get rid of MOPR at all — said it would not oppose the change.

Then all hell broke loose.

Outraged tweets, press releases and all manner of indignation ensued. Critics called it the ISO’s “eleventh-hour change,” accused the ISO of “turning on a dime” and labeled the move an “unnecessary lifeline to gas generators” and “anti-competitive.”

A letter sent by the Northeast Clean Energy Council, NECEC, to all six New England attorneys general called it “wholly out of step with climate action plans adopted by nearly every state in the New England region.”

“Given that this will have a chilling effect on the integration of renewable energy into the regional capacity market until 2028, it could have deleterious effects of reaching established 2030 climate goals,” the letter went on.

It also noted that it would disproportionately impact disadvantaged communities.

The letter asked that the AGs formally request the Federal Energy Regulatory Commission, known as FERC, to reject the delay. FERC has final say on any change to the MOPR.

Another letter sent by dozens of advocates in the New England Offshore Wind Coalition to NESCOE took Dykes and her counterparts to task for not showing leadership, saying that New England “is falling behind other regions that have already moved to eliminate discriminatory market rules like the outdated MOPR.”

Much of the ire is focused on the ISO’s claims of reliability concerns. Clean energy advocates say the ISO didn’t specify what reliability problems would occur if there was no delay. And they say the states — especially Dykes, who has been leading the charge — should have pushed harder for that information.