October 17, 2014

State regulators demand redo of ISO New England power auction

Submitted photo
Submitted photo
Grid administrator ISO New England's Massachusetts nerve center.

State Attorney General George Jepsen this week asked a federal commission to reconsider its decision not to investigate whether a power plant operator deliberately manipulated a February power auction affecting all of New England.

Jepsen is asking the Federal Energy Regulatory Commission to investigate the ISO-New England auction, which set 2017 and 2018 prices, and whether a power plant operator deliberately took a plant offline in order to profit.

The February auction — the eighth since 2008 — resulted in a total regional cost of $2.96 billion, a 140 percent increase over last year's $1.22 billion. The impact on Connecticut ratepayers would be an increase from $277 million per year to $617 million per year.

ISO-New England operates New England's bulk power grid, and the auctions determine prices ratepayers will be charged, based on supply and demand.

Jepsen complained to FERC in April that Energy Capital Partners — which controls at least five power plants in New England — withdrew its 1,500-megawatt plant in Fall River, Mass., from the auction.

Energy Capital Partners withdrew from the auction in Oct. 2013, four months past the deadline for other power generators to qualify to participate in the auction, Jepsen's letter said. The result was that there was less supply than there was demand.

The net result was that an "insufficient competition" clause would take effect, raising the administrative default price from $3.47 per kilowatt month to $7.03.

A September report by consumer lobbyist group Public Citizen said that Energy Capital Partners had incentive to withhold the capacity because it would earn more money on the higher rates than it would lose on the closing of the Massachusetts plant. The group estimated the net gain at $74 million, while Jepsen pegged it at a minimum of $77 million.

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