New England grid preps new winter reliability plan

OREANDA-NEWS. New England's electric grid operator plans to ask regulators to approve an expanded version of its winter reliability program that would continue until "pay-for-performance" capacity market reforms take effect in mid-2018.

The request marks a different approach from the last two winter reliability programs, which have only lasted a single winter before expiring. The reliability program's costs could also double or triple to as much as \\$150mn as it expands to cover coal, nuclear, biomass and hydro resources that can store several days of fuel on-site.

The Independent System Operator of New England created its reliability program so dual-fuel generators would fill up their fuel tanks before winter, when pipelines serving the region are often constrained. The program last year paid generators the equivalent of \\$18/bl for oil and LNG that was unused at winter's end, with total costs last winter hitting \\$48mn.

The plan is to keep this structure for the next three winters, but expand it to cover all dispatchable resources that can store at least 10 days of fuel on-site. The grid operator promised to expand the program in response to concerns from the Federal Energy Regulatory Commission (FERC) that it was selectively benefiting certain resources. The program would last until mid-2018 when steep penalties for non-performance are expected to offset fuel storage risks.

But the expected higher cost of the program is drawing complaints from New England states, which worry consumers will pay more for a winter reliability program that would have the same reliability benefits. The New England States Committee on Electricity wants the grid operator to keep restricting the program to oil and LNG, a move that would cap its maximum costs at \\$92mn at an \\$18/bbl compensation rate.

But such an approach would face an uphill battle in light of FERC's clear directions for the grid operator to expand the reliability program to other resources. The commission two weeks ago told the grid operator it would have to prove why participation of any resources was not feasible if the operator wanted to exclude them from the program.

The New England Power Pool's markets committee will discuss the winter reliability program next week.