New England takes detour on electric grid reform
Pushback ensues as ending of key rule on acquiring power is pushed back two years
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.
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 buildout 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 last minute and played an oftenused 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 crosshairs 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 gives an advantage to 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, which represents the six New England governors’ electricity interests — and dozens of other energy stakeholders through the advisory group the New England Power Pool.
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.
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 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.
They continue to criticize the ISO for its often-stated contention that fossil fuel generation, such as natural gas, is essential to ensure the grid has enough power. That assertion has been turned on its head in recent winters — including this one — when gas has been in short supply, bringing the risk that electricity supplies could be strained when gas is diverted for heating.
Reliability vs. renewables
“We need to stop pitting reliability against clean energy,” said Jeremy McDiarmid, NECEC’s vice president for policy and government affairs. “We need to ask more of ISO than to just focus solely on reliability. Reliability matters, to be clear. But it’s not the only thing. And we need to find solutions to encourage the clean energy resources to come online while keeping the lights on at the same time.”
He said reverting to fossil fuel as the first reaction to any question about reliability on the part of the ISO has to end.
“I think that perspective misses the moment,” he said. “ISO needs to evolve. I think we don’t want this to be a battle between reliability and clean energy, because we firmly believe you can have both, and we need to ask ISO to do both.”
A recent study from Stanford University supports that belief. It finds “that all states and regions can maintain grid stability (avoid blackouts), despite variable and extreme weather, while providing 100% of their all-purpose energy” from wind, water and solar power plus energy storage.
Dykes has had plenty of conversations with the ISO. And the MOPR situation brings up all the issues in them — unvarnished.
“You have to ask yourself: Who has confidence in the ISO-New England’s fragile capacity market and its ability to motivate sufficient investment in the resources that we need to keep the lights on year round today, let alone in 2030 or 2040? I don’t,” she said. “I share the frustrations that people have around the ISO kind of shifting its preference from an immediate end to the MOPR to a transition proposal coming up so late in the stakeholder process.”
But she added: “The important fundamental is that the MOPR is ending.” But when?
A spokesman for the ISO disputed that the eightmonth process that ended in the controversial transition had been solely focused on ending the MOPR for the 2023 capacity auction.
“When we first announced plans to begin a stakeholder process, we did say we would focus on the reliability of the system,” said Matt Kakley. “We went in with an open mind.”
He pointed to delays in the last few years for major renewable systems. New Hampshire and Maine have both turned down transmission projects to bring in additional hydropower from Canada. Offshore wind progressed at a snail’s pace during the Trump years, and there have been other slowdowns due to local communities fighting transmission connection hubs and multiple lawsuits from fishing interests.
“Resources that are retiring are on schedule, while new resources to replace them have had delays or cancellations,” he said. “We believe this is the best path forward.”