Climate or reliability? FERC blocks Northeast gas project

By Miranda Willson | 01/05/2022 06:55 AM EST

The Killingly Energy Center, a proposed natural gas plant from NTE Energy LLC.

The Killingly Energy Center, a proposed natural gas plant from NTE Energy LLC, is shown. NTE Energy

A proposed natural gas power plant in New England suffered a major blow this week, as federal regulators approved a request from the regional grid operator to cut ties with the project.

The Federal Energy Regulatory Commission signed off on a plan from ISO New England Inc. to terminate its contract with the Killingly Energy Center, a 650-megawatt, gas-fired plant slated to be built in eastern Connecticut. ISO New England, which manages the power grid in six Northeast states, announced its intent to cancel the contract in November, citing project delays.

First proposed in 2016, the power plant would have increased the available supply of electricity generated from gas in New England at a time when the region is facing fuel supply issues, according to developer NTE Energy LLC. But critics — including some state officials in Connecticut — have called the project counterproductive to efforts in the Constitution State and New England at large to transition to carbon-free electricity.

In 2019, NTE Energy secured a "capacity supply obligation" with ISO-NE, which would have allowed the facility to participate in the region’s capacity auction next month. But the power plant was supposed to come online by June 1, and it is currently not on track to do so, according to the grid operator. The project could power about 500,000 homes, if completed.

"The ISO’s decision to terminate the capacity supply obligation is based on our lack of confidence that the project would meet its deadline for commercial operations," Matt Kakley, a senior communications specialist at ISO-NE, said in an email.

In a unanimous decision issued Monday, FERC found that "the relevant condition for termination… has been met."

ISO-NE’s initial ties to the project was one of multiple factors that spurred Connecticut to consider leaving the regional power market in 2020 (Energywire, Jan. 27, 2020). In addition, Gov. Ned Lamont (D) said last year that he didn’t want to see the Killingly Energy Center get built, according to news reports.

If completed, the facility would be allowed to emit up to 2.2 million tons of carbon dioxide each year, said Samantha Dynowski, state director of the Connecticut chapter of the Sierra Club. Meanwhile, the state has enacted a policy to reduce greenhouse gas emissions from the electric system, transportation and buildings by 45 percent below 2001 levels by 2030 and by 80 percent below 2001 levels by 2050.

In that sense, the Killingly project exemplifies "serious problems" with the regional grid market as well as with policies and regulations in Connecticut, Dynowski said.

"Building more fossil fuel power plants is holding us back from the solutions we actually need," she said.

FERC’s order comes amid heightened reliability concerns in New England this winter. The natural gas pipeline system in the Northeast is limited, which could make it difficult to ensure the gas supply can continuously meet demand in the event of a prolonged cold snap, ISO-NE said last month. Supply chain disruptions due to the Covid-19 pandemic have also made the grid vulnerable (Energywire, Dec. 7, 2021).

"We have taken numerous actions to improve energy security in the region, including implementing many operational tools," Kakley said.

ISO-NE also is working on a series of studies examining potential reforms to better support renewable energy projects and electric transmission lines (Energywire, Nov. 22, 2021).

While Dynowski said it seemed "highly unlikely" that the Killingly Energy Center would move forward without the support of ISO-NE, NTE Energy indicated it might not abandon the project.

"We are very disappointed and do not agree with FERC’s decision," Tim Eves, a managing partner at NTE Energy, said in a statement. "The Killingly Energy Center is important for grid reliability, and we will continue to work to be the bridge for the region’s carbon-free future."

The Florida-based company has disputed suggestions that its project would run counter to climate policies. The project would have produced fewer emissions than older power plants within the region while boosting the local economy, NTE Energy has said.

However, ISO-NE should pursue reforms to ensure that proposed new projects like the Killingly Energy Center only offer into the market "when they are ready to come in on time," said Dan Dolan, president of the New England Power Generators Association.

"Market reforms should include proposals like escalating penalties for delays," Dolan said in an email. "This will help make continued improvements to provide reliability value for New England consumers and competitive revenue opportunities to those facilities providing the reliability services."