By Rich Heidorn Jr.

In a stunning turnaround, FERC’s Office of Enforcement on Wednesday urged the commission to withdraw its Order to Show Cause alleging that the operators of the Salem Harbor Power Station misled ISO-NE with supply offers it could not meet because of insufficient fuel.

Enforcement litigation staff made the unusual recommendation based on Footprint Power’s Aug. 2 response to the order, which argued that Enforcement had overstated what ISO-NE expected from Salem Harbor Unit 4. (See Salem Harbor Operator Seeks Dismissal of ‘False Offer’ Case.)

The Office of Enforcement’s June 18 show cause order said Footprint Power should forfeit more than $2 million in capacity payments Unit 4 received for a period in June and July 2013 during which the plant’s fuel supply prevented it from operating at its offered capacity. It also sought $4.2 million in civil penalties.

But in its new filing, staff said it was persuaded by new arguments that the commission had failed to consider the 17.5 hours that it took Salem Unit 4 to reach full output from a cold start (IN18-7).

“Although staff disagrees with most of the arguments that Footprint raises, staff finds merit in Footprint’s new defense relating to the start-up requirements of [Unit 4]. In consideration of that argument — one which Footprint had not fully raised … staff agrees with Footprint that its conduct during the June 27 through July 17, 2013, portion of the relevant period (i.e., June and July 2013) does not violate the four Tariff provisions and regulations at issue here.

“Staff still believes that Footprint violated those four Tariff provisions and regulations during the remaining portion of the relevant period, when Footprint submitted day-ahead limited energy generator (LEG) offers from July 18 to July 25, because the start-up requirements comprising Footprint’s new defense do not apply then.”

Enforcement recommended the commission vacate the Order to Show Cause and not assess a penalty or further pursue the matter because the reduced scope of the violations lessened the impact on the market.

“The extent of harm that resulted from Footprint’s conduct is uncertain but likely limited. Moreover, Unit 4 was retired in 2014 and has since been demolished. It is being replaced by a new modern gas plant. Consequently, this specific conduct (i.e., misrepresentations about how much fuel is in the tank) will not recur. For all of these reasons, staff does not believe that pursuing the case further is a prudent use of the staff’s resources.”

Footprint’s lead attorney, John N. Estes III of Skadden, Arps, Slate, Meagher & Flom,  said his client was “gratified” by FERC’s change of heart.

“We trust that the commission will act promptly to follow Enforcement staff’s recommendation and finally end this groundless and stale set of allegations,” he said.