By Rich Heidorn Jr.
The owner of a Massachusetts generating plant says ISO-NE is forcing it to pay millions in unnecessary capacity costs because the RTO mistakenly underestimated the plant’s capacity.
GenOn Energy Management, a unit of NRG Energy, asked the Federal Energy Regulatory Commission last week for relief from what it called an “anomalous, illogical and patently unfair circumstance” (EL15-57).
GenOn said ISO-NE credited its Canal 2 oil- and gas-fired generator in Sandwich, Mass., with capacity of only 303 MW — rather than the plant’s actual 556.5-MW output — in the March annual reconfiguration auction (ARA) for the 2015-2016 capacity commitment period.
As a result, the RTO submitted a demand bid on GenOn’s behalf for the difference, forcing the company “to buy out of a capacity supply obligation that Canal 2 is fully capable of fulfilling.” Only a portion of the demand bid cleared because supply offers filled only two-thirds of the demand bids entered.
The company redacted specifics of how much it estimated the error could cost it, but based on the ARA’s clearing price of $11.466/kW-month, and the prorated apportionment of cleared bids, GenOn could be forced to spend more than $22 million.
GenOn said the plant’s output was derated after the failure of a step-up transformer in July 2013, but that it returned to full capacity in May 2014, as documented by the RTO’s capacity audits. The company noted that it offered the plant’s full capacity in Forward Capacity Auction 9 in February.
The company asked FERC to force the RTO to correct the “obvious mistake on ISO-NE’s part” or grant it a waiver to allow it to escape the capacity charges.
It asked for FERC action by May 25 so that ISO-NE can ensure that the appropriate capacity supply obligations are in place before the beginning of the 2015/16 capacity commitment period on June 1.
