FERC on Monday accepted ISO-NE’s request to yank the capacity supply obligation for the Killingly Energy Center in eastern Connecticut, dealing another near-fatal blow to the contentious 650-MW natural gas plant under development (ER22-355).

The RTO has said that Killingly, which secured a CSO for the 2022/2023 capacity period, has failed to meet developmental milestones and is on track to not be in commercial operation by the required date of June 1, 2024, two years after the start of that period. Developers have up to two years to find other resources to meet their CSO obligations if they themselves cannot.

Developer NTE Energy disagreed with ISO-NE’s claims about delays on the project, saying they were out of its control because of factors including legal challenges and the COVID-19 pandemic. The company claimed in November that financing is “imminent” and challenged what it called “an incorrect assumption” by the RTO that led to a “premature” decision. (See ISO-NE Seeks to Terminate CSO for Conn. Power Plant.)

But in an order issued Monday, FERC sided with ISO-NE, saying it was “persuaded by the evidence” presented that Killingly will not achieve critical milestones by 2024. After consulting with NTE, which it did in several meetings over two months, the RTO has the right to terminate the CSO, FERC said.

As a result of FERC’s ruling, the company will lose its CSO, forfeit financial assurance associated with the terminated megawatts and no longer be eligible for the next Forward Capacity Auction in early February.

NTE, Opponents React

NTE says it’s not giving up on the project.

“We are very disappointed and do not agree with FERC’s decision,” the company’s managing director, Tim Eves, 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.”

But the plant’s future is cloudy. The company itself has said in filings that FERC’s approval of ISO-NE decision would cause it “irreparable” damage and lose it hundreds of millions of dollars of revenue.

Environmental groups in Connecticut, which have opposed Killingly and sued over the project in a case that was ultimately decided by the state Supreme Court, celebrated this week at the latest dimming of the project’s future prospects.

“It was the outcome we hoped for, and we’re happy,” said Samantha Dynowski, director of the Connecticut chapter of the Sierra Club.

She said the plant ever being built appears “very unlikely” without a CSO.

“In the face of [ISO-NE] not wanting them and Gov. [Ned] Lamont saying he doesn’t want the plant … they’d really just be forcing themselves on a market that doesn’t want them here,” Dynowski said.

The order has broader implications for ISO-NE, and the events leading to it should spur action by the RTO, said Dan Dolan, president of the New England Power Generators Association.

“Moving forward, more needs to be done to ensure that new facilities only offer into the market when they are ready to come in on time,” Dolan said in an email to RTO Insider. “Market reforms should include proposals like escalating penalties for delays. 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.”