The Federal Energy Regulatory Commission on Dec. 20 approved an agreement allowing cost-of-service compensation for the continued operation of Exelon Corp.’s Mystic 8 and 9 natural gas-fired generating units to address reliability concerns in the New England region. The contract also includes the company’s Distrigas liquefied natural gas terminal that serves the plant. Commissioner Richard Glick dissented saying that the agency “cannot and should not use its authority over wholesale sales of electricity to bail out an LNG import facility.” The agreement takes effect on June 1, 2022.

Following Exelon’s bids to retire the money-losing plant in 2022, ISO-New England Inc. asked the commission for waivers to maintain the units to ensure fuel security for the region for the period of June 1, 2022 to May 31, 2024. The grid operator said that the closure of the two combined cycle generators would deprive the system of 1,700 megawatts of winter generating capacity with on-site fuel, while also jeopardizing the future of Distrigas terminal, the fuel source for the plant. In July 2018, the commission rejected ISO-NE’s request for waivers saying that the grid operator’s tariff lacks provisions to address reliability risks related to fuel security, although it accepted that their retirement could threaten reliability. ISO-NE’s current rules allow retention of resources to resolve local transmission security issues, but lack a means to address reliability risks related to fuel security. In the July order, FERC directed ISO-NE to file interim revisions for a short-term, cost-of-service agreement for the units, and permanent revisions to address regional fuel security needs by July 1, 2019.

On Dec. 3, FERC approved ISO-NE’s interim market solution to treat fuel secure resources as price takers in the the next three capacity auctions as later commitment periods will use a longer-term solution.