FERC Approves New England Grid Operator’s Fuel Security Plan

The Federal Energy Regulatory Commission on June 18 approved the New England grid operator’s Inventoried Energy Program to compensate resources that provide fuel security during the winters of 2023-2024 and 2024-2025. The commission found that the program is a reasonable short-term solution that will help address winter energy security in light of the misaligned incentives in the market, until a long-term market solution is in place. The grid operator estimates the initiative to cost between $102 million and $148 million annually based on program participation, resource performance, and winter severity.

Commissioner Richard Glick dissented from the decision, saying that the program hands out substantial payments to nuclear, coal, and hydropower generators without any evidence suggesting that these generators will change their behavior in response. Glick said that the grid operator failed to prove that the initiative will actually improve New England’s fuel security or that any improvement that may occur would be worth the up to $300 million it will cost consumers.

The program pays participating resources for having up to three days’ worth of “inventoried energy” or onsite fuel that can convert into electricity during certain conditions. A resource is eligible to participate through a forward contract committing to a certain amount of inventoried energy whenever a cold weather event is declared, or through the spot market that allows payments for any amount of inventoried energy during such an event.