ISO-NE issues statement on settlement with FERC OE

ISO New England has reached a settlement agreement with the Federal Energy Regulatory Commission’s Office of Enforcement (FERC OE) to resolve a long-standing dispute stemming from the delay in the commercialization of the Salem Harbor Power Development generating facility in Massachusetts (formerly known as Footprint Power) and its receipt of capacity payments. In June, the ISO publicly disclosed initial information concerning the investigation into whether there were violations of the ISO’s tariff with regard to the participation of the power plant in the region’s forward capacity market. FERC commissioners approved the settlement today.

In the ISO’s view, today’s settlement confirms that Salem Harbor Power Development’s failure to provide accurate and complete information to ISO staff precipitated these events. As detailed in this settlement agreement and a previous settlement between FERC OE and Salem Harbor Power Development, in 2017, the project faced significant delays in meeting its capacity obligation, but failed to notify ISO staff about the severity of these delays.

While the root cause of these events stems from Salem Harbor Power Development’s deception, ISO recognizes that this matter revealed inadequacies in the market rules and our internal controls, and areas where better judgments could have been made. Once these issues became apparent, ISO promptly proposed changes to the tariff and took action to ensure that similar issues can be identified and addressed in a timely manner.  

Specifically, we worked with stakeholders to change capacity market rules to include an automatic financial penalty for resources that are late. The penalty serves as an enhanced incentive for project sponsors to meet their commercial operation date and eliminates the need for ISO staff to assess the veracity of the information submitted to it by project sponsors. In addition, the ISO restructured departments and put in place mechanisms to foster increased information exchange among internal groups. Additional changes to improve compliance reporting have also been implemented.

Further, while ISO New England argued for FERC OE to dismiss this matter as it pertained to the ISO, we believe it is in the best interest of the region to settle, so we can focus our efforts on the important work being done to help New England achieve a reliable and clean energy future. Throughout the investigation, the ISO cooperated fully with the FERC OE.

ISO New England’s senior management takes responsibility for the ISO’s role in this matter. Therefore, the financial penalty outlined in the settlement agreement will be paid through a reduction in executive compensation.  ISO New England has learned from this experience, and have taken actions to prevent similar situations in the future. We look forward to continuing to work with our partners in the New England states and energy industry to ensure the region’s clean energy transition is a reliable one.