Dive Brief:

ISO-New England will ask the Federal Energy Regulatory Commission for permission to keep online two units at Exelon's Mystic Generating station, saying their retirement could put electricity reliability at risk.

Retirement of units 8 and 9 at the plant would pose an "unacceptable fuel security risk to the region during the winter months," ISO-NE said in a memo. The units contribute about 1,600 MW of generation in the winter.

The grid operator will later seek tariff-based solutions to prevent such reliability risks from retirement in the future. Market actors are set to discuss the filing at the grid operator's April 25 reliability committee meeting.

Dive Insight:

Generation in New England can get tight in winter months when natural gas is diverted for home heating, leaving the grid operator to rely on dual-fuel plants that can burn diesel or bunker oil stored onsite. This winter, those plants helped keep power online during extended cold snaps in the region.

The retirement of a large natural gas plant could put the system at even greater risk, the region's grid operator said in a Tuesday memo.

"Our recent operational experiences during the cold spell, the projected state of the power system in 2022 through 2024, and the future trends identified in our Operational Fuel Security analysis, highlight the critical importance of this facility to the region's fuel security," Chief Operating Officer Vamsi Chadalavada wrote to stakeholders.

Due to that importance, ISO-NE will ask FERC to allow the grid operator to go outside its market tariffs and keep the units open through cost recovery, meaning ratepayers will pay to keep the units online. Chadalavada said it would take this action due to "limited options" to ensure fuel security in the short term, but the ISO hopes to devise market-based solutions to ensure reliability in the future.

"We plan to commence discussions with stakeholders, beginning at the April 25 Reliability Committee Meeting, on the necessary reliability criteria for retaining resources needed for fuel security in the Forward Capacity Market," he wrote. "The ISO would like to file associated Tariff language by November 2018, to be in effect for retirement bids in [the next capacity auction.]"

The Mystic station announcement comes after FERC approved a high-profile reform to ISO-NE's capacity markets, splitting them in two in hopes of better accommodating subsidized resources. That structure was not in effect for the most recent capacity auction when Exelon announced its retirements, however, and it remains to be seen how the new design will impact retirement and siting decisions in the Northeast electricity market.

Correction: An earlier version of this post indicated ISO-NE designated the Mystic Generating Station a Reliability Must Run (RMR) resource. ISO-NE no longer enacts RMR designations, however, and must ask FERC for approval to place a unit under cost recovery outside of its market tariffs.