Conservation Law Foundation Opens New Front in Battle Against Dirty Coal

Challenges ISO-NE Decision Forcing Ratepayers to Pay Millions in Above Market Costs to Keep Salem Harbor Station Running for ‘Contingency’ Needs

CONTACT:
Karen Wood, CLF, (617) 850-1722
Shanna Cleveland, CLF, (617) 850-1716

BOSTON, MA  October 19, 2010 – Conservation Law Foundation (CLF) is challenging a decision by ISO New England (ISO-NE) to keep Salem Harbor Station’s two remaining units running to meet secondary reliability needs – burdening area ratepayers with more than $30 million dollars in above market costs – when more efficient transmission planning would prevent the need for the 58- year-old coal-fired power plant to remain operational. CLF filed a protest with the Federal Energy Regulatory Commission (FERC) saying that its recent reliability determinations for Salem Harbor will result in rates that are “unjust and unreasonable and cause harm to the public interest.”

With its filing, CLF is taking aim at an inefficient system that has served to prolong the life of Salem Harbor Station at great cost to ratepayers, and will continue to do so despite the fact that its power is no longer needed to “keep the lights on.”

N. Jonathan Peress, VP and director of CLF’s Clean Energy and Climate Change program, said, “This protest exposes how insufficient planning, and loopholes in ISO-NE’s rules can be used to prop up a dying business and have ratepayers shoulder the burden. It is preposterous that area ratepayers are paying and will continue to pay millions in above market prices to keep an old, dirty, dangerous power plant in operation, when even its owners have acknowledged its obsolescence. A process that can be gamed to inflict economic, environmental and public harm cannot be allowed to continue.”

ISO-NE determined in its August 30, 2010 filing that the plant is needed for reliability only in the event that there is an unplanned failure of several Boston-area power plants or transmission lines on a day that demand is high. This is the second year in a row that ISO -NE has made that determination for Salem Harbor Station after the plant’s owner, Dominion Energy of Virginia, applied to retire the facility because it is unable to cover its costs through the wholesale electricity energy and capacity markets. Instead, Dominion sought to recover its costs through reliability contracts, which pay Dominion above market prices for electricity based on anticipated need. Because ISO-NE determined that the plant is needed for reliability, ratepayers will incur millions of dollars in above market costs to maintain the units and fund investments in new technology required to bring the plant in compliance with current and anticipated environmental policies.

After ISO New England made its first determination that Salem Harbor was necessary for reliability in the 2009 auction, the rules required ISO to develop a plan that would allow Salem Harbor to retire.  ISO New England failed to meet that obligation and by doing so essentially gave Dominion a green light to ask for additional above-market payments in the most recent electricity supply auction.

ISO New England has known about the potential for reliability issues in the North Shore area since at least 2004, and New England ratepayers have already spent approximately $233 million for reliability upgrades—completed in 2009—which were supposed to end the need for the  Salem Harbor plant.  ISO New England has yet to explain why those upgrades did not achieve that goal.

CLF’s protest asks FERC to compel ISO New England to develop an alternative to running units at Salem Harbor Station to meet the area’s reliability need. Peress continued, “If we are to achieve our climate goals in Massachusetts and move toward a clean energy future, we need to be focused on advancing solutions that move us forward, not enabling those that chain us to the past.”

“The last thing ratepayers need right now is to pay higher bills to Dominion for some of the dirtiest power in the United States,” said Mark Kresowik, Northeast Regional Director for the Sierra Club’s Beyond Coal Campaign. “The Federal Energy Regulatory Commission needs to help electric companies keep the lights on with clean energy as we protect public health and our climate by replacing old, inefficient, and dangerous coal plants like Salem Harbor.”

CLF is working toward a coal-free New England by 2020. For more than 20 years, CLF has held the region’s coal-fired power plants accountable for violations of clean air and water laws, while winning tougher regulations to protect the environment and public health. With its tenacious legal advocacy, policy initiatives and regulatory expertise, CLF is applying pressure in all the right places to rid New England of old, dirty coal and make way for clean, renewable energy.

The Conservation Law Foundation (www.clf.org) works to solve the most significant environmental challenges facing New England. CLF’s advocates use law, economics and science to create innovative strategies to conserve natural resources, protect public health and promote vital communities in our region. Founded, in 1966, CLF is a nonprofit, member-supported organization with offices in Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.