There has been a significant development in the long running saga of the Salem Harbor power plant, one of the major targets of CLF’s Coal Free New England campaign. On October 5, Dominion Energy, the plant’s owner, quietly filed what is known as a Permanent Delist Bid with ISO New England (ISO-NE), the operator of the New England electricity system and markets. The filing commits Dominion to permanently withdraw Salem Harbor Station from the forward capacity market, the key market where power plants, and other resources like energy efficiency, are paid to be present, available and ready to meet the electricity needs of the region.
What does this mean?
By filing to permanently withdraw Salem Harbor Station from the forward capacity market, Dominion is signaling that it does not believe the market will be able to provide sufficient revenue to run the plant profitably and that it cannot maintain the plant going forward.
According to Paul Peterson, senior associate at Synapse Energy Economics, Inc., “The delist process was created specifically to allow power plants to withdraw from the forward capacity market, either temporarily or permanently, depending on their economics. A power plant that enters a permanent delist bid – an irrevocable decision that it will no longer try to earn revenue from that key market – is laying the groundwork to shut down.”
Although there are alternative scenarios that could allow Dominion to re-enter the market at a future date, the barriers to re-entry are extremely high and the process for doing so is complex.
Excessive ratepayer burden
Dominion’s move puts additional pressure on ISO-NE to implement a plan by June 2014 that does not rely on Salem Harbor Station to keep the lights on – ever. On October 14, CLF filed a protest with the Federal Energy Regulatory Commission citing ISO-NE’s failure to develop such a plan following the 2009 and 2010 auctions, keeping Salem Harbor Station available for “contingency” needs at enormous cost to area ratepayers. In our protest, CLF pointed to insufficient planning and loopholes in the ISO-NE process that have allowed Dominion to receive more than $30 million dollars in above market payments just to continue to exist, even while Dominion’s own filings indicated its intentions to leave the market. The company filed “static delist bids” for the past two years, a temporary exit measure that allows a company to receive above market payments if it is deemed necessary for reliability. Dominion’s ability to repeatedly game the system has forced ratepayers to bear the cost of maintaining an obsolete and polluting coal plant well beyond its useful life.
Buckling under pressure?
Salem Harbor Station is under increasing economic and environmental pressure. In June 2010, CLF filed a federal lawsuit against Dominion for repeatedly exceeding smokestack emissions limits at Salem Harbor in violation of the federal Clean Air Act. The suit would hold Dominion responsible for paying millions of dollars in penalties retroactively. Meanwhile, new EPA regulations on the near horizon will mean tougher pollution controls and multi-million dollar investments needed to comply with them. The permanent delist bid is a clear indication that Dominion doesn’t believe it can continue to wring dollars out of ratepayers for its obsolete plant for much longer, and we are making sure they won’t. Stay tuned.