On February 4, 2022, the United States Court of Appeals for the District of Columbia Circuit (“DC Circuit”) issued a per curiam order granting NTE Connecticut, LLC’s (“NTE”) petition for issuance of a writ under the All Writs Act to stay a FERC order issued January 3, 2022 (“January 3 Order”). The January 3 Order terminated the Killingly Energy Center’s capacity commitments in the ISO-New England, Inc. (“ISO-NE”) capacity market. The DC Circuit’s order stays FERC’s January 3 Order until 30 days after FERC resolves NTE’s pending request for rehearing of the January 3 Order. The DC Circuit’s order also states that an opinion will follow in due course. As a result of the DC Circuit’s order, ISO-NE ran its Forward Capacity Auction on February 7, 2022 as scheduled but after “unwind[ing] the actions it had taken to terminate Killingly.” ISO-NE has stated that it will update the auction results if FERC confirms Killingly’s termination.
Killingly Energy Center is a 650 MW natural gas fired generating facility currently in development by NTE. Killingly had previously qualified in ISO-NE’s thirteenth Forward Capacity Auction and was awarded a seven-year Capacity Supply Obligation (“CSO”) beginning with the 2022-2023 Capacity Commitment Period. Under its CSO, the Project is required to achieve commercial operation by June 1, 2024.
ISO-NE submitted a filing at FERC in November 2021 to terminate Killingly’s CSO and to disqualify the project from participating in ISO-NE’s sixteenth Forward Capacity Auction (“FCA 16”) on the grounds that ISO-NE had “lost confidence” the project would achieve commercial operation by June 1, 2024. The ISO-NE Tariff allows ISO-NE to seek termination of a CSO if the project will not achieve commercial operation until more than two years after the beginning of the Capacity Commitment Period for which Killingly first received a CSO. FERC’s January 3 Order accepted ISO-NE’s request to terminate Killingly’s CSO on the grounds that ISO-NE presented sufficient evidence that Killingly would not achieve commercial operation until after June 1, 2024.
NTE filed emergency motions for stay of FERC’s January 3 Order at both FERC and the DC Circuit. NTE’s filing at FERC combined its motion for stay with a request for rehearing of the January 3 Order. NTE argued that the January 3 Order will cause irreparable injury by disqualifying Killingly from participating in ISO-NE’s FCA 16, scheduled to run on February 7, 2022. Without capacity revenues, NTE argued that it would be impossible for the project to obtain financing and that it would be unable to meet its construction milestones. NTE also argued that FERC failed to address the substantial evidence concerning NTE’s ability to meet the June 2024 deadline. NTE asked the DC Circuit to issue a stay of FERC’s January 3 Order no later than February 4, 2022 to allow Killingly to participate FCA 16.
On January 28, 2022 FERC denied NTE’s motion for stay, finding that loss of potential capacity market revenues and development dollars are an insufficient basis to show irreparable harm. FERC also stated that issuing a stay has the potential to interfere with the FCA’s design and operation, including its ability to send accurate price signals to guide entry and exit. FERC also observed that it generally does not order remedies that would require re-running markets. FERC’s January 28 Order did not consider the merits of NTE’s rehearing request.
However, the DC Circuit’s February 4 per curiam order granted NTE’s petition for writ of mandamus, ordering that FERC’s January 3 Order be stayed until 30 days after FERC resolves NTE’s pending petition for rehearing. The order stated that NTE met the requirements for stay under the All Writs Act and that an opinion will follow in due course.
ISO-NE issued a stakeholder notice following issuance of the DC Circuit’s order stating that it would run the February 7, 2022 auction as scheduled and would “unwind the actions it had taken to terminate Killingly.” ISO-NE stated that if FERC confirms Killingly’s termination, it will adjust the FCA 16 auction results accordingly.
ISO-NE’s February 4 stakeholder notice is available here.
The DC Circuit’s February 4 order is available here.
FERC’s January 28 order denying NTE’s emergency motion for stay is available here.
FERC’s January 3 Order is available here.