By Steven Botkin
Most people have never heard of ISO New England. And yet, this organization is responsible for managing the electric power grid for all of New England. That means making sure that every residence and business throughout the six states has a reliably continuous flow of electricity. That means contracting with many different power producing companies to buy enough energy to meet all of the demands for electricity, and then some. And that means providing funding to maintain existing power plants and to build new power producing and transmission infrastructure.
The problem is that ISO New England has not recognized environmental, public health and social costs in their calculations about where to buy their energy. They say “all electrons are neutral,” as if it doesn’t make a difference whether it’s produced by burning coal or by collecting solar energy. So, ISO New England funnels millions of dollars to keep fossil fuel burning power plants operational. And ISO’s invisibility has allowed them to continue to prop up the fossil fuel industry, even in the face of undeniable evidence of its complicity in the climate crisis.
Until now.
In November 2019, seven United States Senators from New England sent a letter to ISO New England President and CEO Gordan van Welie stating “ISO-NE is not considering the region's environmental and climate goals…[and] appears to be pursuing a patchwork of market reforms aimed at preserving the status quo of a fossil fuel-centered resource mix ...which will force consumers to pay millions of dollars to existing, polluting power plants with on-site fuel supplies, such as oil, coal, or liquefied natural gas.”
In December 2019, Massachusetts Attorney General Maura Healey launched an effort to educate Massachusetts families and businesses about the substantial public health and economic costs of fossil fuel usage and encourage them to call on ISO-New England to set market rules that support cleaner energy resources and protect the climate (see the video and the petition to ISO).
And the month after that, January 2020, Connecticut Governor Ned Lamont’s Commissioner of Energy and Environmental Protection said a “lack of leadership” at ISO-New England on the issue of cutting the use of fossil fuels has Connecticut evaluating whether the state should leave the regional power grid. He said ISO-New England’s policies are driving larger investments in natural gas pipelines and power plants that this state “doesn’t want and doesn’t need.”
Sensing new opportunities for leveraging change, climate activists began showing up at the gates of the ISO headquarters in Holyoke, Massachusetts, and sending letters to Gordon van Welie, ISO’s President and CEO, amplifying the messages from the New England states and demanding that ISO stop subsidizing fossil fuels.
Feeling pressure from all these sources , Gordon van Welie gave a presentation on March 10, 2020 titled New England’s Wholesale Electricity Markets: The Clean Energy Transition and Future Pathways. In it, he claims “ISO New England is currently enabling the Clean Energy Transition through a competitive market for power system reliability services.” He emphasizes the reliability challenges of renewable energy, and the need for “balancing resources” (e.g. fossil fuels) to fill in the gaps. He highlights the tension on ISO between FERC regulations that require “resource neutrality” in the market design (i.e. not taking into account the environmental costs), and the new clean energy standards established by New England states. And he concludes by saying, “If a transition to a new pathway is required, the timeframe would be towards the latter part of this decade….We are not currently planning further major market structure changes.”
Understanding the inadequacy of van Welie’s response, in October 2020 governors of Maine, Vermont, Massachusetts, Rhode Island and Connecticut signed a New England States Vision Statement calling for critical changes to ISO New England’s regional energy system. They state, “New England’s wholesale markets fail to sufficiently value the legally-required clean energy investments made by the ratepayers they serve. Absent fundamental changes, the result of the existing market structure will be that some states’ ratepayers will continue to overpay for electricity, constrained by a wholesale market not aligned with a rapidly transitioning resource mix and consumer investments in clean energy and decarbonization. That is not a sustainable outcome.”
They directly accuse ISO New England’s governance for not giving “a sufficiently meaningful voice to State and consumer interests and its mission does not reflect the relationship between ISO-NE’s functions and the New England States’ legal requirements, policy imperatives, and associated consumer interests. Transparency in the stakeholder process and with ISO-NE Board decisions is also a key concern for the New England States. Public access to these processes is inadequate, especially when compared to some other ISOs and grid operators across the country. This lack of transparency and accountability in ISO-NE’s governance structure undermines public confidence in ISO-NE as the entity ultimately responsible, subject to stakeholder feedback and federal approval, for determining resource adequacy and system planning and operation requirements for the region.”
Inspired by these explicit public challenges for accountability, almost 100 comments were submitted in March and April 2021 to the ISO’s regulatory body, the Federal Energy Regulatory Commission (FERC), challenging ISO’s use of its “forward capacity auction” for subsidizing fossil fuel burning power plants.
And still, Gordon van Welie dragged his feet
In June 2021, the New England States Committee on Electricity (“NESCOE”) issued a Report to the Governors. In it they summarized the recommendations from a series of forums held following the release of the New England States’ Vision Statement the previous year. These recommendations, once again, directly challenge ISO New England to make critical changes to ISO New England’s regional energy system by pursuing “a new, regionally-based market framework that delivers reliable electricity service …[and] accounts for and supports States’ clean energy laws in an efficient and affordable manner.”
They note that ISO-NE currently does not conduct a routine transmission planning process that helps “to inform all stakeholders of the amount and type of transmission infrastructure needed to cost-effectively integrate clean energy resources and DERs across the region. The need for such planning has become paramount.”
And, as far as governance, they declare “ISO-NE’s governance does not give a sufficiently meaningful voice to State and consumer interests and its mission statement does not reflect the relationship between ISO-NE’s functions and the New England States’ legal requirements, policy imperatives, and associated consumer interests…. To date, agendas of an ISO-NE Board Committee indicate governance and transparency discussion; however, no process has been convened or proposal advanced.”
Seeing the writing on the wall, on September 23rd the ISO Board of Directors released a “Response to the New England States’ Vision Statement and Advancing the Vision Report.” They begin the report stating “The ISO Board of Directors has directed management to prioritize transmission planning studies and market pathways analysis in support of the states’ clean energy vision.” Emphasizing that “ISO New England Is aligned with the States on the clean energy transition,” they lay out their position in three bullet points.
The states have clean-energy mandates – and we are supportive of the states in those efforts
The ISO has a reliability mandate and a mandate to administer competitive wholesale markets for the resources needed for a reliable system – and we know that the states recognize the importance of reliability and have continued to express support for competitive markets
There is an overarching need to ensure a reliable power system throughout the clean energy transition
They describe studies currently underway on how to transition the New England power grid in response to States’ environmental policies. The Future Grid Reliability Study is examining the implications of a substantially-changed grid (study year 2040), where the majority of the resource mix is clean intermittent and battery storage resources. (“Phase 1” report is due in the first quarter of 2022). The Pathways to the Future Grid study is comparing the effectiveness and efficiency of two potential market frameworks - a new Forward Clean Energy Market and a net carbon pricing framework (a report is scheduled for April 2022). Transmission Planning for the Clean Energy Transition is a pilot study to plan for growing levels of Distributed Energy Resources (DERs), renewable resources, and energy storage into the grid (results to be released in fall 2021).
As far as governance, the ISO Board says they “have reviewed their current practices in light of the states’ recommendations...and are making changes” in terms of board meetings, charter revisions and enhanced communications, and call for increased levels of input and decision-making from state regulators and policymakers.
NESCOE was not satisfied. In a meeting with the ISO Board on November 1, they state ISO “largely maintains the status quo” governance structure, and “fell short in addressing the need for structural changes that we identified. The days are past when what we primarily asked of ISO-NE was to run fuel neutral markets and plan for and operate reliability-based transmission.”
While there is evidence in recent communications from Gordon van Welie and the ISO Board of Directors that decarbonization is now being taken seriously, they continue to justify the system of competitive wholesale electricity markets that perpetuate the ongoing use of fossil fuels.
So, in the New England state houses, governors offices and attorneys general offices, in the advocacy and grass-roots activist groups, and in the homes and communities of residents throughout the region, we are all waiting and watching for the results of the ISO studies, and the recommendations that follow. We are watching to see if ISO takes seriously the decarbonization mandate and sets that stage for rapid retirement of fossil fuel burning power plants, beginning with the Merrimack Station coal plant. And we are watching to see if ISO is bold enough to set up a new forward clean energy market to drive this transition, and willing to stop using fears about reliability as their excuse for continuing to unnecessarily prop up the fossil fuel industry.
ISO recently took an important step in terminating a contract with the natural gas power plant in Killingly Connecticut. However, all eyes are on the ISO to see if they can rise to the occasion and provide leadership in the great challenge that is before us.
