GenOn Claims New England Unit Caught Between EPA and ISO-New England

On June 14, 2012, GenOn Energy Management, LLC and GenOn Kendall, LLC (collectively, “GenOn”) filed a pleading with FERC arguing that GenOn’s Kendall plant in Massachusetts may be forced to choose between violating the Clean Water Act (“CWA”) or violating the ISO-New England, Inc. (“ISO-NE”) tariff provisions on reliability. GenOn filed comments on ISO-NE’s forward capacity auction results highlighting what it argues is an ongoing tension between environmental compliance and reliability rules.

According to GenOn, its Kendall plant is subject to an EPA Administrative Order that will require new controls to comply with its National Pollutant Discharge Elimination System (“NPDES”) permit, including installing a Back Pressure Steam Turbine (“BPST”). The BPST would reduce the Kendall plant’s capacity by 27 MW. The NPDES permit, which was jointly issued by the EPA and Massachusetts Department of Environmental Protection under the federal CWA and the Massachusetts CWA, controls the amount of pollutants that may be discharged from the Kendall plant into the Broad Canal and/or Charles River.

To account for the expected decrease in capacity, GenOn submitted a “de-list” bid in the ISO-NE forward capacity auction, indicating that the capacity will not be available after the installation of controls in 2015. However, ISO-NE rejected the de-list bid over concerns that the decreased capacity could jeopardize reliability. Under ISO-NE rules, capacity for which a de-list bid is rejected is generally expected to remain available until reliability impacts can be mitigated. But, GenOn argues that keeping that extra capacity available would require the unit to violate the EPA’s Administrative Order.

GenOn argues it must now choose between reconfiguring its Kendall plant to comply with the CWA and violating the capacity provisions of the ISO-NE tariff. “A generator should not be put into situations where it must make “a Hobson’s Choice” of choosing between having to run because of the Commission’s requirements and being liable for environmental violations,” GenOn argued to FERC.

GenOn has requested that FERC: (1) encourage ISO-NE to notify GenOn of any decision on its de-list bid as soon as possible, and not wait until the June 1, 2014 deadline; and (2) encourage ISO-NE to work with stakeholders to modify its tariff to account for any future conflicts between the Forward Capacity Market and environmental regulations.

A copy of the GenOn filing can be found here.