Generator To Pay $250,000 For Capacity Payments Made To Closed, Inoperable Power Plant
FERC approved a Stipulation and Consent Agreement (Agreement) between the Office of Enforcement (Enforcement) and Wheelabrator Technologies Inc. (WTI) on behalf of itself and its subsidiary, Wheelabrator Claremont Company, L.P. (Claremont) to resolves an investigation into whether the collection of certain capacity payments, made by ISO New England Inc. (ISO-NE), associated with Capacity Supply Obligations (CSO) held by Claremont violated ISO-NE Transmission, Markets and Services Tariff, at Market Rule 1, § III.13 (hereafter ISO-NE Tariff, § III.13).
According to FERC's order, "Claremont admits the violations herein and agrees to (a) pay a civil penalty of $250,000 to the United States Treasury; (b) disgorge to ISO-NE $107,231.34 in capacity payments and interest calculated pursuant to section 35.19a of the Commission’s regulations, 18 C.F.R. § 35.19a (2018); and (c) for two years, submit annual reports on the progress of WTI’s recently-implemented compliance measures and any new incidents of non-compliance."
Claremont operated a waste-to-energy generator with 4.5 megawatts (MW) of nameplate capacity located in Claremont, New Hampshire (hereafter the Claremont facility). Pursuant to a power purchase agreement with Public Service New Hampshire (PSNH), PSNH purchased Claremont’s generation and operated as its Lead Market Participant (for the Asset and the Resource) and Asset Owner in the ISO-NE market such that PSNH managed Claremont’s participation in the ISO-NE auctions and received the payments issued by ISO-NE. On December 1, 2013, PSNH transferred Lead Market Participant and Asset Owner status for the Claremont facility to an affiliate of Claremont, Wheelabrator North Andover Inc. (North Andover), which operates a WTI generation facility in North Andover, Massachusetts and, as of that date, began receiving capacity payments on Claremont’s behalf.
According to FERC's order, WTI closed the 4.5 MW Claremont facility as of September 30, 2013, after which time it was inoperable. At the time of its closure, Claremont had outstanding CSOs for Forward Capacity Auction (FCA) 4 (June 2013 – May 2014); FCA 5 (June 2014 – May 2015); FCA 7 (June 2016 – May 2017); and FCA 8 (June 2017 – May 2018).
According to FERC's order, following the Claremont facility’s closure, ISO-NE continued to issue monthly capacity payments in exchange for Claremont’s continuing obligation to supply capacity. From October 2013 to October 2014, ISO-NE issued $140,488.97 in capacity payments while the Claremont facility was inoperable and unable to meet its CSOs. ISO-NE later clawed back the July 2014 to October 2014 payments through ISO-NE’s Tariff-based reconciliation process
According to FERC's order, "At the time North Andover assumed Lead Market Participant and Asset Owner status, WTI management did not fully understand its obligation to shed its CSOs for FCA 4 and FCA 5 or how to shed such obligations and continued to collect capacity payments for the closed Claremont facility. Accordingly, Claremont did not successfully shed those obligations. Claremont did shed its obligation for FCA9 through a non-price retirement request. Claremont’s obligations in FCA8 were eventually unwound by ISO-NE after it discovered Claremont’s permanent closure. WTI’s compliance measures were insufficient to identify the violation."