BOSTON – The Chicago-based developer that hopes to build a power plant in Burrillville received another setback today, losing a major source of financing and the ability to take part in a future auction to supply energy to the grid.
A federal commission has approved a request by Independent System Operator New England to terminate an agreement to purchase power from Invenergy Thermal, LLC. The contract, known as a capacity supply obligation, or CSO, was secured at an auction in 2016 and had allowed Invenergy to profit from the proposed Clear River Energy Center even before the facility has been green-lighted for construction by state regulators.
ISO-NE operates the regional power grid and awards the CSOs at annual auctions years before the power is needed to ensure that there is enough supply. Invenergy secured the CSO from the power grid operator at an auction in February 2016, but delays in the approval process have since caused the company to meet that obligation by purchasing power from another source, and reselling it to ISO-NE at a higher cost.
As a result, ISO-NE requested the termination in September, noting that the contract can be terminated if certain conditions are met, including a supplier’s inability to achieve commercial operation for more than two years after the start of the capacity commitment period.
Invenergy initially planned to have the 1,000-megawatt gas-burning power plant in Burrillville operational by June of 2019. Currently, the operation date is reported to be later than June 1, 2021.
Invenergy first applied to build the facility in October of 2015, but ran into obstacles in securing a water source after residents organized a vocal opposition to the plan. In a protest to ISO-NE’s termination request, the company cited the setback.
“Invenergy explains that initial local support for Clear River yielded a tax and property value agreement with the town of Burrillville and that, in 2015, it entered into two successive letters of intent with the local water utility, Pascoag Utility District, to develop a water supply plan for Clear River,” the company stated in the protest to termination of the agreement. “However, it explains that, after an opposition campaign by local and outside parties, the water utility terminated the then-current letter of intent in August 2016.”
The Energy Facility Siting Board – the state regulatory commission that will ultimately decide the plant’s fate – had been conducting hearings on the proposal throughout 2018, but suspended proceedings pending the decision on ISO-NE’s request.
That decision was issued by United States Federal Energy Regulatory Commission on Monday, Oct. 19 and the news, at least for Invenergy, was not good. A letter to EFSB Coordinator Todd Anthony Bianco notes that the commission has approved termination.
The 17-page decision details reasons for approval of the contract termination, noting that Invenergy’s power obligation has been met through another source for two consecutive commitment periods, and the date the plant is currently expected to be operational is not for several more years.
“Among other things, the project sponsor must provide a critical path schedule that includes the dates by which a number of project development milestones are expected to occur,” the decision states.
Among those to weigh in on ISO-NE’s request was the town of Burrillville, and the commission noted that the testimony was accepted because, “they have provided information that assisted us in our decision-making process.”
“Burrillville claims that Invenergy repeatedly failed to submit complete information to Burrillville, the Rhode Island Siting Board, and other Rhode Island governmental agencies conducting reviews of Invenergy’s permitting applications,” the decision notes.
The ruling not only eliminated Invenergy’s funding source for the 2021-2022 year, but also allowed the forfeiture of Clear River’s financial assurance, and prohibited the company from participating in the upcoming supply auction in 2019.
Town Manager Michael Wood said he, and others opposed to the plant proposal, are pleased by the ruling.
“I don’t think we were surprised by the decision,” said Wood, pointing to one major point of contention between Invenergy and plant opponents – whether or not the power the company aims to create is needed to meet local demand. “It does support our long-standing belief that the supply is not needed.”
It is reportedly the first time in the 22-year history of ISO New England that a CSO has been cancelled.
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