Electricity Markets

Exelon to retire New England units in absence of market rule changes

Exelon Generation on March 29 said that it has filed with ISO New England Inc. to retire generating units at its Mystic Generating Station in Massachusetts, although the company said it may reconsider the retirement decision if market rule changes are implemented in the region.

Exelon Generation filed with ISO-NE to retire Mystic Generating Station’s Units 7, 8, 9, and the Jet unit on June 1, 2022. “Absent any regulatory reforms to properly value reliability and regional fuel security, these units will not participate in the Forward Capacity Auction scheduled for February 2019,” Exelon Generation said.

Mystic Generating Station is a 2,000-megawatt natural gas- and oil-fueled power plant. Mystic Units 7, 8 and 9 are the operating units at the plant. Units 1-6 are decommissioned. The Jet unit is an 8-MW oil fueled peaking unit which is run during periods of high demand.

In a news release, Ron DeGregorio, president of Exelon Power, said that the ISO-NE market “fails to properly reflect the reliability and fuel security benefits” that the units provide to the region. Exelon Power is the business unit within Exelon Generation that is responsible for managing, operating and maintaining the company’s fossil, landfill gas, hydro, wind and solar-powered fleet of generating assets.

Exelon Generation noted that ISO-NE recently stated that it may propose interim and long-term market rule changes to address system resiliency in light of significant reliability risks identified in ISO-NE’s January 2018 fuel security report.

“Changes to market rules are necessary because critical units to the region,” including Mystic units, cannot recover future operating costs including the cost of securing fuel, Exelon Generation asserted.

“To the extent that changes are timely filed and approved by the Federal Energy Regulatory Commission, Exelon Generation may reconsider the retirement of the Mystic units,” it went on to say.

Exelon Generation to buy LNG import terminal

In a related move, Exelon Generation also announced an agreement to purchase an ENGIE North America liquefied natural gas import terminal in order to ensure the continued reliable supply of fuel to Mystic Units 8 and 9 while they remain operating.

Closing of the transaction is dependent upon regulatory review by the U.S. Department of Energy for LNG import authorization and, as necessary, authorization from the Department of Justice.

The transaction is expected to close in the fourth quarter of 2018.