ISO New England makes power plant operators pay $39 million after multiple plants failed on Christmas Eve

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As New Englanders celebrated Christmas Eve, the power grid operator came closer to ordering rolling blackouts than it had in more than four years as several power plants failed to deliver on reserve capacity.

ISO New England imposed penalties of roughly $39 million on power plant operators for failing to provide reserves during a confluence of factors including extreme cold in parts of North America.

“It was not the Christmas Eve that we expected,” Matthew Kakley, ISO New England spokesperson, said Monday.

The power grid operator had to dip into reserves as an Arctic blast swept across a large swath of the U.S. and Canada, necessitating controlled power outages elsewhere, while tens of thousands of New Englanders were in the dark after a powerful wind storm.

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Part of the problem was that Quebec cut some of the electricity destined for the U.S. because of extreme cold in the Canadian province, Kakley said.

A “capacity deficiency” declaration at 4:30 p.m. meant there were insufficient reserves, and some power plants responsible for bridging the gap either underperformed or were offline, he said.

With the system maxed, and little safety net, the next step would have been to ask for voluntary conservation measures or rolling blackouts.

Power plant operators were fined roughly $39 million after failing to provide power to tens of thousands of homes in New England for a short period of time on Christmas Eve.

But the problem dissipated quickly with the deficiency declaration being lifted in less than three hours as consumer demand dropped during the evening hours, Kakley said.

The last time the situation was so dire was over Labor Day weekend in 2018, when $36 million in penalties were levied, he said.

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The Christmas Eve scenario underscored the region’s dependence on other regions, said David Littell, an environmental and utility attorney who previously served on the Maine Public Utilities Commission.

“In electricity, like all energy markets, we are painfully dependent on what happens in neighboring control areas like Quebec, New York and the Midwest,” Littell said in an email.

Privacy rules prevented the power grid operator from publicly identifying the underperforming power plants and their owners, Kakley said.

Power grid rules call for the financial penalties to be distributed among the power plant operators that stepped up to meet demand, he said.

The system worked as intended, but penalties wouldn’t have helped ratepayers if they’d been subjected to blackouts, said Littell, who suggested the utilities’ failure raises questions of whether penalties are harsh enough to ensure results.

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In the end, the Christmas Eve situation in New England was not as extreme as the situation in other parts of the country.

The supply of natural gas, a key energy source for power plants in New England, was not a factor, Kakley said. In fact, heating oil became more economical than gas-fired generation during the period, he said.