Federal agency ruling deals Killingly power plant a serious blow this week
Plans to construct a new power plant in Killingly were dealt a serious blow this week after a federal agency upheld a request to end an energy supply agreement between the developers of the project and ISO-New England.
The Federal Energy Regulatory Commission on Monday accepted a November termination filing by ISO-NE citing the likely failure of NTE Energy to achieve certain “critical path schedule milestones,” including commercial operations of the Killingly plant, by June 1, 2024, as laid out in a 2019 capacity supply obligation tariff.
NTE, developers of the planned 650-megawatt, natural gas-fired plant slated for Lake Road in the Dayville section of town, secured an obligation in ISO-NE’s 2019 forward capacity auction for the 2022-23 supply period.
That means it agreed to produce a certain amount of power at a specific cost that would be funneled into the larger New England power grid.
But ISO-NE, which operates the New England bulk energy power system and administers its wholesale electricity market, contends NTE has not met the financial or operational benchmarks that would enable the plant to produce the promised power within the contracted timeframe.
More: Former race car driver opens cigar lounge in Uncasville with his wife
NTE agreed to begin producing power in June 2022, but an automatic two-year extension moved that deadline to mid-2024. ISO-NE argued its monitoring of NTE’s progress found the developer won’t hit its “critical path schedule milestones” in time to meet that extended deadline.
FERC commissioners wrote they agree with ISO-NE's characterization that NTE has made “virtually no progress” on the Killingly project since first awarded a capacity supply obligation.
More: 'We are not a racist town.' Conn.'s first Sikh city council member reacts to defaced signs
“We do not agree with NTE that ISO-NE’s requested termination is premature or based on faulty assumptions,” the FERC statement read.
FERC’s ruling, which went into effect on Tuesday, means NTE will be unable to take part in a Feb. 7 ISO-NE energy auction.
In its written rebuttal to ISO-NE’s filing request – which NTE described as “unripe" – the development company said it experienced three significant developmental delays: a challenge by incumbent generators; administrative challenges by environmental groups that resulted in a complaint to the state Supreme Court; and various COVID-19 issues.
More: Norwich got just over half the COVID-19 tests CT promised. Residents snatched them up.
NTE Managing Partner Tim Eves, in an emailed statement on Tuesday, said the company is “very disappointed” with FERC’s decision.
“The Killingly Energy Center is important for grid reliability, and we will continue to work to be the bridge for the region’s carbon-free future,” he wrote.
The Connecticut Siting Council, the agency responsible for approving such projects, in February 2019 approved NTE Energy's petition to refile for a certificate of environmental compatibility and public need, a crucial document needed before construction could move forward.
More: Plainfield police again form special unit to solve major cases, relieving patrol officers
The council rejected NTE's application in May 2017 without prejudice, meaning although the company did not demonstrate a public need for a combined-cycle plant off Lake Road in Dayville, developers were free to reapply in the future.
The council partly cited the failure of the company to qualify in that year's energy auction as a reason for the rejection. It formally approved NTE's application for a Certificate of Environmental Compatibility and Public Need in June 2019.
No plant means millions in unrealized town revenue
Under a pair of 2018 Town Council-approved agreements, the town of Killingly was in line for $5 million under a community environmental benefit agreement, or CEBA, once the facility was built, along with $120 million in projected tax revenue over the course of 20 years of operation.
Town Manager Mary Calorio said that projected revenue was never a sure thing.
“None of that money was appropriated for any projects since we knew everything was in a holding pattern until the plant was actually built and running,” she said. “We’re not an affluent community and that money would have gone a long way to helping with certain capital and community projects, but it’s not realistic or fiscally responsible to allocate money you don’t have in hand.”
More: Rapper Mic Nickels remembers Norwich Free Academy days in recently-released memoir
Town Council Chairman Jason Anderson called FERC’s decision a “huge blow” to the project.
“They didn’t have all their financing lined-up and for them to finish the project in time to meet a June 2024 deadline – with a 30-33 month construction period - meant they’d have to break ground today,” he said. “And with that kind of rush, what risks does that take?”
He said noting NTE’s inability to take part in this year’s energy auction would push any development off for several years, at best.
More: Dayville resident and her brother turn old Moosup VFW into modern event, wedding venue
“It they can’t bid again until the 2025-26 auction, it makes it more difficult to finance if they don’t have power to sell until then,” Anderson said. “Yes, having that revenue coming into the town would be great but there was always the possibility it wouldn’t come through. There was never any guarantee and we’d never look to spend money before we had it.”
The project has drawn sharp criticism from some environmental groups and state lawmakers, including Gov. Ned Lamont, who in January 2020 bluntly signaled his opposition to the project.
More: Poppy and Rye owners retiring, business to become La Stella Pasta and Pastry
“I don’t want to build Killingly,” he said at a Connecticut League of Conservation Voters summit. “I'm not positive you're going to see Killingly built at all.”
The largest public proponents of the plan have been union workers anticipating the hundreds of new construction jobs such a project would require.
John Penney can be reached at jpenney@norwichbulletin.com or at (860) 857-6965
This article originally appeared on The Bulletin: Federal agency ruling means major setback to Killingly power plant
