Federal energy regulators investigate New England’s grid operator over payments to a Massachusetts power plant

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In an unusual move, federal energy regulators have launched a probe of New England’s electric grid operator over payments to a Massachusetts power plant that filed for bankruptcy in March, the grid operator said Thursday.

ISO-New England in Holyoke, Massachusetts, said the Federal Energy Regulatory Commission is investigating possible fraud and violations of the grid operator’s rules for charging for electricity costs related to a Massachusetts power plant.

“FERC has alleged that the project developer engaged in a fraudulent scheme to deceive the ISO and the market and failed to provide the ISO with complete and relevant information,” ISO said.

Regulators also will investigate the ISO’s role in administering a power auction known as the capacity market, ISO said. It has “cooperated fully” with the investigation, ISO said.

ISO said it has been limited by confidentiality agreements in disclosing details of the investigation, but acted after Salem Harbor Power Development, formerly known as Footprint Power, filed several bankruptcy court motions.

FERC would not comment. Salem Harbor, a natural gas-fired power plant outside Boston, did not immediately respond to an emailed request for comment.

FERC is investigating allegations that Salem Harbor Power Development failed to provide accurate and complete information to ISO New England ahead of the plant’s commercial operation date.

In 2017, Salem Harbor missed its proposed commercial operation date, yet collected market payments under market rules that existed at the time, ISO said. ISO, citing information from Salem Harbor’s bankruptcy filing, said FERC’s preliminary findings allege that Salem Harbor Power Development violated ISO New England and FERC rules by not updating all information relevant to the ISO’s evaluation of the feasibility of the project and its ability to meet the May 31, 2017 commercial operation date.

“FERC also alleges that the project engaged in a fraudulent scheme to deceive the ISO and the market into believing that the project would meet the commercial operation date to ensure that the facility would receive the capacity payments,” ISO said.

FERC alleges that the ISO should have known Salem Harbor Power Development would be late, that it gave the developer advice helping the project avoid the consequences of failing to meet its commercial operation date and that it should have forced Salem Harbor Power Development to sell its supply obligation.

ISO New England denies the allegations and asked regulators to dismiss the matter as it pertains to its actions. It said it has changed capacity market rules to include an automatic financial penalty for resources that are late.

Stephen Singer can be reached at ssinger@courant.com.