Power plants face fine for producing too little electricity on Christmas Eve

ISO New England is fining power plants $39 million for failing to generate enough electricity, the first such shortfall in four years.

Power lines in Somerset, Mass. Regional electric grid operator ISO New England is fining power plants $39 million for failing to generate agreed-to levels of electricity last month during a winter storm that left hundreds of thousands without power for several hours.Joanne Rathe

New England’s electric grid operator will fine several area power plants for failing to supply their agreed-to share of electricity on Christmas Eve, leaving the region’s energy reserves partially depleted as a powerful winter storm that knocked out power for millions across the United States swept through the Northeast.

ISO New England said in a statement that it will enforce penalties totaling $39 million on the power plants, which it declined to name citing its information policy. The generators that incurred the fines either did not provide energy as scheduled on Dec. 24, or failed to contribute to the grid’s operating reserves when demand surged during the storm, ultimately sparking a “capacity deficiency” that lasted roughly three hours, said ISO spokesperson Matt Kakley.

It was the first such shortfall since 2018, and it came after warnings in 2022 that — thanks to constraints on the global supply of liquefied natural gas — a winter storm could trigger rolling blackouts in New England, where access to natural gas is already limited.

“It was significant deficiency, but we were able to avoid blackouts,” said Kakley.

The power plant failures left the grid short by roughly 2,150 megawatts, or one eighth of the energy ISO New England had planned to generate that day. New England power plants that do not meet scheduled quotas are required to repay the grid operator for the energy they didn’t supply.

The capacity deficiency came after freezing temperatures triggered rolling blackouts across the country. In New England, swirling winds left hundreds of thousands temporarily without power, but the region largely avoided the worst of the storm, and the blackouts that could have come with it.

“Capacity deficiencies are typically short-duration events caused by the unexpected loss of resources and affecting the peak demand hours of the day,” ISO New England said in the statement. “Energy emergencies, by contrast, would typically occur when a significant amount of resources lack the fuel to operate and produce electricity, and can affect all hours and last several days until resources are able to replenish their fuel supplies.”

Dan Dolan, president of the New England Power Generators Association, said in a statement that the New England generator failures were driven in part by outages at the Canadian provincial utility Hydro-Québec.

“With an enormous weather event covering much of the continent, natural gas prices were high throughout the weekend leading to oil-fired generation performing at an extraordinary level to support reliability and keep prices lower than they otherwise would have been,” Dolan said in a statement. “While there were some additional plant outages, more than enough facilities were available and offering in the market to keep the lights on.”

The storm was enough, though, to compel the region’s power plants to begin using oil as their main source of energy. Because of supply constraints tied to pipeline capacity into New England, frigid temperatures caused natural gas prices to surge, said Kakley, making oil a “more economical” choice when conditions are poor.

In 2021, Kakley said oil accounted for less than one percent of the region’s yearly energy generation. On Christmas Eve, that figure was 29 percent, reaching 34 percent at peak demand.

That temporary switch to oil highlights the fervent debate over New England’s energy future: Gas and pipeline companies want to bring more gas to the region, saying it could help offset winter energy cost spikes. Clean energy advocates worry more pipelines will make the region too gas-dependent and have urged more aggressive development of renewable sources such as hydropower and offshore wind farms.

The grid operator maintains that rolling blackouts are unlikely this winter, save for a prolonged cold snap.

But, Kakley said, “its good to be prepared.”