Electricity Market Manipulation in New England?
Several parties have criticized oversight of the New England energy market over the past month. Last week, the New Hampshire Register reported that Pulitzer Prize-winning journalist and Syracuse business professor David Cay Johnston criticized the ISO-New England Forward Capacity Market (FCM) for enabling market manipulation. He alleged that the FCM is superfluous, likening the system to “government taxing us to pay auto dealers to keep enough cars and trucks on their lots to satisfy expected future demand.”
Johnston further alleged that power producers operating multiple plants in the region have manipulated the market by closing facilities. These concerns echo those expressed in September 2014 by consumer advocacy group Public Citizen. Specifically, Johnston said Dynegy bought the 1,350 MW coal-fired Brayton Point plant for just $12.9 million with no intention of running the facility as it could make far more in FCM payments from its other assets in New England due to the regional capacity shortage. Dynegy acquired the plant from Energy Capital Partners last year, which in 2013 announced its intention to shut down the plant after acquiring it from Dominion.
Last month, 19 New England legislators protested the upcoming capacity price hikes. In response, FERC Chairwoman Cheryl LaFleur sent a letter on February 18 stating that the price hikes could not be reversed. US Representative Joseph Kennedy III of Massachusetts expressed outrage, calling pricing oversight in New England “a broken system,” reported The Herald News on March 2.
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