Remarks Gov. Ned Lamont made this week opposing a controversial plan to build a new 650 MW gas-fired plant in Killingly raised eyebrows, and questions about how to reconcile his words with recent approvals by state regulators of new gas infrastructure.
The Killingly plant, which was first proposed by Florida-based NTE Energy in 2016, has become a key rallying point in the ongoing effort to promote new sources of renewable energy for Connecticut and to scale back – and eventually eliminate – power plants that burn fossil fuels.
“I don’t want to build Killingly,” Lamont told environmental advocates assembled for the League of Conservation Voters annual Environmental Summit on Tuesday. “I’m not interested in building Killingly, and I’m not sure that the market will say that we need Killingly.”
It was Lamont’s clearest statement yet opposing the gas-fired plant in the state’s quiet corner, yet it left opponents of the plant questioning how exactly “the market” could halt the project, and what action his administration would be willing to take if it doesn’t.
In his comments, Lamont was not optimistic that he could stop the project.
“ISO, this regional group, has made this front and center, the train has sort of left the station there – it’s a lot of the way down the road,” Lamont said. “The question was, ‘Hey, can we slow this up with permitting and play some games there?’ And I’m afraid, at this point, I wasn’t sure we really could legitimately do that, given our ISO obligations.”
Asked for further clarification, Lamont spokesman Max Reiss told CT Examiner that the governor’s comments regarding “the market” referred to shifting energy needs of the state and region, and the state’s relationship with ISO-New England – which Lamont and other New England governors are now pressing for changes that could make the market more friendly to new renewables.
“It remains a possibility that current market forces like decreased demand and increased de-carbonized supply could lead to such a plant not being required,” Reiss said. “As for other efforts to slow down the project, the regulatory process is ongoing and there remain multiple questions that must be answered at that level.”
Reiss said the administration would not play “games” with any of the permits still pending for Killingly.
Critics say words hard to square with actions
Energy policy is one area where the Lamont administration has made a clear departure from his Democratic predecessor, Dannel Malloy, who oversaw expansion of natural gas infrastructure in the state – both to fuel power plants in the region and to expand natural gas to more homes for heating.
Lamont, and Katie Dykes, commissioner of the state’s Department of Energy and Environmental Protection, have been vocal in their criticisms of ISO-New England, the organization that runs the region’s energy markets. Dykes has echoed concerns from backers of expanded renewable energy that the regional markets unfairly favor natural gas in the name of cost and reliability.
“It’s a good sign that the administration is clearly sending a signal that further investment in gas infrastructure in Connecticut is not welcome, and it is antithetical to the interests of Connecticut residents and inconsistent with the long-term climate plan of the state,” said Deborah Donovan, senior policy director at Acadia Center, a nonprofit dedicated to “equitable clean energy solutions.”
But while encouraged by Lamont’s statements, critics say it’s hard to square the anti-natural gas language coming from the administration with actions by DEEP on new natural gas projects.
Over objections from environmental groups including Sierra Club, DEEP has given tentative approval in the past three months to permits for a gas pipeline that will fuel the new plant in Killingly and for a plan to replace turbines at another gas-fired plant in Middletown.
“While the news that market forces might put [the Killingly plant] to rest is welcome, we really think action needs to be taken because we can’t rely on market forces to stop climate catastrophe,” said Samantha Dynowski, Connecticut director of the Sierra Club, which has been fighting permits for the Killingly plant.
While ISO-New England says it’s up to states to decide what kinds of power plants are built within their borders, Dykes said in a recent interview with CT Examiner that it’s the regional market, not state regulators, that decides what plants are needed for the region — an arrangement that was created when the state chose to rely on the regional wholesale market to maintain a reliable supply of energy when it deregulated the electric supply in 1998.
Dynowski told CT Examiner that lawmakers should require the department and the state’s Siting Council, the agency with jurisdiction over the location of energy and infrastructure projects, to reject projects that don’t meet the state’s climate goals – something New York has done and that was included in a massive climate bill that Massachusetts Gov. Charlie Baker vetoed earlier this month.
Dykes said that instead reform needs to happen at the regional level, a top priority for her department, which is working with four other New England states to push for those reforms. According to Dykes, the current market design forces New England ratepayers to fund unnecessary natural gas infrastructure and blocks out new renewables like offshore wind – which ratepayers are also funding through state policies.
“They’re finger-pointing back and forth, rather than taking the kind of action that needs to be taken,” Dynowski said.
After the Killingly plant cleared ISO-New England’s forward capacity market in 2019 — assuring NTE Energy a sufficient stream of future revenue — the company then committed to generating power for the region by June 2022.
The capacity market is where producers sell the promise of power generation three years in advance so they can fund new and expanded plants, and the amount of capacity sold on the market is determined by ISO’s projections of regional energy needs. In that sense, “the market” has already determined a need for Killingly by June 2022.
Even if Killingly isn’t built, Donovan said, someone has to take on that obligation.
Donovan, and other energy market watchers, said they weren’t sure how market forces could stop Killingly at this point, but she said that a slow down in permitting the project could have a major impact.
Projects that sell on the forward capacity market have strict deadlines, and missing those deadlines means losing money, Donovan said, so any talk of slowing down permits could scare off investors.
“ISO takes money from them if they’re not going to be built in time, because ISO needs that to backfill the gap,” Donovan said. “It’s expensive to take on an obligation in 2019 and not show up in 2022.”
Lamont has indicated that’s not an option.
Another possibility, Donovan said, is that NTE Energy is looking to a future when Killingly would be trading energy on a daily market, instead of the initial set price.
As renewables become less expensive to build, and if gas supplies are more constrained, a natural gas plant may not be as competitive in a market with fully-built offshore wind projects that don’t have to buy fuel to run, suggested Donovan.
Earlier this week, the Federal Energy Regulatory Commission, or FERC, met for the last time under President Donald Trump and denied permits to several gas pipelines.
While none of these pipelines are directly related to Killingly, Donovan said, it’s a signal to the natural gas industry that there’s no guarantee regulators will approve everything they need.
Donovan said that if NTE Energy doesn’t like what it sees for the future viability of the project, there is a secondary market where the company can sell that capacity — another possible way for NTE Energy to exit the deal — otherwise, the company will have to start paying back money to ISO-New England.
NTE Energy declined an opportunity to respond to Lamont’s remarks, but said in a statement that the Killingly Energy Center Project “continues to make its way through the state’s regulatory and permitting process.”
The company called the plant a bridge to a zero-carbon future that is cleaner than existing fossil fuel plants, and will allow more wind and solar sources to connect to the electric grid.
“Natural gas-fired generation is the perfect complement to renewables: When the sun stops shining or the wind stops blowing, natural gas fired plants can ramp up quickly and provide instantaneous, reliable power – while producing a fraction of the emissions of existing coal- and oil-fired plants.”
This story was edited to include an additional comment by Reiss reiterating that the administration will not intervene in the permitting process.