Loss of Key Funding Guarantee Leaves Plan for Killingly Gas-Fired Plant in Doubt

KEC rendering of the proposed Killingly gas-fired energy plant


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In a move that calls into question – or at least delays for years – plans for a natural-gas-fired power plant in Killingly, federal energy regulators agreed on Monday to end a contract providing key funding for the proposed Killingly Energy Center. 

The Federal Energy Regulatory Authority (FERC) approved a request by ISO-New England, the regional grid operator, to end its capacity supply obligation to Florida-based NTE Energy after the company failed to meet contractual timelines to build the 650 MW Killingly Energy Center. 

That contract was a key source of funding for the Killingly Energy Center, which has drawn sustained opposition from environmental groups that view the project as at odds with the state’s push to replace fossil fuel-powered electric generation with renewables.

NTE had argued that it would be premature for ISO-New England to end the contract, because three significant delays to the project were out of the company’s control. Competing power generators challenged the results of the initial forward capacity auction and later environmental groups launched an aggressive appeal of the project that wasn’t resolved until September 2021. The COVID-19 pandemic had also delayed the project, the company told federal regulators.

Despite those delays, the company said that it would still be able to complete the project by June 1, 2024, as required by its contract.

ISO-New England uses the forward capacity auction to fund projects three years in advance – a process meant to ensure there is enough generating capacity to meet the region’s electrical needs. NTE was awarded its contract in the 2019 auction, meaning that the company was expected to be generating power by June 1, 2022. NTE extended that deadline to 2024.

But if a company can’t meet its capacity obligations by two years after its original deadline, ISO-New England can end the contract, according to FERC. And the authority was persuaded by the evidence presented by the grid operator that NTE would not be able to meet its obligations before June 1, 2024.

“We are very disappointed and do not agree with FERC’s decision,” NTE Managing Partner for Development Tim Eves. “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.”

In a statement, State Sen. Norm Needleman, D-Essex, one of the co-chairs of the Energy and Technology Committee, said he supported FERC’s decision because it would help the state’s attempts to reduce the use of fossil fuels, and keep the air in eastern Connecticut cleaner.

“ISO-New England determined there hasn’t been a need for the additional power that the Killingly Energy Center would provide,” Needleman said. “With that in mind, and keeping our state’s commitments to reduce fossil fuel emissions and carbon emissions, the decision to not move forward with this natural gas energy plant is excellent for the residents of eastern Connecticut and our state as a whole.”