Winter Reliability Might Be Fine (For Now)
A brief history of ISO-NE’s Inventoried Energy Program
The worst flat tire on my road bike happened on Everett’s Broadway, a nightmare of a main drag pulling riders down the Northern Strand Bike Trail, past a few breweries and the Encore casino, and down a very scary bridge littered with detritus—trash, rocks, the remnants of countless fender-benders. I had hoped that tubeless gravel tires would help me here, but Broadway proved otherwise. And on the east side of that road was the largest power plant in Massachusetts: The Mystic Generating Station. It ran a pair of combined-cycle natural gas units producing 1.4 GW at nameplate, a couple of smaller peaker units, and one of two LNG import stations in New England.
I use the past tense on purpose.
This project has been a financial hot potato since it was built in the early 2000s. It’s changed hands six times in its twenty-year history, and I don’t think it’s ever made money. In March 2018, the project gave up, and it dropped out of the Forward Capacity Auction for the 2022-2023 capacity year. This is a problem, because the Mystic Station shares a lot with the Everett Marine LNG Terminal—one of only two LNG import terminals in New England, and thus a valuable asset for bypassing New England’s constrained natural gas inflows. Since that bombshell announcement, the electric utility industry has braced itself for The Big One: the day when the New England Grid simply didn’t have enough generation to meet its load, leading to mass brownouts in the snobbiest corner of the country. A super-team of desperate stakeholders begged the Mystic Station to stay online for just a bit longer, leading to a settlement that gave (from what I’ve heard) exorbitant payments to the plant’s (new) owners for the next few years.1 But in June 2024, the plant finally shut down. What a cluster.
But throughout this debacle, ISO New England sought a solution. Because this is ISO-NE, it would naturally be forward-looking, market-driven, and needlessly complicated. And because the idea needed FERC approval, it would naturally not get implemented until 2023.
The Inventoried Energy Program, Briefly
The Inventoried Energy Program (IEP) was a temporary program instituted by ISO-NE for the Winters of 2023-2024 and 2024-2025. The core impetus is that gas pipelines in New England can handle 4-5 billion cubic feet per day (Bcf/d)2 of gas inflows, but on cold New England winter days, we really need 5-6 Bcf/day. In these situations, the energy map starts caring about who has firm natural gas contracts, versus who gets cut off when supply is constrained. Suppliers to natural gas heating typically get firm contracts first—which makes sense, because you don’t want people to freeze. As a result, comparatively few electric generators get firm natural gas contracts. Instead, ISO-NE presses otherwise-unused oil generation assets into service.
Why oil? Because it’s easy to move and easy to store. Short of bespoke tanks or massive sealed salt caverns, natural gas is hard to keep in a bottle. You could compress it (or liquefy it), but that’s extra expense. By contrast, the oil generation assets are just using diesel, if not bunker oil.3 These fuels are shelf-stable, they’re readily accessible via normal port infrastructure, and they don’t quadruple in cost during regional cold snaps.
The original format of the IEP was more expansive, but its implemented form targeted two kinds of fuel storage: oil storage, and natural gas storage/LNG access/guarantee of a firm contract. Participants would send in a voluntary application, which amounted to an Excel document describing:
Basic asset information
Fuel type (natural gas, oil, waste-to-energy, electric storage)
Fuel stored, in MWh (which requires you to convert fuel storage in CCF or gallons into MWh, based on your heat rate at 17°F)
The amount of MWh you’re committing to run on a given day, if asked.
Effectively, this form asks you to commit to having a minimum inventory of stored fuel through the winter. And in exchange, ISO-NE pays you to keep that fuel onsite, at a rate of $/stored MWh, drip-fed daily from December to February. All you have to do in return is generate the MWh of electricity you committed to on a day when the Bradley International Airport (BDL) between Hartford, CT and Springfield, MA records an average daily temperature of 17°F or below. Miss your commitment, and you’d have to reimburse some of your IEP payout. Bear in mind, you’d still get paid the spot price of electricity as well, at the elevated prices common on cold days. Meaning the IEP was free money, unless you somehow decided not to run your electric generator on a day that you’d make good money for running your electric generator.
How It’s Played Out
The 2023-2024 winter was warm for New England. ISO-NE only called in its IEP commitments on one day, so the system didn’t get stress-tested. But the 2024-2025 winter has been “normal”—that is, cold. As of time of posting, ISO-NE has called in its IEP commitments for five days: two in December, three in January.
No One Stored Extra Fuel
ISO-NE figured that generators would use their IEP payouts to buy extra fuel in anticipation of cold snaps. But instead, generator owners simply pocketed the money and went about their business. No one bought extra fuel oil. The St. John LNG terminal in New Brunswick did not store extra LNG. No LNG tankers showed up at the Northeast Gateway offshore buoy outside Boston. No gas generator participating said they were getting their LNG from the Everett LNG terminal.
As a corollary, this really sells how much the owners of Mystic Generation swindled all of New England. They extracted eight-figure sums by holding a massive power station and LNG terminal hostage, threatening to condemn the region to brownouts…only for both assets to see next-to-no usage at the exact time we would have needed them most.
Generators Didn’t Actually Run When Asked
ISO-NE recorded negative spot payments for the Inventoried Energy Program in January 2025. Approximately 45% of generators didn’t generate the MWh they promised to generate on their Excel-sheet application, botching their commitment to this free-money program so badly that the participant pool on-net gave ISO-NE its money back.
How?
ISO-NE Has Better Forecasts Now
Since the Mystic Station’s 2018 Gjallarhorn call, ISO-NE has improved its analytics and forecasting tools, particularly its capacity to predict and plan for resource adequacy and reliability risks. To this end, ISO-NE has generated the Probabilistic Energy Adequacy Tool (PEAT) and the Regional Energy Shortfall Threshold (REST), which have been released with serious fanfare (by ISO-NE standards). These new forecasting tools suggest that in the short term, the New England grid is doing okay on generation. There’s a lot of new solar, which makes a difference even in the winter. There’s new generation coming from incoming offshore wind projects, and a new transmission line running from Quebec hydroelectric generation to Boston load. And there’s a new market mechanism for addressing energy shortfalls on a day-to-day basis, which might even work!
There will be problems in ten to twenty years. But the next three to five years are probably okay.
Maybe We Won’t All Freeze in the Dark
The pithy summary of this story is that while ISO-NE scrambled for a short-term solution, the problem solved itself. Naturally, a lot of work went into the “solved itself” part of that story, but the end result was that the Inventoried Energy Program failed quietly because other measures solved the same problem.
Ragnarök was averted—or at least delayed until some other crisis shows itself.
I know everyone’s panicking about brownouts and posting memes about their ruined natural gas positions, but honest and competent people are working on these challenges. It’s not just rubes, hacks, and “the Woke.”
I could have gotten way more Twitter clout by posting about how the fall of the Mystic Generating Station doomed winter reliability forever, and that the only solution would be to assassinate Maura Healey and bring back coal, or something. But in this vignette, it seems like the Woke Green Mob were right—transmission upgrades, new renewable generation, and improved forecasting and controls have solved this particular problem better than paying generators to buy spare fuel.
You’re welcome to disagree, but that’ll require you to make one of two arguments:
ISO-NE made some analytical error that you could catch and fix.
ISO-NE now prioritizes politics over grid reliability.
Both are extraordinary claims. I will ask for extraordinary evidence in turn.
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not reflect those of their current or previous employers or any elected officials. The author makes no recommendations toward any electric utility, regulatory body, or other organization. While certain information contained herein has been obtained from sources believed to be reliable, the author has not independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author assumes no liability for this information and no obligation to update the information or analysis contained herein in the future.
For what it’s worth, the plant didn’t actually run on the days it had apparently promised to run, meaning all that cash went down the drain.
Pipelines from New York can handle 4 Bcf/d, but it’s closer to 5 Bcf/d if you include pipelines from Canada, including an LNG import terminal in New Brunswick.
Bunker Oil: The Rubinoff of Petroleum Products