- New Revisions to the ISO-NE Capacity Market Enhance Resource Flexibility
- December 9, 2016 | Author: Dennis J. Hough
- Law Firm: Duane Morris LLP - Washington Office
- The Federal Energy Regulatory Commission (“Commission”) recently accepted tariff changes proposed by ISO-NE that add flexibility for generators and other entities with respect to meeting and structuring their capacity supply obligations (“CSO”) in the forward capacity market. Capacity suppliers that clear in the forward capacity auction received a CSO that commits them to provide capacity during a future delivery period commencing on June 1, three calendar years after the forward capacity auction. Prior to the delivery period, capacity suppliers have opportunities, through annual reconfiguration auctions, monthly reconfiguration auctions or bilateral transactions, to transfer away or acquire CSOs. The new tariff provisions, which became effective on October 19, 2016, enhance those opportunities.
The tariff revisions increase liquidity in the forward capacity market in two principal ways: 1) if a new capacity resource can demonstrate that it will be ready to provide capacity by the start of a capacity commitment period prior to the one associated with the forward capacity auction in which it first participated, ISO-NE could qualify it to participate in an annual reconfiguration auction or capacity supply auction for an earlier capacity commitment period; and 2) import capacity resources may begin to supply capacity within a shorter time frame after participating in their first forward capacity auction. Other changes accepted by the Commission introduce a new seasonal bilateral CSO, eliminate barriers to participation in the real-time energy market and remove certain filing requirements associated with a CSO termination. With these changes, capacity resources will have more options to tailor their CSOs to their operating circumstances.
Lastly, the Commission’s order acknowledged information provided by the New York Independent System Operator (“NYISO”) in the proceeding concerning the export of capacity from a constrained area and associated pricing inefficiencies. In response, the Commission required the NYISO to submit an informational filing with the Commission on or before November 4, 2016, to update the Commission on its efforts to resolve those concerns. ISO New England Inc. and New England Power Pool Participants Committee, 157 FERC ¶ 61,025 (2016).
 Forward capacity auctions are held in February, and the CSO associated with that capacity auction commences on June 1 three years later.