By Michael Kuser

ISO-NE kicks off 2020 with a key deadline looming to file a long-term fuel security mechanism with FERC — a project two years in the making.

The New England Power Pool Markets Committee worked double-time through the fall to complete the Energy Security Improvements (ESI) program to address winter fuel security concerns. This year, it will meet three days a month to complete the work before FERC’s revised deadline of April 15 (EL18-182). (See FERC Extends ISO-NE Fuel Security Filing Deadline.)

Stakeholders are discussing LNG supplies, market mitigation and a second demand curve to ensure the RTO can meet forecast load throughout the next operating day.

The Participants Committee likely will vote on the new market construct at its April 2 meeting, and stakeholders will learn of any schedule additions early this month.

Based on regular surveys on generator fuel supplies for this winter, the RTO estimates that more than 4,500 MW of gas-fired generating capacity could be unable to get fuel when needed. (See “RTO Cautions on Availability of Fuel in Cold Snaps,” ISO-NE Projects Adequate Resources for Winter.)

This is the first winter season since the 680-MW Pilgrim nuclear plant retired in May. The RTO said the plant’s capacity is being replaced by several new resources, including three dual-fuel plants, as well as solar and wind resources.

Stakeholder Proposals

What’s taking so long to complete the plan? To begin with, stakeholders have varying opinions and have offered several proposals.

Calpine proposed a Forward Enhanced Reserves Market that would procure fuel-secure winter energy three years in advance.

The Massachusetts attorney general’s office, which recommended a call option that would be sold in a simple auction of sealed bids with a uniform clearing price, withdrew its proposal in August. In September, it said it was keeping its options open on several amendments to the ESI proposal, depending on the flow of analyses and discussion in the lead-up to April’s filing.

Eversource Energy presented an amendment to address the company’s concern that the RTO’s Inventoried Energy Program would overlap with ESI for winter 2024/25.

The Connecticut Public Utilities Regulatory Authority and Department of Energy and Environmental Protection jointly presented an amendment to the Tariff language concerning quarterly certification of the competitiveness of the energy call option offers in the day-ahead market.

FirstLight Power Resources proposed that the option strike price — intended to estimate the marginal price of energy to meet next day’s forecasted load plus operating reserves — needs to vary by hour, just as marginal energy prices do.

Market Concerns

Even the U.S. Senate got in on the act in November, as seven senators from New England urged ISO-NE to “return to the table with stakeholders” and more closely align its fuel security initiative with state policies seeking to speed the transition to renewable energy resources. (See Senators Ask ISO-NE to Heed States on Clean Energy.)

In a letter to the RTO, the senators criticized it for “pursuing a patchwork of market reforms aimed at preserving the status quo of a fossil fuel-centered resource mix” and having “charted its own path forward and pursued unpopular initiatives” such as Competitive Auctions with Sponsored Policy Resources (CASPR) and the Inventoried Energy Program.

“CASPR was really just a mechanism we invented and work around to allow such resources to enter the market without crashing the price in the primary auction capacity market,” ISO-NE CEO Gordon van Welie said at a conference in November. (See Overheard at NECBC 2019 Energy Conference.) “When we set out to change anything in our markets, it’s at least a three-year market design, stakeholder journey … with anything substantive likely to be litigated.”

Former FERC Chair Joseph T. Kelliher, now executive vice president for federal regulatory affairs at NextEra Energy, said at the same event that “to the extent there’s a crisis in the industry, it’s a crisis of low energy prices.”

At another conference, Massachusetts Department of Public Utilities Chair Matthew Nelson said, “I don’t think markets are broken; it’s just that the world has changed around the markets. Regardless of our personal or political positions, the reality in the market is one of increasing demand for clean resources.”

Nelson likened today’s market to a three-legged stool balancing clean energy, cost and reliability.

“Reliability today is king in the electric market, but the relationship between reliability and clean energy is not binary,” he said. “The narrative that a clean future can only come at the expense of reliability is false. It’s not a zero-sum game.”

Speaking at the Northeast Energy and Commerce Association’s Power Markets Conference in November, FERC Commissioner Richard Glick said, “I never realized until I got to FERC how complicated some of these markets have grown … and we see a lot of proposals to tinker with the markets, particularly the capacity markets.” (See Overheard at NECA 2019 Power Markets Conference.)

Massachusetts Energy and Environmental Affairs Secretary Kathleen Theoharides in December said that she is focused on bringing new renewable resources into the market and electrifying the transportation and building sectors to take advantage of new hydro, wind and solar resources as they come online. (See Overheard at the 1st New England Energy Summit.)

“We really feel you need to do those two pieces at the same time. You don’t just clean up your power and then do electrification next,” Theoharides said.

Big, Slow Clean Energy Projects

Massachusetts has been facing delays in some of its larger state-sponsored renewable energy projects, as has Avangrid, which is partnered on two of the projects.

Avangrid said in November that it expects “in the not too distant future” to get the final permits on its New England Clean Energy Connect (NECEC) project to bring 1,200 MW of Canadian hydropower to Massachusetts. The company expects to begin construction in the second quarter this year and to be operational by 2022.

NECEC has been plagued by delays, controversy and opposition since it received the state contract following the failure of Northern Pass, a competing project by Eversource, to win regulatory approval in New Hampshire.

Avangrid’s offshore wind joint venture, Vineyard Wind, also saw trouble last year, as the U.S. Bureau of Ocean Energy Management in August delayed issuing a final permit in order to expand environmental impacts analysis for all such offshore projects. (See Renewable Backers Decry Vineyard Wind Delay.)

“All of the developers have agreed to 1 nautical mile of turbine spacing, so we hope the fishermen can do their fishing, and we expect a decision by the secretary of the interior by early January so we can start construction,” Avangrid CEO James P. Torgerson said.

ISO-NE’s activities now center on the grid’s transition to renewable resources, a topic to which the grid operator devoted a conference in May. (See ‘Grid Transformation Day’ Highlights ISO-NE Challenges.)

“It’s a much different grid from 10 years ago,” said Anne George, vice president for external affairs and corporate communications at ISO-NE, speaking at a public forum in December.

“The amount of wind in our interconnection queue is the greatest we’ve ever had,” she said, citing 13,720 MW, or 65% of the queue total of 21,138 MW. “And over the next 10 years, we’re going to see a lot more activity with battery storage.”

FERC in December conditionally accepted ISO-NE’s Order 841 compliance filing (ER19-470), requiring additional changes to how the RTO dealt with the application of transmission charges to storage resources and rejecting its approach for handling the state of charge and duration of those resources in day-ahead markets. (See Storage Plans Clear FERC with Conditions.) The RTO has requested a rehearing on the latter finding, contending that the commission’s recommended approach is “inferior” to its own proposal and could “jeopardize critical ISO-NE projects.”

The RTO’s next compliance filing is due Feb. 10.

Competitive Transmission

ISO-NE in December announced its first-ever competitive transmission solicitation to address peak load condition overloads in the Boston area and system restoration concerns with the underground cable system in the area.

The RFP seeks to address reliability concerns associated with the upcoming retirement of the Mystic Generating Station in Everett, Mass. (See ISO-NE Issues First Competitive Tx RFP.) The RTO will review all proposals in a two-step process before selecting the preferred solution, with a March 4 deadline for submissions.

FERC earlier in December approved Tariff revisions refining ISO-NE’s rules for conducting competitive transmission solicitations in compliance with Order 1000, a process being tried for the first time for solutions to non-time-sensitive needs identified in the RTO’s 2028 Boston Needs Assessment Update and Needs Assessment Addendum (ER20-92). (See FERC OKs ISO-NE RFP Rules.)

But the commission in October instituted Federal Power Act Section 206 proceedings, concerned that ISO-NE may be implementing the immediate-need reliability exemption in a manner “inconsistent with what the commission directed, and therefore may be unjust and unreasonable, unduly preferential and discriminatory” (EL19-90).

The RTO on Dec. 27 filed its response to the proceeding, concluding that “the exception is working as intended” and that no changes are necessary.

However, the RTO promised to conduct a “lessons learned” process following the completion of the Boston RFP to determine if improvements can be made.