By Rich Heidorn Jr.

ISO-NE will apply different deposit rules on new capacity resources for Forward Capacity Auction 14 under a proposal approved by FERC last week (ER20-395).

The RTO will calculate financial assurance for noncommercial resources — those that have cleared an FCA but have not yet achieved commercial operation — based on the net cost of new entry rather than the FCA’s starting and clearing prices.

The financial assurance policy is intended to ensure that resources achieve commercial operation by the time their capacity commitment period begins.

Under the previous rules, noncommercial resources had to submit a deposit before the auction equal to its qualified capacity multiplied by the FCA starting price. If the resource obtained a capacity supply obligation (CSO), the deposit would be recalculated to equal the product of the CSO awarded, the clearing price from the first round in which the CSO was awarded and a multiplier.

Under the new rules, effective Jan. 15, the deposit will be based on net CONE before and after the FCA. ISO-NE said that will reduce uncertainty, meaning market participants will no longer need to speculate as to the eventual deposit.

The change was prompted by concerns that the previous rules could allow noncommercial resources to benefit financially from their CSOs, even when they fail to achieve commercial operation in time to honor them.

The proposal faced no protests, although the New England Power Generators Association contended it discriminated against resources that first clear in FCA 14 because those that cleared in earlier auctions are not affected by the change.

But the commission said resources that clear for the first time in FCA 14 and future FCAs are not “similarly situated” to those that cleared earlier.

“This existing noncommercial capacity has already been subject to the previous financial assurance requirements and enters FCA 14 with settled expectations as to its financial assurance responsibilities. As a result, this existing capacity would have secured financing and/or made arrangements in anticipation of, and contingent upon, the incumbent financial assurance requirements,” the commission said. “By contrast, new noncommercial resources will enter FCA 14 without regard to previous financial assurance requirements and unbeholden to any commitments based on anticipated financial assurance responsibilities.”

FCA 14, for capacity commitment period 2023/24, begins at 8 a.m. on Feb. 3.