The NEPOOL Markets Committee passed a five-time-amended motion to update Forward Capacity Market (FCM) parameters for the 2025/26 capacity commitment period during a marathon two-day meeting.

The motion won with 64% in a sector-weighted vote. Of the five amendments passed, four of them came from the Union of Concerned Scientists on behalf of RENEW Northeast; the other was from Borrego Solar and Enel X.

The committee rejected the initial motion from ISO-NE and Concentric Energy Advisors (CEA) and Mott MacDonald (MM), two consulting firms hired by the RTO to help update the cost of new entry (CONE), net CONE, offer review prices (ORTPs) and performance payment rate values for the FCM. It gained only 16.7% support, with only the Publicly Owned Entity sector voting in favor.

The RTO said the calculations it put forth did not include changes from its Energy Security Improvements (ESI) proposal and assumed the continuation of the Forward Reserve Market. FERC Rejects ESI Proposal from ISO-NE.)

The proposed CONE and net CONE values were based on a new combustion turbine unit in New England, identified as the lowest-cost, economically viable technology likely to be built in the region. ORTPs were proposed for gas turbines, combined cycle, onshore wind, battery, energy efficiency and demand response technologies. The PPR value was based upon the CT technology recommended for the proposed CONE values. The CONE, net CONE and ORTPs were from CEA and MM.

The 1,143-MW pumped-storage hydroelectric Northfield Mountain Project on the Connecticut River in Massachusetts | FirstLight Power Resources

ISO-NE also put forth Tariff revisions to align the calculations for updating the energy and ancillary services revenues input in the years where there is no full recalculation to revise the indices used to update these revenues.

The RTO previously stated that interdependencies among the FCM parameters present unique challenges when calculating the combined effect of more than one amendment on the values. The RTO said it would tabulate and publish the five amendments’ impacts before a vote on Dec. 3 by the Participants Committee.

Monitor and RENEW Duel in Memos

Abigail Krich and Alex Worsley of Boreas Renewables presented RENEW’s four amendments, including capital costs and the investment tax credit for the ORTP calculation for offshore wind.

RENEW used an overnight capital cost of $3,326/kW (2019$) and an 18% tax credit for OSW in Forward Capacity Auction 16 and added that the RTO’s capital cost is 161% of expected prevailing market conditions for 2024/25 projects.

The RTO’s Internal Market Monitor posted a memo critical of RENEW’s calculations and methodology, saying “the use of a top-down method to infer a capital cost from contract rates is not an accurate means of establishing capital cost and the resulting ORTP value as compared to the bottom-up approach taken by the ISO and prescribed by the Tariff.”

According to the Monitor, the approach taken by CEA and MM is a direct estimation of capital cost.

“It uses actual capital cost data; [it] can be scrutinized in its components; and the value does not vary with assumed model parameters,” the Monitor wrote. “While the details were not made available to NEPOOL for confidential/commercial sensitivity reasons, they were scrutinized by MM, CEA and the ISO — none of which has a financial or other interest in having a higher or lower capital cost value other than one that accurately represents the capital cost of a new OSW project in New England.”

In reply to the Monitor, RENEW said ORTPs in FCA 16 would affect capacity commitment periods between 2025 and 2028, when many OSW projects will come online.

“Offshore wind plays a significant role in states’ plans to reach their renewable energy and decarbonization objectives,” the memo said. “Without an appropriate ORTP, these projects will be prevented from clearing in the market due to unreasonable mitigation, which will deprive them of revenue critical to their implementation and consequently increase costs to consumers.”

The Monitor also noted that setting the ORTP “too low … carries with it the potential for significant market harm.”

RENEW countered that setting the ORTP at the low end is “exactly what we should be doing according to the Tariff and FERC directives.” It added that the RTO itself in its December 2013 filing updating ORTPs for FCA 9 described the intent of the calculation is to set ORTPs “at the low end of the competitive range of expected offers so as to strike a reasonable balance by only subjecting resources to IMM review which plainly appear commercially implausible absent out-of-market revenues.”

“If it is the position of the ISO and IMM to subject offshore wind resources to a higher bar than that specified in the Tariff or FERC directives, that could explain why the ISO’s proposed ORTP values are head-and-shoulders higher than all public estimates,” RENEW said.

Order 841 Compliance Filing Nets Support

The committee unanimously supported ISO-NE’s plan for its third Order 841 compliance filing.

The RTO proposed Tariff changes to comply with three FERC directives. The first change was removing Tariff language that could have created a barrier to the participation of a storage resource in its markets, effective in the first quarter of 2021. The second is the inclusion of four bidding parameters and a newly defined term into the Tariff that the RTO will use to account for the state of charge and duration characteristics in the day-ahead energy market. It would be effective Jan. 1, 2026.

Separately at the NEPOOL Transmission Committee, the RTO and Participating Transmission Owners Administrative Committee have proposed Tariff changes to clarify the application of transmission-charge exemptions associated with storage. In addition to the compliance revisions, ISO-NE also proposed several clean-up revisions to Appendix C of the Tariff to correct outdated terminology.

The RTO will next seek support from the Participants Committee, which will vote on the plan at its Dec. 3 meeting, and has asked FERC to allow a Dec. 7 filing date.

Modifications for EERs, RAs Approved

The committee also voted to support the RTO’s modifications to the qualification process for energy efficiency resources (EERs) to better account for expiring measures. ISO-NE’s Ryan McCarthy wrote in a pre-vote memo to the committee that the modifications “will more appropriately balance the performance and expiration of energy efficiency measures and will produce qualification results that are more reflective” of EER capabilities.

There will also be changes to the monthly reconfiguration auction (RA) and bilateral qualification rules to better account for new financial assurance and performance accounting rules. Additionally, the RTO will assign monthly qualification to resources that become commercial during the capacity commitment period. The monthly qualification will track delayed commercial resources and allow noncommercial capacity to participate in monthly RAs and bilateral qualifications.

The EER qualification changes would become effective in February 2021 for FCA 16. The monthly qualification changes would become effective in January 2022 and implemented for the March 2022 RA and bilateral qualification period.

The Participants Committee will vote on the modifications at its Dec. 3 meeting.