By Michael Kuser

FERC on Tuesday approved an uncontested settlement to raise ISO-NE’s peak energy rent (PER) adjustment, resolving the issues the commission set for hearing in a 2017 order finding that the mechanism had become unjust and unreasonable because of the interaction between it and higher reserve constraint penalty factors (EL16-120, ER17-2153).

Under the settlement, ISO-NE will increase the PER strike price for each hour “by the amounts that actual five-minute reserve shadow prices exceed the pre-December 2014 reserve constraint penalty factors (RCPF) values for 30-minute operating reserves and 10-minute non-spinning reserves ($500/MWh and $850/MWh, respectively).”

The change will be applied from Sept. 30, 2016 — the date of the initiating complaint by the New England Power Generators Association (NEPGA) — through May 31, 2018, the last day of the capacity commitment period for Forward Capacity Auction 8.

The commission’s Feb. 20 order directed ISO-NE to make a compliance filing reflecting the settlement.

NEPGA had asked the commission to apply the revised PER and any resulting refunds to capacity suppliers to an Aug. 11, 2016, scarcity event, but the commission rejected the request in November 2017, saying it would impose “an unforeseen and significant increase in costs” to load. (See Generators’ Rehearing Bid on ISO-NE Scarcity Rules Denied.)

The Feb. 20 order noted the settling parties did not agree on the application of the revised strike price methodology to FCA 9, the capacity commitment period from June 1, 2018, through May 31, 2019.

The New England States Committee on Electricity (NESCOE) contended that the new methodology should not apply because FCA 9 was held in February 2015 — after the RCPFs were increased, which allowed resources to reflect the change in their supply offers.

NEPGA countered that NESCOE’s position “would deny capacity suppliers the full extent of the relief granted by the commission.”

The commission chose not to resolve the dispute, saying it was “beyond the scope of this proceeding.”

FERC previously agreed to eliminate the PER adjustment effective with the capacity commitment period beginning June 1, 2019 (ER17-2153, EL16-120). ISO-NE said its Pay-for-Performance program and changes to the day-ahead energy market made the adjustment unnecessary beyond that date.

ISO-NE spokesman Matthew Kakley said the PER calculations will revert to the old method for FCA 9. “The existing Tariff language (not the revised settlement language) will apply,” he said.

NEPGA president Dan Dolan said on Thursday, “PER and the appropriate strike price level has been a persistent issue in the New England markets for years. The settlement and this order help provide some certainty and stability as the market transitions to the elimination of the PER concept beginning on June 1, 2019.”