By William Opalka
Following a directive from a federal appeals court, FERC ordered ISO-NE to provide more information proving that the 2013-14 winter reliability program resulted in just and reasonable rates (ER13-2266).
“ISO-NE should request from program participants information that will enable ISO-NE’s [Internal Market Monitor] to evaluate the competitiveness of the program and whether any amounts exceeding a participant’s cost of providing the winter reliability service are indicative of market participants exercising market power in that program,” FERC wrote in the Aug. 8 order.
ISO-NE previously said such information was commercially sensitive and should not be disclosed.
Under the program, selected resources were compensated through a monthly payment derived from the resources’ bids under an “as-bid” pricing mechanism, rather than a uniform clearing price, FERC wrote.
The program paid for demand response resources and some of the carrying costs for dual-fuel generators that stored oil on-site.
FERC granted ISO-NE expedited approval for the program in late 2013 due to concerns that the region might fall short of generation due to the retirement of coal-fired units and tight natural gas supplies.
Although ISO-NE estimated the program would cost no more than $43 million for up to 2.4 million MWh of energy, the RTO filed for approval of bids totaling nearly 2 million MWh at a cost of $78.8 million, which FERC accepted.
TransCanada Power Marketing argued that this cost disparity required more scrutiny and that the commission did not have adequate information to determine whether the bid results were just and reasonable.
After FERC denied a request for rehearing in 2014, the company appealed to the D.C. Circuit Court of Appeals. On Dec. 22, 2015, “the court agreed with TransCanada’s argument that the record was devoid of any evidence regarding how much of the program’s cost was attributable to profit and risk mark-up,” according to the commission order.
The order directs ISO-NE to request from market participants the basis for their bids, including the process used to formulate the bids. The commission also required an analysis from the IMM and a recommendation from ISO-NE on the reasonableness of the bids within 120 days.
FERC also said ISO-NE “may choose to request” information justifying suppliers’ bids in in the subsequent years’ reliability programs.