FERC on Monday approved parts of the ISO-NE and NEPOOL “jump ball” filing on offer review trigger price (ORTP) values for Forward Capacity Market (FCM) parameters in the 2025/26 capacity commitment period (ER21-1637).

The commission accepted NEPOOL’s proposed ORTP value for battery storage and proposed federal tax credits adjustments to the ORTPs for solar resources for FCA 17 and FCA 18.

FERC also accepted the RTO’s proposed ORTP values, including offshore wind, and ISO-NE’s proposal to maintain the current tariff language regarding economic life determination and the establishment of ORTPs for hybrid and co-located resources in the FCM, rejecting NEPOOL’s proposed revisions in each case.

But FERC also rejected NEPOOL’s proposal to require that the RTO account for future federal tax credit changes through the tariff’s indexing process.  

The commission directed ISO-NE to submit a compliance filing on or before June 22 that combines the accepted alternative proposals.

Chair Richard Glick and Commissioner Allison Clements, the two Democratic members of the commission, dissented on the part of the order that included ISO-NE’s ORTP proposal for offshore wind.  Republican commissioners Neil Chatterjee, James Danly and Mark Christie, voted in favor of the RTO’s ORTP values. Glick said he “strongly” believes that ISO-NE’s proposed capital cost estimate for OSW “is not just and reasonable.”  

“The majority’s adoption of ISO-NE’s proposal will, by definition, shunt every [OSW] resource into an administrative pricing construct that is particularly ill-suited to an emerging technology,” Glick wrote. “The commission should have instead adopted [NEPOOL’s] estimates, which better reflect market activity as opposed to bureaucratic cost estimates that bear little relation to reality.”

Glick added that NEPOOL’s use of publicly available data from four recent power purchase agreements for large regional OSW projects gives its plan “a clear and strong connection to the actual resources being developed in New England.”  

“By contrast, ISO-NE’s proposal is based on a mythical project that produces an absurdly high ORTP of $17.947/kW-month, which ISO-NE calculated by assuming $4.3 billion in capital costs for its hypothetical offshore wind facility,” Glick said. “ISO-NE’s capital cost assumptions are so high that ISO-NE does not even bother to propose an ORTP for [OSW] resources because it is so far above the estimated starting price of $12.400/kW-month for the upcoming Forward Capacity Auction.”  

Glick said by accepting ISO-NE’s proposal, FERC forces OSW developers “to beg for permission just to bid into an upcoming capacity auction at a price that at least offers a chance to be selected for a capacity payment.” Also, by adopting a capital cost estimate “beyond the outer limits of anything even remotely reasonable,” Glick said that the commission assumes “any contract for offshore wind is commercially unreasonable.”  

“The majority’s decision to apply buyer-side market power mitigation rules to entities that are not buyers or that lack market power is nonsensical,” Glick wrote. “I urge ISO-NE to move expeditiously to replace its ORTP and [minimum offer price rule]-related rules or the commission will be left with little choice but to step in and establish new rules ourselves.”

Clements said costs for OSW keep declining as project development proliferates and as states in the Northeast contract for increasingly large projects.  

“These decreasing costs weigh in favor of an ORTP method that uses as up-to-date data as possible,” Clements wrote. “NEPOOL’s approach relies on recently signed PPAs for New England projects, which means it is both up-to-date and reflective of the region in question.”  

She said that given FERC’s “limited visibility” into the sources of the cost database used by ISO-NE consultant Mott MacDonald, the commission could not “ascertain whether that data reflects equally current sourcing.”

Clements said that NEPOOL’s proposal also offers a viable alternative to ISO-NE “having to estimate costs for a hypothetical resource, an exercise that is inherently fraught.”

“RTOs/ISOs are not project developers,” Clements wrote. “Even with the aid of consultants, experience demonstrates that processes requiring RTO/ISOs to make myriad project development assumptions and estimate the associated costs using proprietary data is a recipe for extensive litigation before the commission.”  

Clements said that the ORTP decision was “especially troubling” given New England states’ increasing interest in procuring OSW generation to support their policy goals.  

“I can only express my hope that the Internal Market Monitor will provide a fair and legitimate opportunity for offshore wind resources to demonstrate the appropriateness of offer prices below the ORTP,” Clements wrote.