WESTBOROUGH, Mass. — Continued discussion of eliminating the minimum offer price rule (MOPR) from ISO-NE’s capacity markets and Order 2222 compliance took up a sizeable portion of the agenda during a two-day, in-person meeting last week of the NEPOOL Markets Committee.
The New England Power Generators Association and Advanced Energy Economy laid out their complaints with the RTO’s proposals at the session, the first in-person meeting of the MC since March 2020 because of the COVID-19 pandemic.
ISO-NE Proposes Review Mechanism
As part of its MOPR elimination, ISO-NE proposes a narrow, buyer-side market power review mechanism where new capacity resources qualified to participate in an upcoming Forward Capacity Auction will follow one of three lanes:
- de minimis lane
- supported purpose lane
- full assessment lane
New resources with a qualified capacity below a de minimis size threshold — yet to be determined — enter that lane and will not be reviewed for buyer-side market power. The RTO’s tariff presently provides de minimis exemptions to certain supply-side market power reviews. The threshold will similarly focus future buyer-side market power reviews on larger new resources. As a result, ISO-NE anticipates that a de minimis threshold will likely exempt most new capacity resources currently subject to review under the MOPR.
All remaining resources — small in number but constituting most of the new qualified capacity offered in the Forward Capacity Market — would need to proceed down the supported purpose or full assessment lanes.
A new capacity resource that can demonstrate that it meets certain criteria — such as the absence of any load-side interest or arrangement or that it is a development to meet a specific state regulatory requirement or policy — would go down the supported purpose lane and will not need further evaluation by the Internal Market Monitor. This will allow resources built to further state decarbonization goals and contribute to the region’s capacity supply to participate in the Forward Capacity Market, which is consistent with the overall objective of the MOPR’s removal, ISO-NE said.
New resources that do not qualify for the de minimis or supported purpose lanes will undergo a more thorough buyer-side market power evaluation by the IMM. In addition, those resources must comply with the new certification requirement, which requires an affidavit stating that they are not participating in the auction to reduce the clearing price. They may be required to provide project-specific confidential information to facilitate an assessment of buyer-side market power and mitigation.
Bruce Anderson, vice president of market and regulatory affairs for the New England Power Generators Association (NEPGA), said in a presentation to the committee that ISO-NE’s MOPR elimination proposal “allows for uncompetitive rates and fails to create a proper balance between consumer and investor interests” in the FCM.
Under the ISO-NE mitigation proposal, new capacity resources may be offered at any price, whether competitive or not, eliminating the critical relationship between competitive offers and competitive rates, NEPGA said.
If the RTO eliminates the MOPR at all, NEPGA said it should be done at the same time as it enacts “capacity accreditation reform and meaningful forward reserve pricing.”
NEPGA said ISO-NE has acknowledged its MOPR elimination proposal would create “a greater risk of inefficient retirements” and “gaps” in the wholesale markets that the generators said must be fixed by the accreditation and forward reserve changes.
“Delaying the remedies for the two existing gaps in the wholesale markets, while creating a third issue to be remedied, is poor planning and should be avoided through the concurrent application of these wholesale market design changes,” NEPGA said.
NEPGA also said that ISO-NE has not explained how the FCA will produce competitive clearing prices when there is no review of new capacity resource offers for competitiveness. Additionally, NEPGA said that the RTO has not determined how it, or the Internal Market Monitor, can testify to the competitiveness of the FCA clearing price without any transparency on new capacity resource offers.
Eliminating the MOPR without “counter-balancing changes” violates the need for wholesale markets to balance consumer and investor interests properly, NEPGA said.
AEE Offers Amendments for Order 2222 Compliance Proposal
ISO-NE’s Order 2222 proposal does not meet FERC’s directive to enable distributed energy resources (DERs) to offer wholesale market services they are technically capable of providing through aggregation, Jeff Dennis, managing director and general counsel for Advanced Energy Economy, said in a presentation.
Without viable participation models for many DERs, New England will forego the option to pursue cost savings, market efficiencies and reliability benefits through wholesale markets, AEE added.
AEE proposed a series of five individual amendments that are not part of an overall package, including allowing submetered load to participate as demand response and submetering by third parties.
Load reductions from a DER allow customers who cannot participate at the customer meter, because of the cost of metering and/or widely variable load, to participate with a dispatchable device behind the meter, AEE said. It said CAISO uses a FERC-approved DR model that allows submetered EV charging equipment to participate as DR under Order 745.
Allowing third-party metering permits aggregators to meter the injection, withdrawal and load reduction of all DERs within each aggregation without requiring reconstitution by meter readers. Third parties bear costs of additional equipment and do reconstitution when required. The arrangement would facilitate DER aggregation deployment sooner and in the areas with no advanced metering infrastructure, AEE said.
The precedent cited by AEE is the NYISO DER participation model that allows third parties to provide metering and meter data services for wholesale market participation. It defines the roles, responsibilities, equipment and data quality standards while describing the processes for data processing and analysis. It also provides checks and balances to ensure data accuracy.
ISO-NE must make its Order 2222 compliance filing by Feb. 2, 2022.