After months of moving forward with a plan to eliminate the minimum offer price rule (MOPR), ISO-NE is changing course and proposing a two-year transition period that would maintain the rule for the next two capacity auctions.
In a memo ahead of next week’s NEPOOL Participants Committee meeting, ISO-NE COO Vamsi Chadalavada wrote that the new plan is based on stakeholder suggestions for a “more gradual” removal of the MOPR that reduces risk.
Under the transition proposal, which Chadalavada said is “clear and predictable,” 700 MW of capacity from state-subsidized resources would be able to enter the market through the renewable technology resources (RTR) exemption in FCAs 17 and 18, and the MOPR would be fully replaced by FCA 19.
Specifically, the plan, which closely mirrors a proposal from Calpine and Vistra, allows for 300 MW of RTR exemptions in FCA 17 and 400 MW in FCA 18. The exemption is designed to let a limited amount of renewable resources offer into the auction at prices lower than those set by the MOPR.
“The transition proposal will not impede the ability of the sponsored resources under long-term contracts to continue their path towards commercial deployment,” Chadalavada said.
The decision could reignite a debate over renewables and reliability, as ISO-NE explicitly states that its intention with the transition is to slow the entry of renewable resources into the capacity market in the interest of energy security.
“The proposed MOPR transition sets a steady pace for new, sponsored technologies to displace existing resources over two auction cycles. More certainty around the quantity of sponsored resources entering the market should attenuate the potential for inefficient retirements and the ensuing reliability risk,” Chadalavada wrote. “The two-year, 700-MW transition should help quell a sudden, voluminous and permanent shift that could otherwise occur between entering and exiting resources that may not equivalently contribute to reliability in the commitment period.”
The reliability risks, which have been a long-time subject of debate by stakeholders in New England, lie at the intersection of “inefficient” retirements by existing generators and a lack of ability to measure the contributions of new technologies, the memo says.
ISO-NE pointed to conditions in other regions to justify its decision.
“Insufficient dispatchable (natural gas-fired) generation contributed to [California’s] inability to serve load during August 2020, and it continues to pose challenging summer operating conditions in that region,” Chadalavada wrote. “As the MOPR is eliminated in New England, stakeholders should seek to avoid similar reliability consequences as the region’s growing sponsored resources prompt accelerated resource retirements.”
The change of plans could lead to a contested vote at the PC meeting next week; the Calpine/Vistra plan was voted down by the Markets Committee in its last meeting. (See NEPOOL MC Approves ISO-NE Plan to Eliminate MOPR.)
And it could also put ISO-NE at odds with the FERC majority, which has pushed for removal of the MOPR and just last week called again for it to be eliminated “expeditiously.” (See FERC Weighs in as ISO-NE Prepares for Capacity Auction.)