ISO-NE wholesale market costs were down 23% for the winter of 2023 compared to 2022, said the RTO’s Internal Market Monitor (IMM) at the Markets Committee meeting on Tuesday. The decrease was driven by a 29% drop in energy costs, which was largely a result of the 37% decrease in natural gas prices compared to the previous winter.

While wholesale costs declined, capacity market costs increased by 18%, or nearly $100 million, due to the supplemental payments to the Mystic 8 and 9 generators — the main customers of the Everett LNG import terminal — which totaled $213.5 million.

ISO-NE entered into an agreement in 2022 with Constellation Mystic Power to keep the generators operating through May 2024. The RTO justified the agreement to bolster fuel security in the region, but the agreement has been subject to intense criticism from a range of stakeholders.

“The net costs passed through the agreement so far have been astronomical: more than $436 million over the first ten months of the two-year term,” per a May FERC filing on behalf of a group of New England consumer-owned utilities (ER18-1639). “Most of those costs have resulted from [Constellation] buying — and then selling at a loss, burning uneconomically, or otherwise disposing of — fuel that Mystic did not need.”

The IMM noted in its presentation that relatively high winter temperatures led to lower average and peak loads for 2023. The average load was down by about 4% compared to the winter of 2022.

The region did experience two major cold snaps Dec. 24-27 and Feb. 3-4. On Dec. 24, the region faced its first pay-for-performance (PfP) capacity scarcity conditions since 2018, due to a combination of factors including low temperatures, a reduction in net imports, and several gas and dual-fuel generation plants failing to supply power.

“Most resources that tripped were older generators that run infrequently,” said Kathryn Lynch of the IMM. Lynch said these resources totaled approximately 2,180 MW of capacity.

The IMM said PfP credits and charges totaled $35.9 million during the scarcity conditions, with most charges incurred by gas and dual-fuel generators, while most credits went to imports, nuclear and pumped storage.

Generation from oil spiked during the two periods of extreme cold weather, making up 20-26% of generation during these stretches. Overall, oil generation decreased relative to 2022 and made up a small fraction of overall generation.

Technical Difficulties

ISO-NE said it has paused discussions on its Resource Capacity Accreditation (RCA) project due to a software error related to how it models LNG inputs for gas generation plants.

“The software significantly restricted LNG available to the gas resources,” said Tongxin Zheng of ISO-NE.

The RTO is developing the RCA modeling to project the reliability and availability of energy resources, and it will use the modeling to determine the amount of capacity a resource could receive in the Forward Capacity Market.

“The preliminary evaluation after correcting the software effectively results in negligible reliability risk in the model for winter under FCA 16 assumptions,” Zheng said. “Further evaluation is needed to determine whether the winter risk level in the initial results containing the error [nearly complete elimination of LNG in the software] is reasonable.”

The RTO previously hoped to implement the RCA modeling for the 19th Forward Capacity Auction, which is scheduled for 2025 and will determine capacity obligations for 2028/2029. Zheng said the software will impact the project schedule.

“ISO is reviewing its options and plans to share further information with stakeholders ahead of the June NEPOOL Participants Committee meeting,” Zheng said.