After a brief pause following FERC’s approval of another delay to ISO-NE’s 19th Forward Capacity Auction (FCA 19), the RTO presented the initial scope of its work to coordinate resource capacity accreditation improvements with proposed capacity market timing changes at the NEPOOL Markets Committee meeting July 9-10. 

The potential changes have been an extended work-in-progress for the RTO and its stakeholders. ISO-NE launched its resource capacity accreditation (RCA) project almost exactly two years ago, while the RTO has been discussing moving to a prompt and seasonal capacity market for over a year. (See ISO-NE Starts its Capacity Accreditation Journey and ISO-NE Considers Major Capacity Market Changes.) 

Moving to a prompt and seasonal auction would reduce the time between the auction and the capacity commitment period (CCP) from over three years to likely just a few months, while also breaking up the yearlong CCP into seasons.  

“With the FERC approval of the further delay filing, we will turn our attention to working with stakeholders on [capacity auction reform] and will not continue to study accreditation in a forward, annual framework,” said Chris Geissler of ISO-NE. (See FERC Approves Additional Delay of ISO-NE FCA 19.) 

Geissler said the key considerations for the project scope are making sure the work is finished in time to implement for the 2028/29 commitment period (CCP 19), prioritizing the highest-value reforms and avoiding adding components that jeopardize the overall timing or development of the key aspects.  

The new capacity market design “likely needs to be completed, filed and approved well in advance of CCP 19,” Geissler said. “Expect that this will require hard decisions because even the most narrow project scope that achieves a prompt and seasonal market with accreditation reforms requires enormous design and implementation efforts.” 

The core aspects of the capacity auction reform (CAR) will include defining the exact timing of a prompt and seasonal auction, determining how entering and retiring resources will be treated under this construct, developing seasonal demand curves and incorporating the work that already has been completed on capacity accreditation into the new auction format.  

Geissler said ISO-NE and stakeholders already have made “significant progress” on developing a new accreditation method, but “outstanding areas remain and further changes are necessary with a prompt and seasonal capacity market.” 

The project likely will include work on a new approach to accounting for gas constraints, along with an update to the current cost of new entry value, since “accreditation reforms and modeling changes would impact this value, which is used to derive the capacity demand curves,” Geissler said. 

Geissler said ISO-NE also is contemplating moving from a descending clock to a sealed bid auction format, developing simultaneous seasonal bidding to account for resources that could receive an obligation for just one season, and accounting for resource startup times in accreditation.  

ISO-NE is considering whether to submit CAR’s resulting tariff changes as a single filing or a series of filings. For changes that ISO-NE is unable to complete for CCP 19, Geissler noted that the RTO could explore “improvements and enhancements for later commitment periods, after CAR has gone into effect.” 

Internal Market Monitor Report

Wholesale market costs were down in 2023 relative to the prior year, falling back to the levels seen prior to the spike in natural gas prices, Donal O’Sullivan of the ISO-NE Internal Market Monitor said in presenting takeaways from the Monitor’s 2023 annual markets report.

The lower costs were in part spurred by the lowest loads experienced in the region “since at least 2000 due to mild weather conditions and the growth in behind-the-meter solar generation,” O’Sullivan said. 

He added that renewables have grown gradually in the region over the past five years but said “the combined impact of behind-the-meter solar and wholesale market solar on load and pricing [time-of-day] profiles is noticeable.” 

The annual report found that the energy market accounted for about 51% of wholesale costs, followed by transmission at 28% and the capacity market at 13%. The Mystic cost-of-service agreement accounted for about 5% of total costs.  

While transmission costs were high, “the market impacts of investments are evident in terms of low congestion, fewer local reliability and voltage commitments, and [fewer] local market power issues,” O’Sullivan said. 

Looking at the resource mix, natural gas generation continued to increase despite the historically low loads. It accounted for 48% of total supply in 2023, compared with 45% in 2022 and 39% in 2019.  

In contrast, imports to the region were down, in part because of an approximately 20% reduction in imports from Canada because of lower reservoir levels, O’Sullivan said.  

Hourly Tracking Proposal Fails to Pass

A proposal by Constellation Energy to enable hourly tracking of generation by the NEPOOL Generation Information System failed to pass the MC with 65.1% in favor, falling just short of the two-thirds majority needed to pass.  

The company has argued that enabling hourly tracking would cost ratepayers relatively little and would help boost the market for carbon-free generation that matches load. 

NEPOOL estimated that upgrading the system to accommodate the proposal would cost $75,000.  

Opposition to the proposal came from members of the end user sector and the publicly owned sector. Opponents made the case that the proposal would benefit companies selling certificates at the expense of ratepayers and is not required by regulation. 

The proposal now heads to the NEPOOL Participants Committee.