By William Opalka
ISO-NE CEO Gordon van Welie last week again defended the RTO’s capacity auction to congressmen who say market practices have led to inflated electricity rates for New England ratepayers.
In an eight-page, single-spaced letter sent Monday, van Welie reminded the New England congressional delegation of his testimony three years ago that highlighted the dramatic shift in the region’s market.
“Since then, 4,200 MW of resources have either announced plans to retire or have actually retired. Importantly, since 2013, the region’s Forward Capacity Market (FCM) has procured over 4,700 MW of new capacity resources — demonstrating that the FCM is procuring new, economically competitive resources to meet the region’s energy needs,” he wrote. (See Prices Down 26% in ISO-NE Capacity Auction.)
Van Welie’s letter was a response to a March 14 letter sent to FERC and the RTO by the delegation members after results of the 10th Forward Capacity Auction were filed.
“While these clearing prices were the result of a ‘competitive auction’ according to ISO-NE, the results are roughly equal to FCA 8, an auction that triggered administrative pricing rules due to lack of competition. They are also triple the capacity payments derived from the auctions prior to FCA 8,” the delegation wrote.
The congressmen acknowledged that prices declined more than 25% from FCA 9, but they noted that the previous year was a record $4 billion.
Ten senators and representatives joined in the letter, which was written by Massachusetts Democrats Rep. Joseph P. Kennedy III and Sen. Edward Markey. The members have repeatedly complained to FERC, without success, about alleged market manipulation. (See Congressional Meeting Fails to Sway LaFleur on Capacity Results.)
Van Welie said that market participants respond to price signals.
“We share your goal of ensuring that prices in the capacity market are just and reasonable. The FCM must and does signal the true value of capacity in New England. Artificial prices (whether too high or too low) do not benefit regional electric reliability or New England residents,” he wrote.