By William Opalka

ISO-NE will hold its 10th Forward Capacity Auction on Monday with expectations that prices will continue to rise as more generation resources leave the market.

Capacity prices have more than quadrupled over the past two auctions, with total costs reaching about $4 billion in FCA 9. Last year’s auction set prices at $9.55/kW-month throughout most of New England, with administrative prices set in the constrained zone of Southeastern Massachusetts/Rhode Island.

The upcoming auction, for the capacity commitment period of 2019/20, will not have Entergy’s 680-MW Pilgrim nuclear station in Massachusetts, which the company said last year will close by early 2019. (See Entergy Closing Pilgrim Nuclear Power Station.) Auction results are expected on Wednesday.

A Dec. 31 research report by UBS Securities predicted higher prices with the loss of Pilgrim, “which we assume will be replaced with a new asset requiring $11/kW-month to be economic; without any new entry, we foresee an even higher outcome of $13/kW-month.”

A year ago, UBS thought the market had reached its high-water mark in FCA 9 as more than 1,000 MW of new resources were procured. Entergy announced its intention to close Pilgrim a few months later, just before the deadline for qualified resources to apply for inclusion in FCA 10.

One difference this year is ISO-NE’s inclusion of 390 MW of behind-the-meter solar resources. FERC approved the inclusion of the resources over the objections of power generators, saying they were properly accounted for in the installed capacity requirement calculation.

Solar is only a small piece of the 35,126 MW of ICR resources in FCA 10, but the reduction was enough to displace the need for one small generating plant. (See FERC Accepts ISO-NE’s Solar Count over Protests.)

FERC last month also reaffirmed the zero-price offer requirement in ISO-NE’s new entrant pricing rule, rejecting complaints that it unreasonably suppresses capacity prices and discriminates against existing resources.

ISO-NE’s rule allows new resources to lock in their first-year clearing price for up to six subsequent delivery years by offering as a price-taker with a price of zero.

And a cloud has been lifted over participation of demand response resources now that the U.S. Supreme Court has endorsed FERC jurisdiction over it in the wholesale markets. (See Legal Challenge Behind it, DR Seeks to Overcome Behavioral Resistance, Varying State Rules.)

The New England Power Generators Association, which had previously sought to disqualify DR from participation, last week withdrew its petition as moot.