The Federal Energy Regulatory Commission Friday rejected a challenge by New England states to recalculate the contributions of demand response and distributed resources in advance of February’s Forward Capacity Auction.

FERC accepted the installed capacity requirement (ICR) filed by ISO-NE for the 2018/19 delivery year (ER15-325). However, FERC did order the RTO to conduct a stakeholder process to develop market rules that would consider DR in time for the 2016 FCA.

The New England States Committee on Electricity said ISO-NE has underestimated the impact of distributed generation and its pay-for-performance (PFP) program on the region’s capacity needs. FERC disagreed.

“We agree with ISO-NE that it would have no basis to use forecasted performance data in the absence of actual historical performance under this nascent two-settlement market design. We therefore support ISO-NE’s current methodology, which incorporates actual resource performance data,” FERC said.

FERC also suggested that a request to include distributed generation as part of the calculation was too soon, saying that the RTO first “must examine the market and operational issues.”

ISO-NE’s Nov. 4 filing established its ICR, local sourcing requirements and Hydro-Quebec interconnection capability credits (HQICC) for FCA 9.

The ISO proposed an ICR value of 35,142 MW, which includes 1,970 MW of emergency generation assumed obtainable from New Brunswick, New York and Quebec. The net amount of capacity to be purchased, after deducting the HQICC value of 953 MW per month, is 34,189 MW, the ISO said.