ISO-NE generators asked federal regulators to change market rules ahead of February’s capacity auction while state officials complained consumers face excessive costs because of unrealistic load forecasts. In all, the ISO’s load and supply interests opened three capacity market dockets at the Federal Energy Regulatory Commission in the last two weeks. (See related story, ISO-NE Stakeholders Challenge Capacity Rules Ahead of Auction.)

By William Opalka

New England consumers could purchase hundreds of millions in excess capacity in the upcoming auction because ISO-NE has underestimated the impact of distributed generation and its pay-for-performance (PFP) program, state officials told FERC.

The New England States Committee on Electricity made the allegation in a challenge to ISO-NE’s Nov. 4 filing on its installed capacity requirement (ICR), local sourcing requirements and Hydro-Quebec interconnection capability credits (HQICC) for the 2018/19 delivery year (ER15-325).

The New England Power Pool Participants Committee also criticized the ISO’s failure to incorporate the distributed generation (DG) forecast in its ICR value.

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.

NESCOE said it does not dispute ISO-NE’s adherence to the market rules and methodologies in calculating the ICR to be used for the ninth Forward Capacity Auction (FCA). “However, NESCOE expects that assumptions used in setting the ICR for future years — beginning with FCA 10 — will incorporate contributions to resource adequacy from incremental ratepayer investments in renewable DG resources and investments in improved performance,” it said.

ISO-NE’s DG forecast completed earlier this year projects that solar DG resources will increase in New England from roughly 175 MW in 2013 to 489 MW in 2018 and 632 MW by 2023.

“ISO-NE’s calculation of the ICR used for FCA 9 wholly disregards the very forecast it developed, ignoring hundreds of megawatts of solar resources required by state policies, which ISO-NE itself tracked and verified will come online over the next three years,” NESCOE said. “In addition, while one of the purported benefits of ISO-NE’s proposed PFP program was to ensure better resource performance, the ICR value for the first year under the PFP construct, the 2018-2019 Capacity Commitment Period, fails to reflect any projected increase in resource availability resulting from this new market design.

“Consumers should not pay to strengthen financial incentives under PFP and then be forced to purchase more resources than are needed to achieve resource adequacy standards as if these strengthened incentives were not in place.”

In its 2014 Regional System Plan, ISO-NE cited uncertain market rules as an impediment to using the forecast in resource adequacy studies for the ICR, including treatment of pay-for-performance. It says it is awaiting guidance from FERC “before being able to determine the best methods for potentially incorporating the DG forecast into the resource adequacy process.”