ISO-New England gets support on bolstering winter capacity picture

A successful and sustainable market in the ISO New England region must recognize generator risks and benefits, and permit wholesale market sellers to efficiently manage commercial risks and obligations under future proposed energy, capacity, and ancillary market changes.

The New England Power Generators Assn. (NEPGA) added in Aug. 19 comments filed at the Federal Energy Regulatory Commission that it is concerned that a pattern is emerging of a focus on outcome-oriented market design overriding commercial realities impacting generator sales of service. “As numerous fundamental New England electricity market structure questions will be addressed in the coming months, it is imperative that a better balance of market design considerations is restored to provide a reasonable commercial environment for companies to make sound investment decisions that lead to competitive prices, efficient outcomes and reliable service for consumers,” the association said.

NEPGA’s comments are in response to ISO New England’s (ISO-NE) Aug. 5 amendment to its proposal to address reliability concerns for the winter of 2013-2014 through a procurement of oil inventory and demand response capability.

“NEPGA appreciates that proposals made by generators over the last several months through the NEPOOL stakeholder process to improve the Winter Proposal auction process have been incorporated in the Proposal Amendment,” the association wrote. “As ISO-NE explains in its Proposal Amendment, it is now putting forth several changes based on discussions with stakeholders, including most importantly oil-fired generators. These changes are necessary due to the receipt of insufficient offers under its original proposal.”

The association added: “As ISO-NE explains, all of these changes are to reduce the risk of penalties placed on oil-fired generators under the program. These amendments reflect the changes oil-fired generators informed ISO-NE it must make to the Winter Proposal in order to produce a more robust amount of offers into the Winter Program, but which were originally rejected by ISO-NE. The changes highlight the fact that performance can be optimized by balancing risks and rewards; the limited offers originally received by ISO-NE underscore that such a balance was missing from ISO-NE’s original proposal. Time will tell whether the Proposal Amendment goes far enough to achieve the needed balance.”

ISO-NE believes its amendment will provide it with the capacity it deems necessary for reliability in the winter 2013/2014 season and NEPGA said it generally supports ISO-NE’s amendments in the interest of maintaining a reliable power system. However, given the issues associated with this docket for the winter 2013/2014 season, NEPGA again emphasized its original comments concerning the urgent need to accelerate the ISO-proposed timeline to begin the stakeholder process this year for market changes to support reliability for the winter 2014/2015 season. The region should not find itself in this rushed and disjointed process again, the association said.

Other parties generally support the ISO-NE proposal

The New England States Committee on Electricity (NESCOE) said in its own Aug. 19 comments that it generally supports the ISO-NE amendments.

“To address the insufficient level of participation, ISO-NE proposes the Emergency Winter Amendments,” NESCOE pointed out. “One set of amendments are intended to reduce the penalty risks associated with program participants failing to secure the contracted quantity of oil by a certain date. Another program modification would provide more flexibility for participants with a common oil-storage tank at a multi-unit station. A further change would enable certain program participants more bidding flexibility. The Emergency Winter Amendments also include a narrow exception to the prohibition on self-scheduling. Lastly, the requested timeframes for the Commission to consider the solicitation results and issue an Order have been shortened to accommodate concerns associated with timely oil delivery in advance of the winter season. Together, these Winter Reliability Program modifications are, according to ISO-NE, designed to decrease risks and therefore increase participation.”

NESCOE emphasized the need for ISO-NE, and ultimately FERC, to insist upon “robust competition” in a second solicitation in order to contain overall program costs. NESCOE said its support is offered with the understanding that it has had one week to review and discuss the initial solicitation results and to consider ISO-NE’s proposed program amendments. First, despite the inadequate response to the initial solicitation, ISO-NE has not modified its assertion that out-of-market procurement of incremental energy is needed for winter 2013/2014, it said. Second, the emergency winter amendments appear to strike a reasonable balance between measures designed to increase participation in the Winter Reliability Program and incentives to ensure performance in accordance with the initial program’s requirements, NESCOE said.

The New England Power Pool (NEPOOL) Participants Committee was also among the parties filing Aug. 19 comments.

NEPOOL pointed out that it had joined ISO-NE in the filing of the Winter 2013/2014 Reliability Program, with an over 85% vote in support, but is not able to take any substantive position at this time in response to the emergency winter amendments filing. “There has simply not been the time needed in the stakeholder process for informed consideration and discussion of the Emergency Amendments,” NEPOOL said. “The need and plan for an Exigent Circumstances filing was presented to members at a meeting of the NEPOOL Markets Committee on August 7, two days ahead of the Filing, but without sufficient notice to permit members to fully understand and consider the Emergency Amendments or for the Markets Committee to take any action on the substance of those Amendments. In order to provide at least some opportunity for informed member input, notice of a special teleconference meeting of the Participants Committee was issued on August 8, one day ahead of the Filing, in order to provide the requisite minimum of five business days’ notice. That teleconference meeting of the Participants Committee was held on August 16. Given the circumstances, the Participants Committee was not able to and did not take any substantive position or vote on the Emergency Amendments.”

In this very limited process, though, two clear supported messages on process emerged.

  • First, NEPOOL said it agrees that ISO-NE was justified in concluding that the circumstances here warranted an Exigent Circumstances filing under Section 1 of the Participants Agreement.
  • Second, NEPOOL agrees with ISO-NE’s request for expedited consideration of the filings in this proceeding, notwithstanding the fact that NEPOOL did not have sufficient time to fully consider the Emergency Amendments.

“NEPOOL, by joining in the June 28, 2013 filing in this proceeding, has already signaled its support of the need to address the reliability issues prompting the Winter 2013/2014 Reliability Program, and agrees with ISO-NE that expedited consideration of Market Rule changes is essential to allow such changes to be implemented in time for the upcoming Winter Period,” NEPOOL added.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.