ISO New England (ISO-NE) on Oct. 15 filed with the Federal Energy Regulatory Commission a description of how it evaluated winter 2013-2014 system reliability bids and asked for a quick FERC approval considering the looming Dec. 1 start of the winter season.
On June 28, ISO-NE submitted a set of rules to FERC to establish a program to maintain reliability in winter 2013-14 following tight generating margins in the 2012-2013 winter season. The set of solutions reflected in the filing included a demand response program, incentives to ensure that oil-fired generators incrementally increase their fuel oil inventory, payments to dual-fuel units for testing their switching capacity, and market monitoring changes aimed at increasing flexibility for dual-fuel units. The commission conditionally accepted the Winter Reliability Program rules in a Sept. 16 order.
The rules require the ISO to notify participants of the acceptance or rejection of their bids on or before Aug. 26 and to subsequently file with the commission the list of selected bidders, the prices they will be paid, and “a description of the evaluation process.” The rules make clear that the ISO’s selection of the bids is conditioned upon the commission’s acceptance of both the rules and the bid filing.
The ISO selected participants to provide the oil inventory and demand response services that are part of the Winter Reliability Program and, on Aug. 26, filed the results of the ISO’s bid evaluation for acceptance by the commission in this docket.
Initially, after reviewing the bids for eligibility, the ISO said it arranged the bids by price ($/MWh). The ISO received bids from generator and demand response resources that amounted to 2.29 million MWh at a total offer price of $114.3m. Each of the generator bids was comprised of one or more bid block segments, including some replenishment bids that were contingent upon acceptance of initial inventory blocks. The ISO placed each generator bid block in rank order from lowest to highest cost of providing the oil storage and demand response services. The demand bids were incorporated and evaluated in the supply stack in merit order based on cost per MWh using the MW offered and total number of interruption hours that were available to the ISO pursuant to the program.
Next, the ISO considered reliability issues regarding the resources in the evaluation group, including historical availability and performance and resource flexibility, or, in other words, the ability to respond to contingencies within an operating day. To accomplish this review, the ISO considered forced outage percentages during the period 2009-2011. All generators were within an acceptable range for these purposes (specifically, at 20% or below) and none were removed from consideration.
The ISO also considered the collective operating parameters and characteristics of the assets in the initial selection group for their ability to respond within the operating day to contingencies and other changed conditions. Over 4,000 MW of capacity from resources in the program had start times of ten hours or less, including nearly 3,200 MW from dual-fuel units that are able to switch to oil in five hours or less. Fourteen of the nineteen units with dual-fuel capability that offered into the program were in the initial selection group based on price.
The commission also asked the ISO to resubmit its list of selected bidders, including the revised bids of Essential Power Massachusetts and Exelon.
The total acquisition of demand response and oil inventory services under the Winter Reliability Program is 1,950,599.706 MW at a price of $75.1m. Entities with winning bids include Braintree Electric Light Department, Connecticut Municipal Electric Energy Cooperative, Massachusetts Municipal Wholesale Electric, Shrewsbury Electric and Cable Operations, NextEra Energy Power Marketing, Public Service Co. of New Hampshire and NRG Power Marketing LLC.