ISO-NE Winter Reliability Program 2016-2017

Thursday, September 1, 2016

As winter approaches, the operator of New England's wholesale electricity markets is preparing to run another seasonal Winter Reliability Program to address operational concerns related to fuel adequacy.

Since the winter of 2013-2014, ISO New England Inc. has operated a seasonal program to address winter fuel security and power system reliability concerns, relating largely to natural gas pipeline constraints.  After two initial program years, last fall the Federal Energy Regulatory Commission approved a three-year plan for ISO-NE's Winter Reliability Program.

That program, developed chiefly by market participant group New England Power Pool (NEPOOL), was designed to address reliability concerns through at least 2017-2018, when new “Pay-for-Performance” incentives and penalties in New England's redesigned capacity market are set to take effect.  The winter reliability program encourages generators fueled by oil and liquefied natural gas (LNG) to secure fuel before the winter season begins, by compensating them for some costs related to fuel inventory that remains unused at winter's end, and includes a demand response component.  According to ISO-NE, last year's participants included 77 oil-fired units, 8 LNG units, and 6 demand response assets.

The program's rules are specified in Appendix K to Section III of the ISO New England Inc. Transmission, Markets and Services Tariff.  As approved by FERC, the current program retains the three core components of the 2014-2015 Winter Reliability Program: (1) compensation for certain oil inventory that remains in New England following the end of each winter period; (2) end-of-season compensation for LNG contract volumes kept available for winter use but not actually called upon to produce energy; and (3) a supplemental demand response program.

ISO-NE has also published a memorandum describing payment rates for the 2016-2017 winter program.  Under its tariff, ISO-NE first determines a "Set Rate," representing partial compensation for the per-barrel carrying costs of stored fuel oil.  The Set Rate is translated into an equivalent rate for the other, non-oil services that are compensated through Appendix K.

Requests to participate in ISO New England's 2016-2017 Winter Reliability Program are due to ISO-NE by October 1, 2016

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