ISO-NE files 12th capacity auction results

The organization responsible for New England's wholesale electricity markets has announced the results of its twelfth annual forward capacity auction. According to grid operator ISO New England, Inc., its FCA 12 concluded with sufficient resources to meet electricity demand in 2021-2022, at the lowest price in five years.

As in some (but not all) other organized electricity markets, New England's electricity market design includes a wholesale energy market as well as a forward capacity market. Operated by ISO New England, the Forward Capacity Market or FCM is designed to secure capacity resources sufficient to meet future demand. The capacity market is separate from the energy market, and can provide additional revenues for qualified resources.

The grid operator conducts annual Forward Capacity Auctions or FCAs, held three years in advance of each one-year operating period. Generation and other capacity resources such as load management or energy efficiency can compete in these auctions to obtain monthly market-priced capacity payments during the delivery year, in exchange for the obligation to supply capacity -- and supply energy or curtail demand when dispatched by the ISO in that future period. Capacity revenues can support the development of new resources as well as the retention of existing plants by providing predictable cash flows and incentivizing consistent resource availability.

ISO New England held its twelfth FCA on February 5 and 6, 2018, auctioning off capacity supply obligations for the capacity commitment period of June 1, 2021 through May 31, 2022. On February 28, 2018, ISO New England submitted its forward capacity auction results filing for FCA12 to the Commission. According to the filing, the descending clock auction commenced with a starting price of $12.684/kW-month, with resources in most zones to be paid at a clearing price of $4.631/kW-month based on the system sloped demand curve. About 1,100 megawatts of imports over certain interfaces with Canada will be paid at reduced capacity clearing prices. These prices are all below recent ISO-NE forward capacity auction results.

Through FCA12, ISO-NE procured 30,011 megawatts of generation, including 174 megawatts of new generation. The auction also acquired about 3,600 megawatts of energy efficiency and demand-reduction measures, 514 megawatts of which is new. The grid operator estimated the total cost of the capacity market in 2021-2022 to be approximately $2.07 billion.

ISO noted that it had rejected two "de-list bids", or requests by existing generators to leave the capacity market, for local reliability reasons. It identified those bids as coming from Exelon Generation Company, LLC with respect to its Mystic 7 and 8 units, totaling about 1,278 megawatts. As described in supporting testimony, ISO asserted that "allowing the resources to leave the market would have resulted in a violation of NERC, NPCC, or ISO criteria." According to a related press release, ISO found that "transmission lines in Greater Boston could be overloaded if Mystic 7 and Mystic 8 were not available during 2021-2022."

ISO described the results of the auction as just and reasonable, and asked the Commission to accept the filing.