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FERC Accepts ISO-NE Non-Market Reliability Solution, Assignment of Costs to Real-Time Load, Directs Stakeholder Process to Address 2015/16 Winter
FERC has accepted without modification ISO New England's 2014-15 winter reliability program, a series of non-market programs and compensation which are said to be needed to assure reliability.
Among other things, the program includes compensation for unused oil inventory; compensation for unused liquefied natural gas contract volume; incentives for commissioning dual fuel capacity before December 1, 2016; and a demand response program.
The costs of the demand response and fuel inventory programs will be allocated to Real-Time Load Obligation, excluding Real-Time Load Obligation associated with Dispatchable Asset Related Demand Resources (pumps only).
"While we accept the 2014-2015 Winter Reliability Program as an out-of-market solution because of its temporary nature, we expect ISO-NE to abide by its commitment to develop a long-term, market-based solution to address winter reliability issues," FERC said.
"We therefore require ISO-NE to initiate a stakeholder process by January 1, 2015 to develop a proposal to address reliability concerns for the 2015-2016 winter and future winters, as necessary. We also require ISO-NE to submit to the Commission a stakeholder meeting schedule within 30 days of the date of this order and progress reports every 60 days thereafter for the next 12 months. We note that ISO-NE has made efforts to address the region's dependence on natural gas by initiating market improvements through the stakeholder process, such as offer flexibility changes in the energy market, as well as reserve market improvements including changes to the failure-to-reserve penalty, the failure-to-activate penalty, and introducing a reserve constraint penalty factor for replacement reserves. Given ISO-NE's recent and ongoing efforts to develop and propose long-term, market-based solutions through the stakeholder process, the Commission will not initiate a section 206 proceeding or direct any specific Tariff revisions at this time, as commenters have requested. Similarly, we will not direct ISO-NE to submit metrics for assessing whether the Pay-For-Performance design adequately addresses winter reliability concerns, as NESCOE requests," FERC said.
ER14-2407
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September 9, 2014
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Reporting by Paul Ring • ring@energychoicematters.com
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