FERC Grants Rehearing to Determine Future Treatment of OOM Capacity in ISO-NE

FERC has granted rehearing on a single issue of its April order regarding ISO New England's Forward Capacity Auction (FCA), which largely addressed buyer-side market power, to determine how to treat Out of Market (OOM) resources carried forward under one set of rules under a new and different set of rules (ER10-787 et. al.).

FERC's April 13, 2011 order, which mandates offer floors, was issued after FCA 4 and just prior to FCA 5 (see 4/14).

Due to the timing of the order, as well as prior FERC statements that the then-current rules would continue until changed, FERC said that OOM resources that entered in FCA 4 and FCA 5 should be treated as existing resources and not mitigated further when the offer floor regime is instituted.

"Different considerations apply to any resources that are designated OOM in FCA 6, which will be held in April 2012 or in any subsequent FCAs prior to implementation of the new rules," FERC said.

"Market participants have been on notice since the issuance of the April 13 [2011] Order that the Commission finds the currently effective Joint Filing mitigation provisions unjust and unreasonable and that it has directed instead that an offer floor mitigation regime be implemented. Participants have had the opportunity to raise the question of how the transition from one regime to the next will occur, and they have done so. Furthermore, because FCA 6 and subsequent FCAs have not yet occurred, treating carried-forward OOM entry from FCA 6 as new under the offer floor mitigation regime can prevent uneconomic entry," FERC added.

For these reasons, FERC granted partial rehearing to find that OOM resources entering in FCA 6 or any subsequent FCAs prior to the implementation of the new rules will be carried forward under the existing rules and treated as new resources in the first auction in which offer floor mitigation is put into place.