Northeast Capacity Owner CEO Warns of "Disastrous" Consequences from Current Capacity Market Design; Calls Markets "Not Sustainable"

The northeast RTOs are facing "disastrous" consequences if they do not reform their capacity markets, Entergy Corporation Chairman and Chief Executive Officer Leo Denault said during a Barclays conference Friday, further affirming that capacity market designs are not successful markets which assure reliability, and affirming that these markets are not ready for implementation in Texas.

Entergy owns several thousand megawatts of competitive generation in the Northeast.

"Capacity markets are something that we still believe, [and] I know we're not alone in this, need some work," Denault said.

"The capacity markets are not designed to completely [and] adequately compensate us for the type of facility, the reliability of the facilities, the availability of the facilities," Denault said.

"It's not really a level playing field for those of us who are spending [a] significant amount of money to maintain the reliability of baseload generation versus those that aren't," Denault said.

If the real value of capacity doesn't show up in the owner's revenue line, "there's going to be some disastrous consequences coming down the pike, not for us, as much as what we're going to see in the operations of the grid and the system and things like that," Denault said.

In an accompanying slide deck, Entergy said, "We believe that the current market design of the Northeast ISOs are not sustainable in the long run and need to be reassessed."