FERC Approves Sloped Demand Curve for New England Capacity Market

FERC approved, without modification, ISO New England's proposal to introduce a sloped demand curve into its forward capacity market, effective for auction for the 2018-19 delivery year.

The sloped demand curve was designed to, "reasonably be expected to elicit sufficient capacity to meet its stated reliability objective of a 1-in-10 LOLE on average over time," FERC noted (emphasis added).

FERC rejected protests from generators that the curve should be designed to meet the 1-in-10 LOLE standard in all years.

Consistent with ISO-NE's proposal, the cost of new entry values for the curve are $14.04/kW-month for CONE and $11.08/kW-month for Net CONE. These values, along with the administratively determined demand inputs, will mostly drive capacity prices, as opposed to true interactions between market forces such as buyers and sellers.

FERC noted that ISO-NE has committed to developing zonal sloped demand curves to be in place for FCA 10.

FERC approved without modification ISO-NE's proposal to exempt certain renewable resources from the capacity price floor. FERC rejected calls to expand this exemption.

Docket ER14-1639