FERC Approves Transition Period For Zonal Sloped Demand Curves in ISO-NE Capacity Market, Rejects Generator Protests on Curve Design

FERC accepted without modification a filing by ISO New England to implement sloped zonal demand curves and a new sloped system-wide demand curve for use in ISO-NE’s Forward Capacity Market

The adopted ISO-NE demand curve design includes a new set of demand curves (at both the system- and zonal-level) that reflect the marginal improvement in reliability (MRI) associated with adding capacity in constrained capacity zones versus adding it to the remainder of the system (i.e. rest-of-pool). Notably, ISO-NE sought, and FERC approved, a modification to the existing system-wide demand curve to use the same MRI-based methodology, as opposed to the current linear curve

Generators had opposed adopting the MRI methodology for both the zonal and system-wide demand curves, but FERC rejected such arguments. FERC also rejected generators' protest concerning the intersection of the curves and the Installed Capacity Requirement, which will now occur at net CONE, rather than 1.2 times net CONE

FERC also accepted the proposed transition mechanism from the existing, linear system-wide demand curve to the proposed MRI-based system-wide curve.

The length of transition period will depend on whether certain conditions are met, but will last no longer than three auctions. During this period, a transition demand curve that is a hybrid of the existing, linear demand curve design and the new, MRI-based design will be used (the upper-left region of the transition curve is convex and MRI-based, while the lower-right section is linear and based on the existing design).

The changes are effective with FCA 11, which will take place in February 2017 to procure capacity for the 2020-2021

Docket No. ER16-1434