ISO-NE Files To Impose New Fuel Security Costs On Retail Suppliers, Load

ISO New England has filed with FERC proposed "interim" tariff revisions to allocate the out-of-market costs for resources retained for "fuel security" to load-serving entities on a regional basis using the Real-Time Load Obligation allocator.

In making such proposal, the ISO noted that the NEPOOL Participants Committee supported a proposal to allocate the out-of-market fuel security costs to Regional Network Load, rather than the Real-Time Load Obligation allocator.

To establish its proposed cost allocation methodology, the ISO is proposing to create Section III.13.2.5.2.5A(h). This provision notes that the compensation for resources needed for fuel security reliability reasons will utilize the Commission-approved compensation mechanisms set out at III.13.2.5.2.5.1 of the existing Tariff, with the variation that the costs shall be allocated on a regional basis to Real-Time Load Obligation in the same manner the Commission directed in the Winter Reliability Program dockets, i.e., excluding Real-Time Load Obligation associated with Dispatchable Asset Related Demand Resources (DARD Pumps and other electric storage based DARDs) and Real-Time Load Obligation associated with Coordinated External Transactions.

The allocation of charges for these cost-of-service agreements or approved Retirement De-List bid costs is further specified to be allocated and collected over a 12-month period.

The ISO said that determining that a retiring existing generating resource is needed for fuel security will not necessarily result in a cost-of-service agreement. Such a resource may also elect to be paid its approved Retirement De-List price. Under the current tariff, the delta between that amount and the FCA clearing price is an out-of-market cost that is allocated in the same manner as cost-of-service costs, in this case, per the ISO’s proposal, to Real-Time Load Obligation

ISO-NE noted that, as directed by FERC, the proposed changes are 'interim' in nature and will only be in effect for the 13th, 14th, and 15th Forward Capacity Auctions, which run for Capacity Commitment Periods 2022/23, 2023/24 and 2024/25. "These provisions sunset after FCA 15, as later commitment periods will address fuel security concerns using a longer-term market solution," the ISO said