Proposal benefits consumers and the renewable energy industry
ISO New England’s (ISO or ISO-NE) triennial recalculation of Offer Review Trigger Prices (ORTP) starting with Forward Capacity Auction (FCA) 16 to be run in February 2022 for the capacity commitment period beginning June 2025.
Today, the NEPOOL Participants Committee submitted to the Federal Energy Regulatory Commission (FERC) the NEPOOL-approved set of consumer-friendly ORTP and related Tariff revisions, referred to as the “NEPOOL Alternative,” in a joint filing with ISO.
This joint filing is known as a “jump ball” in which FERC will look at both the ISO and NEPOOL proposals on equal legal footing and decide which is more appropriate.
The jump ball provisions provide FERC with latitude to “adopt any or all of [ISO-NE’s] Market Rule proposal or the alternate [NEPOOL] Market Rule proposal as it finds, in its discretion, to be just and reasonable and preferable.”
Why this filing is important:
Despite renewable power’s advances, ISO-NE continues to limit it from full participation in electricity markets because it relies on outdated data that reflects higher than actual costs for renewables – particularly those for offshore wind.1 This exclusion hurts both renewable generators and ratepayers. It also prolongs the use of dirtier power and keeps prices artificially high for consumers while perpetuating financial advantages to conventional generators.
FERC’s adoption of the NEPOOL Alternative will provide renewables fair access to all ISO-NE markets which will:
- Lower electricity rates to consumers while preserving reliability
- Build a strong new clean energy economy
- Address critical carbon reduction goals
The comment deadline at FERC for any intervenors will expire at 5:00 p.m. on Wednesday, April 28 (21 days from today’s filing date).
“The NEPOOL Alternative reflects that renewable energy and battery storage resources are already competitive and should not be subjected to ISO’s administrative screen that uses artificially inflated cost estimates for these resources that could exclude them from the market,” said Francis Pullaro, Executive Director of RENEW Northeast. “ISO’s proposal to erect barriers to participation in the market by renewable energy, particularly offshore wind, will only result in making prices artificially high for consumers while perpetuating financial advantages to conventional generators.”
The NEPOOL Alternative reflects all the changes RENEW recommended to the NEPOOL Participants Committee. If the NEPOOL Alternative is adopted by FERC, it will result in lower ORTPs for renewable energy and storage resources, as shown in the table below. These ORTPs better reflect market expectations for 2025 and will prevent resources from being forced to submit high-priced capacity offers which could potentially increase consumer costs.
In addition to setting proper ORTP values, another RENEW amendment would specify the solar Investment Tax Credit (ITC) assumption to be used in FCA 17 and 18 and requires ISO to update all ITC assumptions based on future tax law changes. RENEW and other market participants were also able to get an amendment approved by NEPOOL that would strengthen the requirement that ISO use a weighted average ORTP for all resources that contain generators that share a point of interconnection (co-located generators), including co-located solar and battery storage.
Despite ISO now recognizing a higher ITC benefit for offshore wind at the level of 30 percent set by the December 2020 federal tax law, it did not propose an ORTP for this resource type. While the ISO has lowered its calculated ORTP value for offshore wind from $44.421 to $17.948/kW-month to reflect the tax changes, the ISO’s continued use of erroneously high capital cost and short project lifetime assumptions keeps the ORTP value above the auction starting price which precludes setting an ORTP in the Tariff. The NEPOOL amendments from December 2020 of $0.00 kW-month for offshore wind and solar remain intact in the NEPOOL Alternative.
In a letter sent last fall to Massachusetts Governor Charlie Baker and his energy team, Associated Industries of Massachusetts (AIM), Massachusetts Business Roundtable, Power Options, Alliance for Business Leadership, and RENEW Northeast outlined how the current ISO treatment of renewable energy, particularly offshore wind, results in high prices for consumers for the increasing volume of renewable energy coming online to meet the region’s carbon reduction requirements.
1. ISO-NE continues to use cost assumptions closer to that of the Cape Wind project than today’s offshore wind projects, which are estimated to be significantly less. New York issued a whitepaper that detailed offshore wind costs consistent with actual regional offshore wind contract prices. Table 14 on page 29 of the NYSERDA whitepaper appendix A lists a total cost of $3,218/kW compared to ISO’s cost assumption of $5,358/kW. ISO-NE simply needs to adopt these accurate New York numbers and offshore wind will be able to fairly compete in and bring down the overall cost of the capacity market.
RENEW Northeast is a non-profit association uniting the renewable energy industry and environmental advocates whose mission involves coordinating the ideas and resources of its members with the goal of increasing environmentally sustainable energy generation in the Northeast from the region’s abundant, indigenous renewable resources.