FERC rejected without prejudice a filing by ISO New England Inc. to sunset the mechanism in the Forward Capacity Market rules that allows ISO-NE to retain a resource for fuel security reasons (Fuel Security Reliability Retention Mechanism) one year earlier than currently specified in the Tariff, so resources cannot be retained for fuel security beyond May 31, 2024.

The non-market Fuel Security Reliability Retention Mechanism is essentially uplifted to LSEs, such as retail suppliers

FERC noted that, "Filing Parties contend that sunsetting the Fuel Security Reliability Retention Mechanism a year early is just and reasonable for two reasons. First, they state that it prevents the potential overlap of the Fuel Security Reliability Retention Mechanism with the Permanent Market Solution, which ISO-NE intends to implement by the start of the FCA 15 Capacity Commitment Period in June 2024. Second, they assert that it helps achieve the Commission’s and ISO-NE’s objective of limiting the unnecessary use of out-of-market actions that can adversely impact the integrity of the wholesale markets."

However, FERC noted that the Permanent Market Solution is not yet before the Commission, and therefore terminating the Fuel Security Reliability Retention Mechanism early is not appropriate

"We find that the instant filing is unjust and unreasonable because it would prematurely terminate the Fuel Security Reliability Retention Mechanism prior to ISO-NE submitting its Permanent Market Solution to the Commission for review. While the Commission aims to limit the unnecessary use of out-of-market actions, the Permanent Market Solution is not yet before us. Therefore, we cannot ensure that the Permanent Market Solution will be implemented on or before the sunset date proposed in the instant filing," FERC said

"[W]e find it would be unjust and unreasonable to sunset the Fuel Security Reliability Retention Mechanism before ISO-NE implements the Permanent Market Solution," FERC said

"We anticipate that ISO-NE will address the transition from the Fuel Security Reliability Retention Mechanism to the Permanent Market Solution in its proposed Permanent Market Solution, due on April 15, 2020. As the Commission specified in the December 3 Order, ISO-NE must propose to remove the Fuel Security Reliability Mechanism from its Tariff if the Permanent Market Solution is accepted," FERC said

Commissioner Richard Glick dissented.

"I dissent from today’s order because ISO New England Inc. has met its burden to show that removing the Fuel Security Reliability Retention Mechanism (Fuel Security RMR) from its Tariff for FCA 15 is just and reasonable. Frankly, this should be an easy case. Consistent with the Commission’s well-established preference for market-based approaches, ISO New England seeks to remove the Fuel Security RMR to pave the way for its transition to a market-based approach to ensuring fuel security. The ISO explains that retaining the Fuel Security RMR for the fifteenth Forward Capacity Auction (FCA 15) could hinder its efforts to make that transition without doing anything to enhance reliability. That ought to be more-than-sufficient to find the filing just and reasonable," Glick wrote

"Let’s begin with the purported need for the Fuel Security RMR. The only evidence on which the Commission relied in commencing the FPA section 206 investigation was ISO New England’s fuel security studies. In commencing that investigation and in subsequently accepting the Fuel Security RMR, the Commission expressly deferred to the ISO’s assessment of the potential risk to reliability. Now, when ISO New England tells us that that reliability risk has subsided for the FCA 15 delivery year, the Commission refuses to extend the same deference. Accordingly, the Commission lacks a reasoned basis for rejecting ISO New England’s filing, especially in light of the bevy of different options that ISO New England has identified to address any unanticipated fuel security concern that may arise between now and the FCA 15 delivery year," Glick wrote

"The Commission’s determination that ISO New England’s filing is premature is misguided ... The Commission is saying essentially that the ISO cannot withdraw the Fuel Security RMR without filing its long-term market based solution. But, as noted, the Commission has no basis to support that conclusion. It has not made an actual section 206 finding -- as opposed to a preliminary one -- that the Tariff is unjust and unreasonable without something akin to the Fuel Security RMR. And ISO New England has explained that there is no fuel security concern for the FCA 15 delivery year and that, in the event one arises, it has ample tools to address that concern without the Fuel Security RMR. As a result, the Commission has no reasoned basis to find that ISO New England’s filing is not just and reasonable," Glick wrote

Docket No. ER20-645

Tags:
ISO-NE   Uplift   Pricing   ISO New England   Wholesale  

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