ISO New England said that it requires another winter reliability program to keep the lights on during the 2014-15 winter, despite the billions paid to capacity resources to be available via the mandatory capacity market.

The ISO's latest winter reliability program will consist of

1. Compensation for unused oil inventory;

2. Compensation for unused liquefied natural gas (“LNG”) contract volume;

3. Incentives for commissioning dual fuel capacity before December 1, 2016;

4. A demand response program;

5. Elimination of the requirement that dual fuel units burn the higher-priced fuel when offers are based on that fuel and gas prices are volatile; and

6. Rules to permit ISO-initiated audits of dual fuel capability.

The ISO said that the maximum cost of demand response component is estimated at $2.4 million.

For the unused oil inventory and LNG contract volume components of the program, the ISO said that at the high end, assuming that 100% of the targeted amount of fuel is unused, the cost for these two program components is estimated at $82.6 million.

Costs for the dual fuel commissioning program were estimated at $12.9 million for units that commission by December 1, 2015.

"Consistent with the Commission's order on last year's winter program, the costs of the demand response and fuel inventory programs will be allocated to Real-Time Load Obligation, excluding Real-Time Load Obligation associated with Dispatchable Asset Related Demand Resources (pumps only)," the ISO said.

Retail suppliers had objected to this allocation last year (preferring allocation to transmission owners), but such protests were denied by FERC. This allocation to real-time load has been decreasing participation in recent New England SOS procurements.

The costs of dual fuel audits will be allocated consistent with the methodology for all other ISO-initiated audits, the ISO said. Specifically, as set out in Section III.F.3.2.19, these costs are allocated to Real-Time Load Obligation, excluding Real-Time Load Obligation associated with Dispatchable Asset Related Demand Resources (pumps only).

ISO-NE Filing:

Part 1

Part 2

Tags:
ISO New England   Cost Allocation   Capacity Markets   Reliability  

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