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U.S. Senators Urge FERC to "Fundamentally Reexamine" Whether ISO-NE's Capacity Market Is Effective
October 16,2014 Fifteen U.S. Senators and Representatives, including Senators Edward Markey, Elizabeth Warren, Jack Reed, and Sheldon Whitehouse, have signed a letter asking FERC to rehear the results of ISO New England's 2017/18 forward capacity auction, which was deemed by the ISO to be "non-competitive", but whose results nonetheless took effect by operation of law due to FERC inaction. Click here for background from EnergyChoiceMatters.com Apart from seeking relief with respect to the 2017/18 FCA, which will cost customers $3 billion, the letter from the Senators and Representatives also pointed to broader reforms needed with respect to capacity in New England. "The forward capacity market was designed to incentivize investment and healthy competition in the market, yet after eight years of capacity market auctions, there has not been an FCA in which a free, competitive market established the forward capacity price," the letter noted. "Further, the $3.05 billion in capacity payments set to be awarded through FCA8 will mostly go to existing generators. It remains entirely unclear whether these huge capacity payments are the appropriate mechanism to provide the stable, predictable revenue streams necessary to encourage suppliers to build new capacity," the letter observed. "We further request FERC's assistance in fundamentally reexamining whether New England's forward capacity market is the most effective way to address electrical capacity concerns and whether less costly and more direct alternatives should be adopted," the letter said.
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