Massachusetts AG comments on ISO-NE consideration of delay of capacity accreditation reforms; ISO-NE continues discussion of prompt vs. forward capacity auctions with timing of capacity accreditation reforms

On August 1, 2023, the Massachusetts Office of the Attorney General (Mass AG) submitted comments on ISO-NE’s presentation at the July 11 NEPOOL MC meeting (discussed in NE Flash 23-28) regarding alternative Forward Capacity Market (FCM) commitment horizons as well as a potential delay in implementing capacity accreditation reforms. ISO-NE originally planned to implement capacity accreditation in time for Forward Capacity Auction 19 (FCA 19) for the 2028-2029 capacity commitment period but noted that a delay may be necessary due to software errors in its GE MARS model. Relatedly, at the most recent MC meeting on August 10, ISO-NE gave a presentation continuing these discussions and presented the below options for the timing and scope for FCA 19, which it expanded on since the July MC meeting.

  • Proceed with FCA 19 as scheduled under currently approved market rules, without capacity accreditation reforms.
  • Implement capacity accreditation reforms for FCA 19, with FCA 19 held in 2026 instead of February 2025.
    • (New Option) Same as Option 2, but by no later than early Q3 2024, decide whether to implement prompt auctions starting with FCA 19 in early 2028, with continued discussions beginning in late 2024 on implementing as prompt/seasonal auctions starting in early 2028.
  • Implement capacity accreditation reforms for FCA 19 with a prompt/seasonal auction (as opposed to a forward auction) running in early 2028, instead of February 2025.

The Mass AG noted that during the July MC meeting, a stakeholder proposed a fourth option described below.

  • (New Option) Delay FCA 19 for one year to allow time for the MC to work through the issues that should be considered before determining whether to proceed under Options 1, 2, or 3 above.

The Mass AG recommended that ISO-NE:

  • Seriously consider Option 4 to delay FCA 19 by a year to consider all of the pertinent information to FCA 19 before determining the appropriate path forward.
  • Further develop the scope of its modeling software to evaluate the changes needed to move to a seasonal, rather than a forward annual, capacity market.
  • Incorporate potential costs to consumers as an explicit evaluation metric in deciding the optimal path forward for FCA 19.

ISO-NE indicated that it would consider all feedback from the July and August MC meetings and make a decision for its proposed path by late September and bring its proposal forward in October.