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Dan Cwalinski
Director of Contracts and Pricing
Freedom Energy

On March 9, 2022 ISO-NE published the results of Forward Capacity Auction 16 (FCA 16), which was held on February 7th, 2022. The auction closed with adequate power system resources to meet peak demand for the capacity commitment period spanning June 1, 2025 through May 31, 2026.

The purpose of the Forward Capacity Market (FCM) is to send price signals to the market that maintain existing capacity resources and attract new capacity resources, when and where they are needed in ISO-NE. This is important to rate payers because the structure of the ISO-NE FCM also provides visibility into the expected cost of capacity three years in advance of when it utilized, and that capacity cost is part of what suppliers use to determine the rates they offer.

The annual auction has capacity resources compete to obtain a capacity supply commitment for a specific capacity commitment period, in exchange for a market-priced capacity payment. In the FCA format, the price for capacity starts high enough to attract more than enough resources to meet the capacity requirements of ISO-NE and then is decreased until the quantity of capacity remaining in the auction equals the quantity of capacity needed (supply meets demand).

This year’s auction saw the qualified participation of 38,602 MW of capacity resources, including 33,356 MW of existing capacity and 5,246 MW of new capacity from 302 new resources. The auction ended after 4 rounds of competitive bidding which secured capacity commitments of 32,810 MW, exceeding the net installed capacity requirement of 31,645 MW needed to meet the reliability requirements of ISO-NE.

Southeast New England (SENE) $2.639/kW-month

  • Northeastern MA/Boston (NEMA)
  • Southeastern MA (SEMA)
  • Rhode Island

Rest of Pool $2.591/kW-month

  • Western Central MA (WCMA)
  • Connecticut

Northern New England NNE, Maine as a nested Capacity Zone – $2.531/kW-month

  • Vermont
  • New Hampshire
  • Maine

Typically, ISO-NE releases auction results within 15 days of the auction’s completion as required, but this year, due to ongoing litigation uncertainty surrounding the status of the Killingly Energy Center, results were not published pending greater clarity on the situation.

Killingly Energy Center is a proposed 650 MW combined cycle natural gas-fired generating facility in Killingly, Connecticut with an anticipated commercial operation date of 2024. The issues surrounding Killingly’s inclusion in the auction began November 4th, 2021 when ISO-NE asked permission to remove Killingly Energy Center from the upcoming February 2022 Auction, because the owner, NTE, had missed certain required deadlines.

  • On January 3, FERC approved ISO-NE’s request to remove Killingly from the auction. NTE objected and requested a rehearing, resulting in a stay of FERC’s January 3 decision.
  • ISO-NE ran the auction on February 7 and calculated FCA 16 results with and without Killingly, creating two sets of possible outcomes, each having unique prices and quantities. On February 23, FERC denied NTE’s request for a rehearing.
  • On March 2, a federal appeals court dissolved the stay after a request from the ISO-NE for expedited action.
  • On March 9, ISO-NE published the FCA 16 results, which do not include the Killingly facility as a resource, as they have since FCA 13.

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