Important news for New England peak busters, fossil fuel fighters, and anyone who wants to live in a New England powered by cheap, clean electricity: Our regional grid regulator, ISO New England, has started a process to reform our “Capacity Auction” process. More details and history below, but real quick this is the process whereby power plants, utility companies, renewable energy, and innovative conservation and demand response programs all bid to provide the power we need in New England.
Reforming the process has been a long time coming, and is something local climate and clean energy groups have been demanding for years. But there’s still a lot of work to do if we want to make sure the new system works better than the old one. And there’s a risk that ISO NE will once again be captured by the corporations it’s supposed to regulate – our utility companies, the owners of dirty power plants, and more – and put profit over people and the planet.
Click here to submit a quick comment with us telling ISO NE to get it right on capacity auction reforms! We’ll supply talking points, and send your comment directly by email to ISONE and their Board of Directors. We’ll also deliver all the comments at a key series of ISONE meetings this November and December, to make sure they get the message!
Here’s the back-story for those who want the details:
For years, New England peak busters and clean energy advocates have fought to reform or abolish the so-called “Forward Capacity Auction.” You can learn more about capacity auctions here or here, but under the old Forward Capacity Auction, power plants, utility companies, and hedge funds submitted bids three years in advance to supply power to the New England grid. As a result of who was allowed to bid (mostly existing power plants, mostly powered by fossil fuels), and who controlled the process (the people and corporations who owned those same power plants) the old FCA mainly awarded contracts to fossil fueled power plants. These dirty plants got paid millions of dollars every year by rate payers, even if they rarely actually provided power to the grid.1
Because the old Forward Capacity Auction system didn’t work well. No Coal No Gas New England and other advocates repeatedly petitioned ISO-NE to abandon the forward capacity auction, and asked federal regulators to reject ISO-NE’s annual Auction. The core problem was that by requiring bids so far in advance (3 years), and weighting the bid process so heavily towards existing generators, the Forward Capacity Auction ended up subsidizing fossil fuel power plants long past the date when they were useful. The good news is that, at long last, ISO-NE is listening, and has proposed ending the forward capacity auction, and replacing it with a “prompt” or “seasonal” auction instead. ISONE is writing the rules for this new Capacity Auction now, and hopes to put it in effect by 2028, if it’s approved by FERC and other regulators.
Moving to a 6-month capacity Auction is already a step in the right direction, but there’s a lot we still don’t know, and a lot ISO-NE can and must do to make sure that the new system is cleaner, cheaper, and better than the old one.
Click here and enter your contact information and we’ll pull up a sample comment to ISO-NE on the Capacity Auction Reform process. You can write your own comment, but we’ll provide some
talking points to get you started:
- Moving from a three year to a seasonal capacity auction is a good idea – we have wasted too much money in the past subsidizing dirty fossil fuels!
- The process for Capacity Auction Reforms is still biased against ratepayers and the public, and in favor of corporations, investors, and the dirty power plant owners who control NEPOOL.
- There’s no public hearing, comment period, or single page at ISONE’s website where members of the public can contact ISO and ask questions or raise concerns. I’m sending this email via local non-profit advocates, because they’ve made public comment possible when ISONE and your External Affairs department have not.
- Only NEPOOL members are invited to attend meetings where CAR topics are discussed, and NEPOOL gets a final veto on the CAR proposal to be filed with FERC. NEPOOL is not a democratic, elected, or transparent agency. It’s comprised of for-profit corporations, and voting is heavily weighted towards the biggest, oldest, and dirtiest power plants and utilities in the region. Consumer advocates, elected officials, and the public are lumped into small voting blocks with no real power to demand or create change.
- ISONE, not NEPOOL, must file the final proposed Auction rules with FERC, and FERC must approve those changes before they can go into effect. ISONE could use this time to educate the public, encourage them to participate
- The process by which resources are “accredited” continues to favor fossil fuels and legacy generators – instead of distributed renewables, demand response, conservation, efficiency, and virtual power plants.
- The specific proposal to create a Maximum Capability under CAR-SA rules appears to benefit power plants the burn fossil fuels because their output is temperature-dependent. The MCap proposal lowers the ambient temperature for summer accreditation and bases accreditation on the highest output modeled, rather than the median. Both of these will tend to increase the modeled capability (and thus accreditation value) of power plants that burn fossil fuels.
- ISONE lags far behind other regions in adoption of Demand Response providers. the CAR process can correct for historic errors by eliminating: the requirement for a physical call center and allowing groups and companies that are not existing utility companies (so called Load Serving Entities or LSEs) to offer demand response or dispatchable power contracts. This would allow networks of churches, homeowners associations, schools, or municipal entities to bid into the seasonal auction by offering to reduce demand when called.
- ISONE’s own 2024 Economic Study Report models and projects and recommends big build outs of solar, wind, Battery storage. But the CAR reform does not prioritize these technologies, and does specifically incentivize old, legacy generators like oil and gas burning power plants.
- Every State in the ISO NE region has a renewable portfolio or clean energy standard, with most states agreeing that we want at least 50% of our electricity to come from Renewable Energy by 2030, and 100% by 2050 – this is roughly in line with the goals of the Paris Climate Agreement and the US’s commitments under it. But the CAR accreditation rules make no mention of these binding, legally enforceable, standards – and provides no support or preferential bid position to renewables and zero emission power sources.
- ISO NE can correct for the true cost of fossil fuels and climate change by forcing polluting power plants to bid into the auction at a higher price, or applying a premium to fuel payments as part of the accreditation process. Abandoning the myth of “fuel neutrality” is essential to ensuring that fossil fueled power plants and the climate chaos they crate are correctly priced into the Auction.
- ISO’s 2024 Economic study and 2050 Transmission study both recommend adoption of load shifting strategies such as time of day vehicle charging rates and lowering peak winter loads in order to reduce costs and ensure reliability. But the CAR reforms do not provide clear and expedited methods to develop and accredit those strategies for capacity payments.
- ISONE’s studies show that shifting half of the region’s EV fleet to a managed charging plans where vehicles are charged at times of high supply (sunny days) or low demand (midnight-5am) could reduce transmission build-out costs by almost 8%, or $12 billion. How will the CAR reforms encourage and incentivize these programs to be developed?
- ISONE’s 2050 Transmission Study, suggests that Demand Response and load shifting strategies that lower peak winter loads would save more than 6 GW of power by 2050. avoid roughly $9 billion in transmission costs. How will the auction reforms, and in particular winter seasonal market structure, encourage and incentivize winter load shifting, in particular?
1 – The poster child became the Merrimack Generating station in New Hampshire. The plant became the target of a massive protest campaign for years because it was the last remaining coal-fired power plant in the region. Merrimack relied on payments from the Forward Capacity Auction to turn a profit for its investors, even while it shorted suppliers, fired workers, and failed repeated pollution control tests indicating it was not able or willing to meet it’s obligations, and should have been retired years ago due to community concerns about climate change and pollution.
In 2024, we finally got a shutdown date for Merrimack, the last coal fired power plant in New England, and began working to snuff out gas powered peaker plants next. But we ran into the same problem with these other fossil fueled power plants as we had with Merrimack: polluting power plants were getting paid millions of dollars, years in advance, to be “ready” to generate electricity at times of peak demand. Cheaper and cleaner sources of electricity – wind, solar, and especially small, distributed options like demand response and virtual power plants – couldn’t qualify for Forward Capacity payments and therefore got priced out of the market. We were still paying too much money for power that was too dirty for our climate and clean energy goals – and we weren’t even using it most of the time!