United States of America Before the Federal Energy Regulatory Commission
Grid Reliability and Resilience Pricing | Docket No. RM18-1-000
Reply Comments of the New England States Committee on Electricity
The New England States Committee on Electricity (“NESCOE”) submits these reply comments pursuant to the Federal Energy Regulatory Commission’s (“Commission” or “FERC”) October 2, 2017 Notice in the above-captioned proceeding. For the reasons discussed below, NESCOE respectfully requests that the Commission decline to expand the scope of this proceeding by directing specific actions that commenters have proposed as alternatives to the Proposed Rule. Instead, the Commission should continue its long-standing support for regional flexibility in identifying, and fashioning appropriate solutions to, emerging challenges based on defined needs and the relationship between any proposed reform and its benefit to consumers.
Many commenters in this proceeding, including NESCOE, have asked the Commission to decline to adopt the Proposed Rule. NESCOE discussed in its initial comments how the Proposed Rule and its attendant fast-track timeline failed to meet the basic requirements of the Administrative Procedure Act, and how a final rule adopting the Proposed Rule’s reforms could provoke unnecessary and unconstructive jurisdictional disputes with the states. NESCOE also discussed how the Proposed Rule lacked critical information and analysis regarding the effects that a final rule would have on existing competitive wholesale markets and the consumers those markets serve. NESCOE urged the Commission to allow individual regions “to explore whether there are needed attributes not being valued in their power markets and, as appropriate, to consider market rule changes tailored to the region’s specific challenges and market design.”
While many other commenters discussed similar legal and factual flaws underpinning the Proposed Rule, some also asked the Commission to take alternative actions favorable to their interests. The Commission should reject these attempts to expand the scope of this proceeding. As NESCOE explained in its initial comments, New England has an existing process for identifying power system attributes needed for reliable operations. Over time, and through this established process, our region’s competitive wholesale market rules have evolved to meet identified challenges to system reliability.
For example, only several years ago, ISO-NE proposed a fundamental change to the Forward Capacity Market design, called Pay for Performance (“PFP”), “to address real, pervasive, and escalating resource performance problems that pose a serious threat to the reliable operation of the system.” As ISO-NE explained to the Commission, market experience exposed chronic underperformance issues across New England’s generation fleet, issues which the market design at that time did not address. Based on facts and circumstances unique to New England, ISO-NE identified a shortcoming in the market rules and proposed a market-based solution to meet this identified system need, one which was vetted through the New England stakeholder process. The New England Power Pool proposed alternative tariff changes to the energy market through the same stakeholder process, and the Commission adopted elements of both proposals. While NESCOE member states did not collectively support either proposal, the stakeholder process allowed for multiple solutions to be vetted.
The process that New England employed to consider the PFP changes illustrates why the Commission should affirm in this docket its long-standing support for stakeholder processes to identify regional needs and, to the extent such needs are identified, provide regions with the flexibility to develop tailored solutions to address those needs. The stakeholder process in connection with PFP started with discussion of a power system attribute—performance—that the market had not sufficiently valued. ISO-NE identified this problem based on “observed and documented” evidence related to declining resource performance. It proposed a solution consistent with an overall resource and technology-neutral market design, with an incentive and penalty structure that provided transparency to market participants and a clear nexus to consumer benefits. In contrast, as many commenters noted and FERC Staff recognized, the Proposed Rule does not even attempt to define what “resilience” means, let alone provide a meaningful analysis of how the proposed reform fits within each region’s current competitive market construct and how it would affect consumer interests in those regions.
As the Commission considers the Proposed Rule, NESCOE respectfully requests that it decline to direct specific actions in New England or across regions. Instead, as discussed in NESCOE’s initial comments and as further underscored above, the Commission should continue to provide regions like New England with flexibility to meet evolving system needs through an established and proven process that considers reforms based on market experience, analysis of market conditions and other relevant information, and defined consumer benefits.
/s/ Jason Marshall
New England States Committee on Electricity
655 Longmeadow Street
Longmeadow, MA 01106
Tel: (617) 913-0342
Date: November 7, 2017