Accurate ICR Calculation Approach
NESCOE
NEPOOL Reliability Committee
November 19, 2014
Background
Throughout the stakeholder process to consider ISO-NE’s proposed ICR values for FCA 9, NESCOE identified two issues with ISO-NE’s approach that have consumer cost implications
- Solar DG to be installed in the years between the historical data and the commitment period is not accounted for in the calculation
- Generator Availability is based on historical data rather than what is expected under Pay-for- Performance
Solar DG
ISO-NE, NESCOE, various state agencies, and stakeholders worked to develop a Solar DG Forecast
Solar Treatment in ICR
The solar forecast, included in the CELT, shows that ISO-NE expects 489 MW SCC to be present from solar in 2018
Historical solar is included in the load forecast to the extent it has lowered historical load
According to ISO-NE’s PSPC presentation only 85 MW of solar were included on the load side for the FCA9 ICR calculation
There is also about 56 MW solar with CSO’s
That means approximately 348 MW of solar installations – from the ISO’s own forecast – is ignored
ISO-NE’s Suggestions, What Really Happens and Why
ISO-NE says solar can participate as a supply-side resource.
Yes, it could
But, historically <12% of MW actually has
Solar can reduce load with a CSO only if it submits a qualification package in the FCM, including Financial Assurance, so that ISO can track, verify
This is cost prohibitive for the majority of small installations
ISO stated it will work with stakeholders on how it might apply the DG forecast to market-related assessments, including developing the ICR. (2014 RSP atp. 52)
Possible Solution for Discussion
Lower the load forecast used in the ICR calculation by the amount of solar SCC equivalent determined to be installed between the time of the historical load data and the start of the capacity commitment period
To the extent that any solar participates in the auction as a supply resource, adjust the load upward in the first ARA.
These are small resources and most work as load reducers so this adjustment should be minimal
Generator Availability
The current Market Rule uses the last 5 years of historical generator data to calculate availability to be used in the ICR calculation
Generator Availability has been dropping in recent years as shown by this EFORd data:
ICR Implications
The drop in Generator Availability has caused ICR to increase
For FCA9, ICR was up 178 MW due to drop in Generator Availability
For FCA8, the increase was 410 MW
This problem will get worse in coming years as the increasing poor generator performance will have a greater effect on the ICR calculation. It will compound as ARAs take place
ISO-NE proposed Pay-for-Performance is a means to reverse this trend but it won’t be picked up until after the fact
Consumers will pay for enhanced performance and then be forced to purchase more resources than needed to achieve resource adequacy standards
Paying twice is unnecessary and will lead to unreasonable rates
One Possible Solution to Generator Availability
Use the five year average from the first 5 years of FCM, and exclude more recent data until the region experiences some PFP years
PFP will be effective in 2018. The first auction that could incorporate PFP experience will be in Feb 2020 (FCA16)
From now until 2020, fix generator availability based on availability in the first 5 years of FCM
After 2020, start rolling in years with actual PFP experience. (FCA 16: 4 years fixed, 1 year actual, FCA17: 3 years fixed, 2 years actual, etc.)
Open to, and appreciate, other suggestions
Next Steps
Consider feedback from this meeting
Please call with follow-up ideas
NESCOE and states bring forward proposed market rule language to reflect this proposal as modified by workable suggestions that achieve the reasonable objective
Discuss any other matter that needs to be considered so that changes can be in place by FCA 10