In his testimony supporting the NEPOOL Proposal, Mr. Alan Trotta reached the same fundamental conclusion, stating that he was “not aware of any credible evidence provided by ISO-NE or market participants that demonstrates that [Newly Eligible Resources] would be expected to provide incremental fuel inventory to the region in response to program compensation.”[50] However, if the ISO-NE Proposal is implemented, tens of millions of dollars each year “will be transferred from customers to certain generation owners with little or no improvement in reliability of energy supply.”[51] Additional testimony supporting the NEPOOL Proposal drew similar conclusions:

• “[T]he ISO-NE Proposal expands out-of-market payments (and costs to consumers) . . . to resources such as nuclear, coal, biomass, and hydro that are not providing incremental fuel inventory beyond those already provided by the market. . . . Neither ISO-NE not any advocate of the ISO-NE Proposal has provided any information suggesting otherwise.”[52]

• “[T]here is no incremental benefit that has been identified by ISO-NE or anyone else that these resources are likely or able to provide beyond what they would have provided anyway, to support reliable operation of the electric system during the winter season. Nor has it been suggested that there is a need for any additional reliability benefit beyond the NEPOOL Proposal even if these resources were able to provide an incremental benefit. If these other resources are unlikely or unable to provide any additional fuel assurance, it is unclear how they would be providing an incremental measure of reliability. ”[53]

• “Given the region’s experience over the past two winters, it is clear that the fuel oil component of the existing program has proven to be a cost-effective insurance policy that has helped maintain winter reliability. The ISO-NE Proposal, however, would in some cases provide compensation for fuel that a generator already has purchased without the benefit of any subsidy. The most obvious example of this is including nuclear fuel in the program. It is difficult to see how providing a seasonal subsidy to baseload nuclear resources will have any impact on a nuclear power plant’s fueling strategy or its ability to operate reliably during the winter. Providing additional compensation for behavior that generators undertake in the normal course of business is not necessary, is not cost-effective, and will not lead to any measureable increase in seasonal reliability.”[54]

• “The ISO-NE Proposal will incur incremental costs for resources without receiving incremental benefits, due to the expansion of the program to resources that will require no additional efforts or costs to secure fuel for the winter. . . . [E]xpanding the program to include resources that consume more types of fuel (i.e., more ‘fuel neutral’) will, in my view, result only in incremental costs being incurred without receipt of incremental benefits[.]”[55]

Paying resources more to take the same actions they otherwise would have (or have already taken) does not result in greater fuel supply security for the region. Rather, it results in unreasonable costs imposed on consumers. There was no indication by ISO-NE or others through the lengthy stakeholder process leading up to the July 15 Filing of any expectation that Newly Eligible Resources would modify their practices to provide enhanced fuel assurance during the winter period in exchange for program payments.[56]

Instead, ISO-NE now proposes to compensate all resources with on-site fuel “for their contribution to reliability,” and suggests that “the inclusion of these resources should provide value to the region . . . [because] a three-year revenue stream may cause these generators to invest in additional fuel inventory and in the asset more generally.”[57] However, regarding contributions to reliability, Newly Eligible Resources have already undertaken obligations through the FCM and will be compensated through market-based rates set pursuant to the relevant Forward Capacity Auction.[58] Absent some incremental value provided, any payments through a Winter Program III that are over and above what these resources would already be paid in the FCM would be excessive.

In addition, speculation about investments that Newly Eligible Resources may make in response to Winter Program III incentive payments fails to provide a sufficient basis to expend tens of millions of ratepayer dollars. Mr. Wilson states that he is unaware of any indication by market participants that such investments would be made and, he explains, in any event, that kind of “‘investment’ might raise payments under the program without having any appreciable impact on winter reliability.”[59] The Commission should give no weight to ISO-NE’s conclusory assertion, which spans one sentence in the ISO-NE Filing and is wholly without detail or support in accompanying testimony.

Increasing the winter program’s cost “with no resulting impact or benefit”[60] is inconsistent with the overriding Winter Reliability Program objective and will impose unnecessary and therefore unreasonable costs on consumers. In the September 2014 Order, the Commission stated that Winter Program II was designed “to help ensure fuel adequacy by creating incentives for resources to procure more fuel than they would have procured in the absence of the [program].”[61] Accordingly, the Commission found that “it would not be appropriate to make separate payments intended to incent resources to make the same fuel procurement decisions that they would have made, and been compensated for, absent [Winter Program II.]”[62] The same reasoning should hold true for subsequent winter programs.

Indeed, if the objective of Winter Program III remains the same as the most recent program—paying resources to obtain incremental fuel they would not have procured in the absence of program incentives—the ISO-NE Proposal departs from such a targeted objective by proposing to pay resources that would, in the absence of the additional payment, do the same thing. NESCOE agrees with Mr. Trotta that “it is inappropriate to provide out-of-market compensation to an expanded pool of generation owners for doing exactly what they will already do in response to existing market signals.”[63]

The ISO-NE Proposal effectively would turn what has been a clear and narrow objective into a muddied and expansive one: paying all resources with on-site fuel irrespective of any connection to incremental reliability provided. According to Mr. Wilson, “[t]he ISO Proposal adopts a fundamentally different, ill-defined, and inappropriate objective to justify extending the same payments to additional resources, increasing the cost but with no resulting impact or benefit.”[64] When viewed as a whole, “[t]he objective of enhancing reliability by encouraging incremental fuel arrangements has been dropped” from the ISO-NE Proposal, and it now “includes provisions that are not bound by, and do not contribute to, that objective.”[65]

The ISO-NE Proposal is plainly contrary to consumers’ interests and should be rejected. The Commission has recognized that its “statutory mandate under the FPA entails protecting consumer interests.” ISO New England Inc., 146 FERC ¶ 61,038 (2014) at P 26. See also Martha Coakley, Mass. Attorney Gen. v. Bangor Hydro-Elec. Co., Opinion No. 531, 147 FERC ¶ 61,234 (2014) (Opinion No. 531), order on paper hearing, Opinion No. 531-A, 149 FERC ¶ 61,032 (2014) (Opinion No. 531-A), order on rehearing, 150 FERC ¶ 61,165 (2015) (Opinion No. 531-B), Commissioner Honorable Concurring Statement at 2 (“As intended by Congress and confirmed by the Courts, consumer protection is in the DNA of FERC’s ratemaking authority.”). There is unquestionably no consumer interest advanced by extending payments to resources that provide no incremental reliability benefit. Consistent with its statutory mandate to guard against excessive consumer costs, the Commission should not approve the ISO-NE Proposal.