2. There is No Demonstrated Incremental Need Beyond What the Most Recent Winter Program Provided

The introduction of payments made to any resource that has on-site fuel storage through expanded program eligibility ignores a critical, and potentially costly threshold question: does a need exist beyond what would be met through an extension of the core Winter Program II provisions? The ISO-NE Proposal would potentially compensate just over 9,500 MW of Newly Eligible Resources, in addition to the participation of 10,778 MW from oil-fired resources and up to 6 billion cubic feet of LNG.[66] Even if Newly Eligible Resources could provide some incremental reliability beyond what they are obligated to provide pursuant to their CSO—and, as discussed above, there is no indication they would—there has been no suggestion that the additional capacity is needed as part of a stop-gap solution for the next three winters.

Mr. Bentz underscored this point in his testimony accompanying the NEPOOL Filing, stating that “increased costs need to be accompanied by a measurable, needed incremental reliability benefit.”[67] The Bentz Testimony further observes that no market participant or stakeholder appeared to assert that there was an additional need beyond the incremental reliability provided by a program structured like Winter Program II.[68] Mr. Trotta also summed up this threshold issue, testifying that Winter Program III “needs to remain limited in scope to exactly what’s necessary to meet the reliability need – no more, no less.”[69]

As discussed above, ISO-NE has heralded past winter programs as “instrumental,” “critical to reliability,” and, just last month, as “proven to be a cost-effective short-term solution to help keep the lights on in New England during the winter.”[70] Notably, the ISO-NE Filing Letter does not propose its expanded program based on a stated additional reliability need but because it is purportedly more market-based.[71] In fact, the ISO-NE Filing Letter states that “the reliability needs for New England can be met through the unused oil program alone.”[72] That statement—acknowledging that the additional 9,500 MW the ISO-NE Proposal would compensate is superfluous in meeting the region’s reliability need—is itself reason enough for the Commission to reject the ISO-NE Proposal in favor of the NEPOOL Proposal.[73]

To the extent the Winter Program III can be analogized to patching holes in a fence, expanding payments to units that are not needed to provide additional reliability is like replacing large portions of the fence that have no holes. If the fence has already been patched, and a new fence is due to be installed in three years, it is best to let the proven tailored repairs work and move on to the many other tasks at hand.

Again, even assuming that Newly Eligible Resources could or would provide an incremental reliability benefit, there has been no demonstrated need in excess of what the established and cost-effective Winter Program II obtained. Nor has any further incremental reliability benefit associated with the Newly Eligible Resources been justified as warranting increased costs to consumers. These 9,500 MW that ISO-NE would potentially compensate under its program would represent an almost 100% increase over the oil inventory secured through Winter Program II—the same amount that ISO-NE has identified as alone capable of meeting the region’s winter reliability need. Almost doubling the resources compensated under Winter Program III (and at triple the cost), absent a demonstrated incremental need, is not a just and reasonable outcome for New England consumers.