November 29, 2020

Volume X, Number 334


Record Low ISO-NE Forward Capacity Clearing Price

On Monday, February 3, 2020, ISO New England’s 14th annual power generation forward capacity auction (FCA) closed at $2.00/kW-month, the lowest clearing price in the auction’s history, and a 47% decrease from the $3.80/kW-month clearing price resulting from last year’s FCA 13. 

The auction’s record low clearing price appears to be due to major out-of-market actions. In early January, ISO-NE announced the retention of Exelon’s Mystic-8 and -9 gas-fired units for fuel security purposes under a cost-of-service agreement through the 2023-2024 capacity commitment period. ISO-NE also implemented its Inventoried Energy Program, which compensates generation resources that store fuel onsite during winter months, intended as a stop-gap measure applicable only to the 2023-24 and 2024-25 winters. Both of these out-of-market actions are intended to be temporary in nature. If the programs terminate before FCA 15’s capacity commitment period, the market may see an upward trend in the clearing price.

FCA 14’s low clearing price was foreshadowed in November, when the ISO filed a downward revision to its net Installed Capacity Requirement (ICR), a measure of the installed resources projected to be needed to meet reliability standards given total forecasted load requirements for the New England Control Area. ISO-NE’s proposed changes for FCA 14 included a net ICR of 32,490 MW, down from the 33,750 MW net ICR used in FCA 13. 

The FCA 14 auction procured power generation resources to meet peak demand in 2023-2024, and received commitments from 33,956 MW to be available in those years, with 1,466 MW of surplus supply over the net ICR. More than a dozen solar and energy storage projects could have been available to participate, but confusion over federal and state interconnection procedures caused those projects to miss key qualification deadlines to compete in the auction. 

©2020 Pierce Atwood LLP. All rights reserved.National Law Review, Volume X, Number 41



About this Author

John W. Gulliver Partner Energy Energy Infrastructure Project Development & Finance

John Gulliver is a senior partner at Pierce Atwood, member of the Management Committee, and head of the firm's International Group. For over ten years, he was also head of the Energy Practice Group. John's experience involves literally all elements of legal and regulatory power sector issues, having represented clients on a broad range of energy sector transactions, policy issues, financing, mergers and acquisitions, privatization, competition, and regulatory reform matters.

John has worked throughout the United States and in over 50 countries, including the Mideast, Europe, Central...

Ruta Skučas Energy Electric Natural Gas Attorney

Ruta Skučas counsels her clients on energy issues, focusing primarily on electric and natural gas matters, before the Federal Energy Regulatory Commission (FERC), state and federal entities, including federal courts and state public utility commissions. Her clients range from financial institutions and power marketers to traditional utilities.

Ruta's clients benefit from her years of experience working at FERC. Following graduation from law school, she served as law clerk to several FERC Administrative...

Merrill Kramer, Pierce Atwood, finance attorney

Merrill Kramer is an energy and project finance partner resident in our Washington, D.C. office. Merrill represents some of the most active and innovative players in the energy industry.  He has been ranked as one of the top energy lawyers in the country by Chambers USA, Washington, D.C.'s Super Lawyers, and The Legal 500.  He has consistently received an AV® Preeminent™ rating by Martindale-Hubbell, its highest possible rating.

Merrill has advised Fortune 200 companies and other clients in the development and financing of over 80 energy...

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Maeve C. Tibbetts Pierce Atwood DC Associate Energy Infrastructure Project Development  Finance

Maeve Tibbetts focuses her practice on regulatory and enforcement matters before the Federal Energy Regulatory Commission (FERC) and state public utility commissions. Maeve represents energy traders active in the ISO/RTO markets and counsels clients involved in formal and informal investigations by FERC's Office of Enforcement.  She also represents members of the Financial Marketers Coalition in stakeholder proceedings before PJM and other ISOs/RTOs.  Her clients include financial institutions, power marketers, electric and natural gas utilities, renewable energy firms, retail electric...