Interim Program New Hampshire Amendment NEPOOL Markets Committee February 5 2019 George McCluskey 603 4190551 georgemccluskeypucnhgov Amendment Program Eligibility ID: 799777
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Slide1
Winter Energy Security:
Interim
Program New Hampshire Amendment
NEPOOL Markets CommitteeFebruary 5, 2019
George McCluskey
(603)
419-0551
george.mccluskey@puc.nh.gov
Slide2Amendment: Program Eligibility
Modify ISO-NE’s proposal to limit compensation to oil, natural gas, demand response and electric storage resources
. Tariff language redline change to III.K.1(a)(i):Conforming changes in III.K.3.2.1.1(a)2
Slide3Program PremiseISO-NE Improve winter energy security by providing an incentive to maintain and increase available inventoried energy when it is most valuable
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NH Amendment Improve winter energy security by providing an incentive only to resources that can increase or provide incremental available inventoried energy Goal is to better balance interim program objectives with consumer costs1 See slide 11 ISO-NE January 2019 presentation
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Slide4Rationale No energy security needs assessment justifying compensation to
all resources with energy inventories – no demonstration of added valueIncreasing
consumer costs without any relationship to improved energy security is money for nothing. Consistent with FERC precedent, compensation should be limited to resources capable of improving winter energy security by providing incremental reliability benefit. “While ISO-NE expanded the types of resources eligible to participate in the [winter reliability] program, the record does not reflect that including the additional resource types under the same general program principles will incent any additional fuel procurement.” ISO-NE and NEPOOL (152 FERC ¶ 61,190 (2015))“Coal, nuclear, and hydro resources are not similarly situated to the resources included in the NEPOOL Proposal as the record reflects that including such resources in the Program would not provide any additional winter reliability benefit to the region.” Reh’r Order (154 FERC ¶ 61,133
)Tariff already imposes a strict performance obligation on resources and PFP provides further incentives for resources to make investments to ensure they can provide energy and reserves when supply is
scarce.4
Slide5Technology Type
ISO Proposed
Program EligibilityNESCOE Amendment 1 Proposed Program EligibilityBatteriesYesSame as ISO-NE except only for new electric storage assets or those that have added capacity
Biomass
YesNo – Unlikely to change current behavior CoalYes
No – Unlikely to change current behavior
Demand response
If distributed
generation with eligible technology type
Same as ISO-NE except only for new demand response assets or those that have added capacity
Hydro
If has reservoir/
pondage
controlled by participant
No – Unlikely to change
current behavior
Natural gas
If
has LNG contract (to NE)Same as ISO-NE.NuclearYesNo – Unlikely to change current behaviorOilYesSame as ISO-NE.Passive DRNoSame as ISO-NE.SolarNoSame as ISO-NE.WindNoSame as ISO-NE.
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Slide6Consumer Costs Are RelevantNew England
consumers already pay some of the highest rates in the nation and even higher rates are projected when
the above-market costs of the Mystic contract are collected.ISO estimates consumer cost for its interim program to be over one hundred million dollars more than the cost of last Winter Reliability Program.The interim program and the WRP are out-of-market, stopgap measures that share the same goal: To improve energy security while region addresses long-term risks associated with (1) increased dependence on natural gas and (2) resource performance during periods of stressed system conditions As a stopgap measure, the interim program should be focused on achieving its goal at least
cost and not on rectifying a flaw in the current market design.Not compensating resources for a service
they currently provide is a problem best addressed in Ch. 3, after the product has been defined and its demand determined. A more targeted interim program—similar to the last Winter Reliability Program—can achieve the same short-term energy security goal at substantially less cost.
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Slide7Cost Comparisons 7
Amendment reduces total direct cost of interim program by
$50.7M annually Despite this change, oil/dual fuel units receive more than under last Winter Reliability Program2017/2018 WRP costs for oil/dual fuel $24.5MPayments to oil/dual fuel units under amendment $60.84MGas units also receive more than under last WRP 2017/2018 WRP costs for
LNG-backed gas $0.0MPayments to LNG-backed gas units
under amendment $46.19M
Slide8Other considerations
The ISO was not ordered to
submit an interim program that compensates all resources that provide energy security services. Compensating all energy-secure resources without first conducting an energy security needs assessment is potentially wasteful and, moreover, establishes a bad precedent for Chapter 3. Providing additional compensation to resources for behavior they would undertake anyway is not necessary, is not cost-effective, and will not lead to any measurable increases in winter energy security.11 Calpine testimony in FERC Docket
ER15-2208-0000
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Slide9Tariff Language 9Tariff language to support the amendment is provided in the attachment for committee review
Slide1010Questions?