At today’s Commission open meeting, I explained my view that addressing the winter reliability challenge in New England is urgent and that this Commission has a central and immediate role in driving toward solutions (my full comments are available here). Convening stakeholders at the recent forum in Burlington was an important initial step in that process, and additional proactive steps are needed.

On September 21, the Commission issued a notice in Docket No. AD22-9 inviting comments in response to the Burlington forum. While the notice did not solicit comments on specific topics, I know it is helpful for the public to understand what topics are of particular interest to the Commission so parties can target their comments accordingly. For my part, I encourage feedback on the following topics, which I believe will aid the Commission in identifying actionable next steps.

Energy Adequacy Study

In the near term, we must understand the full scope of this energy adequacy challenge the region faces. In advance of the forum, ISO New England stated that “the region should undertake a comprehensive study of both the energy adequacy problem and potential solutions for addressing the problem.” Several panelists at the forum concurred. However, the forum did not provide specificity as to what that study should look like. My starting point is that it must be resource-neutral and adequately explain the “when,” “where,” and “why” of New England’s electric system risks such that the Commission, states, and stakeholders can objectively evaluate solutions spanning various timeframes and federal, state, and local jurisdictions.

What we know is that today New England faces a winter electric reliability challenge driven by natural gas supply constraints during extreme winter weather.  There are four ways to relieve that constraint: (1) reduce reliance on natural gas for electric generation during those times; (2) add more natural gas supply capability; (3) reduce electric demand during those times; and (4) reduce gas demand during those times. Whatever additional energy adequacy study is conducted should provide the basis for illuminating the efficacy of solutions targeting any of those four risk mitigation approaches.

I invite parties to share their views on the form, content, and objectives of this study and the processes by which the Commission might encourage or direct that it gets done promptly.

Wholesale Market Reforms

I heard from parties at the forum that there is likely a set of wholesale market reforms that, if prioritized, can be a meaningful part of the solution set. Everyone agrees that the urgent reliability risk in New England is in the winter. To the extent key elements of ISO New England’s markets do not take aim at that specific winter reliability risk, they would seem to be fundamentally flawed. The Commission should examine these market design elements and, if necessary, require reforms to target the problem we are trying to solve.

Toward that end, I am interested in feedback on several market reforms floated at the forum. ISO New England currently runs a single annual capacity auction that buys capacity to meet peak summer needs. Would the region benefit from a seasonal capacity auction structure to buy necessary capacity for the winter and send appropriate market signals? That includes investment signals to the supply side but also signals to the demand side informing the value to consumers of reducing electric demand during the winter, including through the implementation of state programs targeting that specific reduction. Similarly, should capacity accreditation better reflect resources’ actual availability to provide energy (or reduce load) during the winter periods when operational risk is greatest? This would presumably include the ability—or inability—of generation to procure fuel during winter peak periods.

I also invite feedback on the capacity market’s Pay for Performance mechanism. This mechanism created penalties and bonuses to increase the likelihood capacity resources can deliver energy during the most critical operational periods of the year. But years of experience appear to show that the trigger doesn’t work and thus the incentives are dulled or non-existent. In the near term improving those incentives could spur oil and dual-fuel generators to fill their oil tanks in advance of the winter, and over the longer term it could signal that any resource taking on a capacity obligation must be able to deliver during times of winter reliability risk or else face the loss of substantial capacity revenue.

In addition, there may be energy and ancillary service market reforms needed to facilitate efficient use of the resources on the system leading up to and during times of winter reliability risk. I welcome feedback on those ideas and on any other market-based solutions that should be considered.

Framework for Considering Non-Market-Based Solutions

Several forum participants suggested that market-based solutions alone cannot mitigate winter reliability risk to an acceptable level. I acknowledge that may be true. However, the scope of potential non-market solutions and the timeframe for their applicability is unclear. That scope will be informed by the study discussed above, but we can also begin talking about the framework for evaluation of non-market solutions now. I therefore welcome feedback on what such a framework should look like and how the Commission can advance problem-solving beyond the market-based solutions described above.

This page was last updated on September 26, 2022