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ISO New England capacity auction closes at lowest price ever

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ISO New England capacity auction closes at lowest price ever

ISO New England's 14th forward capacity auction for future power generation resources closed at the lowest preliminary clearing price in its history, the market operator said Feb. 5.

The closing price of $2.00/kW-month compared to $3.80/kW-month in last year's auction, a 47% decrease.

"New England's competitive wholesale electricity markets are producing record low prices, delivering unmistakable economic benefits for consumers in the six-state region," the ISO's vice president for system planning, Robert Ethier, said in a statement.

The auction, known as FCA 14 and which concluded Feb. 4, procured power generation resources to meet peak demand in 2023-2024. The primary auction received commitments from 33,956 MW to be available in those years, with 1,466 MW of surplus supply over the net installed capacity requirement, ISO-NE said.

An analysis in the S&P Global Market Intelligence Power Forecast, published before the auction results were released, predicted a decline in the clearing price because of a decline in the installed capacity requirement. The installed capacity requirement for FCA 14 was about 1,300 MW less than the most recent previous auction and continues a trend going back to FCA 10, with lower capacity requirements and lower clearing prices each year.

No capacity supply obligations were traded this year under Capacity Auction with Sponsored Resources, or CASPR, rules that allow existing resources interested in retiring to trade their obligations with new state-sponsored resources that did not clear in the primary auction, the ISO said.

More than 600 MW of new resources secured obligations during the primary auction, and of that total, approximately 317 MW received obligations under the renewable technology resource designation. The designation allows a limited volume of renewable resources to participate in the auction without being subject to the minimum offer-price rule.

Resources receiving an obligation under that exemption included land-based and offshore wind, solar photovoltaic systems, and solar photovoltaic systems paired with batteries, ISO-NE said.

Prior to the auction, ISO-NE retained two generators, Exelon Corp.'s Mystic River 8 and 9 gas-fired units near Boston, totaling 1,700 MW, for fuel security in the 2023-2024 capacity year, through May 31, 2024.

"This auction was impacted by two major out-of-market actions that held down the prices: retaining the Mystic generating station for fuel security and implementation of the Inventoried Energy Program for winter reliability," Dan Dolan, president of trade group New England Power Generators Association, said in a statement.

Neither program is expected to be in place for the 2021 capacity auction, FCA 15, Dolan said. "Next year's auction may provide a clearer window into the efficacy of the CASPR program," he added.

"Longer term, NEPGA continues to believe that the region should move toward a meaningful price on [carbon dioxide] emissions to match state environmental and clean energy goals," Dolan said. The group is committed to working with state legislatures to take action and help enable state policies through competition and open markets, he added.

Jared Anderson is a reporter for S&P Global Platts. S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.