trending Market Intelligence /marketintelligence/en/news-insights/trending/rj6R6IwvfOJPxGUWkSo3TQ2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

FERC approves ISO-NE tariff changes on financial assurances for new resources

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August

FERC approves ISO-NE tariff changes on financial assurances for new resources

The Federal Energy Regulatory Commission approved proposed tariff revisions for ISO New England that will update how the grid operator calculates financial assurances that new capacity resources must provide before they reach commercial operation.

In finding that the tariff changes appeared just and reasonable, FERC agreed with ISO-NE that the new methodology will provide certainty to market participants because the financial assurances that noncommercial resources must pay to enter the region's forward capacity market will be known before the capacity auction takes place.

In addition, the proposed methodology "will promote the expectation that non-commercial resources reach commercial operation by ensuring a consistent financial assurance requirement that does not decrease with low [forward capacity auction] clearing prices," FERC said in its Jan. 14 order.

FERC's decision was in response to a proposal ISO-NE filed in November 2019 under Section 205 of the Federal Power Act. The tariff revisions would alter the methodology for calculating the collateral owed by noncommercial resources, which are those that have cleared the forward capacity auction but have yet to achieve commercial operation.

The new methodology would base those financial assurances on the net cost of new entry, or net CONE, rather than the starting price before and the clearing price after ISO-NE's annual forward capacity auction, which secures needed capacity in the region for three years ahead. The revisions will require a market participant to add its total financial assurance requirements to an amount that is equal to the net CONE multiplied by the market participant's noncommercial qualified capacity.

After that resource receives a capacity supply obligation, the financial assurance will be equal to the awarded supply obligation, plus the net CONE value associated with the forward capacity auction and a multiplier that rises with each following auction year until it reaches the target commitment period.

Under ISO-NE's previous rules, a resource prior to the capacity auction must provide financial assurances equal to the noncommercial capacity qualified to participate in the forward auction multiplied by the auction starting price. If the resource obtained a capacity supply obligation, the financial assurance requirement was recalculated to equal the product of the awarded supply obligation, the capacity clearing price from the first round of the auction in which the supply obligation was awarded, and a multiplier.

In approving the methodology changes, FERC disagreed with the New England Power Generators Association that the tariff revisions were unduly discriminatory because they applied to noncommercial resources that first clear ISO-NE's upcoming 14th forward capacity auction and future auctions.

"A mere difference in the treatment of two entities does not constitute undue discrimination under the [Federal Power Act]," FERC said. "Instead, undue discrimination occurs only if the entities are 'similarly situated, such that there is no reason for the difference.'"

Despite the New England Power Generators Association's assertions to the contrary, FERC said new noncommercial resources clearing the 14th and future auctions are not similarly situated to existing noncommercial capacity, which "has already been subject to the previous financial assurance requirements and enters [forward capacity auction] 14 with settled expectations as to its financial assurance responsibilities."

FERC granted ISO-NE's request that the new methodology take effect Jan. 15, 10 days before the grid operator's 14th forward capacity auction is scheduled. (FERC docket ER20-395)