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Group seeks access to ISO-NE delist bids

Concerned about the premature retirement of economic resources for the purpose of boosting capacity prices, consumer group Public Citizen has asked federal regulators to grant it access to privileged components of an ISO New England rate filing.

The July 19 ISO-NE filing included information on permanent and retirement delist bids made by capacity suppliers looking to exit ISO-NE's 12th forward capacity auction. The auction, to be held in February 2018 for the 2021-2022 delivery year, gave existing resources until March 24 to submit retirement requests.

Any such request must specify a price at which a generator would assume a capacity supply obligation. ISO-NE imposed the obligation, and FERC approved it to dissuade uneconomic retirements aimed at exercising market power to artificially inflate prices to benefit a generator’s other resources in the market.

Retirement delist bids are submitted by capacity suppliers seeking to withdraw and retire a resource permanently from all the region's wholesale electricity markets. Permanent delist bids are made by capacity suppliers who want to remove a resource from the capacity market only. The resource would still be able to participate in the energy market and other wholesale power markets, but it would be barred from re-entering ISO-NE's capacity market.

ISO-NE's tariff stipulates that the grid operator describe the delist bids submitted for the next capacity auction in a filing with FERC, on a confidential basis. It also must include the internal market monitor's determinations regarding those bids and state whether capacity will permanently delist or retire prior to the auction, and capacity suppliers have elected to conditionally or unconditionally retire the capacity that is subject to the delist bid.

Public Citizen argued in an Aug. 9 protest that the latest retirement requests will influence FCA 12's prices, and "without access to the privileged components of the Section 205 rate filing, it is impossible to determine whether the permanent de-list bids and retirement de-list bids are just and reasonable."

The ISO-NE's tariff allows "authorized persons" to gain access to the confidential information, but Public Citizen said it was "arbitrarily" excluded from the list of those eligible. It added that it is willing to execute a nondisclosure agreement in order to obtain access to the privileged components of the Section 205 rate filing.

The consumer group cited its 2014 challenge to the results of FCA 8 for the 2017-2018 delivery year as evidence of the "central importance" retirements play in setting rates in ISO-NE.

FCA 8 saw a capacity shortfall for the first time, despite unusually high prices. Public Citizen contended that Cayman Islands-based Energy Capital Partners illegally pulled its Brayton Point power plant from the forward capacity market to raise the capacity prices it would receive from its other generating units. A split FERC and federal appeals court ultimately let the auction results stand.

"Intentional withdrawal of capacity from a capacity auction can significantly influence the auction price, thereby providing incentive for capacity suppliers to manipulate de-list bids," the group argued in insisting that intervening parties be allowed to review the privileged parts of the rate filing.

A public version of ISO-NE's filing revealed that the grid operator received one permanent delist bid and 23 retirement delist bids from six market participants for FCA 12. The resources tied to the bids are located throughout all eight of New England's load zones, the filing said.

Four bids totaling 8.5 MW did not require review by ISO-NE's internal market monitor because "the bids were not greater than 20 MW and the four suppliers that submitted the bids are not affiliates of the two remaining suppliers that submitted ... de-list bids for the auction," as prescribed by the grid operator's tariff, the filing explained.

The remaining 20 bids represented 502.6 MW of capacity from two suppliers. The internal market monitor's determinations regarding these bids and all other information on the bids were redacted from the filing.

"ISO New England is obligated, pursuant to its FERC-approved tariff, to protect the confidential information of its market participants," spokeswoman Marcia Blomberg said. "This includes preventing the disclosure of market sensitive information that, if disclosed, could impact the integrity of the wholesale markets."

Blomberg added that the grid operator's formal response to Public Citizen's protest through the FERC docket would "make these obligations clear." (FERC docket ER17-2110)

Jasmin Melvin is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.