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ISO-NE 2016-17 winter reliability program sets max costs at $32 mil

The ISO New England set the maximum potential costs for the 2016-2017 Winter Reliability Program at about $32 million, more than $6 million lower than the 2015-2016 final program costs, according to the ISO-NE.

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During winter months, a number of generators in the ISO-NE territory switch fuels and burn oil and LNG for power generation as regional spot natural gas prices can spike.

The ISO-NE developed its winter reliability program in 2013 as a way to help incentivize these generators that switch to ensure proper fuel inventory levels heading into the winter season.

The program pays the generators a portion of fuel costs related to any unused inventory levels at the end of winter.

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For the upcoming 2016-2017 winter program, there are 85 oil-fired units participating, eight units more than last winter, for a total of 3.06 million barrels of oil eligible for compensation, about 4% higher than last year.

In the past five years, oil-fired generation has represented between less than 1% to as much as 10% of the monthly average fuel mix during January and February.

In the LNG area, four units are participating in the upcoming program, half of the total of units that participated last year.

The amount of LNG for this winter program is also less than half of what it was last year at about 527,675 MMBtu.

For demand response, six units have committed to the 2016-2017 program, the same number of units last year. However, total megawatts for this year came in around 23 MW, about 3.5 MW lower than last year.

The ISO-NE set the compensation 2016-2017 rates back in July, which came in about 21% lower than rates for last year.

Oil compensation rates came in at $10.21/b, LNG was set at $1.70/MMBtu, and demand response was $1,021/MW-month.

--Eric Wieser, eric.wieser@spglobal.com
--Edited by Derek Sands, derek.sands@spglobal.com