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Changes to New England’s Forward Capacity Market. Brian Forshaw New England Restructuring Roundtable Boston, MA. Perception on New England Power Markets. Customers: “Even though gas prices have dropped, I’m still paying way too much…”
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Changes to New England’s Forward Capacity Market Brian Forshaw New England Restructuring Roundtable Boston, MA
Perception on New England Power Markets • Customers: “Even though gas prices have dropped, I’m still paying way too much…” • Generation & DR: “Revenues aren’t high enough for me to cover all of my operating costs, let alone earn a return…” • ISO: “I don’t have the right type of resources to operate the system…”
Evolution of NEPOOL Markets 1999 - Present • New England Wholesale Markets Have Evolved Since late 1990’s. • 1999: Single Settlement System for Energy/Multiple “Products” from same mix of Resources • 2003: Congestion Management/Multi-Settlement System for Energy • 2006: FCM Settlement Ends LICAP Litigation
Implications of How New England Markets Evolved • “Products” Defined by Revenue Streams, not necessarily the type of service they provide. • The same basic mix of resources earn revenues from each type of market. • When we uncovered a problem, we just try to fix it, rather than searching for the root cause.
New England Market Evolution • We started with a “clean-slate” in 1999… • Now we have a white board that’s full and has no room to write on it…
New England is Now Facing the Consequences of These Decisions • The “Market Rules” are too COMPLEX • You can’t change one thing without affecting 5 other things. • Everyone is under significant financial pressure. • Is reliability being impacted – i.e. experiences of September 2nd???
Where Do We Go From Here? • KISS – Keep it Simple S----- • Can we redefine the “Product”… • Required Operating Characteristics, not Revenue Streams. • Won’t happen overnight, but maybe we can define a vision for future evolution.