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Changes to New England’s Forward Capacity Market

Brian Forshaw from New England Restructuring Roundtable in Boston discusses the perception on New England Power Markets and the changes in market evolution since 1999. The complexity of market rules is discussed along with implications and suggestions for future evolution.

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Changes to New England’s Forward Capacity Market

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  1. Changes to New England’s Forward Capacity Market Brian Forshaw New England Restructuring Roundtable Boston, MA

  2. 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…”

  3. 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

  4. 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.

  5. 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…

  6. “The Bible – Market Rule 1”

  7. 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???

  8. 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.

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