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ISO Proposal for CSO Deferrals. Pete Fuller NEPOOL Markets Committee June 11, 2014. Today’s Discussion. ISO’s proposal to allow resources to defer the start of their Capacity Supply Obligations is ill-advised

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iso proposal for cso deferrals

ISO Proposal for CSO Deferrals

Pete Fuller

NEPOOL Markets Committee

June 11, 2014

today s discussion
Today’s Discussion
  • ISO’s proposal to allow resources to defer the start of their Capacity Supply Obligations is ill-advised
    • The tariff already contains provisions for resources that are late in delivering their capacity obligations
    • The proposed deferral sanctions the imposition of additional risk on all other capacity providers while eliminating that risk from one market participant
reliability review
Reliability Review
  • The standard of review
    • ISO has correctly included language clarifying that a simple shortfall of MW will not constitute a ‘reliability need’
  • The test period
    • If the deferral is granted, the resource will not be available in its first CSO year, by definition
    • The question is whether there is a reliability need in the following year that is uniquely served by the resource in question
    • ISO should also look at future years and the prospect that transmission and/or other generation is likely to alleviate the need
consequences of seeking deferral
Consequences of Seeking Deferral
  • ISO’s proposed deferral is an extraordinary imposition on the markets, and should not be available except possibly as a last resort
  • This path should not be available at no cost to Project Sponsor:
    • Post additional Financial Assurance upon filing with the Commission
    • If the Commission does not grant the deferral, ISO should file to terminate all of the resource’s CSOs immediately
      • As part of the filing, the Project Sponsor represented that “the deferral is critical to the resource’s ability to achieve Commercial Operation”
financial assurance
Financial Assurance
  • ISO and stakeholders recently increased the FA requirements for non-commercial capacity
  • Any deferral should apply these stricter requirements
    • Upon filing for deferral: post full amount of FA for a resource that is one year late, as calculated using the new (post-FCA8) FA rules and the applicable auction’s clearing price
    • Upon approval by FERC: post full amount of FA for a resource that is two years late, as calculated using the new (post-FCA8) FA rules and the applicable auction’s clearing price