Results confirm ISO capacity auction procured sufficient electric resources for 2021–2022

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Results confirm ISO capacity auction procured sufficient electric resources for 2021–2022

Thu, 03/01/2018 - 11:08am -- tim

Vermont Business Magazine Finalized results filed Wednesday confirm that New England’s annual capacity auction concluded with sufficient resources to meet electricity demand in 2021–2022, and at the lowest price in five years. ISO New England Inc filed the finalized results with the Federal Energy Regulatory Commission (FERC). The auction assures capacity for the system regular while guaranteeing a rate of return for participating generators. Two Boston-area generators who had previously signed up but wanted to terminate their participation were retained to ensure reliability.

The capacity market has been about 10 to 20 percent of total wholesale electricity costs, but the proportion will vary as the energy market value changes, and that can change significantly from year to year, primarily due to changing fuel costs.

Capacity acquired and retained

The 12th Forward Capacity Market (FCM) auction (FCA #12), which was conducted on February 5 and 6, procured 34,828 megawatts (MW) of capacity for 2021–2022. The auction acquired 30,011 MW of generation, including 174 MW of new generation, primarily in increased output at existing power plants. The auction also procured 514 MW of new energy-efficiency (EE) and demand-reduction (DR) measures. In all, about 3,600 MW of EE and DR cleared. The FERC filing includes a list of resources that have an obligation to be available in 2021–2022.

While the auction closed with enough resources to meet demand, the ISO rejected two bids to ‘dynamically delist’, or withdraw, from the capacity market for the one-year capacity commitment period. Exelon Generation Co. sought to delist its Mystic 7, 8, and 9 generating facilities in Everett, Massachusetts. When a resource seeks to delist, the ISO evaluates whether the transmission system could be operated securely without the resource; the ISO’s tariff does not allow consideration of other factors. The ISO’s mandatory transmission reliability review showed that transmission lines in Greater Boston could be overloaded if Mystic 7 and Mystic 8 were not available during 2021-2022, so those delist bids were rejected and the units retained. Mystic 7 is a 575-MW unit that can use either oil or natural gas and Mystic 8 is a 703-MW natural-gas-fired generator. The reliability review found that Mystic 9 was not needed and it was allowed to leave the capacity market for one year.


The auction clearing price was $4.63 per kilowatt-month (kW-month) for all resources within New England and imports from New York. Most imports from Québec will be paid $3.70/kW-month and imports from New Brunswick will be paid $3.16/kW-month. The estimated cost of the capacity market in 2021-2022 will be approximately $2.07 billion. A table illustrating results from auctions #7 through #12 is below.

Forward Capacity Market

The FCM is designed to procure the resources that will be needed to meet projected demand in three years’ time. Capacity resources can include traditional power plants, renewable generation, imports, and demand-side resources such as load management and energy-efficiency measures. Resources clearing in the auction will receive a monthly payment during the delivery year in exchange for their commitment to provide power or curtail demand when called on by the ISO. The capacity market is separate from the energy market, where resources compete on a daily basis to provide power, and are paid for the electricity they produce.

Auction Results for FCAs #7 through #12 (2013-2018)

Auction, Auction Date,
Commitment Period

Total Capacity Acquired

New Demand Resources

New Generation

Clearing Price

FCA #7 in 2013




$3.15 (floor price)
$14.99/new & $6.66/existing

FCA #8 in 2014




$15.00/new &

FCA #9 in 2015




System-wide: $9.55
$17.73/new & $11.08/existing

FCA #10 in 2016





FCA #11 in 2017





FCA #12 in 2018






  • NEMA/Boston refers to the former Northeast Massachusetts/Boston zone
  • SEMA/RI refers to the former Southeast Massachusetts/Rhode Island zone


  • In FCAs #1 through #7, the auction had a floor price. The floor price was eliminated starting with FCA #8.
  • In FCA #7, the NEMA/Boston zone cleared at $14.99/kW-month for new capacity; the existing capacity price was set at $6.66/kW-month.
  • In FCA #8, due to a resource shortfall, the auction cleared at $15.00/kW-month, which will be paid to new capacity in all zones and existing capacity in NEMA/Boston; existing capacity in all other zones will receive an administratively set price of $7.03/kW-month.
  • In FCA #9, inadequate capacity in the SEMA/RI zone triggered administrative pricing rules. New capacity in SEMA/RI will receive the auction starting price of $17.73/kW-month and existing capacity will receive an administratively set price of $11.08/kW-month.
  • In FCA #10, New York imports cleared at $6.26/kW-month; and New Brunswick imports cleared at $4/kW-month.
  • In FCA #11, New Brunswick imports cleared at $3.38/kW-month.
  • In FCA #12, all resources within New England, all imports from New York, and 57 MW over a Québec interconnection will be paid $4.63/kW-month. Imports from Quebec totaling 442 MW and from New Brunswick totaling 194 MW will be paid $3.70/kW-month and $3.16/kW-month, respectively.

By Timothy McQuiston Vermont Business Magazine New England has reduced its consumption of electricity dramatically since 2006 as well as its production of dangerous gases, according to ISO New England. The region also relies much more heavily on natural gas for generation than it did then. Thousands of megawatts of generation will go off-line in the coming years. New wind power will have a profound effect on the grid, while energy efficiency and storage will become official data points in the wholesale market. New England as a region has the highest electric rates in the nation.

ISO New England has published its 2018 Regional Electricity Outlook (REO), an annual report looking at the trends and challenges affecting New England’s power system, as well as the innovative solutions the ISO is pursuing to ensure reliable electricity for the region’s homes and businesses—today and into the future. For instance energy conservation will be applied into the generation model in June, as will electric storage, by the end of this year.

Vermont (14.62 cents per kilowatt hour) is the only state in New England without retail competition for electricity. Vermont has the second lowest electric rates in New England, behind Maine (12.63/KWH). All six New England (16.24/KWH) states are in the top 10 highest in the nation, with Connecticut (17.71/KWH) the highest among them, with Hawaii (27.49/KWH) and Alaska (19.50/KWH) the highest in the US (10.38/KWH).

Despite the rates, New Englanders, with the notable exception of Connecticut (number 3 in US), have average electric bills compared to the rest of the nation. This is attributed to lower air conditioning use and more conservation. Vermont ranks low, at 33rd in the US with an average electric bill of $116 per month. South Carolina is highest at $173 per month.

ISO New England Inc is the operator of the region’s bulk power system and wholesale electricity markets.

In the report ISO states:

New England’s competitive wholesale electricity markets and the New England states’ clean-energy initiatives are facilitating a dramatic shift to cleaner power sources. Simultaneously, state investments in and consumer adoption of energy-efficiency measures are driving down electricity use, and distributed generation is reducing demand from the grid. ISO New England’s innovative efforts are keeping the regional power system a step ahead of this transformation.

Source: Holyoke, MA—February 28, 2018—ISO NE