Renew Ne., Inc. v. ISO New Eng., Inc.
| Decision Date | 16 February 2023 |
| Docket Number | EL22-42-000 |
| Citation | 182 FERC ¶ 61, 085 |
| Parties | RENEW Northeast, Inc. and the American Clean Power Association v. ISO New England Inc. |
| Court | Federal Energy Regulatory Commission |
Before Commissioners: Willie L. Phillips, Acting Chairman; James P Danly, Allison Clements, and Mark C. Christie.
ORDER DISMISSING COMPLAINT
Kimberly D. Bose, Secretary.
1. On March 15, 2022, RENEW Northeast, Inc. (RENEW) and the American Clean Power Association (ACPA), jointly Complainants, filed a complaint pursuant to sections 206 and 306 of the Federal Power Act (FPA)[1] and Rule 206 of the Commission's Rules of Practice and Procedure[2] alleging that the ISO New England Inc. (ISO-NE) Transmission, Markets and Services Tariff (Tariff) is unjust and unreasonable due to undue preference granted to gas-fired generation resources that have neither dual-fuel capability nor dedicated, firm natural gas supply arrangements (gas-only resources). Complainants contend that such undue preference arises from the failure of the current Tariff rules concerning capacity accreditation and operating reserve designation to account for the uncertainty of natural gas supply in New England, particularly during cold winter conditions. In this order, we dismiss the complaint.
2. ISO-NE administers the Forward Capacity Market (FCM) to procure sufficient capacity to meet expected peak load plus a reserve margin three years in advance of the delivery year. Resources seeking to participate in ISO-NE's FCM and receive a Capacity Supply Obligation[3] must be accepted in the Forward Capacity Auction (FCA) qualification process.[4] New and existing resources that are permitted to participate in the FCM must verify their FCA Qualified Capacity. ISO-NE determines a resource's FCA Qualified Capacity using two different methods, depending on whether the resource is an Intermittent Power Resource,[5] such as wind or solar, or non-Intermittent Power Resource, such as natural gas or nuclear.[6]
3. FCA Qualified Capacity for existing non-Intermittent Power Resources is based on a resource's summer capacity rating and as demonstrated during summer and winter Claimed Capability Audits.[7] Claimed Capability Audits determine a resource's ability to respond to ISO-NE dispatch instructions at a specified output level for a period of one to four hours, depending on the resource type.[8] The Qualified Capacity of a New Generating Capacity Resource that is not an Intermittent Power Resource that clears the FCA is the lesser of the resource's summer or winter Qualified Capacity as adjusted to account for applicable offers composed of separate resources.[9] Non-Intermittent Power Resource capacity ratings are generally lowest in the summer. Summer ratings are used because the ISO-NE system remains a summer-peaking system.[10] The Qualified Capacity for non-Intermittent Power Resources may be adjusted (lowered) if its winter rating is less than its summer rating. 11[]
4. In contrast, FCA Qualified Capacity for existing Intermittent Power Resources is equal to the resource's summer Qualified Capacity, which is based on the median of the resource's historical metered output during Summer Intermittent Reliability Hours.[12]ISO-NE determines the Intermittent Power Resource's summer and winter Qualified Capacity by averaging the median net output during Summer or Winter Intermittent Reliability Hours from previous summer or winter periods. 13[] The Qualified Capacity of a New Intermittent Power Resource is based on claimed summer and winter Qualified Capacity[14] and site-specific summer and winter data relevant to the expected performance of the Intermittent Power Resource (i.e., wind speed data, water flow data, or irradiance data).[15] The FCA Qualified Capacity for such a resource shall be equal to the resource's summer Qualified Capacity, as adjusted to account for applicable offers composed of separate resources. 16[]
5. ISO-NE procures three types of operating reserve products in its real-time market: (1) Ten-Minute Spinning Reserve, which is the ten-minute reserve capability of electrically synchronized resources; (2) Ten-Minute Non-Spinning Reserve, which is the ten-minute reserve capability of non-synchronized resources; and (3) Thirty-Minute Operating Reserve, which is the thirty-minute reserve capability of electrically synchronized or non-synchronized resources.[17] ISO-NE's demand for each of these real-time reserve products is determined formulaically based on its first and second largest contingencies (i.e., the largest amount of megawatts (MW) ISO-NE could lose due to the sudden loss of a generator or transmission facility) and zonal requirements.[18]Together, these reserve products ensure that ISO-NE complies with North American Electric Reliability Corporation and Northeast Power Coordinating Council reliability standards.
6. To be eligible to be designated for real-time reserves, a resource must: (1) be a Dispatchable Resource located within the New England control area; (2) not be a part of the first contingency supply loss; (3) not be designated as constrained by transmission limitations; (4) be able to sustain its output for at least one hour after a reserve activation; and (5) comply with the applicable standards and requirements for provision and dispatch of real-time reserves as specified in the ISO-NE manuals and administrative procedures. 19[] ISO-NE determines the Real-Time Reserve Designation, which is the MW value of each resource's reserve capability, and the Real-Time Reserve Clearing Price based on the resource's real-time energy offer and its operating limits as part of the realtime market's co-optimization of energy and reserves. [20]
7. Complainants ask the Commission to remedy alleged undue preferences granted to gas-only resources resulting from ISO-NE's current practices concerning capacity accreditation and operating reserve market designation. 21[] Complainants contend that undue preferences arise from the failure of the Tariff rules to account for the uncertainty of natural gas supply in New England, particularly during cold winter conditions. As discussed further below, Complainants assert that capacity accreditation and operating reserve designations for gas-only resources do not take appropriate account of gas-only resources' limitations and uncertainties, granting an undue preference to gas-only resources to the detriment of both resources with known, dedicated fuel supplies (e.g., dual-fuel, oil, nuclear, pumped storage, and pondage hydro) and intermittent generation (e.g., wind, solar, and run of river hydro).22[]
8. According to Complainants, ISO-NE's capacity accreditation and operating reserves rules provide undue preference to gas-only resources because the Qualified Capacity rating fails to properly capture a number of uncertainties for gas-only resources, including: (1) the uncertainty of a gas-only resource obtaining gas in an intraday market during peak and other extreme weather conditions; (2) an absence of an obligation for a gas-only resource to secure gas prior to or upon receipt of a real-time dispatch instruction to deploy reserves; and (3) the fact that capacity ratings are conducted on a unit-by-unit basis without consideration of the total pipeline capacity to support multiple gas-only resources. 23[] Complainants assert that historical events such as the 2021-2022 winter, wherein ISO-NE estimated that 3,700 MW to 4,500 MW of gas-only resources in New England were at risk of being unable to operate due to potential unavailability of fuel supply, is illustrative of the supply limitations and uncertainties of gas-only resources. 24[]
9. As to capacity accreditation, Complainants contend that ISO-NE's rules and procedures determine the Qualified Capacity rating for a gas-only resource based solely upon a test that confirms only the physical ability of the resource to convert fuel into energy.25[] Complainants contend that ISO-NE therefore assumes that each gas-only resource can always access fuel. Complainants argue that these "blind spots" in the capacity accreditation regime improperly result in more Qualified Capacity for the FCA from gas-only resources than can be simultaneously fueled in peak winter conditions, and as such the FCM rules allow compensation for gas-only resources for levels of capacity that cannot collectively be delivered in severe winter conditions.
10. Complainants contend that, without documentation of a known, dedicated fuel source, gas-only resources do not possess the same fundamental "input energy certainty" that nuclear and dual-fuel facilities provide, and that basing the capacity accreditation upon an assumption of 100% fuel availability improperly places gas-only resources on par with resources with known, dedicated fuel inventories.26[] Complainants state further that gas-only resources receive undue preference because intermittent resources' capacity ratings are significantly lowered because ISO-NE applies a different accreditation process for intermittent resources to account for the energy input limitations experienced by solar, wind, and run-of-river resources. 27[] Complainants argue that while Pay-for-Performance28[] penalties are intended to incentivize gas-only resources to acquire dualfuel capabilities, those penalties are ineffective because the penalties only apply during infrequent Capacity Scarcity Conditions.29[]
11. In addition, Complainants argue that ISO-NE's rules concerning operating reserves afford gas-only resources an undue preference relative to resources with dedicated fuel supplies because, unlike all other reserve resources with onsite fuel supplies,...
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