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Monday, June 8, 2020
ISO-NE security proposal sees In this issue
ongoing debate ISO-NE security proposal
sees ongoing debate
Calpine with Vistra, NEPGA disagree with NESCOE
Texas Supreme Court to
The debate over ISO-NE’s energy security improvements (ESI) review ERCOT, Panda dispute
proposal continued at FERC last week with the states and
generators making dueling filings (PMT, May-19). The New NYSERDA asks for OK on
England States Committee on Electricity (NESCOE), which clean energy program
represents the region’s governors, filed an answer last Monday
that drew responses Friday from the New England Power 1 story in 20 seconds
Generators Assn (NEPGA) and Calpine and Vistra Energy.
NESCOE argued the ESI proposal presented an inherent risk
of uncompetitive offers and a unique challenge to mitigating
market power. The IMM and NESCOE’s expert witness – James
Wilson – both raised that issue in the first round of comments
last month.
The market monitoring issue is compounded by the confusion
around the central feature of the ESI – the energy call option.
At times the IMM calls it a “real option – apparently viewing it as
distinct from a financial option, but the IMM and the ISO also say
it is a financial, not a physical, obligation.”
One of the IMM’s major worries is that parties could submit
offers with no intent or ability to cover their option in real-time
by providing energy and instead, take the financial risk of an
unfavorable closeout. The IMM said the ability of ESI’s financial
consequences to induce performance in real-time remains to be
seen, arguing it will need to be monitored closely and ex ante
mitigation rules might need to be developed, or ex post probes
run if it fails.
“However, no assessment of market power or rules to effectively
mitigate the exercise of such power accompany the ISO-NE
filing,” NESCOE said.
FERC should reject the proposal as premature as it fails to
address market power, NESCOE argued. Generators argued
FERC could accept the rules and then approve market mitigation
later on, but NESCOE said they could not point to any instance
where that happened.
The IMM wants to file reports on ESI’s performance, but
NESCOE argued that would not be enough and should only be
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Webinar recording
used as a complement for mitigating market power.
NEPGA said nothing in the Federal Power Act’s Section 206 The Impact of
prohibits FERC from conditionally accepting one part of an overall Coronavirus on the
design conditioned on the latter approval of mitigation rules. Power Industry
“NESCOE mistakenly relies on a FPA Section 205 case that
A multi-media recording of Power
was rejected (without prejudice) due to its lack of market power Markets Today's webinar originally
analysis,” NEPGA said. aired on May 20, 2020
“ISO-NE here acknowledges the need for – and is in the Distinguished panel
process of completing – a market power analysis and has asked
the commission to approve the ESI proposal conditioned on
subsequent commission-approved mitigation rules.”
The state group also argued the ESI proposal would simply cost
too much, but NEPGA said its arguments were based on the
highest revenue projections from two specific resource types. Gavin Donohue
IPPNY
Frank Graves
The Brattle Group
Potential margins from two resource types operating under highly
stressed winter conditions say little about whether the rules are
just and reasonable, NEPGA said.
“The more relevant comparison is total potential market-wide
costs averaged over multiple years versus the reliability benefits
those costs will bring,” NEPGA said. “As explained below, when
the totality of the impact assessment projected cost evidence is Bill Kinneary
NEM
Jamie Wimberly
DEFG
considered, it shows relatively modest costs more than justified in
that they represent the cost of a reliable day-ahead operating plan Much of the world is largely sheltering
for the near and long-term.” in place to try to flatten the curve of
the coronavirus and that has rocked
the economy with a huge spike in
NESCOE is the main supporter of the alternate rules before unemployment. The power sector is a
FERC, of which the biggest difference is that they are limited to vital industry with the grid needing to
the winter season only. Calpine and Vistra argued that would stay reliable in order to keep modern
society functioning.
not do enough as the risk of shortfalls is not limited to only
winter months. The virus has destroyed demand for
power and other sources of energy.
With people staying home, residential
ISO-NE had a scarcity event in September 2018 that triggered its demand has gone up, but C&I demand
pay-for-performance rules but Calpine and Vistra noted that is not for power is down. The economic
the only example of the ISO’s grid being stressed outside of winter. impacts have had states react by
banning utility disconnections and some
states even ending meter reads to avoid
Outage offers insight potential spreading of the virus. ISO/
RTOs began to implement their version
In the last two weeks – on May 29 – ISO-NE experienced issues of social distancing before the states
when a 1,250-MW power plant tripped offline and then six hours started requiring everyone to in order to
keep their workforces healthy.
later a major power line went down, leading to the loss of another
1,340 MW. ISO-NE fixed the issue by dispatching a number of Find out how the power industry is
adapting to changes caused by the
combined-cycle plants outside the market. coronavirus from our panel of industry
experts by downloading Power
“Had that product been in place for the event, ISO-NE would have Markets Today's webinar, " The Impact
known that required reserves were in place, thereby avoiding of Coronavirus on the Power Industry,"
originally aired on May 20, 2020.Call
the need to take out-of-market actions,” Calpine and Vistra +1-301-769-6812 (1-888-637-7776
said. “Additionally, had fuel supply been tighter when the event toll-free in the US and Canada) to
occurred, the replacement energy reserves would have provided order up by phone.
generators issuing such options with an incentive to firm up their
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fuel arrangements in advance of the event.”
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Texas Supreme Court to review ERCOT, Power Markets Today's editorial staff
Panda dispute hosts online events or "webinars"
where industry experts present highly
The Texas Supreme Court agreed to review a dispute between relevant and valuable information and
ERCOT and Panda Power, which sprung out of a lawsuit the firm insight on the topics most important to
our industry – and answer questions
filed after its investment in a natural gas plant did not pan out. The from the audience. These events are
legal question before the court is whether ERCOT qualifies for the available for live attendance and post-
same immunities that government entities get under state law. event, multi-media downloads. Click
here to see what we have coming up.
The case involves investments from earlier this decade as the last
few years have had shortages of reserves and much higher prices.
Webinar recordings
The case has now found its way to the highest court in the state
after ERCOT filed to appeal a lower court’s decision. In a filing
Panda made last year, the firm argued the lower court’s decision Catch up on webinars
made no sense as it found ERCOT entitled to “sovereign immunity,” you've missed
but that it is not a governmental unit and those conclusions are
irreconcilable, the ISO said. Catch up on retail, ISO/RTO, and
ERCOT markets, and more by visiting
Power Markets Today's webinar library
ERCOT wants the court to find it is a governmental unit, but Panda where a multi-media recording of every
would rather the court reverse the finding that the grid operator is webinar we've presented is available
entitled to sovereign immunity. The grid operator noted the Texas for immediate download. Don't miss
Supreme Court found a private university’s police force entitled to this chance to hear industry experts
sovereign immunity as even though it is paid by a private entity, it break down the most critical topics
also performs critical governmental functions. impacting power markets today. Click
here to catch up.
“ERCOT has more indicia of governmental-unit status than did the
police force” at the university, the grid operator said in a filing last
year. “It exercises uniquely governmental powers, including the Abbreviations
power to make law, and it does so while under the state’s complete
authority and supervision. Glossary of
“It is subject not only to conflict-of-interest and public-information abbreviations
laws, but – more significantly – sunset review. It even receives If you do not recognize a term or
public funding. No other privately organized entity in Texas meets all abbreviation in Power Markets Today,
these criteria.” please visit our online glossary to get
up to speed. We use them as part of
Panda argued ERCOT’s claims that it is a state agency cannot our commitment to deliver the most
be right, arguing Texas’ deregulation of the electric industry was concise, easy-to-read news possible
designed to make government less involved in the electricity market The link to the glossary is also
available at the end of every issue.
– not more. “It is passing strange for this market-focused overhaul
to have resulted in the creation of a governmental grid operator NOTE: More common or important
entitled to sovereign immunity, as ERCOT claims,” Panda said. terms listed in the glossary are linked
to a search of our archive on that
NYSERDA asks for OK on clean term, letting readers zoom into a
particular topic. Click here to view the
energy program complete list.
The New York State Energy R&D Authority (NYSERDA) filed
a petition with the PSC last week to set up the Clean Energy
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