ISO New England auction predicts price relief for power but muddies Invenergy project’s future

HOLYOKE, Mass. — Good news for ratepayers. New Englanders could pay less to keep the lights on in three years.

ISO New England, the regional operators of the electricity grid, on Monday closed its annual auction, dubbed the Forward Capacity Auction, with 35,835 megawatts of committed capacity for a estimated 34,075 megawatts of demand for 2020-2021, according to preliminary results. The auction, now in its 11th year, is held each year to secure contractual commitments from electricity generators to ensure there’s enough capacity to turn on the lights three years in advance. Capacity could include traditional power plants, renewable generators, demand resources and imported electricity from other regions.

“The chief purpose of the capacity market — resource adequacy — was achieved through a competitive process that balances the needs of consumers and suppliers,” said Robert Ether, vice president of market operations at ISO New England.

This year’s auction not only closed with an excess of 1,760 megawatts, but also at the lowest price since 2013. Indeed, the systemwide clearing price of $5.30 per kilowatt month fell from $7.02 per kilowatt month a year earlier. This bodes well for Rhode Islanders, who are part of what’s called an “import-constrained zone,” meaning there are infrastructural constraints that could drive up capacity costs, which happened two years ago when the clearing price here was $17.73 per kilowatt month for new generation. At $5.30 per kilowatt month, the total value of the capacity market for 2020-21 will be about $2.4 billion, according to ISO New England.

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The auction, albeit regional, has local implications.

Indeed, Invenergy LLC, which is seeking permission to build a controversial, gas-fired power plant in Burrillville, failed to clear a bid during this year’s auction, according to a company representative, signaling to some that the power plant, Clear River Energy Center, is unnecessary.

“[The auction] is confirmation that the Invenergy plant is not needed,” said Jerry Elmer, Conservation Law Foundation Rhode Island attorney.

Last year, Invenergy, a Chicago-based company, cleared 485 megawatts of its 1,000-megawatt nameplate capacity, and although its bid didn’t clear this year, a company representative disagrees with Elmer.

“While our bid was not selected in the latest capacity auction, prior auction results have confirmed the need for the Clear River Energy Center, and our plans remain unchanged,” said John Niland, business development director at Invenergy.

Niland argues the auction is only a snapshot of what the market will look like in three years, and does not address long-term needs, citing various power plants throughout the region that have either announced plans to retire, or are “at-risk” of retiring.

Elmer, however, says this argument is moot.

“It is a false argument to talk about possible future retirements because the reason of the forward capacity auction is that it specifically accounts for all retirements,” he said. “To say you’re not counting retirements, or possible anticipated retirements, ignores what the purpose of what the auction is.”

The R.I. Energy Facility Siting Board is currently considering whether to approve the power plant, and a long-awaited decision is expected some time this year.

This year’s capacity that did clear the auction included 31,389 megawatts of generation, including 264 megawatts new, all from increased generating capability added at existing power plants; 3,211 megawatts of demand resources, including 640 megawatts new; 1,235 megawatts of imports from other regions; and six megawatts of new wind and five megawatts of new solar resources. There is now 137 megawatts of wind and 66 megawatts of solar facilities committed for 2020-21, according to ISO New England.
New England ratepayers pay for capacity costs each year.

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