New England generators want demand response banned from capacity markets

Dive Brief:

  • New England generators have petitioned FERC to disallow demand response resources from participating in ISO New England's upcoming forward capacity auction for the 2018/2019 commitment period, RTO Insider reports.
  • After a the U.S. Court of Appeals for the District of Columbia Circuit determined FERC had gone too far when it mandated payments for demand response in power markets, generators say similar logic should apply to capacity planning as well.
  • Meanwhile, a bill has been introduced in the U.S. Senate to amend the Federal Power Act, making clear FERC has the authority to regulate those markets and ensure full locational marginal pricing for resources able to avoid the need for additional generation.

Dive Insight:

Generators representing 26,000 MW of capacity in New England have asked federal regulators to remove demand response from the New England ISO tariff and to keep the resources from competing in upcoming capacity auctions. They say the D.C. Circuit Court's decision to vacate FERC Order 745, which would have allowed demand response to compete on equal footing in wholesale power markets, should also be applied to capacity markets.

"Although decided in the context of a rulemaking concerning demand response participation in organized wholesale energy markets, the reasoning of the D.C. Circuit’s decision applies equally to [forward capacity market] and other wholesale markets," the generators said.

The petition follows a similar move by FirstEnergy, attacking demand response participation in the PJM capacity markets. Demand response providers say banning DR from capacity markets would spell serious trouble for the industry.

Experts say a legislative fix may be necessary to sort out just who will regulate demand response resources. New Mexico Sen. Martin Heinrich has introduced legislation that would grant FERC the authority by amending the Federal Power Act.

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Filed Under: Efficiency & Demand Response Regulation & Policy
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