ISO CEO: FCM auction results business as usual
ISO New England has successfully completed an acquisition of enough resources to meet New England's anticipated electricity demand for 2016-2017 via the Forward Capacity Market (FCM) auction.
ISO New England was able to estimate consumer demand and power system needs three years in advance, leaving enough time for new resources to be developed.
The three zones representing most of New England each concluded at the auction floor price of $3.15 per kilowatt-month with surplus capacity, which means the price will be reduced. However, with the retirement of existing power plants and other resources, the zone representing Northeast Massachusetts and Greater Boston (NEMA/Boston) will need new resources. The FCM auction procured the capacity needed to ensure reliable power for NEMA/Boston residents and businesses, closing at $14.99/kW-month, near the auction ceiling price of $15.00/kW-month.
"The market worked as designed to bring new resources where they are needed, which includes both new generation and energy-efficiency measures as a part of the mix," said Gordon van Welie, president and CEO of ISO New England. "The monthly clearing price for these new resources in NEMA/Boston is much higher than the price in the rest of New England, but this is indicative of the cost of developing new resources in this zone."
This cost of doing business means that consumers will see reliability benefits for years to come if the resources are developed appropriately.
But not everyone supports FCM auctions to purchase power years in advance.
Critics like the consumer watchdog Public Citizen say that by locking in rates, there are no guarantees that new capacity will ever be developed.
- see this article