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Citing underperformance by generators, ISO-NE proposes to beef up reserves, take other reliability steps

From the December 7, 2012 issue of Public Power Daily

Originally published December 7, 2012

Faced with alarming underperformance by generators during stressed system conditions, ISO New England has asked the Federal Energy Regulatory Commission to approve changes to the ISO’s rules designed to ensure that enough ten-minute non-spinning reserves will be available. An examination of dispatch response performance "following the 36 largest system contingency events over the last three years indicates that, on average, the response rate for New England's non-hydro generation resources was less than 60 percent of the amount requested during events," the ISO said. "In sum, at times of greatest need, many resources delivered below the performance ability represented in their offer data."

In addition to the underperformance by generators, the ISO said its filing was prompted by New England’s increased reliance on natural gas-fueled generation. In 2000, natural gas supplied 15 percent of New England’s electricity, the ISO said. That increased to 51 percent in 2011. That increased reliance "raises questions for the ISO about whether the wholesale electricity markets require enhancements to ensure both reliability and market efficiency, given the structure of the gas markets and the risks of increasing reliance on the supply of natural gas," ISO-NE said.

To address the problem with reserves, the ISO is proposing to procure more ten-minute, non-spinning reserves. However, that proposal is "another step in a series of operational and market improvements that the ISO is working on with stakeholders" to address concerns related to resource performance and gas-electric coordination. ISO-NE said it plans to propose three phases of market rule changes to address resource performance and market efficiency issues: near-term changes that can be implemented quickly; intermediate-term changes that could be implemented in the next year; and longer-term changes that could be implemented over the course of the next two to three years.

Near-term improvements planned by the ISO include proposed modifications to its generation resource auditing requirements and procedures; proposed tariff amendments that would allow the ISO to share certain confidential information with the interstate natural gas pipeline companies serving New England; and accelerating the closing of the day-ahead energy market "to allow the ISO to commit long lead-time resources earlier and to allow participants with gas-fired resources to learn their next-day commitments earlier so that they are able to procure gas based on those commitments."

Intermediate-term changes (which the ISO expects to present to stakeholders within the next year) could include:

  • tightening the shortage event trigger in the forward capacity market;
  • allowing market participants to change offers in real time to reflect the cost of obtaining fuel intra-day; and
  • possibly procuring additional intra-day reserve capability, which would address the fuel dependence risk between now and when the ISO implements planned longer term revisions to its forward capacity market.

Longer term, the ISO "is planning to propose forward capacity market changes to provide market participants with greater incentives and the capital to meet their supply offer obligations."



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