The Federal Energy Regulatory Commission has accepted ISO New England’s first batch of proposed reforms to the capacity market. The reforms are intended to improve power system reliability and cost-effectiveness as the region’s resource mix evolves.
FERC’s acceptance is the culmination of the first phase of the Capacity Auction Reforms (CAR) key project. The ISO worked closely with stakeholders on the effort over more than two years. The first phase involves moving capacity auctions to a “prompt” timeline, as well as updating the process for resources exiting the capacity market. The ISO plans to conduct its first auction under the new framework in 2028.
Past capacity auctions were held more than three years before the delivery period. Future auctions will be held about a month before delivery.
The grid operator said benefits include:
- Better forecasts: Up-to-date projections for supply and demand allow the ISO to establish more accurate auction parameters and resource owners to make better-informed decisions about their costs for selling capacity.
- No “phantom” entry: Resources must be operational before they can sell capacity. This ensures they enhance system reliability and that consumers get what they pay for.
- Simplicity: The shorter schedule streamlines administration for the ISO and participation for resource owners.
The process through which resources exit the market will shorten from four years to one. The ISO will continue performing reviews intended to deter attempts at market manipulation and safeguard against deactivations that jeopardize transmission security.
Stakeholder discussions continue around CAR’s second phase, which will focus on establishing separate auctions for winter and summer capacity commitment periods and updating resource accreditation standards. A FERC filing on this phase is expected at the end of 2026.
The Capacity Auction Reforms fact sheet provides more information. Additionally, the CAR Proposal Information Summary is updated frequently and breaks down details of the proposal and links to relevant presentations.
