Capacity Watch- April 2011
Significant developments in the three Northeast capacity markets.
SUMMARY: There are active developments transpiring in each of the three Northeast capacity markets, all of which have significant consequences on capacity clearing prices. In PJM, FERC has ruled on the Minimum Offer Price Rule (MOPR) and has largely approved the overall PJM filing, with the exception that the proposed three-year mitigation will be changed to no time limit for the mitigated units.
In New York, the NYISO filed a compliance filing on March 29 in response to the January 29 FERC order ruling on the 2011 to 2013 demand curve reset process. The FERC January 28 order was very bullish for New York City capacity prices (almost double the original NYISO proposal) and the NYISO compliance filing, if accepted will result in New York City reference points that are only about 10 percent lower than implied by the FERC ruling.
In New England, FERC has directed ISO-NE to develop a set of mitigation rules that would mitigate new entry in relation to generator class net CONEs. FERC also rejected ISO-NE’s proposal for a two-tiered pricing result. ISO-NE had proposed that two prices be applied, including one that treats out-of-market resources separately from existing generators.
In the front section of Capacity Watch, ESAI examines the issue of long term capacity price equilibrium and compares the conventional wisdom of equilibrium at net CONE with ESAI’s expectation of long term equilibrium at a discount to net CONE.
Find out more in this quarterly issue of ESAI’s Northeast Power Markets Capacity Watch.