Recently appointed FERC Chairman Neil Chatterjee issued his first dissent since being appointed Chairman. See ISO-New England Inc, Docket No. ER18-1170, 2-1 vote (Commissioners LaFleur, Glick in the majority, Chairman Chatterjee in dissent, with Commissioner McIntyre not participating).
In preparing for the February 2019 Forward Capacity Auction (FCA) 13, ISO-NE filed to change the economic life calculation for an Existing Capacity Resource’s De-List Bid that would have been in effect. The New England Power Generator Association (NEPGA) protested the filing saying that the ISO-NE did not like the price outcome under the current rules for FCA 13 and therefore — to lower prices — filed to change the rules.
FERC rejected the NEPGA protest. FERC balanced (i) the interests involved with settled expectations to (ii) the benefits from applying the proposed change to the upcoming auction. NEPGA said applying the Economic Life Revisions to FCA 13 would harm settled market expectations because it would reduce market participant confidence in the FCM, deny market participants the opportunity to make fully informed decisions on whether to submit De-List Bids, and could result in lower, uncompetitive auction clearing prices. ISO-NE said the Economic Life Revisions would ensure competitive market outcomes and prevent severe market distortions. In balancing these interests, FERC sided with ISO-NE concluding “the specific benefits of implementing the Economic Life Revisions, including ensuring competitive market outcomes for FCA 13, outweigh the concerns articulated by NEPGA.” Order at P 27
Chairman Chatterjee dissented. He said, “[i]mplementing these tariff revisions for FCA 13 will disrupt settled market expectations mid-course and harm market participants who relied on the existing tariff in calculating prices and entering into contracts.”
Chairman Chatterjee also expressed concern that the ISO-NE knew the results under the existing tariff, did not like those results and then changed the tariff. He said, “I also find it troubling that ISO-NE submitted this proposal to modify the economic consequences of those De-List Bid decisions after ISO-NE was able to calculate what the economic consequences would be under the existing rules. This change would achieve a specific price-oriented outcome based on information ISO-NE possesses due to its unique role as both system operator and auction administrator.”