By PBN Staff
By PBN Staff
HOLYOKE, Mass. – An ISO New England auction held Feb. 3 to acquire an adequate power supply to meet consumer demand in 2017-18 fell slightly short, causing an increase in electricity prices that the grid operator said reflects the need for new energy resources in the region.
Through the auction, ISO secured about 33,700 megawatts of the 33,855 megawatts in total capacity required for 2017-18. Roughly 24,885 megawatts came from existing power resources and will be paid at $7.03 per kilowatt-month, while 4,455 megawatts in new and existing resources will be paid at the capacity clearing price of $15 per kilowatt-month.
Another 1,030 megawatts of existing resources will be paid according to rates set in previous auctions, and 3,330 megawatts of self-supply resources will not be paid through the ISO auction.
ISO put the preliminary estimate of the total cost of the New England capacity market in 2017-18 at $3.05 billion, compared with $1.06 billion in 2013.
Gordon van Welie, president and CEO of ISO New England, attributed the shortfall to the large number of regional electricity generators – representing 3,135 megawatts or nearly 10 percent of New England’s total capacity – set to retire in 2017 or before, including the 1,535-megawatt Brayton Point Power Station in Somerset, slated to shut down in June 2017.
“The region abruptly went from a capacity surplus and low prices in previous auctions to a capacity shortfall and relatively high prices,” said van Welie in a statement. “The slim capacity margin and the resulting auction prices are a clear signal to the marketplace that the region needs more power generation and demand-reduction capacity.”
When Brayton Point owner Energy Capital Partners announced its intent last month to go forward with plans to close the coal power plant, despite ISO New England’s concern that the grid could experience thermal overloading caused by the redirection of power from other locations after Brayton Point’s four main turbines are shut down.
While the auction closed with slightly less capacity than will be needed in 2017-18, ISO said it will employ methods in place to deal with such gaps through periodic reconfiguration auctions held during the next three years.
A representative of ISO New England was not immediately available to comment on whether ISO expected it would be able to close the gap, or how higher auction prices would ultimately impact electricity consumers in the region.
The Federal Energy Regulatory Commission has established rules designed to protect consumers from sudden, significant price increases caused by electricity-generating companies leveraging higher demand to raise prices, ISO said.