Whither New England’s Wholesale Electricity Market?

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 Dan Bosley the Government Relations Executive for the Northeast Clean Energy Council speaks on a panel about New Englands Wholesale Electricity markets as John Carroll of Avangrid and Brian Foresaw listen photo by Kay MannOn November 17, 2016, the Environmental and Energy Technology Council (E2Tech) hosted its second annual E2Tech Expo at the University of Southern Maine in Portland. The day-long event comprised a number of fora on different aspects of energy policy; Green Energy Maine was there and brings you this report on the forum entitled, “Clean Energy Policy & Procurement- Regional v. Go-It-Alone Approach”.

New England, as a region, is looking to move towards a clean energy future, while individual states have been developing and implementing their own policies for many years. Recently, a consortium of New England states and electric utilities joined together to identify projects to advance regional clean energy goals through a combination of large solar, wind, fuel cell and hydro generation and transmission projects. This is known as the Tri-State RFP. 

In August, a new stakeholder process, called Integrating Markets and Public Policy (or IMAPP), got underway with the goal of making adjustments to the wholesale electricity market to accommodate and achieve the New England states' renewables and carbon reduction policy objectives. The question before this panel was, “Can a regional approach to energy policy work, and how does a patchwork of state energy initiatives fit into regional plans?”. John Carroll, the Director of Corporate Communications at Avangrid (parent company of CMP), moderated this panel.

The first panelist to speak was Dan Bosley, the Government Relations Executive for the Northeast Clean Energy Council. Bosley began by describing the IMAPP process that is currently underway. The IMAPP group describes itself as a focused stakeholder process to identify and explore potential changes to the wholesale power markets that could be implemented to advance state public policy objectives in New England. 

Bosley observed that this is an entire industry, not a single business. All the New England states are working on the same issues; we need to harmonize our efforts. The collective infrastructure needs to be upgraded. The Three State RFP provides a template for working regionally. Businesses need state policies to be consistent in order for them to operate and grow in several states.

Brian Forshaw Principal at Energy Market Advisors LLC and Vice Chair at the New England Power Pool speaks as John Carroll of Avangrid listens photo by Kay MannThe second speaker was Brian Forshaw, Principal at Energy Market Advisors LLC & Vice Chair at the New England Power Pool (NEPOOL).

NEPOOL’s mission is to create and sustain open, non-discriminatory, competitive and unbundled markets for energy capacity and ancillary services that are balanced between buyers and sellers. This body advises ISO-New England on all matters regarding wholesale power procurement rules and competitive market design. It was formed in 1971 to address reliability concerns and coordinated dispatch.

State actions to achieve mandated public policy objectives impact the competitive markets, creating tension between the market and public policy. Hence the need for the IMAPP process. The IMAPP committee has held 5 meetings since August, primarily seeking to define the problem and design 3 categories of approaches:

To modify the energy market rules to adjust dispatch to reflect emissions profiles;

To create a new, centralized, regional market for clean energy resources and

To modify the capacity market rules to better accommodate the resources needed to meet policy goals and consumer demand.

One principle being considered is that the electricity customers from one state should not bear the cost of policies dictated by another state. With time, the group will achieve better definition and consolidation of proposals. The target date to have final proposals in is now set for Q2 of 2017.

Bottom line: Maine is part of a regional market which is very complex. It is important to understand how it works. An action by a single state can impact the entire region. There is a consumer engagement process that all are welcome to take part in.

Interested parties can do further reading on the ISO New England website under planning advisory committee materials.

AUDIENCE QUESTIONS

Q: Why are we not thinking in terms of a national system that puts a price on carbon?

Forshaw: One option is to add a carbon adder to the price of energy. If the last unit on the supply chain has the highest carbon impact, even if the rest of the generators are using clean energy, it sets the price that all others on the production line are paid. The full production chain is charged the same if any carbon is included in it.

Bosley: It would need to be carbon neutral, without impacting consumers. A surcharge on fossil fuels would not necessarily have to apply to heating oil and can be used to fund efficiency measures to bring costs down.

Q: DOE is talking about moving control of the grid to the edges, that is, moving pricing signals down as close to the consumer as possible to drive behavior. This NEPOOL centralized process seems to be going in the opposite direction.

Forshaw: Wholesale markets produce granular price structures but these signals do not do not translate to set, hourly retail rates.

Q: Any speculation as to the new administration having an effect on the regional RFP’s?

Bosley: The regional RFP’s may affect FERC’s authority and they are likely to go ahead with it anyway.

All photos by Kay Mann.

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