FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION ON THE NEW ENGLAND ANSWER PROVIDING ADDITIONAL SUPPORT FOR APPLICATION OF "FIRST LEVEL MITIGATION" IN UNCONSTRAINED AREAS UNDER NEW ENGLAND SMD MITIGATION PLAN
BACKGROUND
The NE SMD, filed by the New England entities (ISO-NE and the New England Power Pool Participants’ Committee (NEPOOL)) in the form of Market Rule 1 on July 15, 2002, is intended to replace all of the existing NEPOOL Market Rules currently on file with the Commission. The NE SMD replaces NEPOOL's existing bid-based, single-settlement system with multi-settlement, bid-based, security-constrained day ahead and real time energy markets. The proposal was approved by the Federal Energy Regulatory Commission (FERC or the Commission) on September 20, 2002 (September 20 Order). In that order, however, the Commission carved out one mitigation issue for further comment and justification by the New England entities. The Commission stated:
We will, however, defer acting on that portion of the proposal that would provide for mitigation in the absence of transmission constraints until we receive additional information from NEPOOL and ISO NE regarding their rationale. Specifically, we will require NEPOOL and ISO NE to provide us with further information as to why they believe it is necessary to have the first level of monitoring and mitigation, i.e., when the transmission system is unconstrained. The Commission will require that, within 15 days, NEPOOL and/or ISO NE provide the Commission with factual support and justification for the need for the first level mitigation in addition to the $1000/MWh safety net bid cap that is in place market wide.
This request for additional information was based on concerns expressed by Commissioners Linda Breathitt and Nora Brownell at the Commission Meeting held on September 18, 2002 (September 18 Commission Meeting). At that public meeting, both Commissioners expressed concern over the inclusion of the first level mitigation in unconstrained areas in addition to the $1,000 “safety net” bid cap. On October 7, 2002, the ISO-NE submitted an answer to the question posed by the Commission in the September 20 Order. According to the ISO-NE, the mitigation proposed in the absence of transmission constraints is necessary, because “[w]hile the New England market is generally competitive, market dynamics can change significantly during periods of high demand or unusual outages.” This possibility is enough to warrant preventative mitigation, according to the ISO-NE.