Commissioner Tony Clark Statement
April 17, 2015
Docket No. ER14-2407-004
Rehearing of ISO-NE Market Rule 1
“I vote in favor of today’s order as a matter of pragmatism given the practical challenges ISO New England asserts in its filing. Nonetheless, I must express a degree of frustration given ISO-NE’s inability or reluctance to move a market-based solution through the stakeholder process that would relieve persistent winter reliability concerns.
“Since its inception, it was my impression that the out-of-market Winter Reliability Program was intended to be a short-term, stop-gap method of ensuring system reliability. Within this limited context, the Winter Reliability Program was first proposed in 2013. Now, two years later, ISO-NE continues to view the Winter Reliability Program as a suitable option not only for the winter of 2015-2016, but for the winters of 2016-2017 and 2017-2018.
“While the most recent Winter Reliability Program was an improvement over its earlier iteration, it must be noted that the subsidies provided by these Winter Reliability Programs are particularly detrimental within a predominantly restructured electricity regime like ISO-NE. In such regions, merchant generation is a critical component of installed system capacity. Such markets rely upon accurate price signals to guide complex, multi-year investment, operational and retirement decisions. Distortions to price signals, which may provide temporary rate relief, often lead to price and rate shock in later years, as supply and demand fundamentals seek to quickly correct imbalances that have been allowed to develop. As such, after the launch of the two-settlement capacity market design in 2018, which ISO-NE has indicated will solve reliability concerns throughout the operating year, it is my hope that this Commission will cast a critical eye towards continued requests for seasonal deployment of out-of-market reliability programs that continue to distort price and investment signals.
“Accordingly, I respectfully concur.”