Time Limits on Resources Retained for Fuel Security - FCM Fuel-Security Reliability Review Refinement

1. July 30, 2019 I Westborough, MA Time Limits on Resources Retained for Fuel Security FCM Fuel-Security Reliability Review Refinement 1

2. FCM Fuel-Security Reliability Review Refinement WMPP ID: 124 Proposed Effective Date: December 2019 Starting with Forward Capacity Auction 13, resources needed for fuel-security reliability can be retained in the Forward Capacity Market for up to two Capacity Commitment Periods Resources retained for fuel security in the FCM retire after the two-year retention limit has been met or the resource is no longer needed for fuel security purposes, whichever comes sooner The ISO proposes to strike a provision of the tariff that could extend a resource’s retirement beyond the two-year retention period The ISO’s goal is for reliability concerns to be addressed through competitive solutions; this provision is inconsistent with that objective • When resource owners submit retirement bids and demand bids in the FCA, they are indicating their economic decision to exit the markets • Out-of-market retentions should be limited in scope and timing To the extent the provision may cause uncertainty regarding the Greater Boston Needs Assessment, the ISO seeks clarity ahead of the solicitation of competitive transmission • The ISO is requesting that the change become effective prior to the issuance of the Order 1000 RFP in December of 2019

3. Problem Statement The Compliance Filing fora Fuel Security Reliability Standard, FERC Docket Nos. ER18-2364-000 and EL18-182-000 (filed on August 31, 2018), established the Fuel Security Reliability Review authority (i.e., Section III.13.2.5.2.5A) Subsection III.13.2.5.2.5A(j) defines the annual reevaluation of the resource and notes that after the fuel security need is met, the resource exits the markets Additional language in that clause implies that a resource no longer needed for fuel security may be retained for another reliability reason if necessary, which could possibly extend the two-year retention Application of this provision could potentially prevent the anticipated retirement of the resource after two years If the provision is not removed, it could potentially expand the retention of such resources, which is contrary to the ISO’s preferred approach of procuring reliability services through competitive solutions

4. Proposal The ISO is proposing to delete the phrase in subsection III.13.2.5.2.5A(j) concerning a resource being needed for “another reliability reason” The deletion of this phrase would remove the potential for a fuel-security resource to be retained in the FCM for more than the two-year period

5. Summary of Proposed Tariff Changes Section 13.2.5.2.5A(j) “The ISO shall perform an annual reevaluation of any Existing Generating Capacity Resources retained for reliability under this provision. If a resource associated with a Retirement De-List Bid that was rejected for reliability reasons pursuant to this section, is found to no longer be needed for fuel security, and is not needed for another reliability reason pursuant to Section III.13.2.5.2.5, the resource will be retired from the system as described in Section III.13.2.5.2.5.3(a)(1). In no case will a resource retained for fuel security be retained for fuel security beyond June 1, 2025.”

6. Conclusion A revision is required in Section III.13.2.5.2.5A(j) to limit the retention of resources needed for fuel security to a two-year maximum time frame Without a change, a resource retained for fuel security could potentially be retained beyond the intended Capacity Commitment Period, which further impacts the competitive processes in New England The ISO is requesting that the change become effective prior to the issuance of the Order 1000 RFP in December of 2019

7. Stakeholder Schedule

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