NEPGA Files Complaint on Capacity Scarcity Condition Balancing Ratio – No. EL25-106

On Friday, July 25, 2025,  NEPGA filed a Complaint explaining that the ISO-NE Tariff is unjust and unreasonable because it allows for a capacity resource that delivers energy and/or reserves during a Capacity Scarcity Condition (CSC) equal to its Capacity Supply Obligation to be charged rather than paid (as part of the so-called Pay for Performance design) (No. EL25-106). This was the case on June 24, 2025, when New England temperatures rose above 100 degrees, and New England experienced its highest load levels since 2013. At present under the Tariff, when load (plus reserve requirement) levels exceed the MWs of Capacity Supply Obligations held as of the CSC event day, the Balancing Ratio exceeds 1.0. Consequently, CSO holders are held to a higher standard than is Capacity Supply Obligation), and thus charged even when it delivers energy and reserves in a quantity equal to its CSO (e.g., a 100 MW CSO and a 1.05 Balancing Ratio would obligate the capacity resource to instead deliver 105 MW of energy/reserves). NEPGA proposes a replacement rate that would remedy this unjust outcome, by capping the Balancing Ratio at 1.0 (i.e., it cannot exceed 1.0) and changing how ISO-NE allocates ‘under-collections.’ At present, the Tariff requires ISO-NE to allocate (charge) all CSO holders on a pro rata basis for an under-collection caused by the stop-loss mechanism (on June 24, ISO-NE under-collected approximately $25 million due to the stop-loss). Capping the Balancing Ratio as well would cause an under-collection (likewise, approximately $25 million, based on June 24 data). Without a change to the allocation methodology, the Balancing Ratio-related under-collections would be assigned (charged) to CSO holders, which is the functional equivalent of applying a Balancing Ratio above 1.0 to CSO resources. Thus, as part of its replacement rate, NEPGA proposes to instead eliminate the requirement that ISO-NE charge CSO holders for under-collections, but instead simply to allow the under-collection to remain, and pay those resources due payments following a CSC solely from the amount of CSC charges actually collected. NEPGA further explained that this must apply to under-collections caused both by capping the Balancing Ratio at 1.0 and the stop-loss mechanism (to avoid potentially absurd results, e.g., a negative payment rate for those due payments). In sum, rather than charge CSO holder this replacement rate would reduce the effective payment rate to those due payments following a CSC (though, notably, the charge rate would remain unchanged at $9,337/MWh). NEPGA notes that this is the exact treatment PJM applies to under-collections and the Balancing Ratio in its form of Pay for Performance.

 nepga_pfp_complaint_072525.pdf
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