NEPGA Files Comments in Support of Dynamic De-List Bid Threshold Methodology – Docket No. ER21-782-000

On January 21, 2021, NEPGA filed Comments in support of ISO-NE’s and NEPOOL’s joint proposed change to the Dynamic De-List Bid Threshold methodology (Docket No. ER21-782-000). Under the proposal, the DDBT is set, preliminarily, to the average (mean) of: (1) the prior FCA’s actual system-wide capacity clearing price; and (2) the price at which the quantity of capacity that cleared in the prior FCA would clear in the subsequent FCA based on the forecast change in the demand curve. The preliminary is then adjusted, if necessary, in that it may be no higher than 75% of the Net CONE value in the subsequent FCA and no less than 75% of the prior FCA system-wide clearing price. The last step in the methodology requires a “margin” adder to the preliminary DDBT that serves to better protect against uncompetitive outcomes caused by the administrative burden of submitting a de-list bid.   Following the calculation of the preliminary DDBT and application of the maximum and minimum limits, the final DDBT is set equal to the sum of the preliminary DDBT and a “margin” adder.   This adder will have the effect of increasing the DDBT such that potential offers within a range of the preliminary DDBT will not be subject to mitigation review.  As explained during the NEPOOL Markets Committee deliberation on the proposed change, the cost of submitting a de-list bid and engaging in the Internal Market Monitor’s mitigation review process discourages Market Participants from making competitive offers that fall just above the DDBT.  Thus, an administrative cost may interfere with competitive market outcomes, in that these near-DDBT economic offers are not reflected in the clearing of the auction.  The margin adder thus properly accounts for this risk by creating a competitive offer range “buffer” above the preliminary DDBT. The overall proposal was the result of a collaborative effort between Dynegy Marketing and Trade LLC (Vistra), Calpine Energy Services, LP (“Calpine”), and the New England States Committee on Electricity.

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