NEPGA Protests ISO-NE Net CONE Value Proposal – Docket No. ER21-787-000

On January 21, 2021, NEPGA filed a Protest of ISO-NE’s proposed Net CONE value for effect beginning in FCA 16 (No. ER21-787-000). ISO-NE proposed a Net CONE value of $7.024/kW-month, a significant reduction for the FCA 15 Net CONE value of $8.707/kW-month. NEPGA challenges several aspects of ISO-NE’s proposal. NEPGA first argues that ISO-NE has not assumed Net CONE Reference Unit (a combustion turbine, dual-fuel, with a GE 7HA.02 turbine) costs sufficient to operate and earn the revenues ISO-NE forecasts for the Reference Unit. ISO-NE assumes that the Reference Unit does not require on-site compression or pipeline capacity upgrades to meet its modeled dispatch instruction and Forward Reserve Market obligation, with no evidentiary support. NEPGA’s consultants, Richard Levitan and Sara Wilmer, instead show that both compression and capacity upgrades are necessary in order for the Reference Unit to earn the revenues from those markets, which NEPGA argues renders ISO-NE’s proposal unjust and unreasonable. NEPGA also shows that ISO-NE assumes a specific location for purposes of estimating the length of transmission and pipeline interconnection, but for other costs (e.g., gas compression) it effectively assumes a different location.  NEPGA argues that this as well render ISO-NE’s Net CONE proposal unjust and unreasonable. NEPGA also challenges other ISO-NE cost assumptions, including the per mile cost of the gas lateral, transmission network interconnection costs, and metering station costs. With respect to the non-capacity market revenues ISO-NE assumes for the Reference Unit, NEPGA argues that ISO-NE has violated it Tariff by failing to account for reasonable expectations about future market revenue opportunities. NEPGA supported this part of its Protest with an affidavit from Matthew Tanner (Berkeley Research Group). ISO-NE models its non-capacity market revenue forecasts based on system whose resource mix does not change, and which has a quantity of energy available equal to only the Net Installed Capacity Required, in all 20 years of the Resource Unit forecast period. NEPGA argues that ISO-NE made no attempt to reflect reasonable expectation, in contrast to the Tariff requirement and ISO-NE’s Net CONE recalculation methodologies in 2014 and 2016. In the alternative, NEPGA argues that ISO-NE’s non-capacity market revenue forecast methodology is unjust and unreasonable because it, unlike NEPGA’s reading of the Tariff requirement, causes inefficient retirements and, in an auction where the amount of capacity procured is much less than the Net Installed Capacity Requirement, consumers to incur higher than efficient costs.

 NEPGA-Protest_ER21-787-000.pdf  Attachment-A_Wilmer-and-Levitan-Affid_No-ER21-787-000.pdf  Attachment-B_Tanner-Affidavit_No-ER21-787-000.pdf  Attachment-C_NEPGA-Complaint_No-EL21-26-000.pdf


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