UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION. ) ) ) ISO New England Inc. ) Docket No. ER ) ) ) )

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1 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION ISO New England Inc. Docket No. ER MOTION TO INTERVENE AND LIMITED PROTEST OF THE NEW ENGLAND POWER GENERATORS ASSOCIATION, INC. Pursuant to Rules 211 and 214 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission ( Commission, 1 the New England Power Generators Association, Inc. ( NEPGA 2 hereby submits this Motion to Intervene and Limited Protest of ISO New England Inc. s ( ISO-NE filing of several changes to the Competitive Auctions with Sponsored Policy Resource ( CASPR rules. 3 Among the changes ISO-NE seeks is a rule that dictates that an Existing Capacity Supplier cannot participate as demand in the CASPR Substitution Auction if the marginal clearing price in the associated Forward Capacity Auction is higher than the supplier s test price ( Test Price. Under the proposal, ISO-NE and its Internal Market Monitor ( IMM propose to file the IMM s estimate of a competitive Test Price, rather than the Market Participant-submitted Test Price, as the rate under Section 205 of the Federal Power Act ( FPA. This part of ISO-NE s proposal violates the FPA in that it requires the Market Participant to involuntarily forgo its right to file its rates, terms and conditions of service for Commission 1 18 C.F.R ( The comments expressed herein represent those of NEPGA as an organization, but not necessarily those of any particular member. 3 Joint Filing of ISO New England Inc. and New England Power Pool regarding Conforming Change to ISO Tariff for CASPR, Docket No. ER (filed Dec. 12,

2 acceptance. NEPGA therefore respectfully requests that if the Commission finds the Test Price proposal to otherwise be just and reasonable, that it confirm that ISO-NE shall file the Market Participant-submitted Test Price for acceptance under FPA Section 205, and that by filing it ISO- NE does not acquire any rights held by the Market Participant in the rate. I. MOTION TO INTERVENE NEPGA is the trade association representing competitive power generators in New England. NEPGA s member companies represent approximately 26,000 megawatts, or roughly 80% of the installed capacity in New England. NEPGA s mission is to support competitive wholesale electricity markets in New England. NEPGA believes that open markets guided by stable public policies are the best means to provide reliable and competitively-priced electricity for consumers. A sensible, market-based approach furthers economic development, jobs and balanced environmental policy for the region. NEPGA s member companies are responsible for generating and supplying electric power for sale within the New England bulk power system. As active participants in the ISO-NE wholesale electricity markets, NEPGA s member companies have substantial and direct interests in the outcome of these proceedings, and those interests cannot be adequately represented by any other party in the proceeding. All correspondence and communications related to this proceeding should be addressed to the following individual: Bruce Anderson Vice President, Market and Regulatory Affairs New England Power Generators Association, Inc. 33 Broad Street, 7 th Floor Boston, MA banderson@nepga.org 2

3 II. BACKGROUND Under the CASPR design, an Existing Capacity Resource may participate as demand in the Substitution Auction if it acquires a Capacity Supply Obligation in the associated Forward Capacity Auction. ISO-NE here proposes to add a second condition to Substitution Auction participation, that the resource s Test Price (discounted by 10% must be greater than the FCA clearing price. An Existing Capacity Resource that wishes to bid in the Substitution Auction must provide the IMM with its Test Price several months in advance of the FCA, with the Test Price intended to reflect the resource s competitive retirement offer under the Retirement De-List Bid methodology (whether the Market Participant submits an actual Retirement De-List bid or some other offer type. 4 The Test Price differs from a Retirement De-List Bid price only in that: (1 it does not account for the impact on the offer price due to revenues that may be earned by clearing in the Substitution Auction; 5 and (2 it is not submitted in price/quantity pairs, as a Retirement De-List Bid may, but instead as a single offer price for the entire Substitution Auction demand bid quantity. 6 The IMM will then review the submitted test price and consult with the participant before arriving at its estimate of the competitive Test Price for the resource. The IMM will notify the Market Participant of its estimate, and then file, with the Retirement and Permanent De-List Bids (if any the IMM s estimate (or the Market Participant s if the IMM is in complete agreement. 7 ISO-NE and the IMM will make that filing pursuant to FPA Section ISO-NE Filing, Prepared Testimony of Matthew C. Brewster and Christopher Geissler on Behalf of ISO New England Inc., at p. 60, Docket No. ER (filed Nov. 30, 2018 ( Brewster/Geissler Testimony. 5 Id. 6 Id. at p Id. at p See ISO New England Inc. Transmission, Markets and Services Tariff, Market Rule 1, III (a. 3

4 III. LIMITED PROTEST NEPGA s protest addresses only the requirement in the Test Price proposal dictating that ISO-NE file the IMM s rather than the Market Participant s Test Price for acceptance by the Commission under FPA Section As NEPGA explained in seeking rehearing of the Commission s recent order accepting a change to a separate mitigation mechanism, 10 and as currently under consideration by the D.C. Circuit, 11 a Retirement De-List Bid is the Market Participant s rate, and it alone is entitled to file that rate for acceptance by the Commission under FPA Section 205. The Test Price likewise is a rate, term or condition of the Market Participant s participation in the FCA. The Test Price is a rate, term, or condition of service in two primary respects. First it is a condition pursuant to which a Market Participant may offer into a Commission-jurisdictional market (the Substitution Auction. The Test Price signals the price at which it believes its FCA offer price should be deemed competitive (as a retirement offer, thus leaving it eligible to participate in the FCA under the Test Price proposal. As ISO-NE explained, the Test Price affects the Market Participant s flexibility with respect to its participation in the substitution auction. 12 If it is a just and reasonable estimate of that competitive offer price, it should stand under FPA Section 205. Second, as ISO-NE further explains, the Test Price (as accepted by the Commission may affect the price at which the Market Participant is willing to assume a Capacity Supply Obligation. As noted above, unlike a Retirement De-List Bid, the Test Price 9 This issue, in the context of ISO-NE asserting authority to file a Retirement De-List Bid for Commission acceptance under FPA Section 205, is currently on appeal before the U.S. Court of Appeals for the District of Columbia ( D.C. Circuit. See Exelon Corporation v. FERC, Case No (D.C. Cir. (opinion pending. 10 Request for Rehearing of the New England Power Generators Association, Inc., at pp. 6-9, Docket No. ER (filed Dec. 10, See Exelon Corporation v. FERC, Case No (D.C. Cir. (opinion pending. 12 Brewster/Geissler Testimony at p

5 does not include any measure of potential Substitution Auction revenues. 13 If a Market Participant reflected those revenues in its de-list bid (thus lowering it all else equal, and subsequently finds that its Test Price makes it unlikely to receive those revenues, its de-list bid may be adjusted accordingly. 14 Though ISO-NE proposes to allow a Market Participant to so adjust its de-list bid, the point is that a Market Participant s estimate of its Test Price may affect its FCA offer price and thus is properly considered part of the Market Participant s rate design with respect to services provided by its own assets. 15 Judicial precedent dictates the relief NEPGA requests. In Atlantic City I 16 and II, 17 the D.C. Circuit considered whether as a condition of participation in the PJM Interconnection RTO a transmission owner could be compelled to forfeit its FPA Section 205 rate filing right for transmission services. To that end, the D.C. Circuit definitively held that FERC lacks the authority to require the utility owners to give up their statutory rights under section The D.C. Circuit explained further that the Section 205 right is to initiate rate design changes with respect to services provided by their own assets. 19 The D.C. Circuit thus confirmed that an asset owner providing services within an ISO/RTO is a utility with Section 205 rate filing rights under the FPA, a designation for which there is no reasonable distinction between transmission owners providing transmission service and generation owners providing capacity Brewster/Geissler Testimony at p Id. at pp Atlantic City Elec. Co. v. FERC, 295 F.3d 1, 10 (D.C. Cir ( Atlantic City I. 16 Atlantic City I, at p Atlantic City Elec. Co. v. FERC, 329 F.3d 856, 859 (D.C. Cir Atlantic City I, at p Id. 20 The Court considered the question of whether an RTO/ISO and asset owner can simultaneously hold rights to file rates, holding that they can. Atlantic City I, at pp

6 As more than one rate can be found to be within the zone of reasonableness, it is the Market Participant s rate that must be filed with the Commission. The IMM, through the ISO, ought not be in the business of setting rates. The role of an IMM is to monitor the energy, capacity and ancillary services markets to identify non-competitive outcomes potentially due to the exercise of market power or manipulative conduct by market participants. The fact that the IMM may calculate a Test Price rate that is slightly lower than the Market Participant s rate does not mean ipso facto that there has been an exercise in market power; the justness and reasonableness of the Market Participant s rate ought to be left to a Commission determination, where the IMM or ISO-NE can challenge whether the Market Participant s filed rate is outside the zone of reasonableness. Put simply, ISO-NE ought not to have the right to file the IMM s estimate of a competitive Test Price as its rate under FPA Section 205. ISO-NE s proposal to file the IMM s estimate of a competitive Test Price as its own rate, term and condition under FPA Section 205 is unlawful and should be rejected by the Commission. If the Commission otherwise finds the Test Price proposal to be just and reasonable, it should order ISO-NE to file the Market Participant-submitted Test Price under FPA Section 205 rather than the IMM s estimated Test Price. IV. CONCLUSION For the reasons explained above, NEPGA respectfully requests that the Commission grant this Motion to Intervene and Limited Protest, and order ISO-NE to file the Market Participant-submitted Test Price as the Market Participant s rate for Commission acceptance under FPA Section

7 Respectfully Submitted, /s/ Bruce Anderson Bruce Anderson Vice President, Market and Regulatory Affairs New England Power Generators Association, Inc. 33 Broad Street, 7 th Floor Boston, MA Tel: Fax: banderson@nepga.org 7

8 CERTIFICATE OF SERVICE I hereby certify that I have served a copy of the comments by via upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Boston, Massachusetts, December 21, /s/ Bruce Anderson Bruce Anderson Vice President, Market and Regulatory Affairs New England Power Generators Association, Inc. 33 Broad St., 7 th Floor Boston, MA Tel: Fax: banderson@nepga.org 8