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June 2015

June 2015. Henry Yoshimura. Director, Demand Resource Strategy. Proposed Tariff and Manual Changes to Delay the Full Integration of Demand Response into the Wholesale Markets by One Year. The Future of Demand Response in New England’s Wholesale Markets. Background.

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June 2015

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  1. June 2015 Henry Yoshimura Director, Demand Resource Strategy Proposed Tariff and Manual Changes to Delay the Full Integration of Demand Response into the Wholesale Markets by One Year The Future of Demand Response in New England’s Wholesale Markets

  2. Background Why delay the full integration of demand response into the energy and reserves markets?

  3. Background: Legal Challenges Create Uncertainty for Demand Response • March 15, 2011 • FERC issues Order 745 requiring payment of the locational marginal energy price to demand response • May 23, 2014 • DC Circuit Court vacates Order745 • Notably, the court rules that demand response is exclusively within the state’s jurisdiction • January 15, 2015 • Solicitor General and FERC file with Supreme Court to review DC Circuit Court decision • May 4, 2015 • Supreme Court grants writ of certiorari • May 6, 2015 • ISO and Markets Committee discuss contingency options should FERC lose jurisdiction over demand response

  4. Demand Response Full Integration Must be Delayed • The Supreme Court’s final ruling will likely be issued by June 2016 • The current ISO Tariff requires that demand response be fully integrated into the energy and reserve markets on June 1, 2017 • At minimum, full integration of demand response into the energy and reserve markets requires a two-year implementation • If the ISO moved forward to meet the current June 1, 2017 deadline, substantial resources would be wasted if the Supreme Court ultimately upholds the DC Circuit’s decision in EPSA v. FERC (“EPSA”) • Prudent resource management requires that the ISO delay full-integration implementation until there is more certainty

  5. Market Rule Changes Needed for a One-Year Delay • A one-year delay in the implementation of full integration is needed given uncertainty in the outcome of the legal and regulatory processes • Since a Supreme Court decision is likely by June 2016, a one-year delay should give the ISO sufficient time to implement full integration by June 2018 if EPSA is reversed • If EPSA is upheld, the delay would have avoided an unnecessary expenditure of resources, and would give the ISO and NEPOOL time to develop an alternative approach to demand response • A series of market rule changes are needed to realize a one-year delay in the implementation of full integration from June 1, 2017 to June 1, 2018

  6. Description of Proposed Tariff and Manual Changes

  7. Changes to Extend the Currently Effective Rules • Market rule and manual changes are needed to extend the currently effective rules for Real-Time Demand Response Resources to apply to the 8th Capacity Commitment Period – i.e., June 1, 2017 through May 31, 2018 • The date June 1, 2017 needs to be changed to June 1, 2018. For example: • Appendix E1, which currently applies to Capacity Commitment Periods commencing prior to June 1, 2017, will be changed to apply to Capacity Commitment Periods commencing prior to June 1, 2018 • Appendix E2, which currently applies to Capacity Commitment Periods commencing on or after June 1, 2017, will be changed to apply to Capacity Commitment Periods commencing on or after June 1, 2018 • Similar date changes as that described above must be made to 12 sections of the Tariff and to Manual M-11

  8. Changes to Apply the Real-Time Demand Response Rules to Demand Response Capacity Resources • By delaying full integration by one year, the market rules and manuals applicable to Demand Response Capacity Resources that cleared FCA 8 for the 8th Capacity Commitment Period must be clarified • A Demand Response Capacity Resource that cleared FCA 8 will be treated as a Real-Time Demand Response Resource during the 8th Capacity Commitment Period • For example, Section III.13.1.4.1 must be modified to treat a Demand Response Capacity Resource as a Real-Time Demand Response Resource for any Capacity Commitment Period commencing prior to full integration • Presently, the market rules for Real-Time Demand Response Resources would be applied to a Demand Response Capacity Resource with an early Commercial Operation Date prior to full integration • As a result of treating Demand Response Capacity Resources as Real-Time Demand Response Resources, changes must be made to avoid the application of the Shortage Event construct to Demand Response Capacity Resources • Changes to 13 sections of the Tariff and to Manual M-20 must be made

  9. Proposed Schedule

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