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Market Response to Winter 2013-2014

Explore the market response and investment in the New England energy sector following the winter of 2013-2014. Learn about the key elements of pay-for-performance and the challenges and opportunities in the current market design.

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Market Response to Winter 2013-2014

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  1. Market Response to Winter 2013-2014 Dupont Group Energy Summit New England Power Generators Association Carol J. Holahan, Esq. October 5, 2015

  2. Who is NEPGA • The trade association representing competitive electric generators in New England • Our member plants represent 25,000 MW – or 80% – of all New England generating capacity • Our core mission is to promote sound energy policies which will further economic development, jobs & balanced environmental policy NEPGA is a regional trade association representing a diverse portfolio of plants, including natural gas, oil, coal, hydro, nuclear, and other renewable resources.

  3. PAY FOR PERFORMANCE: KEY ELEMENTS • New capacity market design that first took effect in FCA 9, corresponding to the June 1, 2018 – June 1, 2019 capacity delivery period. • Intended to incent resources to make the capital and O&M investments necessary to improve resource performance. • Resources that clear the base Forward Capacity Auction will be penalized if they fail to deliver during times of system stress, with no excuse for non-performance. • A resource-neutral structure that allows all resources to compete.

  4. MARKET RESPONSE-- INVESTMENT • INFLUX OF INVESTMENT CAPITAL INTO THE REGION AS A RESULT OF THE OPEN, COMPETITIVE MARKET STRUCTURES IN PLACE • CURRENTLY MORE THAN 90 MARKET-BASED PROJECTS TOTALING APPROXIMATELY 1,300 MW PENDING WITH ISO-NE • APPROXIMATELY 8,500 MW OF NEW RESOURCES WERE QUALIFIED FOR THE MOST RECENT FORWARD CAPACITY AUCTION

  5. Generation Investments • Capacity Auction Responses – 1,700 MW of new plants have cleared in recent capacity auctions beginning delivery in 2017 – 16,000 MW of new plants have expressed an interest in next auction • Interconnection Queue – Over 13,000 MW currently in ISO-NE interconnection queue, only 6,000 MW in 2014 • We’ve Done This Before –In the years following restructuring over 13,000 MW of new merchant generation was built in New England

  6. SOME EXAMPLES OF NEW GENERATION • EXELON—MEDWAY, MA—195 MW • FOOTPRINT—SALEM, MA—700 MW • CPV—OXFORD, CT—700 MW • LS POWER—WALLINGFORD, CT—150 MW • EMERA—TIVERTON, RI—22 MW • NRG–CANAL, SANDWICH, MA—330 MW • DEEPWATER WIND--BLOCK ISLAND, RI--30 MW • INVENERGY—BURRILLSVILLE, RI—900 MW

  7. The Markets Today • Tight Supply – Power plants being retired, new plants being built and concerns of natural gas supply infrastructure • Winter Volatility – Following price spikes in 2013/2014, major influx of LNG and improved generator performance drove 2014/2015 winter price reductions • Changing Market Design – FCM Pay-for-Performance and major energy market pricing changes

  8. The Markets Today • Limited Demand Growth — Increase energy efficiency and demand response programs limiting load growth • Environmental--Carbon Mandates – State environmental regimes raising questions on future supply mix and increase in renewable energy requirements • Siting—Regulatory Uncertainty – Protracted and expensive process for siting of any new generation facility • Technology and Innovation Driving Market – Developments with storage and other technologies will affect market

  9. Questions? www.NEPGA.org Follow us on Twitter – @_NEPGA

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