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Cost Treatment for Fuel Security

Cost Treatment for Fuel Security. Maine’s Proposal July 31 2018 Markets Committee meeting. Topics Covered Today. Remedies to a Finding of Need Cost Allocation Alternatives Ability to Assist Cost causation. Remedies to a finding of need. Competitive RFP

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Cost Treatment for Fuel Security

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  1. Cost Treatment for Fuel Security Maine’s Proposal July 31 2018 Markets Committee meeting.

  2. Topics Covered Today • Remedies to a Finding of Need • Cost Allocation Alternatives • Ability to Assist • Cost causation

  3. Remedies to a finding of need • Competitive RFP • Fuel security analysis reveals the expected unserved energy in MWh • ISO conducts the analysis and issues a competitive RFP for the unserved energy during the 3 month period of the IMM Retirement and Permanent De-List Bid Review Window. • Lowest competitive bid is compared to the RMR Cost of Service contract. • If RFP provides a lower cost remedy, unit retires • Limited Cost of Service Contracts • If RMR is determined to cost less; • Should only require a 3 month exposure to the PPR incentives • Should not require any operations during the non-winter period

  4. Cost allocation • Allocate costs to network load • Allocate costs to load zones either; • According to ability to assist, or • Cost causation principles

  5. Cost allocation – Ability to assist • During a fuel security challenge, all units with a CSO will be expected to operate, but with all due respect to ISO not all units will be able to deliver. There are transmission constraints.

  6. Ability to Assist • The chart matches hourly Maine loads for the 2014-2015 OFSA study period with Maine resources and Imports cleared in FCA 12. • For 96% of the hours shown here, no relief could be provided from Maine resources to relieve a fuel security constraint south of the ME-NH interface. • Loads are actually declining, several projects in the interconnection queue would boost Maine’s qualified capacity levels, and ISO has modelled Maine as a separate zone for FCA 13. There is every reason to believe that there may not be any relief available from Maine resources.

  7. Cost allocation – Cost causation principles • Regional allocation may not be appropriate for a generic load ratio share allocation. • Unit specifics can matter • For example, Mystic has been retained for transmission security purposes. If units 8 and 9 are utilized for transmission security purposes during non-winter months, the allocation should respect this. • Allocate by zones according to cost causation or beneficiary pays. • Locational price signals can be useful for more than just transmission congestion • ISO-NE and the Commission both agreed cost causation principles support local allocation. “Allocation of RMR costs to local reliability areas is consistent with the principle that efficiency is enhanced when entities that cause costs to be incurred pay these costs…” New England Power Pool and ISO New England, Inc. 100 FERC ¶ 61,287 at P.61 (citations omitted) (2002).

  8. Questions?

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