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Alternative ICAP Proposal

Alternative ICAP Proposal. NSTAR Strategy James Daly Director Electric and Gas Energy Supply (781) 441-8258. What problem are we trying to solve: Reliability. NEPOOL reliability standard is 1 day outage in 10 years Translates to Loss Of Load Expectation (LOLE) = 0.1day/year

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Alternative ICAP Proposal

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  1. Alternative ICAP Proposal NSTAR Strategy James Daly Director Electric and Gas Energy Supply (781) 441-8258

  2. What problem are we trying to solve: Reliability • NEPOOL reliability standard is 1 day outage in 10 years • Translates to Loss Of Load Expectation (LOLE) = 0.1day/year • NEPOOL Installed Reserve is 31% of peak load in 2004-2005 • NEPOOL Required Reserve is 12.4% of peak load in 2004-2005

  3. NEPOOL Load Growth & LOLE Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004

  4. NEPOOL Load Growth: Installed vs. Required Reserves Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004

  5. Boston Area LOLE: Meets criteria over 10 YearsSo does CT Source: ISO Staff “RTEP04 Resource Adequacy Analysis” presentation 03/18/2004

  6. It is not a capacity issue.We have plenty of capacity.It’s an operating reserves issue!

  7. Coalition Alternative Filed at FERC 03/22/2004 • Implement Locational Operating Reserve Market • Ensures that units needed for operating reserve are adequately compensated • Newly implemented region wide Forward Reserves Market cleared at $4.495/kW-month last January • Implement single region-wide ICAP market • NEPOOL historically planned for reliability on a pool wide basis • Integrates transmission planning and operating realities • Compensates all generators for comparable services • Demand curve key points set at: • 100% of Objective Capability, not 106.7% • X-intercept at 112% of Objective Capability, not 118% • Same as NYISO

  8. Coalition Alternative (continued) • Units compensated in the Locational Operating Reserve Market are units needed for: • 2nd contingency reserve coverage • Local voltage support • Or other local operating needs • Existing units receive a transitional payment under cost-of-service type (RMR) agreements • Contract forward for new resources needed for Locational Operating Reserve Market under RFP

  9. Coalition Alternative (Continued) • ISO/NEPOOL provides 3-year notice prior to changing the price signals established in the ICAP demand curve • Participating ICAP resources provide three-year commitment to remain on the system • No delisting allowed • Liquidated damages for failure to perform • ISO approval of maintenance schedule • New generation should be fully integrated into the grid

  10. ISO Vs Coalition Alternative Costs Total 5 Year Costs $M ISO No Cap $2,865 ISO W/ Cap $1,591 ISO Adjusted $597 Coalition Alternative $154

  11. Coalition March 22 filing in support at FERC: • Attorney General of Massachusetts • Attorney General of Rhode Island • Associated Industries of Massachusetts • Massachusetts Division of Energy Resources • New Hampshire Office of Consumer Advocate • NSTAR Electric And Gas Corporation • National Grid USA • Rhode Island Division of Public Utilities and Carriers • Strategic Energy LLC (in part) • Vermont Electric Power Company (in part) Filed separately but supporting in part: • Connecticut Department of Public Utility Control • Connecticut Office of Consumer Counsel

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