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May 4, 2010 Via Hand Delivery the Honorable Kimberly D. Bose

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May 4, 2010 Via Hand Delivery the Honorable Kimberly D. Bose TREET UITE 1666 K S N.W., S 300 WASHINGTON, DC 20006 t 202.778.6400 Sherry A. Quirk f 202.778.6460 202/778-6475 [email protected] www.schiffhardin.com May 4, 2010 Via Hand Delivery The Honorable Kimberly D. Bose, Secretary The Honorable Nathaniel J. Davis, Sr., Deputy Secretary Federal Energy Regulatory Commission Room 1A-East, First Floor 888 First Street, N.E. Washington, D.C. 20426 Re: ISO New England Inc., Docket No. ER10-___-000 Informational Filing for Qualification in the Forward Capacity Market Dear Secretary Bose and Deputy Secretary Davis: Pursuant to Section III.13.8.1 of the ISO New England Transmission, Markets and Services Tariff (the “Tariff”),1 ISO New England Inc. (the “ISO”) hereby submits an original and five public, redacted copies of this informational filing for qualification in the Forward Capacity Market (“Informational Filing”) for the 2013-2014 Capacity Commitment Period.2 Also attached is one original of a confidential version of this filing, for which the ISO seeks privileged treatment, as discussed further below. The Tariff allows parties to comment on or challenge determinations provided in the Informational Filing. Pursuant to Tariff Section III.13.8.1(b), any comments or challenges to the ISO’s determinations must be filed with the Federal Energy Regulatory Commission (“FERC” or “Commission”) no later than 15 days from the date of the Informational Filing. Accordingly, the ISO requests that the Commission issue a notice requiring that any comments or protests be filed on or before May 19, 2010. In accordance with Tariff Section III.13.8.1(b), if the Commission does not issue an Order within 75 days after the date of this filing directing otherwise, the determinations described in the Informational Filing and any elections pursuant to Tariff Section III.13.1.2.3.2.1.1 shall be used in conducting the fourth Forward Capacity 1 Capitalized terms used but not otherwise defined in this filing have the meanings ascribed thereto in the Tariff, the Second Restated New England Power Pool Agreement, and the Participants Agreement. 2 The rules governing the FCA are primarily contained in Section III.13 of the Tariff, but also may include other provisions, including portions of Section III.12 (Calculation of Capacity Requirements) and portions of Section I.2.2 (Definitions). CHICAGO | WASHINGTON | NEW YORK | LAKE FOREST | ATLANTA | SAN FRANCISCO Auction (“FCA”), which will be held beginning on August 2, 2010, and will procure the needed capacity for the six state New England Control Area for the 2013-2014 Capacity Commitment Period. This Informational Filing details determinations made by the ISO with respect to that FCA and provides supporting documentation for such determinations. In this filing, as appropriate, the ISO utilized revised tariff provisions that were filed on February 22, 20103 and accepted by the Commission in an Order issued April 23, 2010 (“FCM Revisions Order”).4 For de-list bids rejected by the Internal Market Monitor (“IMM”), the Informational Filing includes the IMM’s determination of the resource’s net risk-adjusted going forward and opportunity costs (“NRAGFC”).5 A resource with a rejected de-list bid may elect to have the ISO determined bid entered into the FCA by so indicating in a filing with the Commission.6 No later than 15 days from the date of this Informational Filing, Lead Market Participants must notify the ISO of an election to participate in the FCA using the IMM’s determined bid price.7 A resource that elects to have the IMM’s determined bid price entered into the auction is prohibited from challenging that determination.8 I. COMMUNICATIONS The ISO is the private, non-profit entity that serves as the regional transmission organization (“RTO”) for New England. The ISO operates the New England bulk power system and administers New England’s organized wholesale electricity market pursuant to the ISO New England Transmission, Markets and Services Tariff and the Transmission Operating Agreement with the New England Participating Transmission Owners. All correspondence and communications in this proceeding should be addressed to the undersigned as follows: 3 See ISO New England Inc. and New England Power Pool, Various Revisions to FCM Rules Related to FCM Redesign, Docket No. ER10-787-000 (filed February 22, 2010) (“February 22 Filing”), Transmittal Letter at pp. 24-26. 4 Order On Forward Capacity Market Revisions and Related Complaints, 113 FERC ¶ 61,065 (2010) at PP 16,108. 5 Section III.13.1.2.3.2.1.1 of the Tariff. 6 Id. 7 Section III.13.8.1(b) of the Tariff. 8 Section III.13.1.2.3.2.1.1 of the Tariff. 2 Raymond W. Hepper, Esq. Sherry A. Quirk, Esq.* Kevin W. Flynn, Esq.* Monica M. Berry, Esq. ISO New England Inc. Schiff Hardin LLP One Sullivan Road 1666 K St., NW, Ste. 300 Holyoke, MA 01040-2841 Washington, D.C. 20006 Tel: (413) 535-4177 Tel: (202) 778-6475 Fax: (413) 535-4379 Fax: (202) 778-6460 E-mail:[email protected] E-mail:[email protected] [email protected] [email protected] *Persons designated for service II. II. BACKGROUND AND OVERVIEW To provide interested parties the opportunity to comment upon and the Commission the opportunity to review the ISO’s fulfillment of its responsibilities prior to the fourth FCA, the Tariff requires the ISO to make a filing setting forth specific information related to the FCA.9 The Informational Filing is to include the locational capacity requirements of the fourth FCA based upon the topology of the transmission system, and specifically whether Capacity Zones are to be modeled in the auction. The Tariff also requires the ISO to determine the appropriate Capacity Values for Demand Resources, as well as specify the resources accepted or rejected in the qualification process for participation in the fourth FCA. The ISO has reviewed all resources participating in the fourth FCA. These include Existing and New Generating Capacity Resources,10 Import Capacity Resources and Demand Resources.11 Pursuant to the Tariff, the Informational Filing must include the results of the IMM’s review of certain offers and bids, e.g., Existing Generating Capacity Resources that seek to permanently or statically de-list above 1.25 times the Cost of New Entry (“CONE”)12 and 0.8 times CONE,13 respectively, and new resources 9 Section III.13.8.1(a) of the Tariff. The Commission approved the Informational Filing for the third FCA in a September 18, 2009 Order. See Order on Informational Filing, 128 FERC ¶ 61,266 (2009), reh’g denied, 130 FERC ¶ 61,108 (2010) (“Third FCA Informational Filing Order”). 10 As appropriate, in accordance with Tariff Section III.13.2.3.2(f) new generating resource totals include conditionally qualified resources. 11 Values in this filing are represented in FCA Qualified Capacity (“FCA QC”) megawatts. Resources were required to submit Financial Assurance by April 27, 2010. Resources that have not submitted Financial Assurance have five business days (until May 4, 2010) to submit Financial Assurance. Due to timing, resources represented in this filing may not yet have submitted their required Financial Assurance. 12 For the fourth FCA, CONE is $4.918 /kW- month. 3 that seek to offer below 0.75 times CONE. Further, the Tariff sets forth a specific process for review of the offers and bids submitted by various types of resources. This filing is the ISO’s fulfillment of these requirements. The Tariff requires the Informational Filing to include the transmission interface limits used in the process of selecting which Capacity Zones shall be modeled in the fourth FCA; which existing and proposed transmission lines the ISO determines will be in service by the start of the 2013-2014 Capacity Commitment Period; the expected amount of installed capacity in each modeled Capacity Zone during the 2013-2014 Capacity Commitment Period; the Local Sourcing Requirement for each modeled import- constrained Capacity Zone; and the Maximum Capacity Limit for each modeled export- constrained Capacity Zone. In accordance with the Tariff, the ISO has made specific determinations with regard to the Capacity Zones. In particular, the ISO has determined that given the Local Sourcing Requirements and the capacity located in each zone, there are no import- constrained zones, and therefore no binding Local Sourcing Requirements before execution of the FCA.14 Given potential export constraints, however, the ISO determined that Maine should be modeled as a separate, export-constrained zone, resulting in two Capacity Zones for the fourth FCA: Maine and Rest of Pool.15 The Rest of Pool Capacity Zone includes Massachusetts, Connecticut, Vermont, New Hampshire, and Rhode Island. The Tariff also requires that the Informational Filing include the loss multiplier used to derive the Capacity Value for Demand Resources.16 For the fourth FCA, this multiplier is 1.08. In addition, the Tariff requires new resources, whether generation, import, or demand, to demonstrate that they will be in commercial operation by the beginning of the relevant Capacity Commitment Period. The Tariff also requires Project Sponsors of New Generating Capacity Resources to submit in their New Capacity Qualification Packages sufficient information about each project so that the ISO can perform an interconnection study to ensure that, if selected, the project can interconnect and provide incremental capacity to the system. The interconnection study includes an analysis to determine whether the New Generating Capacity Resources have overlapping interconnection impacts with other New or Existing Generating Capacity Resources. This Informational Filing details the new resources that have qualified to offer in the fourth FCA and provides a detailed discussion of resources that the ISO has disqualified and the reasons therefore.
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