Effective June 1, ISO-NE implemented a number of changes to its
market rules, systems, and procedures related to the operation of
the regional wholesale electricity markets. The most significant of
these changes include:
- the Forward Capacity Market Pay for
Performance initiative ("PFP"); and
- the Price-Responsive Demand (PRD)
structure.
The two programs, released simultaneously earlier this month,
will affect both traditional generation resources and demand
response resources alike.
Through the PFP project, ISO-NE seeks "to increase
financial incentives for resource owners to make investments to
ensure their resource's reliability during periods of
scarcity." PFP creates a two-tiered settlement process where a
resource's capacity revenue is calculated based on the forward
capacity auction prices and an additional capacity performance
adjustment, namely a payment or a penalty. While the formula for
determining the ultimate
