NECPUC Says Disqualification of Energy Efficiency Resources from FCA to Raise Retail Electric Rates

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A determination by the ISO New England Internal Market Monitoring Unit that 151 MW of new energy efficiency resources resulting from state sponsored programs, which had sought to bid into the fifth Forward Capacity Auction, are out of market could result in hundreds of millions of dollar in additional costs for load unless the determination is corrected, the New England Conference of Public Utilities Commissioners said in a protest at FERC (ER11-3034).

A total of 254 new MW from state-approved energy efficiency programs had sought to offer as new resources in the Forward Capacity Auction, but the Internal Market Monitoring Unit categorized 151 MW, or close to 60%, as Out of Market (OOM), which could trigger the alternative minimum price rule.

"[J]ust over 151 MWs of cost-effective energy efficiency resources were classified as OOM while 103 MWs of virtually identical programs were determined In-Market. The only logical explanation is that information was not provided, was provided incorrectly or not in the form the IMMU requires, or was not understood by the IMMU," NECPUC said.

NECPUC noted that the Internal Market Monitoring Unit has stated that its analysis of whether the efficiency resources are in-market includes a determination of whether, "the program's benefits exceeded their costs," and that, "the appropriate way to determine whether a resource is in market or out of market is to determine whether it is cost effective."

NECPUC said that New England's state regulatory commissions, "have not only deemed these programs cost-effective, but have found cost/benefit ratios as high as three to one."

"Nonetheless, the IMMU has determined for FCA#5 that some state-approved energy efficiency programs are In-Market Capacity ("In-Market") while other, virtually identical state-approved programs are OOM. While there are some differences in the criteria used by ISO-NE and the states to determine cost-effectiveness, the inconsistencies in the IMMU's determinations evidence that state-sponsored energy efficiency resources classified as OOM have been misclassified," NECPUC said.

NECPUC asked FERC to correct the market monitor's determinations, because otherwise additional costs would be passed onto customers. "Not only would passing on such costs to consumers be unjust and unreasonable, but the possibility that programs achieving energy savings could have the effect of increasing the cost of power is counter to the core principles guiding our state-sponsored programs," NECPUC said.

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