ISO New England – Capacity Market Evolution

It was only six months ago that we last wrote about ISO-NE’s Forward Capacity Market (FCM) and its efforts to adopt the true availability of generation resources - not just during the summer period but throughout the year - under a project called Resource Capacity Accreditation (RCA). 

Much has transpired since then, but let’s pick up where we left off. In the last article, we talked about the ISO delaying its next auction to ensure RCA would be implemented correctly in the next Forward Capacity Auction (FCA). The ISO held its last auction, FCA 18, back in February 2024 for the Capacity Commitment Period (CCP) June 1, 2027, through May 31, 2028. FCA 19 was originally scheduled for February 2025, but with the implementation of RCA, the auction was pushed back until at least February 2026. 

However, things have taken a new twist. The ISO is now proposing a Capacity Auction Reform (CAR) that would impact FCA 19. The CAR seeks to transition the current forward capacity market from a forward/annual market to a prompt/seasonal market, while implementing various accreditation reforms. This transition would move the ISO away from setting capacity prices with a three-year outlook (leaving PJM as the only ISO providing such visibility), to one that is closer to how NYISO has structured its capacity market. 

Under the proposed reform, three primary components would be in place for the next CCP starting June 1, 2028. 

• Prompt Auction: Rather than taking place three years in advance, the capacity auction would take place shortly before the capacity commitment period, reflecting more accurate information about projected electricity supply and demand. 
• Seasonal CCP: The CCP would change from annual to sub-annual (seasonal) commitment periods to better address the distinct reliability challenges of winter and summer, as well as variations in resource performance from season to season. 
• Summer CCP – May 1 to October 31  
• Winter CCP – November 1 to April 30   
• Accreditation Reforms: Capacity accreditation methodologies would be updated to reflect evolving resources’ capabilities and how those capabilities contribute to resource adequacy. 

Continuing the work started on RCA, updated accreditation standards will determine how much capacity each resource may offer into the market. Those standards remain in development, and the ISO’s proposals will be presented to stakeholders beginning later this year. 

The CAR also seeks to change the way in which resources enter and exit the capacity market. The current process requires a resource to notify the ISO more than four years prior to exit, with the proposed new process shortening the notification period to two years. The review process would remain in place to deter attempts at market manipulation and safeguard against deactivations that jeopardize transmission security. The shorter notification period is intended to balance the time needed for the ISO to complete its reviews and for market participants to react to deactivation decisions. 

The ISO anticipates proposing its reforms to FERC in two filings: the first, addressing the deactivation process and the “prompt” aspects of the auction schedule, is targeted for the fourth quarter of 2025. Resource accreditation and the seasonal aspects of the auction schedule would be addressed in a second filing, planned for the fourth quarter of 2026.    

Stay tuned for further updates as the ISO continues to evolve and work through the reform of New England’s capacity market.