How Does ISO-NE Effect My Costs In NH? Answer: More than you realize. I’ll let them explain it briefly below.
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From their website:
Reliable Electricity, Competitive Prices
ISO New England is the independent, not-for-profit company authorized by the Federal Energy Regulatory Commission (FERC) to perform three critical, complex, interconnected roles for the region spanning Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and most of Maine. Together, these three responsibilities help protect the health of the region’s economy and the well-being of its people by ensuring the constant availability of competitively-priced wholesale electricity—today and for future generation.
Grid operation:
Every minute of every day, we coordinate and direct the flow of electricity over the region’s high-voltage transmission system.
Market administration:
We design, run, and oversee the billion-dollar markets where wholesale electricity is bought and sold.
Power system planning:
We do the studies, analyses, and planning to make sure New England’s electricity needs will be met over the next 10 years.
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Sometimes FERC will take issue with how the a grid operator is conducting business if they see a problem., as they did last year regarding high transmission costs in ISO-NE:
“In an order issued on Dec. 28, FERC commissioners wrote that New England transmission rates appear to be “unjust, unreasonable and unduly discriminatory or preferential” and called for an investigation. – See more at: http://www.unionleader.com/apps/pbcs.dll/article?AID=/20160110/NEWS05/160119977#sthash.rMDJxD7R.dpuf”
In Vol 2 we made note of Eversource Energy’s recent Q3 2016 Earnings Call where they reported that their “primary driver of the earnings growth is a higher transmission rate base” which accounted for a total of $271 M of their $713 M earnings year to date ( approx 38%). Clearly transmission costs have become very high in the ISO-NE region under ISO-NE’s watch ……. so much so that the FERC had to launch an investigation. At the same time, income from transmission assets have added a significant increase to utility company net earnings.
It is not as if ISO-NE is a consumer driven operation, so don’t automatically think that the system operator’s mission is to just stand with the financial interests of electrical energy consumers on the grid. That’s not to charge them with doing a bad job, just don’t confuse them with being a Consumer Advocate for the region. After all, they are the New England Regional Operator, and as we outlined in Vol 2, New England has high energy costs by virtue of location and lack of natural resources. Also, as we pointed out in Vol 1 of this series, ISO-NE has already baked increased energy capacity cost into the system operation through the forward capacity auction system that now extends as far out as 2020 and that will soon occur again in 2017 for 2020-2021. The good news is the 2016 auction yielded better pricing for 2020 than it did for 2019. The bad news is that the higher capacity prices in 2017-2019 are already fixed and won’t go away…… another reason for businesses to take action now (see Vol 1). The 2020 costs are lower than 2019, but not back down to 2016 levels, so I’m telling you right now that your total electrical energy costs over the next four years (2017-2020) are guaranteed to be higher than what you just spent in 2016 (subject to major weather differences and energy use) just due to capacity costs increases alone ….. and fuel costs in 2016 were low on a relative basis, so don’t look for relief on that side of the equation.
As consumers, businesses can shop for the best price on the supply of fuel and electricity (energy only). However, when it comes to the delivery of it (we are talking about electricity and natural gas here) you are working with monopolies. The higher the fixed costs of delivery (electrical transmission and distribution grids, and gas pipelines), the less you can lower the total cost of supply by only shopping the energy supply side. Spend some time with your facilities manager and your energy providers to understand your bill and see what you are paying for ……… then look at options to reduce some of the fixed cost of delivery (see Vol 1) by using less of it or replacing some of it with your own. Also, if you are a big natural gas consumer, explore options for winter use of on site LNG to combat fuel cost spikes.
If you want to know more about ISO-NE and what the status of the regional grid looks like, download their REO (2016 Regional Electricity Outlook) report and dive into it. It is very informative.
UPDATED 2-14-17: Good news on the capacity front. ISO-NE’s 2017 forward capacity auction was just completed (FCA#11) and system resources needed for 2020-2021 not only were easily filled, but the resulting system wide clearing price of $5.30 per kilowatt-month was lower than the previous auction (FCA#10 @ of $7.03/kw-month), which is the lowest clearing price since the floor price was eliminated in the 2013 auction. Just remember, those lower prices don’t start until sometime in 2020.
