New England grid may redraw capacity zones

OREANDA-NEWS. The operator of New England's electric grid might adjust the planning parameters used for the annual forward capacity auctions so it can account for recent generator retirements and transmission upgrades.

The proposed changes to inner capacity zone boundaries would provide a stronger price signal to build or retain generation near load centers in eastern Massachusetts and Rhode Island, while creating a disincentive to building capacity in export-constrained northern states. The region's grid operator identified the boundary changes yesterday in a filing with the Federal Energy Regulatory Commission (FERC).

New England's grid buys capacity to meet expected load three years in advance through capacity auctions, but transmission constraints can cause different zones identified ahead of the auction to clear at differing prices. Creating a capacity zone requires FERC to first approve the boundaries of a zone, after the grid operator decides whether to model them as separate zones in the auction.

The grid's latest forward capacity auction for power delivered in 2018-19 split the grid into four zones: northeast Massachusetts, southeast Massachusetts and Rhode Island, Connecticut and the rest of the pool. Most capacity cleared at \$9.55/kW-month, but a lack of capacity in the import-constrained southeast Massachusetts and Rhode Island zone pushed prices to \$11.08/kW-month.

For next year's capacity auction, the grid wants to combine northeast Massachusetts, southeast Massachusetts and Rhode Island into an import-constrained area called the Southeast New England capacity zone. Grid planners found transmission constraints caused the entire area to act like a single zone so that new capacity built in the zone would relieve capacity shortages.

The second potential change would merge Maine, New Hampshire and Vermont into an export-constrained area called the Northern New England capacity zone. The grid operator wants the change because of an increase in flows on a constrained north-to-south interface that is expected because of the retirement last year of the 605MW Yankee Vermont nuclear plant in Vermont and the planned retirement in 2017 of the 1,500MW Brayton Point coal plant in Massachusetts.

New England's grid operator has asked FERC to accept the potential capacity zone boundaries by 29 May.