The US Federal Energy Regulatory Commission Wednesday conditionally approved the New England Independent System Operator (ISO) proposal for transmission congestion management.
The proposed congestion management system will become more market-responsive, the commission said. In addition, FERC said appropriate price signals will give generators incentives to locate in suitable areas and will make it easier to meet load requirements at a minimum cost.
However, FERC complained the16 to 24 months the ISO says it needs to implement the new plan is too long. The commissioners gave the New England ISO, which runs the power grid and administers the wholesale electric power market for a six-state region, 30 days to explain why the new procedures will not be ready by February 2001.
The congestion management plan includes three-part bids for the day-ahead energy market and requires the ISO to allow self scheduling of energy services and availability bids for 10-min spinning reserves. FERC approved the ISO's plan for 4-hour non-spinning reserves and virtual demand bidding.
The ISO currently operates six bid-based markets in real-time�buyers pay sellers on real-time transactions. The conditional order also allows termination of the installed capability (ICAP) market Aug. 1, 2000, and allows the New England ISO to determine administrative penalties for ICAP deficiencies.
In filings to terminate ICAP, ISO New England CEO Philip Pelligrino said the ICAP market was initially designed to help ensure long-term electric grid reliability by providing a price signal for the construction or retention of generating capacity in New England.
But the ISO contended bids submitted for significant amounts of installed capability in January 2000 and subsequent months represented a pattern of behavior consistent with an intentional or systematic effort to raise the market clearing prices.