NESCOE Report Advances Governors’ Demands for Climate Leadership at ISO-NE

Foley Hoag LLP - Energy and Cleantech Counsel
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Foley Hoag LLP - Energy and Cleantech Counsel

The managers of the New England States Committee on Electricity (“NESCOE”) recently released a report (“Report”) to New England’s governors to advance its shared vision for a clean, affordable, and reliable 21st-century electric grid. The Report is the latest development that highlights the growing tension between the states’ decarbonization policies on the one hand, and ISO-NE’s wholesale market rules, on the other. The Report calls for critical changes to three elements of New England’s regional energy system: wholesale market design, transmission planning, and ISO-NE governance. According to the Report, failure to make significant changes to these key system elements will continue to hinder, if not prevent, the New England states from reaching their decarbonization goals.

NESCOE’s Report is not unexpected. In October 2020, five of New England’s governors issued a joint statement demanding changes from ISO-NE. The governors sent a clear message that the status quo at ISO-NE is a substantial barrier to their states’ clean energy goals: “going forward, we require a regional electricity system operator and planner that is a committed partner in our decarbonization efforts.” Shortly thereafter, NESCOE published a visioning document, expanding the governors’ statement.

NESCOE’s Report refines that vision and is the product of technical forums and stakeholder comments collected since October. For each of the three elements–wholesale market design, transmission planning, and ISO-NE governance–the Report provides a summary, a status on current activity, and recommendations. A high-level summary of these recommendations, and recommendations concerning equity and environmental justice, are provided below.

Recommendations for Wholesale Electricity Market Design

  • Continue to engage with ISO-NE studies and discussions related to various potential market structure reforms. Potential reforms referenced in the report include establishing a forward clean energy market–a centralized auction for clean energy attribute procurement on a forward basis–or a net carbon pricing framework.
  • Explore potential new energy and ancillary service market mechanisms to allow for reliable and cost-effective integration of large amounts of renewable energy resources.
  • Engage in the process to phase out or replace the Minimum Offer Price Rule (MOPR). Advocates say that the MOPR prevents state sponsored resources from clearing the Forward Capacity Market. (Several regional transmission operators, including ISO-NE and PJM, are actively considering changes to the MOPR).

Recommendations for Transmission Planning

  • Contribute to ISO-NE’s 2050 Transmission Study–announced in response to the October visioning document–that will inform transmission needs and costs necessary to meet decarbonization goals.
  • Reform ISO-NE’s transmission planning tariff on a timely basis, implement a state-led, scenario-based planning process inclusive of state mandates.
  • Engage and shape other transmission planning reform efforts, including ISO-NE’s rules for evaluating major transmission projects and interconnection processes.

Recommendations for ISO-NE Governance

  • Enhance transparency and accountability at ISO-NE and adopt several best practices and governance reforms related to consumer responsiveness, public meetings, level of detail in board reports, the organization’s mission statement, and board composition.

Recommendations for Equity and Environmental Justice

  • Create a working group of state officials with policy, permitting, siting, and regulatory authority to identify barriers to integrating individual states’ environmental justice considerations into regional planning.
  • Facilitate transparency and accessibility at ISO-NE by supplementing Planning Advisory Committee meeting materials and other major documents with summaries written in non-technical language.

NESCOE’s Report proposes a path forward and calls for collaboration among all key stakeholders in the generation, transmission and distribution of energy in the region, namely, the states, the regional transmission operator, ISO-NE, the Federal Energy Regulatory Commission (FERC), and NEPOOL, the voluntary association of wholesale market participants. Whether NESCOE’s Report will result in necessary market design changes at ISO-NE, get the necessary buy-in from stakeholders, or receive FERC’s endorsement, remains to be seen. What is clear, however, is that individual stakeholders acting alone cannot bring about the changes necessary to green the grid. NESCOE closes the Report with an optimistic tone: “This report is another step toward the significant work we need to execute collaboratively… for the public we all serve.”

*This article was also written by Foley Hoag summer associate, Joshua Rosen.

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