Posted on February 6th, 2014 by

When you walk in a room and flip the switch, it’s good to know that the light will turn on – as it will tomorrow, next week, next year, in five years.  That’s the goal of the forward capacity market.  It’s a way to guarantee that the power we need will be there several years from now.

Every year, the region’s grid operator, ISO-New England, estimates how much power we’ll need three years down the road.  The ISO holds a Forward Capacity Market (FCM) auction where power generators and developers bid to supply electricity, a.k.a “capacity,” to meet that future customer demand.  Up until now, each FCM auction has yielded a surplus of capacity – more than enough to meet that anticipated demand – but that has changed dramatically.

For the first time since the auction started, New England is looking at a shortfall. This week’s regional FCM auction ended with a slight shortfall from power generators to meet the expected demand for capacity in 2017.

“The region abruptly went from a capacity surplus and low prices in previous auctions to a capacity shortfall and relatively high prices,” said Gordon Van Welie CEO of ISO-New England, in announcing the auction results. “The slim capacity margin and the resulting auction prices are a clear signal to the marketplace that the region needs more power generation and demand reduction capacity.”

From a Northern Pass perspective, the FCM auction’s shortfall is the latest and perhaps most significant sign of the major energy challenges facing New England. Driving those challenges is the planned retirement of about 10 percent of the region’s power generation capacity. This includes the announced closings of various power generators in Connecticut, Massachusetts, and Vermont, and the likely retirement of even more. In fact, ISO New England has projected that the region needs about 6,000 megawatts of new sources of energy to ensure we’ll have enough to meet demand.

The need for new sources of clean, low-cost energy, like that of the Northern Pass, is strikingly clear. No other proposal in New England is as far along as the Northern Pass is to delivering 1,200 megawatts of energy that will help meet our future needs.  The project will also add critical fuel diversity to New England, which currently relies on natural gas to produce more than half its power, making the region vulnerable to supply constraints and price fluctuations.

The energy exists – clean, renewable Canadian hydropower. Northern Pass can bring it to the grid; and, today it’s clear we need that to happen as soon as possible.


Posted on February 6th, 2014 by

Posted In: Need, Uncategorized, Updates