{"document":{"slug":"report-el26-72-isone","title":"ISO-NE reports on resource adequacy and large-load proposals","issued":"2026-07-20","accession":"20260720-5216","docket":"EL26-72-000","group":"ISO-NE filings","filer":"ISO New England Inc.","kind":"informational report","file":"sources/originals/20260720-5216_01.pdf","url":"https://elibrary.ferc.gov/eLibrary/filelist?accession_Number=20260720-5216","sha256":"2b751d867e08a1b161960af0dced27409fd226b82e35464e51025f94ef21fe89","pages":8,"tokens":3542,"emptyPages":[]},"pages":[{"page":1,"startToken":0,"endToken":325,"text":"July 20, 2026 \nVIA ELECTRONIC FILING \n \nThe Honorable Debbie-Anne A. Reese, Secretary \nFederal Energy Regulatory Commission \n888 First Street, N.E. \nWashington, D.C. 20426 \nRe: \nISO New England Inc.; Informational Report; Docket No. EL26-72-000 \n \nDear Secretary Reese:   \nISO New England Inc. (“ISO-NE”) hereby submits the informational report required by the \nFederal Energy Regulatory Commission (“Commission”)1 in its June 18, 2026 Order Instituting \nProceeding Under Section 206 of the Federal Power Act.2  That Order directed ISO-NE to \noutline its plans to ensure that adequate generation will be available to serve existing and new \nlarge loads.3  Specifically, the Commission noted the reliability concerns created by the addition \nof large loads without concomitant additions of supply or demand-side resources.4   \nThe Commission required that ISO-NE describe proposals under consideration in the stakeholder \nprocess to address resource adequacy to serve large loads or increase the pace of adding \ngeneration capacity, as well as any new proposals.  For each, ISO-NE must include a schedule of \nkey milestones, such as dates within the stakeholder process, and the estimated filing date.5  \nBelow, ISO-NE outlines its resource adequacy outlook, and then addresses existing and potential \nnew proposals to meet upcoming challenges.  The commonality of these proposals is their \nreliance on New England’s existing competitive markets as the most cost-effective and efficient \nmeans of ensuring resource adequacy in New England; as discussed below, resource adequacy \nfor New England requires both maintaining sufficient revenue for the existing fleet to remain \ncommercially viable, and providing sufficient incentives for new resource investment.  In sum, \n \n1 Capitalized terms used but not defined in this informational report have the meaning ascribed to them in the ISO \nNew England Transmission, Markets and Services Tariff (“Tariff”).  ISO-NE anticipates defining “large loads” in \nthe Tariff. \n2 ISO New England Inc., 195 FERC ¶ 61,215 (2026) (the “June 18 Order”) at P 119. \n3 Id. at P 4. \n4 Id. at P 118. \n5 Id. at P 119."},{"page":2,"startToken":325,"endToken":831,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 2 of 8 \n \n \nISO-NE believes that New England’s markets are sufficiently mature and flexible to meet \nupcoming challenges.   \nI. \nNew England’s Resource Adequacy Outlook \nOver the past decade, load in New England has been either flat or declining, and the region has \ngenerally been long on supply, with a robust, largely uncongested transmission system that \nfacilitates the delivery of supply to load.6  Moreover, unlike other regions of the country, New \nEngland has not yet encountered significant load growth attributable to the addition of large \nloads, such as data centers.7  Nonetheless, ISO-NE has been planning for large loads by working \nwith the region’s transmission owners to develop protocols for tracking large loads, and \nincorporating large loads in its forecasting processes.8 \n \nThe region’s most recent Report on Capacity, Energy, Loads, and Transmission (the “CELT \nReport”) suggests that, into the next decade, electricity demand will grow steadily, given \nelectrification and other drivers.9  On the supply side, the CELT Report indicates healthy \ninstalled reserve margins.10  Nonetheless, ISO-NE is prepared for the factors that are not \naccounted for in the CELT Report and occur in the ordinary course of business, including winter \ngas pipeline constraints, operating reserve requirements, unplanned outages, and reduced \navailability of imports during periods of high demand.11  Moreover, ISO-NE expects that the \ncapacity accreditation changes that are part of the Capacity Auction Reforms project (discussed \nbelow) may further tighten supply margins.  \n \nLarge loads, obviously, are not the ordinary course of business.  They create unique \ncircumstances that will require changes to the Tariff to facilitate their interconnection and ensure \nsystem reliability.  They may also require new generation at a speed and in amounts that are not \ntypical, and that development may be stymied by existing permitting and supply chain \nchallenges.  In recognition of these realities, ISO-NE has concluded that New England must, at a \nminimum, (i) maintain its existing fleet through competitive markets that assure the fleet’s \n \n6 Potomac Economics, 2025 Assessment of the ISO New England Electricity Markets (June 2026) (“Potomac \nAnnual Report”), available at https://potomaceconomics.com/markets-monitored/iso-new-england/, pp. 4-5 and \nFigure 2. \n7 Gordon van Welie, ISO-NE’s Response to Chairman David Rosner’s September 18, 2025 Letter Seeking a \nDialogue on Large Load Growth in New England, ISO New England Inc. (Oct. 6, 2025), available at large-load-\nforecasting-isone-response.pdf, at 3 of PDF. \n8 Planning for Large Loads in New England, Presentation at the NECPUC Annual Symposium by Al McBride (May \n20, 2026), available at iso_large_loads_necpuc_symposium_mcbride.pdf. \n9 2026-2035 Forecast Report on Capacity, Energy, Loads, and Transmission, ISO New England Inc. (May 1, 2026), \navailable at 2026_celt.xlsx, at Tab 1.1, Section 1. \n10 Id. at Tab 1.1, Section 4.2. \n11 Regarding imports, see ISO New England Internal Market Monitor, 2025 Annual Report, (May 29, 2026), \navailable at 2025-annual-markets-report.pdf, at p. 39 (net interchange with Canadian and New York balancing areas \ncombined was at its lowest level in thirteen years)."},{"page":3,"startToken":831,"endToken":1354,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 3 of 8 \n \n \ncontinued commercial viability in the near term; (ii) ensure these competitive markets will send \nappropriate price signals to provide incentives for cost-effective new resource development when \nneeded; and (iii) maintain the competitive markets’ structure and stability in the face of the \nabrupt emergence of material amounts of large loads.     \n  \nInitially, ISO-NE outlines why it believes that the markets are well-positioned to meet the first \ntwo objectives above, and how the region may need to adapt to maintain the markets’ \nfunctioning as reflected in the third objective.  In sum, the region’s over-arching wholesale \nmarket structure is designed to, and has proven effective at, cost-effectively compensating \ngeneration and providing incentives for new entry to reliably meet the needs of the consumers \nthe markets were designed to serve.  This design includes not only the capacity market, which \nISO-NE continues to enhance to address the region’s evolving system (as discussed below), but \nalso the region’s energy market – through which the vast majority of generators’ revenue flows.  \n \nFrom an investor’s perspective, these markets work to provide that essential compensation \nbecause of three key factors.  First, New England’s forward power market prices, which guide \nresources’ future energy revenue expectations, are among the highest in the nation and remain \nelevated for coming years.12  Because of these high prices, some recent analyses indicate total \nwholesale market revenues are presently approaching the cost of new entry for dispatchable \ncombined cycle generation in our region.13  Second, as discussed above, New England is now \nfacing steady, incremental load growth over the coming decade due to increasing electrification \n(even without large load development), further supporting that the forward market’s energy price \nsignals are not likely to abate any time soon.   \n \nFinally, investors value a stable market in which they have confidence, facilitated by a \ndependable regulatory environment.  New England has a longstanding stakeholder process that \ncollaboratively and thoughtfully produces market enhancements large and small.  The effective \nrule change process in New England helps to bolster confidence in the region’s wholesale market \nfor the future.   \n \nFrom ISO-NE’s perspective, the existing competitive market structure has proven able to send \nthe appropriate capacity and energy price signals to provide incentives for new entry and \nmaintain existing supply in the ordinary course of business.  As discussed in the next section, \ntailored changes currently underway are appropriate to sustain the markets’ strength as the \nsystem evolves.  In the third section of this report, ISO-NE outlines its preparations for potential \nlarge loads in New England.  These changes will facilitate the entry of large loads in a manner \nthat respects the existing well-functioning markets.  \n \n12 S&P Global, Power Daily, July 9, 2026, p. 8 (“PJM and ISO-NE are forecast to have the country’s highest prices \nthis summer at $69/MWh and $64/MWh,” citing the Energy Information Administration’s July 2026 Short Term \nEnergy Outlook).  Looking further forward, annual average on-peak power contract prices for New England system \npower trading at the Intercontinental Exchange exceed $68/MWh for 2030 (ISO-NE calculations, trade data as of \nJuly 10, 2026).    \n13 Potomac Annual Report at Figure 8, page 21."},{"page":4,"startToken":1354,"endToken":1870,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 4 of 8 \n \n \nII. \nExisting Resource Adequacy Proposals:  Balancing Incentives for New \nInvestment with Retention of the Existing Fleet \nAs noted above, ISO-NE seeks to preserve its existing fleet as the most cost-effective means of \nmaintaining resource adequacy in the short- to mid-term.  That requires achieving a balance \nbetween the level of risk inherent in market participation and the incentives to perform.  ISO-NE \nalso recognizes its obligation to send price signals to investors to build new generation in the \nregion when needed. \n \nISO-NE details below a number of pending projects that are intended to create incentives for \nnew investment, retain the existing fleet, and deal with increased uncertainty and volatility.  \nMany of these projects are detailed in our multi-year roadmap, which sets out present priorities \nthrough 2030, and addresses resource adequacy as well as operational uncertainty related to \nsteeper ramps, the need for flexibility, and limited energy constraints.14  The projects most \ndirectly related to resource adequacy and operational uncertainty are:  the reduction in the Pay \nfor Performance rate; the Capacity Auction Reforms project; improvements to Surplus \nInterconnection Service; probabilistic forecasting; uncertainty reserves; updated capacity market \nparameters, including revisions to the Cost of New Entry (“CONE”) and net CONE; and work \nwith the states to facilitate greater demand flexibility in the region.   \nPast projects in the categories of resource adequacy and operational uncertainty include:  the \nchanges to generator interconnection practices in compliance with Order No. 2023, as a result of \nwhich most speculative projects have left the queue, leaving it essentially with no backlog; the \nDay-Ahead Ancillary Services Market, which compensates resources that provide the ancillary \nservice capabilities necessary to meet reliability requirements; and the development of the \nProbabilistic Energy Adequacy Tool and the Regional Energy Shortfall Threshold, which, \ntogether, assess energy shortfall risk and guide consideration of mitigations (such as the need for \nadditional resources). \nPay for Performance (“PFP”).  Per the PFP market rules, resources that receive an obligation \nin the capacity auction risk the loss of their capacity revenues if they fail to perform during \ndefined scarcity conditions.  The Capacity Performance Payment Rate is the rate charged to \ncapacity suppliers when they fail to meet those obligations; at its current level, it creates \nsignificant risk for the region’s capacity fleet.15  Older, slow start resources that provide energy \nduring both summer and winter high demand events face significant PFP risk due to their slow \nstart capabilities.  Of similar concern, strong performers face significant “stop loss” risk due to \nthe rate at which stopped losses can accrue under the current high payment rate and the \nobligation of all capacity suppliers to cover those losses when they occur.  These risks may \n \n14 ISO New England Inc. Multi-Year Roadmap (November 5, 2025), available at rsp25-public-meeting-iso-bod-\nopen-meeting-nov-5-2025-slides.pdf, at slide 35. \n15 External Market Monitor’s 2024 Assessment of the ISO New England Electricity Markets, available at \nhttps://www.iso-ne.com/static-assets/documents/100025/iso-ne-2024-emm-report-final.pdf, at pp. 69-70 (explaining \nthat “excessively high incentives can create inefficient risk for less flexible resources and may lead to inefficient \nretirement decisions”)."},{"page":5,"startToken":1870,"endToken":2350,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 5 of 8 \n \n \nincrease the likelihood that higher-cost resources will exit the market despite the reliability value \nthey provide to the system. \n \nISO-NE has proposed a downward adjustment to the Performance Payment Rate in a filing that \nwas made with the Commission earlier this month.16  The rationale for this change is based on \nempirical evidence that the current rate is not necessary to motivate strong performance by the \ngeneration fleet; under such circumstances, prudent market design weighs in favor of lowering \nthe rate to reduce participation risk in the market, which may in turn promote the continued \ncommercial operation of resources that help meet the region’s energy and resource adequacy \nneeds (as well as cost reductions for consumers).  Notwithstanding the lowered rate, the marginal \nincentive for performance, inclusive of the shortage pricing in the energy and ancillary services \nmarkets, can reach approximately $6,000/MWh, which is among the highest in the nation.17 \n \nCapacity Auction Reforms.  With this two-phase project, ISO-NE is moving from a three-year \nforward to a prompt seasonal capacity market, which will incorporate updated and more accurate \ninformation on supply and demand conditions.  The design also includes a marginal reliability \nimpact-based accreditation methodology.  This accreditation methodology will better reflect each \ntechnology’s contribution to resource adequacy, thereby sending appropriate price signals to \ncapital markets regarding investment in new and existing resources of different technology types \nas well as resource performance improvements.  The project is also introducing an innovative \napproach to capturing the impacts of the region’s constrained gas system on the gas fleet’s \nresource adequacy contributions.   \n \nISO-NE anticipates making its second filing for this project at the end of this year.  Should the \nCommission approve this second filing, ISO-NE will administer its first prompt and seasonal \nauction in May 2028 (the date through which the region has previously procured capacity).  ISO-\nNE is focused on administering the capacity auctions on schedule, as it believes such consistency \nis critical to the wholesale markets and to investors.  As a core market principle, ISO-NE will \ncontinuously evaluate and work with stakeholders to ensure efficient price formation in the \ncapacity market.   \n \nSurplus Interconnection Service.  In conjunction with stakeholders, ISO-NE is evaluating \nreforms to the Surplus Interconnection Service design to further accommodate interconnection \nrequests that do not increase the type or level of service at a given point of interconnection.  In \nother words, new generating facilities can speed interconnection by co-locating at the same point \nof interconnection with existing resources that have “headroom.”  ISO-NE is presenting a surplus \ngap analysis, followed by design concepts, to stakeholders later this year. \n \n16 Revisions to ISO New England Inc. Transmission, Markets and Services Tariff to Change the Capacity \nPerformance Payment Rate to $3,500 per MWh, Docket No. ER26-3047-000, available at \nrev_to_change_the_capacity_performance_rate.pdf. \n17 Id. at p. 5."},{"page":6,"startToken":2350,"endToken":2832,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 6 of 8 \n \n \nProbabilistic Forecasting.  ISO-NE is developing new probabilistic forecasting models and \nmethods to forecast not only load, but also the risk of different outcomes at higher or lower load \nlevels.  These tools will provide greater situational awareness of risks, enabling the region to \nmore cost-effectively meet future system flexibility needs, such as system ramping and reserve \nrequirements.  This work should also provide more granular, forward-looking daily system \ninformation to generators. \nUncertainty Reserves.  To address the system’s growing need for flexibility given intermittent \npower resources and variability in load, ISO-NE plans to develop dynamic operating reserve \ndemand curves for incremental quantities of existing real-time reserve products (10- and 30-\nminute reserves) in amounts that vary during the operating day based on the system’s near-term \npotential ramping needs.  Additionally, ISO-NE is evaluating a potential new longer-response \nreserve product (60- or 90-minute), possibly with dynamically-determined demand quantities, to \naddress operational uncertainties (unanticipated supply and demand changes) during the \noperating day.  ISO-NE plans to begin a stakeholder process on this topic in 2027. \n \nUpdated Capacity Market Parameters.  Generally speaking, every four years, ISO-NE updates \nthe capacity market’s parameters, including the net CONE, which recalibrate the market’s \ncapacity demand curves.  The next update is due before the 2030-31 capacity commitment \nperiod.  ISO-NE anticipates that the revisions will reflect new resource development conditions, \nsuch that the capacity market will continue to send appropriate price signals for new entry when \nthe system requires it.  ISO-NE anticipates filing the new values in late 2028 or early 2029. \n \nDemand Flexibility.  Demand response initiatives, at both the wholesale and retail level, can \nprovide some of the same benefits as peaking generators in ensuring resource adequacy in \ndifficult operating conditions, without siting, permitting and supply chain challenges.  \nAccordingly, ISO-NE plans to work closely with the New England states and stakeholders to \nmaximize demand flexibility and the use of the existing system. \n \nIII. \nNew Resource Adequacy Proposals \nISO-NE appreciates that, in addition to its continuing work to ensure resource adequacy, it must \nexplicitly consider the potential impact of large loads on the markets.  While those loads have yet \nto materialize in New England, ISO-NE believes that two related actions will be necessary:  \nrequiring new large loads to “bring their own” incremental new generation; and excluding new \nlarge loads from the load-side requirements of the capacity market (i.e., the Installed Capacity \nRequirement).  Both changes are intended to avoid cost-shifts and adverse reliability risks.    \nEach is discussed below.   \n \nBring Your Own New Generation.  ISO-NE would like to consider with stakeholders a concept \nthat has emerged in Massachusetts,18 other states, and other regional markets:  a “bring your own \n \n18 Press Release, Governor Healy Halts Data Center Tax Incentive (June 25, 2026) available at Governor Healey \nHalts Data Center Tax Incentive and Calls for Strict Guardrails to Protect Ratepayers, Environment & Public Health \n| Mass.gov."},{"page":7,"startToken":2832,"endToken":3333,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 7 of 8 \n \n \n(new) generation” requirement for new large loads.  Implementation will require resolution of \nvarious issues to ensure that each large load’s expected usage is aligned with the anticipated \nperformance of the incremental new generation – effectively, to ensure that a large load cannot \nadversely impact traditional load’s reliability during stressed conditions.   \nAs part of its compliance with the June 18 Order, ISO-NE intends to pursue rules similar to the \nSouthwest Power Pool’s conditional high impact large load service (“CHILLS”) rules, which \nwould allow transmission customers serving large loads to receive energy until sufficient \ndesignated resources and network upgrades are in place, subject to flexibility requirements \nand/or curtailment and interruption.  These flexibility or curtailability requirements will require \nthe resolution of related operational issues, including the need for equipment, signals, and an \nappropriate chain of communication to the large load customer.   \n \nSubject to discussion with stakeholders, ISO-NE anticipates including a statement in its filing to \ncomply with the June 18 Order that will put Eligible Customers on notice that large loads must \n“bring your own new generation.”  Following a robust stakeholder process and resolution of \noperational issues, ISO-NE anticipates filing the detailed supporting rules implementing this \nconcept in 2027.  \n \nExcluding Large Loads from the Installed Capacity Requirement in the Capacity Market.  \nISO-NE preliminarily proposes to treat large loads differently from traditional firm end-use load \n(and traditional firm load growth) by excluding large loads (e.g., large data centers) from the \nsystem load forecasts used to set the capacity market’s demand curves and Installed Capacity \nRequirement.  Justifications for this disparate treatment include the size of these loads and the \npotential adverse impact on system reliability if new large loads were to abruptly materialize in \nNew England before new generation can be built to serve them.19   \n \nConceptually, the exclusion of large loads from the capacity market’s Installed Capacity \nRequirement complements the “bring your own new generation” obligation.  Namely, the \ncapacity market will not procure incremental capacity on behalf of new large loads, which will \nbe responsible for their own energy supply. \n  \nSubject to discussion and review with stakeholders, ISO-NE anticipates including a statement in \nits filing to comply with the June 18 Order that will put Eligible Customers on notice that the \ncapacity market will exclude new large loads.  Following a robust stakeholder process, ISO-NE \nwill file detailed rules implementing this concept in 2027.  \n \n \n19 While ISO-NE recognizes that high prices can serve an important function in the capacity market to signal \nreduced supply or an increase in native demand (or both), data centers are a generational disruption.  Given the \npresent supply chain, siting, and permitting challenges in New England, the signals created by these new large \nloads’ participation may not elicit sufficient timely response unless they develop their own generation concurrent \nwith their data center’s development.  We have seen in other regions that the development timelines for data centers \ncan be significantly shorter that the timeframes associated with building new generation."},{"page":8,"startToken":3333,"endToken":3542,"text":"The Honorable Debbie-Anne A. Reese, Secretary \nJuly 20, 2026 \nPage 8 of 8 \n \n \nIV. \nConclusion \nAs reflected in the foregoing plans, ISO-NE’s guiding principle is that competitive markets \nremain the most effective and efficient means of ensuring resource adequacy in New England.  \nISO-NE, along with its external and internal market monitors, is committed to continuous \nassessment of New England’s suite of markets to ensure that they create sufficient incentives to \nattract new resources and retain the existing fleet – in other words, support a cost-effective, \nreliable power system.   \n \nISO-NE respectfully requests that the Commission accept this informational report, and looks \nforward to complying in full with the Commission’s directives on the topic of large loads.  ISO-\nNE also looks forward to working with states and stakeholders on the ideas contained in this \nreport, particularly those in Section III.  Those concepts will benefit from careful consideration \nby states and stakeholders, including significant discussion with the states to address \njurisdictional issues, and with the transmission owners and market participants to address \njurisdictional, coordination, and operational issues.   \n \nRespectfully submitted, \n                        ISO NEW ENGLAND INC. \n \n \n \n \n \n \nBy:_/s/ Maria Gulluni \nMaria Gulluni \nVP, General Counsel and Chief Compliance Officer \nISO New England Inc. \nOne Sullivan Road \nHolyoke, MA  01040-2841 \nTel:   (413) 540-4473 \nE-mail: mgulluni@iso-ne.com"}],"sections":[{"p":1,"at":0,"title":"Opening text","method":"opening text","endPage":2,"endAt":192,"startToken":0,"endToken":353},{"p":2,"at":192,"title":"I. New England’s Resource Adequacy Outlook","method":"printed heading","endPage":4,"endAt":79,"startToken":353,"endToken":1367},{"p":4,"at":79,"title":"II. Existing Resource Adequacy Proposals: Balancing Incentives for New","method":"printed heading","endPage":6,"endAt":2318,"startToken":1367,"endToken":2672},{"p":6,"at":2318,"title":"III. New Resource Adequacy Proposals","method":"printed heading","endPage":8,"endAt":79,"startToken":2672,"endToken":3346},{"p":8,"at":79,"title":"IV. Conclusion","method":"printed heading","endPage":8,"endAt":84,"startToken":3346,"endToken":3347},{"p":8,"at":84,"title":"Conclusion","method":"printed heading","endPage":8,"endAt":1508,"startToken":3347,"endToken":3542}]}