Access documents related to the Forward Capacity Market (FCM) Sloped Demand Curve project.
The ISO developed and implemented a downward-sloping system-wide demand curve for the FCM’s ninth Forward Capacity Auction (FCA), which was held February 2015. The system-wide demand curve establishes aggregate demand for capacity resources in the New England region over a range of possible prices. Previously, FCAs procured a fixed quantity of capacity regardless of the price. The system-wide demand curve is designed to procure sufficient capacity supply to maintain resource adequacy and reduce price volatility over time, yielding smaller swings in capacity prices when the market moves from conditions of excess supply to periods when new capacity resources are needed, which occur as aging plants retire. Adding a systemwide demand curve also allowed the removal of other administrative pricing triggers.
As part of the design changes to the FCM, the ISO is also assessing:
The FCM Sloped Demand Curve project is just one of several key projects at the ISO, which continuously undertakes a variety of short- and long-term projects to enhance the region's competitive wholesale electricity markets and ensure reliable operation of the power grid.