Installed Capacity Requirement

The Installed Capacity Requirement (ICR) is a projection of the amount of installed capacity needed to meet New England’s and the Northeast Power Coordinating Council’s resource adequacy planning standards for satisfying the region’s peak demand forecast while maintaining required operating reserves.  The “Installed Capacity Requirement (ICR) Reference Guide” and the presentation “Installed Capacity Requirement Development Webinar” provide a high-level overview of the processes used to develop the ICR and associated values, and include the calculation methodology, results, and detailed assumptions.

The ICR is calculated as part of the Forward Capacity Market (FCM) and used as an input into the Forward Capacity Auction (FCA) for each capacity commitment period (CCP). In addition, ISO New England calculates other requirements for New England and its capacity zones. These requirements, along with ICR, are considered the ICR and Related values:

• Hydro-Québec Interconnection Capability Credits (HQICCs), a key input into the calculation of the ICR
• Net ICR, calculated as ICR minus HQICCs
• Local sourcing requirement (LSR) for import-constrained capacity zones
• Maximum capacity limit (MCL) for export-constrained capacity zones
• Marginal reliability impact (MRI) capacity demand curves for the system and capacity zones

ICR values are recalculated each year for the Forward Capacity Auction and annual reconfiguration auctions (ARAs) with updated assumptions to reflect the most recent system conditions for each CCP.

Assumptions used to develop the ICR are discussed with the Power Supply Planning Committee beginning in May of each year, after the load forecast is published as part of the annual CELT report. ISO New England develops the ICR values through a stakeholder and regulatory process with review and action by the Power Supply Planning Committee, the Reliability Committee, the Participants Committee, state regulators, and the New England States Committee on Electricity. ISO New England files the ICR values with the Federal Energy Regulatory Commission each November/December.

In addition to developing the ICR and related values for an FCA and the ARAs, the ISO develops “representative” ICR values for future CCPs. The representative net ICR values are updated annually and do not indicate the definitive amount of capacity the region will purchase for that period but provides stakeholders with a general forecast of the likely capacity needs of the region into the future.

In conjunction with the representative net-ICR development process, the ISO conducts a study to forecast the expected number of systemwide operating reserve deficiency hours for capacity-resource levels of the New England system, at, lower, and higher than the net ICR.  Study results are documented in a memorandum to NEPOOL, specifically the PSPC, MC, and RC.  Study results include the following:

• The expected number of operating reserve deficiency hours
• The frequency distribution (i.e., percentiles) of operating reserve deficiency hours
• A comparison of the study results to the previous year

Studies of systemwide operating reserve deficiency hours performed to date can be retrieved at the following links: