In comments submitted to the Federal Energy Regulatory Commission’s Docket AD13-7-000, which considers how centralized capacity market rules support the procurement and retention of resources necessary to meet future reliability and operational needs, RAP suggests three areas warranting additional consideration. First, there is a pressing need to examine the role of capacity markets in guiding not only incremental new investments, but also in the quantity and shape of divestment from existing capacity resources. Second, at least two RTOs/ISOs already recognize the imperative of differentiating capacity resources based on critical capabilities, further eroding the claim that a centralized capacity market must be designed around a single undifferentiated capacity product. Third, historical generation resource adequacy standards must be reexamined due to their impact on wholesale market interventions. As the level of renewable energy resources increases, capacity markets must value the optimal mix of capabilities, not just capacity, to ensure reliability at least cost. Appropriate consideration of these three issues is critical to designing wholesale markets capable of meeting future reliability and operational needs.
Comments on Centralized Capacity Markets in Regional Transmission Organizations and Independent System Operators
January 7, 2014