Dive Brief:

• Advanced Energy Economy (AEE) this week filed a petition with the Federal Energy Regulatory Commission (FERC), asking regulators to halt ISO New England from making changes outside of an established process, to how energy efficiency resources are measured in the grid operator's forward capacity market (FCM).
• According to AEE, the ISO has informed some market participants that it may apply a new "net-to-gross" conversion factor to reevaluate energy efficiency resources. 
• AEE says its primary concern is that the ISO could consider the change without going through the proper review channels. However, shifting to a net-to-gross calculation rather than an "adjusted gross reduction" would generally be negative for efficiency participants.

Dive Insight:

According to AEE, about 10 days before New England's Feb. 4 FCM auction, staff of the ISO began calling market participants with qualified energy efficiency resources, informing them of potential changes — and that the changes could be retroactive to the auction they were about to enter.

"The uncertainty is what underlies our petition," Jeff Dennis, managing director and general counsel at AEE, told Utility Dive.

The potential changes would impact how efficiency is measured. Traditionally in the New England FCM, efficiency resources were defined and evaluated based on their reduction to energy consumption, from baseline federal and state standards, referred to as their "gross reduction to load."

Under a net-to-gross accounting, however, some of the resource would not be counted in the capacity market because the reductions might have occurred anyway, outside the auction, for a variety of reasons.

"That could result in a pretty significant reduction in the amount of energy efficiency capacity value that could be offered into the auction," Dennis said. It "obviously created a lot of market uncertainty heading into the auction."

With less energy efficiency capacity in the market, it is possible prices were higher than they would otherwise have been — and some capacity needs were filled by generation resources instead of reductions. But AEE's petition "focuses on process," Dennis said, and asking FERC to ensure the grid operator doesn't enact changes "without going through the stakeholder process."

The filing asks regulators to issue declaratory rulings confirming that the ISO may not retroactively revise "qualification packages" for the recent auction, and that any changes will need to "follow the appropriate process for changing its tariff, including submitting the proposed change to the commission for approval," AEE said in a statement.

"We're reviewing the filing, and, if warranted, will respond in an answer to FERC," ISO New England spokesman Matthew Kakley told Utility Dive in an email.