ISO-NE Files FERC Proposal for Prompt Capacity Auction
- Capacity & Wholesale Markets Policy & Markets Regulatory
Marin Holt
- 0
- 5 minutes read
- ISO-NE filed a FERC proposal on December 30, 2025, to replace its three-year Forward Capacity Market with a prompt auction structure.
- The prompt auction would allow VPPs and DERs to commit to capacity obligations months before delivery, not three years in advance.
- Seasonal summer and winter capacity obligations would replace the existing single annual commitment period.
- Connected Solutions already aggregates over 570 MW of distributed battery storage in Massachusetts and Connecticut.
- FERC has been asked to rule on the first phase of reforms by March 31, 2026; full implementation is targeted for 2028.
ISO New England filed a proposal with FERC on December 30, 2025, to replace its three-year-forward capacity auction with a prompt auction structure, allowing virtual power plants and distributed energy resources to commit to capacity obligations months before delivery rather than years in advance. FERC has been asked to rule on the first phase by March 31, 2026; full implementation is targeted for 2028.
What Is Being Proposed
The reform eliminates the existing Forward Capacity Market structure, in which resources must secure obligations three years ahead. Under the new framework, capacity would be procured one to several months before each Capacity Commitment Period. A seasonal element replaces the single annual commitment with separate summer and winter obligations , directly addressing New England’s distinct reliability challenges: summer peak demand from cooling loads and winter supply risk from natural gas fuel constraints. ISO-NE filed the first part of the proposal in December 2025; a second filing covering seasonal accreditation standards is expected before the end of 2026. The Connected Solutions state-level demand response program already aggregates more than 570 MW of distributed battery storage across Massachusetts and Connecticut, operating as a de facto VPP that the ISO is now working to bring into formal wholesale market participation.
Critical Perspective
ISO New England’s prompt-forward auction is a structurally sound reform for resources that can plan six to twelve months ahead. The 570 MW of currently-qualified VPPs represents 1.8% of ISO-NE’s 32 GW summer peak — a rounding error in a system where a single nuclear unit contributes 2,200 MW. PJM’s demand response reclassification process shows that relaxing participation rules raises enrolled capacity numbers while actual dispatch performance averages 62% of committed volume during high-stress events. The question energy professionals should be asking: what is the performance guarantee structure for VPP commitments under this proposal, and what happens to system reliability when 570 MW of virtual capacity fails to dispatch during a January cold snap?
Why It Matters
The three-year forward commitment window has been the single largest structural barrier for VPP aggregators in New England. Customer churn over a three-year period means aggregators routinely fail to deliver the capacity they originally committed, creating reliability risk and financial exposure. Shortening the window to months makes aggregation economically viable by aligning commitment periods with realistic enrollment retention rates. ISO-NE’s reform also strengthens FERC Order 2222 compliance by making market participation structurally accessible to DER aggregators, not just theoretically permitted. With 570 MW of behind-the-meter storage already operating in Massachusetts and Connecticut, the ISO has a large and ready resource base to integrate once the market rules are in place. The seasonal structure addresses a recurring New England problem , winter capacity that performs reliably in summer but cannot deliver during cold snaps , by scoring resources against the season in which they must actually perform.
