[Market Monitor] ISO-NE Ancillary Service Costs Continue to Rise: DASI Explained

February 9, 2026

ISO-NE Ancillary Service Costs Continue to Rise: DASI Explained

Ancillary service costs in ISO New England began increasing in 2025 following the implementation of the Day-Ahead Ancillary Services Initiative (DASI), a major redesign of how ISO-NE procures essential grid reliability services.

Ancillary services are the support functions required to keep the electric grid stable and operating reliably—such as balancing supply and demand in real time, maintaining system frequency, and ensuring sufficient reserves are available during unexpected disruptions.

Previously purchased months in advance, these services are now procured much closer to real time. While the shift improves alignment with actual system needs, it has also made ancillary costs more sensitive to immediate market conditions—driving greater volatility and higher charges across the region.

Why This Matters

Under DASI, ancillary service costs are now more directly influenced by the same factors that drive overall power prices, including fuel costs, generator availability, and system stress.

Key Impacts:

• Higher natural gas and emissions-related costs, combined with ongoing generator retirements, are tightening supply and increasing reliability expenses.
• More variable demand patterns are raising the amount of ancillary support needed to maintain system balance.
• Extreme weather events have amplified price impacts. During Winter Storm Fern, for example, system stress contributed to sharp increases in ancillary service charges under the new structure.

Impact on Fixed-Price Contracts

Ancillary costs are allocated across all load based on overall demand and are further affected by deviations between forecasted and actual usage. Under DASI, this framework has introduced additional cost volatility, particularly during high-stress market conditions.

As suppliers and utilities experience materially higher ancillary service expenses, many customers—including those on fixed-price agreements—may see adjustments. Most contracts allow certain market-based or administrative charges, such as ancillary services, to be passed through.

How Tradition Energy Can Help

Tradition Energy is actively monitoring ISO-NE market developments and the cost impacts of DASI. We can help assess your exposure under current contract terms and identify strategies to manage rising ancillary-related charges.

For more information about this or other developing regulatory matters that may affect your energy supply costs please contact your Tradition Energy Advisor.