New England Capacity Market Changes

April 6, 2026

In the waning days of March the Federal Energy Regulatory Commission (FERC) issued a ruling approving the first phase of reforms for the ISO-NE capacity market.

Similar to many other regions, the capacity market structure in New England has come under fire, not because of the record high prices seen in regions like PJM but instead because of perceived inefficiencies.  Some analysis has shown that the current structure, which procures capacity years in advance based on projected requirements, has been overestimating needs and causing costs for consumers to become bloated.

Under the new structure, the amount of capacity procured to ensure adequate supply will be calculated on a more immediate basis with auctions taking place just months before the obligation to deliver.

That change will not only ensure that there is more certainty around the need, but it will also help ensure that the resources bidding to provide the service will be on-line and able to fulfill their obligations.

The approval is only for “phase 1” which is about the timing of the auction process.  Phase 2, which will create a new “seasonal” system differentiating between the needs and capabilities during spring, summer, autumn, and winter.  A filing for that should happen later this year.

As of now, the new auction timing rules is not having any material impact on markets, but that may change in the coming months

Now more than ever having an experienced and knowledgeable energy advisor is a key to understanding the risks created by the fluidity of capacity market rules.

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