The Federal Energy Regulatory Commission on Nov. 9 approved ISO New England Inc.’s proposal to revise the calculation of the economic life of a generator that seeks to retire or permanently leave the capacity market. The revision establishes that the economic life of such a resource will be the evaluation period that maximizes the net present value of its expected future profit. The grid operator currently requires retirement or permanent de-list bids submitted by a resource to include at least five years of cash flow estimates to explain the bid, which specifies a price at or below which it would not accept a capacity supply obligation. ISO-NE’s market monitor calculates the competitive delist price as the lowest capacity payment at which the generator would be “no worse off by” keeping its capacity obligation. The market monitor recently found that the current calculation – the period for which the net present value of cumulative future expected cash flows is positive – may overstate the true economic life resulting in a higher de-list bid price. ISO-NE said it may not be appropriate to assume that a plant which earned positive cash flows in the earlier years will continue to operate and incur losses as long as cumulative flows are positive, noting that a resource would choose to retire and keep the maximum of the cash flow. The new rules are effective Aug. 10, and will apply to the thirteenth capacity auction to be held in February 2019. Chairman Neil Chatterjee dissented saying that applying the rule for this auction harms market participants who relied on the existing tariff to calculate prices and also expressed concern over when and how the rule against retroactive rate making applies.