FERC Accepts First Phase of New England Grid Operator’s Capacity Market Reforms

The Federal Energy Regulatory Commission on March 31 accepted the first phase of capacity market reforms proposed by ISO New England, advancing efforts to align the region’s power market design with a rapidly changing resource mix. The decision marks a key milestone in a multi-year stakeholder process aimed at improving reliability outcomes and ensuring consumers pay for resources that are available when needed.

The initial reforms center on shifting the timing of capacity auctions to a prompt timeline, moving from auctions held more than three years in advance to a schedule closer to real-time system needs. Under the updated framework, auctions will occur roughly one month before the delivery period, with the first implementation planned for 2028. The revised timeline is expected to improve forecasting accuracy for both supply and demand, enabling more precise market signals and better-informed participation by resource owners. It also eliminates the risk of speculative or non-operational resources securing commitments, ensuring that only available assets contribute to system reliability.

The regulator also accepted changes to the process governing resource exits from the market. The revised approach shortens the deactivation timeline from four years to one, while maintaining oversight mechanisms designed to prevent market manipulation and protect transmission security. The streamlined process is intended to provide greater flexibility as older resources retire and new technologies enter the system.

ISO New England’s capacity market plays a central role in securing future electricity supply by compensating resources for their availability to meet demand. The reforms reflect a broader effort to balance payments across energy and capacity markets as resource economics evolve.

Stakeholder discussions are ongoing for the second phase of reforms, which will examine seasonal capacity auctions and updated resource accreditation rules. A filing on the next phase is expected by the end of 2026.