Forward Capacity MarketRevised Stop Loss and PPR

Joel NewtonNextEra Energy Resources

October 8, 2013

2

NextEra concurs with the ISO’s proposed annual stop loss, but believe the monthly stop loss continues to be flawed

PPR= $ 5,455

ISO Proposal NextEra Original Proposal

Monthly Stop-loss Annual Stop-loss Monthly Stop-loss Annual Stop-loss

Capacity Clearing Price

Maximum Net Loss ($15 -

CCP)Net Missed

Hours

Maximum Net Loss

(3x Monthly)Net Missed

Hours*

Maximum Net Loss (1.5 *

CCP)Net Missed

Hours

Maximum Net Loss (20%

Annual CCP)Net Missed

Hours*

1 14.0 2.7 42.0 9.9 1.5 0.5 2.4 2.6

2 13.0 2.7 39.0 11.5 3.0 0.9 4.8 5.3

3 12.0 2.7 36.0 13.2 4.5 1.4 7.2 7.9

4 11.0 2.7 33.0 14.8 6.0 1.8 9.6 10.6

5 10.0 2.7 30.0 16.5 7.5 2.3 12.0 13.2

6 9.0 2.7 27.0 18.1 9.0 2.7 14.4 15.8

7 8.0 2.7 24.0 19.8 10.5 3.2 16.8 18.5

8 7.0 2.7 21.0 21.4 12.0 3.7 19.2 21.1

9 6.0 2.7 18.0 23.1 13.5 4.1 21.6 23.8

10 5.0 2.7 15.0 24.7 15.0 4.6 24.0 26.4

11 4.0 2.7 12.0 26.4 16.5 5.0 26.4 29.0

12 3.0 2.7 9.0 28.0 18.0 5.5 28.8 31.7

13 2.0 2.7 6.0 29.7 19.5 6.0 31.2 34.3

14 1.0 2.7 3.0 31.3 21.0 6.4 33.6 37.0

15 0.0 2.7 0.0 33.0 22.5 6.9 36.0 39.6

* Excluding hours in excess of monthly-stop loss cap.

3

The annual stop loss for a resource receiving $14.99/kW-mo. is $0.03/kW-year; at $2.76/kW-mo. its $36.72/kW-year

PPR= $ 2,000

ISO Proposal NextEra Original Proposal

Monthly Stop-loss Annual Stop-loss Monthly Stop-loss Annual Stop-loss

Capacity Clearing

Price

Maximum Net Loss

($15 - CCP)Net Missed

Hours

Maximum Net Loss

(3x Monthly)Net Missed

Hours*

Maximum Net Loss

(1.5 * CCP)Net Missed

Hours

Maximum Net Loss (20%

Annual CCP)Net Missed

Hours*

1 14.0 7.5 42.0 27.0 1.5 1.3 2.4 7.2

2 13.0 7.5 39.0 31.5 3.0 2.5 4.8 14.4

3 12.0 7.5 36.0 36.0 4.5 3.8 7.2 21.6

4 11.0 7.5 33.0 40.5 6.0 5.0 9.6 28.8

5 10.0 7.5 30.0 45.0 7.5 6.3 12.0 36.0

6 9.0 7.5 27.0 49.5 9.0 7.5 14.4 43.2

7 8.0 7.5 24.0 54.0 10.5 8.8 16.8 50.4

8 7.0 7.5 21.0 58.5 12.0 10.0 19.2 57.6

9 6.0 7.5 18.0 63.0 13.5 11.3 21.6 64.8

10 5.0 7.5 15.0 67.5 15.0 12.5 24.0 72.0

11 4.0 7.5 12.0 72.0 16.5 13.8 26.4 79.2

12 3.0 7.5 9.0 76.5 18.0 15.0 28.8 86.4

13 2.0 7.5 6.0 81.0 19.5 16.3 31.2 93.6

14 1.0 7.5 3.0 85.5 21.0 17.5 33.6 100.8

15 0.0 7.5 0.0 90.0 22.5 18.8 36.0 108.0

* Excluding hours in excess of monthly-stop loss cap.

4

Can Analysis Group’s FCM PI Objectives Be Met?

• Quantity of resources continuing to participate in ISO-NE markets will increase under PI compared to current rules– FCA 8 non-price retirements

• Performance risk associated with gas supply curtailment will be mitigated through increased dual fuel capability– Incremental dual fuel capability of 5,848 MW to 7,368 MW for

gas shortage and high gas shortage cases

• FCM PI will shift the resources that remain economically viable in the markets towards a more flexible mix

Lowering the PPR may significantly affect the benefits ISO expects from the implementation of FCM PI

5

The ISO has not demonstrated that a PPR of $2000 will meet its reliability objectives (i.e., increased dual fuel units)