ISO-NE assessing changes to Day-Ahead Ancillary Services market

ISO New England is moving quickly on changes for the Day-Ahead Ancillary Services (DAAS) market, with a filing with the Federal Energy Regulatory Commission (FERC) planned in the next few months.

Approved by FERC in 2024 and implemented the following year, DAAS was designed to strengthen reliability by ensuring the regional power system has sufficient generating resources lined up through the competitive markets for the next operating day. This critical part of New England’s wholesale markets helps ensure resources are available when needed most, like extreme weather events. The ISO has observed reliability and market improvements following the launch of the DAAS market.

However, the ISO recognizes that system and market conditions have changed since DAAS was developed and these changes are affecting today’s market costs. Specifically, variables like higher consumer demand, higher natural gas prices, a shift in the resource mix, and extended extreme cold have resulted in a higher prices than initial models predicted.

For these reasons, ISO-NE is targeting several areas for adjustments that could improve cost-effectiveness while maintaining the benefits of the market’s design structure.

The proposed changes will be consistent with recommendations proposed recently by the Internal Market Monitor (IMM). The IMM has affirmed that the market is performing as designed from a reliability perspective, while also identifying several targeted areas for adjustments that could improve cost-effectiveness without undermining reliability.

In April, ISO-NE plans to bring up the proposed DAAS market changes for discussion in the stakeholder process, which includes state agencies, with a filing to FERC anticipated this summer.

DAAS is among a suite of wholesale markets ISO New England administers to ensure the region has reliable electricity at cost-effective prices. Over the first 11 months, the DAAS market accounted for roughly 9% of total wholesale energy and ancillary services costs.

Costs associated with the wholesale markets ISO New England administers, as well as the transmission system, make up about a third of the average residential customer’s annual electricity costs.