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Letters to the Editor

Fortnightly Magazine - July 2008

revealed facts that shed a new light on the discussion in Prime Time for Efficiency ,” (June 2008). The article states that New England ISO’s forward capacity auction ended at the pre-set price floor of $4.50 per kilowatt-month, with over 2,000 MW of supply resources—both demand response and generation—still wanting to sell but unable to find a bidder to buy. The article suggested this portends even greater participation by DR in future auctions. However, various speakers at the May 7 FERC conference said the floor price mechanism didn’t produce a true, market-based auction clearing price. For example, John J. Boudreau, from the Massachusetts Municipal Wholesale Electric Co., testified that the flood of DR bidders into the auction depressed the price, so the arbitrary floor prevented prices from falling to their true market value. An ISO NE official acknowledged the deficiency and said the ISO is considering changing the price floor for future auctions.