On December 30, 2025, ISO New England Inc. (ISO-NE) and the New England Power Pool Participants Committee (NEPOOL) filed proposed revisions to ISO-NE’s Transmission, Markets and Services Tariff (Tariff) to establish a prompt capacity market and deactivation framework (CAR-PD) to be implemented starting with the proposed framework’s first annual capacity auction cycle for the June 1, 2028 – May 31, 2029 capacity commitment period (2028/2029 Delivery Period). If accepted, the prompt capacity market will replace ISO-NE’s three-year Forward Capacity Market (FCM). ISO-NE requests that the Commission accept its proposed reforms, effective March 31, 2026.

As part of ISO-NE’s capacity market, ISO-NE currently operates a three-year FCM, pursuant to which annual capacity auctions are held more than three years before the capacity delivery period. Among other things, the current FCM framework also: (1) allows new resources to participate in the capacity auction before commercialization and construction; (2) utilizes a descending clock auction; and (3) requires participants with retiring resources to submit a “de-list bid” into the FCM auction four years before retirement. ISO-NE argues that its proposed revisions to the FCM’s rules are necessary to accommodate projected growth in electricity demand and plan for serving any potential large load development within ISO-NE.

ISO-NE’s proposed revisions, if accepted, will replace the current FCM framework with the CAR-PD framework. The proposed CAR-PD would implement several reforms to ISO-NE’s capacity market and most notably: (1) features annual capacity auctions held approximately one month before the capacity delivery period; (2) requires all resources to be commercial and demonstrate deliverability before participating in the annual capacity auction; (3) replaces the descending clock auction with a sealed-bid auction; and (4) requires participants with retiring resources to submit a deactivation notification to ISO-NE one year before the capacity period in which the resource will be deactivated. ISO-NE notes that the proposed revisions will eliminate pre-delivery-period balancing auctions, also referred to as “annual reconfiguration auctions.” ISO-NE also argues a one-year advance notification for participants with retiring resources is consistent with similar requirements in other organized wholesale markets.

ISO-NE states that certain features of its capacity market, like pay for performance rules and processes for calculating the capacity of a resource, will be retained under the proposed Tariff revisions. ISO-NE adds that its proposal contains only minimal, necessary modifications to market power mitigation rules to account for the change in timing of the auction and related processes.

ISO-NE explained that it has procured adequate capacity under the FCM through May 2028 such that it was able to pause further forward capacity auctions in order to permit the region time to develop capacity market reforms for filing and implementation concurrent with the first annual capacity auction for the 2028/2029 Delivery Period, which is to be held in May 2028. ISO-NE clarifies that it does not intend to run that annual capacity auction with the proposed rules filed in this proceeding, and instead plans to continue to work with the region’s stakeholders and file additional reforms that will build on the currently proposed revisions for implementation in the 2028/2029 Delivery Period.

ISO-NE argues that its reduction of market-related processes and related rules will benefit participating entities, as well as the market itself, by simplifying capacity market participation and capacity auction administration, thereby increasing stability by minimizing the need for rule revisions. In particular, ISO-NE contends that the proposed change in timing of the capacity auction will allow for improved forecasting and participation by entities who are called upon to perform by ISO-NE. Finally, ISO-NE argues the proposed changes will provide more accurate market data to inform potential deactivations. ISO-NE states that the proposed Tariff revisions are supported by a broad range of ISO-NE stakeholders, including both the External Market Monitor and Internal Market Monitor.

ISO-NE’s filing is available here. Comments and interventions are due by 5 PM EST on January 20, 2026.