If you’re an energy broker serving commercial and industrial clients in New England, ISO-NE is the most important market structure you’ll encounter — and the one most brokers can explain only in broad strokes. That’s a problem, because your clients are increasingly sophisticated, electricity costs are a meaningful line item for any commercial operation, and the brokers who understand how the market actually works provide a categorically different level of service than those who just quote rates.

This is a practical overview of what ISO-NE does, how the markets work, and what it means for the clients you serve.

What Is ISO-NE?

ISO New England is the independent system operator for the six-state New England grid — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It manages the transmission system in real time, runs wholesale electricity markets, and plans for the long-term reliability of the regional grid. Every kilowatt-hour that flows to your client’s building has been scheduled and dispatched through ISO-NE’s systems.

The Four Markets That Drive Your Clients’ Bills

• Energy market: The energy market sets the price of electricity generation in real time and day-ahead. Prices vary by hour and by location. Prices spike in winter when gas demand is high and natural gas — the dominant fuel in New England — gets expensive. In summer, heat waves drive demand spikes. ISO-NE publishes day-ahead and real-time locational marginal prices (LMPs) hourly.
• Capacity market: The Forward Capacity Market (FCM) is the mechanism ISO-NE uses to ensure enough generation capacity exists three years out. Suppliers buy this capacity and pass the cost through to customers. The most recent annual auction (FCA 16, covering June 2026-May 2027) cleared at $3.58/kW-month — historically low, reflecting excess capacity in the current period. Higher clearing prices in future auctions will flow through to commercial bills.
• Ancillary services: ISO-NE runs markets for frequency regulation, operating reserves, and voltage support. These costs are allocated to load — meaning commercial customers pay for them through their retail supply contracts or utility bills. Ancillary service costs spiked materially in 2024/2025 above forecast levels, adding to C&I supply costs across the region.
• REC obligations: Massachusetts has a Renewable Portfolio Standard (RPS) requiring retail suppliers to source a percentage of supply from Class I renewables. In 2026, the Class I requirement is roughly 25% of retail sales. Compliance costs are passed through to commercial contracts — and green product add-ons carry additional REC premiums.

What This Means When You’re Quoting Clients

When a supplier prices a fixed-rate contract for your client, they’re pricing a forward position that includes energy, capacity, ancillary services, REC compliance, and their own margin. Each component carries risk. Capacity costs are locked in at FCA prices for the delivery year. Energy costs are hedged at current forward prices. Ancillary service costs are passed through — meaning some contracts include an ancillary services passthrough clause.

Understanding these components helps you explain to clients why prices change over time, what the supply rate includes, and why a supplier with good market intelligence and hedging discipline can offer better value than one that doesn’t actively manage its book.

The CAR Phase 1 Reforms: What’s Coming

ISO-NE is in the process of implementing Capacity Auction Reform (CAR Phase 1), approved by FERC in 2024. The most significant change: shifting from three-year-forward capacity auctions to prompt auctions held closer to the delivery period. This changes the risk profile for suppliers who currently lock in capacity costs years in advance. As the reform implements, expect some repricing in how suppliers structure forward offers.

How to Use This Knowledge with Clients

You don’t need to be an ISO-NE expert to serve clients well. But being able to explain the difference between energy cost and capacity cost, what drove the winter price spike, or why ancillary services costs are rising puts you in a different category from brokers who just say ‘rates went up.’ It builds trust, reduces churn, and positions you as a long-term advisor rather than a transaction facilitator.

Contact Gridwealth Electric: Gridwealth Electric publishes regular ISO-NE market intelligence through our weekly briefing. Contact our team at tford@gridwealth.com to discuss the market and our broker program.