FERC tells New York ISO more clarity needed on reliability-must-run issues

The Federal Energy Regulatory Commission on Feb. 19 directed the New York Independent System Operator to file tariff revisions to establish rates, terms and conditions for reliability-must-run (RMR) service under which power units that are to shut down, but are needed to ensure transmission system reliability and the efficient operation of the NYISO markets, remain in service.

The lack of tariff provisions for such service in NYISO creates uncertainty and could undermine the operation of the grid, FERC said. The commission explained that, without RMR service provisions, NYISO may be unable to ensure there is adequate generation where it is needed, or that such generation is adequately compensated so that it is available when needed.

The commission directed NYISO to submit a compliance filing within 120 days that includes tariff provisions governing the retention of, and compensation to, generating units required for reliability, and a pro forma service agreement for RMR service. The Feb. 19 order provided general guidance on the elements NYISO should address in its compliance filing. Those elements include:

  • a process for determining which generation resources seeking to deactivate are needed for reliability;
  • compensation for RMR service, including accelerated cost recovery for generators that require upgrades, retrofitting or other investments; and
  • how RMR costs should be allocated.

The proposal also must include rules to prevent, or at least minimize, incentives for generators to toggle between market-based and RMR compensation for the same units. The commission emphasized that, while RMR agreements may be appropriate, they should be of limited duration and not prolong out-of-market solutions that potentially could undermine price formation.

In two related orders issued Feb. 19, the commission addressed filings Dunkirk Power LLC and Cayuga Operating Co. submitted regarding RMR service in the NYISO market for their coal-fired power plants. In both cases, the plant operators want to convert the plants to firing natural gas, and if they can’t do that, retire them. Issues have been arising having to do with operating them in the meantime and whether it is economic to do so. 

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.