Power generators protest delay of exports from New York into ISO-NE

The Independent Power Producers of New York (IPPNY) and the New England Power Generators Association (NEPGA) on Sept. 20 filed a protest at the Federal Energy Regulatory Commission over an effort by the New York Independent System Operator to delay a power import program from New York into the New England region.

In its Sept. 9 filing, the NYISO protested a proposal by ISO New England (ISO-NE) and the New England Power Pool Participants Committee to permit certain generators in constrained capacity areas (called “Localities”) in the New York Control Area (NYCA) to begin exporting capacity to New England as early as June 2017. The NYISO claimed that exports of capacity from Localities to New England “creates a substantial risk of unjustifiably increasing New York capacity prices and creating inefficient price signals in the NYISO-administered capacity market.”

The two power groups said in their Sept. 20 protest that while the NYISO confirms that it has work underway to develop tariff revisions to address export transactions to New England in the 2017-2018 capability year, it requests that the commission defer the implementation of the proposal for one capacity year for generators located in Localities so that it would first apply for capacity commitments beginning June 1, 2018. They added: “[T}he Commission must reject the NYISO’s request to delay the ability of generators in Localities to sell capacity into New England.

IPPNY is a not-for-profit trade association representing the independent power industry in New York whose membership includes nearly 100 companies involved in the development and operation of electric generators and the sale of electric power in New York. NEPGA is the trade association representing competitive power generators in New England. NEPGA’s member companies represent approximately 26,000 MW, or roughly 80% of the installed capacity in New England.

The NYISO said that its request to delay the ability of generators in Localities to export capacity to New England for one capacity year “would enable the NYISO to work deliberately to adopt a solution to prevent significant market inefficiencies and adverse consumer impacts in New York.” The power groups said that NYISO states that if its request is granted, resources in Localities would not lose opportunities they currently have under the ISO-NE tariffs but would instead not be afforded a new opportunity to export capacity to ISO-NE during the 2017/2018 Capacity Commitment Period. The NYISO argues that “the potential impact of hundreds of millions of dollars on New York consumers far outweighs a ‘lost’ opportunity for a handful of potential exporters.”

The NYISO states that if its request is denied, it “would attempt to fashion an immediate market rule change to try to avoid pricing inefficiencies.” The power groups said the commission should reject the NYISO’s request because, if granted, it is contrary to open and efficient competitive markets by unfairly preventing the sale of capacity from a lower cost region to a higher cost region when transfer capability is otherwise available for such transactions.

They added: “The NYISO does not point to any flaw in the Proposal or ISO-NE capacity market. The only flaw raised by the NYISO is its belief that the NYISO’s tariff fails to recognize a reliability benefit that capacity exports from resources in Localities provide to New York. Yet, so long as capacity prices in ISO-NE are greater than capacity prices in New York, the NYISO’s longstanding market power mitigation rules recognize that exports of capacity to New England are efficient and consistent with a competitive market. Nor is the NYISO’s extraordinary remedy required. As the NYISO reported to market participants as recently as yesterday’s Installed Capacity Working Group meeting, the NYISO has produced a time line to develop, vet with market participants, and propose changes to its tariff for the 2017-2018 capability year to the Commission by November 2016, which could become effective by January 2017.

“The NYISO reported to market participants that it intends that its proposed tariff changes be in place only temporarily for the 2017/2018 capability year and that it intends to work with stakeholders to consider permanent rules to more broadly address exports from constrained capacity areas that would then go into effect for the 2018/2019 capability year and future years. This, in turn, would allow the NYISO to fully explore the issues associated with the export of capacity including, but not limited to, how exports should be addressed in the Installed Reserve Margin and Locational Capacity Requirement processes.

“As of the date of this filing, the NYISO is well along in developing a proposal that would reflect in its market rules the reliability benefits of sales of capacity from Localities to New England to address the NYISO’s concerns of creating inefficient price signals in the NYISO-administered capacity market. Projected changes in the market clearing prices resulting from proposed tariff revisions would be addressed before the Commission. IPPNY and its members have been actively engaged in these discussions and are committed to continue to work collaboratively in the stakeholder process to consider whether rule changes are required and, if so, to develop rules that are consistent with competitive market outcomes.”

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.