FERC Approves ISO-NE Capacity Market Change That Could Spike NY Capacity Prices By $340 Million
October 19,2016
FERC approved, effective October 19, 2016, tariff changes at ISO-NE that, among other things, will accelerate when imports may participate in the ISO-NE capacity market which New York regulators said could spike New York capacity prices by $340 million.
The issue for New York is that, under such ISO-NE change, the capacity from the 511 MW Roseton generating facility, in NYISO capacity-constrained G-J Locality, could be imported to ISO-NE as soon as June 1, 2017. Currently, Roseton has a capacity supply obligation in ISO-NE beginning June 2018
NYISO and the PSC explained that NYISO’s existing capacity market rules treat a generator that exports capacity outside of New York (e.g., Roseton) as though it does not exist in the NYCA. "The local reliability benefit that the resource supporting the export provides, however, accrues to the bulk system in NYCA even if the exporting generator is deemed non-existent by the NYISO’s existing capacity market rules," the PSC said
In other words, the NYISO market will clear as if the Roseton unit does not exist. "Under the current market rules, allowing a generator in a NYISO Locality to begin exporting capacity in June 2017 could result in inefficient capacity cost increases in the NYISO’s 2017/2018 Capability Year of as much as $341 million," NYISO said
NYISO and the NY PSC had sought to delay the effective date of the ISO-NE tariff changes until NYISO market rules were changed to fix the issue.
In adopting the ISO-NE tariff changes effective October 19, 2016, FERC said, "the concerns raised by NYISO are not the result of ISO-NE’s proposed tariff revisions, but result from NYISO’s treatment of generators that export capacity from within a constrained locality under its current market rules. We are not persuaded that the potential behavior of New York suppliers provides a sufficient basis to reject ISO-NE’s filing in this case, and deferring the effective date of an otherwise just and reasonable proposal would be inconsistent with the notice provision in section 205 of the FPA."
FERC noted that stakeholder documents indicate that NYISO is anticipating filing relevant tariff changes to fix the issue on November 16, 2016, in order to have new rules in place before the NYISO 2017-2018 Strip Auction. However, NYISO has noted that any tariff changes are expected to be controversial, and cautioned against conclusions that any change will be in place quickly.
FERC said NYISO should file an information report concerning the status of such changes on or before November 4, 2016, "so that the Commission can assess whether additional Commission action would be appropriate."