UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

Energy Spectrum, Inc. and Riverbay)

Corporation)

)

v.)Docket No. EL12-56-000

)

New York Independent System Operator, Inc. )

REQUEST FOR LEAVE TO ANSWER AND ANSWER OF THE
NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

In accordance with Rule 213 of the Commission’s Rules of Practice and Procedure,1 the
New York Independent System Operator, Inc. (“NYISO”), respectfully requests leave to answer
and answers the April 20, 2012 Motion for Leave to Answer and Answer of Energy Spectrum,
Inc. and Riverbay Corporation (the “Riverbay Answer”). The NYISO understands the
Commission’s preference that parties avoid responding to answers when possible. It is making
this filing solely to correct major misstatements in the Riverbay Answer. The fact that the
NYISO has confined itself to addressing the most significant factual and tariff interpretation
errors should not be construed as agreement with, or acceptance of, any of the Riverbay
Answer’s other assertions. Nothing in the Riverbay Answer alters the fact that the underlying
Complaint2 in this proceeding is without merit and should be dismissed in its entirety.

I.REQUEST FOR LEAVE TO ANSWER

The Commission has discretion to accept responses to answers when they help to clarify
complex issues, provide additional information, or are otherwise helpful in the development of

1 18 C.F.R. § 385.213 (2011).

2 Complaint of Energy Spectrum, Inc. and Riverbay Corporation and Request for Fast-Track Processing and Summary Disposition, April 12, 2012 (“Complaint”).

the record in a proceeding.3 The Riverbay Answer makes major misstatements and proposes a

fundamentally erroneous interpretation of the NYISO’s Market Administration and Control Area Services Tariff (“Services Tariff”). It confuses the issues in this proceeding and must be
corrected so that the Commission will have an accurate record. This answer focuses exclusively on correcting the most significant errors and the Commission should therefore exercise its
discretion to accept it.

II.ANSWER

The Riverbay Answer begins by wrongly asserting that the “impact of TB 217 is to

prohibit Special Case Resource (‘SCR’) behind the meter generation from participating in the NYISO’s Installed Capacity (‘ICAP’) market ” which it supposedly does by “changing

definitions” set forth in, and by altering the “meaning” of section 5.12.11.1, of the Services

Tariff.4 The truth is that Technical Bulletin 217 does no such thing. Technical Bulletin 217 does
not prevent behind the meter generation from participating in the SCR program provided that it
can satisfy the Services Tariff’s core, reliability-based, eligibility requirement. Specifically,
behind the meter generation must be able to reduce demand at the direction of the NYISO in
order to enroll as a SCR. If it cannot satisfy this requirement it may not, and should not be
permitted to, provide Installed Capacity. Contrary to the impression that the Riverbay Answer

3 See e.g., New York Independent System Operator, Inc., 108 FERC ¶ 61,188 at P 7 (2004)

(accepting the NYISO’s answer to protests because it provided information that aided the Commission in
better understanding the matters at issue in the proceeding); Morgan Stanley Capital Group, Inc. v. New
York Independent System Operator, Inc., 93 FERC ¶ 61,017 at 61,036 (2000) (accepting an answer that

was “helpful in the development of the record...”).

4 Riverbay Answer at 2. The Riverbay Answer also repeats the Complaint’s claims that Technical Bulletin 217 made “substantial changes” to the tariff in contravention of NYISO governance requirements and the Federal Power Act. The NYISO has already explained that Technical Bulletin 217 simply
restated and clarified existing Services Tariff requirements and did not change any rules. See Answer and Request for Expedited Action of the New York Independent System Operator, Inc., April 19, 2012 at 6-10. The NYISO is therefore not addressing these allegations further here.

seeks to create, there is behind the meter generation in New York that meets this requirement and that will continue to be eligible to participate in the SCR program.

In fact, it is the Riverbay Answer, and not Technical Bulletin 217, that attempts to rewrite
the Services Tariff in this proceeding. The Riverbay Answer would create an alternative set of
SCR program eligibility criteria for behind the meter generation with no basis in the text of the
Services Tariff or the purpose of the program. It effectively asks the Commission to read the
Services Tariff to allow Installed Capacity Suppliers5 to be paid for reducing demand even if
they have no ability to actually provide demand reductions when needed.
Complainants deny that the Services Tariff’s definition of “Capacity” requires SCRs to have the ability to “control demand at the direction of the ISO” by noting that the definition also encompasses resources that “generate or transmit electrical power.”6 Complainants fail to
acknowledge, however, that behind the meter generation enrolled as a SCR does not provide
capacity as a “Generator” under the Services Tariff. Like any other SCR, behind the meter
generation is eligible to receive capacity payments based on its ability to reduce demand, not its
ability to “generate electrical power” for the grid. The tariff recognizes this distinction by
identifying “Responsible Interface Parties” (“RIPs”) and “Generators” as separate classes of
“Installed Capacity Supplier” and in numerous other ways.7

Further, it is important to note that merely meeting the definition of “Capacity” does not
confer automatic eligibility for compensation in the NYISO’s Installed Capacity markets.
Section 5 of the Services Tariff contains the requirements for any facility meeting the definition

5 Capitalized terms that are not otherwise defined herein shall have the meaning specified in Section 2 of the Services Tariff.

6 See Riverbay Answer at 11.

7 See, e.g., Section 2.0 of the Services Tariff (establishing the definition of “Installed Capacity Supplier.”); Section 5.12 (differentiating between RIPs and Generators with respect to various Installed Capacity Supplier requirements).

of “Capacity” to sell its Capacity. For Generators choosing to connect to the electric

transmission grid to sell Capacity and Energy at wholesale, Section 5.12.1 et seq. establishes

testing, Day-Ahead Bidding and outage reporting requirements, among others. Similarly, section

5.12.11.1 requires behind the meter generators, choosing not to sell Energy at wholesale but

desiring to sell their Capacity in the SCR program, to have the ability “to control demand at the direction of the ISO.” The distinction between participating in the Installed Capacity market as a SCR and a Generator is also clearly referenced in the letter from Mr. Allen that is included in Exhibit 1 to the Riverbay Answer.

Complainants also quote selectively from section 5.12.11.1 to make it seem as though a
SCR need not comply with subsection (i), which requires that it is “available to operate … at the
direction of the ISO,” if it has reported behind the meter generation that was operating as a Load
modifier coincident with the peak.8 Complainants’ reading of 5.12.11.1 is wrong. A SCR
cannot ignore the requirements of subsection (i), which unambiguously applies to all potential
SCRs, simply because it has reported behind the meter generation in accordance with subsection
(ii). Both requirements apply to a SCR that seeks to participate with behind the meter
generation.

The Riverbay Answer advances the remarkable claim that the fact that behind the meter
generation that could not reduce demand at the NYISO’s direction was apparently enrolled in the
SCR program in the past means that such enrollments must be permissible. Resources that
cannot reduce their demand may not participate as SCRs under the Services Tariff. Commission
precedent is clear that “informal communications between the parties, such as phone calls and

8 See Riverbay Answer at 2.

e-mails, do not take precedence over the language of the filed tariffs.”9 Accordingly, the

communications included in the Riverbay Answer do not represent an affirmative NYISO

endorsement of their participation and are not relevant. They provide no support for

Complainants’ attempt to revise the Services Tariff’s prohibition on the enrollment in the SCR program of resources that cannot reduce their demand.

Finally, the Riverbay Answer claims that the NYISO timed the issuance of Technical

Bulletin 217 to coincide with religious holidays in order to “[ensure] that interested stakeholders would not be able to obtain relief from the Commission ” in advance of the registration

deadline for the May ICAP Spot Auctions.10 The NYISO takes exception to this false

insinuation. The NYISO issued Technical Bulletin 217 on Friday, April 6, 2012, a day that it, and many other institutions (including the federal government) was open for business, after reviewing the comments it received from stakeholders. The NYISO issued Technical
Bulletin 217 on that date to provide RIPs with certainty regarding the SCR enrollment rules at the earliest possible time during the May enrollment period.

III.CONCLUSION

WHEREFORE, for the foregoing reasons, the New York Independent System Operator, Inc. (“NYISO”), respectfully requests that the Commission accept this answer and renews its request that the Commission dismiss the Complaint in its entirety.

Respectfully submitted,

/s/ Ted J. Murphy

Ted J. Murphy
Counsel to

the New York Independent System Operator, Inc.

April 24, 2012

9 See New York Independent System Operator v. Astoria Energy LLC, 118 FERC ¶ 61,216 at P 36, citing Arco Oil and Gas Co., 22 FERC ¶ 61,293 at 61,515 (1983).

10 Riverbay Answer at 3.

CERTIFICATE OF SERVICE

I hereby certify that I have this day caused the foregoing document to be served upon

each person designated on the official service list complied by the Secretary in this proceeding in accordance with the requirements of Rule 2010 of the Rules of Practice and Procedure, 18 C.F.R. § 385.2010 (2011).

Dated at Washington, DC this 24th day of April, 2012.

By:/s/ Ted J. Murphy

Ted J. Murphy

Hunton & Williams LLP

2200 Pennsylvania Avenue, NW Washington, D.C. 20037