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Compliance with Commission Rule 213(c)(2)

A. Specific Admissions and Denials of Material Allegations

In accordance with Commission Rule 213(c)(2)(i), to the extent practicable and to the
best of the New York Independent System Operator, Inc.’s (“NYISO”) knowledge and belief at this time, the NYISO admits or denies the factual allegations in the Complaint, as specified
below. To the extent that any fact or allegation in the Complaint is not specifically admitted
below, it is denied. Except as specifically stated herein, the NYISO does not admit any facts in the form or manner stated in the Complaint. Denials of allegations made in the text of the
Complaint should be understood as encompassing all related allegations and assertions regarding the attachments accompanying the Complaint.

1.Denials

The NYISO denies all allegations and characterizations that the decision to cease

determining Going-Forward Cost (“GFCs”) for Astoria Generating Company, L.P.’s

(“AGC”) generating units for the March, April and May 2012 ICAP Spot Market

Auctions violated the NYISO’s Market Administration and Control Area Services Tariff

(“Services Tariff”).(Complaint at 1, 15).

The NYISO denies all allegations and characterizations that the Services Tariff does not

include a requirement that a supplier must provide, in support of a GFC request,

information that the NYISO determines satisfactorily supports the request. (Complaint
at 16).

The NYISO denies all allegations and characterizations that the decision to cease

determining GFCs for AGC’s generating units was an “abuse of discretion” under the Services Tariff. (Complaint at 19).

The NYISO denies all allegations and characterizations that AGC’s requests

“unquestionably satisfied” the Services Tariff criteria.(Complaint at 17).

The NYISO denies all allegations and characterizations that there were no material

changes in fact relevant to AGC’s GFC determinations between the February 2012 ICAP Spot Market Auction and the March 2012 ICAP Spot Market Auction.
(Complaint at 3, 13, 19).

The NYISO denies all allegations and characterizations that its decision to cease

determining GFCs was unexplained or unjustified. (Complaint at 3, 13, 14).

The NYISO denies all allegations and characterizations that it did not identify the

additional information and clarifications that AGC was required to submit to support its requests for GFCs. (Complaint at 13, 14).

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The NYISO denies all allegations that its requests for additional information regarding

AGC’s generating units were unclear. (Complaint at 13, 14).

The NYISO denies all allegations and characterizations that its determination of GFCs

for October 2011, November 2011, December 2011, January 2012 and February 2012 established a “course of performance” that required the NYISO to continue issuing GFCs or that demonstrated that the AGC GFC requests were satisfactory and met all tariff criteria. (Complaint at 18).

The NYISO denies all allegations and characterizations that the NYISO could not have

reasonably determined that AGC failed to provide satisfactory information for its GFC requests. (Complaint at 20, 21).

The NYISO denies all allegations and characterizations that its decisions to not

determine GFCs for AGC’s generating units for March, April and May 2012 were “patently unreasonable.” (Complaint at 20, 21).

The NYISO denies all allegations and characterizations that GFC determinations must

be issued unless the NYISO determined that each cost element included in the GFC determinations of each AGC generation unit was invalid. (Complaint at 20).

The NYISO denies all allegations and characterizations that its reduction of GFCs for

some of AGC’s units in its GFC determinations was inappropriate. (Complaint at 20).

The NYISO denies all allegations and characterizations regarding the causes of the July

2011 reduction in New York City capacity prices. (Complaint at 10 and fn. 31).

The NYISO denies all allegations and characterizations that it is “[e]liminating the

ability of suppliers to offer capacity into ICAP Spot Market Auctions at their [GFCs].”

(Complaint at 22).

2.Admissions

The NYISO admits that it provides open access transmission service, facilitates

reliability services, and administers organized wholesale markets for electricity,

capacity, and ancillary services in New York State pursuant to its OATT and Services

Tariff. (Complaint at 5).

The NYISO admits that its responsibilities under the Services Tariff include

determining GFCs and administering monthly ICAP Spot Market Auctions. (Complaint

at 5).

The NYISO admits that the rules set forth in Attachment H of Services Tariff provide

for the determination of GFCs by the NYISO. (Complaint at 2).

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The NYISO admits that the Services Tariff provides it with discretion regarding GFC

determinations and does not require the NYISO to “rubber-stamp” a supplier’s GFC claims. (Complaint at 17).

The NYISO admits that AGC requested GFC determinations for its generating units

beginning on July 8, 2011 and that such request was submitted more than 50 business

days in advance of the deadlines for offers into the October 2011 Auction. (Complaint at 10, 17, 18).

The NYISO admits that it determined GFCs for ICAP Spot Market Auctions beginning

with October 2011 and through February 2012. (Complaint at 2, 11).

The NYISO admits that it requested additional information and clarification from AGC

regarding its requests for GFCs. (Complaint at 3, 10, 11).

The NYISO admits that it reduced GFCs for two of AGC’s units because it believed that

certain costs were overstated, beginning with the January 2012 Auction. (Complaint at

20).

The NYISO admits that it made numerous additional requests for information to AGC,

including one on March 5, 2012. (Complaint at 14).

The NYISO admits that it made adjustments to GFC determinations applicable to prior

beginning with the November 2011 Auction and that those adjustments concerned the GFCs for two of AGC’s generating units. (Complaint at 12, 13).

The NYISO admits that prior to the ICAP Spot Market Auctions for March 2012, April

2012, and May 2012, it informed AGC that it would not be determining GFCs for AGC’s generating units for the respective auction. (Complaint at 13, 14).

B.Defenses

In accordance with Commission Rule 213(c)(2)(ii), the NYISO sets forth the following defenses.

 Complainants have failed to meet their burden of proof under section 206 and 306 of the
FPA, and Commission Rule 206.

 The Complaint is moot and should be dismissed because Units 20 and 40 have been

mothballed, and the NYISO is prepared to determine GFCs for AGC’s generating units if future requests are supported by complete information.

 Complainants have failed to show that the NYISO’s decisions not to determine GFCs for
AGC’s generating units for March, April and May 2012 were inconsistent with the
Services Tariff.

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 Complainants have failed to show the NYISO’s decisions not to determine GFCs for
AGC’s generating units for March, April and May 2012 were unreasonable or
represented an “abuse of discretion.”

 Complainants have failed to show that the NYISO’s decisions not to determine GFCs for
AGC’s generating units for March, April and May 2012 were inconsistent with the
issuance of GFC determinations in prior months.

C.Proposed Resolution Process

Commission Rule 213(c)(4) states that an answer “is also required to describe the formal or consensual process it proposes for resolving the complaint.” In compliance with that
requirement, the NYISO requests that the Complaint be dismissed based solely on the pleadings in this proceeding.

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Attachment 2

Letter from Joshua A. Boles to

Mark R. Sudbey and Kiran Ramineni
Dated February 2, 2012

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Attachment 3

Letter from Joshua A. Boles to

Mark R. Sudbey and Kiran Ramineni
Dated February 10, 2012

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Attachment 4

Letter from Joshua A. Boles to

Mark R. Sudbey and Kiran Ramineni
Dated February 13, 2012

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Attachment 5

Excerpt included as enclosure to the Letter from Mr. Liam T.
Baker to Joshua A. Boles (dated February 9, 2012)

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Attachment 6

Letter from Mr. Liam T. Baker to Joshua A. Boles
Dated February 9, 2012

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Attachment 7

Letter from Mr. Liam T. Baker to Joshua A. Boles
Dated February 15, 2012

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Attachment 8

April 11, 2012 Notice of Mothball Status
of Astoria Generating Company for Unit 20

ASTORIA

GENERATING

A USPOWERGEN COMPANY

April 11, 2012

VIA ELECTRONIC MAIL

Mr. Ricardo Gonzales, Chief Operating Officer
New York Independent System Operator, Inc.

10 Krey Blvd.

Rensselaer, NY 12144

RE: Notice of Mothball Status of Astoria Generating Company, L.P.
Astoria Unit 20 PTID 24149

Nameplate Rating 180MW

Dear Mr. Gonzales:

This letter is to inform you that Astoria Generating Company, L.P. ( the “Company”) is placing its 180 MW Astoria Unit 20 (the “Unit” or “Unit 20”) in NERC Mothball State status effective immediately.

By way of background, in August 2011, the Company requested that the New York Independent System Operator, Inc. (the “NYISO”) conduct a reliability study for several generating units being considered by the Company for “mothballing”. After receiving the results in early December 2011 that showed a de minimis impact of mothballing Unit 20, on December 14, 2011 the Company filed a notice of its intention to mothball the Unit with the New York Public Service Commission (“PSC”).

Unit 20, of 1952 vintage, is one of the oldest steam generating units in New York having been retired in 1993 and

subsequently restored and returned to the market in 2000. More recently based on a condition assessment performed
by the company, it was decided that the Unit was unsafe to operate without completion of significant maintenance
work. On January 31, 2012, the Company’s internal assessment was confirmed by an independent engineering firm
which recommended that, due to safety concerns and the possibility for significant equipment damage, the Unit
turbine not be operated until: (i) a full condition assessment is completed; and (ii) any critical recommendations

identified by the condition assessment are rectified.

As part of the mothball process, Con Edison conducted a more extensive reliability review and notified the Company on January 27, 2012 that through its analysis of its second phase of the reliability study with respect to the
mothballing of Unit 20, it had identified substantial second contingency reliability problems associated with the
mothballing of Unit 20 given the continued outage of Unit 40. On February 1, 2012 the Company met with New York State Department of Public Service (“DPS”) staff to inform them of the Company’s inability to bring the Unit back into service in the near term and offered them full cooperation in finding and implementing reliability solutions for the upcoming summer 2012 period. On February 10, 2012 the Unit’s status was changed to a forced outage given the Company’s conclusion of its internal assessment as described above.

The Company was notified by Con Edison and subsequently DPS staff that a temporary solution for the reliability
problem had been identified. That temporary solution, while in place, occupies the Unit's point of interconnection.
To facilitate this solution for summer 2012, the Company provided its point of interconnection at no cost to Con
Edison. The Company has been notified by Con Edison that the solution will be in place in early May at which point the Unit will no longer be deliverable until such time as a permanent solution can be identified. As the NYISO is
aware, the Company has worked closely with Con Edison to ensure that this temporary reliability solution was
developed and in place by May.

While the 180-day PSC notification period does not conclude until June 11, 2012, under NERC reporting

requirements (attached), 60 days after a unit is forced out if an affirmative decision to not repair the unit has been

made, the unit status should be changed to mothball status and under the NYISO rules the unit may no longer provide
capacity. The attached letter dated September 13, 2012 from Karen Gach regarding availability, albeit with respect to
Unit 40 and for which we presume the NYISO’s opinion would be the same for Unit 20, further states that “if at any
point AGC (the Company) determines that it does not plan to perform repairs in order to return Unit 40 to service, and
AGC continues to offer UCAP from Unit 40, AGC may be subject to a deficiency charge.” Given this information,
the cost of Unit repairs and the Company’s forecast view of market prices, there is no legitimate economic

justification for Unit 20 operation. Thus, the Company does not intend to repair the Unit at this time. Consistent with the NYISO’s Installed Capacity Manual, a unit placed in a NERC Inactive State is not qualified to participate in the NYISO Installed Capacity Market. Accordingly, please remove the unit from the NYISO capacity market as well as the energy and ancillary service markets since the Unit will no longer qualify to be offered in the day ahead or real time markets or otherwise available to provide service.

In conclusion, the Company is therefore providing this notice of the Unit’s unavailability (NERC Mothball State) and removal from the NYISO markets. We are also contemporaneously notifying the New York Public Service
Commission of the Unit’s NERC status by copy of this letter.

Sincerely,

Mark Sudbey

Chairman and CEO

US Power Generating Company

cc: Jaclyn Brilling (PSC)

Kevin Burke(Con-Ed)

Astoria Generating Company, L.P.

300 Atlantic Street, 5th Floor,

Stamford, CT 06901

T: 212.792.0800 / 203.614.0500
F: 212.792.0899 / 203.614.0599

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Attachment 9

April 18, 2012 Notice of Mothball Status of
Astoria Generating Company for Unit 40

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Attachment 10

Letter from Mr. Liam T. Baker to Joshua A. Boles
Dated January 13, 2012

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