146 FERC ¶ 61,097

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Cheryl A. LaFleur, Acting Chairman;
Philip D. Moeller, John R. Norris,

and Tony Clark.

New York Independent System Operator, Inc.Docket No. ER14-552-000

ORDER CONDITIONALLY ACCEPTING TARIFF REVISIONS
(Issued February 20, 2014)

1. On December 6, 2013, the New York Independent System Operator, Inc.
(NYISO) filed proposed tariff amendments to its Open Access Transmission Tariff
(OATT) and its Market Administration and Control Area Services Tariff (Services
Tariff) to add new real-time External Transaction bidding and scheduling rules.1
These new real-time market rules, together known as Coordinated Transaction
Scheduling (CTS), are proposed for use at specifically designated Proxy Generator
Buses (CTS Enabled Proxy Generator Buses) between NYISO and PJM
Interconnection, LLC (PJM) (together, the ISOs). For the reasons discussed
below, the Commission conditionally accepts the proposed tariff revisions and
grants the requested waiver to allow the tariff records to be effective the later of
November 2014 or the date that CTS becomes operational, subject to a further
compliance filing with the Commission as discussed below.

I.Background

2.NYISO explains that CTS is a set of real-time market rules that allows for

the scheduling of imports and exports based on a transmission customer’s

willingness to purchase energy at a source in the PJM Control Area or NYISO

Control Area and sell the energy at a sink in the other region’s Control Area if the
forecasted price at the sink minus the forecasted price at the corresponding source

1 The proposed tariff revisions are listed in the appendix. On December 13, 2013, PJM submitted its own separate filing regarding the implementation of CTS, which proposed revisions to Attachment K-Appendix of its OATT and Schedule 1 of its Amended and Restated Operating Agreement in Docket No. ER14-623-000. That filing is addressed in a contemporaneous order in that docket.

Docket No. ER14-552-0002

is greater than or equal to the dollar value specified in the CTS Interface Bid.

NYISO states that PJM and NYISO intend to designate all four of the PJM Proxy
Generator Buses as CTS Enabled Proxy Generator Buses by November 2014.2

3. In a series of orders addressing proposed tariff revisions by ISO New
England (ISO-NE) and NYISO, the Commission accepted a similar CTS
mechanism for implementation at NYISO’s primary interface with ISO-NE.3
NYISO states that the proposed tariff revisions discussed herein were developed
by building upon the tariff language accepted by the Commission in the April
2012 Order. NYISO notes, however, that the proposed tariff revisions have been
developed to both account and allow for the differences between CTS
implementation with PJM and CTS implementation with ISO-NE.

4. NYISO states that Potomac Economics, NYISO’s external market monitor,
has endorsed CTS as a method for improving the efficiency of energy trading
across the external interfaces at which it is implemented. Further, NYISO states
that joint studies conducted by NYISO and PJM demonstrate that CTS should
result in more efficient scheduling at the ISOs’ border, closer alignment of the
ISOs’ clearing prices, and provide a net benefit to customers from PJM and
NYISO. NYISO notes that the ISOs have also executed an iterative, supply curve
based analysis in order to analyze the production cost savings that both ISOs could
have realized in 2012 if CTS had been implemented and effectively utilized by
transmission customers. NYISO states that the analysis indicated that the total
potential cost reduction ranged from almost $9 million/year to over
$26 million/year.

II.Notice of Filing and Responsive Pleadings

5.Notice of NYISO’s December 6, 2013 filing was published in the Federal

2 NYISO states that the ISOs propose to implement CTS at the PJM

Keystone Proxy Generator Bus, the Neptune Scheduled Line Proxy Generator
Bus, the Linden VFT Scheduled Line Proxy Generator Bus and the HTP
Scheduled Line Proxy Generator Bus. NYISO December 6, 2013 Filing at 1 n.3.

3 N.Y. Indep. Sys. Operator, Inc., 139 FERC ¶ 61,048 (2012) (April 2012 Order); ISO New England, Inc. and New England Power Pool, 139 FERC
¶ 61,047 (2012).

Docket No. ER14-552-0003

6. The New York State Public Service Commission, Exelon Corporation, and
NRG Companies filed timely motions to intervene. Indicated New York
Transmission Owners (Indicated NYTOs)4 filed a timely motion to intervene and
comments. Great Bay Energy, LLC and the Financial Marketers Coalition (Great
Bay Energy and the Coalition) filed a timely motion to intervene and protest.

7. On December 30, 2013, the PSEG Companies (PSEG)5 filed an out-of-time
motion to intervene. On January 10, 2014, Con Edison Energy filed an out-of-
time motion to intervene. On January 10, 2014, NYISO filed an answer to Great
Bay Energy and the Coalition’s protest. On February 3, 2014, NYISO filed an
answer to a request to consolidate Docket Nos. ER14-552-000 and ER14-864-000,
which Great Bay Energy and the Coalition filed in Docket No. ER14-864-000.6
On February 12, 2014, Great Bay Energy and the Coalition filed a motion to
strike, or in the alternative, to answer NYISO’s February 3, 2014 answer.

III.Discussion

A.Procedural Issues

8.Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.214 (2013), the notice of intervention and timely unopposed

motions to intervene serve to make the entities that filed them parties to this

proceeding. Pursuant to Rule 214(d) of the Commission’s Rules of Practice and

4 Indicated NYTOs collectively consist of Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., New York Power Authority, New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, Orange and Rockland Utilities, Inc. and
Rochester Gas & Electric Corporation.

5 The PSEG Companies consist of PSEG Energy Resources & Trade LLC and PSEG Power New York LLC.

6 On January 17, 2014, Great Bay Energy and the Coalition filed a protest
in Docket No. ER14-864-000 requesting, inter alia, that the Commission
consolidate Docket Nos. ER14-552-000 and ER14-864-000. In Docket No. ER14-
864-000, NYISO proposes tariff amendments to simplify and improve the real-
time market pricing rules that apply at NYISO’s external proxy generator buses
and to eliminate the real-time bid production cost guarantee for imports (real-time
import guarantee) at all of the New York Control Authority’s (NYCA) proxy
generator buses.

Docket No. ER14-552-0004

Procedure, 18 C.F.R. § 385.214(d) (2013), the Commission will grant PSEG’s and
Con Edison Energy’s late-filed motions to intervene given their interest in the
proceeding, the early stage of the proceeding, and the absence of undue prejudice
or delay.

9. Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure,

18 C.F.R. § 385.213(a)(2) (2013), prohibits an answer to a protest or to an answer unless otherwise ordered by the decisional authority. We will accept the answers filed in this proceeding because they have provided information that assisted us in our decision-making process.

B.Coordination Transaction Scheduling

1.Proposal

a.Interface Pricing

10.NYISO states that, under its proposal, once a Proxy Generator Bus at the

NYISO/PJM border is CTS enabled, importing and exporting transmission

customers will gain the option to submit CTS interface bids at that bus.7 NYISO
explains that transmission customers would submit a single CTS interface bid to
indicate their desire to simultaneously buy in one control area and sell into the
other based on the forecasted price difference between the NYISO and PJM
markets at the relevant locations. NYISO states that every 15 minutes it would
use its Real-Time Commitment (RTC) optimization, incorporating PJM’s

7 NYISO explains CTS interface bids can be used to schedule both

transactions to buy and sell energy from the ISOs’ locational based marginal price
markets and bilateral transactions to schedule transmission service for a private
energy sale. Wheel-through transactions at CTS Enabled Proxy Generator Buses
would use decremental bids, as they do currently. NYISO December 6, 2013
Filing at 3 n.11.

Docket No. ER14-552-0005

forecasted prices and submitted CTS interface bids, decremental bids8 and sink price cap bids9 to determine cross border transaction schedules.10

11. NYISO explains that, under its proposal, NYISO’s economic evaluation in its RTC will schedule CTS interface bids that would be profitable given the
projected PJM and NYISO prices at each CTS Enabled Proxy Generator Bus.
NYISO states that its RTC will use the most recently available information on
prices from PJM’s IT SCED to schedule imports and exports, and to produce
forward-looking advisory schedules. NYISO notes that it will provide PJM with the advisory schedules produced by each RTC evaluation so that PJM can utilize these schedules in subsequent IT SCED runs. NYISO contends that, as a result, RTC and IT SCED will be more closely aligned and will iterate to produce an
efficient scheduling solution at the ISOs’ borders.

12. NYISO explains that CTS coordinated optimization for both regions

improves scheduling efficiency by: (i) introducing a new scheduling option for

8 Section 2.4 of the Services Tariff defines “decremental bid” as: “A

monotonically increasing Bid curve provided by an entity engaged in a Bilateral Import or Internal Transaction to indicate the LBMP below which that entity is willing to reduce its Generator’s output, and purchase Energy in the LBMP
Markets, or by an entity engaged in a Bilateral Wheel Through Transaction to indicate the Congestion Component cost below which that entity is willing to
accept Transmission Service.”

9 Section 2.19 of the Services Tariff defines “sink price cap bid” as: “A
monotonically increasing Bid curve provided by an entity engaged in an Export,
other than an entity submitting a CTS Interface Bid, to indicate the relevant Proxy
Generator Bus LBMP at or below which that entity is willing to either purchase
Energy in the LBMP Markets or, in the case of Bilateral Transactions, to accept
Transmission Service, where the MW amounts on the Bid curve represent the

desired increments of Energy that the entity is willing to purchase at various price points.”

10 Every 15 minutes, NYISO runs a multi-period optimization covering the next 2.5 hours (or 150 minutes) in 15 minute intervals. To implement CTS, PJM will provide NYISO the forecasted locational marginal prices from its
Intermediate Term Security Constrained Economic Dispatch (IT SCED)
application prior to each RTC run, as an input into the NYISO optimization.
NYISO December 6, 2013 Filing at 3 n.12.

Docket No. ER14-552-0006

transmission customers that transact across the NYISO/PJM border; (ii) allowing
transmission customers to bid different MW quantities at different prices for each

15 minute interval within an hour; (iii) reducing counter-intuitive regional

schedules by explicitly incorporating projected price differences between the NYISO and PJM markets into scheduling decisions; and (iv) establishing intrahour schedules 15 minutes closer to actual, real-time operations.11

b.Intra-hour Scheduling

13.NYISO states that when economic transactions are proposed to move

power from the low-cost to the high-cost region, the CTS-enabled interfaces will
more fully utilize the available capacity. NYISO also asserts that establishing
intra-hour schedules 15 minutes closer to real-time operations will improve the
accuracy of cross-border scheduling decisions because those decisions will reflect
updated system conditions.12 Further, NYISO states that moving the evaluation of
bids 15 minutes closer to real-time operation will increase the likelihood that
projected NYISO and PJM prices used to schedule external transactions will
closely align with actual real-time prices and will also improve the accuracy of
NYISO’s economic evaluation of decremental and sink price cap import offers
and export bids. In addition, NYISO maintains that CTS interface bids will also
avoid the financial risk of inconsistent transmission schedules in NYISO and PJM
because CTS interface bids are jointly scheduled and coordinated between the
ISOs.

14. NYISO states that its proposed tariff amendments will also allow

transmission customers at any Variably Scheduled Proxy Generator Bus13 to

11 Currently, NYISO begins its economic evaluation 45 minutes prior to each quarter hour and establishes the binding schedules 30 minutes prior to realtime operations. Under CTS, NYISO proposes to begin its evaluation of import offers and export bids 30 minutes before each quarter-hour and to establish the binding schedules 15 minutes prior to real-time operations.

12 NYISO notes that transmission customers will continue to submit their
import offers and export bids at least 75 minutes before each real-time market
operating hour in order to ensure that NYCA resources and external resources are
evaluated on an equivalent basis. NYISO December 6, 2013 Filing at 6 n.17.

13 Section 2.22 of the Services Tariff defines “Variably Scheduled Proxy
Generator Bus” as: “A Proxy Generator Bus for which the ISO may schedule

(continued…)

Docket No. ER14-552-0007

submit up to an 11-point bid curve (up to eleven different prices and eleven

different MW quantities), for each 15-minute interval of an upcoming hour.

NYISO states that this additional scheduling flexibility will be available to CTS interface bids, decremental bids, and sink price cap bids14 and will provide
transmission customers with a more precise method of arbitraging price
differences between the NYISO and PJM markets.

15. NYISO notes that it will continue to evaluate decremental bids and sink price cap bids for all transactions between NYISO and PJM, and that decremental bids will continue to be required to schedule wheel-through transactions through the NYCA. NYISO explains that CTS will accommodate both purchases and
sales of energy and the scheduling of transmission service in real-time at CTS
Enabled Proxy Generator Buses. NYISO states that no changes to the scheduling of external transactions in the day-ahead market are necessary. NYISO explains that transmission customers will be able to transfer their day-ahead scheduled
imports and exports into the NYISO’s real-time market through the use of a CTS interface bid, a decremental bid, or a sink price cap bid.

c.Removal of Import Guarantees

16.NYISO indicates that as part of its overall CTS proposal it intends to

remove two import guarantees that otherwise would be available to importers of energy to NYISO from PJM: (1) the real-time Bid Production Cost Guarantee for imports and (2) the Import Curtailment Guarantee. NYISO notes that tariff
revisions eliminating both import guarantees at any CTS Enabled Proxy Generator Bus, including the CTS Enabled Proxy Generator Buses at the NYISO/PJM
border, have already been approved by the Commission.15

17. NYISO states that the real-time Bid Production Cost Guarantee for imports

Transactions at 15 minute intervals in real time. Variably Scheduled Proxy
Generator Buses are identified in Section 4.4.4 of the Services Tariff.”

14 NYISO explains that this market improvement will apply at all Variably
Scheduled Proxy Generator Buses, at any NYCA border, without regard to
whether a Proxy Generator Bus is CTS enabled. NYISO December 6, 2013 Filing
at 4 n.15.

15 See N.Y. Indep. Sys. Operator, Inc., 139 FERC ¶ 61,048, at PP 20 and 21
(2012); see also NYISO, Filing, Docket No. ER12-701-000, at 14-15 (filed Dec.
28, 2011).

Docket No. ER14-552-0008

is currently paid to a transmission customer when the locational based marginal
price revenues it receives for importing energy to the NYCA do not cover the bid
cost the transmission customer submitted. NYISO explains that the expected
locational based marginal price at the time an import is scheduled by the RTC can
differ from the actual locational based marginal price at the time the energy
associated with the import is delivered to NYISO. NYISO states that this
variation can occur due to system conditions that have not occurred or that are not
yet reflected in the RTC at the time an import is scheduled, but that occur before
the energy associated with the import is delivered. NYISO describes this
deviation as latency risk. NYISO contends that its proposal to move the
evaluation of import offers and export bids 15 minutes closer to real-time
operations will significantly decrease latency risk by reducing the time between
the RTC’s scheduling decision and the delivery of energy in half.

18. NYISO states that it intends to eliminate the real-time Bid Production Cost
Guarantee payments for all imports that enter NYCA, regardless of whether a CTS
interface bid or decremental bid is used to offer the import, in a separate filing.16
NYISO explains that after CTS implementation with ISO-NE, imports and exports
between NYCA and ISO-NE may only be scheduled via a CTS interface bid.
However, NYISO states that after CTS implementation with PJM, imports into
NYCA may be scheduled through the use of a CTS interface bid or a decremental
bid. NYISO asserts that it would not be appropriate to protect some imports but
not others from latency risk, i.e., if imports submitted via a decremental bid
continued to be eligible to receive a real-time Bid Production Cost Guarantee, but
imports submitted via a CTS interface bid were not eligible to also receive a real-
time Bid Production Cost Guarantee.

19. NYISO notes that it also intends to eliminate Import Curtailment Guarantee
payments at CTS-enabled interfaces at the NYISO/PJM border. NYISO explains
that it pays Import Curtailment Guarantees to keep the importer whole to its day-
ahead margin if NYISO curtails the real-time scheduled import for reliability
reasons and the importer’s balancing market obligation erodes the day-ahead
margin it would otherwise have earned. NYISO asserts that, similar to latency
risk, transmission customers should reflect the costs associated with the risk of
curtailment in their import offers, rather than assigning these costs to statewide
load. NYISO notes that it did not propose any tariff modifications in the instant

16 In currently-pending Docket No. ER14-864-000, NYISO proposes to eliminate the real-time import guarantee at all proxy generator buses, separately from its CTS proposal in the instant proceeding.

Docket No. ER14-552-0009

proceeding, and is instead relying on the tariff language previously accepted by

the Commission in ISO-NE/NYISO CTS proceeding, which does not allow for

Import Curtailment Guarantees at any CTS-enabled interfaces.17

d.Requested Effective Date

20.NYISO requests a flexible effective date between November 1, 2014 and

November 30, 2014 for its proposed tariff revisions that are necessary to

implement CTS with PJM. NYISO explains that it proposes to submit a

compliance filing at least two weeks prior to the proposed effective date

specifying the date, or dates, on which its PJM Proxy Generator Buses will be designated as CTS Enabled Proxy Generator Buses.18

21. NYISO states that although it developed its CTS with PJM tariff revisions
by building on the language that NYISO developed, and the Commission
approved, to implement CTS with ISO-NE, it does not expect to implement CTS
with ISO-NE until the fourth quarter of 2015. As a result, NYISO clarifies that it
will specify the effective date for the tariff sections that: (1) are amended in this

proceeding and were not modified in the CTS with ISO-NE proceeding (Docket
No. ER12-701-000);19 (2) were first amended in Docket No. ER12-701-000 and
are further modified in this proceeding;20 (3) were accepted in Docket No. ER12-
701-000, that are not further amended in this proceeding, but that are necessary for
CTS implementation with PJM;21 and (4) were amended in Docket No. ER12-701-

17 See N.Y. Indep. Sys. Operator, Inc., 139 FERC ¶ 61,048, at PP 20-21

(2012); see also NYISO, Filing, Docket No. ER12-701-000, at 14-15 (filed

Dec. 28, 2011) (referencing NYISO, Market Services Tariff, Attachment C, § 18).

18 NYISO explains that its compliance filing will include revisions to

Section 4.4.4 of its Services Tariff specifying the proposed effective date(s) for enabling CTS at its PJM proxy generator buses.

19 NYISO states that these tariff sections include Services Tariff Sections 2.9 and 26.4, and OATT Sections 35.2, 35.7 and 35.12.

20 NYISO states that these tariff sections include Services Tariff

Sections 2.2, 2.3, 2.16, and 4.4, and OATT Sections 1.2, 1.3, 1.16 and 16.3.

21 NYISO states that these tariff sections include Services Tariff

Sections 2.4, 2.18, 2.19, 2.20, 17.1, 18.6, 21, and 25, and OATT Sections 1.4, 1.5,

1.18, 1.19, 1.20 and 3.1. Note, Services Tariff Sections 18.6 and 25 describe the

(continued…)

Docket No. ER14-552-00010

000, that NYISO proposes to further amend in this proceeding, that should not

become effective until NYISO implements CTS with the ISO-NE in the fourth

quarter of 2015.22

2.Comments and Response

22.Great Bay Energy and the Coalition oppose as premature NYISO’s

proposal to remove the real-time Bid Production Cost Guarantee for imports and the Import Curtailment Guarantee in advance of NYISO’s implementation of CTS in November 2014.23 Great Bay Energy and the Coalition note that NYISO has not included tariff language eliminating the real-time Bid Production Cost
Guarantee for imports and Import Curtailment Guarantee in its filing.

23. Great Bay Energy and the Coalition contend that NYISO's removal of the
real-time Bid Production Cost Guarantee for imports prior to the implementation
of CTS would unduly discriminate against imports compared to the treatment
given to NYISO generators participating in internal transactions.24 Further, Great
Bay Energy and the Coalition assert that importers cannot avoid latency risk
without increasing its bid price in order to account for potential changes in
locational based marginal prices due to system conditions. Great Bay Energy and
the Coalition maintain that it cannot make a determination, before the
implementation of CTS, as to whether the elimination of the real-time Bid
Production Cost Guarantee for imports is appropriate once NYISO’s real-time
pricing rules at all Proxy Generator Buses are in effect.25

removal of the real-time import guarantee and the import curtailment guarantee, respectively.

22 Specifically, NYISO states that the proposed modifications to Services Tariff Section 31 and OATT Sections 6.1, 6.2, and 6.5 do not need to become effective until CTS implementation with ISO-NE and therefore, NYISO’s
compliance filing will not propose an effective date for the CTS with ISO-NE tariff revisions in these tariff sections.

23 Great Bay Energy and the Coalition Protest at 3.

24 Great Bay Energy and the Coalition Protest at 4.

25 Great Bay Energy and the Coalition Protest at 5-6.

Docket No. ER14-552-00011

24. Great Bay Energy and the Coalition also assert that NYISO has failed to
justify the elimination of the Import Curtailment Guarantee.26 Great Bay Energy
and the Coalition state that NYISO has not presented alternatives describing how
NYISO would address revenues lost by importers as a result of reliability-based
curtailments following the removal of the Import Curtailment Guarantee.
Moreover, Great Bay Energy and the Coalition contend that prices at the PJM-
NYISO border will potentially be higher if importers adhere to NYISO’s
suggestion that importers take curtailment risk into account in their offers.27

25. The NY Transmission Owners support NYISO’s proposal to implement CTS and NYISO’s request to grant a flexible effective date within November 2014. The NY Transmission Owners request that the Commission encourage expeditious implementation of CTS reasoning that CTS will improve scheduling efficiency at the PJM-NYISO border.

26. In response to Great Bay Energy and the Coalition, NYISO clarifies that
the tariff amendments and tariff effective dates proposed in this proceeding will
not result in the elimination of the real-time Bid Production Cost Guarantee for
imports before CTS implementation with PJM.28 NYISO notes that it requested a
November 2014 effective date for the tariff revisions submitted in this proceeding,
as well as for certain tariff revisions approved by the Commission in New York

Independent System Operator, Inc., 139 FERC ¶ 61,048 (2012) (Docket No.

ER12-701-000) regarding CTS implementation with ISO-NE. NYISO explains
that the tariff revisions submitted in both proceedings are necessary for CTS
implementation with PJM. However, NYISO notes that it has submitted a
separate filing in Docket No. ER14-864-000 that proposes to eliminate the real-
time Bid Production Cost Guarantee for imports at all of NYISO’s Proxy
Generator Buses effective April 8, 2014.29 NYISO asserts that Docket ER14-864-
000 is the appropriate venue for Great Bay Energy and the Coalition to raise
concerns with the removal of the real-time Bid Production Cost Guarantee for
imports at one or more of NYISO’s Proxy Generator Buses prior to CTS
implementation with PJM in November 2014.

26 Great Bay Energy and the Coalition Protest at 6.

27 Great Bay Energy and the Coalition Protest at 7.

28 NYISO January 10, 2014 Answer at 2-3.

29 NYISO January 10, 2014 Answer at 3 n.6.

Docket No. ER14-552-00012

27. With respect to Import Curtailment Guarantees, NYISO contends that Great Bay Energy and the Coalition do not explain why imports scheduled at CTS
Enabled Proxy Generator Buses located at the NYISO/PJM border should remain eligible to receive Import Curtailment Guarantee payments that will not be
available at CTS Enabled Proxy Generator buses located at the NYISO/ISO-NE
border after CTS implementation with ISO-NE.30 NYISO states that it is simply
proposing that the PJM CTS Enabled Proxy Generator Buses be treated the same as the ISO-NE CTS Enabled Proxy Generator Buses for which the Commission
has already approved tariff amendments.31

28. NYISO notes that, in 2012 and 2013, NYISO paid an average Import

Curtailment Guarantee of approximately $0.015/MWh to imports from PJM, and
that is what it expects the increase to be after the removal of Import Curtailment
Guarantees.32 Therefore, NYISO alleges that it is hard to understand Great Bay
Energy and the Coalition’s assertion that NYISO’s proposal will result in higher
than necessary prices at the NYISO/PJM border. Further, NYISO notes that it
expects any potential increase in locational based marginal price costs to be offset
by the reduction in uplift cost allocations following the removal of the Import
Curtailment Guarantee.33

29. In addition, NYISO states that competition to schedule imports to NYCA from PJM, internal generators, and other markets is expected to preclude
transmission customers from inflating their import offers with unrealistically high costs associated with curtailment risk.34 Therefore, NYISO states that it does not expect higher than necessary increases in locational based marginal prices to
account for curtailment risk.

30. Further, NYISO asserts that, since exports from NYCA have never been
eligible to receive Import Curtailment Guarantee payments, traders that schedule

30 NYISO January 10, 2014 Answer at 3.

31 NYISO January 10, 2014 Answer at 4 (citing N.Y. Indep. Sys. Operator, Inc., 139 FERC ¶ 61,048).

32 NYISO January 10, 2014 Answer at 4.

33 NYISO January 10, 2014 Answer at 5.

34 NYISO January 10, 2014 Answer at 5-6.

Docket No. ER14-552-00013

exports from NYCA already incorporate curtailment risk into their bidding

strategy. NYISO also contends that incorporating curtailment risk into import

offers will benefit NYCA by re-assigning the costs of this risk into the locational based marginal price component of an import offer, rather than incorrectly
including the costs in uplift.35 In addition, NYISO states that, taking into account the costs of curtailment risk into the import offer price will allow the RTC
economic evaluation to properly asses the value of scheduling these import offers and select a more efficient set of resources to meet NYCA load.

31. NYISO notes that PJM does not offer Import Curtailment Guarantee

payments. NYISO asserts that the removal of the Import Curtailment Guarantee will more closely align the settlement rules utilized in the two markets.36

32. NYISO requests that the Commission reject Great Bay Energy and the

Coalition’s motion to consolidate Docket Nos. ER14-552-000 and ER14-864-000. NYISO states that the tariff amendments proposed in these dockets address
different market design improvements that NYISO proposes to implement on
different dates.37 Further, NYISO notes that it has requested different effective
dates in order to develop software improvements to effectuate each of the
proposed tariff amendments.

3.Commission Determination

33.We find that CTS will enhance market efficiency of interregional

transactions and provide substantial benefits to consumers in both PJM and
NYISO. As previously noted, joint studies performed by PJM and NYISO
estimate potential production cost savings ranging from $9 million/year to
$26 million/year.38 CTS should also minimize counter intuitive flows, such as

35 NYISO January 10, 2014 Answer at 6.

36 NYISO January 10, 2014 Answer at 6.

37 NYISO February 3, 2014 Answer at 2-3.

38 See NYISO December 6, 2013 Filing at 9 n.26 (citing NYISO, Presentation to Stakeholders, at 10 (Sep. 30, 2013),

http://www.nyiso.com/public/webdocs/markets_operations/committees/mc/meetin
g_materials/2013-09-

30/CTS%20PJM%20MC%2009302013%20FOR%20PRESENTATION.pdf); see
also id. at 8 n.24 (citing Potomac Economic Ltd., 2010 State of the Market Report

(continued…)

Docket No. ER14-552-00014

flows going from a high priced control area to a low priced control area, by

incorporating projected price differences between the NYISO and PJM markets

into scheduling decisions. Further, CTS should improve scheduling efficiency for
both regions by introducing a new scheduling option for transmission customers at
the NYISO/PJM border that will allow bidding of different MW quantities at
different prices for each 15 minute interval within an hour. In addition, CTS
should significantly reduce latency risk by establishing intra-hour schedules

15 minutes closer to actual, real-time operations.

34. Accordingly, we accept the proposed tariff revisions to be effective the later of November 2014 or the date that CTS becomes operational, subject to NYISO
making a compliance filing with revised tariff records no later than 14 days prior
to the date on which CTS will become operational reflecting the effective date of
the tariff provisions.

35. Great Bay Energy and the Coalition oppose removing the real-time Bid

Production Cost Guarantee for imports before NYISO’s implementation of CTS in
November 2014. We find the protest is beyond the scope of this proceeding. The
protest deals only with the removal of that guarantee for the period before the
instant CTS proposal would take effect; Great Bay Energy and the Coalition do
not protest the removal of that guarantee once CTS is implemented. NYISO does
not propose to remove the real-time Bid Production Cost Guarantee for imports at
Proxy Generator Buses in its filing in this proceeding. Instead, it relies on the
tariff provisions previously accepted in 2012 in the NYISO/ISO-NE proceeding in
Docket No. ER12-701 that remove all such guarantees from any CTS-enabled
Proxy Generator Bus; here NYISO proposes simply to make those previously
accepted tariff provisions effective in November 2014 to coincide with the
effectiveness of the instant PJM CTS proposal. In Docket No. ER14-864-000,
NYISO proposes to eliminate the real-time Bid Production Cost Guarantee
payments for all imports that enter NYCA, regardless of whether a CTS interface
bid or decremental bid is used to offer the import and requests that the proposed
tariff revisions describing this removal become effective April 8, 2014. The
Commission will address the merits of NYISO’s proposal to remove the real-time
Bid Production Cost Guarantee for imports prior to the implementation CTS with
PJM in Docket No. ER14-864-000.

for the New York Market, x (Aug. 31, 2011), available at

http://www.nyiso.com/public/markets_operations/documents/studies_reports/inde
x.jsp).

Docket No. ER14-552-00015

36. With respect to the protest to the removal of Import Curtailment

Guarantees, NYISO also does not propose such removal here; rather the removal
of such guarantees applicable to CTS-enabled Proxy Generator Buses was
previously accepted in Docket No. ER12-701,39 and here is simply proposed to be
made effective November 2014. Therefore, this protest of the removal is also
beyond the scope of this proceeding. Further, we note that Great Bay Energy and
the Coalition do not explain why imports scheduled at CTS Enabled Proxy
Generator Buses located at the NYISO/PJM border should remain eligible to
receive Import Curtailment Guarantee payments that will not be available at CTS
Enabled Proxy Generator Buses located at the NYISO/ISO-NE border after CTS
implementation with ISO-NE.

37. When we accepted NYISO’s proposal to remove both import and

curtailment guarantees in the ISO-NE CTS proceeding, the Commission agreed
with NYISO that competition from other importers, internal generators, and other
marketers should preclude transmission customers from inflating their import
offers with unrealistically high costs associated with import curtailment risk.
Taking into account the costs of these risks into the import offer prices will allow
for an equal footing among import offers and export bids since exports from
NYCA have never been eligible to receive guarantee payments. We continue to
find it reasonable to incorporate both import and curtailment risk in the importer’s
offer rather than assigning these costs to statewide load. We also agree that
removing the Import Curtailment Guarantee will more closely align the settlement
rules utilized in the ISOs’ markets since PJM currently does not offer Import
Curtailment Guarantee payments at its border with NYISO.

38. Additionally, we will deny Great Bay Energy and the Coalition’s request to consolidate Docket Nos. ER14-552-000 and ER14-864-000. The Commission generally consolidates proceedings when it sets them for trial-type evidentiary hearing and decision, and because we are not doing so here, and we have not yet acted in Docket No. ER14-864-000, consolidation is not warranted.40

39 See N.Y. Indep. Sys. Operator, Inc., 134 FERC ¶ 61,186, at P 6 (2011); N.Y. Indep. Sys. Operator, Inc., 139 FERC ¶ 61,048, at PP 20-21 (2012).

40 E.g., Entergy Services, Inc., 108 FERC ¶ 61,107, at P 21 (2004).

Docket No. ER14-552-00016

The Commission orders:

NYISO’s December 6, 2013 filing is hereby accepted to be effective as

discussed in the body of this order, subject to the filing condition discussed above.

By the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,
Deputy Secretary.

Docket No. ER14-552-00017

Appendix

New York Independent System Operator, Inc.
FERC FPA Electric Tariff

NYISO Tariffs

NYISO OATT, 1.2 OATT Definitions - B, 3.0.0
NYISO OATT, 1.3 OATT Definitions - C, 2.0.0
NYISO OATT, 1.16 OATT Definitions - P, 4.0.0

NYISO OATT, 6.1 OATT Schedule 1 - ISO Annual Budget Charge and Other Non, 9.0.0

NYISO OATT, 6.2 OATT Schedule 2 - Charges For Voltage Support Service,

4.0.0

NYISO OATT, 6.5 OATT Schedule 5 - Charges For Operating Reserve Service,

3.0.0

NYISO OATT, 16.3 OATT Att J Transmission Service, Schedules And Curtailm,

5.0.0

NYISO OATT, 35.2 OATT Att CC Abbreviations, Acronyms, Definitions and Ru,

3.0.0

NYISO OATT, 35.7 OATT Att CC Exchange Of Information, 3.0.0

NYISO OATT, 35.12 OATT Att CC M2M Coordination Process, 2.0.0 NYISO MST, 2.2 MST Definitions - B, 6.0.0

NYISO MST, 2.3 MST Definitions - C, 5.0.0
NYISO MST, 2.9 MST Definitions - I, 9.0.0
NYISO MST, 2.16 MST Definitions - P, 8.0.0

NYISO MST, 4.4 MST Real-Time Markets and Schedules, 14.0.0