134 FERC ¶ 61,186
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Jon Wellinghoff, Chairman;
Marc Spitzer, Philip D. Moeller,
John R. Norris, and Cheryl A. LaFleur.
New York Independent System Operator, Inc.Docket No. ER11-2547-000
ORDER CONDITIONALLY ACCEPTING PROPOSED TARIFF REVISIONS AND
GRANTING WAIVER
(Issued March 14, 2011)
1. On December 28, 2010, the New York Independent System Operator, Inc.
(NYISO) submitted proposed revisions to its Market Administration and Control Area
Services Tariff (Services Tariff) and Open Access Transmission Tariff (OATT), pursuant
to section 205 of the Federal Power Act (FPA),1 with a proposed effective date of March
15, 2011. The NYISO states that its proposed revisions are designed to permit more
frequent, intra-hour transaction scheduling at its borders, and will be phased in over time.
The NYISO further states that these revisions are consistent with a broader regional
action plan proposed by the NYISO, the Midwest Independent Transmission System
Operator, Inc. (Midwest ISO), PJM Interconnection, L.L.C. (PJM), and the Ontario
Independent System Operator (OISO) in Docket No. ER08-1281-000, et al. to reduce
Lake Erie region loop flows (NYISO Report).2 On March 9, 2011, in light of problems
with implementing the computer software on which the proposed tariff revisions depend,
the NYISO filed a request to temporarily waive its obligation to implement the subject
tariff revisions until the earlier of May 10, 2011, or the date it informs the Commission
on two weeks notice that the NYISO is prepared to implement the revisions.
1 16 U.S.C. § 824d (2006).
2 The NYISO Report outlines physical and market solutions addressing the
occurrence of Lake Erie region loop flows. See New York Independent System Operator,
Inc., 132 FERC ¶ 61,031 (Lake Erie Loop Flow Order), order or reh’g and compliance,
133 FERC ¶ 61,276 (2010) (approving filing deadlines applicable to the parties’
proposals).
Docket No. ER11-2547-000- 2 -
2. For the reasons discussed below, we require the NYISO to file revised tariff
sheets, within 30 days of the date of this order, identifying the generator proxy bus or
buses for which intra-hour scheduling and new pricing rules will apply and be made
available. We also require the NYISO to submit revised tariff provisions, within 30 days
of the date of this order, addressing when and how each of the remaining border
generator proxy buses, referred to in the NYISO’s transmittal letter, will become subject
to intra-hour scheduling and new pricing rules. Alternatively, we permit the NYISO to
submit a plan with a timeline detailing the steps it will take to incorporate this
information into its tariff. Further, we require that, in any tariff language submitted by
the NYISO, the NYISO: (i) identify whether each intra-hour proxy generator bus is a
dynamically scheduled generator proxy bus, a variably scheduled generator proxy bus, a
designated scheduled line, or a generator proxy bus that does not fit in any of these
categories, (ii) specify which intra-hour generator proxy buses are competitive and non-
competitive, and (iii) indicate what rules will apply if flexible scheduling is unavailable.
Finally, we grant the NYISO’s request for waiver of implementation of the subject tariff
provisions until the earlier of two weeks after it notifies the Commission of the
implementation date, or May 10, 2011.
Background
3. The NYISO states that currently its tariff only allows market participants in the real-time energy market to schedule energy transactions at the NYISO’s borders on an hourly basis, not on an intra-hour basis. The NYISO states that this limitation may
expose market participants to locked-in positions and price volatility given the lag time that exists between the scheduling commitment made by a participant and the subsequent pricing determination applicable to such transaction.3
4. The NYISO proposes to reduce this lag time and the resulting price risk by
allowing intra-hour scheduling at its borders (and proposes to do so on a phased-in basis
discussed more fully below). The NYISO states that, under its proposal, market
participants will be allowed to schedule energy transactions on an intra-hour basis if
certain conditions are met -- at 15-minute intervals at “variably scheduled” proxy
generator buses, or on a five-minute basis at “dynamically scheduled” proxy generator
buses.4
3 Hourly border transactions are settled by the NYISO at the applicable real-time
clearing price, with an existing gap of between 60 to 120 minutes between the scheduling
of the transaction and the determination of the resulting price at which it will be settled.
4 Fifteen minute scheduling allowances are addressed at Section 4.4.1.4 of the Services Tariff; five minute transactions are addressed at Section 4.4.2.
Docket No. ER11-2547-000- 3 -
5. The NYISO also proposes pricing rules applicable to its proposed enhanced
scheduling options at its border interfaces. The NYISO states that these proposed pricing
rules are conceptually similar to the provisions currently governing the NYISO’s internal
proxy generator buses. Specifically, the NYISO states that, under its proposal, all
external transactions, absent the existence of a constraint, will settle at a price based on
the real-time dispatch Locational-Based Marginal Price (LBMP) at that proxy generator
bus.5 The NYISO states that, if a constraint limits either imports or exports at a given
location, or if the external transaction is along a “designated scheduled line,” a substitute
LBMP will be used.6 The substitute LBMP will be based on the applicable constraint
costs at the given proxy generator bus, provided that the transactions at that bus have
been determined to be competitive.7 The NYISO adds that alternative pricing rules will
apply if the proxy generator bus has been determined to be non-competitive,8 or is
associated with a designated scheduled line.9
6. To encourage intra-hour transactions, the NYISO also proposes to modify its
eligibility rules for real-time bid production cost guarantee payments for transaction bids at designated proxy generator buses offering intra-hour scheduling.10 Among other
things, the NYISO proposes to preclude hourly import transactions scheduled at these
buses from receiving real-time shortfall payments. The NYISO states that, similarly,
customers will not be eligible for such payments with respect to import transactions at
non-competitive proxy generator buses or at any of the designated scheduled lines, if the facility is export-constrained.
7. As noted above, the NYISO states that it intends to implement its proposed tariff
changes one proxy generator bus at a time. The NYISO states that it will provide at least
a two-week notice to its market participants prior to activating its enhanced scheduling
5 The real-time dispatch LBMP is the LBMP calculated by the NYISO’s real time dispatch software. This calculation is made every five minutes.
6 See Services Tariff, Section 2.19 (identifying, as scheduled lines, generator proxy
buses for the Cross-Sound Scheduled Line, Neptune Scheduled Line, Dennison
Scheduled Line, Northport Norwalk Scheduled Line, Linden VFT Scheduled Line).
7 NYISO filing at 3 (citing New York Independent System Operator, Inc., 104
FERC ¶ 61,220, order on reh’g and clarification,105 FERC ¶ 61,347 (2003) (recognizing certain external proxy buses as non-competitive)).
8 See proposed revisions to Services Tariff at Attachment B, Subsection 6.3.
9 Id. at Subsection 17.1.6.4.
10 See proposed revisions to the NYISO OATT at Attachment C, Section 18.6.1.2.
Docket No. ER11-2547-000- 4 -
options. In addition, the NYISO proposes, in its OATT, to provide itself flexibility in implementing intra-hourly scheduling.11
8. In support of its filing, the NYISO states that enhanced scheduling options at its
border interfaces, as proposed, will promote more efficient inter-regional transmission,
reduce uplift costs associated with real-time event management and congestion
management, support system balancing efforts by expanding the pool of resources
available to system operators, and lower total system operating costs by improving price
signals. The NYISO states that an analysis prepared by its independent market monitor,
Potomac Economics, has identified a total annual production cost savings for all NYISO
interfaces of $175 million.
Notice of Filing and Responsive Pleadings
9. Notice of the NYISO’s December 28, 2011 filing was published in the Federal
Register, 76 Fed. Reg. 1425 (2011), with interventions and protests due on or before
January 18, 2011. Timely filed interventions and comments were filed by H.Q. Energy
services (U.S.) Inc. (H.Q. Energy) and the New York Transmission Owners.12
10. H.Q. Energy, in its comments, urges the Commission to accept the NYISO’s
proposed tariff changes. In addition, H.Q. Energy requests that the Commission establish additional procedures and require a compliance filing addressing the NYISO’s proposed implementation of mitigated pricing at its external proxy generator buses, as triggered by either an “Interface Ramp Constraint” or a “New York Control Area [NYCA] Ramp
Constraint.”13 H.Q. Energy asserts that, while this pricing proposal will apply the same
policy for external proxy generator buses as currently applies to non-competitive proxy
generator buses, and will require the NYISO to set ramp constraints on an intra-hour
basis consistent with the approach it now uses at the top of the hour, assurances and
possible clarifications are required that these ramp constraints will continue to be set at
the proper level so as to avoid over-mitigation.
11 Id. at Attachment J, Section 16.3.
12 The New York Transmission Owners are comprised of the eight electric systems
in the State of New York that own the transmission facilities operated by the NYISO,
namely: Central Hudson Gas & Electric Corporation, Consolidated Edison Company of
New York, Inc., Long Island Power Authority, 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 and Electric Corporation.
13 See proposed revisions to Services Tariff, Attachment B at Section 17.1.6.1.
Docket No. ER11-2547-000- 5 -
11. The New York Transmission Owners, in their comments, support the NYISO’s proposed tariff revisions, which they agree will enable regional system operators to utilize transmission between the NYISO and its neighbors more efficiently, facilitate better integration of intermittent resources and lower total system costs.
12. In its March 9, 2011 request for waiver, the NYISO states that, at time of its filing,
it expected that implementation of the proposed tariff revisions would follow soon after
the March 15, 2011 requested effective date. However, it states, the NYISO has recently
determined that additional testing of the new software designed to implement the
proposed revisions’ functionality will be necessary and, therefore, requests that the
Commission delay the requested effective date beyond March 15, 2011. The NYISO
states that it expects to complete the work needed to verify the software’s functionality no
later than May 10, 2011, and possibly as early as April 26, 2011. NYISO states that it
apologizes for the lateness of the waiver request, but that the concerns that gave rise to
need for this delay were only recently discovered as part of the NYISO’s quality
assurance testing and are being addressed as quickly as possible.
Discussion
A.Procedural Matters
13.Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,
18 C.F.R. § 385.214 (2010), the timely, unopposed motions to intervene serve to make
the entities that filed them parties to this proceeding.
B.Analysis
14.We conditionally accept the NYISO’s proposed tariff revisions, effective March
15, 2011, and waive the NYISO’s obligation to implement the provisions as requested. Except as otherwise noted below, we find that the NYISO’s proposed tariff changes appear to be just and reasonable and have not been shown to be unjust, unreasonable, unduly discriminatory or preferential or otherwise unlawful. We also note that the
NYISO’s filing is not contested and appears to be consistent with the initiatives
contemplated by the NYISO Report.14
15. The NYISO states in its transmittal letter that it intends to implement its revised
scheduling and pricing rules on a phased-in basis, “one Proxy Generator Bus at time.”
Specifically, the NYISO’s transmittal letter states that enhanced scheduling will be
offered at the Hydro Québec/Chateauguay interface, effective March 15, 2011, and
thereafter at the PJM interface in the fourth quarter of 2011, and at the ISO-NE interface
in early 2012. We note that the NYISO does not refer in its transmittal letter to the proxy
buses at the Ontario interface and has not proposed to implement enhanced scheduling at
14 See Lake Erie Loop Flow Order, 132 FERC ¶ 61,031 at P 40.
Docket No. ER11-2547-000- 6 -
the Ontario interface: an interface across which many of the prohibited path transactions related to Lake Erie Loop Flow were scheduled. The NYISO’s transmittal letter further states that the NYISO will inform market participants of the availability of intra-hour
scheduling at a given proxy generator bus at least two weeks prior to implementing
enhanced scheduling.
16. However, the NYISO’s description of its proposal in its transmittal letter does not
fully comport with the NYISO’s proposed tariff changes. The proposed tariff changes,
for example, do not identify the bus or buses at which it originally intended intra-hourly
scheduling to be made available as of March 15, 2011, or specify the triggering
circumstances and processes giving rise to the phase-in of flexible pricing at other proxy
buses. Accordingly, we find that the NYISO’s proposed revised tariff revisions do not
provide sufficient detail as to when, or how, the proposed scheduling changes and pricing
rules will be made effective. As such, consistent with the waiver we grant herein, we
require the NYISO to file revised tariff sheets, within 30 days of the date of this order,
identifying the generator proxy bus or buses for which intra-hour scheduling and new
pricing rules will apply and be made available when the proposed tariff revisions become
effective.
17. We also require the NYISO to submit revised tariff provisions, within 30 days of
the date of this order, addressing when and how each of the remaining border generator
proxy buses, referred to in the NYISO’s transmittal letter, will become subject to intra-
hour scheduling and new pricing rules. This filing should also include a discussion of the
Ontario proxy buses and whether or not intra-hour scheduling and the new pricing rules
will be available at the Ontario border. Alternatively, the NYISO may submit a plan with
a timeline detailing the steps it will take to incorporate this information into its tariff. In
addition, in any tariff language submitted by the NYISO, the NYISO should: (i) identify
whether each intra-hour proxy generator bus is a dynamically scheduled generator proxy
bus, a variably scheduled generator proxy bus, a designated scheduled line, or a generator
proxy bus that does not fit in any of these categories, (ii) specify which intra-hour
generator proxy buses are competitive and non-competitive, and (iii) indicate what rules will apply if flexible scheduling is unavailable.
18. Further, we deny H.Q. Energy’s request for additional procedures. H.Q. Energy
acknowledges that the NYISO’s proposed tariff changes are appropriate and should be
accepted. H.Q. Energy’s request that additional tariff provisions be submitted by the
NYISO, in the form of a compliance filing, and/or considered independently by the
Commission to address a separate issue (mitigated pricing), is beyond the scope of this
proceeding, i.e., H.Q. Energy’s mitigated pricing request requires no revision to the
proposal before us here. Nor has H.Q. Energy demonstrated that the NYISO’s tariff, in
the absence of these additional requested mitigated pricing changes, is unjust,
unreasonable or unduly discriminatory or preferential. If H.Q. Energy wishes to pursue
Docket No. ER11-2547-000- 7 -
this concern it may do so through the NYISO stakeholder process or in a separate
proceeding.
19.Finally, we grant the NYISO’s request for waiver for the reasons explained by the
NYISO in its March 9, 2011 request.
The Commission orders:
(A) The NYISO’s proposed tariff changes are hereby conditionally accepted,
effective March 15, 2011, subject to the submission of a compliance filing, and subject to the waiver granted herein, as discussed in the body of this order.
(B) The NYISO’s request for waiver of implementation of the subject tariff provisions until the earlier of two weeks after it notifies the Commission of the implementation date, or May 10, 2011, is granted.
By the Commission.
( S E A L )
Kimberly D. Bose,
Secretary.
