10 Krey Boulevard Rensselaer, NY 12144
May 31, 2011
Submitted Electronically
Kimberly D. Bose
Secretary
Federal Energy Regulatory Commission 888 First Street N.E.
Washington, D.C. 20426
Re: New York Independent System Operator, Inc. Errata Correcting Tariff
Provision; Docket No. ER11-___-___
Dear Ms. Bose:
On July 30, 2010, the New York Independent System Operator, Inc. (“NYISO”)
submitted proposed revisions to its Market Power Mitigation Measures (“MMM”)1 to
improve the NYISO’s ability to fuel index Generator reference levels (“July 30 Filing”). The
revisions were conditionally accepted by the Federal Energy Regulatory Commission
(“Commission”) in an order issued on September 29, 2010 in Docket No. ER10-2062-000
(“September 29 Order”). On November 15, 2010, the NYISO submitted a compliance filing
addressing the requirements of the Commission’s September 29 Order (“November 15
Filing”). The November 15 Filing was accepted by the Commission in a Letter Order issued
on December 21, 2010 in Docket No. ER10-2062-001 (“December 21 Order”).2
The tariff revisions that were proposed in the July 30 and November 15 Filings
include penalties/sanctions that apply to Market Parties3 that submit inaccurate fuel price
and/or fuel type information for a Generator, where (i) the inaccurate information is used by the NYISO to develop a reference level, and (ii) the inaccurate information increases
guarantee payments or market clearing prices paid to the Market Party above the payment(s) that the Market Party would have received had it submitted accurate fuel price/type
information for its Generator(s).
1 The NYISO’s MMM are set forth in Attachment H to its Market Administration and Control Area Services
Tariff.
2 The NYISO initially attempted to submit this errata filing in Docket No. ER10-2062, but the associated e-Tariff submission was rejected, so the NYISO is instead submitting this filing in a new Docket.
3 Capitalized terms that are not otherwise defined herein shall have the meaning specified in the Services Tariff or in the MMM.
Kimberly D. Bose, Secretary May 31, 2011
Page 2
It has subsequently come to the NYISO’s attention that the penalty calculation
included in Section 23.4.3.3.3.4 of the MMM, as submitted by the NYISO in Docket No.
ER10-2062, erroneously transposed two variables in the formula used to calculate the daily
Real-Time Market penalty. The error within the formula was not identified in the tariff
development or stakeholder process, and was only recently discovered by the NYISO. It has
taken the NYISO some time to discover this error because the NYISO has not had cause to
consider implementation of the Real-Time Market penalty provision contained in Section
23.4.3.3.3.4 of the MMM. To be clear, the NYISO has not identified any Market Parties that have submitted significantly inaccurate fuel price and/or fuel type information since the tariff revisions first proposed in the July 30 Filing became effective. The NYISO is filing this errata to correct Section 23.4.3.3.3.4 of the MMM.4
I.DISCUSSION
Section 23.4.3.3.3.4 of the MMM contains the following erroneous formula for calculating the Real-Time Market daily penalty:
Daily Penalty = Max [(Multiplier * Σg [▲ simplified guarantee paymentg]) +
Σh Σg (Multiplier * [updated reference levelgh - original reference levelgh]) *
max [MWh DAMgh, MWh RTgh, Market Party MWhgh, 0], 0]
The highlighted variables ‘updated reference levelgh’ and ‘original reference levelgh’ were inadvertently reversed in the formula. As a result of this error, the penalty calculation will result in a penalty of zero dollars, even though the results of the relevant Real-Time Market impact tests5 indicate that the Incremental Energy Bid submitted for a Market Party’s
Generator had either LBMP or guarantee payment impact. As mentioned above, the NYISO does not believe that any Market Parties have exploited this error.
To achieve its intended purpose, the formula should read as follows:
Daily Penalty = Max [(Multiplier * Σg [▲ simplified guarantee paymentg]) +
Σh Σg (Multiplier * [original reference levelgh - updated reference levelgh]) *
max [MWh DAMgh, MWh RTgh, Market Party MWhgh, 0], 0]
4 The Commission has previously permitted filing entities to correct errors in filed tariff sheets after the issuance
of an order accepting the tariff revisions for filing. See, e.g., New York Independent System Operator, Inc.,
Letter Order, Docket No. ER09-1027-001 (Sept. 24, 2009) (accepting revised tariff sheets to reinstate
erroneously omitted language several months after the Commission’s acceptance of the tariff revisions that
contained the erroneous omission); New York Independent System Operator, Inc., Letter Order, Docket Nos.
ER04-230-037 and ER04-230-038 (Sept. 5, 2008) (accepting corrected tariff sheets that reinstated erroneously
omitted language and corrected the table of contents several months after the Commission’s acceptance of the
tariff revisions that contained errors).
5 See, MMM §§ 23.4.3.3.3.2.2, 23.4.3.3.3.2.3.
Kimberly D. Bose, Secretary May 31, 2011
Page 3
The intended purpose of the penalty was explained to the NYISO’s Market
Participants at stakeholder meetings.6 It was also accurately described in the July 30 filing letter that accompanied the NYISO’s proposed tariff revisions.
On page 5 of its July 30 filing letter, the NYISO explained the intended purpose of the proposed penalty provisions:
The proposed penalty is calculated based on the difference between the
compensation the Market Party received based on the inaccurate fuel type and/or fuel price information it submitted and the compensation the Market Party would have received if it had submitted accurate information.
On page 10 of its July 30 filing letter, the NYISO described the purpose of the Section
23.4.3.3.3.4 Real-Time Market penalty in the following manner:
Section 23.4.3.3.3.4 - sets forth the Real-Time Market penalty calculation. It
necessarily differs from the Day-Ahead penalty calculation because the
NYISO is not able to re-run its Real-Time Market in an integrated manner to
determine the full market impact that a Market Party’s submission of
inaccurate fuel type or fuel price information causes. The real-time penalty
calculation is performed for the hours during which (a) inaccurate fuel type or
fuel price information was provided, and (b) at least one of the Market Party’s
Generators failed the real-time conduct and impact tests that are described
above. The NYISO proposes to use the difference between the inaccurate
reference level that was originally used to evaluate the Generator’s Real-Time
Market Bids and the Corrected Reference Level to approximate the LBMP
impact of the Market Party’s behavior for each affected Generator. Similarly,
the NYISO proposes to perform a simplified guarantee payment impact
calculation to estimate the impact that the submission of incorrect fuel type or
fuel price information had on real-time Bid Production Cost guarantee
payments to affected Generators. To address the full potential impact of the
submission of incorrect fuel price or fuel type information, the NYISO will
use the greater of the Generator’s Day-Ahead scheduled MWs, its real-time
scheduled MWs, or its actual real-time output for each hour. This is
appropriate to better capture disruptions to economic dispatch that may be
caused by the submission of inaccurate fuel price information….
[Highlighting added.]
6 See, http://www.nyiso.com/public/webdocs/committees/bic_miwg/meeting_materials/2010-04-
19/RLS_Tariff_Changes_revised.pdf. Page 7 of the Market Issues Working Group presentation for discussion of the Real-Time Market daily penalty. In this presentation the variable ‘updated referencegh’ describes the
Market Party’s submission of (inflated) fuel cost information; and the variable ‘previously calculated
referencegh’ describes a reference level calculated using the fuel cost that was in place prior to the Market Party’s submission of inaccurate data.
Kimberly D. Bose, Secretary May 31, 2011
Page 4
It is clear from the quoted sections of the NYISO’s filing letter that the intended
purpose of the penalty calculation is to start with the inappropriately inflated reference level that results from the inaccurate submission of fuel price or fuel type information, and to
subtract the lower reference level that is calculated using accurate data to arrive at the
difference. The properly calculated difference is then used in the penalty calculation formula to arrive at an appropriate result.
The NYISO requests permission to correct the inadvertent error that was included in the tariff revisions that it submitted on July 30 and November 15, 2010 in Docket No. ER10-
2062. Proposed revisions to Section 23.4.3.3.3.4 of the NYISO’s MMM that incorporate the correction described above are attached to this filing letter.
II.DOCUMENTS SUBMITTED
The NYISO submits the following documents:
1.this filing letter;
2.a blacklined version of the proposed revisions to Section 23.4.3.3.3.4 of the
MMM NYISO’s MST (“Attachment I”); and
3.a clean version of the proposed revisions to Section 23.4.3.3.3.4 of the MMM
NYISO’s MST (“Attachment II”)
III.COMMUNICATIONS
Correspondence concerning this filing should be served on:
Robert E. Fernandez, General Counsel
Raymond Stalter, Director of Regulatory Affairs *Alex M. Schnell
*James H. Sweeney, Attorney
New York Independent System Operator, Inc.
10 Krey Boulevard
Rensselaer, NY 12144
Tel: (518) 356-8707
Fax: (518) 356-7678
aschnell@nyiso.com
jsweeney@nyiso.com
* Persons designated for receipt of service
Kimberly D. Bose, Secretary May 31, 2011
Page 5
IV.EFFECTIVE DATE
The attached tariff revision reflects a correction to an inadvertent error included in
tariff revisions that were accepted for filing by the Commission. The NYISO, therefore,
requests that the Commission accept the NYISO’s proposed corrected tariff sections with an
effective date of October 21, 2010, which is the effective date of the tariff revisions that were
accepted by the Commission in this proceeding. If the Commission determines that a later
effective date is necessary or appropriate for administrative reasons, the NYISO would not be
opposed to the Commission assigning the corrections submitted herewith an effective date of
May 31, 2011. Granting an effective date for the NYISO’s proposed correction that is after
the date of this filing (May 31, 2011) could permit a Market Party to take advantage of the
error described herein.
V.SERVICE LIST
The NYISO will send an electronic link to this filing to the official representative of
each of its customers, to each participant on its stakeholder committees, to the New York
Public Service Commission, to all parties listed on the Commission’s official service list in
Docket No. ER10-2062, and to the electric utility regulatory agency of New Jersey. In
addition, the complete filing will be posted on the NYISO’s website at www.nyiso.com.
VI.CONCLUSION
The NYISO respectfully requests that the Commission accept the NYISO’s proposed
corrections to Section 23.4.3.3.3.4 of the MMM for the reasons set forth above. Consistent
with Section IV of this letter, the NYISO requests an effective date of October 21, 2010.
Respectfully submitted,
/s/ Alex M Schnell
Alex M. Schnell
James H. Sweeney
New York Independent System Operator, Inc.
