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 TO THE INDICATED NEW YORK TRANSMISSION OWNERS
AND THE COMPLAINANTS’ NEW 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 27, 2012 Motion to Intervene Out of Time and Answer of the Indicated
New York Transmission Owners (the “Indicated NYTOs’ Answer”) and the April 30, 2012
Motion for Leave to Answer and Answer of Energy Spectrum, Inc. and Riverbay Corporation
(the “New Riverbay Answer”).

The Indicated NYTOs2 appear to agree with the NYISO that allowing resources that

cannot reduce Load3 at the direction of the NYISO to participate in the Special Case Resources
(“SCR”) program would create a reliability “issue.”4  They mistakenly argue, however, that this
reliability issue can only be addressed through a tariff revision or, in the short-term, by obtaining

1 18 C.F.R. § 385.213 (2011).

2 The Indicated NYTOs are Central Hudson Gas & Electric Corporation, Consolidated Edison

Company of New York, Inc., Long Island Power Authority, New York Power Authority, and Orange and Rockland Utilities, Inc.

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

4 Indicated NYTOs’ Answer at 5 (“The Indicated New York Transmission Owners recognize that

this is a reliability issue...”).

a tariff waiver.  The New Riverbay Answer suggests that Technical Bulletin 217 has impacted
Installed Capacity Spot Auction clearing prices to an extent that is clearly implausible.5
The NYISO respectfully requests leave to submit this answer so that it may highlight three important points.  First, the Indicated NYTOs misunderstand section 4.12.4.4 of the
NYISO’s Installed Capacity Manual, which is the only tariff or manual provision that they cite
to support their position.  Second, even if section 4.12.4.4 had the meaning that the Indicated
NYTOs ascribe to it, it would be irrelevant because the Installed Capacity Manual cannot
override the clear language of the NYISO’s Market Administration and Control Area Services
Tariff (“Services Tariff”).  The NYISO has previously explained that Technical Bulletin 217 in
no way alters the Services Tariff but instead simply restates and clarifies what it has always
required.  Third, the NYISO must correct Complainants’6 incredible assertions regarding the
supposed impact of Technical Bulletin 217 on capacity clearing prices.
The fact that the NYISO has deferred to the Commission’s preference that parties avoid unnecessary responses to answers by limiting this pleading to these three points should not be construed as agreement with, or acceptance of, any other assertion that has been made in support of the Complaint.

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
the record in a proceeding.7  Accordingly, the NYISO has limited this answer to identifying and

5 New Riverbay Answer at 2.

6 Complainants are Energy Spectrum, Inc. and Riverbay Corporation.

7 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

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clarifying two limited points that are raised by the Indicated NYTOs’ Answer and correcting the assertions in the New Riverbay Answer. The NYISO therefore respectfully requests that the Commission exercise its discretion and accept this pleading.

II.ANSWER

A.Technical Bulletin 217 Restates and Clarifies Rules that Were Already in the

Services Tariff and the Installed Capacity Manual; It Is Not a Substantive
Change

The Indicated NYTOs assert that Technical Bulletin 217 “seeks to address a substantive
issue with respect to the Services Tariff without adhering to the applicable governance
procedural requirements.”8  They do not explain how Technical Bulletin 217 is inconsistent with,
let alone how it represents a revision to, any provision of the existing Services Tariff.  They
likewise do not address the NYISO’s explanation that Technical Bulletin 217 is fully consistent
with the Services Tariff.  The Services Tariff has always included, and should have always been
understood to include, the core, reliability-based requirement, that resources be able to reduce
demand at the direction of the NYISO in order to enroll as a SCR.9  Behind the meter generation
that can meet this requirement, such as emergency generation and incremental generation of a
unit regularly operating in baseload status that remains available to serve load, will continue to
be eligible to enroll in the SCR program.  Behind the meter generation that cannot reduce
demand at the NYISO’s direction should not be participating in the market as a SCR and
provides no reliability benefit.  The issuance of Technical Bulletin 217 does not alter any of
these facts.

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...”).

8 Indicated NYTOs’ Answer at 4.

9 See Answer and Request for Expedited Action of the New York Independent System Operator, Inc., Docket No. EL12-56-000 at 8-10 (April 19, 2012) (“April 19 Answer”).

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Instead of addressing the Services Tariff, the Indicated NYTOs focus on section 4.12.4.4 of the Installed Capacity Manual.  They suggest that it “appears to conflict” with Technical
Bulletin 217 but this is not the case.  Section 4.12.4.4 is a subpart of section 4.12.4 which reads (emphasis added):

4.12.4 Performance

A Special Case Resource must make Energy available, for a minimum four (4) hour block (except where environmental constraints that have been previously
considered and approved by the NYISO require a shorter block), in amounts that correspond to the Installed Capacity Equivalent of the amount of Unforced
Capacity it supplies to the NYCA, by reducing Load or by transferring Load to a distributed generator.  The obligation to reduce Load or to transfer
Load to a distributed generator shall commence at the top of the hour after the NYISO has provided the following notices:

a. on the day before the Special Case Resource’s performance may be

required, the NYISO shall provide twenty-one (21) hour notice to the RIP, so long as notification is provided by 3:00 PM ET.  If notice is provided to the RIP after 3:00 PM ET on the day before the Special Case Resource’s performance may be required, then the NYISO shall instead provide
twenty-four (24) hours notice;

b. following the advance notice described in (a) above, on the operating day

the NYISO shall provide at least two (2) hours notice to the RIP that the
Special Case Resource’s performance will be required.  The Special Case
Resource shall reduce its Load or to transfer Load to a distributed
generator (as appropriate) commencing at the top of the hour
immediately after the two-hour notice period has expired.  In the
alternative, the NYISO may specify the hour at which the Special Case
Resource shall commence performance of its obligation by reducing
its Load or to transferring Load to a distributed generator (as
appropriate), so long as the start hour specified by the NYISO is at least
two hours in the future.

Section 4.12.4.4. must be read in tandem with section 4.12.4, not in isolation from it.  It
cannot be read as authorizing any and all behind the meter generation to participate in the SCR
program.  It can only be read as referring to participation as SCRs by the kinds of emergency and
incremental generators that were referenced above and that are capable of reducing demand
when instructed to do so.  The latter reading is also consistent with both the Services Tariff and

4

the numerous other Installed Capacity Manual provisions that the NYISO has previously referenced.10  Thus, there is no inconsistency between section 4.12.4.4 and Technical
Bulletin 217.

Even assuming arguendo that section 4.12.4.4 were somehow in conflict with Technical
Bulletin 217, it would not invalidate Technical Bulletin 217.  As the NYISO has noted,
Commission precedent holds that when a tariff is clear then the plain language of the tariff
controls.11  Extrinsic evidence, including the text of manuals, is only relevant to the extent that a
tariff is ambiguous.  The Services Tariff clearly requires that a SCR must be able to reduce
system load at the NYISO’s request during certain specified reliability events in order to
participate in the SCR program.  There is thus no need to consider the Installed Capacity
Manual.  Because Technical Bulletin 217 merely restates and clarifies the Services Tariff, any
conflict between it and section 4.12.4.4 would properly be resolved by clarifying the Installed
Capacity Manual to conform to the tariff, not by revising the tariff (and Technical Bulletin 217)
to align with the manual.

B. Complainants’ Claim Regarding the Supposed Impact of Excluding

Behind the Meter Generation that Cannot Reduce Demand from the SCR Program Is Clearly Implausible

The New Riverbay Answer falsely attributes the fact that the clearing price in the

NYISO’s Installed Capacity Spot Auction for Zone J (i.e., New York City) for May 2012 was

higher than the corresponding price for May 2011 to the issuance of Technical Bulletin 217.12  It
goes on to: (i) suggest that the price for May 2012 somehow disproves the NYISO’s observation
that neither Complainants nor any other party would suffer a legally cognizable harm as a result

10 See April 19 Answer at 10-13.

11 Id. at 10.

12 See New Riverbay Answer at 2.

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of continued adherence to the reliability requirement reflected in Technical Bulletin 217; and

(ii) “forecast” that absent a Commission order invalidating this paramount reliability requirement
that there will be a similar impact on clearing prices in future Installed Capacity Spot Auctions.13
These claims are clearly not reasonable.  While tariff confidentiality requirements prevent the NYISO from voluntarily providing a detailed explanation of the various factors that produced the May 2012 spot auction results, Complainants need only have considered publicly available information to discern that their claim is not plausible.  Publicly available data indicates that
Technical Bulletin 217 had a negligible impact on SCR participation for May 2012.  Zone J SCR
capacity available for the ICAP Auction in May 2012 (353.4 MW) was only 17.4 MW less than
the SCR capacity that participated in May 2011 (370.8 MW).14  Even if all of this reduction
could somehow be attributed to the issuance of Technical Bulletin 217, it would still represent
less than five percent of the available SCR capacity that participated in last May’s ICAP Market.
Further, when compared to all eligible capacity that participated in the Installed Capacity Market
for May in Zone J, this 17.4 MW is well below 0.2 percent of the total NYC capacity.15
Other factors affected the change in the Installed Capacity Spot Auctions from May 2011 to May 2012 to a much larger degree.  These include: (i) the implementation of the Summer
2012 Capability Period Installed Capacity Demand Curve for Zone J (May 1 is the beginning of
the Capability Period); (ii) the application of the new Installed Reserve Margin and Locational
Capacity Requirements for the Summer Capability Period; and (iii) several hundred megawatts
of publicly announced generator mothballing decisions.

13 Id.

14 See http://icap.nyiso.com/ucap/public/auc_view_default_reference_price_detail.do; and

http://www.nyiso.com/public/webdocs/products/icap/monthly_scr_reports/2011/SCR_May_2011
_Summary.pdf

15 Id.

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In short, it is clearly unreasonable for Complainants to claim that adherence to the

reliability requirement in Technical Bulletin 217 caused the increase in May 2012 Installed

Capacity Spot Auction clearing prices.  The exclusion of ineligible resources is required by the Services Tariff, and any price increase associated with such exclusion cannot be said to “harm” Complainants, other market participants, or consumers.

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 expeditiously issue an order dismissing the Complaint in its
entirety.

Respectfully submitted,

/s/ Ted J. Murphy

Ted J. Murphy
Counsel to

the New York Independent System Operator, Inc.

May 1, 2012

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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 1st day of May, 2012.

By:/s/ Ted J. Murphy

Ted J. Murphy

Hunton & Williams LLP

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