UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

)

New York Independent System Operator, Inc.)Docket No. ER14-39-000

)

REQUEST FOR LEAVE TO ANSWER AND ANSWER

OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

Pursuant to Rule 213 of the Rules of Practice and Procedure of the Federal Energy

Regulatory Commission (“Commission”),1 the New York Independent System Operator, Inc.
(“NYISO”) respectfully seeks leave to answer, and submits this answer to, the November 26,
2013, answer of the New York Demand Response Coalition2 (“DR Coalition”) concerning the
NYISO’s proposed revisions to its Market Administration and Control Area Services Tariff
(“Services Tariff”) related to Special Case Resources (“SCRs”) in the above-referenced docket.3
In its answer, DR Coalition incorrectly states that the NYISO does not have authority to issue shortfall penalties to Responsible Interface Parties (“RIPs”) on an individual SCR basis,4 and falsely asserts that the NYISO has stated that its methodology for verifying a Provisional Average Coincident Load (“ACL”) baseline is flawed.5 The NYISO respectfully requests that the Commission reject DR Coalition’s inaccurate assertions and issue an order by December 3,

1 See 18 C.F.R. § 385.213 (2013).

2 New York Independent System Operator, Inc., Motion for Leave to Answer and Answer of New York Demand Response Coalition, Docket No. ER14-39-000 (November 26, 2013) (“DR Coalition
Answer”). The DR Coalition is comprised of: EnergyConnect, a Johnson Controls Company; Energy Curtailment Specialists, Inc.; Innoventive Power, LLC; and Energy Spectrum.

3 New York Independent System Operator, Inc., Proposed Tariff Revisions Related to Special Case Resources, Docket No. ER14-39-000 (October 4, 2013) (“October 2013 Filing”).

4 DR Coalition Answer at pp. 4-8. The NYISO’s silence on any other points raised in the DR Coalition Answer should not be construed as agreement or acquiescence with them.

5 Id. at p. 8.

2013, accepting the NYISO’s proposed tariff revisions set forth in its October 4, 2013, filing (“October 2013 Filing”), without modification.6

I.REQUEST FOR LEAVE TO ANSWER

The Commission has discretion to accept answers when they help to clarify complex

issues, provide additional information, are otherwise helpful in the development of the record in a proceeding, or assist in the decision-making process.7 The NYISO’s answer to DR Coalition’s answer satisfies those standards and should be accepted because it addresses inaccurate or
misleading statements, and provides additional information that will help the Commission to fully evaluate the arguments in this proceeding.

II.ANSWER

A.The NYISO Applies Shortfall Penalties on an Individual SCR Basis Consistent with

its Current Tariff Requirements

The NYISO has clear authority under its tariffs to issue penalties to Installed Capacity
Suppliers that sell more capacity than they are qualified to sell.8 Section 5.14.2 of the Services

6 As the NYISO explained in its October 2013 Filing, the NYISO expects to implement the

functionality to allow for the proposed SCR changes through a software deployment currently scheduled
for March 2014. In order for the NYISO to meet this software deployment schedule, it needs to know by
early December the specific tariff revisions that have been accepted by the Commission to allow the
NYISO to develop and test the related software changes. See October 2013 Filing at p. 13. Accordingly,
the NYISO reaffirms its request that the Commission issue an order by December 3, 2013, accepting the
October 2013 Filing within the 60 day period normally applicable to filings under Section 205 of the
Federal Power Act.

7 See, e.g., Southern California Edison Co., 135 FERC ¶ 61,093 at P 16 (2011) (accepting

answers to protests “because those answers provided information that assisted [the Commission] in [its] decision-making process”); New York Independent System Operator, Inc., 134 FERC ¶ 61,058 at P 24 (2011) (accepting the answers to protests and answers because they provided information that aided the Commission in better understanding the matters at issue in the proceeding); New York Independent
System Operator, Inc., 140 FERC ¶ 61,160 at P 13 (2012) and PJM Interconnection, LLC, 132 FERC ¶ 61,217 at P 9 (2010) (accepting answers to answers and protests because they assisted in the
Commission’s decision-making process).

8 Capitalized terms not otherwise defined herein shall have the meaning specified in the NYISO’s Market Administration and Control Area Services Tariff (“Service Tariff”) or its Open Access
Transmission Tariff (“OATT”).

Tariff provides, in pertinent part:

If an Installed Capacity Supplier is found, at any point during a Capability Period,
to have had a shortfall for that Capability Period, e.g., when the amount of
Unforced Capacity that it supplies is found to be less than the amount it was
committed to supply, the Installed Capacity Supplier shall be retrospectively
liable to pay the ISO the monthly deficiency charge equal to one and one-half
times the applicable Market-Clearing Price of Unforced Capacity determined
using the applicable ICAP Demand Curve for that ICAP Spot Market Auction for
each month the Installed Capacity Supplier is deemed to have a shortfall.

A RIP that enrolls an SCR in the SCR/ICAP program is an Installed Capacity Supplier.9 Each
SCR enrolled by the RIP is qualified on an individual basis and its response is measured on an
individual basis.10 The NYISO has applied the tariff provision excerpted above to penalize RIPs
on an individual SCR basis for selling more capacity with respect to an enrolled SCR than the
resource has committed to or is capable of providing.11 Absent such a requirement, a RIP, unlike
other Installed Capacity Suppliers, would not be subject to a shortfall penalty when it sells

capacity from a resource that was not eligible, not available, or did not exist.

The NYISO has revised its tariffs to supplement its existing shortfall provisions with

certain SCR situation-specific shortfall penalties, which enumerate how shortfall penalties are to
be applied in those specific instances. In 2011, as part of changes to the SCR baseline
requirements that introduced the use of the ACL and Provisional ACL baselines, the NYISO
supplemented the general shortfall penalty requirement in Section 5.14.2 to provide for a

9 Services Tariff § 5.12.11.1.

10 Services Tariff § 5.12.11.1.

11 The NYISO must apply this shortfall penalty provision on an individual SCR basis because the capability of SCRs is enrolled and response is measured on an individual basis before the RIP assigns the SCR to an aggregation. For the NYISO to apply this tariff provision on an aggregate, coincident load basis, new mechanisms would need to be developed to determine the capability and performance of SCRs on an aggregate basis, which is beyond the scope of the proposed tariff revisions.

Provisional ACL-specific shortfall penalty that applies on an individual SCR basis.12

Additionally, as part of its October 2013 Filing, the NYISO proposes to insert additional

situation-specific shortfall penalties to address how these shortfalls can occur and how the

NYISO will identify and measure the extent of the shortfalls associated with an SCR Change of
Status or Incremental ACL.13 Due to the look-back nature of establishing eligibility,
participation and performance, these situation-specific shortfalls are uniquely inherent to SCRs.
In its answer, DR Coalition erroneously relies on a different portion of Section 5.14.2 of the NYISO Services Tariff that establishes the “RIP deficiency penalty.” The RIP deficiency penalty is based on the aggregate performance of a RIP’s portfolio of SCRs on a Load Zone basis. However, as described in detail in the NYISO’s November 13, 2013 answer in this
proceeding (“November 13 Answer”), this deficiency penalty serves a separate purpose from the
shortfall penalties described above. 14

DR Coalition also creates a false comparison between Generators and RIPs. A

Generator’s performance is measured based on the simultaneous output of all of the units that
compose that Generator. On the other hand, the NYISO qualifies and measures SCRs on an
individual basis, which data is then rolled up as the RIP’s portfolio. The NYISO would have to
make fundamental changes to its existing processes to measure and qualify a portfolio of SCRs,
which would require the measurement of the coincident output of the resources for determining
the capacity baseline as well as performance. The NYISO has not proposed such revisions, nor
have stakeholders requested or approved such changes to the NYISO’s existing process.

12 See New York Independent System Operator, Inc., 135 FERC ¶ 61,020 (2011) at P 6; FERC Letter Order, Docket No. ER11-2906-001 (May 31, 2011).

13 October 2013 Filing at pp. 11-13.

14 New York Independent System Operator, Inc., Request for Leave to Answer and Answer to
Protest of the New York Independent System Operator, Inc., Docket No. ER14-39-000 (November 13,
2013) .

B.NYISO’s Existing Methodology for Verifying a Provisional ACL Is Outside the

Scope of this Proceeding

DR Coalition falsely asserts that NYISO admitted in its November 13 Answer that its

methodology for verifying a Provisional ACL is flawed.15 The NYISO made no such admission. The NYISO explained in its answer that given the different purposes served by a Provisional ACL and an Incremental ACL, the NYISO has developed different methodologies for verifying a Provisional ACL and an Incremental ACL.16

The NYISO has not proposed to change its existing methodology for verifying a

Provisional ACL as part of its October 2013 Filing or its November 13 Answer. The NYISO simply indicated that it would be willing to consider with its stakeholders potential revisions to this methodology. DR Coalition’s comments on this issue are outside the scope of this
proceeding. The Commission should not address in its order issues raised by the DR Coalition that are beyond the scope of this proceeding.

III.CONCLUSION

WHEREFORE, the New York Independent System Operator, Inc. respectfully requests that the Commission accept the NYISO’s proposed tariff revisions in the October 4, 2013 filing in the above-referenced docket.

Respectfully submitted,

/s/ Michael J. Messonnier

Hunton & Williams, LLP Counsel for

New York Independent System Operator, Inc.

November 27, 2013

15 DR Coalition Answer at p. 8.

16 NYISO Answer at pp. 11-13.

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 compiled by the Secretary in this proceeding in accordance with the requirements of Rule 2010 of the Commission Rules of Practice and Procedure, 18 C.F.R. § 385.2010 (2013).

Dated at Washington, D.C. this 27th day of November 2013.

/s/ Catherine Karimi

Catherine Karimi

Sr. Professional Assistant

Hunton & Williams LLP

2200 Pennsylvania Ave, NW
Washington, DC 20037
Tel: (202) 955-1500
Fax: (202) 778-2201

E-mail: ckarimi@hunton.com