10 Krey Boulevard Rensselaer, NY 12144
April 30, 2013
By Electronic Delivery
Honorable Kimberly D. Bose, Secretary Federal Energy Regulatory Commission 888 First Street, NE
Washington, DC 20426
Re: New York Independent System Operator, Inc., Proposed Tariff Revisions to
Establish and Recognize a New Capacity Zone and Request for Action on
Pending Compliance Filing, Docket No. ER13-____-000
In accordance with Section 5.16.4 of the Market Administration and Control Area
Services Tariff (“Services Tariff”), the Commission’s April 2, 2013 letter order granting a
limited waiver of Section 5.16.4’s filing deadline,1 and Section 205 of the Federal Power Act, the New York Independent System Operator, Inc. (“NYISO”) respectfully submits proposed tariff revisions to establish and recognize a New Capacity Zone2 (“NCZ”).3 In addition, and as required by the Services Tariff, this filing includes a “report of the results of the NCZ Study.” As discussed below, the NCZ Study identified a Highway deliverability constraint, which
triggered the requirement to create an NCZ.4 This filing proposes to establish an NCZ that would encompass NYISO Load Zones G, H, I, and J (the “G-J Locality”).5
The NYISO strongly supports the establishment of the NCZ. As discussed in detail in
this filing, the NYISO carefully examined and considered the transmission system, capacity
market, and economic consequences of its NCZ proposal. It concluded that establishing and
implementing the G-J Locality for the May 1, 2014 start of the 2014/2015 Capability Year is
necessary to send more efficient price signals, enhance reliability, mitigate potential transmission
security issues, and serve the long-term interest of all consumers in New York State. The
1 See Letter Order, Docket No. ER13-1124-000 at 1 (April 2, 2013) accepting the Motion for
Expedited Action and Limited Tariff Waivers of the New York Independent System Operator, Inc.
(“Expedited Waiver Filing”), Docket No. ER13-1124-000 (March 15, 2013). As noted in Section II.A.1, the April 2 letter order also authorized the NYISO to make any necessary adjustments by April 30, 2013 to the “Indicative NCZ LCR” determination that it had made by March 1, 2013.
2 Capitalized terms that are not otherwise defined herein have the meaning set forth in the
NYISO’s Services Tariff, and if not defined therein, in the Open Access Transmission Tariff (“OATT”).
3 Services Tariff Section 2.14.
4 Services Tariff Sections 5.16.4(a), 5.16.2.
5 See Attachment IX hereto, a map depicting the NYISO’s Load Zones; the NCZ, which would be defined as the “G-J Locality;” and the current Localities of Load Zone J and Load Zone K.
Honorable Kimberly D. Bose April 30, 2013
Page 2
Independent Market Monitoring Unit (“MMU”) for the NYISO has previously called for the creation of an NCZ and supports the NYISO’s proposal.
The NYISO respectfully requests that the Commission issue an order no later than July 1,
2013, accepting the tariff revisions proposed in this filing with an effective date of July 1 except
as noted below and in Section V. The NYISO is asking for an order by July 1, 2013 because
sixty days from the date of the filing (i.e., June 29) is a Saturday. Therefore, the NYISO believes
that the sixty-day notice period does not expire until July 1.6 As explained in the NYISO’s
November 7, 2011 compliance filing (“November 2011 Filing”)7 and in the Commission’s
August 2012 order accepting it,8 acceptance of the NCZ within sixty days of filing is critical to
the schedule of the ongoing ICAP Demand Curve reset process and the processes to implement
the G-J Locality. Specifically, the ICAP Demand Curve reset consultant must know that a new
Locality will be established, and its boundaries, with certainty. This information is needed so
that the consultant may timely develop and propose an ICAP Demand Curve for the NCZ
concurrent with the other ICAP Demand Curves. Commission acceptance is also necessary for
development, testing, and deployment steps that are specific to the configuration of the G-J
Locality. That timing is consistent with existing Service Tariff provisions.9
The NYISO is requesting later effective dates for certain of its proposed tariff revisions
as specified in Section V. The reasons for each effective date are also specified. The requested
effective dates correspond to necessary actions to implement the G-J Locality in time for the
market activities which occur before the May 2, 2014 start of the 2014/2015 Capability Year.
As noted in Sections II.A.2 and V, the NYISO also asks the Commission to issue an
order accepting pending compliance tariff revisions to establish market power mitigation rules in the NCZ as soon as possible.10
6 See 18 C.F.R. 385.2007 (2012). The NYISO does not intend that its request for effective dates later than June 29, 2013 be deemed to be a waiver of the requirement under 18 C.F.R. §35.3 that the Commission act on its proposed tariff revisions within sixty days of the date of this filing.
7 Compliance Filing at 7, Docket No. ER12-236 (filed November 7, 2011).
8 New York Independent System Operator, Inc., 140 FERC ¶ 61,160 (2012) (“August 2012
Order”).
9 Services Tariff Section 5.14.1.2 specifies that an ICAP Demand Curve is to be established for any New Capacity Zone. The defined term “New Capacity Zone” means the “proposed” zone. (See Services Tariff Section 2.14 at definition of “New Capacity Zone”). Section 5.14.1.2.11 specifies that such ICAP Demand Curve is to be filed by November 30 “of the year prior to the year that includes the beginning of the first Capability Year to which such ICAP Demand Curves would be applied.” In this instance, the first Capability Year is 2014/2015, which commences May 1, 2014.
10 The pending tariff revisions were submitted on June 29, 2012 in Docket No. ER12-360-001. (“June 2012 Compliance Filing”).
Honorable Kimberly D. Bose April 30, 2013
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I.LIST OF DOCUMENTS SUBMITTED
The NYISO respectfully submits the following documents:
1.This filing letter;
2.A blacklined version of the proposed modifications to the Services Tariff effective
July 1, 2013 (“Attachment I”);
3.A clean version of the proposed modifications to the Services Tariff effective July 1,
2013 (“Attachment II”);
4.A blacklined version of the proposed modifications to the OATT effective July 1,
2013 (“Attachment III”);
5.A clean version of the proposed modifications to the OATT effective July 1, 2013
(“Attachment IV”)
6.A blacklined version of the proposed modifications to the Services Tariff effective
January 15, 2014 (“Attachment V”);
7.A clean version of the proposed modifications to the Services Tariff effective January
15, 2014 (“Attachment VI”);
8.A blacklined version of the proposed modifications to the Services Tariff effective
January 27, 2014 (“Attachment VII”);
9.A clean version of the proposed modifications to the Services Tariff effective January
27, 2014 (“Attachment VIII”);
10. Map of NYISO Load Zones, identifying proposed G-J Locality and the current
Localities.(“Attachment IX”).
11. 2013 New Capacity Zone Study Report (“Attachment X”);
12. Affidavit of Dr. David B. Patton, Ph.D (“Patton Affidavit”) (“Attachment XI”);
13. Affidavit of Mr. Tariq N. Niazi (“Niazi Affidavit”) (“Attachment XII”);
14. Affidavit of Mr. Steven Corey (“Corey Affidavit”) (“Attachment XIII”);
15. Affidavit of Henry Chao, Ph.D. and John M. Adams (“Chao/Adams Affidavit”)
(“Attachment XIV”);
16. Affidavit of Mr. Gary Jordan (“Jordan Affidavit”) (“Attachment XV”); and
17. Affidavit of Ms. Emilie Nelson (“Nelson Affidavit”) (“Attachment XVI”).
Honorable Kimberly D. Bose April 30, 2013
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II.BACKGROUND AND SUMMARY
A.NYISO Tariff Provisions Governing the Creation of, and Market Mitigation
Power Mitigation in, NCZs
1. Tariff Provisions Governing the Creation of NCZs
In response to the Commission’s September 2011 Order,11 the NYISO’s November 2011 Filing specified the process for evaluating, identifying and, if necessary, establishing NCZs in the New York Control Area (“NYCA”). In the August 2012 Order, the Commission accepted the November 2011 Filing and made it effective as of January 9, 2012.
The August 2012 Order accepted Section 5.16.4 of the Services Tariff, which requires the NYISO to make one of two types of NCZ filings12 on or before March 31 of each ICAP Demand Curve Reset Filing Year13 (i.e., by March 31, 2013, because 2013 is an ICAP Demand Curve
Reset Filing Year). The Services Tariff also requires the NYISO to commence a triennial NCZ Study in the preceding year, review the inputs and assumptions to be used in it with stakeholders by October 1 of that preceding year,14 and complete the NCZ Study by January 15 of the ICAP Demand Curve Reset Filing Year.15 Under Section 5.16.2, if the NCZ Study identifies a
constrained Highway interface into one or more Load Zones, the NYISO is to identify the
boundary of one or more NCZs. Under Section 5.16.4, the NYISO must file tariff revisions to implement new NCZ(s) along with the NCZ Study results.
Section 5.14.1.2 of the Services Tariff describes both: (i) the timing and sequence of the
steps needed to create an NCZ; and (ii) how an NCZ is factored into the triennial ICAP Demand
Curve reset process. Essentially, the periodic review of the ICAP Demand Curves incorporates a
review of an ICAP Demand Curve for an NCZ concurrent with the review of ICAP Demand
Curves for existing Localities and the NYCA. The economic parameters of each NCZ ICAP
Demand Curve are likewise established as part of the normal reset procedure. ICAP Demand
Curves for an NCZ would be effective at the same time as revised ICAP Demand Curves for the
existing Localities and the NYCA, subject to Commission acceptance of certain tariff revisions
effective January 27, 2014, as further explained in Section V. That is, the NCZ ICAP Demand
Curve would be in effect for all ICAP market activities for the first Capability Year that
commences after its filing and acceptance. Thus, for the NCZ proposed in this filing, the ICAP
11 New York Independent System Operator, Inc., 136 FERC ¶ 61,165 (2011).
12 Services Tariff Section 5.16.4(b) provides that “[i]f the NCZ Study does not identify a
constrained Highway interface, the ISO shall file with the Commission the ISO’s determination that the NCZ Study did not indicate that any New Capacity Zone is required pursuant to this process, along with a report of the results of the NCZ Study.”
13 Services Tariff Section 2.9.
14 Services Tariff Section 5.16.1.2.
15 Services Tariff Section 5.16.
Honorable Kimberly D. Bose April 30, 2013
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Demand Curve is expected to be filed by November 30, 2013, and become effective for the Capability Year beginning May 1, 2014.
Section 5.16.3 of the Services Tariff directs the NYISO to establish an Indicative
Locational Minimum Installed Capacity Requirement (“Indicative NCZ LCR”) for each Load
Zone or group of Load Zones “identified in the NCZ Study as having a constrained Highway
Interface, on or before March 1 of each ICAP Demand Curve Reset Filing Year.” The NYISO
must also provide “an opportunity for stakeholders to review and comment... ” 16 Indicative
NCZ LCRs are used “solely for establishing revised ICAP Demand Curves in accordance with Section 5.14.1.2.”17
Accordingly, the NYISO only briefly addresses its Indicative NCZ LCR determination in
this filing.18 The NYISO satisfied the March 1 tariff deadline to establish an Indicative NCZ
LCR including the stakeholder review requirements. 19 The Commission subsequently granted
the NYISO’s request in the Expedited Waiver Filing for a waiver of the March 1 deadline so that
the NYISO could adjust the Indicative NCZ LCR if necessary after further technical analyses.
On April 4, 2012, the NYISO presented a revised proposed Indicative NCZ LCR at an ICAP
Working Group meeting. At the April 18, 2013 ICAP Working Group meeting, the NYISO
made a presentation in response to stakeholder questions regarding the Indicative NCZ LCR.
The Indicative NCZ LCR will be an element in the ICAP Demand Curve reset filing that will be
submitted by November 30, 2013. The NYISO will continue to discuss with stakeholders the
Indicative NCZ LCR, and its use, in the ICAP Demand Curve reset process.
2. Proposed Market Power Mitigation Rules for NCZs
On June 29, 2012, the NYISO submitted the June 2012 Compliance Filing in further
compliance with the September 2011 Order. The June 2012 Compliance Filing proposed tariff
revisions to implement “both buyer-side and supplier-side mitigation measures for NCZs using
the same conceptual framework of the existing market mitigation measures currently applicable
to the New York City Locality.”20 The NYISO asked that these further compliance revisions be
made effective as of “September 1, 2012, or the effective date the Commission accepts for the
16 Services Tariff Section 5.16.3.
17 Id. The actual Locational Minimum Installed Capacity Requirements (“LCR”) that will be used to administer market rules for the G-J Locality will be established in the same manner as, and concurrent with, the LCRs for existing Localities J and K.
18 Specifically, the Chao/Adams Affidavit presents a brief description, at PP 35-41 of how the
NYISO used the same methodology and tools it employed to determine the NYCA Installed Reserve
Margin and Locational Minimum Installed Capacity Requirements (“LCRs” to determine an Indicative
NCZ LCR of 88%. The Jordan Affidavit affirms the reasonableness of this analysis at PP 14-15.
19 See Services Tariff Section 5.16.3. The actual LCR that will be used to administer the G-J
Locality capacity market rules will be established in the same manner as, and concurrent with, the LCRs for existing Localities J and K.
20 June 2012 Compliance Filing at 1.
Honorable Kimberly D. Bose April 30, 2013
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tariff revisions submitted in the November 2011 Filing... ” (i.e., January 9, 2012). The
Commission has not yet acted on the June 2012 Compliance Filing. The NYISO had proposed
that the NCZ mitigation compliance revisions would be in place before the beginning of the
triennial NCZ Study process on September 1, 2012. The order would provide Market
Participants, including those in the on-going Class Year processes,21 with certainty of the rules.
It is essential that the Commission act on the June 2012 Compliance Filing by August 30, 2013.
That date is sufficiently in advance of the NYISO’s November 29, 2013 filing of the ICAP
Demand Curves to permit buyer-side mitigation analyses to be performed in time for the NYISO
to issue an “Indicative BSM Determination” for any project proposed to be located in the NCZ
that is then going through the Class Year project cost Allocation process.22
B. The 2013 New Capacity Zone Study Report
As required by Sections 5.16.4 and 5.16, the NYISO commenced work on the NCZ Study
by September 1 2012 and completed it by January 15, 2013. A copy of the 2013 New Capacity
Zone Study Report is included as Attachment X to this filing. As discussed in more detail
therein, and in Section III.A, the NCZ Study was performed in accordance with the procedures
and methodology set forth in Section 5.16. The rules require the NYISO to use, in large part, the
deliverability methodology from the Class Year Study set forth in Attachment S to the NYISO
OATT. The NCZ Study concluded that “[t]he UPNY-SENY Highway Interface is bottling 849.2
MW generation from upstream (Zones A through F), thus indicating the need to create a New
Capacity Zone.”
C.Selection of the NCZ Boundary
Section 5.16.2 of the Services Tariff provides that “[i]n determining the New Capacity
Zone boundary, the ISO shall consider the extent to which incremental Capacity in individual
constrained Load Zones could impact the reliability and security of constrained Load Zones,
21 OATT Attachment S contains a process for periodic study of projects that have completed
similar milestones - a “Class Year” of projects that are through a certain stage of the Interconnection
process. The NYISO conducts a detailed study that evaluates the cumulative impact of the group of
projects (a “Class Year Study”).21 The Class Year Study identifies the upgrade facilities needed to
reliably interconnect all the projects in a Class Year. For the group of Class Year projects requesting
Capacity Resource Interconnection Service (“CRIS”), the Class Year Study includes a deliverability test
to determine the extent to which each project is deliverable at the requested CRIS MW level. The
deliverability study in the Class Year Study evaluates the deliverability of projects requesting CRIS
within the applicable Capacity Region. The Class Year Study then allocates the cost of System Upgrade
Facilities and System Deliverability Upgrades identified in the study among the projects in the Class Year
in accordance with the cost allocation methodologies set forth in Attachment S to the OATT. Section
IV.B.2.b of this filing describes tariff revisions that would apply to the deliverability test used in the Class
Year Study.
22 See June 2012 Compliance Filing at Section 23.4.5.7.2.2. The Indicative BSM Determination is for informational purposes only. A final buyer-side mitigation determination will be issued for projects then going through the project cost allocation process, and projects in a completed Class Year, after
Commission acceptance of the ICAP Demand Curves for the NCZ.
Honorable Kimberly D. Bose April 30, 2013
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taking into account interface capability between constrained Load Zones.” As discussed in
Section III.B, the Chao/Adams Affidavit describes the resource adequacy and transmission
security analyses that the NYISO conducted in order to determine the boundary of the NCZ. The
Jordan Affidavit reviews and validates the reasonableness of those analyses. The Patton
Affidavit explains the market design principles that are relevant to establishing NCZ boundaries
and accepts the NYISO’s proposed G-J Locality as consistent with them and reasonable.
D.The Benefits of Establishing an NCZ
As explained in the Patton Affidavit, the creation of an NCZ will bring many benefits by
sending more efficient locational investment signals.23 As Dr. Patton explains, NCZs are
intended to reflect the reliability needs of the system over the planning horizon, which allows the
capacity market to attract investment where it will provide the greatest reliability benefit.24 The
creation of an NCZ provides an incentive to build new, and to maintain existing, resources, in
areas where investment is most effective. The Patton Affidavit notes that establishing the G-J
Locality also will improve the incentives to develop new demand response resources in that
location.25 In short, establishing an NCZ will “facilitate more efficient investment and
retirement decisions.”26
The reliability needs that the G-J Locality would address are becoming increasingly
significant. As indicated in the NYISO’s 2012 Comprehensive Reliability Plan27 and in the
MMU’s 2012 State of the Market Report (“2012 SOM”),28 recent generator retirements in Load
Zones G and H resulted in higher Locational Minimum Installed Capacity Requirements
(“LCRs”) for Load Zones J and K.29 The total amount of Unforced Capacity in Load Zones G,
H, and I has fallen by 1 GW since the Summer of 2006, even though there has been an apparent
need for resources to address issues with the UPNY-SENY interface.30 The lack of a capacity
price signal has contributed to a reduction in capacity in these Load Zones.31 This has led to
23 See Patton Affidavit at P 8.
24 Id.
25 Id. at P 12.
26 Id. at P 13.
27 NYISO, 2012 Comprehensive Reliability Plan Final Report (March 19, 2013), available at
<http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_espwg/meeting_materials/2
013-01-31/2012%20CRP%20Compare%20Jan29%20to%20Jan23changes.pdf>.
282012 State of the Market Report for the New York ISO Markets (April 2013) available at
<http://www.nyiso.com/public/webdocs/markets_operations/documents/Studies_and_Reports/Reports/M
arket_Monitoring_Unit_Reports/2012/NYISO2012StateofMarketReport.pdf> .
29 Id. at P 11.
30 Id.
31 Id. at P 12.
Honorable Kimberly D. Bose April 30, 2013
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increased LCRs for New York City and Long Island, which have resulted in higher capacity prices in those Localities.32
Additionally, as described in the Niazi Affidavit, the NYISO conducted analyses of the potential wholesale price impacts of creating the G-J Locality. The NYISO considered various timeframes and alternative assumptions regarding future transmission development, new
resource entry, and plant retirements. A number of the NYISO’s analyses were conducted in direct response to stakeholder requests.
The Niazi Affidavit focuses on the two wholesale consumer impact price analyses that
Mr. Niazi believes are the most informative. They are: (i) a forward-looking 2013 impact
analysis that considers both summer and winter conditions;33 and (ii) a forward-looking 2018
case that assumes a 1000 MW increase in transmission system transfer capability and resource
additions.34 The NYISO presents this information to provide an indication of prices with and
without a G-J Locality.35 In general, Mr. Niazi’s analysis shows expected capacity price
increases in Load Zones G, H, and I and no price increases in other zones.36 This is an expected
consequence of reflecting the effect of the UPNY-SENY interface on capacity prices.
While the simulations show that the creation of the NCZ will increase capacity prices in Load Zones G, H, and I over the prices absent the creation of the G-J Locality, this is a corrective response to the longstanding absence of a needed locational price signal.37 Price increases in Load Zones G, H, and I therefore appear to be an efficient and appropriate outcome that will signal the need for capacity investment in Load Zones G, H, and I.38 The reliability and market benefits of sending more effective investment signals are in the long-term interest of all
consumers, even those that may pay higher locational prices in the short-term.
Finally, the Niazi Affidavit highlights another benefit that the establishment of an NCZ for the G-J Locality would likely bring. Proposed new resources in the new Rest of State (Load Zones A-F) may be more likely to enter the market.39 Those resources would be more
32 Id. at P 12.
33 As noted in the Niazi Affidavit, the NYISO is not proposing to implement the NCZ in 2013. However, the 2013 case is instructive because there are more data and therefore less need to rely on assumptions than for any future year. (See Niazi Affidavit at P 11).
34 Niazi Affidavit at PP 12-13.
35 As Mr. Niazi states in his Affidavit, the simulated ICAP Spot Market Auction prices are not
intended to be a forecast of prices for 2013 or 2018. (See Niazi Affidavit at PP 11 and 12, respectively).
They also do not reflect hedging or other actions Market Participants may take to manage capacity costs.
(See id.).
36 Niazi Affidavit at P 15.
37 Id.
38 Id.
39 Id.
Honorable Kimberly D. Bose April 30, 2013
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environmentally friendly than the existing generators they might displace, and thus could bring environmental benefits.40
E.MMU Recommendations
The MMU has consistently stated that the NYISO should create an NCZ in the Lower
Hudson Valley, most recently in its comments on the 2012 SOM.41 The 2012 SOM emphasizes that “[c]apacity price signals should reflect the value of capacity in each area” and that the
creation of an NCZ in Southeast New York “will greatly enhance the efficiency of the capacity
market signals but is overdue.”42 It explains that: (i) the total amount of UCAP sold in Load
Zones G, H, and I has fallen by more than twenty percent since 2006 “even as the need for
resources to address the UPNY-SENY interface has become more apparent in the NYISO’s
Comprehensive Reliability Planning Process;” (ii) UPNY-SENY interface limits have resulted in higher LCRs for Load Zones J and K; and (iii) it should be a “high priority for the NYISO to
move forward expeditiously to create and price” an NCZ in SENY. The NYISO agrees with
these recommendations.43 Similarly, as noted above, the Patton Affidavit reiterates that an NCZ is needed and that the proposed G-J Locality is reasonable.
F.Stakeholder Review
The NYISO has had extensive discussions with its stakeholders regarding the NCZ
Study, the proposed boundary, potential impacts of the proposed G-J Locality, the tariff revisions
that would implement it, and related issues.44 By engaging in these discussions, carefully
considering all of the input provided by stakeholders, and responding to numerous requests for
additional information, the NYISO has more than fully satisfied tariff requirements concerning
stakeholder review. More specifically, on October 1, 2012, the NYISO presented to the ICAP
Working Group the NCZ Study inputs and assumptions. On November 19, 2012 the NYISO
presented additional information on the NCZ Study and responded to stakeholder input and
questions. On January 14, 2013, the NYISO presented the results of the NCZ Study to the ICAP
Working Group. The NYISO released a final version of the study incorporating stakeholder
feedback on the same date.
On January 30, 2013, the NYISO presented to ICAP Working Group members a
proposed boundary for the NCZ of Load Zones G, H, I, J, and K based on its analysis as of that
date. It received input from stakeholders at the January 30 and February 14 ICAP Working
40 Id. at P 44.
41 2012 SOM at 51-52.
42 Id. at 51.
43 The NYISO is evaluating other recommendations made by the MMU in the 2012 SOM.
However, those recommendations go beyond the scope of the issues to be considered in this proceeding.
44 As noted above, these other issues include the Indicative NCZ LCR which is an element to be discussed in more detail in relation to the proposed ICAP Demand Curve for the NCZ. See Services Tariff Section 5.14.1.2.
Honorable Kimberly D. Bose April 30, 2013
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Group meetings and continued its analyses, including analyses requested by stakeholders. After
further analysis, the NYISO revised the NCZ boundary on March 28, 2013 to consist of Load
Zones G, H, I, and J. Load Zone K was not included. The NYISO presented details of its
analyses at the March 28 and April 18 ICAP Working Group meetings. At each of these
meetings, and also separately, the NYISO responded to stakeholder questions regarding the
boundary.
Drafts of the non-credit-related tariff revisions proposed to establish the NCZ were
proposed at the February 14, April 4, and April 18 ICAP Working Group meetings. Additional incremental tariff revisions were sent to stakeholders on April 26. In response to stakeholder comments during and separate from the meetings, a number of changes were made to the various drafts of tariff revisions based on stakeholder input. The credit-related provisions, i.e., those described in Section IV.A.4 were discussed at its January 25, February 22, and March 8, 2013 Credit Policy Working Group meetings, and additionally, they were also posted on the NYISO’s website with the ICAP Working Group meeting materials. The NYISO revised its proposed credit tariff provisions based on stakeholder input, as described below.
The NYISO made presentations concerning the consumer impacts of its NCZ proposal at the September 11 and December 3, 2012, and the January 30, and March 28, 2013 meetings, and provided further information in presentation form on April 18.
III.BASIS FOR THE PROPOSED NEW CAPACITY ZONE
A.NCZ Study
The Corey Affidavit explains that, as required by the Services Tariff, the NCZ Study was
performed using in large part,45 the deliverability methodology from the Class Year Study set
45 See Corey Affidavit at P 6. Section 5.16 of the Services Tariff is replete with references to
Attachment S of the OATT which clearly establish that the NCZ Study is largely based on the Class Year
Study methodology. See, e.g., Section 5.16.1.1.5 (“The ISO will perform the NCZ Study by applying to
the above inputs and assumptions the methodology contained in OATT Attachment S Sections 25.7.8.2.6,
25.7.8.2.7, 25.7.8.2.8, 25.7.8.2.9, 25.7.8.2.12, and 25.7.8.2.13 to Highways.”). As explained in the
NYISO’s October 11, 2011 Request for Clarification, or in the Alternative Rehearing in Docket No.
ER04-449-023 (“Request for Clarification”), and as accepted by the Commission, the primary difference
between the way the NCZ Study is performed relative to the deliverability methodology is that the
evaluation is limited to deliverability across Highways and not Byways, in accordance with Section
5.16.1 of the Services Tariff. See Request for Clarification at 5 (Assessment of Byway facilities, i.e.,
transmission facilities that are neither Highways nor Other Interfaces, would not provide an indication of whether the transmission system interfaces between Load Zones are constrained. Assessment of Highway facilities by application of the Deliverability Test methodology in section 25.7.8 will provide the
information necessary to determine whether inter-zonal constraints exist which necessitate the creation of new Capacity zones.”). See also New York Independent Transmission System Operator, Inc., 137 FERC ¶ 61,229 (2011) (“We grant clarification that the section 25.7.8 Highway Capacity Deliverability Test methodology to be used in the context of determining whether a new capacity zone is needed should only be that test in section 25.7.8 which applies to Highway facilities.”).
Honorable Kimberly D. Bose April 30, 2013
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forth in Attachment S of the OATT.46 The NCZ Study evaluates whether there is a constrained Highway interface into one or more Load Zones but does not evaluate deliverability across Other Interfaces or Byways.47 Thus, the NYISO conducted the NCZ Study by testing the transfer
capability across Highway interfaces.
As further explained in the Corey Affidavit, the NCZ Study applied the assumptions and
methodology required under Section 5.16.1.1.48 Pursuant to those provisions, the NYISO
developed the required Load, Generator, Transmission, and Import/Export models, which used
results from many NYISO studies and reports. Specifically, the NYISO’s Load model used the
2017 Summer peak load conditions from the 2012 Load and Capacity Data report (“Gold
Book”), and accounted for the impact of Load Forecast uncertainty using values from the 2012
New York State Reliability Council (“NYSRC”) IRM Report.49 The NYISO’s Generator model
included: (1) existing Capacity Resource Interconnection Service (“CRIS”) generators and all
projects with Unforced Capacity Deliverability Rights (“UDRs”), and (2) planned generation
projects or Merchant Transmission Facilities. The Generator model also included a UCAP
derate factor and accounted for units retaining CRIS rights for three years after being
deactivated, that still have the ability to transfer those rights. The transmission model included:
(1) existing transmission facilities, as set forth in the 2012 Gold Book; (2) planned changes of facilities that are scheduled to be in service prior to the NCZ Study Capability Period; and (3) any System Upgrade Facilities and System Deliverability Upgrades associated with planned projects, however, System Deliverability Upgrades were only modeled if they are being
constructed.50 The Import/Export model included: (1) NYCA scheduled imports from
HQ/PJM/ISO-NE/IESO; and (2) actual flow scheduled from Rest of State to New York City and Long Island consistent with the IRM and the LCRs for Load Zones J and K.51
The NCZ Study finalized on January 14, 2013 determined that the UPNY-SENY
Highway interface into Load Zones G, H, and I was constrained. Therefore, in accordance with the Services tariff, the NYISO is required to establish an NCZ.
46 The Class Year Study identifies the upgrade facilities needed to reliably interconnect all the
projects in a Class Year, including System Upgrade Facilities. For the group of Class Year projects
requesting CRIS, the Class Year Study includes a Deliverability test to determine the extent to which each project is deliverable at the requested CRIS MW level. Among the Class Year Study provisions in
Attachment S are details regarding the study methodology for evaluation of a project’s Deliverability and the identification and cost allocation of System Deliverability Upgrades required for a project’s proposed capacity to be fully deliverable. This is the “deliverability methodology” referred to herein.
47 Corey Affidavit at P 7.
48 Id. at P 13.
49 Id. at PP 14.
50 Id. at P 15
51 Id. at P 16.
Honorable Kimberly D. Bose April 30, 2013
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B.Selection of the NCZ Boundary
As discussed in the Chao/Adams Affidavit,52 the NYISO’s NCZ boundary determination
focused principally on resource adequacy assessments. The NYISO ran simulations in which
capacity was relocated from Load Zones G, H, and I to Load Zones J and K while monitoring
compliance with NYSRC loss-of-load (“LOLE”) requirements. The simulations were conducted
using General Electric’s Multi-Area Reliability Simulation (“MARS”) model together with the
“unified” or “Tan 45” methodology. The simulations demonstrated that capacity in Load Zones
G, H, and I was more fungible with capacity in Load Zone J than it was with capacity in Load
Zone K. This meant that Load Zone K could provide only very limited support to Load Zones G,
H, and I. By contrast, Load Zone J capacity had a considerably greater value to Load Zones G,
H, and I.53
The NYISO undertook further analyses which demonstrated that adding capacity to Load Zone J would provide greater LOLE benefits per MW in Load Zones G, H, and I than would
adding capacity to Load Zone K.54 In addition, the NYISO conducted a transmission security
analysis the results of which were consistent with and reinforced the results from its probabilistic resource adequacy analyses.55 Finally, the Chao/Adams Affidavit explains that establishing an NCZ that included Load Zone K would be inconsistent with sound market design principles.
Such an NCZ would incent capacity additions in Load Zone K even though they would provide “considerably less reliability value to the other Load Zones located on the constrained side of the UPNY-SENY interface and to the NYCA as a whole.”56 The NYISO therefore concluded that an NCZ encompassing the G-J Locality was more consistent with tariff requirements and market
design principles than alternative NCZ configurations.
The Jordan Affidavit reviewed the NCZ boundary analysis described in the Chao/Adams Affidavit and concluded that the NYISO had “reasonably: (i) concluded that the NCZ that it is required to establish should encompass Loads Zones G, H, I, and J (“GHIJ”), but exclude Load Zone K; (ii) selected and applied the methodology that it used in its NCZ boundary analysis; and (ii) determined the Indicative NCZ LCR for its proposed NCZ.”57
The Patton Affidavit notes that “[i]n principle . . . the boundaries of any [NCZ] should be
determined based on the ability of the resources within each area to contribute to satisfying the
reliability needs of the zone.”58 Not including Load Zone K in the NCZ is consistent with this
52 See Chao/Adams Affidavit at PP 12-34.
53 Id. at PP 19-22.
54 Id. at PP 23-27.
55 Id. at PP 28-31.
56 Id. at PP 32-33.
57 See Jordan Affidavit at P 7.
58 See Patton Affidavit at P 9.
Honorable Kimberly D. Bose April 30, 2013
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principle. More generally, the Patton Affidavit accepts and defers to the analysis in the
Chao/Adams and Jordan Affidavits. It concludes that the NYISO’s proposal to create a G-J Locality is consistent with market design principles and “therefore, a reasonable
configuration.”59
IV. EXPLANATION AND DESCRIPTION OF PROPOSED TARIFF REVISIONS
A.Proposed Revisions to the Services Tariff
1.Definitions
Several existing Services Tariff definitions refer to, address, or define concepts related to Load Zones and Localities. They thus require modification to recognize the creation of an NCZ. Because the NCZ will be a new Locality, the NYISO is proposing to revise the definition of “Locality” in Section 2.12 to include the NCZ, as follows:
Locality: A single LBMP Load Zone or set of adjacent LBMP Load Zones within one
Transmission District or a set of adjacent Transmission Districts (or a portion of a
Transmission District(s)) within which a minimum level of Installed Capacity must be
maintained, and as specifically identified in this subsection to mean (1) Load Zone J; and (2) Load Zone K; and (3) Load Zones G, H, I, and J (collectively the “G-J Locality”).
A new defined term “G-J Locality” proposed in a revision to Section 2.7 would clearly
specify that the NYISO’s NCZ is to be “comprised of Load Zones G, H, I, and J, collectively.”
In addition, the NYISO seeks to clarify the Services Tariff definition of “Locational
Minimum Installed Capacity Requirement.” When the NYISO proposed revisions to the OATT Section 1.12 definition of “Locational Installed Capacity Requirement” at an ICAP Working Group Meeting, stakeholders identified that the Services Tariff definition of “Locational
Minimum Installed Capacity Requirement” could benefit from certain clarifying revisions. The NYISO agrees and proposes the following revisions:
Locational Minimum Installed Capacity Requirement: The portion of the NYCA Minimum Installed Capacity Requirement provided by Capacity
Resources that must be electrically located within a Locality (including those combined withor possess an approved Unforced Capacity Deliverability Right except for rights returned in an annual election to the ISO in accordance with ISO Procedures.) in order to ensure that sufficient Energy and Capacity are available in that Locality and that appropriate reliability criteria are met.
The NYISO is further proposing to revise the Services Tariff’s definition of “LSE Unforced
Capacity Obligation” to reflect the fact that there will be such an obligation for the “G-J
Locality.”
59 See id. at P 16.
Honorable Kimberly D. Bose April 30, 2013
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Additionally, the NCZ will include Load Zones G, H, and I which were formerly not a Locality or part of a Locality, but instead were included in the “Rest of State,” as defined in Section 2.18. Therefore, the definition of “Rest of State” in Section 2.18 must be revised to add Load Zones G, H, and I to the list of Load Zones not included in “Rest of State” and to specify the Capability Year in which their removal will become effective, as follows:
Rest of State: The set of all non-Locality NYCA LBMP Load Zones. As of the 2002 2003 2014/2015 Capability Year, Rest of State includes all NYCA LBMP Load Zones, other than LBMP Load Zones G, H, I, J, and K.
The NYISO also proposes revisions to the definition of “Unforced Capacity
Deliverability Rights” in Section 2.21to reflect the establishment of an NCZ, and minor
clarifying revisions requested by stakeholders which the NYISO agrees adds clarity, as follows:
Unforced Capacity Deliverability Rights: Unforced Capacity Deliverability Rights
(“UDRs”) are rights, as measured in MWs, associated with new incremental controllable
transmission projects that provide a transmission interface to a NYCA Locality (i.e., an area
of the NYCA in which a minimum amount of Installed Capacity must be maintained). When
combined with Unforced Capacity which is located in an External Control Area or
non‐constrained NYCA region either by contract or ownership, and which is deliverable to
the NYCA interface in the Locality in whichwith the UDR transmission facility is electrically
located, UDRs allow such Unforced Capacity to be treated as if it were located in the NYCA
Locality, thereby contributing to an LSE’s Locational Minimum Installed Capacity
Requirement. To the extent the NYCA interface is with an External Control Area the
Unforced Capacity associated with UDRs must be deliverable to the Interconnection Point.
2.Revisions to Tariff Provisions Related to the Installed Capacity
Market
a.Section 5.11
Several tariff provisions related to the NYISO’s administration of the Installed Capacity market must be modified to recognize the creation of the NCZ. Section 5.11.1 requires revision to accommodate the fact that the NCZ will be a Locality that contains another Locality within it. The NYISO is proposing a revision to clearly acknowledge that it is to calculate for each relevant Locality the Unforced Capacity Obligation for any LSE with Load in a Load Zone that is
included in more than one Locality.
Specifically, the NYISO proposes to revise Section 5.11.1 as follows:
Each LSE Unforced Capacity Obligation will equal the product of (i) the ratio of that
LSE’s share of the NYCA Minimum Unforced Capacity Requirement to the total NYCA
Minimum Unforced Capacity Requirement and (ii) the total of all of the LSE Unforced
Capacity Obligations for the NYCA established by the ICAP Spot Market Auction. The
LSE Unforced Capacity Obligation will be determined in each Obligation Procurement
Honorable Kimberly D. Bose April 30, 2013
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Period by the ICAP Spot Market Auction, in accordance with the ISO Procedures. Each LSE will be responsible for acquiring sufficient Unforced Capacity to satisfy its LSE Unforced Capacity Obligations. LSEs with Load in more than one Locality will have an LSE Unforced Capacity Obligation for each Locality.
The NYISO is also proposing a minor clarifying change to Section 5.11.4 to delete the term “NYCA” and to reiterate that LSEs will have LCRs for every Locality in which they serve Load. Specifically:
The Locational Minimum Unforced Capacity Requirement represents a
minimum level of Unforced Capacity that must be secured by LSEs in
NYCAeach Localityies in which it has Load for each Obligation Procurement
Period...”
Again, this change more clearly recognizes the establishment of an NCZ.
b.Section 5.12
The NYISO is proposing to revise Section 5.12 of the Services Tariff to specify that
certain capacity cannot be used to satisfy an LCR. Specifically, capacity associated with
External CRIS Rights, Grandfathered External Installed Capacity Agreements listed in
Attachment E of the Installed Capacity Manual, and Existing Transmission Capacity for Native
Load (“ECTNL”) for the New York State Electric & Gas Corporation (“NYSEG”)60 listed in
Table 3 of Attachment L to the ISO OATT, is only qualified to satisfy a NYCA Minimum
Unforced Capacity Requirement and is not eligible to satisfy an LCR. The restriction would
not apply to External capacity associated with UDRs. As noted by the Nelson Affidavit, this
modification would align the proposed rule for NCZs with the existing limitation that prevents
External Capacity not associated with UDRs from satisfying LCRs in the existing Localities, i.e.,
Load Zones J and K.61 This rule is reasonable because, as explained in the Nelson Affidavit,
although it is possible that some portion of the Energy associated with External capacity may
satisfy a Locality’s need under certain circumstances, there is no assurance that it will actually do
so.62 Unless External capacity is associated with controllable transmission equipment that is
considered a Scheduled Line (i.e., a UDR), there is no such assurance. Therefore, External
capacity should not be counted towards a Locality’s LCR unless it is associated with a LCR.63
60 Under the OATT, ETCNL is “[t]ransmission capacity identified on a Transmission Owner’s
transmission system” to serve its Native Load customers “(as of the filing date of the original ISO Tariff -
January 31, 1997) for the purposes of allocating revenues from the sale of TCCs related to that capacity.” The Commission has held that NYSEG’s ETCNL constitutes a grandfathered Deliverability right to
import up to 1080 MW of capacity from PJM. See New York Independent Transmission System
Operator, Inc., et al., 127 FERC ¶ 61,318 (2009).
61 See Nelson Affidavit at PP 10-17.
62 See id. at P 11.
63 See id. at P 12.
Honorable Kimberly D. Bose April 30, 2013
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Additionally, the Nelson Affidavit explains why the NYISO disagreed with suggestions
that it create additional “exceptions” that would allow certain External capacity to be used to
satisfy LCRs.64 Certain stakeholders have argued that Energy from External capacity ought to
be eligible to count against LCRs if it is expected, e.g., to flow over a Phase Angle Regulator
(“PAR”)-controlled transmission facility from the PJM Interconnection, LLC (“PJM”),
specifically, in recognition of certain power flows associated with the Ramapo PAR facilities
(“Ramapo PARs”).65 Ms. Nelson explains that target flow assumptions associated with the
Ramapo PARs are not the functional equivalent of a UDR right. 66 Further, deviations from the
target flow can be satisfied by financial settlement payments from PJM, rather than through
physical delivery on the Ramapo PAR-controlled 5018 line.67 Thus, there is no guarantee that
when external PJM capacity is called upon to meet a reliability need in the G-J Locality that the
associated Energy would be delivered across the 5018 line into Load Zone G, rather than over
the large set of interconnections connecting PJM to the new Rest of State.68 Therefore, it is
distinguishable from capacity associated with a UDR which is qualified to satisfy an LCR
obligation under the NYISO’s Services Tariff and should not be eligible to satisfy an LCR.
The NYISO also considered but rejected a stakeholder request that External capacity over a transmission line from ISO-New England be permitted to satisfy a G-J Locality LCR.69 As Ms. Nelson explains, it is impossible for External capacity from New England, and the
associated Energy, to be controlled to be made deliverable to the G-J Locality.70 Accordingly, it should not be eligible to satisfy an LCR.71
Therefore, the NYISO proposes to insert the following new paragraph, after the third paragraph in Section 5.12.1:
External Installed Capacity not associated with UDRs, including capacity associated with
External CRIS Rights, Grandfathered External Installed Capacity Agreements listed in
Attachment E of the ISO Installed Capacity Manual, the Existing Transmission Capacity
for Native Load listed for New York State Electric & Gas Corporation in Table 3 of
Attachment L to the ISO OATT, Import Rights, and External System Resources, is only
64 See id. at PP 18-22.
65 Id. at P 18.
66 Id. at P 21.
67 Id. The 5018 line is one of larger set of interconnections connecting PJM to the NYCA. Id. at P
19.
68 Id.
69 Id. at P 22. As explained in the Nelson Affidavit, this one line is part of a much larger set of uncontrolled interconnections connecting New England to the NYCA.
70 Id.
71 Id.
Honorable Kimberly D. Bose April 30, 2013
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qualified to satisfy a NYCA Minimum Unforced Capacity Requirement and is not eligible to satisfy a Locational Minimum Installed Capacity Requirement
The NYISO is also proposing to add the language set forth below to the second paragraph
of Section 5.12.8. It would specify limits on offering non-UDR External Capacity into capacity
market auctions that parallel the proposed prohibition against counting such capacity against
LCRs.72
External Unforced Capacity (except External Installed Capacity associated with UDR(s))
may only be offered into the Capability Period Auctions or Monthly Auctions for the
Rest of State, and ICAP Spot Market Auctions for the NYCA and may not be offered into
a Locality for an ICAP Auction. Bilateral Transactions which certify External Unforced
Capacity using Import Rights may not be used to satisfy a Locational Minimum Unforced
Capacity Requirement...
Language has also been added to Section 5.12.2 to specify that terms not defined therein,
will have the meaning provided in the OATT. This clarification is intended to avoid ambiguity
and confusion given the number of terms defined in OATT Attachments S and X that appear in
Section 5.12.2. Additionally, and consistent with the changes described above, several revisions
to Section 5.12.2 are proposed to clarify that the External Installed Capacity deliverability test
will only evaluate whether such External capacity is deliverable within the Rest of State. Section
5.12.2.4.1 has been revised to provide that the Offer Cap applicable to certain External CRIS Rights will be determined based on the relevant NYCA ICAP Demand Curve.
Revisions to the sanctions provision in Section 5.12.12 are also needed to recognize the
introduction of an NCZ. Specifically, the NYISO is proposing to revise Section 5.12.12.2 to
state: “The deficiency charge may be up to one and one-half times the applicable Market-
Clearing Price of Unforced Capacity determined in the ICAP Spot Market Auction
corresponding to where the Installed Capacity Supplier’s capacity cleared, and for each month in
which the Installed Capacity Supplier is determined not to have complied with the foregoing
requirements...”
c.Section 5.14
Just as it has proposed to do in its revision to Section 5.12.2.4.1 (described above), the
NYISO proposes to modify language describing the payment of ICAP Suppliers in Section
5.14.1.1 to more clearly specify that their compensation will be computed using the “ICAP Demand Curve applicable to its offer.” This change would recognize and accommodate the establishment of ICAP Demand Curves for NCZs.
Similarly, the NYISO would revise Section 5.14.2, which governs the calculation of
deficiency charges to more clearly establish that such charges will be determined “using the
72 See id. at P 15.
Honorable Kimberly D. Bose April 30, 2013
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applicable in theICAP Demand Curve for that ICAP Spot Market Auction... ” Again, this
revision would accommodate the establishment of ICAP Demand Curves for NCZs.
The NYISO is also proposing revisions to Section 5.14.3.2(iii) and (iv) to reflect the addition of the NCZ. Specifically, Section 5.14.3.2(iii) would be revised to describe how the NYISO would rebate unspent deficiency charges or supplemental supply fees for the proposed G-J Locality. The language added has been modeled on the previously accepted provisions for the existing Localities, and provides as follows:
(iii) G-J
If an Unforced Capacity shortfall exists during any month, the ISO shall rebate any
remaining unspent deficiency charges or supplemental supply fees collected for that
month for the G-J Locality, allocated among all LSEs in that Locality in proportion to
their share of the applicable Locational Minimum Installed Capacity Requirement.
Rebates shall include interest accrued between the time payments were collected and the time that rebates are paid.
Section 5.14.3.2(iv) has been renumbered and its references to the New York City and Long Island Localities, which would be too narrow after the G-J Locality is effective, would be deleted, as follows:
(iv) Rest of State
If an Unforced Capacity shortfall exists during any month, the ISO shall rebate any
remaining unspent deficiency charges or supplemental supply fees collected for that
month for the Rest of State requirements, allocated among all LSEs in each of the two
Localities, New York City and Long Island, and in Rest of State, in proportion to each
LSE’s share of the NYCA Minimum Installed Capacity Requirement less that LSE’s
Locational Minimum Installed Capacity Requirement. Rebates shall include interests
accrued between the time payments were collected and the time that rebates are paid.
Additionally, while the NYISO is not proposing any changes to the table of ICAP
Demand Curves in Section 5.14.1.2 at this time, the ICAP Demand Curve reset filing to be made by November 30, 2013 will include a new row for the G-J Locality. The creation of the G-J
Locality will not alter the existing requirement that the plant used to establish the NYCA ICAP Demand Curve must be located in the Rest of State (as that term would be revised to recognize the new G-J Locality).73
73 See Services Tariff Section 5.14.1.2; and New York Independent System Operator, Inc., 134
FERC ¶ 61,058 at P 38 (2011) (“Therefore, we conclude that the tariff requires that NYISO determine the
localized levelized embedded costs for three separate peaking units, i.e., one for the NYC (Zone J)
locality, one for the LI (Zone K) locality, and one for the rest-of-state. Further, in past applications of the
demand curve, the rest-of-state has carried a de facto meaning of all NYCA Load Zones with the
exception of NYC and LI. Furthermore, protestor’s assertions would lead to the conclusion that a NYCA
Honorable Kimberly D. Bose April 30, 2013
Page 19
d. Additional Minor Typographical Correction to Section 5.16.1.1.4
The NYISO proposes an additional minor revision to correct a typographical error in
Services Tariff Section 5.16.1.1.4, to insert a close parenthesis after “5.16.1.1.1(iii)” as follows: “(excluding and not recognizing MW of CRIS requested by Developers other than CRIS
identified in Section 5.16.1.1.1 (iii)),…”
3. Revisions to the Pivotal Supplier Threshold in Attachment H
The NYISO’s June 2012 Compliance Filing described that it is necessary to apply market power mitigation measures within NCZs because they will not have a significant amount of
surplus capacity in equilibrium. Thus, establishing the NCZ will raise local market power
concerns. “Over- mitigation” is unlikely to occur as long as a threshold is applied only to ICAP Suppliers that likely have market power and not to relatively small suppliers that do not control a minimum quantity of Unforced Capacity.
The June 2012 Compliance Filing proposed to apply mitigation measures to the NCZ that
this filing would establish.74 That filing explained that the NYISO would propose a Pivotal
Supplier threshold at the time that it made a filing to implement an NCZ. Accordingly, the
NYISO is now proposing the threshold by revising Section 23.2.1’s definition of “Pivotal
Supplier.” The NYISO is proposing a 650 MW threshold, and minor wording revisions (i.e., the
insertion of the words “New York City Locality,” “G-J Locality,” and “if any”):75
For purposes of Section 23.4.5 of this Attachment H, “Pivotal Supplier” shall mean (i)
for the New York City Locality, a Market Party that, together with any of its Affiliated
peaking unit on LI would need to be deliverable to the entire state, including NYC and rest-of-state. This would imply that a NYCA peaking unit located in rest-of-state would need to be deliverable to NYC and LI, which is not reasonable and not required by the Tariff. Accordingly, we find NYISO correct in
locating the NYCA peaker within the rest-of-state area.”).
74 For ease of considering the revisions proposed to this section, the NYISO distinguishes them with double underline. The revisions proposed in the June 2012 Compliance Filing are shown with a single underline.
75 As noted at Section II.A.2, the NYISO respectfully requests the Commission issue an order on
the June 2012 Compliance Filing no later than August 30, 2013, well in advance of the effective date of
the tariff revisions proposed herein, so that the NYISO may make necessary mitigation and exemption
determinations for facilities in the NCZ. In the event that the Commission does not issue an order on the
June 2012 Compliance Filing prior to acting on this submittal, the NYISO respectfully requests that the
Commission accept the changes to the Pivotal Supplier definition, in Services Tariff Section 23.2.1,
proposed in the June 2012 Compliance Filing. Pursuant to the Commission’s e-tariff filing requirements, the June 2012 Compliance Filing’s proposed changes to that Section 23.2.1 are reflected in Attachment VII as the base, accepted language to which the incremental changes proposed in this filing are marked. Therefore, consistent with the NYISO’s proposal, the NYISO is seeking acceptance of the tariff language in Section 23.2.1 as reflected in Attachment VIII to this filing.
Honorable Kimberly D. Bose April 30, 2013
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Entities, (a) Controls 500 MW or more of Unforced Capacity, and (b) Controls Unforced
Capacity some portion of which is necessary to meet the New York City Locality
Locational Minimum Installed Capacity Requirement in an ICAP Spot Market Auction;
(ii) for the G-J Locality, a Market Party that, together with any of its Affiliated Entities,
(a) Controls 650 MW or more of Unforced Capacity; and (b) Controls Unforced Capacity some portion of which is necessary to meet the G-J Locality Locational Minimum
Installed Capacity Requirement in an ICAP Spot Market Auction; and (iii) for each
Mitigated Capacity Zone except the New York City Locality and the G-J Locality, if any, a Market Party that Controls at least the quantity of MW of Unforced Capacity specified for the Mitigated Capacity Zone and accepted by the Commission.
The Patton Affidavit explains that the NYISO calculated its proposed 650 MW threshold for the
G-J Locality in a manner consistent with MMU recommendations and describes how those
calculations were conducted.76 The methodology aimed to achieve a balance between the
benefits of effectively mitigating Suppliers with market power against the benefits of minimizing
NYISO interventions in the markets.77 It focused on identifying how large an ICAP Supplier’s
portfolio would have to be for it to have the incentive to withhold capacity and raise prices in the
NCZ.78 The Patton Affidavit reiterates that “[i]t is appropriate to be conservative in selecting the
minimum size threshold because this will ensure that suppliers with market power will be subject
to mitigation.”79 The Patton Affidavit therefore concludes that the proposed threshold is
reasonable. 80
At the same time, the Patton Affidavit notes that the MMU is concerned that the existing
Pivotal Supplier framework could be circumvented.81 The concern is that under the proposed
tariff language, “UCAP that is sold in advance of the monthly spot auction is deducted from the
portfolio of the supplier” when applying the Pivotal Supplier test and “minimum size
threshold.”82 Thus, a “large supplier with market power can reduce the amount of capacity that
it is deemed to control by selling some of its capacity in the Capability Period Auction or the
Monthly Auction.”83 By doing so, the Supplier could drive up ICAP Spot Market Auction prices
via withholding. It could thereby benefit itself by inflating capacity prices in future Monthly or
76 See Patton Affidavit at PP 18-26.
77 Id. at P 18.
78 Id. at P 19.
79 Id. at P 25.
80 Id.
81 Id. at PP 27-32. The MMU also raised this issue in the 2011 SOM (2011 State of the Market Report for the New York ISO Markets (April 2012) available at
<http://www.potomaceconomics.com/uploads/nyiso_reports/NYISO_2011_SOM_Report-Final_4-18-
12.pdf> and the 2012 SOM.
82 Patton Affidavit at P 27.
83 Id. at P 29.
Honorable Kimberly D. Bose April 30, 2013
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Capability Period auctions as those prices converged with prices in the ICAP Spot Market
Auctions over time.84 The NYISO would emphasize that, to date, it has not, and to the best of its knowledge, the MMU has not, detected any entity pursuing this strategy.
The Patton Affidavit states that the MMU’s concern could be addressed by deleting the “current exclusion of forward capacity sales in Section 23.4.5.5(1).”85
The NYISO agrees that the MMU’s proposed change to Section 23.4.5.5(1) would be an enhancement and supports it. The NYISO would ask the Commission to consider that the
approach to determining “Control” that the NYISO has proposed to apply to the NCZ currently applies in New York City. That is, “Control” of UCAP in both New York City and the NCZ is determined based on the number of MW of UCAP controlled after certification and prior to the ICAP Spot Market Auction.86 The NYISO believes that the MMU’s proposed enhancement
should apply to both New York City and the NCZ. Thus, the NYISO would favor conforming tariff revisions to provide for parallel treatment.87
4. Revisions to the Credit Provisions in Attachment K
Section 26.4.3 (iv) of the Services Tariff, which governs the NYISO’s administration of
the bidding requirements for the ICAP Spot Market Auction, must be modified to recognize the
creation of the NCZ; i.e., a new Locality. The credit policy reflects modifications, based on
stakeholder input, including what the potential exposure will be based on the fact that there will
be a Locality contained within another Locality (Load Zone J is within the G-J Locality).
Further, the tariff revisions will recognize that the Locality’s price could be set by the bids and
offers within the Locality or could be determined by the larger Locality in which it is contained.
Also in response to stakeholder comments, the NYISO included a credit cap set at the UCAP
based reference point (in $/kW-Month) to prevent unrealistic credit requirements by limiting it to
cover probable market outcomes. The NYISO proposes to use its current methodology for
calculating a Market Participant’s credit requirement for bidding in the ICAP Spot Market
Auction88 while accommodating the fact that the NCZ will be a Locality that itself contains a
84 Id. at PP 29-30.
85 Id. at P 32.
86 Services Tariff Section 23.2.1 at the definition of “Pivotal Supplier,” specifies in (b) that the
determination is made based on Control of UCAP “which is necessary to meet the New York City
Locational Minimum Installed Capacity Requirement in an ICAP Spot Market Auction.” This same
concept was proposed in the June 2102 Compliance Filing for any “Mitigated Capacity Zone.” “Mitigated
Capacity Zone” is a term proposed in the June 2012 Compliance Filing to mean “New York City and any
Locality added to the definition of “Locality” accepted by the Commission on or after March 31, 2012.”
See June 2012 Compliance Filing at proposed revisions to pp 3-4, and Services Tariff Section 2.13.
87 If the Commission declines to require that the “Control” definition be enhanced consistent with
the MMU’s recommendation at this time, the NYISO believes that its proposed Pivotal Supplier threshold
for the NCZ, and its existing Pivotal Supplier test for New York City, would still be just and reasonable.
88 For more information on the current methodology see New York Independent System Operator,
Honorable Kimberly D. Bose April 30, 2013
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Locality.
Each calendar month the NYISO uses the most recent Monthly Auction Market-Clearing
Price plus a margin as a proxy for the ICAP Spot Market Auction Market-Clearing Price. The
NYISO then calculates credit requirements by multiplying the proxy price by the Market
Participant’s estimated LSE UCAP Obligation, by location, for the Obligation Procurement
Period. The NYISO proposes that for a Locality (i.e., Load Zone J) contained within another
Locality (i.e., the G-J Locality) the proxy price will be the higher of that Locality’s most recent
Monthly Auction Market-Clearing Price plus its margin or the proxy price for the NCZ,
multiplied by its margin. The margin for the G-J Locality will be 100%, as it will contain Load
Zones that currently have a 100% margin. This proposal will protect the NYISO and its Market
Participants from any large increases in credit exposure associated with an increase in market
price. The revisions are consistent with the methodology and computation of Market
Participants’ credit requirements associated with Long Island and Rest of State obligations.
The NYISO proposes to use within its credit calculation for the NCZ the price that is the
lower of the proxy price calculated as explained above or the UCAP based reference point (in
$/kW-Month). This proposal will cap the proxy price for the NCZ at the UCAP based reference
point (in $/kW-Month) derived from the corresponding ICAP Demand Curve because the
NYISO’s exposure to the Market Participant is unlikely to exceed this amount. As such, any
funds retained by the NYISO above this amount would be an unnecessary cost to Market
Participants. The NYISO further proposes to apply this credit cap to all Localities and for the
NYCA to create uniformity of computations for all capacity obligations in the different locations,
and certainty for Market Participants.89 Once the proxy price is determined, the NYISO would
calculate the bidding requirement by multiplying the proxy price by the Market Participant’s
estimated LSE UCAP Obligation, by location, for the Obligation Procurement Period. The
Market Participant’s ICAP Spot Market Auction bidding requirement would equal the sum of its
locational credit requirements.
The NYISO is proposing to revise the formula in Section 26.4.3 (iv) as follows:
five (5) days prior to any ICAP Spot Market Auction, the amount that the Customer maybe required to pay for UCAP in the auction, calculated as follows:
Σ(1 + MarginL )*MCPL ICPML x 1000 x DeficiencyL
Inc.’s Filing of Proposed Tariff Revisions Related to ICAP Credit Requirements, Docket No. ER12-2443-
000, accepted by the Commission on September 10, 2012.
89 The NYISO believes that creating this uniformity is warranted (and authorized) under Section
5.16.4 because it addresses an issue, i.e., the potential implications of non-uniform computations across locations, that is raised by the establishment of the NCZ. It is therefore a tariff change that “recognizes” the creation of NCZ.
Honorable Kimberly D. Bose April 30, 2013
Page 23
+
(1 + MarginL )*MCPL ICPML x 1000 x (ZCPL - 1)
x RQTL
LЄS2
The NYISO would also modify and add the following definitions for the new variables
used in the equation.
ICPMLequals the lesser of UBRPL or LML,
UBRPLequals the UCAP based reference point (in $/kW-Month) for location L, as
determined on the ICAP Demand Curve for that location (or for the NYCA if L is
Rest of State) for the applicable Obligation Procurement Period,
LMLequals (1) for any Locality L that is contained within another Locality X, the greater
of CPML or CPMX, or (2) for any other Locality or Rest of State, CPML,
CPMLequals for location L, (1 + MarginL )*MCPL ,
CPMXequals for location X, (1 + MarginX )*MCPX ,
It would also make the following revisions to four definitions of variables that are
currently included in Section 26.4.3(iv) formula, in order to account for the establishment of the G-J Locality.
Sequals a set containing the following locations: New York City, Long Island each
Locality and Rest of State,
MarginLequals 25% if location L is New York City and 100% if location L is the G-J
Locality, Long Island or Rest of State,
DeficiencyL equals the number of megawatts of Unforced Capacity that are to be procured in
location L on behalf of that Customer in the ICAP Spot Market Auction in order to cover any deficiency for that Customer that exists in that location after the
certification deadline for that ICAP Spot Market Auction less any deficiency
calculated for that Customer for any Localities contained within location L, such value not to be less than zero,
RQTL equals (1) if L is New York City or Long Island, that Customer’s share of the
Locational Minimum Unforced Capacity Requirement for location L or (2) if L is
G-J Locality, that Customer’s share of the Locational Minimum Unforced Capacity
Requirement for the G-J Locality that remains after reducing this amount by its
share of the Locational Minimum Unforced Capacity Requirements for New York
Honorable Kimberly D. Bose April 30, 2013
Page 24
City or,(3) if L is Rest of State, its that Customer’s share of the NYCA Minimum
Unforced Capacity Requirement that remains after reducing this amount by (a) its
share of the Locational Minimum Unforced Capacity Requirements for New York
City and Long Island, for the month covered by the ICAP Spot Market Auction,
measured in megawatts and (b) that Customer’s share of the Locational Minimum
Unforced Capacity Requirement for the G-J Locality remaining after accounting for
New York City, as calculated in (2) above; such value not to be less than zero
B.Proposed Revisions to the OATT
Several provisions of the OATT must be modified to recognize the creation of the NCZ.
1.OATT Definitions
Modifications to two OATT definitions are necessary due to the creation of the G-J
Locality. Specifically, the OATT definition of “Locality” in Section 1.12 of the OATT requires revision, as follows:
Locality: Shall have the meaning set forth in §2.12 of the ISO Services TariffA single
LBMP Load Zone or set of adjacent LBMP Load Zones within one Transmission
District, and within which a minimum level of Installed Capacity must be maintained.
Similarly, the NYISO is proposing to revise the existing OATT definition of “Locational Installed Capacity Requirement” to achieve consistency with the Services Tariff definition
(which is described above). The concepts in the OATT and Services tariff are the same, and conforming the language will enhance clarity.
Locational Minimum Installed Capacity Requirement: AThe determination by the ISO in accordance with the ISO Services Tariff of that portion of the NYCA Minimum statewide Installed Capacity rRequirement (as defined in the ISO
Services Tariff) that must be electrically located within a Locality in order to
ensure that sufficient Energy and Capacity are available in that Locality and that appropriate reliability criteria are met.
2.Revisions to Attachments S and X of the OATT
a.Changes to Recognize the Establishment of a G-J Locality
Attachments S and X contain definition sections in Section 25.1 of Attachment S, Section
30.1 of Attachment X and in the pro forma Large Generator Interconnection Agreement in
Section 30.14. For consistency, the NYISO proposes to make the revisions described below to each of these definition sections.
The deliverability test methodology evaluates Load Zones in groups defined by
Attachments S and X as “Capacity Regions.” Because the NCZ will create a new Locality and
also impact the composition of the Rest of State Capacity Region, the NYISO is proposing to
Honorable Kimberly D. Bose April 30, 2013
Page 25
revise the definition of “Capacity Region” as follows:
Capacity Region: One of three four subsets of the Installed Capacity statewide markets
comprised of (1) Rest of State (i.e., Load Zones A through IF), ; (2) Lower Hudson
Valley (i.e., Load Zones G, H and I); (3) New York City (i.e., Load Zone J); and (4)
Long Island (i.e., Zone K) and New York City (Zone J), except for Class Year
Interconnection Facility Studies conducted prior to Class Year 2012, for which “Capacity
Region” shall be defined as set forth in Section 25.7.3 of this Attachment S.
Similarly, due to the new composition of the Rest of State Capacity Region, the NYISO is proposing to revise the definition of “External CRIS Rights” to reflect the new composition of Load Zones in the Rest of State Capacity Region. The NYISO also proposes to further clarify
the definition of “External CRIS Rights,” so that it corresponds to the proposed revisions to the
Services Tariff Sections 5.12.1, and 5.12.8. The proposed revisions to the definition of “External CRIS Rights” are as follows:
External CRIS Rights: A determination of deliverability within a New Yorkthe Rest of
State Capacity Region (i.e., Load Zones A - F), awarded by the NYISO for a term of five
(5) years or longer, to a specified number of Megawatts of External Installed Capacity that satisfy the requirements set forth in Section 25.7.11 of this Attachment S to the
NYISO OATT, and that can be certified in a Bilateral Transaction used for the NYCA and not a Locality, or sold into the NYCA for an Installed Capacity auction and not in an Installed Capacity auction for a Locality.
The new composition of the Capacity Regions evaluated in the deliverability test also
impacts the definitions of certain transmission facility interfaces to which specific analyses
apply. The deliverability test methodology evaluates three separate categories of transmission
facilities: (1) Highways (transmission facilities 115 kV and above that comprise internal NYCA
interfaces and in series BPS facilities; Highway interfaces: Dysinger East, West Central, Volney
East, Moses South, Central East/Total East, UPNY-SENY and UPNY-ConEd); (2) Other
Interfaces (interfaces into New York Capacity Regions, into Zone J and into Zone K, and
external ties into the NYCA); and (3) Byways (all transmission facilities of the NYS
Transmission System that are neither Highways nor Other Interfaces). In light of the new
“Lower Hudson Valley” Capacity Region which comprises Load Zones G, H and I, the UPNY-
SENY interface would no longer be a Highway interface, but rather, would be defined as an
“Other Interface.” The NYISO is therefore proposing to alter the definition of “Highway” as set
forth below.
Highway: 115 kV and higher transmission facilities that comprise the following NYCA
interfaces: Dysinger East, West Central, Volney East, Moses South, Central East/Total
East, UPNY-SENY and UPNY-ConEd, and their immediately connected, in series, Bulk
Power System facilities in New York State. Each interface shall be evaluated to
determine additional “in series” facilities, defined as any transmission facility higher than
115 kV that (a) is located in an upstream or downstream zone adjacent to the interface
and (b) has a power transfer distribution factor (DFAX) equal to or greater than five
percent when the aggregate of generation in zones or systems adjacent to the upstream
Honorable Kimberly D. Bose April 30, 2013
Page 26
zone or zones which define the interface is shifted to the aggregate of generation in zones
or systems adjacent to the downstream zone or zones which define the interface. In
determining “in series” facilities for Dysinger East and West Central interfaces, the 115
kV and 230 kV tie lines between NYCA and PJM located in LBMP Zones A and B shall
not participate in the transfer. Highway transmission facilities are listed in ISO
Procedures.
The NYISO is also proposing revisions to the definition of “Other Interface.” These
proposed revisions: (1) modify the definition such that it refers to Capacity Regions in a manner consistent with the addition of the Lower Hudson Valley region; (2) clarify the existing
language; and (3) provide explanatory parentheticals to further clarify the references to each of the Other Interfaces:
Other Interfaces: The following Interfaces into New York Ccapacity Rregions,: Lower Hudson Valley [i.e., Rest of State (Load Zones A-F) to Lower Hudson Valley (Load
Zones G, H and I]; New York City [i.e., Lower Hudson Valley (Load Zones G, H and I) to New York City (Load Zone J)]; and Long Island [i.e., Lower Hudson Valley (Load Zones G, H and I) to Long Island (Load Zone K)], and external ties into the New York Control Area the following Interfaces between the NYCA and adjacent Control Areas: PJM to NYISO, ISO-NE to NYISO, Hydro-Quebec to NYISO, and Norwalk Harbor
(Connecticut) to Northport (Long Island) Cable.
b. Revisions to the Deliverability Test Methodology
Section 25.7 of OATT Attachment S details the deliverability test methodology. With
the implementation of the NCZ and resulting addition of the Lower Hudson Valley Capacity
Region and change to the composition of the Rest of State Capacity Region, certain sections of
Section 25.7 require revisions. The basic framework of the current deliverability test
methodology, however, is not changing; rather, the revisions are required merely to reflect the
NCZ and the resulting composition of the respective Capacity Regions in the methodology for
the deliverability test.
Section 25.7.3, for example, which explains the manner in which the deliverability test methodology will be applied within the Capacity Regions, requires revisions to reflect the new definition of Capacity Region. The NYISO proposes to further revise Section 25.7.3 as set forth below in order to clarify that the revised Capacity Regions will be reflected in the Class Year deliverability study beginning with Class Year 2012.90
The specific proposed revisions to Section 25.7.3 are as follows:
25.7.3 New York Capacity Regions.
90 As explained in Section V below, the NYISO does not anticipate that the Class Year
Deliverability Study for Class Year 2012 will begin before Commission action on this filing.
Honorable Kimberly D. Bose April 30, 2013
Page 27
For Class Years prior to Class Year 2012, Tthe deliverability test will be applied within
each of the three (3) New York Capacity Regions: (1) Rest of State (i.e., Load Zones A
through I),; (2) New York City (i.e., Load Zone J); and (3) Long Island (i.e., Load Zone
K)and New York City. To be declared deliverable a generator or merchant transmission
project must be deliverable throughout the NYISO Capacity Region in which the project
is interconnected. For example, a proposed generator or merchant transmission project
interconnecting in the Rest of State Capacity Region (i.e., Load Zones A-I) will be
required to demonstrate deliverability throughout the Rest of State Capacity Region (i.e.,
Load Zones A-I), but will not be required to demonstrate deliverability to or within either
of the following Capacity Regions: New York City (i.e., Load Zone J); or Long Island
(i.e., Load Zone K)Long Island Capacity Region or the New York City Capacity Region.
Starting with Class Year 2012, the deliverability test will be applied within each of the
four (4) Capacity Regions: (1) Rest of State (i.e., Load Zones A through F); (2) Lower
Hudson Valley (i.e., Load Zones G, H and I); (3) New York City (i.e., Load Zone J); and
(4) Long Island (i.e., Load Zone K). To be declared deliverable a generator or merchant
transmission project must only be deliverable throughout the Capacity Region in which
the project is interconnected. For example, starting with Class Year 2012, a proposed
generator or merchant transmission project interconnecting in the Rest of State Capacity
Region (i.e., Load Zones A-F) will be required to demonstrate deliverability throughout
the Rest of State Capacity Region (i.e., Load Zones A-F), but will not be required to
demonstrate deliverability to or within any of the following Capacity Regions: Lower
Hudson Valley (i.e., Load Zones G, H and I); New York City (i.e., Load Zone J); or Long Island (i.e., Load Zone K).
A number of the NYISO’s proposed revisions to Attachments S and X would modify
tariff language that the Commission adopted in Order No. 2003, or its successors as part of the
pro forma interconnection procedures.91 The Commission has accepted other modifications to
the NYISO interconnection procedures,92 recognizing that where changes to pro forma
interconnection procedures “are clarifying and/or ministerial in nature and/or NYISO has
supplied sufficient justification,” such modifications are acceptable under the “independent
entity variation” standard.93 The Commission has explained that under this standard, “the
Commission will review the proposed variations to ensure they do not provide an unwarranted
opportunity for undue discrimination or produce an interconnection process that is unjust and
91 Standardization o/Generator Interconnection Agreements and Procedures, Order No. 2003,
FERC Stats. & Regs. 31,146 (2003), order on reh’g, Order No. 2003-A, FERC Stats. & Regs. 31,160
(2004), order on reh’g, Order No. 2003-B, FERC Stats.& Regs. 31,171 (2004), order on reh’g, Order No.
2003-C, FERC Stats. & Regs. 131,190 (2005), affirmed sub nom. Nat’l Ass’n of Regulatory Util. Com’rs
v. FERC, 475 F.3d 1277 (D.C. Cir. 2007).
92 See, e.g., New York Independent System Operator, Inc., 135 FERC ¶ 51,014 (2011); New York Independent System Operator, Inc., 124 FERC ¶ 61,238 (2008).
93 New York Independent System Operator, Inc., 124 FERC ¶ 61,238 at PP 17-18.
Honorable Kimberly D. Bose April 30, 2013
Page 28
unreasonable.”94
The proposed revisions to Attachments S and X are fully justified under the
Commission’s “independent entity variation” standard because they are required under Section
5.16.4 of the Services Tariff, are necessary to implement the NCZ, and are in no way unduly discriminatory or unjust and unreasonable.
3.Additional Minor OATT Modifications
The NYISO also proposes additional minor revisions to the following subsections of
OATT Attachment S Section 25.7 and Attachment Y Section 31:
•Revisions to update outdated references to the PJM-NYISO operating protocols in
Section 25.7.8.2.9 and Section 25.7.8.2.12;
• Revision to Section 25.7.8.2.14 to refer simply to “Highway interfaces” rather than
“Highway interfaces in the Rest of State Capacity Region” to reflect the fact that
Highway interfaces are no longer limited to the Rest of State Capacity Region;
• Revisions to Section 25.7.11.1.2.3 to clarify that the referenced auctions are NYCA
Auctions, to clarify the reference to “bilateral contract” and to clarify that defined terms
used in such section, to the extent not defined in Attachment S are defined in the Services
Tariff;
• Revisions to Section 25.7.11.1.4.2 to make the reference to the “open Class Year
Deliverability Study” a reference to the defined term “Open Class Year;”
•Revisions to Section 25.7.11.1.4.2.2 consistent with the revised definition of External
CRIS Rights;
•Certain ministerial formatting and grammatical revisions to Section 25.7 of Attachment S
and its subsections;
• A revision to the defined term LCR to insert the word “Minimum” in the definition of
LCR to reflect the corresponding insertion in OATT Section 31.1.2 to the defined term “Locational Installed Capacity Requirement” and
• Revisions to 31.5.3.1.12 to make the corresponding change to reflect the defined term
“Locational Minimum Installed Capacity Requirement”
Finally, the NYISO is also proposing certain ministerial formatting revisions to Section
25.1 of Attachment S and to Sections 30.1 and 30.14 of Attachment X.
94 See id. at P18.
Honorable Kimberly D. Bose April 30, 2013
Page 29
V.REQUESTED EFFECTIVE DATE
As stated above, the NYISO respectfully requests that the Commission issue an order no
later than sixty days after the date of filing (i.e., by July 1, 2013),95 that accepts the NYISO’s
proposed tariff revisions and makes them effective on July 1, 2013, except for the provisions
noted below for which later effective dates are requested. As explained in the November 2011
Filing, and at page 2, above, a Commission order accepting the tariff revisions identifying the
NCZ issued sixty days after their filing is necessary to allow the ICAP Demand Curve reset
consultant to develop an ICAP Demand Curve for the NCZ, along with the other ICAP Demand Curves. The requested effective dates are also necessary for development, testing, and
deployment steps that are specific to the identified NCZ.
With respect to the proposed revisions to Attachments S and X of the OATT, the NYISO
respectfully requests a July 1, 2013 effective date, i.e., the first business day that is sixty days
from the date of this filing. That date will provide the certainty needed with respect to the
applicable deliverability methodology for the Class Year Study for Class Year 2012. While
Class Year 2012 has formally begun, the deliverability analysis is not scheduled to begin until
later this year, due largely to the status of Class Year 2011, which has not concluded.96 Certain
components of a Class Year Study can begin prior to completion of the prior Class Year Study;
however, system-wide analysis is dependent upon assumptions that cannot be finalized until after
the completion of the prior study. Therefore, since Class Year 2011 has not concluded, a number
of the inputs for the base cases required for Class Year 2012 cannot yet be determined.
The NYISO anticipates that the Commission will have acted on this filing prior to the
NYISO’s start of the deliverability analysis for Class Year 2012. Accordingly, the NYISO
believes that its proposed revisions to OATT Attachments S and X could, and in order to reflect
the NCZ, should be applied to Class Year 2012. The NYISO therefore requests that the revisions
proposed herein to Attachments S and X of the OATT become effective July 1, 2013.
The NYISO also respectfully requests an effective date of July 1, 2013 for all Services Tariff revisions described herein except those enumerated in the next two paragraphs.
95 Because sixty days from the date of the filing is Saturday June 29, the NYISO believes that the sixty-day notice period does not expire until July 1. See 18 C.F.R. 385.2007 (2012). The NYISO does not intend that its request for effective dates later than June 29, 2013 be deemed to be a waiver of the
requirement under 18 C.F.R. §35.3 that the Commission act on its proposed tariff revisions within sixty days of the date of this filing.
96As of the date of this filing, the NYISO anticipates that the Class Year 2011 Project Cost
Allocation process will commence in the second quarter or early in the third quarter of 2013. Certain
components of a Class Year Study can begin prior to completion of the prior Class Year Study; however, system-wide analysis is dependent upon assumptions that cannot be finalized until after the completion of the prior study. Therefore, since Class Year 2011 has not concluded, a number of the inputs for the base cases required for Class Year 2012 cannot yet be determined.
Honorable Kimberly D. Bose April 30, 2013
Page 30
Activities in preparation of the 2014/2015 Capability Year, such as the calculation of
LCRs and the Imports Rights processes, and each of the auctions associated with the month of
May 2014 all occur before May 1, 2014. Therefore, the NYISO requests an effective date of
January 27, 2014, so that the following tariff revisions are applied to the 2014/2015 Capability
Year: Section 2.7 (definition of “G-J Locality”), Section 2.12 (definitions of “Locality, ” and
“LSE Unforced Capacity Obligation”), Section 2.18 (definition of “Rest of State”), Section
5.14.3.2(iv) (describing G-J Locality shortfalls), and Section 23.2.1 (Attachment H, at definition
of Pivotal Supplier).97 The NYISO is requesting an effective date of January 27, 2014 for these
provisions because that date is sixty days after the ICAP Demand Curves are filed so it will be
the requested effective date for all ICAP Demand Curves including the Demand Curve for the G-
J Locality.
The NYISO is requesting an effective date of January 15, 2014 for the revisions to
Section 26.4.3(iv) (Attachment K, credit provisions). This date corresponds with the anticipated date of the NYISO’s deployment of software through which the changed credit requirements
would be applied. Thus, it would be applied to the first ICAP Spot Market Auction after the
software deployment. That date would enable the NYISO to implement the rule requested by
stakeholders to cap the credit requirements for all capacity market areas in the NYCA, not just associated with the G-J Locality.
For ease of reference, the NYISO specifically sets forth each proposed modification and the requested effective date in the table below:
Tariff Section Being Revised
OATT 1.12
• Definition of “Locality”
• Definition of “Locational Minimum
Installed Capacity Requirement”
OATT 25.1, 30.1, and 30.14
• Definition of “Capacity Region”
• Definition of “External CRIS Rights” • Definition of “Highway”
• Definition of “Other Interfaces” OATT 25.7.3
Requested Effective Date
July 1, 2013
July 1, 2013
July 1, 2013
97 See n.73 in which the NYISO requests that if the Commission accepts the revision to the
definition of “Pivotal Supplier” proposed in this filing prior to ruling on the June 2012 Compliance Filing, the NYISO respectfully requests that the Commission accept the totality of the revisions proposed to the term “Pivotal Supplier” herein and therein.
Honorable Kimberly D. Bose April 30, 2013
Page 31
Tariff Section Being RevisedRequested Effective Date
OATT 25.7.8.2.12July 1, 2013
OATT 25.7.8.2.9July 1, 2013
OATT 25.7.11.1.2.3July 1, 2013
OATT 25.7.11.1.4.2July 1, 2013
OATT 25.7.11.4.2.2July 1, 2013
OATT 31.1.2July 1, 2013
OATT 31.5.3.1.12July 1, 2013
ST 2.12
• Definition of “Locality”• January 27, 2014
• Definition of “Locational Minimum• July 1, 2013
Installed Capacity Requirement”
• Definition of “LSE Unforced Capacity• January 27, 2014
Obligation”
ST 2.7 - Definition of “G-J Locality”January 27, 2014
ST 2.18 - Definition of “Rest of State”January 27, 2014
ST 2.21 - Definition of “Unforced CapacityJuly 1, 2013
Deliverability Rights”
ST 5.11.1July 1, 2013
ST 5.11.4July 1, 2013
ST 5.12.1July 1, 2013
ST 5.12.12.2July 1, 2013
ST 5.12.2July 1, 2013
ST 5.12.2.4.1July 1, 2013
ST 5.12.8July 1, 2013
ST 5.14.1.1July 1, 2013
ST 5.14.2July 1, 2013
ST 5.14.3.2(iii)January 27, 2014
ST 5.14.3.2(iv)January 27, 2014
ST 5.16.1.1.4July 1, 2013
Honorable Kimberly D. Bose April 30, 2013
Page 32
Tariff Section Being RevisedRequested Effective Date
ST 23.2.1 - Definition of “Pivotal Supplier”January 27, 2014
ST 26.4.3(iv)January 15, 2014
VI.SERVICE
This filing will be posted on the NYISO’s website at www.nyiso.com. In addition, the
NYISO will e-mail an electronic link to this filing to the official representative of each party to
this proceeding, to each of its customers, to each participant on its stakeholder committees, to the
New York Public Service Commission, and to the New Jersey Board of Public Utilities.
VII. COMMUNICATIONS
Copies of correspondence concerning this filing should be served on:
Robert E. Fernandez, General Counsel Ray Stalter, Director of Regulatory Affairs *Gloria Kavanah, Senior Attorney
New York Independent System Operator, Inc.
10 Krey Boulevard
Rensselaer, NY 12144
Tel: (518) 356-6000
Fax: (518) 356-4702
rfernandez@nyiso.com
rstalter@nyiso.com
gkavanah@nyiso.com
*persons designated to receive service
*Ted J. Murphy
Hunton & Williams LLP
2200 Pennsylvania Avenue, NW Washington, DC 20037-1701 Tel: (202) 955-1500
Fax: (202) 778-2201
tmurphy@hunton.com
*Vanessa A. Colón98
Hunton & Williams LLP Bank of America Center Suite 4200
700 Louisiana Street
Houston, TX 77002
Tel: (713) 229-5700
Fax: (713) 229-5782
vcolon@hunton.com
98 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3) (2012)) is requested to the
extent necessary to permit service on counsel for the NYISO in both Houston, TX and Washington, DC.
Honorable Kimberly D. Bose April 30, 2013
Page 33
VIII. CONCLUSION
For the reasons specified above, the New York Independent System Operator, Inc. respectfully requests that the Commission accept the tariff revisions proposed herein to be effective on the dates as described in Section V.
Respectfully submitted,
/s/ Gloria Kavanah
Gloria Kavanah
Senior Attorney
New York Independent System Operator, Inc.
Dated: April 30, 2013
cc:Travis Allen
Michael A. Bardee
Gregory Berson
Anna Cochrane
Jignasa Gadani
Morris Margolis
David Morenoff
Michael McLaughlin
Daniel Nowak
