10 Krey Boulevard  Rensselaer, NY 12144

February 24, 2014

By Electronic Delivery

Ms. Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First Street, NE

Washington, DC 20426

Re:New York Independent System Operator, Inc., Compliance Filing to State

Currently Effective ICAP Demand Curves, Docket No. ER14-500-___

In compliance with the Commission’s January 28, 2014 Order Accepting Tariff Filing
Subject to Condition and Denying Waiver1 on the November 29, 2013 proposed tariff revisions
filed by the New York Independent System Operator, Inc. (“NYISO”) to implement revised
Installed Capacity (ICAP)2 Demand Curves for the 2014/2015, 2015/2016, and 2016/2017
Capability Years, the NYISO respectfully submits this compliance filing. The proposed
compliance modifications to Section 5.14.1.2 of the Market Administration and Control Area
Services Tariff (“Services Tariff”) establish that the ICAP Demand Curves for the new Locality
encompassing Load Zones G, H, I, and J (“G-J Locality”) will be in full effect for the start of the
2014/2015 Capability Year beginning May 1, 2014 with no phase-in period. Ordering Clause A
of the January Order established an effective date for the ICAP Demand Curves conditioned on
the filing of the tariff revisions set forth in this compliance filing. Accordingly, the NYISO
requests that the Commission accept this compliance filing with an effective date of January 28,
2014.

I.BACKGROUND

As part of the triennial Demand Curve reset process, the NYISO submitted a filing on
November 29, 2013 to revise all the ICAP Demand Curves for the Capability Years 2014/2015,
2015/2016, and 2016/2017 (“ICAP Demand Curve Filing”).3 In its filing the NYISO submitted

1 Order Accepting Tariff Filing Subject to Condition and Denying Waiver, 146 FERC ¶ 61,043 (2014) (“January Order”).

2 Capitalized terms that are not otherwise defined herein shall have the meaning set forth in the NYISO’s Services Tariff.

3 The submission was dated November 27, 2014, but was accepted for filing by the Commission on November 29, 2013.

Honorable Kimberly D. Bose February 24, 2014

Page 2

revised tariff language for Section 5.14.1.2 of the Services Tariff that contained the 36 points4 to
establish the ICAP Demand Curves for the 2014/2015, 2015/2016, and 2016/2017 Capability
Years for the NYCA, New York City, Long Island, and the new G-J Locality. These points were
established using the Net Cost of New Entry for the proxy plant technology recommended by the
NYISO in its ICAP Demand Curve Filing; however, as part of the ICAP Demand Curve Filing,
the NYISO proposed modifications to four of these values in order to phase-in the ICAP
Demand Curves for the new G-J Locality over the first two Capability Years and the associated
cost impacts. As proposed in the ICAP Demand Curve Filing, the full ICAP Demand Curve for
the G-J Locality would take effect at the beginning of the 2016/2017 Capability Year, and
therefore the points provided in the proposed tariff language submitted in the ICAP Demand
Curve Filing for this Capability Year were fully consistent with the proxy plant technology
recommended for the G-J Locality after applying the appropriate escalation factors.

In the January Order the Commission accepted the proposed parameters used in the reset
to capture the Net Cost of New Entry associated with the recommended proxy plant technologies
in all four capacity regions. The Commission also accepted all the tariff changes that incorporate
the points to establish the Demand Curves in all four regions except for the two modified
reference points and the two modified maximum values associated with the proposed two year
phase-in of the new ICAP Demand Curve for the newly established G-J Locality. The January
Order directed the NYISO to file revisions to Section 5.14.1.2 to reflect the full ICAP Demand
Curves for the G-J Locality for the 2014/2015 and 2015/2016 Capability Years. 5 The NYISO is
therefore making this compliance filing to submit proposed tariff language that fully implements
the ICAP Demand Curve for the G-J Locality for the three Capability Years without any phase-
in adjustment.

4 Three points were provided for each of the four regions and for each of the three Capability

Years evaluated in this ICAP Demand Curve reset. The three defined points describe the ICAP Demand
Curve that is a line segment with a negative slope that will result in higher values for capacity percentages
less than 100% of the NYCA Minimum Installed Capacity Requirement or the Locational Installed
Capacity Requirement (“reference point”) with the maximum value for each ICAP Demand Curve
established at 1.5 times the estimated localized levelized cost per kW-month to develop a new peaking
unit in each Locality or in Rest of State, as applicable. These points include the zero crossing point for the
ICAP Demand Curve, the reference point when the supply equals the requirement, and the maximum
value.

5 The Commission renewed this compliance directive in Docket No. ER14-39-001. In this

separate proceeding the Commission accepted by Letter Order dated February 18, 2014 (“February Letter Order”), clarifying tariff revisions to Section 5.14.2 that were proposed by the NYISO in a January 10,
2014 compliance filing. In the February Letter Order the Commission renewed its compliance
requirement for the NYISO to submit this compliance filing revising Section 5.14.1.2 in accordance with the Commission’s January Order. While the tariff revisions to Section 5.14.1.2 of the Services Tariff that are being proposed in this filing are required to take effect on January 28, 2014, this revised tariff
language is provided on the accepted NYISO Services Tariff Section 5.14 Installed Capacity Supplier
Shortfalls and Deficiency Payments, 14.0.0, which contains the revisions accepted in Docket No. ER14-
39-001 with an effective date of March 15, 2014.

Honorable Kimberly D. Bose February 24, 2014

Page 3

II.LIST OF DOCUMENTS SUBMITTED

The NYISO respectfully submits the following documents:

1. This filing letter;

2. A blacklined version of the modifications to Section 5.14.1.2 of the Services Tariff
(“Attachment I”); and

3. A clean version of the modifications to Section 5.14.1.2 of the Services Tariff
(“Attachment II”).

III. DESCRIPTION OF PROPOSED COMPLIANCE TARIFF REVISIONS

The NYISO respectfully requests that the Commission accept the tariff revisions in

compliance with the January Order to be effective January 28, 2014. This filing revises the table in Section 5.14.1.2 establishing the full ICAP Demand Curve parameters for the new G-J
Locality for 2014/15 and 2015/2016 in accordance with the January Order. This filing will result in the ICAP Demand Curves for the G-J Locality, as developed and recommended by the NYISO through its stakeholder process and approved by the Commission, being in full effect for the
three Capability Years 2014/2015, 2015/2016, and 2016/2017.

IV.COMMUNICATIONS

Communications regarding this proceeding should be addressed to:

Robert E. Fernandez, General Counsel
Raymond Stalter, Director of Regulatory Affairs * David Allen, Senior Attorney

New York Independent System Operator, Inc.

10 Krey Boulevard

Rensselaer, NY 12144
Tel: (518) 356-7656
Fax: (518) 356-8825
rfernandez@nyiso.com
rstalter@nyiso.com

dallen@nyiso.com

* Ted J Murphy

Hunton & Williams LLP 1900 K Street, N.W.

Washington, D.C. 20006 Tel: (202) 955-1588

Fax: (202) 778-2201
tmurphy@hunton.com

*Noelle J. Coates6

Hunton & Williams LLP 1100 Brickell Ave.

Miami, FL 33131
Tel: (305) 536-2734
Fax: (305) 810-1635

ncoates@hunton.com

Honorable Kimberly D. Bose February 24, 2014

Page 4

V.CONCLUSION

Wherefore, for the foregoing reasons, the NYISO respectfully requests that the Commission take action as requested herein.

Respectfully submitted,

/s/ David Allen

David Allen

Senior Attorney

New York Independent System Operator, Inc.

cc:Michael Bardee

Gregory Berson

Anna Cochrane

Jignasa Gadani

Morris Margolis

Michael McLaughlin
David Morenoff
Daniel Nowak

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the foregoing document 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 Rules of Practice and Procedure, 18 C.F.R. §385.2010.
Dated at Rensselaer, NY this 24th day of February, 2014.

/s/ Joy A. Zimberlin

Joy A. Zimberlin

New York Independent System Operator, Inc.

10 Krey Blvd.

Rensselaer, NY 12144 (518) 356-6207