10 Krey Boulevard Rensselaer, NY 12144
March 27, 2014
ELECTRONICALLY SUBMITTED
Kimberly D. Bose
Secretary
Federal Energy Regulatory Commission 888 First Street, N.E.
Washington, D.C. 20426
Re: New York Independent System Operator, Inc.’s Seventh Informational Report on
Efforts to Develop Rules Addressing Compensation to Generators that Are
Determined to be Needed for Reliability; Docket No. ER10-2220-000.
Dear Secretary Bose:
In accordance with paragraph 54 and ordering paragraph “(C)” of the Federal Energy
Regulatory Commission’s (“Commission’s”) October 12, 2010, Order On Proposed Mitigation
Measures in Docket No. ER10-2220-000 (“Order”),1 the New York Independent System
Operator, Inc. (“NYISO”), hereby submits this Seventh Informational Report on Efforts to
Develop Rules Addressing Compensation to Generators that Are Determined to be Needed for
Reliability (“March 2014 Informational Report”). The NYISO submitted its Sixth Informational
Report on Efforts to Develop Rules Addressing Compensation to Generators that Are
Determined to be Needed for Reliability on September 27, 2013, (“September 2013
Informational Report”). In footnote 44 of its Order the Commission stated that it does not
intend to issue public notices, accept comments, or issue orders on this Informational
Report.
1New York Independent System Operator, Inc., 133 FERC ¶ 61,030. Since issuance of this Order in October 2010, the Commission has accepted tariff revisions to establish a New Capacity Zone comprised of Load Zones G, H, I and J, and a corresponding revision to the definition of “Rest of State.” See New York Independent System
Operator, Inc., 144 FERC ¶ 61,126, (Docket No. ER13-1380-000, accepting Services Tariff Sections 2.7, 2.18.) Effective January 27, 2014, Rest of State is defined as Load Zones A through F.
Kimberly D. Bose, Secretary March 27, 2014
Page 2
Paragraph 54 of the Order stated, in part, as follows:
Because fixed cost recovery issues do not go to whether NYISO’s mitigation
proposal is in itself just and reasonable, this proceeding is not the appropriate
forum in which to raise such issues. Further, commenters do not present factual
evidence that demonstrates that market participants generally will be unable to
recover their costs due to application of the proposed mitigation provisions. We
note, however, that the NYISO Board of Directors, in its July 29, 2010 decision
on the appeal of the NYISO Management Committee’s adoption of the instant
mitigation proposal, directed NYISO management to work with stakeholders to
examine the generation owners’ claims that existing cost recovery mechanisms
are inadequate and to review the process that evaluates permanent solutions to
reliability problems. Accordingly, we believe the better course is to await the
outcome of the stakeholder process as directed by the NYISO Board of Directors. In this regard, we direct NYISO to file status reports every 180 days beginning 180 days from the date of this order for informational purposes only.44
44 The Commission does not intend to issue public notices, accept comments, or issue orders on such informational filings.
In compliance with the cited sections of the Order, the NYISO submits this Informational
Report.
I. Informational Report
A. Summary of the September 2013 Informational Report
The NYISO did not present new or updated proposals to its stakeholders prior to the
September 2013 Informational Report. In addition, the NYISO did not receive new or updated proposals from its stakeholders or DPS staff between submission of its fifth and sixth
informational reports. During this time, the NYISO continued assessing whether additional rules addressing compensation to generators needed for reliability are necessary to improve the
NYISO administered markets.
B.March 2014 Informational Report
The NYISO has not made any proposals to its stakeholders since filing the September 2013 Informational Report nor has the NYISO received any proposals from its stakeholders or DPS staff. The NYISO continues to actively monitor and assess whether additional rules
addressing compensation to generators needed for reliability, such as the Alternative RRC
proposal discussed in the October 2012 Informational Report, are necessary to improve the
NYISO administered markets.
Kimberly D. Bose, Secretary March 27, 2014
Page 3
C.Additional Market Activity Update
The September 2013 Informational Report included information on a matter that involved
certain New York Control Area resources seeking to retire. The New York State Public Service
Commission (“NYPSC”) issued an order that approved a mechanism for a transmission owner to
compensate specific generating units that were seeking to retire but were determined to be
necessary to address a reliability need.2 The subject of the order was a proposal for the
transmission owner (Niagara Mohawk Power Corp. d/b/a/ “National Grid”) to compensate the
generator owner (Dunkirk Power LLC, “Dunkirk”) for “reliability support services” (“RSS”)
provided by two of the four generating units at the Dunkirk facility. Subsequently on March 5,
2013, National Grid filed a request with the PSC to extend the RSS agreement for one of the
Dunkirk units. The agreement provides for the continued operation and maintenance of the one
Dunkirk unit from June 1, 2013 through May 31, 2015 for a fixed total price of approximately
$72.741 million.3 National Grid then filed proposed tariff revisions with the Federal Energy
Regulatory Commission to certain National Grid-specific components of the Wholesale
Transmission Service Charge formula under Attachment H of the NYISO Open Access
Transmission Tariff.4 National Grid’s filing requested amendments to its Scheduling, System
Control and Dispatch Costs formula to incorporate costs incurred for RSS, which secure the
reliability of the company’s transmission system. The Commission rejected National Grid’s
proposed tariff revisions without prejudice, therefore allowing National Grid to submit another
filing.
Since the September 2013 Informational Report, the Commission accepted National
Grid’s filing of additional tariff revisions amending its formula rate to incorporate costs incurred
for RSS.5 National Grid’s December 6, 2013 Federal Power Act Section 205 filing was accepted
and suspended subject to further order of the Commission after additional consideration of the
matter.
D.Next Steps
The NYISO will continue to assess whether enhancements to the prior proposals or
additional alternate approaches are necessary to address compensation to generators needed for
reliability and to improve the NYISO administered markets. The NYISO does not have any
2 NYPSC Case No. 12-E-0136, Order Deciding Reliability Issues and Addressing Cost Allocation and Recovery (issued August 16, 2012). Order may be retrieved from
http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={34D25567-D7B7-41EA-822F-
6585B344BC0E}
3 On March 25, 2014, the Independent Power Producers of New York, Inc. (“IPPNY”) moved to amend its May 10, 2013 complaint against the NYISO in Docket No. EL13-62-000. IPPNY motion is generally based on an executed term sheet between National Grid and Dunkirk regarding the Dunkirk facility’s NYPSC filing on February 13, 2014 in NYPSC Case No. 12-E-0577.
4 See Federal Energy Regulatory Commission Docket No. ER13-1182-000.
5 New York Independent System Operator, Inc., Niagara Mohawk Power Corporation, 146 FERC ¶ 61,065 (2014).
Kimberly D. Bose, Secretary March 27, 2014
Page 4
presentations scheduled at this time. The NYISO will continue to discuss this topic with its stakeholders.
II. Service
The NYISO will send an electronic link to this Informational Report to the official
representative of each of its customers, to each participant on its stakeholder committees, to the
New York Public Service Commission, to all parties listed on the Commission’s official service
list in this Docket and to the New Jersey Board of Public Utilities. In addition, the complete
filing will be posted on the NYISO’s website at www.nyiso.com.
III. Conclusion
The NYISO respectfully submits this Informational Report in compliance with the
Commission’s Order. For the reasons explained above, the NYISO is continuing to monitor and assess whether additional rules addressing compensation to generators needed for reliability are necessary to improve the NYISO administered markets. The NYISO’s next informational report is due on September 23, 2014.
Respectfully submitted,
/s/ James H. Sweeney
Rana Mukerji, Senior Vice President of Market Structures Robert E. Fernandez, General Counsel
James H. Sweeney, 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 27th day of March, 2014.
/s/ Joy A. Zimberlin
Joy A. Zimberlin
New York Independent System Operator, Inc.
10 Krey Blvd.
Rensselaer, NY 12144 (518) 356-6207
