HUNTON & WILLIAMS LLP
RIVERFRONT PLAZA, EAST TOWER 951 EAST BYRD STREET
RICHMOND, VIRGINIA 23219-4074
HEATHER S. GLASS
DIRECT DIAL: 804.788.8691
EMAIL: HGLASS@HUNTON.COM
July 31, 2015
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.’s Proposed Tariff Revisions
to Enhance ICAP Spot Market Auction Credit Requirement; Docket No.
ER15 - ___-000
Dear Ms. Bose:
Pursuant to Section 205 of the Federal Power Act,1 the New York Independent System
Operator, Inc. (“NYISO”) hereby submits revisions to Attachment K of its Market
Administration and Control Area Services Tariff (“Services Tariff”).2 The NYISO is
proposing to enhance its ICAP Spot Market Auction credit requirement to more accurately
reflect the NYISO’s credit exposure by providing for the netting of a Market Participant’s
purchases and sales across localities when calculating the Market Participant’s bidding
requirement. The Management Committee unanimously approved the proposed tariff
revisions on March 31, 2015.
The NYISO requests that the Commission issue an order accepting the proposed tariff revisions by September 30, 2015, with an effective date of October 28, 2015, in accordance with the notice requirements in section 35.3(a)(1) of the Commission’s regulations. The
period between the date of the Commission’s order and the proposed effective date provides time for the NYISO to finalize the software enhancements necessary to implement the tariff revisions prior to the effective date.
1 16 U.S.C. § 824d.
2 Capitalized terms used in this filing letter but not defined herein shall have the meanings given to them in the Services Tariff.
ATLANTA AUSTIN BANGKOK BEIJING BRUSSELS CHARLOTTE DALLAS HOUSTON LONDON LOS ANGELES
McLEAN MIAMI NEW YORK NORFOLK RALEIGH RICHMOND SAN FRANCISCO TOKYO WASHINGTON
www.hunton.com
Kimberly D. Bose, Secretary July 31, 2015
Page 2
I.List of Documents Submitted
The NYISO submits the following documents:
1. This filing letter;
2. A clean version of the proposed revisions to the Services Tariff (Attachment I);
and
3. A blacklined version of the proposed revisions to the Services Tariff (Attachment
II).
II.Copies of Correspondence
Copies of correspondence concerning this filing should be served on:
Robert E. Fernandez, General Counsel
*Raymond Stalter, Director of Regulatory Affairs 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
* Persons designated to receive service.
III.Service
Kevin W. Jones
*Heather S. Glass
Hunton & Williams LLP 951 E. Byrd Street
Richmond, VA 23219
Tel: (804) 788-8691
Fax: (804) 343-4755
kjones@hunton.com
hglass@hunton.com
The NYISO will send an electronic link to this filing to the official representative of
each of its Market Participants, to each participant on its stakeholder committees, to the New
York Public Service Commission, 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.
IV.Background
A Market Participant with a capacity obligation may procure capacity to satisfy its
obligation through certified bilateral sales or a NYISO-administered ICAP auction. The
NYISO administers three types of ICAP auctions: (i) Capability Period Auction; (ii) Monthly Auction; and (iii) ICAP Spot Market Auction. Participation in the Capability Period Auction and the Monthly Auction is voluntary for all Market Participants. In contrast, any Market Participant with a capacity obligation that has not met its obligation for any given month must participate in the ICAP Spot Market Auction for that month.
Kimberly D. Bose, Secretary July 31, 2015
Page 3
Each Market Participant in the ICAP Spot Market Auction is required to post credit
support to Bid in the auction (“credit requirement”) to cover its deficiency in capacity. The
credit requirement differs by locality and is determined based on the number of deficient
megawatts and the most recent monthly auction price (for the locality), plus a margin. A
Market Participant’s total credit requirement equals the sum of the credit requirements for
each locality where the Market Participant is deficient. The credit support posted by a Market
Participant to cover its credit requirement is typically held by NYISO for less than one week.
The current methodology does not account for the situation where a Market
Participant is deficient in one locality but has excess capacity in another locality. As a result,
the Market Participant’s credit requirement is likely overstated and does not accurately reflect
the NYISO’s credit exposure because it is not reduced by the Market Participant’s sale of its
excess capacity.
Under the proposed tariff revisions, a Market Participant that is required to post credit support for a deficiency in one locality in the ICAP Spot Market Auction will have its credit requirement offset to the extent of its sale of excess capacity in another locality.
V.Description of Proposed Revisions
Services Tariff Section 26.4.3(iv) establishes the credit requirement for a Market
Participant to participate in the ICAP Spot Market Auction. This credit requirement equals
the sum of the credit requirements for each locality where the Market Participant is deficient.
With this filing, the NYISO is proposing revisions to Services Tariff Section
26.4.3(iv) to allow a Market Participant to offset its ICAP Spot Market Auction credit
requirement to the extent of any excess capacity the Market Participant offers into the ICAP
Sport Market Auction.3 Under the proposed tariff revisions, a Market Participant with excess
capacity in any locality could offer this capacity into the ICAP Spot Market Auction at a price
of $0.00 prior to the close of certification. The offer would become binding upon certification
close and the $0.00 price would ensure that the capacity is sold. Under the proposed tariff
revisions, the Market Participant’s ICAP Spot Market Auction credit requirement would be
reduced to the extent of the Market Participant’s sale of excess capacity in another locality in
the ICAP Spot Market Auction.
These revisions will reduce credit requirements for some Market Participants and establish a methodology for determining the ICAP Spot Market Auction credit requirement that more closely aligns with the NYISO’s actual credit risk.
3 These offers would not be made via the Enter Offer screens, but rather on the Allocate Sales screen prior to certification close.
Kimberly D. Bose, Secretary July 31, 2015
Page 4
VI.Effective Date
The NYISO respectfully requests Commission action within sixty days from the date of this filing (i.e., September 30, 2015) and an effective date of October 28, 2015. The period between the date of the Commission’s order and the effective date provides time for the
NYISO to finalize the software enhancements necessary to implement the proposed tariff
revisions prior to the effective date.
VII. Requisite Stakeholder Approval
The NYISO and Market Participants collaboratively developed the proposed tariff
revisions at meetings of the Credit Policy Working Group in September and November 2013.
In 2014, the software revisions required to implement the proposed tariff revisions were
added to the NYISO’s 2015 project plan. The Credit Policy Working Group affirmed the
proposed tariff revisions in January 2015. The Business Issues Committee approved the
proposed tariff revisions unanimously, with abstentions, on March 11, 2015. The
Management Committee approved the proposed tariff revisions unanimously on March 31,
2015. On April 21, 2015, the Board of Directors authorized NYISO management to file the
proposed tariff revisions pursuant to Section 205 of the Federal Power Act.
VIII. Conclusion
WHEREFORE, for the foregoing reasons, the New York Independent System
Operator, Inc. respectfully requests that the Commission accept the proposed tariff changes identified in this filing.
Respectfully submitted,
/s/ Heather S. Glass
Heather S. Glass
Counsel to the
New York Independent System Operator, Inc.
cc:Michael Bardee
Gregory Berson
Anna Cochrane
Morris Margolis
David Morenoff
Daniel Nowak
Kathleen Schnorf
Jamie Simler
Kevin Siqveland
