UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Uplift Cost Allocation and Transparency)
in Markets Operated by Regional Transmission)Docket No. RM17-2-000
Organizations and Independent System)
Operators)
COMMENTS OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.
Pursuant to the Notice of Proposed Rulemaking issued by the Federal Energy Regulatory
Commission (“Commission”) on January 19, 2017 in the above-referenced docket (“Uplift
NOPR”),1 the New York Independent System Operator, Inc. (“NYISO”) hereby submits its
comments in response to the Uplift NOPR.2 The NYISO generally supports the reforms
proposed by the Commission. The NYISO also: (i) provides comments in response to certain of
the questions posed by the Commission in the Uplift NOPR; (ii) seeks clarification regarding
certain aspects of the proposed reforms related to the monthly total uplift payments report and
the reporting of operator-initiated commitments; and (iii) respectfully requests that the
Commission provide additional flexibility with respect to the proposed schedule for
implementing any reforms that may be established by a final rule in this proceeding.
1 Uplift Cost Allocation and Transparency in Markets Operated by Regional Transmission Organizations and Independent System Operators, 158 FERC ¶ 61,047 (2017).
2 Capitalized terms not otherwise defined herein shall have the meaning specified in Section 1 of the NYISO Open Access Transmission Tariff (“OATT”) and Section 2 of the NYISO Market
Administration and Control Area Services Tariff (“Services Tariff”).
I.COMMUNICATIONS AND CORRESPONDENCE
All communications and correspondence concerning these comments should be directed
to:
Robert E. Fernandez, General Counsel
Raymond Stalter, Director, Regulatory Affairs
*Garrett E. Bissell, Senior Attorney
New York Independent System Operator, Inc.
10 Krey Boulevard
Rensselaer, New York 12144 Phone: 518-356-6107
Fax: 518-356-8825
Email: gbissell@nyiso.com
*Person designated for receipt of service.
II.COMMENTS
A. Allocation of Real-Time Uplift to Deviations
The Commission proposes certain reforms to the allocation of “real-time uplift” to
deviations.3 The Commission defines real-time uplift to mean “uplift payments to resources
committed after the close of the day-ahead market, including any uplift associated with reliability
commitments, whether or not the RTO/ISO considers such commitments outside of the day-
ahead market ….”4 The Uplift NOPR clearly states that the proposed reforms apply only to real-
time uplift, as defined by the Commission, and only if such real-time uplift costs are allocated to
deviations.5 The Commission expressly provides that “[t]his NOPR does not apply to other
methods used by RTOs/ISOs to allocate uplift costs. If an RTO/ISO does not currently allocate
3 Uplift NOPR at P 35-55.
4 Id. at P 4, fn. 2.
5 Id. at P 4.
2
real-time uplift costs to deviations, this NOPR does not impose a requirement on those RTOs/ISOs to allocate real-time uplift costs to deviations.”6
The NYISO strongly supports the Commission’s proposal to not require RTOs/ISOs to
implement deviations-based allocation methods if real-time uplift costs are currently allocated
using a different methodology. The NYISO does not currently allocate real-time uplift costs to
deviations. Instead, as acknowledged by the Uplift NOPR, the NYISO allocates such uplift costs
to load using a “beneficiary pays” approach.7 As aptly noted by the Commission, the
beneficiaries pay approach: (i) recognizes that load is the ultimate beneficiary of the actions
taken by operators in real-time to maintain reliability; and (ii) is least likely to distort market
participant behavior.8
The NYISO’s use of the beneficiaries pay methodology for allocating real-time uplift
costs to physical load correctly recognizes that load ultimately benefits from the actions taken in
real-time that may cause uplift. Real-time uplift is generally the result of either the lumpiness of
committed resources or different system conditions being anticipated by the Real-Time
Commitment (“RTC”) and Real-Time Dispatch (“RTD”) programs that together constitute the
6 Id.
7 Id. at P 17. Although the NYISO primarily allocates all uplift costs to load using a beneficiaries
pay approach, there is a very small subset of day-ahead uplift allocated to both virtual supply transactions
and real-time load that cause the need for certain day-ahead commitments giving rise to such uplift and,
thus, arguably could be interpreted as being allocated on a deviations basis. This day-ahead uplift relates
to certain unit commitments within the Day-Ahead Market that are necessary to ensure that sufficient
resources are committed to meet the NYISO’s forecasted load if the amount of load bid into the Day-
Ahead Market is less than the forecasted requirements. Because this category of uplift costs relates solely
to unit commitments within the Day-Ahead Market, it does not constitute real-time uplift, as defined by
the Commission. Notably, these commitments to meet forecasted load are distinct from the NYISO’s
day-ahead reliability commitment process that consists of two components - one conducted as part of the
Day-Ahead Market solution (i.e., the Day-Ahead Reliability Unit or “DARU” commitment process), and
another conducted after the close of the Day-Ahead Market (i.e., the Supplemental Resource Evaluation
or “SRE” commitment process). Uplift costs related to DARU and SRE committed units are allocated
using the NYISO’s beneficiaries pay methodology.
8 Id. at P 13.
3
NYISO’s Real-Time Market.9 These factors are unaffected by deviations from day-ahead
schedules that are addressed by the Uplift NOPR. Therefore, deviations-based uplift allocations
would not serve to incent behavior to mitigate uplift resulting therefrom.
Under its beneficiaries pay approach, the NYISO allocates real-time uplift costs on the basis of the underlying reliability need giving rise to such uplift. If real-time uplift is the result of a statewide (New York Control Area or “NYCA” wide) reliability need, such costs are
allocated proportionately to all load. If, however, real-time uplift is the result of a local
reliability need, such costs are allocated only to load within the subzone where the generator is
located.
B. Uplift Reporting
The Commission proposes to require the posting, in a machine readable format, of two uplift reports within 20 days after the end of each month: (i) a total uplift payments report
providing total uplift dollars paid to resources within each transmission zone for each day of the month, broken down by uplift cost categories; and (ii) a unit-specific uplift report providing the total aggregate uplift dollars for the month paid to each resource receiving uplift payments
during the month.10 The Commission also proposes to allow transmission zones to be
aggregated for purposes of the monthly total uplift payments report if a transmission zone
consists of fewer than four resources.11
9 RTC schedules/commits resources every 15 minutes. Each RTC run requires 15 minutes to
execute. RTD optimizes the NYISO’s resource dispatch every five minutes. As a result, the two
programs may consider slightly different real-time operating conditions, including generator operating status and output levels. This may result in circumstances where RTC may not perfectly anticipate RealTime LBMPs produced by RTD.
10 Uplift NOPR at P 83-89.
11 Id. at P 89.
4
The NYISO generally supports the uplift cost reporting reforms proposed by the
Commission. The NYISO strives to provide a high degree of transparency regarding its market
outcomes, including uplift costs, while balancing the need to protect confidential information and avoid the potential for indirectly facilitating anti-competitive behavior. The NYISO makes
publicly available a significant amount of information to assist market participants and the public in understanding the amount and underlying causes/categorization of uplift costs in New York’s wholesale energy markets.12
As acknowledged by the Commission, the NYISO already provides reports of uplift costs
on a monthly basis, broken down by uplift cost category as part of its “Operations Performance
Metrics Monthly Reports.”13 These reports are posted to the NYISO’s website each month and
presented to market participants at the NYISO Management Committee and Operating
Committee meetings.14 A number of uplift payments to resources are detailed in these reports,
including Day-Ahead Bid Production Cost Guarantee (“BPCG”) payments, real-time BPCG
payments, Day-Ahead Margin Assurance Payments, and payments to resources required to
operate on alternative fuels pursuant to certain local reliability rules adopted by the New York
State Reliability Council, L.L.C. (commonly referred to as the “minimum oil burn”
requirements).15 To comply with the proposed requirements of the Uplift NOPR, the NYISO
12 See, e.g., Docket No. AD14-14-000, Price Formation in Energy and Ancillary Services
Markets Operated by Regional Transmission Organizations and Independent System Operators, Post-
Technical Workshop Comments of the New York Independent System Operator, Inc. at 5-7 (March 6,
2015); and Docket No. AD14-14-000, supra, Report of the New York Independent System Operator, Inc. at 56-57 and 59-60 (March 4, 2016).
13 Uplift NOPR at P 59.
14 For example, the February 2017 report is available at:
http://www.nyiso.com/public/webdocs/markets_operations/committees/mc/meeting_materials/2017-03-
29/02_Operations_Report.pdf.
15 Further information regarding payments to generators related to minimum oil burn obligations is provided in Section 6.1.7 of Rate Schedule 1 of the OATT.
5
would need to revise its processes for developing and posting its current monthly uplift cost
reporting, including the format of the report.16 The NYISO would also need to implement the
necessary processes to generate the monthly unit-specific uplift report proposed by the Uplift
NOPR.
The Commission proposes to require that total uplift payments be reported by
“transmission zone.” The Commission proposes to define a transmission zone to mean “a
geographic area that is used for the local allocation of charges.”17 The NYISO generally
allocates uplift by Transmission District “subzones.” Subzones are uniquely identified by
Investor-Owned Transmission Owner service territories within each Load Zone.18 In some
cases, however, a subzone used for allocating certain uplift costs may encompass portions of an Investor-Owned Transmission Owner’s service territory located in more than one Load Zone.19
The NYISO also strongly supports the Commission’s recognition of the need to provide for the ability to aggregate data for purposes of the monthly total uplift payments report to avoid potential confidentiality and anti-competitive behavior concerns.20 The NYISO, however, seeks clarification of the Commission’s proposal regarding data aggregation.
As recognized by the Commission, the provision of daily total uplift payments by
transmission zone has the potential to disclose commercially sensitive information that is deemed
confidential information under the NYISO’s tariffs. Release of this information could raise anti-
16 Although the Operations Performance Metrics Monthly Reports are posted to the NYISO’s website on a monthly basis, these reports are currently not posted in a machine readable format.
17 Uplift NOPR at P 85.
18 For example, within Load Zone A, unique subzones exist for the portion of each InvestorOwned Transmission Owner’s service territory that is located within the load zone.
19 For example, costs associated with certain local reliability rules are allocated to all load within the Consolidated Edison Company of New York, Inc. Transmission District. This geographic area
includes portions of Load Zones H, I and J.
20 Uplift NOPR at P 89.
6
competitive behavior concerns.21 If such information is not adequately aggregated, it could,
under certain circumstances, facilitate the ability to deduce an individual resource’s operating
costs. Access to a competitor’s cost information can give rise to competitive advantages and
incent a resource to be offered in a manner that does not reflect its true cost of operation. To
address such concerns, the Commission proposes to allow transmission zones with fewer than
four resources to be aggregated with neighboring transmission zones for purposes of the
proposed monthly total uplift payments report.22
The NYISO also seeks clarification regarding the determination of whether a
transmission zone contains “fewer than four resources.” If a particular transmission zone
contains more than four resources in total, but less than four resources within that transmission
zone are receiving uplift payments on a given day, such a transmission zone should be
aggregated with other neighboring transmission zones until the geographic area being reported
contains at least four resources receiving uplift payments on that day. Measuring the number of
applicable resources on the basis of those receiving uplift payments within a given transmission
zone would help to ensure that the Commission’s proposed data aggregation procedures serve to
protect confidentiality and mitigate the potential for anti-competitive behavior concerns.23
C. Operator-Initiated Commitments Reporting
The Commission proposes to require the posting of all “operator-initiated commitments”
21 Id. at P 87-88.
22 Id. at P 89.
23 The interaction of the data aggregation procedures and the reporting of total uplift paid to all
resources for each day could result in circumstances where the geographic regions being reported in a
single monthly report change from day-to-day, as the resources receiving uplift payments each day vary.
Therefore, the Commission should provide flexibility for RTOs/ISOs to consider whether the
understandability and usefulness of the data may be improved by applying the data aggregation
procedures in a manner that would identify a more consistent set of geographic regions to be reported for
each day of the month.
7
within four hours after they occur.24 For purposes of this reporting obligation, the Commission
proposes to define an operator-initiated commitment to mean “a commitment that is not
associated with a resource clearing the day-ahead or real-time market on the basis of economics
and that is not self-scheduled.”25 The Commission further clarifies that this definition is
intended to:
include any commitment, whether manual or automated, made
after the execution of the day-ahead market that is made outside
the real-time market. Such commitments include commitments
made through residual unit commitment processes after the
execution of the day-ahead market, commitments made through
look-ahead commitment processes, and manual commitments
made in real-time.26
The Commission further proposes that operator-initiated commitment reports be posted in a
machine readable format and include the following information regarding each committed
resource: (i) the resource’s upper economic operating limit; (ii) the transmission zone in which
the resource is located; and (iii) the category of the commitment reason.27
The NYISO generally supports the Commission’s proposed reforms, but seeks
clarification regarding the intended scope of the term “operator-initiated commitments.”28 The
NYISO already posts information regarding many operator-initiated commitments in a machine
readable format as part of its “Operational Announcements” postings.29 To comply with the
24 Uplift NOPR at P 90-91.
25 Id. at P 90.
26 Id.
27 Id. at P 90-91 and 95.
28 It is important to note, however, that depending on the requirements of any final rule in this
proceeding, it may be necessary to modify existing mitigation rules or potentially create new rules to
address any market power or other anti-competitive behavior concerns that may arise as a result of the
required reforms.
29 These reports are updated in real-time to include various information including operator-
initiated commitments. For example, the Operational Announcements document from the March 28,
8
proposed reforms, however, the NYISO would need to revise its current processes for the
development and posting of this information to: (i) include additional commitments that fall
within the proposed definition of “operator-initiated commitments” but are currently not
reported; and (ii) broaden the information provided regarding resource commitments to include
both the location and upper operating limit of each committed resource.
To comply with the reforms proposed by the Uplift NOPR, the NYISO would report all SRE commitments and Out-of-Merit (“OOM”) actions resulting in unit commitments as
operator-initiated commitments. The NYISO seeks clarification regarding the intended scope of
the term operator-initiated commitments, as defined in the Uplift NOPR. Specifically, the
NYISO seeks to confirm that commitments made on the basis of economics as part of the real-
time market are not intended to be classified as operator-initiated commitments simply because
an RTO’s/ISO’s real-time market software includes look-ahead functionality.
The NYISO’s Real-Time Market, which is comprised of RTC and RTD, performs a
unique ex ante, co-optimized, multi-period commitment, scheduling and dispatch process that
evaluates bids and offers submitted by External Transactions and internal resources to
simultaneously solve for all Load, Operating Reserves and Regulation Service requirements and
to minimize the total as-bid production costs. Both RTC and RTD include look-ahead
functionality.30 This look-ahead functionality is intended to ensure that the most efficient set of
resources are scheduled, recognizing both the current system conditions and expected future
conditions.
2017 operating day is available at:
http://mis.nyiso.com/public/pdf/OperMessages/20170328OperMessages.pdf.
30 The RTC optimization horizon is nominally 2.5 hours and the RTD optimization horizon is 55 to 60 minutes, depending on the interval.
9
RTC makes binding unit commitment and de-commitment decisions for the periods
beginning 15 minutes (in the case of resources that can respond within 10 minutes) and 30
minutes (in the case of resources that can respond within 30 minutes) after the scheduled posting time of each RTC run.31 Resource commitments made by RTC are based on an evaluation of the economics of resource Bids and Bid parameters. Accordingly, the NYISO does not believe that RTC commitments are intended to fall within the scope of operator-initiated commitments, as defined in the Uplift NOPR. Otherwise, the Uplift NOPR would essentially require the NYISO to post all economic commitments that are made as part of its Real-Time Market.
RTD primarily provides for resource dispatch on a five minute basis, but also includes
resource “commitment” functionality under certain circumstances. For example, when the
NYISO needs to respond to real-time system conditions that were not anticipated by RTC or by the regular RTD, such as the unexpected loss of a major generator or transmission facility,
operators may activate a specialized version of RTD referred to as RTD-Corrective Action Mode (“RTD-CAM”).32 Certain modes of RTD-CAM can commit resources that are able to respond
within 10 minutes. Such commitments are performed based on an evaluation of the economics
of resource Bids and Bid parameters. Therefore, like RTC commitments, the NYISO does not
believe that the resource commitments made by RTD-CAM constitute operator-initiated
commitments, as defined by the Uplift NOPR.
31 RTC also provides advisory commitment information for the remainder of the 2.5 hour optimization horizon.
32 RTD-CAM runs are normally five to ten minutes long and, by design, do not include lookahead functionality in order to minimize execution time.
10
In addition, RTD includes certain offline gas turbine (“GT”) pricing logic applicable to
offline, block-loaded GTs that can respond to dispatch instructions within 10 minutes.33 RTD
can commit eligible offline GTs for pricing purposes when such a commitment represents the
least cost option to meet real-time system conditions.34 Although RTD can elect to commit an
eligible offline resource for pricing purposes (i.e., the resource’s costs are accounted for in Real-
Time LBMPs produced by RTD), subsequent action must be taken by the operator to effectuate
the actual dispatch of the resource. Because the offline resource commitment decision for
pricing purposes is made by RTD based on economics, the NYISO likewise believes that this category of resource commitments is not intended to be classified as operator-initiated
commitments, as defined by the Uplift NOPR.
D. Transmission Constraint Penalty Factors
The Commission proposes to require that the following be specified in RTO/ISO tariffs:
(i) transmission constraint penalty factor values; (ii) the conditions when such penalty factors
may be used to set price; and (iii) any procedures authorizing temporary changes to such penalty
factors, including a requirement to notify market participants of any such temporary changes.35
The NYISO recently obtained approval from its stakeholders to file for the Commission’s consideration tariff revisions that will clarify and enhance its transmission constraint pricing
33 See, e.g., Docket No. AD14-14-000, supra, Post-Technical Workshop Comments of the New
York Independent System Operator, Inc. at 8-10 (March 6, 2015); Docket No. AD14-14-000, supra,
Report of the New York Independent System Operator, Inc. at 6-7 (March 4, 2016); and Docket No.
RM17-3-000, Fast Start Pricing in Markets Operated by Regional Transmission Organizations and
Independent System Operators, Comments of the New York Independent System Operator, Inc. at 2-4
(February 28, 2017).
34 In evaluating eligible offline resources, RTD considers both the start-up and incremental energy costs of such resources.
35 Uplift NOPR at P 97-99.
11
logic.36 Subject to obtaining approval from its Board of Directors, the NYISO intends to submit
these tariff revisions to the Commission for approval in April 2017. The tariff revisions related
to the proposal align with the proposed requirements of the Uplift NOPR in that they: (i) clearly
define the transmission constraint penalty factor values utilized by the NYISO; (ii) describe the
circumstances when these penalty factors are used to set price; and (iii) describe the process
allowing for temporary changes to the penalty factor values under limited circumstances and
include an obligation to notify market participants of any such temporary changes.
E. Transmission Outage Reporting
The Commission seeks comments on the reporting of transmission outages.37 The
NYISO already posts information regarding outages of 100 kV and higher transmission facilities in the NYCA. The reports are provided in a machine readable format and include separate
reports for both scheduled and actual outages.38
F. Market Model Availability
The Uplift NOPR solicits comments regarding the availability of RTO/ISO network
models and any restrictions relating thereto.39 The NYISO currently makes a network model
available to entities that participate in the NYISO-administered Transmission Congestion
Contract (“TCC”) market. TCC market participants seeking access to the model are required to
submit a request and execute a non-disclosure agreement due to the fact that the model includes
36 See NYISO, Transmission Constraint Pricing (presented at the March 29, 2017 Management Committee meeting), available at:
http://www.nyiso.com/public/webdocs/markets_operations/committees/mc/meeting_materials/2017-03-
29/03_Transmission%20Constraint%20Pricing.pdf.
37 Uplift NOPR at P 100.
38 The transmission facility outage reports are posted in the “Outages” folder within the “Power
Grid Data” subsection of the “Market & Operational Data” section on the NYISO’s website, available at:
http://www.nyiso.com/public/markets_operations/market_data/power_grid_data/index.jsp.
39 Uplift NOPR at P 101.
12
Critical Energy Infrastructure Information (“CEII”). Furthermore, because the model includes certain modifications to account for system assumptions utilized in the NYISO-administered TCC auctions, use of the model is restricted to TCC market participation.
G. Implementation Schedule
The Commission proposes to require the submission of compliance filings to address the reforms established by any final rule in this proceeding within 90 days after the effective date of any such final rule.40 The Commission further proposes that RTOs/ISOs implement any required changes necessary to comply with such reforms within six months after the deadline for
submitting compliance filings.41
The NYISO respectfully requests that the Commission provide flexibility to each
RTO/ISO to develop and implement the reforms proposed by the Uplift NOPR. To achieve
compliance with the reforms proposed in the Uplift NOPR, the NYISO would need to modify
certain of its current data reporting processes which may require software development and
testing to automate such revised reporting. Based on the reforms proposed by the Uplift NOPR,
the NYISO currently estimates that it will likely require at least nine months following the
deadline for submitting compliance filings to implement the changes necessary to comply with
the proposed reforms.
The NYISO is in year one of a three year long effort to upgrade the hardware and
software that runs its wholesale energy markets and monitors reliability of the bulk electric
system. These improvements are commonly referred to as the “Energy Management System
(“EMS”)/Business Management System (“BMS”) Upgrade Project.” The project will provide
several important benefits. The new operating system and server hardware provide improved
40 Id. at P 102.
41 Id.
13
computational performance. This will better enable the NYISO’s hardware and software to
support new market designs and increasing performance demands. The new system will also be more secure with enhanced cyber security protections.
Embarking on material software modifications that affect the NYISO’s market software while the NYISO is transitioning to the upgraded EMS/BMS would significantly complicate the task of implementing the EMS/BMS upgrades. Based on the reforms proposed in the Uplift NOPR, the NYISO currently does not anticipate any direct impacts to its market software would occur to achieve compliance with such proposed reforms.
However, the ultimate impacts, if any, to the NYISO’s market software will depend on
the reforms required by any final rule issued in this proceeding. If the reforms established by
any such final rule result in the need for changes to the NYISO’s market software, implications
to the ongoing EMS/BMS upgrades would need to be considered. The NYISO would incur
significant risk and expense if the reforms established by any final rule required material changes
to the NYISO’s market software and were required to be implemented during the ongoing
transition to the upgraded EMS/BMS. Under such circumstances, the NYISO would ideally be
positioned to begin software development for a compliance solution in 2019, with the earliest
possible implementation date occurring in 2020, in order to mitigate the potential risks and
additional costs associated with conducting significant market software changes in tandem with
the ongoing EMS/BMS upgrades.
Accordingly, the NYISO requests that the Commission provide regional flexibility with respect to the implementation timeline for compliance solutions in response to the reforms established by any final rule in this proceeding.
14
III.CONCLUSION
The NYISO respectfully requests that the Commission consider these comments in formulating any final rule in this proceeding.
Respectfully submitted,
/s/ Garrett E. Bissell
Garrett E. Bissell
Senior Attorney
New York Independent System Operator, Inc.
Dated: April 10, 2017
cc:Michael Bardee
Nicole Buell
Anna Cochrane
Kurt Longo
Max Minzner
Daniel Nowak
Larry Parkinson
J. Arnold Quinn
Douglas Roe
Kathleen Schnorf
Jamie Simler
Gary Will
15
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 10th day of April 2017.
/s/ Joy A. Zimberlin
Joy A. Zimberlin
New York Independent System Operator, Inc.
10 Krey Blvd.
Rensselaer, NY 12144 (518) 356-6207
