April 28, 2017
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., Docket No. ER17-___-000;
Proposed Tariff Amendments Regarding Submission of Start-Up Bids in the Real-Time Market
Dear Secretary Bose:
The New York Independent System Operator, Inc. (“NYISO”) submits this filing
pursuant to Section 205 of the Federal Power Act1 to propose amendments to its Market
Administration and Control Area Services Tariff (“Services Tariff”) to revise provisions
concerning Start-Up Bids in the Real-Time Market (“RTM”). The proposed revisions will allow
Generators scheduled in the Day-Ahead Market (“DAM”) to increase the Start-Up Bids provided
in their RTM offers.2 While all Generators will be allowed to increase Start-Up Bids in the
RTM, only Start-Up Bids from Generators that are re-evaluated by the Real-Time Commitment
(“RTC”) software will be considered in the NYISO’s real-time commitment decisions.3 The
opportunity to revise Start-Up Bids in real-time, for Energy already scheduled Day-Ahead, will
allow certain Generators to reflect cost implications that arose following the DAM commitment,
such as fuel cost increases. For Generators that were awarded DAM schedules and whose
commitment is re-evaluated by RTC, this functionality provides an opportunity to manage the
risk of unexpected fuel cost increases.
1 16 U.S.C. §824d.
2 Capitalized terms not otherwise defined herein shall have the meaning specified in Section 2 of the Services Tariff and Section 1 of the Open Access Transmission Tariff (“OATT”).
3 See Services Tariff Section 4.4.1.4 (RTC will re-evaluate and may commit Resources with 10-minute and 30-
minute start-up times).
Honorable Kimberly D. Bose April 28, 2017
Page 2
I.Documents Submitted
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.Background
Market Participants submit Generator Start-Up Bids in the DAM based on the expected
costs to bring the Generator up to its specified minimum operating level from an off-line state.
Generators can submit two different types of Start-Up Bids: (1) a single point Start-Up Bid
submitted as part of the Generator’s hourly offer, which specifies the cost to start the Generator
in that hour; or (2) a multi-point Start-Up Bid curve that applies to all future offers and specifies
the cost to start the Generator based on how long the Generator has been off-line and how long it
takes to start. If a Generator submits both types of Start-Up Bids into the NYISO’s Market
Information System (“MIS”) software, the single point Start-Up Bid takes priority over the
multi-point Start-Up Bid curve. In the absence of a single point Start-Up Bid, the NYISO’s MIS
software will use the multi-point Start-Up Bid curve to determine the cost to start the Generator.
The costs associated with starting a Generator may increase following the close of the
DAM, for example, due to increased fuel costs or the need to switch to an alternate fuel.
Currently, the Services Tariff provides that RTM Start-Up Bids may not exceed Start-Up Bids
submitted in the DAM for any hour in which the Generator received a Day-Ahead Energy
schedule or a Regulation Service schedule. The Services Tariff, however, permits Generators
that have only a Day-Ahead Operating Reserves schedule to submit revised Start-Up Bids in
real-time.
The NYISO identified two issues related to a Generator’s ability to modify Start-up Bids in the RTM, when that Generator received a DAM schedule.4
1. The current tariff rules prohibit Generators with a Day‐Ahead Energy and/or Regulation
Service schedule to increase their Start-Up Bids in real-time. The NYISO’s RTM
software, however, has inappropriately allowed for such increases in certain limited
4 Out of an abundance of caution, the NYISO requests a limited waiver of certain tariff provisions below. See infra
Section IV. The NYISO’s analysis of these issues did not reveal any financial impacts. While there have been
instances of Generators revising Start-Up Bids in real-time, these Generators were not compensated based on the
revised RTM Start-Up Bids. With respect to Generators that should have been able to revise Start-Up Bids in real-
time but were prohibited by the software, the NYISO was not contacted by any Generator attempting to use this
functionality. Therefore, the NYISO is not aware of any instances where a Generator was inappropriately prevented
from revising a Start-Up Bid.
Honorable Kimberly D. Bose April 28, 2017
Page 3
circumstances. These circumstances only exist when a multi‐point Start‐Up Bid curve is
submitted in the DAM and results in a Day‐Ahead Energy and/or Regulation Service
schedule. The RTM software allows the Generator to enter a new single point Start‐Up
Bid or multi‐point Start‐Up Bid curve for evaluation, scheduling and potentially
compensation.
2. Generators with only a Day‐Ahead Operating Reserves schedule have not been able to
increase their Start‐Up Bids in the RTM. Increasing Start‐Up Bids in this situation
should be permitted pursuant to the current NYISO tariff rules. Under previous tariff
rules, Generators were not permitted to increase Start‐Up Bids in the RTM in any hour in
which the Generator had a DAM schedule. However, this prohibition was effectively
lifted for Generators with only a Day‐Ahead Operating Reserves schedule on March 12,
2011.5
The NYISO made stakeholders aware of these two issues at its January 17, 2017 Market Issues Working Group (“MIWG”) meeting. During this meeting, the NYISO reiterated that
Start-Up Bids in the RTM must not exceed the Start-Up Bids submitted in the DAM for any hour that the Generator was scheduled in the DAM for Energy or Regulation Service.6 Stakeholders
were also informed that the NYISO would implement software logic to permit units to increase
RTM Start-Up Bids when scheduled for Operating Reserves in the DAM as part of the proposed revisions described in this filing.
III. Description of Proposed Revisions to the Services Tariff
A. Increasing Start-Up Bids in the Real-Time Market
The enhancement proposed herein will allow Generators to increase their RTM Start-Up
Bids, using either type of Start-Up Bid, for DAM scheduled Energy and/or Regulation Service.
This modification provides the same bidding flexibility for Start-Up Bids that exists today for
Incremental Energy Bids.7 Allowing Generators that are re-evaluated by RTC to increase Start-
Up Bids in real-time, regardless of Day-Ahead schedules, could result in more efficient real-time
scheduling decisions and market outcomes.8 This functionality improves real-time market
5 See Docket No. ER11-2549-000, New York Independent System Operator, Inc., Proposed Tariff Clarifications
Regarding the Bidding for and Scheduling of Energy in New York’s LBMP Market and the scheduling of
Transmission Service in the New York Control Area (December 21, 2010); New York Independent System Operator, Inc., Docket No. ER11-2549-000 Letter Order (February 10, 2011).
6 See slide 6 of the Start-Up Bids Treatment presentation, available at
http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_miwg/meeting_materials/2017-01-
17/Start-up%20Bid%20Treatment%20MIWG%202017%2001%2017.pdf
7 See Docket No. ER10-1977-000 et al., New York Independent System Operator, Inc., Proposed Tariff
Clarifications Regarding Real-Time Energy Offers (July 26, 2010); and New York Independent System Operator, Inc., 132 FERC ¶ 61,271 (2010).
8 If a Generator that is not re-evaluated by RTC increases its real-time Start-Up Bid, the RTM Start-Up Bid will not
be evaluated by RTC; however, the bidding information will provide the NYISO valuable insight into market
conditions.
Honorable Kimberly D. Bose April 28, 2017
Page 4
efficiency by making up-to-date cost information available to the RTM software and more
accurately reflecting costs in the commitment evaluation for Generators that are re-evaluated by
RTC.
A Generator dispatched lower in real-time than its DAM schedule will face RTM
balancing obligations for not operating to its DAM schedule; however, these obligations could be less than the cost of operating to its DAM schedule. As such, this feature will improve the
ability of Generators to manage the risk of cost increases occurring after submission of their
Day-Ahead offers but before the real-time dispatch hour. Generators scheduled in the DAM to start in a given hour will continue to receive Day-Ahead settlements based on their Day-Ahead Start-Up Bids regardless of any increased RTM Start-Up Bids for the same hour.
The proposed revisions to Section 4.4 of the Services Tariff specify that Start-Up Bids may be submitted in the RTM that exceed the Start-Up Bids submitted in the DAM in the same manner that RTM Incremental Energy Bids may be submitted that exceed the Incremental
Energy Bids submitted in the DAM.
B. Day-Ahead Margin Assurance Payment Eligibility
The NYISO also proposes to exclude from eligibility for Day-Ahead Margin Assurance
Payments (“DAMAP”)9 those hours for which Generators have increased their real-time Start-
Up Bids compared to the Start-Up Bids submitted in the DAM. This exclusion applies to the
hours that the Generator was scheduled for Energy and/or Regulation Service and whose
commitment is re-evaluated by RTC. DAMAP is intended to reimburse a Supplier for any lost
Day-Ahead Margin that may result from actions taken by the NYISO in real-time that reduce a
Resource’s Day-Ahead Margin.10 This typically happens when the NYISO, in real-time, reduces
the otherwise applicable schedule of a Generator, as determined in the DAM, for reliability
reasons. However, DAMAP is not warranted when the Supplier’s own actions cause lost, or
reduced, Day-Ahead Margin. In this case, the reduced real-time dispatch could be the result of
the Generator’s increased real-time Start-Up Bid, not the result of NYISO actions, and a
DAMAP is not warranted.
In addition, the NYISO proposes to exclude from DAMAP the two hours before and the
two hours following the hour(s) for which the unit has submitted an increased real-time Start-Up
Bid on Day-Ahead scheduled Energy and/or Regulation Service, consistent with the current
exclusion when a Generator increases its Incremental Energy Bids in real-time. The NYISO’s
RTC software considers a two-and-a-half hour look-ahead for its optimization horizon.
9 DAMAP is calculated pursuant to Section 25 of (Attachment J to) the Services Tariff.
10 DAMAP is a “supplemental payment made to an eligible Supplier that buys out of a Day-Ahead Energy,
Regulation Service, or Operating Reserves schedule such that an hourly balancing payment obligation offsets its Day-Ahead Margin.” A Supplier’s Day-Ahead Margin, in turn is “[t]hat portion of Day-Ahead LBMP, Operating Reserves settlement or Regulation Service settlement for an hour that represents the difference between the
Supplier’s accepted Day-Ahead offer price and the Day-Ahead LBMP, Operating Reserves settlement or Regulation Service settlement for that hour.” See Services Tariff Section 2.4.
Honorable Kimberly D. Bose April 28, 2017
Page 5
Therefore, Start-up Bid changes in a particular hour for a Generator whose commitment is re-
evaluated by RTC could impact commitment decisions for the following two hours. Depending
on a unit’s ramp rate, the NYISO may begin to ramp a Generator to its new schedule as many as
two hours ahead in the RTM. For the same reasons that no DAMAP should be paid for hours for
which the increased real-time Start-Up Bid has been made, no DAMAP should be payable for
the two hours preceding and the two hours following the hour(s) for which the increased real-
time offer was made.
The NYISO proposes to add a new Section 25.2.2.5 of the Services Tariff specifying that a Generator, otherwise eligible for DAMAP, whose commitment is re-evaluated by RTC will be ineligible for DAMAP in hours when its real-time Start-Up Bid exceeds the DAM Start-Up Bid associated with a Day-Ahead Energy and/or Regulation Service schedule and the two hours
immediately preceding and the two hours immediately following the hour(s) in which the StartUp Bids are increased in real-time.
IV.Request for Waiver
As discussed above, the NYISO’s RTM software has: (i) inappropriately allowed for
Generators with a Day‐Ahead Energy and/or Regulation Service schedule to increase their Start-
Up Bids in real-time in certain limited circumstances; and (ii) prevented Generators with only a
Day‐Ahead Operating Reserves from being able to increase their Start‐Up Bids in the real-time.
Out of an abundance of caution, the NYISO requests that the Commission grant it a
waiver of the tariff provisions prohibiting Generators with a Day‐Ahead Energy and/or
Regulation Service schedule from increasing their Start-Up Bids in real-time11 and the tariff
provisions in effect between March 12, 2011 and July 1, 2017 allowing Generators with only a
Day‐Ahead Operating Reserves schedule to increase their Start‐Up Bids in the real-time; to the
extent it may be necessary. The Commission has previously evaluated a number of factors in
determining whether to authorize a tariff waiver. These include whether: (1) the underlying error
was made in good faith; (2) the waiver is of limited scope; (3) a concrete problem needs to be
remedied; and (4) the waiver will not have undesirable consequences, such as harming third
parties. To the extent that the Commission determines that a waiver is necessary to resolve these
issues, the NYISO requests that the Commission consider the following:
The RTM software has only inappropriately allowed Generators with a Day‐Ahead
Energy and/or Regulation Service schedules to increase their Start-Up Bids in real-time when a
multi-point Start-Up Bid curve was submitted in the DAM and resulted in a Day‐Ahead Energy
and/or Regulation Service schedule. The NYISO identified a limited number of instances when
a Generator meeting these conditions revised its RTM Start-Up Bid. Notbaly, however, none of
these instances resulted in financial impacts to Market Participants. The relevant Generators
were compensated based on Day-Ahead Start-Up Bids as they were not eligible for re-evaluation
by RTC. The NYISO advised Market Participants not to attempt to increase RTM Start-Up Bids
in these circumstances on January 17, 2017. The term of the waiver would end on July 1, 2017
11 See Services Tariff Section 4.4.1.2.1 (the same section that the NYISO proposes to amend as part of this filing).
Honorable Kimberly D. Bose April 28, 2017
Page 6
when the tariff revisions and software modifications described in this filing are proposed to become effective.
Generators with only a Day‐Ahead Operating Reserves schedule should have had the
option to increase Start-Up Bids in real-time since the prohibition was removed from the
NYISO’s tariffs on March 12, 2011. The tariff amendments removing this prohibition included
significant reorganization and clarification of bidding and scheduling provisions in the Services
Tariff and OATT. The waiver only involves Generators scheduled for Operating Reserves in the
DAM that would have increased their Start-Up Bids in the RTM. The NYISO is not aware of,
and was not contacted by, any such Generators that attempted to increase their RTM Start-Up
Bids but were prevented from doing so by the NYISO’s software. The NYISO intends to correct
its software to allow Generators with a Day-Ahead Operating Reserves schedules to increase
their Start-Up Bids in real-time and to implement the software change on the same date as the
tariff revisions proposed herein. Market Participants have been aware of this situation since
January 17, 2017.
V.Effective Date
The NYISO respectfully requests that the Commission issue an order accepting the
proposed tariff revisions by June 27, 2017 (i.e., sixty days from the date of this filing) with an effective date of July 1, 2017.
VI.Stakeholder Approval
The proposed tariff amendments were approved unanimously by the NYISO
Management Committee on March 29, 2017. The NYISO’s Board of Directors approved the proposed revisions on April 11, 2017.
VII. Communications and Correspondence
All communications and service in this proceeding should be directed to:
Robert E. Fernandez, General Counsel
Raymond Stalter, Director, Regulatory Affairs *James H. Sweeney, Senior Attorney
10 Krey Boulevard
Rensselaer, NY 12144
Tel: (518) 356-6000
Fax: (518) 356-7678
rfernandez@nyiso.com
rstalter@nyiso.com
jsweeney@nyiso.com
*Person designated for receipt of service.
Honorable Kimberly D. Bose April 28, 2017
Page 7
VIII. Service
The NYISO will send an electronic link to this filing to the official representative of each
of its customers, to each participant on its stakeholder committees, to the New York State 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.Conclusion
The New York Independent System Operator, Inc. respectfully requests that the
Commission accept for filing the proposed tariff revisions that are attached hereto with an effective date of July 1, 2017.
Respectfully submitted,
/s/ James H. Sweeney
James H. Sweeney, Senior Attorney
New York Independent System Operator, Inc.
cc:Michael Bardee
Nicole Buell
Anna Cochrane
Kurt Longo
David Morenoff
Daniel Nowak
Larry Parkinson
J. Arnold Quinn
Douglas Roe
Kathleen Schnorf
Jamie Simler
Gary Will