UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

New York State Reliability CouncilDocket No. ER19-659-000

MOTION TO INTERVENE AND COMMENTS OF

THE NEW YORK STATE INDEPENDENT SYSTEM OPERATOR, INC.

Pursuant to Rules 212 and 214 of the Commission’s Rules of Practice and Procedure,1
the New York State Independent System Operator, Inc. (“NYISO”) respectfully moves to
intervene in this proceeding and offers its comments in support of the filing made by the New
York State Reliability Council (“NYSRC”).2 The NYISO believes that an Installed Reserve
Margin (“IRM”) of 17.0 percent for the New York Control Area (“NYCA”) for the upcoming
2019-2020 Capability Year,3 which runs from May 1, 2019 through April 30, 2020, falls within a range of reasonable levels of installed capacity (“ICAP”) required to maintain reliability of the NYCA bulk power system. Accordingly, the NYISO supports the NYSRC’s request that the
Commission approve the proposed IRM of 17.0 percent.

The NYISO also requests that the Commission accept and approve the NYSRC’s filing
effective February 15, 2019. As indicated by the NYSRC in its filing, such an effective date is
necessary to provide sufficient time for the NYISO to calculate and post the minimum capacity
requirements and for Market Participants to prepare for the first ICAP auction that must be
conducted for the Summer 2019 Capability Period prior to March 30, 20194 and is currently

1 18 C.F.R. §§ 385.212, 385.214.

2 New York State Reliability Council, L.L.C., Filing of Installed Capacity Requirement for the New York Control Area, Docket No. ER19-659-000 (December 21, 2018) (“NYSRC Filing”).

3 Capitalized terms have the meaning ascribed to them in the NYISO’s Open Access Transmission Tariff and its Market Administration and Control Area Services Tariff (“Services Tariff”).

4 Section 5.13.2 of the Services Tariff requires the Capability Period Auction “be conducted no later than thirty (30) days prior to the start of the Capability Period ”

scheduled to begin March 28, 2019. Without this necessary information, the efficient operation
of the NYISO’s Summer 2019 ICAP auction could be seriously impaired.
Finally, as in prior years, the NYISO respectfully suggests that the Commission
coordinate its decision in this proceeding with the actions that the New York Public Service
Commission (“NYPSC”) may soon take in response to the NYSRC’s filing. Inconsistent
determinations by the Commission and NYPSC would create uncertainty about what IRM the
NYISO should use and, potentially, subject the NYISO to contradictory regulatory mandates.
The NYISO also respectfully requests that the Commission not allow jurisdictional
considerations to delay the timely implementation of its ICAP auction process.
In support thereof, the NYISO states:

I.Communications and Correspondence

All communications regarding this filing should be directed to:

Karen G. Gach, Acting General Counsel

Raymond Stalter, Director, Regulatory Affairs * Carl F. Patka, Assistant General Counsel * David Allen, Senior Attorney

10 Krey Boulevard

Rensselaer, New York 12144 Tel: (518) 356-6220

Fax: (518) 356-7678
kgach@nyiso.com
rstalter@nyiso.com

cpatka@nyiso.com
dallen@nyiso.com

* Persons designated for receipt of service.

II.Background

Section 3.03 of the New York State Reliability Council Agreement, which was approved
by the Commission in connection with the formation of the NYISO and the NYSRC, obligates

the NYSRC to submit any proposed revisions of the NYCA IRM to the Commission for

approval before the beginning of the Capability Year to which the change would apply.5 The

IRM was set at 18.0 percent for the 2000-2001 through 2006-2007 and the 2010-2011 Capability
Years.6 In intervening and subsequent years, the IRM has varied. The Commission accepted an
IRM of 16.5 percent for the 2007-2008 Capability Year,7 15 percent for the 2008-2009
Capability Year,8 16.5 percent for the 2009-2010 Capability Year,9 15.5 percent for the 2011-
2012 Capability Year,10 16.0 percent for the 2012-2013 Capability Year,11 17 percent for the
2013-2014, 2014-2015, and 2015-2016 Capability Years,12 17.5 percent for the 2016-2017
Capability Year,13 18.0 percent for the 2017-2018 Capability Year,14 and 18.2 percent for the
2018-2019 Capability Year.15

The current IRM of 18.2 percent means that Load Serving Entities (“LSEs”) in the

NYCA must procure capacity equal to 118.2 percent of their forecast peak load.16 In addition,
there are separate location-specific ICAP requirements for LSEs in New York City, Long Island,

5 New York State Reliability Council Agreement § 3.03 (December 2, 1999), available at
http://www.nysrc.org/pdf/Agreements/NYSRC%20Agreement%20signed.PDF.

6 New York State Reliability Council, 90 FERC ¶ 61,313 (2000); New York State Reliability Council, Letter Order, Docket No. ER10-416-000 (January 28, 2010).

7 New York State Reliability Council, 118 FERC ¶ 61,179 (2007).

8 New York State Reliability Council, 122 FERC ¶ 61,186 (2008).

9 New York State Reliability Council, Letter Order, Docket No. ER09-437-000 (February 6, 2009).

10 New York State Reliability Council, Letter Order, Docket No. ER11-2392-000 (January 24, 2011).

11 New York State Reliability Council, Letter Order, Docket No. ER12-597-000 (February 3, 2012).

12 New York State Reliability Council, Letter Order, Docket No. ER13-572-000 (February 5, 2013); New York State Reliability Council, Letter Order, Docket No. ER14-916-000 (February 21, 2014); New York State Reliability Council, Letter Order, Docket No. ER15-821-000 (March 3, 2015).

13 New York State Reliability Council, Letter Order, Docket No. ER16-623-000 (February 12, 2016).

14 New York State Reliability Council, Letter Order, Docket No. ER17-613-000 (January 31, 2017)

15 New York State Reliability Council, Letter Order, Docket No. ER18-524-000 (February 6, 2018)

16 For example, the NYCA forecast peak load for the 2018-2019 Capability Year was 32,902.5 MW. The

18.2 percent IRM means the minimum ICAP requirement for the NYCA was 38,890.8 MW (i.e., 118.2 percent of 32,902.5 MW).

and, collectively, Load Zones G, H, I, and J (the “G-J Locality”) that reflect the existence of transmission constraints in those areas. These Locality requirements are determined by the NYISO given the NYSRC’s recommended IRM.17

At the request of the NYSRC and in accordance with the Agreement Between the New York Independent System Operator, Inc. and the New York State Reliability Council, the
NYISO conducted a technical study that provided parameters for determining an IRM necessary to meet all applicable reliability criteria in the NYCA in the upcoming Capability Year. The
NYISO employed General Electric’s Multi-Area Reliability Simulation (“GE-MARS”) model to determine the amount of ICAP that is required NYCA-wide to meet the governing resource
adequacy criterion that the probability of an unplanned disconnection of firm load would not
exceed one occurrence in ten years.18 The NYISO’s base case evaluation yielded a NYCA IRM of 16.8 percent for the 2019-2020 Capability Year.

The NYISO reported its results to the NYSRC’s Installed Capacity Subcommittee

(“ICS”), which reviewed the results of the study, together with verification of the data inputs and
modeling from General Electric, Consolidated Edison of New York, Inc., and PSEG Long
Island. The results are reflected in the Technical Study Report prepared by the ICS and issued
by the NYSRC on December 7, 2018, which is attached to the NYSRC’s December 21, 2018
filing.19

17 On October 5, 2018, FERC issued an Order, effective October 9, 2018, accepting revisions to the

NYISO’s Market Services Tariff that revised the NYISO’s methodology for the calculation of Locational Minimum
Installed Capacity Requirement (“LCR”). See, New York State Independent System Operator, Inc., 165 FERC ¶
61,011 (2018).

18 This criterion is known as the “Loss of Load Expectation” or “LOLE” and is the standard prescribed in the reliability rules of the Northeast Power Coordinating Council (“NPCC”) and the NYSRC.

19 NYSRC Filing, Attachment A, “Technical Study Report: New York Control Area Installed Capacity Requirement for the Period May 2019 to April 2020.”

The NYSRC’s filing with the Commission highlights portions of the Technical Study
Report.20 As described in its filing, the NYSRC Executive Committee relied on the base case
results, its identification and evaluation of modeling and assumption changes that drove the
decrease in the 2019 IRM Study from the prior 2018 IRM Study base case value, and the
numerous sensitivity studies that resulted in a range of IRMs that were higher and lower than the
base case IRM.21 Based upon the study results and its experience and expertise, the NYSRC
adopted an IRM for the 2019-2020 Capability Year of 17.0 percent. On December 21, 2018, the
NYSRC filed with the Commission its proposed NYCA IRM of 17.0 percent for the 2019-2020
Capability Year, requesting that the Commission accept its filing and issue an order no later than
February 15, 2019.22

On December 10, 2018, the NYSRC submitted to the NYPSC the Technical Study

Report and its resolution adopting a 17.0 percent IRM for the 2019-2020 Capability Year.23 The
NYPSC published a notice under the State Administrative Procedures Act on December 26, 2018
of its consideration of the proposed 17.0 percent IRM with a 60-day public comment period
running until February 24, 2019.24 The NYISO intends to file comments similar to those herein
with the NYPSC in support of the NYSRC’s adoption of an IRM of 17.0 percent for the 2019-
2020 Capability Year.

20 Id. at pp 8-13.

21 Id. at pp 10-13.

22 Id. at pp 13-14.

23 Case No. 07-E-0088 - In the Matter of the Adoption of an Installed Reserve Margin for the New York Control Area, Informational Filing: New York State Reliability Council Adoption of Installed Reserve Margin for the New York Control Area (December 11, 2018).

24 See Notice of Proposed Rulemaking, “New York State Reliability Council’s Establishment of an Installed Reserve Margin of 17.0%,” N.Y. Reg., I.D. No. PSC-52-18-00010-P (December 26, 2018).

III.Motion to Intervene

The NYISO is the independent body responsible for providing open access transmission
service, maintaining reliability, and administering competitive wholesale markets for electricity,
capacity, and ancillary services in New York State. Pursuant to its Commission-approved tariffs,
the NYISO is also responsible for administering the ICAP auctions for the NYCA, including the
Summer Capability Period Auction scheduled to begin March 28, 2019.25 The NYISO’s
Services Tariff also requires LSEs within the NYCA to procure sufficient levels of capacity,
including locational ICAP requirements for New York City, Long Island, and the G-J Locality.
Together with the ICAP Demand Curves, the NYCA IRM is a critical input into the
NYISO’s ICAP auctions because it is used to calculate each LSE’s minimum NYCA-wide
capacity requirements and its data inputs are used to calculate the Locational Capacity
Requirements (“LCRs”). Specifically, the NYISO uses the adopted IRM to determine the
capacity requirements for the NYCA as a whole for the upcoming Capability Year. It then uses
the data underlying the determination of the base case for the IRM and the IRM established by
the NYSRC as a starting point in calculating the LCRs for LSEs. Those LCRs, together with the
demand curve, determine the minimum amount of capacity that LSEs must procure. The NYISO
informs the LSEs of their minimum capacity requirements and conducts auctions for each
Capability Period (i.e., summer and winter six-month capability periods), as well as monthly and
spot market auctions.26 Because the NYISO cannot fulfill its tariff obligations without the IRM,
the NYISO has a unique interest in this proceeding that cannot be adequately represented by any
other entity and should, therefore, be permitted to intervene with all of the rights of a party.

25 The ICAP auction processes are described in Sections 5.13 and 5.14 of the Services Tariff.

26 See Sections 5.12-5.14 of the Services Tariff.

IV.Comments

A.The NYSRC’s Proposal to Establish a NYCA IRM of 17.0 Percent for the

2019-2020 Capability Year is Reasonable

As explained above, the NYSRC has requested the Commission’s approval to decrease
the NYCA IRM from 18.2 percent to 17.0 percent for the upcoming Capability Year. The
NYISO believes that the proposed 17.0 percent IRM falls within a range of reasonable IRM
levels as it is a value slightly above the 16.8 percent result determined for the base case
evaluation as reported in the Technical Study. The Technical Study Report also provided results
of numerous sensitivity studies producing a range of reasonable IRM levels that are consistent
with maintaining reliability in New York State for the upcoming 2019-2020 Capability Year.
The NYSRC Executive Committee determined, based upon the base case result, modeling and
assumption changes, and numerous sensitivity studies, that the 17.0 percent IRM best satisfies
the resource adequacy criterion and should be adopted for this upcoming Capability Year.

B. The Commission Should Act Expeditiously

The NYISO requests that the Commission act in time to provide a decision by February
15, 2019.27 Pursuant to its tariffs, the NYISO has scheduled the first ICAP auction for the six-
month 2019 Summer Capability Period to begin on March 28, 2019. The outcome of this
auction will affect the monthly and spot capacity auctions that the NYISO will conduct for May
2019.

As a result, the NYISO must know the NYCA IRM sufficiently ahead of the scheduled
auction so that it can calculate the minimum NYCA-wide and LCRs capacity requirements and
transmit this information to auction participants. If the Commission acts by February 15, 2019,

27 The NYISO similarly intends to ask the NYPSC to act promptly in considering the proposed IRM level for the same reasons discussed herein.

the NYISO is confident that it could complete this work on time. In accordance with its manuals
and past practices, the NYISO has informed Market Participants that the new minimum
requirements will be available by March 18, 2019. This information is conveyed in advance of
the capacity auction for the six-month Summer Capability Period to provide Market Participants
with sufficient notice of their capacity requirements so that they may develop or adjust their
bidding strategies. The NYISO would prefer to start making the necessary calculations as early
as possible in advance of this deadline. Further, without timely information, it will be much
harder for ICAP Suppliers and LSEs to make economically efficient capacity procurement
decisions.

C.The Commission Should Coordinate with the NYPSC to Avoid Imposing

Inconsistent IRM Requirements

As in previous years, the NYISO respectfully suggests that the Commission coordinate
its review of the NYSRC’s proposed revision of the NYCA IRM with the NYPSC’s inquiry into
the subject. To the extent that both the Commission and the NYPSC address common questions,
the NYISO asks the Commission to take reasonable measures to ensure that its determination are
compatible with the NYPSC’s determination. If the two agencies were to issue conflicting or
contradictory orders to the NYSRC concerning the IRM level, confusion may ensue as to what
IRM level the NYSRC should provide to the NYISO to use in the locational capacity
calculations. If the NYSRC received conflicting regulatory directives, it would be forced to
choose between them, leaving its choice susceptible to almost certain litigation. The probability
of such litigation and the uncertainty as to its outcome would engender uncertainty about the
LSE’s minimum requirements for the auction for the six-month Summer Capability Period (and
possibly even the subsequent monthly and spot auctions). The resulting disruption and confusion

would negatively affect the NYISO-administered markets and potentially threaten the reliability of the NYCA bulk power system.

Conflicting Commission and NYPSC rulings could also put the NYISO in the difficult
position of being subject to inconsistent federal and state requirements. This would greatly
complicate the NYISO’s ability to fulfill its ICAP-related responsibilities under its tariffs. The
NYISO could also be exposed to demands for refunds, and other potential legal claims, from
either LSEs claiming that the NYISO unlawfully required them to over-procure capacity or
generators alleging an unlawful under-procurement and lost revenues.
The NYISO recognizes that the parallel reviews of the NYSRC’s proposed revisions to the NYCA IRM could lead to disagreement between the agencies as to whether the Commission or the NYPSC, or both, have jurisdiction over the NYCA IRM. If a jurisdictional dispute should arise, the NYISO respectfully submits that the Commission should not allow the possibility of such dispute to interfere with the timely administration of its ICAP auctions.

V.Conclusion

WHEREFORE, for the foregoing reasons, the New York Independent Service Operator,
Inc. respectfully requests that the Commission: (i) accept its motion to intervene; (ii) approve the
NYSRC’s proposed revision to the NYCA IRM with an effective date of February 15, 2019; and
(iii) coordinate with the NYPSC in order to avoid the possibility of inconsistent federal and state
rulings.

Respectfully submitted,

/s/ David Allen_

Karen G. Gach

Acting General Counsel David Allen

Senior Attorney

New York Independent Service Operator, Inc.

10 Krey Boulevard

Rensselaer, New York 12144 Tel: (518) 356-7656

January 8, 2019

cc:Nicole Buell

Anna Cochrane
James Danly
Jignasa Gadani
Jette Gebhart
Kurt Longo

David Morenoff
Daniel Nowak
Larry Parkinson
Douglas Roe

Kathleen Schnorf Gary Will