April 16, 2019
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. ER19-___-000;
Proposed Tariff Revisions to Modify the Fixed Price Transmission
Congestion Contract Credit Requirement
Dear Secretary Bose:
In accordance with Section 205 of the Federal Power Act (“FPA”)1 and Part 35 of the
regulations of the Federal Energy Regulatory Commission (“Commission”), the New York
Independent System Operator, Inc. (“NYISO”) respectfully submits proposed amendments to its
Market Administration and Control Area Services Tariff (“Services Tariff”).2 Through these
amendments, the NYISO seeks to better align its credit requirement for Fixed Price Transmission
Congestion Contracts (“FPTCCs”) with the credit risk associated therewith, and make the credit
requirement for FPTCCs consistent with that of all other Transmission Congestion Contracts
(“TCCs”).
The NYISO Management Committee unanimously approved the proposed tariff revisions on January 30, 2019 and March 27, 2019. The NYISO respectfully requests that the tariff
revisions proposed in this filing become effective on June 18, 2019.3
I.Documents Submitted
The NYISO respectfully submits the following documents with this filing letter:
1.A clean version of the proposed revisions to the Services Tariff (“Attachment I”);
and
1 16 U.S.C. § 824d.
2 Capitalized terms not otherwise defined herein shall have the meaning specified in the Services Tariff and the Open Access Transmission Tariff (“OATT”).
3 Should the NYISO determine that the changes cannot be implemented on June 18, 2019, the NYISO will promptly notify the Commission.
10 Krey Boulevard, Rensselaer, New York 12144 | www.nyiso.com
Honorable Kimberly D. Bose April 16, 2019
Page 2
2.A blacklined version of the proposed revisions to the Services Tariff (“Attachment
II”).
II.Background
A. Fixed Price TCC Offerings
The NYISO offers three types of FPTCCs: Historic Fixed Price TCCs (“HFPTCCs”),
HFPTCC extensions, and Non-Historic Fixed Price TCCs (“NHFPTCCs”). The NYISO first
offered HFPTCCs in 2008 to Load Serving Entities (“LSEs”) that received transmission service under certain long-term transmission agreements that predated the NYISO’s commencement of operations. Qualifying LSEs may purchase HFPTCCs upon expiration or termination of these long-term transmission service agreements and may renew the HFPTCCs on an annual basis for a total initial duration of up to 10 years (except in certain limited circumstances where an initial duration of up to 12 years is available).4
The NYISO first offered HFPTCC extensions in 2018 to qualifying LSEs. The HFPTCC extension product is generally available only to LSEs that purchased and retained HFPTCCs for their entire initial duration. Qualifying LSEs can purchase HFPTCC extensions for one year at a time. The purchase price for each one-year extension is updated annually.5
The NYISO first offered NHFPTCCs in 2013 to LSEs to hedge congestion costs
associated with their load-serving obligations. Qualifying LSEs can purchase NHFPTCCs for an initial term of two years, renewable thereafter for one year at a time.6 There are currently no
active NHFPTCCs in the market. Previously-awarded NHFPTCCs have expired and no LSE
sought to purchase new NHFPTCCs during the NYISO’s most recent offering of this product as part of the recently completed Centralized TCC Auction conducted in advance of the upcoming 2019 Summer Capability Period.
B. Fixed Price TCC Credit Requirement
The existing TCC Component of the Operating Requirement is equal to the greater of
(a) the Auction TCC Holding Requirement or the Fixed Price TCC Holding Requirement, as appropriate, or (b) the Mark-to-Market Calculation.7 Currently, the Fixed Price TCC Holding Requirement is calculated as follows:
Upon award of a Fixed Price TCC, and for the duration of the Fixed Price TCC, the
credit holding requirement will equal the amount calculated in accordance with the
one-year TCC formula set forth in Section 26.4.2.1.5; provided, however, the
4 See Section 19.2.1 of the OATT.
5 See Section 19.2.1.4 of the OATT.
6 See Section 19.2.2 of the OATT.
7 See Section 26.4.2.4 of the Services Tariff.
Honorable Kimberly D. Bose April 16, 2019
Page 3
market clearing price (Pijt) shall be replaced by the fixed price associated with that
Fixed Price TCC, as determined in accordance with, as appropriate, OATT Section
19.2.1 or OATT Section 19.2.2.
In this calculation, the price used to calculate the Fixed Price TCC Holding Requirement
is the price paid for the FPTCC, and the requirement remains the same over the entire term of the
FPTCC. In contrast, the holding requirement for all other TCCs (the Auction TCC Holding
Requirement) is calculated based on the market clearing prices determined in the NYISO-
administered TCC auctions.8 As subsequent TCC auctions are conducted following the initial
purchase of such TCCs, the holding requirement calculation is updated reflecting the most recent
market clearing prices. As such, the TCC Holding Requirement for all TCCs other than FPTCCs
changes over the life of such TCCs to account for changes in the credit risk profile of TCCs over
time.9
III.Description of Proposed Tariff Revisions
The NYISO proposes to modify the calculation of the holding requirement for FPTCCs
by eliminating Section 26.4.2.4.2 of the Services Tariff that sets forth a separate calculation for
FPTCCs. Instead, the NYISO proposes to calculate the holding requirement for FPTCCs
consistent with the calculation applicable to all other TCCs pursuant to Section 26.4.2.4.1.
Consistent with all other TCCs, the credit requirement for FPTCCs will be both
calculated based on market clearing prices from the most recent TCC auctions and recalculated over the term of the TCC. Using recent auction prices and recalculating the holding requirement over the term of a FPTCC more accurately reflects the potential credit risk of a TCC over time than the NYISO’s current methodology applied to FPTCCs, which utilizes a static value based solely on the initial purchase price of each instrument.10
IV.Effective Date
The NYISO requests an effective date for these tariff amendments of June 18, 2019.
V.Stakeholder Process
The proposed amendments were unanimously approved by the NYISO Management Committee on January 30, 2019 and March 27, 2019. The NYISO’s Board of Directors approved the proposed revisions on April 16, 2019.
8 See Section 26.4.2.4.1 of the Services Tariff.
9 See Section 26.4.2.4.1 of the Services Tariff.
10 The NYISO proposes changes in Section 26.4.2.4.1.6 of the Services Tariff to clarify the
calculation of the holding requirement for HFPTCCs that have terms that do not begin on the start date of a Capability Period. Currently, three such sets of HFPTCCs exist in the market.
Honorable Kimberly D. Bose April 16, 2019
Page 4
VI.Communications and Correspondence
All communications and service in this proceeding should be directed to:
Karen Georgenson Gach, Acting General Counsel
Raymond Stalter, Director, Regulatory Affairs
*Amie Jamieson, Attorney/Registered In-House Counsel
10 Krey Boulevard
Rensselaer, NY 12144
Tel: (518) 356-6000
Fax: (518) 356-7678
Email: ajamieson@nyiso.com
*Person designated for receipt of service.
VII.Service
The NYISO will send an electronic link to this filing to the official representative of each
of its customers, each participant on its stakeholder committees, the New York State Public
Service Commission, and the New Jersey Board of Public Utilities. In addition, the complete
filing will be posted on the NYISO’s website at www.nyiso.com.
VIII.Conclusion
The NYISO respectfully requests that the Commission accept the tariff revisions proposed in this filing to become effective on June 18, 2019.
Respectfully submitted,
/s/ Amie Jamieson
Amie Jamieson, Senior Attorney/Registered InHouse Counsel
New York Independent System Operator, Inc.
cc:Nicole BuellDavid Morenoff
Anna CochraneDaniel Nowak
James DanlyLarry Parkinson
Jignasa GadaniDouglas Roe
Jette GebhartGary Will
Kurt Longo