UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

New York State Reliability Council, L.L.C.Docket No. ER20-655-000

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 Filing”).2 The NYISO believes that an Installed
Reserve Margin (“IRM”) of 18.9 percent for the New York Control Area (“NYCA”) for the
upcoming 2020-2021 Capability Year,3 which runs from May 1, 2020 through April 30, 2021,
falls within a range of reasonable levels of installed capacity (“ICAP”) required to maintain the
reliability of the NYCA bulk power system. Accordingly, the NYISO supports the NYSRC’s
request that the Commission approve the proposed IRM of 18.9 percent.
The NYISO also requests that the Commission accept and approve the NYSRC Filing effective February 15, 2020. 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 2020 Capability Period that is scheduled to begin March 30, 2020.4

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. ER20-655-000 (December 19, 2019) (“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 ”

Without this necessary information, the efficient operation of the NYISO’s Summer 2020 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 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.

I.Communications and Correspondence

All communications regarding this filing should be directed to:

Robert E. Fernandez, Executive Vice President & General Counsel Karen Gach, Deputy 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

rfernandez@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 15.0 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 17.0 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 18.2 percent for the 2018-
2019 Capability Year, 15 and 17.0 percent for the 2019-2020 Capability Year.16
The current IRM of 17.0 percent means that Load Serving Entities (“LSEs”) in the
NYCA must procure capacity equal to 117.0 percent of their forecast peak load.17 In addition,
there are separate location-specific ICAP requirements for LSEs in New York City, Long Island,
and, collectively, Load Zones G, H, I, and J (the “G-J Locality”) that reflect the existence of

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 New York State Reliability Council, Letter Order, Docket No. ER19-659-000 (February 8, 2019).

17 For example, the NYCA forecast peak load for the 2019-2020 Capability Year was 32,383 MW. The

17.0 percent IRM means the minimum ICAP requirement for the NYCA was 37,888 MW (i.e., 117.0 percent of 32,383 MW).

transmission constraints in those areas. These Locality requirements are determined by the NYISO given the NYSRC’s recommended IRM.

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 does not
exceed one occurrence in ten years.18 The NYISO’s base case evaluation yielded a NYCA IRM of 18.9 percent for the 2020-2021 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 (“2020 IRM Study”) prepared by the ICS and issued by the NYSRC on December 6, 2019, which is attached to the NYSRC
Filing, dated December 19, 2019.19

The NYSRC Filing highlights portions of the 2020 IRM Study.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 increase in the 2020 IRM Study

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 2020 to April 2021.”

20 Id. at pp 8-13.

from the prior 2019 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 the 18.9 percent base case
value as the IRM for the 2020-2021 Capability Year. On December 19, 2019, the NYSRC filed
with the Commission its proposed NYCA IRM of 18.9 percent for the 2020-2021 Capability
Year, requesting that the Commission accept its filing and issue an order no later than February
15, 2020.22

On December 24, 2019, the NYPSC published a notice under the State Administrative Procedures Act of its consideration of the proposed 18.9 percent IRM with a 60-day public comment period running until February 22, 2020.23 The NYISO intends to file comments
similar to those herein with the NYPSC in support of the NYSRC’s adoption of an IRM of 18.9 percent for the 2020-2021 Capability Year.

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 30, 2020.24 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.

21 Id. at pp 11-13.

22 Id. at p 13.

23 See Notice of Proposed Rulemaking, “New York State Reliability Council’s Establishment of an Installed Reserve Margin of 18.9%,” N.Y. Reg., I.D. No. PSC-52-19-00002-P (December 24, 2019).

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

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 requirement, and because the IRM and its data inputs are used to calculate 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.25 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.

IV.Comments

A.The NYSRC’s Proposal to Establish a NYCA IRM of 18.9 Percent for the

2020-2021 Capability Year is Reasonable

As explained above, the NYSRC has requested the Commission’s approval to increase
the NYCA IRM from 17.0 percent to 18.9 percent for the upcoming Capability Year. The
NYISO believes that the proposed 18.9 percent IRM falls within a range of reasonable IRM
levels because that value is the base case IRM value reported in the 2020 IRM Study. The 2020
IRM Study also provided results of numerous sensitivity studies producing a range of reasonable

25 See Sections 5.12-5.14 of the Services Tariff.

IRM levels that are consistent with maintaining reliability in New York State for the upcoming
2020-2021 Capability Year. The NYSRC Executive Committee determined, based upon the
base case result, modeling and assumption changes, and numerous sensitivity studies, that the

18.9 percent base case IRM value best satisfies the resource adequacy criterion and should be adopted for the 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, 2020.26 Pursuant to its tariffs, the NYISO has scheduled the first ICAP auction for the six-
month 2020 Summer Capability Period to begin on March 30, 2020. The outcome of this
auction will affect the monthly and spot capacity auctions that the NYISO will conduct for May
2020.

Accordingly, 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 the information to auction participants. If the Commission acts by February 15, 2020,
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 26, 2020. 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

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

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 is
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
LSEs’ 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, 2020; and
(iii) coordinate with the NYPSC in order to avoid the possibility of inconsistent federal and state
rulings.

Respectfully submitted,

/s/ Carl Patka

Carl Patka

Assistant General Counsel

New York Independent Service Operator, Inc.

10 Krey Boulevard

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

January 8, 2020

cc:Anna Cochrane

James Danly
Jignasa Gadani
Jette Gebhart
Kurt Longo
John C. Miller
David Morenoff
Daniel Nowak
Larry Parkinson
Douglas Roe
Frank Swigonski
Gary Will

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 8th day of January 2020.

/s/ Joy A. Zimberlin

Joy A. Zimberlin

New York Independent System Operator, Inc.

10 Krey Blvd.

Rensselaer, NY 12144 (518) 356-6207