10 Krey Boulevard Rensselaer, NY 12144
November 30, 2010
By Electronic Submission
Hon. Kimberly D. Bose, Secretary
Federal Energy Regulatory Commission 888 First Street, NE
Washington, DC 20426
Re: New York Independent System Operator, Inc’s, Proposed Tariff Revisions
Regarding its Locational Based Marginal Pricing Calculation; Docket No.
ER11-____- .
Dear Secretary Bose:
In accordance with Section 205 of the Federal Power Act1 and Part 35 of the
Commission’s regulations, the New York Independent System Operator, Inc. (“NYISO”)
respectfully submits proposed revisions to its Market Administration and Control Area Services Tariff (“Services Tariff”) and its Open Access Transmission Tariff (“OATT”) to clarify the provisions defining the NYISO’s Locational Based Marginal Pricing2 (“LBMP”) calculation. The proposed tariff changes involve comprehensive reorganization and clean-up of these
provisions to provide a clearer formula for Market Participants. These revisions are not
substantive in nature and will not involve any software changes.
I.Documents Submitted
1.This filing letter;
2.A clean version of the proposed revisions to the NYISO’s OATT and Services
Tariff;
3.A blacklined version of the proposed revisions to the NYISO’s OATT and
Services Tariff.
1 16 U.S.C § 824(d)
2 Capitalized terms not otherwise defined herein shall have the meaning specified in Article 1.0 of the OATT and Article 2 of the Services Tariff.
The Honorable Kimberly Bose November 30, 2010
Page 2
II.Background
A majority of the changes proposed in this filing are to the LBMP Calculation provisions
located in Attachment B of the NYISO’s Services Tariff. The NYISO calculates the marginal
price of Energy at generator and load locations in the NYS Transmission System, at each of the
Control Area borders and at each location where a Scheduled Line enters the Control Area. This
locational, marginal methodology produces a Location Based Marginal Price or LBMP. The
NYISO recently conducted an internal review of several provisions in its tariffs, including those
that describe the calculation of LBMP, and identified inconsistencies, ambiguities, and
opportunities to improve and clarify certain provisions.3 Many of the changes proposed in this
filing involve deleting extraneous or unclear words and phrases, re-organizing sections, and
inserting/removing cross-references as appropriate. These changes are proposed to clarify the
entire Section.
As part of this effort the NYISO is proposing to delete Section 16.1 of Attachment J to its
OATT, which repeats the provisions in Section 17.1 of Attachment B of the Services Tariff.
This change consolidates the LBMP Calculation rules into one place in the NYISO’s Tariffs.
The NYISO proposes to specifically revise such provisions as described below.
III.Tariff Description and Justification
A.Revisions to the Services Tariff
1. Revisions to Section 17 of Attachment B
The majority of the revisions the NYISO is seeking to make are located in this Section.
The NYISO proposes to delete the word “Method” from the title of the Section to improve the
accuracy of its description of the Section which includes all the rules and definitions surrounding
LBMP calculations. Throughout the Section, the NYISO proposes to clarify the acronyms being
used and to consistently use: i) “RTS” in place of the term “Real-Time Scheduling;” ii) “RTC”
in place of the term “Real-Time Commitment;” iii) “RTD” in place of the term “Real-Time
Dispatch;” and iv) “SCUC” in place of the phrase “Security Constrained Unit Commitment.”
These changes add consistency and flow to the Section. Also, with respect to the term Real-
Time Dispatch in section 17.1, the NYISO proposes to delete the separate reference to “RTD-
CAM”, which is a special mode that the RTD software runs in based on system conditions. This type of information does not need to be specified because the term “RTD-CAM” is necessarily encompassed under Real-Time Dispatch. Finally the phrase “as determined by the ISO” is
deleted in Section 17.1 as unnecessary.
Proposed subsection 17.1.1 contains the LBMP Calculation equation and description.
3 The NYISO conducted this internal review and is making this filing as part of an on-going comprehensive review of its tariffs to identify opportunities to improve and clarify them.
The Honorable Kimberly Bose November 30, 2010
Page 3
The NYISO proposes to relocate this language from existing subsection 17.1.3. This subsection
is more appropriately located at the beginning of the Section because it contains the basic
equation used in the calculation methods described in Sections 17.1.1 (real-time LBMP
calculation) and 17.1.2 (Day-Ahead LBMP calculation). Additionally, two minor changes are
proposed to this subsection including addition of the word “Bus” to the title and appropriate
references to subsections 17.1.2.2.1 and 17.1.2.3.1. Besides these two changes and the overall
relocation, this subsection remains the same although its relocation required a renumbering of the
entire Section. Section references in this filing letter specify whether they are to existing or
proposed numbering.
Existing subsection 17.1.1, renumbered as 17.1.2, contains the procedures for calculating
Real-Time LBMP. In this subsection, the NYISO proposes to delete the reference to the
Marginal Losses Component and the Congestion Component because those calculations are
contained in proposed subsection 17.1.1. Cross-references to the subsections containing the bus,
zonal, and Proxy Generator Bus LBMP calculation procedures are added to this subsection to
point the reader to the exact location of these more specific rules. The NYISO also proposes to
delete the sentence providing the general reference to the calculation of LBMPs at external
locations, now that the specific subsection cross-references are identified. Further, the NYISO
eliminated empty cells in the table in this subsection as unnecessary and confusing and filled in
two cells to clarify that the information above should have been inserted there.
In existing subsection 17.1.1.1, proposed subsection 17.1.2.1.1, the NYISO proposes
numerous language clarifications. First, the time period for each new RTD run is clarified to
"initialize" as opposed to "begin" every five minutes. Second, to be more precise, the NYISO proposes to use a new term "optimization period" to refer to the five points in time that each Real Time Dispatch run produces schedules and prices for. This is a more accurate characterization and this term replaces generic references to a "run", where appropriate throughout the Section. The NYISO also proposes adding a clarification that the posting time and the first time point in each RTD run will be five minutes apart, while deleting an unnecessary statement that the first and second points will be five minutes apart. These language changes do not involve any
substantive changes, but are clarifications to the existing rules.
In existing subsection 17.1.1.1.2.1.1 (proposed subsection 17.1.2.1.2.1.1), the NYISO proposes to capitalize several words in the title and to replace four instances of the word
“Resource” with the more specific reference to “Dispatchable Resource.” The NYISO also proposes to delete two outdated references to future software support of Demand Reduction, which is already in place.
In existing subsection 17.1.1.1.2.1.2 (proposed subsection 17.1.2.1.2.1.2), the NYISO
proposes to make one capitalization correction to the title and to replace a reference to “time
points” with the more precise term “optimization period” defined in an earlier subsection.
The NYISO is proposing to delete existing subsection 17.1.1.1.4 as extraneous, because
the marginal losses and congestion components of LBMP are already specifically defined in
proposed subsection 17.1.1. The NYISO also proposes two minor language clarifications and to
The Honorable Kimberly Bose November 30, 2010
Page 4
delete a cross-reference to Attachment J of the OATT, in existing subsection 17.1.1.1.5.
The NYISO also proposes several clarifying changes in Scarcity Pricing Rule “A”
contained in existing subsection 17.1.1.2 (proposed subsection 17.1.2.2). First, in existing
subsection 17.1.1.2.1, the NYISO proposes to replace the generic reference to LBMP with the
term “system marginal price.” This more specific term is defined in proposed subsection 17.1.1
and is a more accurate description of what is calculated at the Reference Bus. In this subsection,
the NYISO also proposes to delete the bullet defining LBMP as the sum of the Marginal Losses
Component plus the LBMP at the Reference Bus. Instead the NYISO proposes the following
bullet:
The LBMP at each location shall be as defined in Section
17.1.1 of this Attachment: the sum of the Marginal Losses
Component of the LBMP at that location, plus the Congestion Component of the LBMP at that location, plus the LBMP at the Reference Bus.
This is a much more precise definition of the components of LBMP and provides an
accurate cross-reference. Finally, to existing subsection 17.1.1.3 on Scarcity Pricing Rule “B”
the NYISO proposes to add an introductory phrase to parallel the subsection on Scarcity Pricing
Rule “A”.
In existing subsection 17.1.2 NYISO proposes two minor language changes throughout
for consistency and greater accuracy. First, the acronym “SCUC” is defined and used throughout in place of the term “Security Constrained Unit Commitment.” Second, the terms “Virtual
Supply” and “Virtual Load” are capitalized because they are defined terms in the NYISO’s
Services Tariff and OATT.
As discussed above, existing subsection 17.1.3 is proposed for relocation to the beginning
of the Section as proposed subsection 17.1.1. A reference to the specific Section of the Market
Monitoring Plan, Attachment O of the Services Tariff, and the exact duties of the Market
Monitoring Unit are proposed to be added to existing subsection 17.1.4 for clarification. The
NYISO also proposes to add to existing subsection 17.1.5 a specific reference to Section 17.1.1,
replace the phrase “predetermined by the ISO” with “calculated from the load bus MW
distribution” to eliminate apparent NYISO discretion, and to delete the final paragraph of the
subsection as repetitive of other language in the subsection. Finally, in existing subsection
17.1.6.5 the NYISO proposes to add a specific reference to Section 17.1.6 instead of using the imprecise word “above.”
2. Other Revisions to the Services Tariff
In order to effectuate the changes described above, particularly the elimination of the
LBMP calculation provisions from Attachment J of the OATT, the NYISO proposes to replace
references to LBMP calculations in Attachment J of the OATT with the correct reference to
Attachment B of the Services Tariff, where appropriate in the Services Tariff, Rate Schedules
The Honorable Kimberly Bose November 30, 2010
Page 5
and Attachments.
B.Revisions to the OATT
As discussed above in the background Section of this letter, the NYISO is
proposing to delete the entire Section 16.1 of Attachment J to the OATT, which is
repetitive of the language in Attachment B of the Services Tariff. This will consolidate
all the rules associated with the calculation of LBMP into one Section of the Tariffs. In
existing Section 16.1, the NYISO proposes to insert standard language directing readers
to Attachment B of the Services Tariff for the rules associated with LBMP calculation.
The NYISO proposes to replace a reference in subsection 16.2.2.3 of the OATT Attachment J to the correct reference in Attachment B of the Services Tariff now that Section 16.1 of the OATT is proposed for deletion. The NYISO also proposes to delete references to Section 16.1 of Attachment J of the OATT and replace them with the proper Attachment B references in the OATT rate schedules.
IV.Effective Date
The NYISO requests an effective date for these tariff amendments of January 31, 2011,
60 days from the date the proposed changes have been filed with the Federal Energy Regulatory Commission.
V.Requisite Stakeholder Approval
These amendments were unanimously approved, with an abstention, by the NYISO Management Committee on September 29, 2010 and by the NYISO’s Board of Directors on October 18, 2010.
VI. Communications and Correspondence
All Communications and service in this proceeding should be directed to:
Robert E. Fernandez, General Counsel
Raymond Stalter, Director, Regulatory Affairs *Mollie Lampi, Assistant General Counsel * Kristin Bluvas, Attorney
10 Krey Boulevard
Rensselaer, NY 12144
Tel: (518) 356-8540
Fax: (518) 356-7678
rfernandez@nyiso.com
rstalter@nyiso.com
mlampi@nyiso.com
* Persons designated for receipt of service.
The Honorable Kimberly Bose November 30, 2010
Page 6
VII. 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 Public
Service Commission, and to the electric utility regulatory agency of New Jersey. In addition, the
complete filing will be posted on the NYISO’s website at www.nyiso.com. This is in accordance
with 18 C.F.R. 35.2(e).
VIII. Conclusion
Wherefore, for the foregoing reasons, 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 January 31, 2010.
Respectfully Submitted,
/s/ Kristin A. Bluvas
Kristin A. Bluvas
Attorney
New York Independent System Operator, Inc.
10 Krey Blvd.
Rensselaer, New York 12144 (518) 356 8540
