10 Krey Boulevard Rensselaer, NY 12144

June 20, 2011

Ms. Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First Street, NE

Washington, DC 20426

Re: New York Independent System Operator, Inc., Compliance Filing and
Continued Request for Flexible Effective and Implementation Dates,
Docket No. ER11-2224-00_

In compliance with the Commission’s May 19, 2011 Order on Rehearing (“May 2011

Order”)1 regarding the NYISO’s proposed updated Installed Capacity (“ICAP”)2 Demand

Curves, the NYISO respectfully submits this compliance filing. This filing proposes compliance tariff revisions for the New York City Demand Curves as directed by the May 2011 Order. It also responds to the Commission’s clarification and directive regarding the winter-to-summer ratios to be used for the Demand Curves.

As discussed in Section V below, the NYISO proposes to implement revised ICAP

Demand Curves that incorporate the changes proposed in its March 29, 2011 compliance filing,3
as revised by this filing, during the 2011 Summer Capability Period. The revised ICAP Demand
Curves would be effective beginning on the date established by the Commission through the end
of Capability Year 2011/2012, and continuing through the 2012/2013 and 2013/2014 Capability
Years. The effective date would depend on the timing of a Commission order accepting the
revised ICAP Demand Curves without a need for further analysis or revised computations.

I.LIST OF DOCUMENTS SUBMITTED

The NYISO respectfully submits the following documents:

1. This filing letter;

1 New York Independent System Operator, Inc., 135 FERC ¶ 61,170 (2011) (“May 2011 Order”).

2 Terms with initial capitalization that are not otherwise defined herein shall have the meaning

set forth in the NYISO’s Market Administration and Control Area Services Tariff (“Services Tariff”), and if not defined therein, in the NYISO’s Open Access Transmission Tariff (“OATT”).

3 See New York Independent System Operator, Inc., Compliance Filing and Request for Flexible Effective and Implementation Dates, Docket Nos. ER11-2224-004 and ER11-2224-005 (collectively, “March 29 Compliance Filing”) at Section IV.

Kimberly D. Bose, Secretary June 20, 2011

Page 2

2. A blacklined version of the modifications to Section 5.14.1.2 of the Services Tariff
(Attachment I);

3. A clean version of the modifications to Section 5.14.1.2 of the Services Tariff
(“Attachment II”) and

4. The affidavit of Mr. David Lawrence (“Lawrence Affidavit”) (Attachment III).

II.BACKGROUND

The NYISO filed proposed ICAP Demand Curves for Capability Years 2011/2012,
2012/2013, and 2013/2014 on November 30, 2010 (“November Filing”).4 The Commission
issued an order on January 28, 2011 (“January Order”)5 on the November Filing and, among
other things, directed the NYISO to make a compliance filing. Parties including the NYISO
filed petitions for rehearing and clarification of the January Order, and those filings, along with related submissions in this docket, were the subject of the May 2011 Order. The May 2011
Order directed that the NYISO:

• Include property tax abatement provided under New York State Law6 in the calculation
of the New York City net Cost of New Entry (“CONE”).7

• “Include … values for [the winter-to-summer ratios (“WSRs”)] in the relevant locations

that are consistent with the assumed average levels of excess capacity used to calculate
the other components of net CONE, or to explain why the values for WSR calculated
based on recent actual data reasonably approximate the ratio of winter-to-summer
DMNCs that would arise under the assumed average level of excess capacity.”8

III. DESCRIPTION OF PROPOSED COMPLIANCE TARIFF REVISIONS

Section 5.14.1.2 of the Services Tariff includes a table that identifies the points at which the NYISO’s three ICAP Demand Curves are to be established. The NYISO has prepared a blacklined version of the Section 5.14.1.2 table that reflects values that incorporate the
compliance revision to the New York City Demand Curves.

The May 2011 Order requires the NYISO “to file tariff … revisions … to include revised
demand curve prices in tariff section 5.14.1.2 that reflect the effect of full NYC tax abatement as

4 New York Independent System Operator, Inc., Tariff Revisions to Implement ICAP Demand Curves for Capability Years 2011/2012, 2012/2013, and 2013/2014, Docket No. ER11-2224-000 (filed November 30, 2010).

5 New York Independent System Operator, Inc., 134 FERC ¶ 61,058 (2011).

Kimberly D. Bose, Secretary June 20, 2011

Page 3

applicable for a peaking unit installed in New York City.”9 The property tax abatement is the abatement provided pursuant to New York State Law.10 Accordingly, the NYISO is proposing in this filing the revisions to the New York City Demand Curves set forth in section 5.14.1.2 of the Services Tariff.

To establish the revised ICAP Demand Curves, as described in the Affidavit of David
Lawrence (the “Lawrence Affidavit”) that is Attachment III to this filing, the NYISO‘s ICAP
Demand Curve reset consultants, NERA Economic Consulting (“NERA”) and Sargent & Lundy
revised the levelized fixed charge rates for the New York City Demand Curve peaking plant to
reflect 15 years of 100% property tax abatement. The NYISO incorporated the revised fixed
charge rates into the New York City Demand Curve model developed by NERA. The model that
was revised was the NERA revised model prepared in relation to, and described in, the NYISO’s
March 29 Compliance Filing in this docket.11 The resulting ICAP Demand Curves reference
points and plots are described in the Lawrence Affidavit12 and are set forth in Attachment I and
Attachment II to this filing.

IV. COMPLIANCE WITH THE WINTER/SUMMER RATIO DIRECTIVE

The January Order accepted the NYISO’s proposed winter/summer adjustment

methodology as “just and reasonable and consistent with the requirements of the Services Tariff
with respect to the issue of quantities of capacity available versus quantities sold.”13 However,
as specified in the May 2011 Order, the January Order “did not accept the numerical values to
the extent they rely on a level of excess capacity.”14 The May 2011 Order gave the NYISO the
option to either “include, in its compliance filing, values for WSRs in the relevant locations that
are consistent with the assumed average levels of excess capacity used to calculate the other

components of net CONE, or to explain why the values for WSR calculated based on recent actual data reasonably approximate the ratio of winter-to-summer DMNCs that would arise under the assumed average level of excess capacity.”15

The NYISO analyzed estimated WSRs based on the reduction from actual levels of

excess to the proposed level of excess done to perform the “deliverability test” that was part of
its March 29 Compliance Filing. The Lawrence Affidavit describes the analysis. The NYISO

9 May Order at P 43.

Kimberly D. Bose, Secretary June 20, 2011

Page 4

then compared the results of that analysis to the winter/summer ratios proposed by the NYISO in the November Filing, which were based on the level of capacity actually available. The
Lawrence Affidavit demonstrates that there is a zero to minimal difference in the ratios for each capacity region derived using the two different methodologies. Based on the analysis, the
NYISO is not proposing to alter the WSRs that were included in the November Filing. Mr.
Lawrence’s analysis supports a finding by the Commission that the use of the winter/summer
ratios is consistent with the level of excess utilized for all other purposes in the formulation of
the ICAP Demand Curves. It also demonstrates that the WSRs proposed in the November Filing reasonably approximate the ratio of winter-to-summer DMNCs that would arise under the
assumed average level of excess capacity.

V.REQUEST FOR FLEXIBLE EFFECTIVE AND IMPLEMENTATION DATES

In the March 29 Compliance Filing, the NYISO requested a flexible implementation date

for the revised ICAP Demand Curves that would be determined based on the issuance date of a

Commission order accepting them.16 The May 2011 Order specified that the current ICAP

Demand Curves “must remain in effect....until superseded by revised rates that comply with

the Commission’s directives (including new directives by [the May 2011] order)...The

Commission may authorize the filing entity to defer implementation of compliance rates that

must reflect Commission directives.” For the reasons set forth in the March 29 Compliance

Filing, the NYISO requests a flexible implementation date for the ICAP Demand Curves that are proposed in this compliance filing.

The requested implementation date would be the date of the ICAP Spot Market Auction that next follows a Commission order accepting specific numeric values for the new ICAP
Demand Curves (i.e., an order that does not require further analysis or revised computations17) provided there are at least twelve business days between the date of such Commission order and the date of the deadline for certification for LSEs and ICAP Suppliers. Certification deadlines for ICAP Spot Market Auctions through the end of 2011 are set forth on the NYISO’s ICAP Event Calendar, which is posted on the NYISO website.18

As it has done in past requests for flexible effective or implementation dates, the NYISO
will notify the Commission once final dates have been determined. To the extent necessary, the

16 See March 29 Compliance Filing at Section IV.

17 If a Commission order requires further analysis or revised computations, the NYISO may need additional time to implement the new ICAP Demand Curves.

18 The NYISO will need the intervening time to, among other things, review the Commission’s order and identify the accepted numerical values for the ICAP Demand Curves, enter the revised values into its software, establish and post ICAP Demand Curve reference prices, compute Mitigation Net
CONE, perform IT system verification and validation, and identify Pivotal Suppliers prior to the opening of the ICAP Spot Market Auction. The ICAP Event Calendar is available at

<http://icap.nyiso.com/ucap/public/evt_calendar_display.do>.

Kimberly D. Bose, Secretary June 20, 2011

Page 5

NYISO will make an additional filing at the same time to update section 5.14.1.2 of the Services
Tariff to reflect the actual effective date of the proposed compliance revisions to that provision.

VI.SERVICE

This filing will be posted on the NYISO’s website at www.nyiso.com. In addition, the
NYISO will e-mail an electronic link to this filing to the official representative of each party to
this proceeding, to each of its customers, to each participant on its stakeholder committees, to the
New York Public Service Commission, and to the New Jersey Board of Public Utilities.

VII. CONCLUSION

Wherefore, for the foregoing reasons, the New York Independent System Operator, Inc. respectfully requests that the Commission accept this compliance filing to become effective on the date proposed in Section V so that it may implement the revised ICAP Demand Curves during the Summer 2011 Capability Period.

Respectfully submitted,

/s/ Gloria Kavanah___________________

Gloria Kavanah

Senior Attorney

New York Independent System Operator, Inc.

10 Krey Boulevard

Rensselaer, NY 12144 518.356.6103

gkavanah@nyiso.com

cc:Michael A. Bardee

Gregory Berson
Connie Caldwell
Anna Cochrane
Jignasa Gadani
Lance Hinrichs
Jeffrey Honeycutt

Michael Mc Laughlin
Kathleen E. Nieman

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 20th day of June, 2011.

/s/ Joy Zimberlin

Joy Zimberlin

New York Independent System Operator, Inc

10 Krey Blvd.

Rensselaer, NY 12114 (518) 356-6207