10 Krey Boulevard Rensselaer, NY 12144

September 1, 2010

By Electronic Filing

Hon. Kimberly D. Bose, Secretary

Federal Energy Regulatory Commission 888 First Street, NE

Washington, DC 20426

Re: New York Independent System Operator, Inc., Docket No. ER10-__-__

Proposed Tariff Amendments to Eliminate Tariff Provisions Concerning Pre-Scheduled Transaction Capability

Dear Ms. Bose:

Pursuant to Section 205 of the Federal Power Act1, the New York Independent System
Operator, Inc. (“NYISO”) hereby submits proposed revisions to its Open Access Transmission
Tariff (“OATT”) and Market Administration and Control Area Services Tariff (“Services
Tariff”) to remove provisions pursuant to which the NYISO offers Pre-Scheduled Transaction
capability.2 Pre-Scheduled Transaction capability allows Market Participants to submit requests
for External Bilateral Transactions, including Wheels Through, and Transactions involving the
purchase or sale of Energy at External Proxy Generator Busses well in advance of the NYISO’s
Day-Ahead Market. By allowing the use of economic bids that assured economic priority not
otherwise available to users of the Day-Ahead Market, Pre-Scheduled Transaction capability
offers greater certainty that a Transaction request would ultimately be scheduled in the Day-
Ahead Market.

Pre-Scheduled Transaction capability was added to the NYISO’s tariffs and systems in
early 2002 to accommodate, within the NYISO’s financial-based reservation system, those
Market Participants with physical transmission reservations in the NYISO’s neighboring Control
Areas who desired to import to, export from, or wheel Energy through the NYCA.3 Pre-
Scheduled Transaction capability, however, has proven unnecessary to assure the degree of
scheduling certainty sought by NYISO’s Market Participants. Moreover, its rules for modifying
previously submitted Transaction requests are less flexible than those available to Market

The Honorable Kimberly Bose September 1, 2010

Page 2

Participants bidding directly into the Day-Ahead Market. As a result, Pre-Scheduled Transaction
capability has proven to be an unused service in the NYISO Markets. Market Participants have
used this feature a total of five times since its introduction. The last request was received in
April 2007.

While the NYISO has not been opposed to maintaining this functionality, forthcoming
software modifications needed to support the NYISO’s Broader Regional Markets initiatives4
represent an appropriate time to remove this redundant functionality and reduce costs to NYISO
stakeholders. Therefore, after extensive discussions with, and approval by, its Market
Participants, the NYISO is seeking to retire this unnecessary capability from its OATT and
Services Tariff.

I.Documents Submitted

1.This filing letter;

2.A clean version of the proposed revisions to the NYISO’s OATT and Services

Tariff; and

3.A blacklined version of the proposed revisions to the NYISO’s OATT and

Services Tariff.

II.Background and Justification

Pre-Scheduling Transaction capability allows Market Participants to submit, for pre-
scheduling and reservation of transmission service, requests for Bilateral Import, Export and
Wheels Through Transactions and requests for Import and Export Transactions to or from the
NYISO’s LBMP Market. These requests can be submitted as many as 18 months in advance of the NYISO’s Day-Ahead Market. At the time the request is submitted, the NYISO evaluates it against Available Transmission Capacity (ATC) and Ramp Capacity. Once accepted, the
Transaction is assigned the highest economic priority available in the NYISO system, -$1,000 MWh for injections and $1,000 MWh for withdrawals. These economic bid levels provide the highest degree of certainty that the Transaction will be scheduled in the appropriate Day-Ahead Market since the bid limits allowed for Day-Ahead Market Participants other than those using Pre-Scheduling Transaction capability, are ± $997.00.

The intent of this feature was to facilitate inter-control area Transaction scheduling between the NYISO’s financially based reservation system and neighboring physical based reservation systems. For Suppliers with physical transmission reservations in neighboring Control Areas, desiring to Export, Import or Wheel through Energy using the NYISO’s DayAhead scheduling system, this functionality was thought to be necessary in order to provide greater scheduling consistency and certainty.

4 See, New York Independent System Operator, Inc., Report on Broader Regional Markets; Long-Term Solutions to Lake Erie Loop Flow, Docket No. ER08-1281, et al (January 12, 2010).

The Honorable Kimberly Bose September 1, 2010

Page 3

However, after almost eight years experience, the degree of scheduling certainty that this capability provided has proven to be unnecessary to NYISO Market Participants. Market
Participants are able to achieve comparable economic certainty for their Day-Ahead transactions through the use of Day-Ahead bids alone. Experience has shown that Market Participants have
not found the level of certainty offered through the Pre-Scheduled Transaction feature to be
necessary to their Day-Ahead Market bidding strategies and it has basically been an unused
service since it was introduced.

In fact, Market Participant bidding behavior and feedback indicates this functionality is less attractive than Day-Ahead economic bidding alone for scheduling Transactions. The PreScheduled Transaction feature limits a Market Participant's options for altering previously
requested positions, potentially months in advance of the Dispatch Day. This limited flexibility makes the Pre-Scheduled Transaction feature less attractive to Market Participants than
economic-based transaction requests.

The NYISO recently conducted an internal review of several provisions in its tariffs and
identified opportunities to improve and clarify certain provisions.5 Prescheduled Transaction
capability was identified during this process as an unused portion of the NYISO’s tariffs. The
NYISO was historically indifferent to maintaining this functionality. However, with the
introduction of the Broader Regional Markets Initiative and specifically the Enhanced
Interregional Transaction Coordination project (“EITC”), the complexity and costs for
maintaining and supporting this capability have increased significantly. The EITC project will
require the NYISO to upgrade or retire all software that interacts with Transaction bids,
including the pre-scheduling feature. The upgrades for this pre-scheduling feature are estimated
to add significant costs to the EITC project, costs that would ultimately be paid by Market
Participants and passed on to ratepayers. Initial cost estimates by the NYISO to maintain this
functionality are in excess of $500,000. After discussing the costs and benefits of upgrading this
capability with Market Participants at numerous stakeholder meetings, no Market Participants
expressed an ongoing interest in maintaining this capability. With this filing, the NYISO
requests the Commission allow it to remove this capability from its Tariffs.

III.Description of Proposed Tariff Revisions

A.Definitions

In order to remove this capability from its tariff the NYISO proposes to delete the

definitions of the terms Pre-Scheduled Transaction Request, Pre-Scheduled Transaction, and

Scheduling Differential from both the OATT and the Services Tariff. The term “Scheduling

Differential” was introduced in order to assign differing scheduling priorities to transactions and
to ensure that accepted Pre-Scheduled Transaction Requests were assigned the highest economic
priority. This bid priority integrated the concept of pre-scheduling transmission service into the

5 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 September 1, 2010

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NYISO’s financially based transmission service scheduling system. The Terms proposed for deletion are contained in the following specific tariff sections:

• OATT Section 1.16 Pre-Scheduled Transaction Request

• OATT Section 1.16 Pre-Scheduled Transaction

• OATT Section 1.19 Scheduling Differential

• Services Tariff Section 2.16 Pre-Scheduled Transaction Request

• Services Tariff Section 2.16 Pre-Scheduled Transaction

• Services Tariff Section 2.19 Scheduling Differential

B.OATT

The NYISO proposes to remove all references to Pre-Scheduled Transactions from the
OATT. First, the NYISO proposes to delete an exception for Firm Point-To-Point Transmission
Service that is associated with a Pre-Scheduled Transaction from Sections 3.1.7.1 and 3.1.8.2 of
the OATT. While Firm Point-To-Point Transmission Service is still available, it will no longer
be available via the Pre-Scheduling feature. Consistent with this change, the NYISO is
proposing to remove Section 3.1.8.1, which outlines the method by which the Pre-Scheduling
feature is used to schedule Firm Point-To-Point Transmission service. In existing Sections

3.1.8.2 and 3.1.8.3 the NYISO proposes to delete an assignment of scheduling priority to

Decremental Bids and Sink Price Cap Bids submitted at Proxy Generator Buses. This was added
to assign the highest economic priority to these Bids. Finally, the NYISO proposes to renumber
existing Sections 3.1.8.2 and 3.1.8.3 as Sections 3.1.8.1 and 3.1.8.2 respectively because Section

3.1.8.1 is being proposed for deletion.

The NYISO is proposing to amend Attachment C of the OATT, which addresses the
methodology for assessing Available Transfer Capability (“ATC”), in several places to delete
references to Pre-Scheduled Transactions. First, in Sections 9.1 and 9.2, the NYISO proposes to
delete two instances of a phrase indicating that ATC is posted and/or calculated two (2) days to
eighteen (18) months in advance of the Dispatch Day to accommodate Pre-Scheduled
Transaction Requests at External Interfaces. NYISO is also proposing to delete an exception in
Section 9.1 excluding Pre-Scheduled Transactions from the typical methodology for calculating
ATC values. In Section 9.5 the NYISO is proposing to delete both the firm and non-firm
Transmission Flow Utilization definitions concerning ATC calculations for Pre-Scheduled
Transactions. These definitions are unnecessary if the Pre-Scheduling feature is deleted from the
tariffs. Finally, in Section 9.6 the NYISO proposes to delete the description of how the
Transmission Reliability Margin is used to calculate ATC associated with Pre-Scheduled
Transaction requests.

C.Services Tariff

The majority of the tariff provisions concerning Pre-Scheduled Transactions are located
in Sections 4.2 and 4.4 of the Services Tariff. The NYISO is proposing to delete, in their
entirety, Sections 4.2.1 and 4.4.1 which describe the specifics of arranging such service. Section

4.2.1 provides the procedures for making Pre-Scheduled Transaction Requests in the Day-Ahead Market and Section 4.4.1 provides the counterpart provisions for in-day Pre-Scheduled

The Honorable Kimberly Bose September 1, 2010

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Transactions. These Sections outline when to submit such requests, how to submit such

requests, how the requests are evaluated and accepted by the NYISO, how the requests are

assigned a scheduling priority and any limitations on scheduling such requests. The NYISO also proposes a few other minor changes in these sections. First, in existing Section 4.2.2.1, the
NYISO seeks to delete a reference to Pre-Scheduled Transactions excluding them from the
general responsibilities of Customers submitting Bids. A calculation for the Scheduling
Differential for Bids to supply Energy at Proxy Generator Buses in existing Section 4.2.2.3.1 is
also proposed for deletion. In existing Section 4.2.2.7 a reference to the bid limitations and
pricing rules for Decremental Bids and Sink Price Cap Bids located in Attachment B of the
Services Tariff is proposed for deletion because the referenced section is also being removed in this filing. Another reference to the Scheduling Differential for Bids from External purchasers in existing Section 4.2.2.8 is proposed for deletion.

In Section 4.4 the NYISO proposes to remove one reference to Pre-Scheduled

Transactions in existing Section 4.4.2.4 in addition to the removal of Section 4.4.1, as discussed above. Finally, the NYISO proposes to renumber Sections 4.2 and 4.4 to accommodate the deletion of the entire sections related to Pre-Scheduling and to update any cross-references to these sections in order to reflect the accurate numbering in its tariffs.

In Attachment B of the Services Tariff the NYISO proposes to delete Section 17.3.1

which describes the specific information a Market Participant must submit with a Pre-Scheduled Transaction request. Furthermore, the pricing rules associated with Sink Price Cap Bids and Decremental Bids in existing Section 17.3.2.7, are proposed for deletion. The NYISO proposes to re-title existing Section 17.3.3 to “Bilateral Transaction Scheduling” dropping the reference to Pre-Scheduled Transaction Requests. Further, a majority of the text in existing Section 17.3.3.1 titled “ISO’s General Responsibilities” describes the NYISO’s process for evaluating Pre-
Scheduling requests, and is, therefore, proposed for deletion. The NYISO also proposes to
renumber Attachment B, due to the deletion of Section 17.3.1.

Finally, the NYISO proposed to remove from Section 21.6.1 of Attachment F of the Services Tariff a reference to the pricing rules for Sink Price Cap Bids and Decremental Bids that are proposed for deletion from Attachment B.

IV.Effective Date

The NYISO Requests an effective date of January 19, 2011, more than 60 days from the
date of this filing. The NYISO is requesting this date because it is the date that the software for
the NYISO’s EITC project is targeted for deployment and, unless the Pre-Scheduling feature is
updated as part of this project, its functionality will no longer be available to Market Participants.

V.Requisite Stakeholder Approval

The NYISO’s Management Committee unanimously approved, with abstentions, this

proposal at the July 21, 2010 meeting. The NYISO’s Board of Directors approved this proposal at its August 16, 2010 meeting.

The Honorable Kimberly Bose September 1, 2010

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VI. Communications and Correspondence

All communications and service in this proceeding should be directed to:

Robert E. Fernandez, General Counsel

Elaine D. Robinson, Director, Regulatory Affairs Mollie Lampi, Assistant General Counsel
*Kristin A. Bluvas, Attorney

New York Independent System Operator, Inc.

10 Krey Boulevard

Rensselaer, NY 12144
Tel: (518) 356-8540
Fax: (518) 356-7678

rfernandez@nyiso.com
erobinson@nyiso.com
mlampi@nyiso.com
kbluvas@nyiso.com

* Designated to receive service.

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.

VIII. Conclusion

Wherefore, for the foregoing reasons, the New York Independent System Operator, Inc.
respectfully requests that the Commission accept this filing to be effective January 19, 2011.

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

kbluvas@nyiso.com