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Capacity Suppliers File Complaint to Raise Capacity Prices in New York

June 6, 2011
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No doubt emboldened by several recent FERC decisions, several New York capacity suppliers have filed a complaint at FERC alleging that the New York ISO's implementation of its buyer-side market power mitigation provisions is in violation of its tariff.

Capacity suppliers are seeking FERC action which will raise the price of capacity versus what would result absent FERC action, by establishing a greater likelihood that mitigation, in the form of higher offer floors, is imposed on some 2,500 MW of new capacity.

"The problems identified in this Complaint stem not from the mitigation rules in the Services Tariff itself, but instead from the NYISO's unwillingness to apply the Buyer-Side Market Power Rules with anything approaching the same vigilance and vigor that it brings to its application of supplier-side mitigation rules," capacity suppliers said.

However, capacity suppliers are forced to admit that NYISO's actions do not violate specific tariff language, but rather that, "the NYISO is bound to make these [mitigation] determinations in a manner that is consistent with what market participants would reasonably expect in light of the plain English meanings of the terms used in the Services Tariff."

Specifically, capacity suppliers alleged that each of the following actions by NYISO is inconsistent with the tariff under this "reasonable expectation" standard:

- NYISO will set Unit Net Cost of New Entry (CONE) as a single value that will not be escalated, which suppliers alleged ignores inflation

- NYISO will determine whether new entrants are exempt from mitigation using projected future ICAP clearing prices that are based the 2010/2011 ICAP demand curve, versus the supplier's preferred 2013/2014 demand curve.

- NYISO proposes to use Net CONE estimates developed in 2008 in its mitigation determinations, rather than the more recent Net CONE values from the Third Reset Proceeding.

- NYISO does not plan to adjust Offer Floors, even if new Demand Curves are implemented in the future

- NYISO does not intend to request or review contracts that the suppliers said are relevant to the determination of a new entrant's specific Unit Net CONE.

Complainants are Astoria Generating Company, NRG Energy, and TC Ravenswood, LLC.


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