NYISO ICAP Report Finds No Withholding Concerns

An analysis of the New York ISO ICAP market for the Winter 2009-2010 and Summer 2010 Capability Periods did not raise any withholding concerns, the New York ISO reported to FERC.

Physical withholding is not a concern given the low amounts of unoffered capacity (less than 2% for the New York City and Rest of State areas).

NYISO also did not raise any concerns of economic withholding. For the New York City area, the capacity that was not sold, as a percent of available capacity, was less than 0.25% per month on average for the Winter 2009-2010 and Summer 2010 Capability Periods, which NYISO attributed to the supply-side mitigation measures that became effective in the Summer 2008 Capability Period.

For the Rest of State region, on average, 77.0 MW of capacity was unsold in each month of the Winter 2009-2010 Capability Period, which was down over 100 MW from the previous Winter Capability Period. During this period, the NYCA minimum Capacity requirement was 35,785.3 MW, and there was significant excess above this amount, NYISO said.

"Thus, during the Winter 2009-2010 Capability Period, the amount of ROS Capacity offered but not sold constituted less than one percent of the NYCA minimum Capacity requirement. Similarly, unsold capacity amounts in the Summer 2010 Capability Period were very low. These results show that the small amount of ROS Capacity that was offered but not sold was very unlikely to constitute economic withholding," NYISO concluded.

NYISO also reported that revenue margins for a hypothetical peaking unit remain below the level needed for new entry.

Revenue Margins are provided below; a higher value indicates a greater degree of adequacy of revenues.
2005 2006 2007 2008 2009 2010
NYCA 29% 52% 58% 55% 50% 48%
NYC 84% 80% 75% 53% 45% 70%
LI 92% 101% 73% 55% 49% 52%

While the Rest of State margins have been steady, NYISO noted the volatility in New York City and Long Island margins, and attributed the decline in 2008-09 to low spot capacity prices, followed by retirement of an 890 MW unit for 2010 which lifted prices.

"It continues to be difficult to correlate the effects of the ICAP Demand Curves on investment in new generation in the NYCA mainly because over the past several years New York has had Capacity available in excess of the minimum amount to satisfy reliability requirements," NYISO said.