FERC Adjustments to Raise N.Y. Capacity Costs

In another order which will raise capacity costs for customers, this time in New York, FERC accepted with modifications the New York ISO's proposed tariff to reset the ICAP demand curves (ER11-2224).

The NYISO's reset proposal was approved as filed with the exception of the following:

FERC rejected NYISO's exclusion of deliverability costs from the demand curves (a position supported by load), and directed NYISO to revise the NYCA and, if necessary, the NYC and LI demand curves to reflect the estimated cost of System Deliverability Upgrades under a level of excess capacity that slightly exceeds the minimum requirement.

Additionally, FERC rejected the position of NYISO and load that the Cost of New Entry should be adjusted downward to reflect a New York City tax abatement for power plants. The tax abatement shall now be excluded from the calculation of net CONE for NYC.

Furthermore, FERC rejected the NYISO's proposed excess capacity adjustments, which were lower than those used in prior filings. Load had argued that there should not be any excess capacity adjustments, which adjust the CONE to reflect an assumed level of average excess capacity, affecting both the determination of projected energy and ancillary services revenues, and the amount of projected capacity revenues realizable in the spot capacity market. An assumption of a higher level of average excess capacity will result in a higher net CONE, since it will decrease the revenue offsets used to define CONE.

FERC held that the levels of average excess capacity adjustments used in the last reset proceeding, which assume a higher level of excess capacity, should be maintained for this reset.