NYISO Calls Annual New Capacity Zone Process Unfeasible, Will Revisit Over Time

The New York ISO, "plans to revisit the possibility of evaluating the need for new capacity zones (NCZs) more frequently as it progresses through the first process cycle to evaluate and establish a new zone," but, at this time, believes that an annual examination and implementation of new capacity zones is not feasible.

"[T]he NYISO's analysis concludes that there are benefits to a process that provides for an annual examination and implementation of NCZs; however, at present, those benefits are outweighed by significant feasibility challenges. The analysis confirmed the NYISO's prior determination that it is appropriate to use the three-year process," NYISO said in a FERC filing.

The NYISO reported that an annual process for new capacity zones has certain disadvantages over the triennial process.

"An annual process would necessarily reduce the amount of time available for NYISO studies and stakeholder input. This compressed timeline will limit the ability for the NYISO and its stakeholders to raise and address issues that may be resolved through additional analysis or discussion in the stakeholder process. Lessening the amount of time provided for analysis and stakeholder input will likely increase the number of disputed issues that would ultimately be raised before the Commission. Thus, it is foreseeable that there could be a limited period between the Commission's final order on tariff revisions arising from one annual process, and the commencement of the subsequent annual process, and the Commission's review of one may possibly overlap with the subsequent process," NYISO said.

"A three-year period aligns the NCZ Evaluation Process with the ICAP Demand Curve reset process. Allowing these processes to proceed in concert ensures that sufficient time exists for the completion of necessary analyses and adequate time for stakeholder review and input. One of the primary benefits of aligning the creation of an NCZ with the ICAP Demand Curve reset cycle is to ensure the ICAP Demand Curves for existing Localities (presently New York City and Long Island, plus any established New Capacity Zones) and the NYCA are developed based on a consistent set of economic data and assumptions. It also allows stakeholders to review and consider all inputs and assumptions in the NCZ ICAP Demand Curve in the same timeframe as the other ICAP Demand Curves," NYISO said.

NYISO further said that it is infeasible to compress all of the steps of the new capacity zone evaluation process into an annual process, and that implementing a new capacity zone at a point other than the beginning of a Capability Year would interfere with the ICAP Auctions.

NYISO said that it proposes to reevaluate the feasibility of a more frequent process once the initial new capacity zone evaluation process is concluded. "The NYISO's planned reevaluation will allow the NYISO to: (1) obtain the experience needed to identify other impacts of the creation of NCZs that should be considered; (2) determine what additional accommodations may be necessary to implement a more frequent process; and (3) identify ways to address some of the feasibility issues. It also provides an opportunity to evaluate the benefits of a feasible alternative approach," NYISO said.