New York ISO Files Changes to Allow Scarcity Conditions on Localized Basis

The New York ISO has filed tariff changes at FERC to modify the calculation of Locational Based Marginal Pricing (LBMPs) during periods of scarcity, to allow for pricing to reflect scarcity conditions on a localized basis.

NYISO said that the current Services Tariff requires that LBMPs reflect the cost of Special Case Resources (SCR) and Emergency Demand Response Program (EDRP) Resources (known as scarcity pricing) when such Resources are called upon to resolve reliability issues and, but for their Load reduction, the NYISO would have experienced a regional or statewide shortage in certain Operating Reserves products.

Under the existing Tariff, scarcity pricing is used to calculate LBMPs for all buses and Load Zones East of Central East if SCR / EDRP Resources were called only in the area East of Central-East and, but for their Load Reduction, Available Reserves East of Central-East would have been insufficient to meet the Eastern 10-minute Operating Reserves requirement. If SCR / EDRP Resources are called in Load Zones other than those East of Central-East, or if they are called statewide, scarcity pricing is used to calculate LBMPs statewide if, but for the Load Reduction provided by the SCR / EDRP Resources, statewide Available Reserves would have been insufficient to meet the total 30-minute Operating Reserves requirement.

"Thus, only a shortage in Available Reserves as measured across a broad region will allow the NYISO to reflect in LBMPs the Bid-cost of reliability-necessary SCR Resources. Scarcity Pricing is currently not triggered for reliability situations requiring localized Load reductions in order to maintain reliable service as long as Available Reserves either East of Central East or statewide are sufficient to maintain specified Operating Reserves requirements," NYISO said.

NYISO said that its proposed changes will ensure that scarcity pricing is invoked when localized as well as broader scarcity conditions occur.

NYISO's changes include a change in the definition of available reserves and a series of amendments to Section 17.1.2, the Real-Time LBMP Calculation Procedures. NYISO said that it will use a new scarcity pricing formula in Section 17.1.2.2 for any interval, "[I]n which EDRP/SCR Resources have been called in one or more Load Zones due to a reliability need and the aggregate of Available Reserves in the Load Zone(s) in which the reliability need was identified are less than the number of EDRP/SCR MWs called for that event."

The NYISO proposes that these changes become effective on a date to be specified with a two-week notice to FERC and the NYISO's Market Participants, with such notice expected to be issued between June 12, 2013 and June 26, 2013, contingent on software updates and testing.