New York ISO Files to Create New Capacity Zone, Would Double Capacity Prices for ESCOs

The New York ISO has filed at FERC to implement a new capacity zone under its capacity market, which would require load serving entities such as ESCOs to meet capacity obligations for such new zone.

The new capacity zone encompasses NYISO Load Zones G, H, I, and J (the G-J Locality).

An analysis from NYISO estimates that, were the new capacity zone to be in place during 2013, capacity prices would more than double in the Lower Hudson Valley to $9.34 per kW-month in August 2013 and $5.35 per kW-month in November 2013.

Zones G-H-I are estimated to see a $173 million increase in annual capacity costs under the proposal.

NYISO said that, "[i]t concluded that establishing and implementing the G-J Locality for the May 1, 2014 start of the 2014/2015 Capability Year is necessary to send more efficient price signals, enhance reliability, mitigate potential transmission security issues, and serve the long-term interest of all consumers in New York State."

"The reliability needs that the G-J Locality would address are becoming increasingly significant. As indicated in the NYISO's 2012 Comprehensive Reliability Plan27 and in the MMU's 2012 State of the Market Report ('2012 SOM'), recent generator retirements in Load Zones G and H resulted in higher Locational Minimum Installed Capacity Requirements ('LCRs') for Load Zones J and K.29 The total amount of Unforced Capacity in Load Zones G, H, and I has fallen by 1 GW since the Summer of 2006, even though there has been an apparent need for resources to address issues with the UPNY-SENY interface," NYISO claimed.