Retail Supplier Protests Asymmetric Treatment of Imports, Exports in New New York Local Capacity Zone, Which Will Raise Capacity Prices

ConEdison Solutions has protested the New York ISO's filing to implement a new, local capacity zone in the ICAP market due to the asymmetric treatment of capacity imports and exports in the zone, which will lead to increased capacity prices for ESCOs.

As previously reported, the NYSIO has filed to institute a new capacity zone encompassing NYISO Load Zones G, H, I, and J (the G-J Locality).

ConEdison Solutions noted that external capacity not associated with Unforced Capacity Deliverability Rights (UDRs) will not be allowed to satisfy any of the Locational Capacity Requirements (LCRs) of the New Capacity Zone (NCZ). In summary, the NYISO takes this position to be consistent with the treatment in J & K load zones and because the transmission lines into the NCZ are not controllable and therefore the NYISO has no assurance that the energy will be delivered to the NCZ. The NYISO's conclusion is to treat all external supply as Rest of State Capacity.

"ConEdison Solutions disagrees with this treatment for external supply because it fails to recognize that capacity imported from ISO-NE is more deliverable and therefore contributes more to the reliability of the NCZ than capacity from other external regions or even capacity from within the New York control Area ('NYCA')."

Story Continues Below ...

"The higher reliability value of imports from ISO-NE is a direct result of the physical configuration of the NYISO's transmission grid, which has three transmission lines that electrically connect New England and New York State, one of which, the 345 KV Pleasant Valley to Long Mountain/Frost Bridge ('PV – LM'), connects directly to zone G within the NCZ. The higher reliability value of capacity imported from ISO-NE can be empirically seen in the lower shift factor of 47.5% that the NYISO assigned to imports from ISO-NE versus the 92-93% factors applied to other external resources. This means that resources from ISO-NE are roughly twice as deliverable into the constrained Load Zone GHI portion of the state as compared to resources from other external regions because they use up less of the constrained interface into GHI," ConEdison Solutions said.

"NYISO argues that because the Pleasant Valley line is not controllable and one should conclude that capacity from ISO-NE is not deliverable in the NCZ. However, that conclusion is not supportable as it would also suggest that capacity imported over free-flowing lines is not deliverable into the state as a whole, when the NYISO currently allows such capacity sales," ConEdison Solutions said.

"Another problem with the NYISO's argument becomes apparent when you consider the potential for resources in the NCZ to sell capacity into the ISO-NE market. Under such a scenario, which would be economically rational whenever ISO-NE prices were higher than those in the NCZ, there would be a reduction in the supply available to clear the LHV [Lower Hudson Valley] market, increasing the LHV price. This would be physically equivalent to that unit exporting over the same Pleasant Valley to Frost Bridge transmission line. Absent the ability for some (or some portion of) ISO-NE imports to count as LHV capacity, this would lead to an asymmetric treatment between the import rules and export rules in the LHV," ConEdison Solutions said.

"Instead of just precluding capacity from ISO-NE from counting towards the NCZ requirements, the NYISO should evaluate how much energy is deliverable across the Pleasant Valley tie-line during peak load conditions and use that as a basis for determining the deliverable capacity. By taking a conservative approach that disqualifies all non-controllable transmission lines, the NYISO has taken away a natural market mechanism to signal that resources from ISO-NE have more value to the NCZ than resources from other regions and to provide a potential price signal for increasing the transmission transfer capability into the NCZ. From the perspective of suppliers in New England, they would be denied the ability to sell an appropriate percentage of their capacity into the NCZ even though they can be (at least partially) deliverable into the LHV. From a load perspective, it will artificially reduce the amount of resources that can meet the NCZ's reliability needs and could result in higher ICAP prices," ConEdison Solutions said.

Docket No. ER13-1380