Stakeholders expressed confusion and concern with the most recent updates to NYISO’s operating reserves performance penalty proposal during the Installed Capacity Working Group meeting May 13.

Members seemed unclear as to the rationale for the proposed performance thresholds and unimpressed with the proposed penalty.

“I’m just curious as to why you wouldn’t have a much higher requirement to be considered a good performer,” asked Howard Fromer, representing Bayonne Energy Center.

The ISO outlined its proposed metrics for identifying different types of poor performers at a previous ICAP meeting in late April. (See NYISO Details Proposed Metrics for IDing Poor Performers in Reserve Market.) Resources that fail to respond or provide the requested energy during Reserve Pickup (RPU) events and audits would be subject to potential removal from the market for at least 30 days, increasing to 90 days on repeat offenses. The “expected performance” threshold is 70% and the “energy performance” threshold is 50%.

In the previous meeting, stakeholders had asked for more clarity on how these thresholds had been decided and for stronger penalties for offenders. The ISO provided different data to justify them.

Katherine Zoellmer, NYISO’s market design specialist for the project, said that only 10% of resources drop below the expected performance threshold, and 9% fail the energy performance threshold. Under both metrics, most resources are performing and providing energy as expected, she said.

“We found that this proposal was effective at capturing those resources that both the NYISO and the [Market Monitoring Unit] have identified as poor performers,” Zoellmer said.

Stakeholders asked repeatedly why the energy performance threshold had been set at 50%, meaning a resource is required only to provide half of the energy expected. They said it was strange that a resource producing 55% of what was requested was rated as “good.”

Zoellmer said that she didn’t think that a resource performing at 55% was performing well, merely that the threshold captured most poor performers.

Several stakeholders said they wanted to see RPU performance data in a graph or histogram so that they could judge for themselves if the threshold made sense. They also said it was strange the energy performance threshold was so much lower than the expected performance threshold.

“I think we’re imposing a more rigorous test on the units that are routinely called upon to provide reserves and respond,” said Fromer. “I don’t think that’s fair that, because I am a good provider, I am subject to a much more challenging definition than if I was a unit that hardly got called upon.”

He then asked if Zoellmer would be comfortable dropping the expected performance threshold to 50%, saying he did not think she was. Zoellmer did not respond directly to this comment.

On the actual penalty for poor performance, stakeholders questioned why there was no mechanism resetting penalties for resources that had fixed their performance issues; all prior offenses would be held against a resource. Stakeholders representing large customers, New York City and transmission owners all said they would accept both increased penalties and a forgiveness mechanism for resources that cleaned up their operations.

Another stakeholder mentioned that as currently calculated, if a generator missed the mark, the metrics incentivized overgeneration to compensate and avoid being disqualified. They asked if it would be difficult to exclude overgeneration from the way the metrics are calculated.

Zoellmer said the ISO would not be proposing changes to their methods for accessing resources during RPUs and audits.

“If what you’re saying is you put these metrics down and you’re not going to consider changes, then why do we have this process?” asked Kevin Lang of Couch White, representing New York City. “Stakeholders are raising some legitimate concerns about what you’re proposing, and the whole point of this process is to refine proposals.”

Zoellmer did not respond.

Pallas LeeVanSchaick, vice president of Potomac Economics, the MMU, chimed in and said he agreed with the “common sense suggestions” and that the ISO had not engaged with stakeholders. He said he also wanted clear justification for the proposal. “We have been talking about having some sort of incentives for like eight years now.”