The NYISO Market Monitoring Unit is proposing to revise the ISO’s net congestion rent assignment process by allocating residuals to transmission owners on an individual facility basis.

Congestion rent is collected by the ISO from load and paid out through transmission congestion contracts (TCCs). Residuals can arise when there is a difference in internal transfer capability between the day-ahead market and what was assumed in the TCC auctions. They represent the difference between the congestion rent required to fund payments to TCC holders and the amount of rent collected.

Currently residuals are assigned to TOs depending on the reason for the congestion, and some situations leading to residuals are socialized among TOs based on their respective shares of TCC auction revenues. Under the MMU’s proposal, however, “the TO that owns the ‘offending’ transmission facility would absorb or pay the shortfall associated with their facility,” it said.

The MMU says this would improve the incentives for transmission investment and operating grid-enhancing technologies, and reward efficient transmission operations, including line switching.

NYISO is on board with the change, but it needs to do a significant amount of modeling and simulating of the change’s impacts on the markets first. The ISO plans to propose a dedicated “Net Congestion Rent Assignment Evaluation” project as part of its 2026 prioritization process.