By Michael Kuser

FERC on Thursday granted NYISO a waiver of the Tariff language defining a public power entity, extending the definition to cover any government entity, regardless of whether it owns or controls distribution facilities and provides electric service (ER20-922).

The ISO in January requested the waiver of Section 26.5.3.6 of its Market Administration and Control Area Services Tariff in order to allow it to continue granting unsecured credit, up to $1 million annually each, to government entities that do not meet the definition of public power entity.

NYISO also said it is working with stakeholders to revise the relevant definition and seek approval from the commission.

“NYISO acted in good faith because it did not intentionally disregard the limitations set forth in the currently effective definition of public power entity and … took this self-correcting action promptly upon discovering the limitation in its current definition,” the commission said.

The ISO said it extended unsecured credit to government entities, regardless of whether they own or control distribution facilities and provide electric service, based on a good faith understanding of how Section 26.5.3.6 should be administered in light of the credit profiles of government entities.

The commission also found NYISO’s waiver request was limited in scope, being in place for nine months and only involving a subsection of a definition, noting that the ISO said that it may not need the waiver for the full nine months.

FERC said that granting the waiver will avoid needlessly creating practical business difficulties for certain municipal and government entities. It is also consistent with the underlying Tariff recognition that municipal entities generally do not present significant risk of nonpayment but are unable to demonstrate creditworthiness through conventional indicators, the commission said.

NYISO identified 10 municipalities or other government entities that would be affected by the requested waiver, resulting in an extension of up to $10 million in unsecured credit among them.

Finally, the commission found that the waiver request would not have undesirable consequences “because, as NYISO explains, there has not been any material increase to the financial risks of NYISO or other market participants, and denying the requested waiver could needlessly harm government entities that do not own or control distribution facilities and provide electric service.”

Given that the ISO admitted to having been violating the Tariff definition since as early as 2004, the commission said it would “exercise our discretion in addressing such matters and, given the facts and the record before us in this matter, take no action with respect to the instances of NYISO’s past noncompliance.”