The NYISO Management Committee on Wednesday endorsed a technical fix to the 2017-2021 capacity demand curve reset (DCR) to address an error in the model used to estimate net energy and ancillary services (EAS) revenues for the hypothetical peaking plant.

The problem resulted from a misalignment of natural gas prices. The model assumed that index prices published by S&P Global represented the “trade day” — the day before generators take delivery and use the gas to produce electricity. In fact, the data actually represent the “flow day” prices.

The error was discovered during work on the net EAS model for the 2021-2025 DCR, and the change will apply to that period as well. (See NYISO Management Committee Briefs: Sept. 23, 2020.)

NYISO already submitted the change to FERC, which approved it on Oct. 22 (ER21-130). “We have implemented the revised reference prices into the capacity market [and] spot market auctions,” Vice President of Market Operations Robb Pike said.

Pike said the ISO would submit an informational filing to FERC to provide notice of the MC’s concurrence with the previously filed revisions.

The 2017-2021 DCR includes the capacity demand curves for the 2017/18 through 2020/21 capability years (May 1, 2017, through April 30, 2021).

2020 Reliability Needs Assessment OK’d

The MC unanimously approved the 2020 Reliability Needs Assessment (RNA), which cut the peak load forecasts for 2020-2028 by as much as 467 MW from the 2018 RNA. If the Board of Directors approves the revisions in November, NYISO will file the changes with FERC.

Laura Popa, manager of resource planning, presented the 2020 RNA, which examines needs over the coming 10 years. The presentation included a transmission analysis supplied by Keith Burrell, manager of transmission studies.

Pallas LeeVanSchaick of Potomac Economics, the ISO’s Market Monitoring Unit, presented comments on the RNA and said the MMU found a number of areas where the reliability needs identified by the RNA are in part driven by gaps in the market design, where it fails to provide incentives for resources.

Some key findings that the MMU focused on included a number of base case transmission violations from 2024 to 2030 in New York City driven by impending peaker retirements and load growth, he said. The state Department of Environmental Conservation last year adopted a regulation to limit nitrogen oxides (NOx) emissions from simple cycle combustion turbines, or peaking units, and required all impacted plant owners to file compliance plans by March 2. (See NY DEC Kicks off Peaker Emissions Limits Hearings.)

The RNA found transmission security violations on Consolidated Edison’s non-bulk power transmission facilities system in the Astoria East/Corona as well as Greenwood/Fox Hills load pockets, rising to 180 MW in 2030 for the former and 370 MW for the latter.

It “also found transmission security violations on Con Edison’s bulk system, and the deficiency there rises to 1,075 MW by 2030,” LeeVanSchaick said. “[The RNA] also found resource adequacy violations beginning in 2027, but it’s notable that the compensatory megawatts needed to resolve those are much lower than for the transmission security violations … being only 350 MW by 2030.”

The two significant takeaways are Astoria East/Corona and Greenwood/Fox Hills, as well as the “big difference” between the compensatory megawatts needed in the transmission security analysis versus those in the resource adequacy analysis, he said.

“This RNA reveals a number of ways in which the NYISO market design fails to reflect the value of resources that help satisfy transmission security needs, which may lead to [reliability-must-run] contracts and other regulated transmission investment. The first recommendation that would help to align market signals with the reliability value of resources is better reserve market pricing in New York City,” LeeVanSchaick said.

The second issue is lining up the capacity accreditation with the reliability value of resources in NYISO planning studies, particularly for the large units and special-case resources, LeeVanSchaick said. Finally, the RNA is another piece of information that supports enhancing locational capacity pricing with the “C-LMP” framework, which would allow the ISO to set different prices for different areas and, in turn, for more cost-effective capacity to meet reliability needs, he said.

“If you do those things, it’s much less likely that you’d have to make any further out-of-market investment,” LeeVanSchaick said.

NYISO will seek updates to local transmission owner plans and other resource and load changes in December and determine in January whether the needs should be adjusted and solutions solicited to the remaining needs.

2021 Budget Approved

The MC also approved a draft budget for 2021, which will go before the board for final approval in November.

Alan Ackerman of Customized Energy Solutions, chair of the Budget and Priorities Working Group, presented the draft budget, which was unchanged from the draft stakeholders reviewed last month.

For the second year in a row, NYISO is proposing a decrease to the budgeted revenue requirement, with the draft budget allocating $167.4 million across a forecast of 147.3 million MWh, for a Rate Schedule 1 charge of $1.137/MWh, down from the 2020 budget of $168 million allocated across 154.3 million MWh ($1.089/MWh).

Wentlent Elected 2021 Vice Chair

The MC elected Christ Wentlent to serve as its vice chair for 2021, beginning in December.

Wentlent represents the Municipal Electric Utilities Association and New York Municipal Power Agency as liaison to both NYISO and the New York State Reliability Council.

He was unable to attend the meeting, but he sent a message read by Chair Jane Quin. “We all know our energy market is at a major transition point, and I would be honored to assist the NYISO and its stakeholders with that transition,” he said.