NYISO and sympathetic intervenors last week filed comments urging FERC to reject a request that it require the ISO to implement a “clean” minimum offer price rule (MOPR) that applies to all subsidized resources throughout the New York Control Area with limited exceptions.
The comments came in response to an Oct. 14 complaint by the owners of two natural gas-fired plants in the Hudson Valley, the 1,177-MW Cricket Valley Energy Center (CVEC) in Dover and the 635-MW Empire Generating facility in Rensselaer (EL21-7).
The complainants requested fast-track processing and the issuance of an order on or before Dec. 31 finding that NYISO’s market rules are unduly discriminatory “because they fail to address price suppression” in the installed capacity spot market auctions resulting from resources receiving out-of-market payments.
They asked the commission to require NYISO to implement a clean MOPR, “as it did when confronted with the same problem in FERC Acts on PJM MOPR Filing.)
NYISO said that New York’s support for some resources is not resulting in price suppression because conditions in NYISO differ from those in PJM when it instituted a MOPR in 2018.
The complainants’ “price suppression claims are overstated, one-sided and incomplete,” and they try to use their concerns regarding the potential price effects of zero emission credits (ZECs) to sweep away buyer-side mitigation (BSM) rules that have nothing to do with ZECs, NYISO said.
In their complaint, CVEC and Empire pointed to the commission’s “standard solution” precedent, which found that FERC will rely on a MOPR as its standard practice for dealing with subsidized resources. But NYISO said their interpretation of that policy is “overly simplistic, inconsistent with earlier rulings (including the ‘standard solution’ precedent itself), and an impermissible collateral attack on settled commission determinations.”
The complainants failed to meet their burden of proof, NYSIO said in urging the commission not to grant the requested relief or take any other action in the proceeding.
“In the alternative, and at a minimum, the commission should reject the clean MOPR because imposing it on New York would be unjust and unreasonable,… would result in over-mitigation and would artificially increase capacity prices. The clean MOPR was designed to work with PJM’s three-year ahead forward auctions, not the NYISO’s ‘prompt’ seasonal and monthly auctions,” the ISO said.
NYISO referred to a separate but concurring comment from its Market Monitoring Unit, Potomac Economics, which said “complainants have not come close to meeting their burden of proof to show that the existing BSM Framework is unjust and unreasonable… [and the] recommended clean MOPR would result in inefficiently higher prices because it would selectively address out-of-market state actions that increase supply while conspicuously ignoring those that decrease supply.”
Supporting Voices
The Independent Power Producers of New York (IPPNY) and the Electric Power Supply Association (EPSA) supported the complaint.
IPPNY said New York’s decision to require retail electricity customers to “pay a higher price for zero-carbon energy sources than is reflected in the competitive wholesale electricity market price suppresses wholesale market prices below efficient levels,” suggesting instead a carbon pricing program.
Carbon pricing would help achieve the state’s clean energy goals, maintain the competitive market, and lessen the incidence of mitigation issues, thus avoiding unnecessary litigation, IPPNY said, noting its previous testimony to the commission. (See “RTOs, Regional Differences,” Wide Support for FERC Carbon Pricing Statement.)
IPPNY also noted that wholesale energy prices in New York currently include some value for carbon emissions because the state participates in the Regional Greenhouse Gas Initiative (RGGI).
EPSA also urged NYISO to finalize its carbon pricing proposal or face prospective implementation of a clean MOPR-type mitigation to protect the wholesale market.
“Expanding mitigation may be necessary if a market-based alternative is not finalized by the state and the ISO, though competitive suppliers want to see markets move beyond this approach,” EPSA said. “The possibility of expanding mitigation to protect the wholesale market should serve as a clear indicator to New York that a comprehensive carbon pricing approach is the necessary next step … [to] integrate emerging environmental goals as seamlessly as possible.”
Commissioner Richard Glick last month dissented from the commission’s decision not to exempt commercial demand response programs from NYISO’s BSM rules, saying the rules “that were once intended only as a means of preventing the exercise of market power have evolved into a scheme for propping up prices, freezing in place the current resource mix, and blocking states’ exercise of their authority over resource decision making.” (See FERC: NY DR Program Not Exempt from Offer Floor Rule.)
Subsidies for All
The New York Public Service Commission and the New York State Energy Research and Development Authority (NYSERDA) also rebutted the complaint, joined by the Utility Intervention Unit of the state’s Department of State, the City of New York, the Municipal Electric Utilities Association of New York, and Multiple Intervenors, a coalition of large industrial, commercial and institutional energy customers.
Complainants have not established a valid factual or legal basis for the granting of their request, and NYISO’s markets are functioning well, are competitive and are producing just and reasonable results, the PSC and its partners said.
A group of “Clean Energy Parties” urged the commission to allow stakeholders to work through NYISO’s governance process and the PSC’s resource adequacy proceeding to explore ways to integrate policy with the ISO’s capacity market design.
The group included the Sustainable FERC Project; the Natural Resources Defense Council; Sierra Club; American Wind Energy Association; Alliance for Clean Energy New York; and Advanced Energy Economy and relied on a Brattle Group report on resource adequacy in New York.
Expanding NYISO’s BSM rules as requested in the complaint would result in almost 3,900 MW of redundant gas- and oil-fired plants clearing the capacity market over the next decade that otherwise would have been replaced by state policy resources, the protest said.
The Brattle Group researchers “estimate the total cost to New York consumers of the MOPR expansion sought by this complaint at $1.3 billion annually by 2030. Rarely do consumers get so little for so much,” Clean Energy Partners said.
Public Citizen noted that CVEC, while attacking what it claims to be unfair subsidies provided to zero emission resources, has received over $100 million in property tax breaks from Dutchess County.
“Again, Cricket Valley’s claim that zero emission resources receive unfair subsidies ignores their own nine figure subsidy courtesy of New York taxpayers,” the watchdog group said.
Public Citizen criticized complainants for asserting that the identities of minority share owners of CVEC, partner-owners of Switzerland-based Advanced Power, are “highly sensitive commercial information that is not generally available to the public,” while the company’s public website lists the individuals.
“When Cricket Valley cannot recognize the distinction between ‘highly sensitive commercial information’ and freely-available information on a public web site, then it is unsurprising the company is struggling to earn income in excess of its costs and debt service,” Public Citizen said.