NYISO on Tuesday laid out a plan to revise its capacity market rules, especially those on buyer-side mitigation (BSM), by this fall to address regulators’ views that they stymie the cost-effective deployment of state-subsidized resources like solar and wind, which have environmental attributes not normally accounted for in market valuations.

“We are thinking holistically about what we should be doing with buyer-side mitigation. … It is our No. 1 priority for the capacity market right now, and it is affecting the class year and intermediate class year as we speak, so it’s a problem that’s here today,” said Michael DeSocio, NYISO director of market design, during a meeting of the Installed Capacity Working Group.

Earlier in April, FERC Chairman Richard Glick had urged the ISO to consider “more holistic reforms in light of New York’s greenhouse gas reduction goals … [and to] take steps to better align the capacity market’s principal parameters with the goals of the state in which it operates.” (See FERC Approves NY Demand Curve Reset, Rejects 17-Year Amortization.) The state’s Climate Leadership and Community Protection Act (CLCPA) mandates the procurement of massive amounts of renewable energy resources to get to 100% zero-emission electricity by 2040.

The ISO wants to eliminate BSM risk for state-subsidized resources and simplify the “unnecessarily complicated” BSM process, DeSocio said.

“This [initiative] is focused on making sure that BSM is not a deterrent to state programs … but ultimately the idea is to make sure that the capacity market is available for all resources that are trying to compete and help the state achieve its goals,” DeSocio said.

One stakeholder asked how carbon pricing fits into the ISO’s plans for the capacity market.

“Carbon pricing is still a concept that we believe strongly in at NYISO,” DeSocio said. “We see that as a remedy that would help the energy market utilize these new technologies more effectively than not having such a mechanism, but we don’t necessarily see carbon pricing as the solution to buyer-side mitigation. We do believe that we need to address [BSM] with or without carbon pricing.

“Where carbon pricing shines is that it certainly helps make sure the energy prices are more meaningful, which has a lot of pluses regarding incentives for resources to follow dispatch and resources to take outages during the right times of year.”

Focus on Reliability

NYISO also wants to better align the assumptions that go into setting different capacity requirements. It also wants to explore creating a new capacity requirement that would reflect the resource mix’s impact on transmission. The ISO said it also aims to improve “resource adequacy tools and models to account for the evolving critical reliability time periods, changing load shapes and load variability, new technology operation such as energy storage, and consideration of regional conditions that may inhibit shared assistance.”

DeSocio said the ISO believes the new approach — tweaks here and there, not a major revamp — sets up the capacity market to be viable for the foreseeable future.

“We don’t want to overstep what the state wants us to do in terms of facilitating entry of renewable resources,” he said.

Regarding proposals for multiple value pricing or establishing requirements for procuring a certain amount of capacity from certain technologies, “until we hear that’s something the state wants us to think about, we won’t spend a lot of time on it,” DeSocio said.