RENSSELAER, N.Y. — NYISO’s Management Committee on Monday recommended that the Board of Directors approve a Comprehensive Reliability Plan (CRP) that identified no reliability needs over the coming decade but did point to risks that could develop over the period.

NYISO Senior Manager for Reliability Planning Kevin DePugh presented a summary of the 2019-2028 plan, which included a scenario on the reliability impacts of proposed environmental regulations on 3,300 MW of peaking units, predominantly in New York City (Zone J) and Long Island (Zone K).

The state’s Department of Environmental Conservation earlier this year proposed to lower allowable NOx emissions from simple cycle and regenerative combustion turbines (SCCTs) during the ozone season, beginning May 1, 2023. (See NY DEC Kicks off Peaker Emissions Limits Hearings.)

NYISO, Consolidated Edison and PSEG Long Island said losing all the peakers without replacement resources or system reinforcements would threaten reliability in pockets in New York City, Long Island and southeast New York.

“Starting in 2023, with the first implementation phase of the rule, pockets in New York City would be deficient of supply for up to 14 hours in a given day at a peak amount of 240 MW, while pockets in Long Island would be deficient 320 MW possibly for 15 hours in a given day. With full implementation of the peaker rule assumed in 2025, the New York system as a whole would significantly exceed the probability of one loss-of-load event in 10 years due to a supply deficiency of at least 700 MW in southeast New York,” the report said.

“One thing generators will have to do by [March 2020] is put in compliance plans, and if they plan on closing a plant, they would have to submit a deactivation notice to the ISO,” DePugh said.

If NYISO can prove the loss of such a unit will create a reliability need for which it can find no alternative solution, it can get a two-year extension to keep the unit online, followed by an additional two years if necessary, DePugh said.

Working with Con Ed, the Long Island Power Authority and PSEG LI, the ISO found at least 700 MW of capacity needed in Zones J and K to meet loss-of-load expectation criterion, assuming the state’s AC Transmission projects are completed on schedule by December 2023. (See NYISO Board Selects 2 AC Public Policy Tx Projects.)

Local transmission alone cannot fully solve the needs, and upgrading the transmission path from UPNY-SENY into Zones J and K would likely bring the New York Control Area at or only marginally below the LOLE criterion, the report said. It would not address the local transmission constraints identified in J and K.

“The solutions could be a mix and match of different things,” DePugh said, including a combination of local transmission, resource additions and load reductions.

MMU Recommendations

Pallas LeeVanSchaick of the Market Monitoring Unit reviewed the CRP, as required by the Tariff, and confirmed that transmission security and resource adequacy needs could arise if a number of plants retire.

“There are really six load pockets, three in New York City and three on Long Island, where additional resources would be needed,” LeeVanSchaick said.

The CRP found the violations could be avoided through a variety of solutions, including by retaining 1,280 MW of peaking capacity in specific areas.

The MMU recommends NYISO adopt three significant market reforms, starting with modeling in the day-ahead and real-time markets Long Island transmission constraints — which the ISO currently manages with out-of-market actions — and developing mitigation measures to address them.

“A lot of congestion on Long Island is managed outside the market, which doesn’t provide much transparency about congestion bottlenecks or incentives for investment,” LeeVanSchaick said. “There are certain areas where it is less expensive to build generation than other areas, so price signals have to be adequate to attract investment where it is needed for reliability.”

The Monitor also recommends the ISO model local reserve requirements in New York City load pockets and consider rules for efficient pricing and settlement when operating reserve providers also provide congestion relief benefits.

NYISO-PJM JOA Revisions

The MC approved revisions to NYISO and PJM’s Joint Operating Agreement, as recommended by the Business Issues Committee. The revisions will go to the ISO’s board in June ahead of a joint FERC filing.

Under the changes, the determination of redispatch settlements would exclude several flowgates, said Cameron McPherson, the ISO’s operations analysis and services analyst.

FERC last September granted a one-year waiver of the JOA to permit the addition of the East Towanda-Hillside tie line as a market-to-market (M2M) flowgate. (See “NYISO, PJM Revising JOA for Tie Line Issues,” NYISO Business Issues Committee Briefs: March 13, 2019.)

The proposed JOA revisions were developed to address the concern raised in the waiver request and to improve other components of the M2M coordination process — in particular, the rules for performing entitlement calculations.

New External SRE Penalty

The MC also approved a new external supplemental resource evaluation (SRE) penalty regime that would boost the ISO’s ability to call on external resources that have sold capacity to New York. The changes, approved by the BIC in April, will take effect in the third quarter.

Amanda Carney, NYISO capacity market design specialist, presented the proposal and said all external capacity suppliers required to offer their energy at an external proxy must bid at the offer floor, be operating and available, and flow the scheduled transaction.

Any external capacity supplier that fails to meet the criteria will be subject to the penalty, which is equal to 1.5 times the applicable spot price multiplied by the number of megawatts of shortfall and the percentage of the SRE call hours in which a supplier fails to respond.

Howard Fromer, director of market policy for PSEG Power New York, said he hoped that NYISO would include in its FERC filing a mention of stakeholder concerns about being scrutinized for performing the bidding “gymnastics” called for under the proposed penalty scheme.

LeeVanSchaick said the Monitor is aware of those stakeholder concerns and that the ISO would mention them in the filing.

Under the new penalty provisions, the ISO will calculate deficiencies monthly, using the total number of SRE call hours in a given month that the resource could be online for and the total number of megawatts of shortfall in that month, Carney said.

Collateral Change for Foreign Market Participants

The MC on Monday approved a Tariff change restricting the posting of cash collateral to entities based in the U.S. and Canada.

The changes affect only four market participants, said Sheri Prevratil, manager of corporate credit.

Market participants that do not meet Tariff requirements for unsecured credit must post cash, letters of credit or surety bonds as collateral.

In the event of a bankruptcy, the ISO’s ability to retain a company’s cash collateral is dependent on applicable bankruptcy laws. Given the potential number of jurisdictions at issue worldwide, it is not feasible for the ISO to evaluate laws in all jurisdictions to ensure its interest in cash collateral would be adequately protected, Prevratil said.

The board will consider the measure in June ahead of a planned FERC filing.

— Michael Kuser