By William Opalka

The Federal Energy Regulatory Commission last week left intact most of its 2010 order meant to mitigate market power in the installed capacity market in New York City.

FERC denied rehearing on most challenges to its order, which affirmed changes to the NYISO Tariff (EL07-39-006, ER08-695-004, ER10-2371).

However, it clarified the previous order’s consideration of demand response programs that may benefit from state policies or subsidies.

The order accepted NYISO’s compliance filing with the exception of its proposal to grant a blanket exemption from offer floor calculations for all payments and other benefits to special case resources (SCR) under state programs. An SCR is a demand-side resource that participates as a supplier in NYISO’s capacity market.

“We clarify that our May 20, 2010, order did not intend for NYISO to rule on the legitimacy of particular state programs. However, neither did we intend to grant a blanket exemption for all state programs that subsidize demand response,” FERC wrote.

The order removes a requirement in the 2010 ruling that NYISO provide a list of criteria governing which payments are included in offer floor calculations. Instead, the commission will decide petitions for exemptions on a case-by-case basis.

The order granted rehearing on whether payments under Consolidated Edison’s distribution load relief program and the New York State Energy Research and Development Authority rebate program should be excluded from the SCR offer floor.

That shift resulted in a partial dissent from Commissioner Norman Bay.

“The commission announced five years ago that it did not intend ‘to interfere with state programs that further specific legitimate policy goals.’ Yet that is precisely what the majority does today by declaring the ConEd and NYSERDA programs to be presumptively improper exercises of market power,” Bay wrote.

The order denied rehearing on a challenge to the demand curve price used for calculating the default offer floor.