RENSSELAER, N.Y. — The NYISO Management Committee voted Wednesday to recommend that the Board of Directors authorize a fix to address an inconsistency between the ISO’s current Tariff provisions governing transmission constraint pricing and how its software applies the rules.

The change is in response to an error discovered last year, which led the ISO to declare a “Market Problem” in November and to seek a waiver from FERC, allowing it to continue using the current software until revisions to the Tariff and software are approved. The commission has not acted on the Jan. 6 request (ER17-758).

The graduated transmission shortage cost rules, which took effect in February 2016, establish limits on the shadow prices that the ISO’s security-constrained unit commitment and dispatch algorithms use to resolve transmission constraints.

The ISO presented an analysis of its proposed changes to the transmission constraint pricing logic and a consumer impact analysis to the Market Issues Working Group in January and February.

The fix would remove the feasibility screen and apply the graduated transmission shortage cost method to all constraints with a non-zero constraint reliability margin (CRM). A single $4,000/MWh cap would continue to apply for all facilities and interfaces with a zero CRM.

In addition — because the ISO has determined that it was unnecessarily concerned about forgoing dispatch to secure transmission constraints when all eastern reserve locations and eastern reserve products are short — the second step of the method would be reduced to $1,175/MWh from $2,350/MWh.

“The $1,175/MWh value will continue to support moving resources that can effectively secure the transmission constraint before utilizing the 15 MW of relief available from the second step” of the shortage cost method, the ISO said. “The $4,000/MWh [cap] still acts as a backstop to ensure that resources are dispatched for constraints with larger overloads.”

The board will be asked to approve a FERC filing outlining the software and Tariff changes required to implement the fix.

“We will not update the transmission software without FERC approval,” said Jennifer Boyle, NYISO energy market design specialist.

The motion prompted no discussion from stakeholders at the meeting.

The ISO said it will begin a discussion with stakeholders about additional improvements to transmission constraint pricing in the third quarter.

Replacing Bernard Dan

CEO Brad Jones prefaced his monthly report with comments on how the grid operator may replace Director Bernard W. Dan, who resigned March 21 after less than one year on the board. Jones said the board already has issued a solicitation for an executive search firm to find a replacement for Director Robert Hiney, who will reach his term limit in April 2018.

“The process may take a few months, say late summer, and if that happens we may have a combinatorial [selection process],” Jones said. “But the board has not decided.”

Hiney was appointed to a four-year term in 2006; under NYISO bylaws, a director may serve no more than three full terms. Dan’s replacement will fulfill the remainder of his term, expiring in 2020. (See NYISO Board Member Resigns After Less Than a Year.)

Members OK Change to Emergency Energy Pact with ISO-NE

The Management Committee also voted Wednesday to recommend the board approve rewording the ISO’s coordination agreement with ISO-NE on emergency energy transaction charges to reflect the RTO’s move to five-minute settlements. ISO-NE made the change to comply with FERC Order 825, which required RTOs and ISOs to settle real-time energy, operating reserves and intertie transactions in the same time interval it dispatches, prices and schedules them.

NYISO said it wanted to clarify the emergency energy settlements formula in the agreement to better align with real-time intervals and ISO-NE’s change. “For both RTOs, we are clarifying that the emergency energy charge is the sum of the charges for each real-time interval for the duration of the emergency energy transaction,” NYISO said.

The locational-based marginal pricing (LBMP) in a settlement interval will be increased to $0 if it is negative.

Change OK’d for Start-Up Bid Rules

The committee also approved a recommendation that the board revise the Tariff to allow all generators to increase start-up bids in real time.

NYISO said generators committed for day-ahead energy or regulation service have been able to “inappropriately” increase their start-up bids in real time, while generators scheduled for reserve services in the day-ahead market have been improperly prevented from doing so.

Under ISO rules, generators can submit two types of start-up bids: a single point bid, which specifies the cost to start the generator as part of hourly offers, or a multi-point bid, which sets the start-up cost based on how long the generator has been offline and how long it takes to start. If both types are submitted, the single point bid takes priority.

The ISO’s Tariff prohibits generators scheduled in the day-ahead market for energy or regulation from offering a higher start-up bid in real time for any hour in which the generator was scheduled.

The proposed amendment to Tariff Attachment J would specify that when a day-ahead-scheduled generator that is available for real-time commitment increases its real-time start-up bid, it becomes ineligible for a day-ahead margin assurance payment for the hour in which it increased its bid as well as the two hours before and afterward — an approach consistent with the current treatment of incremental energy bids.

The ISO says allowing generators to increase start-up bids in real time regardless of the day-ahead commitments would result in more efficient real-time scheduling decisions.

Impact of Shorthanded FERC on Fate of Con Ed-PSEG ‘Wheel’

Before adjourning the meeting, Management Committee Chair Scott Leuthauser, a consultant to Hydro-Quebec Energy Services, took a question from Howard Fromer of PSEG Power New York, who asked what would happen to NYISO’s joint operating agreement with PJM to end the 1,000-MW Con Ed-PSEG wheel absent FERC action. (See NYISO Members OK End to Con Ed-PSEG Wheel.)

Jane Quin of Consolidated Edison followed Fromer’s question by asking what would happen if the protocols of the agreement were delayed by inaction from FERC.

The commission lost its quorum when former Chairman Norman Bay resigned in February, leaving the remaining two commissioners short of a quorum to act on contested matters.

NYISO COO Rick Gonzales answered that the filing specifically states that the agreement “can go into effect within 60 days without action from FERC. … Unless we hear different, we will implement what we have filed jointly with PJM,” he said.

– Michael Kuser