FERC on Wednesday accepted NYISO revisions to its operating reserve demand curves (ORDCs) but rejected the supplemental reserves procurement process component of the ISO’s proposal (ER21-1018-001).
NYISO proposed two sets of changes, with the first concerning the current ORDCs and designed to improve pricing efficiency; provide for better alignment with the cost of actions that may be taken to preserve sufficient availability of reserves and maintain system reliability; and reduce historical occurrences of reserve shortages.
The commission found that the proposed ORDC changes would improve pricing efficiency by introducing additional steps to the New York Control Area’s 30-minute reserve demand curve based on recent NYISO data demonstrating the value of various operator actions taken to maintain reserve availability and system reliability.
“These additional steps will make the ORDC more graduated and assign more accurate prices to these actions and avoid unnecessary price volatility by further graduation of the NYCA 30-minute reserve demand curve,” the commission said, adding that the proposed updated ORDC values better reflect the locational price signals necessary to incent resources to develop and/or maintain the capability to provide reserves when and where needed.
“Further, based on the evidence NYISO provided, we find that the proposed ORDCs would significantly address the reserve shortages that NYISO has experienced. Together, the ORDC changes will improve NYISO’s ability to manage operational uncertainty via market signals,” the commission said.
The compliance filing must provide at least two weeks’ notice of the actual effective date; NYISO requested a flexible effective date between June 1 and 30.
Supplemental Reserves
The second set of tariff revisions concerned the establishment of a process to facilitate procurement of operating reserves in excess of the quantities required by minimum reliability standards and rules to the extent such supplemental reserves are needed to assist with maintaining system reliability as intermittent renewable generation increases over time.
The commission, however, rejected this proposal and directed the ISO to submit a compliance filing removing all instances of supplemental reserves from its proposed language within 30 days.
The New York Department of State’s Utility Intervention Unit (UIU) had protested the supplemental reserves component, arguing that the filing lacked the information the commission needs to assess the proposed changes. The Independent Power Producers of New York supported the proposal, arguing it was made in collaboration with stakeholders to address reliability concerns as intermittent renewable resources increase in the near future.
“As a preliminary matter, we disagree with NYISO’s assertion that the procedures for implementing and adjusting supplemental reserve requirements are substantially similar to the existing procedures for adjusting regulation services requirements,” the commission said. “We agree with UIU’s assertion that the two requirements are not substantially similar because the criteria by which the regulation services requirements are established and adjusted rely on reliability rules established by external reliability organizations rather than at NYISO’s discretion.”
The commission said NYISO’s proposed tariff revisions “lack sufficient specificity” because they only describe how the ISO would review any supplemental reserve procurement with its market participants; obtain Operating Committee approval at least 30 days prior to any procurement; and then post the targeted procurement level.
“Additional specificity in the Services Tariff will provide a degree of predictability as to costs associated with any procurement of supplemental reserves,” the commission said.