FERC Update

FERC is learning from technical conferences that it’s important to be clear about what the emerging system needs will be with the energy transition, Robert Fares, a wholesale electricity markets analyst at the commission, told NYISO’s Management Committee on Tuesday.

The MC received from Fares an update of the commission’s recent areas of interest, including changes to capacity, energy and ancillary services markets.

“And it’s important to be clear about whether and why the existing products are not meeting those needs and then finding the product that addresses those needs in a very targeted way just in order to balance the tradeoff between minimizing consumer costs and also meeting the needs of the system,” Fares said.

Fares referred to NYISO’s recently completed changes to both its buyer-side mitigation (BSM) and capacity accreditation. The commission earlier this month accepted NYISO’s proposal to implement its revised BSM rules for the current class year.

Capacity accreditation is going to be a hot topic going forward, and “I think you all know that that’s become a bit of a trend across the eastern RTOs, where PJM took the first bite of the apple, and NYISO has taken the second one, and now I am assuming everybody will shortly be taking a bite at the apple,” Fares said. “I personally expect that’s going to be continually refined over the coming decades as the transition continues, so that’s certainly a big area of interest.” (See PJM Responds to Market Monitor Recommendations.)

FERC has also been very interested in transmission because there’s a wide consensus that it is going to be an extremely challenging area over the coming years in terms of enabling the energy transition, he said.

Another area of interest across all the RTOs concerns the rapid pace of new development of generation. “The interconnection queues are totally flooded right now, and making those queues work quickly and efficiently is really an important part of FERC’s mission,” Fares said. “Part of the commission’s underlying mission is promoting competition, and promoting efficient entry and exit is a big part of promoting electric competition.”

RS1 Cost-of-service Study

NYISO staff recommended that a new Rate Schedule 1 cost-of-service study be conducted in 2022-2023 in order to consider the impact of the significant market design changes to be implemented, though several stakeholders seemed reluctant to commit the ISO’s limited resources to such a study.

The last study was done in 2011, and the MC will vote on conducting a new study at its July 27 meeting.

Market changes include the integration of distributed energy resources, large-scale solar and co-located storage resources, which “will result in an increase in the number of market participants and resource types that may not be prevalent in our markets today, so conducting a cost-of-service study in the coming year would be appropriate to provide rate certainty for those new entrants, as well as NYISO cost recovery and budget planning,” said Chris Russell, manager of customer settlements.

The MC discussed whether a Rate Schedule 1 Cost of Service Study is necessary due to current and future market changes. | NYISO

 

Some market participants said that the penetration of renewables in NYISO markets has yet to cause big changes and expressed concern the ISO could stretch its resources too thin dedicating up to $300,000 for a new RS1 study while trying to manage some major projects.

“We want to be ahead of these things rather than reacting to them, and that’s part of the reason why we look at doing a study now rather than later, even with limited market penetration for a lot of these kinds of resources,” Russell said.

Another stakeholder recommended that the ISO consider asking the MC to approve two RS1 studies — one in 2025 and another in 2030 — which would lock down some dates while also giving staff time to prepare for the study.