RENSSELAER, N.Y. — NYISO on Tuesday said it will file comments for New York state to consider as it plans its cap-and-invest program, addressing issues such as allowances and leakage.

Mike DeSocio, director of market design at NYISO, told stakeholders at a meeting of the Installed Capacity Working Group and Market Issues Working Group that the ISO “supports placing a price on carbon emissions and thinks that it is very compatible with the competitive wholesale markets New York has benefited from over the last two decades.”

But, he added, “we are very concerned about reliability and want to reinforce that any program should envision times where there may be a need to run generation to support keeping the lights on that have run out of allowances.”

The cap-and-invest program would auction emission allowances to obligated sources, such as large-scale greenhouse gas producers, and nonobligated entities, such as agricultural or forestry industries. Nonobligated sources would see their allowances retired by the state, while obligated sources would need to purchase allowances to continue emitting. Money obtained from these auctions would go into a climate action fund, with much of it set aside for disadvantaged communities (DACs). (See NY Climate Justice Panel Sets Disadvantaged Community Criteria.)

“The program should be designed in a way where a generator does not need to make a decision or choice between running to keep the lights on or complying with an allowance,” DeSocio said.

The ISO will also comment on how to best address leakage, as well as inform agencies that however they plan to tackle the issue, NYISO will need plenty of time to develop software compliant with the new regulations.

NYISO will also share its support for the creation of an independent monitor, who is able to oversee the state’s policy.

“We’re treating this as an opening for us to offer our experience and help New York shape the cap-and-invest program,” DeSocio said. The ISO will happily provide guidance on any topic, but it would be helpful for agencies to give more insight into the program’s time frame, he said.

Chris Wentlent, chair of the New York State Reliability Council’s Executive Committee, asked whether NYISO plans to comment on having separate trade requirements for different DACs, and on the intent to initially have no offsets for generators.

DeSocio responded that NYISO did not plan to comment on either topic, but “both are important pieces for the state to consider, especially considering other requirements established by the [Climate Leadership and Community Protection Act], but this is not something the ISO will weigh itself into.”

The state’s Department of Environmental Conservation and the New York State Energy Research and Development Authority recently ended a series of webinars dedicated to explaining the cap-and-invest policy and identifying where public input could be most helpful to regulatory decision-making. (See NY Starts Public Review of Cap-and-invest Plans.)

The DEC and NYSERDA plan to have two rounds of pre-proposal outreach and ask that initial comments be submitted no later than July 1. Comments can be sent either online or mailed to the DEC’s Division of Air Resources.