The New York State Research and Development Authority last week petitioned the state’s Public Service Commission to adjust how it calculates the reference capacity price (RCP) for renewable energy certificates to account for NYISO’s new capacity accreditation construct (18-E-0071/15-E-0302).

The RCP is an input used to calculate how much generators who own index REC contracts are paid each month. The price, along with a reference energy price, is subtracted from the index strike price to determine the total amount paid. Thus, the lower the RCP, the higher the revenue.

NYSERDA told the PSC that some intermittent generators were having difficulty predicting the amount of capacity revenue they expected to receive because of the changes. The agency proposed eliminating the need for generators to predict their unforced capacity (UCAP) production factor, itself an input in the calculation for the RCP, and change the variable to a fixed value, unless a generator requests a specific value and the commission approves it.

“Eliminating the need for [REC bidders] to predict future UCAP amounts would reduce the risk associated with future variance between a resource’s capacity revenue and reference capacity price,” NYSERDA wrote.

But while “the proposed revised reference capacity price formula provides a more flexible and resilient hedge and is therefore expected to lower bid prices in future” requests for proposals, NYSERDA cautioned that it “is not able to reasonably predict the associated reduction in ratepayer costs.”

NYISO received FERC approval in 2022 to adopt a new marginal capacity accreditation market design that placed more value on intermittent suppliers and generators providing marginal contribution to reliability, instead of their average contribution. (See FERC OKs NYISO Capacity Market Changes Stemming from NY Climate Law.) The new rules are scheduled to become effective May 1, 2024.