The Analysis Group told NYISO stakeholders Aug. 22 that it did not recommend any major changes to the annual process for updating the ISO’s gross cost of new entry for generators, saying it did not find any other, more accurate source of data on component costs.
NYISO increases its CONE every year between its quadrennial demand curve resets (DCRs) to account for inflation. It uses data from inflation indices for four major components of engineering, procurement and construction costs: generating equipment, labor, materials and other miscellaneous costs.
Stakeholders have raised concerns that the Analysis Group’s recommendation of a two-hour lithium ion battery storage system as the peaker plant for the 2025-29 DCR — a change from GE Vernova’s 7HA.02 gas turbine — leads to higher CONE values.
But the consultancy said the increase is attributed to factors that are not taken into account in the annual update — and they should not be.
“In our view, annual updates are not designed to replicate a full demand curve reset,” Daniel Stuart, a manager and public policy expert for Analysis Group, told the Installed Capacity Working Group. “They just can’t consider policy changes in market factors, [such as] federal policy that provides a new tax credit for battery storage technology that will never be picked up on an inflation index.”
The consultancy did, however, change an index it had recommended to estimate the generating equipment component for battery storage systems to one that that excludes lead acid batteries.
“That seems like a helpful improvement to exclude a kind of battery that is quite different from lithium ion batteries,” said Stuart. “But beyond that, we have not found any other indices that more accurately reflect the changes and the four cost components defined in the tariff.”
Howard Fromer, director of regulatory affairs for Bayonne Energy Center, expressed concern that utility-scale batteries would not be accurately represented by the new index because they represent a small minority of the batteries included.
“It’s going to get watered down by including a lot of stuff [that] aren’t even subject to tariffs,” Fromer said. “We’re going to miss a huge potential component going forward.”
Stuart asked what other index should be used. Fromer suggested adjusting the index; Doreen Saia, chair of the Albany office of energy and natural resources practice for Greenberg Traurig, said the risk factor could be adjusted.
“Throwing up our hands and saying, ‘We just can’t get there,’ doesn’t ignore the fact that an investor will just throw up his hands,” Saia said.
Amanda De Vito Trinsey, a lawyer with Couch White representing New York City and Multiple Intervenors (MI) — a group of large industrial, commercial and institutional energy consumers — stepped in.
“I hear what everyone’s saying, and I understand the concern,” Trinsey said. “We don’t know what will happen, and so I think we’re doing the best with what we have in place. The city and MI support the process that you have here, and we don’t see any reason to depart. … What we have now captures that risk adequately.”