Tensions flared at the NYISO Installed Capacity Working Group meeting Nov. 4 over the ISO’s proposed changes to the special case resource (SCR) demand response program, which large energy consumers said will cause a mass exodus of participants.
“I think NYISO should know that part of the extreme frustration with this project is that we thought there was going to be actual engagement with the demand side; that there would be engagement with SCR participants,” said Mike Mager, speaking for Multiple Intervenors, a group of large industrial customers.
Mager said that he believed the vast majority of the changes proposed to the SCRs would be viewed unfavorably by the participants.
SCRs typically are large industrial consumers that have loads that can be reduced or turned off. In a report to FERC, NYISO said that from November 2023 to April 2024, the SCR market reduced load by about 1,300 MW statewide. Local behind-the-meter generators participating in the SCR program contributed an additional 100 MW. NYISO allows customers who qualify to participate in the Installed Capacity Market to be SCRs, receiving revenue for reducing their load at the ISO’s direction.
The ISO proposes to change how SCR performance and compensation are calculated. Currently they are based on the average coincident load (ACL), which is the average of the SCR’s highest 20 one-hour peak loads from the previous capability year. NYISO wants to change this to the “customer baseline load” (CBL), which uses data from the prior 30 calendar days and is based on the highest five consumption days of the past 10 prior to an SCR event.
NYISO’s market design report from 2023 estimated this would reduce the megawatt value of an SCR by 6% to 26% depending on the zone; in New York City, this would be about 26%. Michael Ferrari, a market design specialist for NYISO, said the changes more accurately would capture the performance of SCRs.
“The whole ACL/CBL change was not part of any type of engagement,” Mager said. “The testing proposal we’re going to get to is also new by the NYISO. The four-hour notices was also new by the NYISO. There was some discussion about the notice period during the engagement phase, but the feedback provided by the SCR participants was largely ignored.”
NYISO also wants to increase the duration of the performance test of an SCR to six hours, up from one. In prior meetings ISO staff also expressed a desire to increase the duration requirement of an SCR to six hours and shorten the notice window from 21 hours to four hours. (See Large Consumers Miffed at NYISO Proposal to Shorten SCR Notice Period.)
“This deal just kind of seems to be getting worse and worse,” said Aaron Breidenbaugh, senior director of regulatory and government affairs for CPower. “For a project that’s supposed to be coming out of ‘Engaging the Demand Side,’ I think a word besides ‘engaging’ is more appropriate.”
Mager said the changes were moving in the wrong direction, disincentivizing participation at a time when the state’s reliance on intermittent generation was increasing. Shutting down manufacturing for longer SCR testing, or on shorter notice for less compensation, was an overall bad deal for manufacturers, he said.
“The last time we talked about this, I used the Titanic analogy,” said Breidenbaugh. “Now we’ve just punched a hole in two more compartments.”
Breidenbaugh said if he was working at NYISO and had been given the job of eliminating the SCR program, he would do exactly what the ISO was proposing to do.
“If you’re trying to get rid of it, you’re doing a really good job, but I don’t think that’s what you’re trying to do,” he said. “I think everyone can believe that this could make a better program with more flexible megawatts. You’ll have more flexible resources; they will just be a tiny fraction of what you have.”
“I’ve not been given the request to kill the SCR program. That is not the intent of this series of proposals,” Ferrari said.
After some additional discussion, Breidenbaugh said he didn’t think New York state’s regulatory authorities would allow the amount of DR that is dependent on participating in the SCR program to go away. He said if the changes caused participants to jettison from the program, the state might work with utilities to get its own program in place.
“I certainly don’t think it’s the best way for NYISO and its operators to lose control of those levers,” he said. “I’m not sure the utilities necessarily want to take on that responsibility, but they oftentimes get tasked with doing things they don’t want to do.”