NYISO stakeholders Nov. 21 expressed skepticism of an ISO proposal to levy financial penalties against underperforming generators, saying it was not developed enough to be voted upon by the end of the year. 

While nonperforming generators must buy out the energy they did not provide in the real-time market based on its day-ahead operating reserves schedule, there is no penalty for nonperformance, NYISO said in presenting its proposed Operating Reserves Performance Penalty to the Installed Capacity Working Group meeting.  

Under the proposal, NYISO would use three metrics to identify consistently underperforming providers of operating reserves: 

• • resource response frequency during emergency conditions and audits;  
  • frequency of underperformance after being scheduled in the day-ahead market to provide operating reserves; and  
  • the real-time energy provided compared to the real-time energy requested, covering generators that are infrequently dispatched. 

“We heard feedback from a number of folks that poor performers should be removed from the market and that folks would like to see us put some additional provisions on how we will effectuate removal from the market for poor performers,” said Nathaniel Gilbraith, NYISO’s manager of energy market design. “What we wanted to do … is lay out some illustrative metrics here today to start the discussion.” 

While no one at the meeting was opposed to the idea of penalties, some said that because the thresholds for the metrics were not well defined, it was hard for them to evaluate if they were fair assessments of poor performance. 

“I think you would want to provide some criteria so that people could understand at what level someone would be disqualified,” said Howard Fromer, director of regulatory affairs for Bayonne Energy Center. “I understand you have the authority today to do it, but there needs to be some distinction.” 

The proposal will be discussed again Dec. 11, with a final draft for stakeholders to vote on before the end of the year, Gilbraith said. 

“I’m struggling to understand why we’re moving forward with a vote on this in December when there seems to be a lot of outstanding questions that may or may not be answered during the manual revision discussions. … It sounds like we’re going to be working on this project next year. What’s the rush?” asked Matthew Schwall, director of regulatory affairs at AlphaGen. “As things stand, I’m inclined to vote ‘no.’” 

Another stakeholder chimed in that they also thought the proposal was “under-baked” and that while they appreciated that NYISO was “under the gun” to get a vote in by the end of the year, it was hard to support a proposal that was not clearly laid out.