By William Opalka

RENSSELAER, N.Y. — NYISO’s Market Monitoring Unit is recommending changes to the capacity market and planning processes in import-constrained zones as a result of a New York generating plant’s successful offers into the last two ISO-NE Forward Capacity Auctions.

Pallas LeeVanSchaick of Potomac Economics outlined the recommendations in a presentation on the monitor’s 2015 State of the Market Report to the NYISO Management Committee meeting on Wednesday.

The changes would better account for capacity that is exported to neighboring control areas from import-constrained capacity zones, he said. “This is new this year and we see it as high priority.”

The Roseton 1 generator, a 1,242-MW dual-fuel generator in Newburgh, N.Y., sold 511 MW of capacity in ISO-NE’s FCA 9 for the 2018/19 commitment period and 532 MW in FCA 10 for 2019/2020. The plant will have simultaneous capacity obligations in New York and New England. Roseton 1 is in Zone G in the Lower Hudson Valley, which has been designated as import-constrained.

Potomac said rules were needed to prevent inefficient capacity prices and anticompetitive outcomes.

“If such rules are not devised soon, clearing prices will be set above competitive levels in the Lower Hudson Valley. Therefore, we recommend rules to account for these transactions that would ensure efficient pricing in NYISO’s capacity zones,” according to the report.

The monitor said planning for this now would reduce uncertainty regarding future prices and reliability.

“This would avoid the scenario where prices would be inflated in June 2018 by $40/kW-year” in zones G-J, (Lower Hudson Valley and New York City), LeeVanSchaick said.

Potomac said underlying principles of the adjustments should be that the capacity clearing price is equal to the value of the additional megawatts in the area and that the capacity payment is equal to the reliability value to NYISO.

It proposed:

• Accounting for the reliability benefits provided by a Southeast New York resource that exports to another control area when clearing zones G-J;
• Compensating exporters based on local/rest-of-state price differentials; and
• Adjusting planning assumptions to recognize these benefits.

ISO Seeking Feedback on Potomac

Separately, NYISO will collect comments on Potomac’s performance until July 15 in its annual solicitation of market participant input.