NYISO on Jan. 30 laid out for the Installed Capacity Working Group its proposal to remove operating reserve suppliers that consistently underperform from the market until they pass a requalification test. 

“When a resource is identified for review, there will be a rebuttable presumption that the resource’s ability to provide operating reserves will be removed,” said Katherine Zoellmer, NYISO market design specialist. “Removing a resource’s qualification to provide operating reserves should incentivize performance due to a loss of operating reserves revenues during the period of removal.” 

Zoellmer said the ISO was exploring what the timeline of removal and possible requalification might be. In response to a stakeholder’s question, this would mean that 100% of the resource’s operating reserves would be “in jail” and off the market. 

“We want to make sure that the time of removal is long enough that it provides a disincentive,” said Mike Mager, representing Multiple Intervenors. “But it shouldn’t be too long. We want to get resources able to provide operating reserves to the market.” 

NYISO first presented the proposal last year, along with financial penalties for resources on the day-ahead schedule who fail to provide electricity as promised in the real-time market. The Business Issues Committee ended up tabling the penalty component but approved moving forward with the removal portion. (See Stakeholders Turn down NYISO Reserve Performance Penalties.) 

As currently proposed, NYISO would remove a resource from the market if it failed to perform during reserve pickup (RPU) events or audits and when dispatched in real time. The thresholds for failure have not been finalized yet. Crossing these thresholds would not cause automatic removal, Zoellmer said, but it would trigger a “holistic performance review.” 

“We take a look at the resource’s performance as a whole,” she said. “The goal of this is to remove persistently poor performers.” 

Stakeholders emphasized that resources should not be removed for isolated events. One stakeholder suggested splitting the RPU events/audits metric to take into account a failure to not just perform but also to ramp in the time desired. 

There was some discussion about whether removing a supplier would cause prices to rise. Mager pointed out that the point is that if resources are not providing the electricity they promised, they are already costing consumers money. 

“If we remove supply, that could have a price impact in the short run,” said Nathaniel Gilbraith, NYISO manager of energy market design. “The focus of this project is to improve performance and reliability of our operating reserve supplier fleet so in the long run, consumers can benefit from more availability of supply.” 

Another stakeholder said it would be helpful if the ISO generated automated notifications for resources that fail to perform on its metrics. Issuing warnings could help mitigate administrative or communications issues between NYISO and its fleet, they said.