NYISO Proposes Changes to Shortage Pricing

The New York Independent System Operator (NYISO) created the Fuel Assurance Initiative to address concerns about reduced power reserves and constrained natural gas capacity – and the associated costs and operational risks for New York energy consumers. As part of this initiative, NYISO filed a proposal with FERC to create a Comprehensive Shortage Pricing (CSP) project to ensure sufficient generation is available when needed. Specific components include:

• Raising the cap on total shortage pricing to $3,250 per MWh under the most severe scenarios.
• Adjusting operating reserve demand curves (ORDC) by increasing or creating caps on pricing for capacity reserves, regulation service, and transmission shortage service in the New York City Area, East, and Southeast New York load zones. See the tables below for specific changes.
• Increasing the amount of ancillary reserve capacity it procures from 1,965 to 2,620 (i.e. twice the amount necessary to restore lost power under the largest possible contingency event).
• Acquiring 1,300 MW of the reserves within the transmission-constrained Southeast New York load zone.

The filing notes that 84 percent of NYISO’s Management Committee voted in favor of the measure. NYISO requested a FERC ruling within 60 days of the filing, with the new pricing taking effect November 1 or later. In October, NYISO presented a Consumer Impact Analysis from the proposed rule. The material in this article is based on NYISO’s filing (FERC accession number 20150218-5152).