The Federal Energy Regulatory Commission on Feb. 20 acted on a series of orders that narrow or deny exemptions from the New York Independent System Operator’s buyer-side market power mitigation rules in its mitigated capacity zones.
The actions at FERC’s monthly open meeting came in four orders that address specific, relatively narrow buyer-side market power issues in NYISO pending before the Commission.
FERC Chairman Neil Chatterjee said that the Commission was taking action to narrow the scope of exemptions from NYISO buyer-side mitigation (BSM) rules, “thereby broadening the markets’ protections against price distortion.”
The federal agency took action in four NYISO-related orders.
FERC denied rehearing of an order that rejected a complaint asking for the application of buyer-side mitigation to existing capacity resources needed for short-term reliability and with repowering agreements (Docket Nos. EL13-62-001, EL13-62-002).
In a second proceeding, FERC denied a complaint from the New York Public Service Commission and the New York State Energy Research and Development Authority seeking an exemption for electric storage resources from NYISO’s buyer-side market power mitigation rules. (Docket No. EL19-86-000).
Meanwhile, FERC found that all new special case resources (SCRs), a type of demand response resource in NYISO, should be subject to NYISO’s buyer-side market power mitigation rules, and initiated a paper hearing to determine whether payments from the retail demand response programs should be excluded from the calculation of SCRs’ offer floors (Docket Nos. EL16-92-001, ER17-996-000).
In the fourth proceeding, FERC found that NYISO’s proposed 1,000-megawatt cap on the renewable resource buyer-side mitigation exemption fails to comply with prior Commission directives, and directed NYISO to make a further compliance filing to ensure the cap is narrowly tailored to the specific capacity zones and not the full state, is based on unforced capacity instead of installed capacity, and limits the risk that renewable resources significantly impact the price. FERC also excludes from the mitigation exemption for self-supply resources public authorities or corporate municipal instrumentalities created by the State of New York that own or operate generation or transmission and authorized to produce, transmit or distribute electricity for the benefit of the public (Docket No. ER16-1404-000).
With respect to this decision, Chatterjee said that FERC rejected NYISO’s proposed 1,000-megawatt exemption cap, as well as the grid operator’s proposal to allow state entities to be eligible for the self-supply exemption.
Glick says FERC has “created one big mess” in eastern capacity markets
Commissioner Richard Glick said it is “kind of comical to suggest that what we’re doing here in New York – what this whole proceeding is about – has anything to do with buyer side market power. It doesn’t. It’s not buyer side mitigation.”
He said at the meeting that “most of the resources affected by today’s order aren’t even buyers.” And of those that are affected by the order, “very few of them actually have market power. Yet the Commission’s decided to subject them all” to a mitigation regime that will “increase prices and make renewables, demand response and energy storage less likely to clear in the market.”
The Commission “has now spoken in the three regions that have mandatory capacity markets – New England, New York and PJM,” Glick noted.
“I would challenge anyone to find a common scheme here, to find what the Commission’s theory is, except for, ‘We want to raise prices to benefit existing generators and stunt the development of new clean energy resources,” which a lot of states are eager to promote, he went on to say.
“The fact is that we’ve created one big mess in the eastern capacity markets, and I don’t think my colleagues have plans for getting us out of it,” Glick said.
Meanwhile, states are “growing restless,” he said. For example, the New York Public Service Commission has initiated a proceeding to examine “whether they should take back resource adequacy from the market,” Glick said.
“And then we see other states -- primarily in PJM and reacting to the recent PJM orders, but also in New England – say, ‘We need to think about doing something similar or even something more drastic. Getting our utilities out of the RTO altogether, or maybe at least getting them out of the capacity market as we currently know it.’”
Glick said that “there’s real doubt about the future of our regional markets. Everyone knows it. The capacity markets are really in doubt right now and we need to really act to get some control over it again and figure this out and I hope we do so in the future because today’s orders aren’t going to help.”
Commissioner Bernard McNamee addressed Glick’s saying he doesn’t see a common scheme when it comes to FERC’s approach to the three eastern mandatory capacity markets.
“My view has always been that each ISO and each RTO is different,” McNamee said. “Our obligation is not to impose a worldview on those different RTOs and ISOs. Instead, it’s to look at how are they developed, where are the resources that are available to them, how does their load work, how was the market developed, and trying to look at the actual facts that apply to those and make those decisions based on the facts in the record, based on the facts in those markets, and make the decisions.”
