The New York Independent System Operator (NYISO) is a not-for-profit corporation responsible for operating the bulk electricity grid, administering wholesale electricity markets, and providing comprehensive reliability planning for New York's electricity system. The CPB represents the interests of residential consumers by actively participating on various committees and working groups related to the governance and oversight of the NYISO. The CPB serves on the NYISO's Management Committee, Business Issues Committee, Installed Capacity Working Group, Market Issues Working Group and the By-laws Subcommittee. The CPB files petitions and comments with Federal Energy Regulatory Commission (FERC) to ensure the adoption and implementation of pro-consumer policies at the NYISO.
NYISO NERC Penalty Allocation Proposal
The CPB filed comments in a FERC proceeding protesting a NYISO proposal to allocate to customers the cost of penalties incurred for its violations of the North American Electric Corporation ("NERC") reliability standards and other applicable regulatory requirements. In its filing, the NYISO proposed recovery of penalty costs from all customers and market participants even when the penalties for reliability violations were incurred due to its own actions or inactions, and not those of customers or market participants. The FERC issued its "Order Accepting Tariff Revisions" in the reliability penalty case and generally agreed with the CPB that penalties incurred due to the NYISO's conduct should not be borne by customers and market participants.
FERC Order on the Lake Erie Loop Flow
The CPB emphasized the need for greater vigilance by the Market Monitoring Unit at the NYISO given FERC's Order stemming from allegations that the placing of certain circuitous schedules around Lake Erie by market participants constituted market manipulation. In the spring of 2008, market participants noticed a substantial increase in their bills. NYISO ultimately determined that some of this increase was attributable to congestion resulting from the loop flow effects of these schedules. While FERC determined that the market participants placing these schedules were openly responding to price signals, were not artificially influencing those signals or deliberately causing congestion in order to raise prices, it ordered the NYISO and other regional market operators to develop solutions that address interface pricing and congestion management. The CPB also urged the NYISO to perform simulation studies and focus on unintended consequences before making any major market design changes. The NYISO's response to these recommendations was positive and the entity is engaging research institutions to gain more information on simulation research.
NYISO's Forward Capacity Market (FCM) Proposal
With assessments indicating that there is no need for extra capacity in New York through 2018 and due to significant project costs, the CPB cautioned the NYISO about switching from the current ICAP market, where a monthly market compensates generators for siting units based on the net capacity the unit provides to the marketplace after accounting for certain factors, to an FCM approach where power capacity for a future year is purchased. Subsequently, market participants voted to heed CPB's message and to cease work on an FCM.
Market Power Mitigation Filing
The NYISO filed with FERC a request for authority to apply prospectively new mitigation rules to three upstate generators. In its filing, the NYISO stated that these generators bid in a manner that reflected an exercise of market power and departed significantly from the conduct one would expect to see under competitive market conditions. The CPB filed a motion to intervene supporting the NYISO filing. NYISO staff discussed in general terms the type of behavior it observed and noted that the behavior, while an exercise of market power, did not violate any provisions in the NYISO's tariffs. The NYISO introduced proposed revisions to the mitigation rules that they assert would ensure that this behavior would be subject to market mitigation.