FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION-New York Independent SystemOperator, Inc.-Docket Nos. ER01-1489-000, ER01-181-000, ER00-181-001, and ER01-1517-000, not consolidated.
II. NYISO’s Notice of Its Circuit Breaker Mechanism is Inappropriate, and Should be Made in a §205 or §206 Filing
In its notice to withdraw the October 20, 2000 filing in ER01-181-000 (in which the NYISO originally requested that its current bid cap of $1000 be indefinitely extended until such time as the NYISO was able to successfully develop, test, and implement a “superior market protective mechanism”), NYISO introduced a new automated market mitigation mechanism – or a “circuit breaker”—that would automatically impose a default bid as a mitigation measure under the NYISO’s market mitigation plan. NYISO maintains that such market mitigation measures were “previously approved by the Commission and are currently in effect,” and therefore dismisses the need to file the circuit breaker with the Commission because it allegedly falls within the NYISO’s existing market mitigation authority.
EPSA believes the NYISO is misguided in understanding the importance or impact of its circuit breaker mechanism. NYISO should not expect that its simple mention of the circuit breaker in a notice to withdraw a bid cap proposal would be acceptable to market participants. Moreover, NYISO should not interpret the Commission’s prior approval of the ISO’s Market Mitigation Plan as a green light to implement the proposed circuit breaker, which is very different from the procedures previously approved by the Commission. A circuit breaker is a tool that has not yet been applied in any of the region’s control areas, let alone New York. The NYISO’s filing is inadequate to justify that it is an appropriate market mitigation measure and will not hinder the development of competitive markets in New York. Given its potential significance, the circuit breaker should be filed under §205 or §206 of the Federal Power Act for review and comment by all market participants.
NYISO has announced its intent to implement the circuit breaker before the Summer 2001 capability period. Given the serious nature of the circuit breaker’s consequences, it is unquestionable that such a mechanism would have significant impacts on the greater regional markets, including PJM, ISO New England and Ontario’s Electricity Market Operator control areas. The Commission has long supported the goal of achieving consistency across regional competitive markets. Requiring a §205 or §206 filing will ensure that the viewpoints of all market participants in those control areas are considered. Failure to do so could result in serious unfavorable effects on regional markets, including potential liquidity and reliability concerns.
Additionally, the implementation of a circuit breaker would have a significant impact on the value of transmission congestion contracts (TCCs). Customers purchased the TCCs in auctions conducted by NYISO before the circuit breaker concept was discussed. Had circuit breakers been in place previously, customers interested in TCCs would have bid different prices. To implement the circuit breakers now would represent a significant and unfair change in the rules, and create uncertainty in the markets. EPSA therefore recommends that the Commission order a full investigation of the circuit breaker concept before allowing the NYISO to introduce such inconsistencies and uncertainty to the market.