FERC Filings
MOTION FOR LEAVE TO INTERVENE AND PROTEST Re: NYISO
THE NYISO’S PENALTY PROVISION PROGRAM WILL UNDERMINE THE DEVELOPMENT OF COMPETITIVE MARKETS, INCREASE UNCERTAINTY AND DRIVE SUPPLY OUT OF NEW YORK.
The NYISO is misunderstood in its interpretation and therefore the impacts the Penalty Provisions will have on the market. As stated by the NYISO itself, the mitigation measures are intended to “restore competitive market outcomes, while avoiding unnecessary intervention in the New York Electric Markets and providing appropriate incentives to participate in those markets.” Indeed, the proposed Penalty Provisions will have the opposite affect.
The NYISO, in its Penalty Provisions filing, states that “Market Parties are aware of their reference prices, and of the bidding conduct thresholds, and thus avoidance of penalties is within the control of each market participant.” Yet at the date of this filing, the NYISO has not developed or distributed generators’ reference prices associated with the Real-Time Market. This is absurd, given that the NYISO requests that the Penalty Provisions take effect July 3rd. The only constant this brings to the market is increased uncertainty and a disincentive to those Market Participants who should be encouraged to participate during times of supply shortages – a result the NYISO should hope to avoid.
In addition, further uncertainty will result because the NYISO has failed to expressly illustrate when the NYISO must determine whether punishable behavior has occurred. The Penalty Provisions do not impose time limits on the NYISO to complete
its review and determine whether punishable behavior has occurred. Again, Market
Participants will not be able to make sound market decisions and will look to more
stable markets elsewhere.
In a purported attempt at a balanced approach, the Proposal would apply the same escalating penalty schedule to loads that incur mitigation under the MMM as well as sellers. In particular, the Proposal would impose penalties if load-serving entities choose to purchase power needs in the real-time market versus the day-ahead market. This action will contribute to unwarranted divergence between the two markets. The filing asserts that the NYISO cannot rule out the possibility that situations can arise in which market outcomes will be distorted by the exercises of market power. This despite the fact that the NYISO’s Independent Market Advisor, Dr. David Patton, has just recently concluded that while “some had initially expressed concern that large LSEs may deliberately under-bid their load in the day-ahead market in an attempt to artificially reduce the day-ahead clearing prices. This has not been the case.” Further, the ISO has not established what will be considered a “substantial” portion of load nor hat will constitute “unwarranted divergence” for purposes of imposition of the proposed penalties. This can only lead to further uncertainty and risk for load-serving entities who are struggling with the shortage of supply. It also introduces additional risk to entities attempting to help customers manager their demand in response to ISO emergencies and price volatility.