FERC Filings
PROTEST OF THE ELECTRIC POWER SUPPLY ASSOCIATION re: NYISO AMP
PROTEST
The instant compliance filing is a continuation of the NYISO’s unremitting effort to impose regulatory interventions that interfere with truly competitive electric power markets in New York by substituting overly complex and arbitrarily determined price control mechanisms for market-driven outcomes. It is unfortunate that the ongoing effort to establish robust, competitive electricity markets must be conducted under circumstances wherein mere suspicions of market power are invoked to rationalize regulatory interventions that conflict with fundamental economic principles for market development. If the NYISO succeeds in establishing an indefinite regulatory overhang premised on vague, unsubstantiated assertions of market power abuse, the consequence will be further delays in achieving the very market solutions that RTOs and the Commission’s Standard Market Design are intended to promote.
In numerous prior filings, EPSA has expressed its objections to regulatory interventions generally and the NYISO’s Automated Mitigation Procedures (AMP) in particular. Additionally, EPSA has addressed many of the issues presented here in a piece entitled Market Monitoring: A White Paper published on February 9, 2001, which explains the dangers of allowing market monitors to impose unnecessary market “fixes.” The analysis contained in the EPSA’s White Paper and many prior filings is based on sound and widely accepted economic principles relating to market development and operation. The sheer volume of the March 20th filing reflects the great lengths to which the NYISO has gone to insert itself in between competitive power suppliers and customers. In this case, less would most certainly be more.
Rather than its self-serving description that the proposal “strikes an appropriate balance between undue interference in markets, and protection of consumers from significant abuses of power,” the NYISO’s Comprehensive Mitigation Measures would further distort and disrupt the marketplace dynamics essential for new entry and increased investment activity. This is even more true if the flaws identified in the Independent Power Producers of New York (IPPNY) filing in this docket go uncorrected. Further, this misguided attempt to “mimic” market outcomes, if permanently installed, would impede the development of risk management tools, undermine demand response efforts and contribute to seams issues between New York and the rest of the Northeast.
The NYISO filing does contain some positive features, a point recognized by the IPPNY. However, while there may be some welcome developments, overall the proposed measures contain significant flaws that could hinder the advancement of competitive markets in the region, not the least of which is the development of needed new generation. In particular, the use of excessively tight “threshold levels” proposed for some regions of the state has the potential to amount to marginal cost pricing. This and other flaws described in more detail by IPPNY, pose serious threats to the competitive markets the Commission is trying to promote through viable RTOs and related market designs and structures. In reviewing the NYISO filing, EPSA urges the Commission to maintain its focus on the long-term needs of the New York market and resist the temptation to readily approve short-term regulatory “solutions,” such as AMP-like mitigation, that will only further delay the achievement of the Commission’s ultimate goals.