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Adequate Cost Recovery is Necessary for NYISO Generators Needed for Reliability
WASHINGTON, D.C. - The Electric Power Supply Association (EPSA) on Friday, September 3, 2010, submitted a protest to the Federal Energy Regulatory Commission (FERC or Commission) regarding the New York Independent System Operator, Inc.s (NYISO) proposed tariff revisions that will generally apply to all Rest-of-State (ROS) generators when they are the sole unit that can meet an identified reliability need and when certain other conditions are satisfied.
EPSA protested the ROS Mitigation Proposal because it fails to provide generators committed for reliability the opportunity to earn adequate revenues to recover their fixed costs. EPSA asserted that until such a cost recovery mechanism is included as part of a comprehensive proposal for Commission review, the ROS Mitigation Proposal is not just and reasonable, as required by the Federal Power Act. ROS refers to the areas of the state outside of New York City.
EPSA raised concerns that by mitigating generators potentially subject to these new rules back to their short-run operating costs, there are no price signals to the marketplace to provide proper incentives for the development of future resource adequacy whether from new generation, demand response or transmission, or to ensure the viability of existing economic generation. EPSA asked that the Commission direct the NYISO to develop tariff provisions similar to those the Commission has previously approved (and thus determined to be just and reasonable) for neighboring independent system operators, that provide for a generator to make a filing pursuant to Section 205 of the Federal Power Act (FPA) requesting the establishment of a reliability-must-run (RMR) agreement.
In requesting the Commission to suspend consideration of the ROS Mitigation Proposal until an appropriate cost recovery mechanism is filed, EPSA stated that Tightening mitigation rules to the point where generators cannot recover their variable and fixed costs is clearly not just and reasonable. To meet the just and reasonable ratemaking requirements under the FPA, the Commission must require a comprehensive proposal from the NYISO that allows a generator subject to the mitigation that is needed for reliability the opportunity to recover its full costs, which includes a reasonable return of and on its investment.
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.