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NYISO plans more than a dozen major power market design improvements


Market design changes will be implemented over the medium term

Multiple efforts focused on shortage pricing as resource mix changes

  • Author
  • Jared Anderson
  • Editor
  • Rocco Canonica
  • Commodity
  • Electric Power

New York — The New York Independent System Operator is pursuing several power market design changes similar to those underway or completed at the other regional ISO's, including potential fuel security enhancements, shortage pricing and enhanced fast-start pricing, the grid operator said in a Tuesday update.

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The grid operator has 15 market design initiatives underway intended to improve functionality in the capacity, distributed energy resource and energy markets, according to a presentation scheduled to be given at a Wednesday committee meeting that was posted to the NYISO website Tuesday.

One of the major capacity market design changes under consideration -- enhancing fuel and energy security -- is "slightly behind schedule" due to additional time needed for vetting assumptions, methodology and results, according to the presentation.

Originally expected in the second quarter, a report being prepared by consultant Analysis Group assessing fuel/winter energy security for the NYISO under various system scenarios and contingencies is currently expected early in the fourth quarter of 2019.

The report evaluates power market trends that are introducing potential risks as the system increasingly relies on intermittent and natural gas-fired generation by modeling scenarios during an extended cold weather period in winter 2023 to 2024, according to Analysis Group.

After nixing a contentious 2017 proposal (RM18-1) from the US Department of Energy to institute new market rules providing full cost recovery and a return on investment for generators with 90-day on-site fuel supplies, federal regulators in January 2018 launched a holistic review (AD18-7) of the resilience of the bulk power system.

PJM Interconnection and ISO New England have been working on potential market-based fuel security improvements as part of that proceeding.

The NYISO is also adjusting its capacity market demand curves which estimate net energy and ancillary services revenues for peaking plants. Stakeholder discussions are set to begin on August 23, the demand curve model is scheduled to be finalized around Q3 2020, the proposed updates will be filed with the Federal Energy Regulatory Commission in Q4 2020 and implementation of the approved curves is expected to start with the May 2021 capacity auction.

Being in the very early stages, there is not enough information available at this time to project how this process might impact future power prices, the NYISO said in an email Tuesday.


Of the six energy market design projects on the schedule, three are focused on shortage pricing efforts. Constraint-specific transmission shortage pricing intended to ensure transmission shortages are appropriately valued based on the constraint's severity, among other things, is running behind schedule, according to the grid operator.

The NYISO is "considering whether it is prudent to request a stakeholder vote at this time based on other project priorities and implementation timing," according to the presentation.

In response to an April FERC order (EL18-33, EL18-34) that directed the NYISO and PJM to adjust market rules to more effectively allow fast-start resources to set prices, New York's grid operator is working with market participants and its external market monitor on a methodology for amortizing fast-start resource start-up and minimum generation costs when determining prices.

Fast-start resources are able to start and synchronize to the grid in 30 minutes or less which boosts reliability by providing additional energy and ancillary services on short notice.

"Fast-start pricing focuses on allowing dispatchable resources with quick start-up times to set locational based marginal prices in the energy market," the NYISO said in an email Tuesday. "As part of this effort, the FERC requires that all costs, including startup and no load costs, be included in the determination of the LBMP. In order to include a startup or no load cost, they need to be amortized over time (e.g. an hour)," NYISO said.

The FERC order requires the changes be deployed by December 31, 2020.

The grid operator is also studying ways to improve shortage pricing for ancillary services like reserves that will be needed more as the penetration of weather-dependent generation resources increases, according to a July NYISO presentation.

The study is on schedule to be completed in Q4.

The NYISO is also working to price carbon dioxide emissions into its wholesale markets and currently anticipates discussing the latest study focused on that effort with stakeholders in late Q3 or early Q4.

-- Jared Anderson,

-- Edited by Rocco Canonica,