Chairman Richard Glick Statement
April 9, 2021
Docket No. ER21-502-001
I dissent in part from today’s order because NYISO has not shown that its proposal to include dual fuel capability in the cost assumptions for the peaking facility used to establish the ICAP Demand Curve for the G-J Locality is just and reasonable and consistent with its Tariff. NYISO’s Tariff requires that the proxy unit used to establish its ICAP Demand Curves reflect the resource “with technology that results in the lowest fixed costs and highest variable costs among all other units’ technology that are economically viable.”[1] NYISO has not established that in the G-J Locality, a dual fuel unit better satisfies that tariff provision than a gas-only unit connected directly to an interstate natural gas pipeline, which the record suggests could potentially have lower fixed costs while remaining economically viable. While I agree with many of the points outlined in Commissioner Clements’s dissent,[2] I believe that the present record simply is not sufficient to answer the question one way or another. Accordingly, I would set this aspect of NYISO’s proposal for hearing.
On a more general level, I cannot help but observe that this issue, and its central role in the NYISO capacity market, illustrates the extent to which we are not dealing with a market in any ordinary sense of the term. The administrative exercise of arguing about the cost attributes of a mythical power plant is about as far afield from market competition as anything I can imagine. We should not lose sight of these facts when presented with arguments about the need to prevent out-of-market actions from sullying the otherwise pure “market” that exists today.
Finally, while I agree that the just and reasonable amortization period is 20 years,[3] I urge NYISO to examine adopting a different proxy unit or other more holistic reforms in light of New York’s greenhouse gas reduction goals. Although it is by no means certain that what are currently gas-fired resources will retire by 2040, it is clear that they will make up a smaller and smaller share of the resource mix. Before long, a gas-fired resource may no longer represent a likely new entrant, even when reserve margins are tight. NYISO would be well-served to take a hard look at whether it makes sense to anchor its demand curve to a resource that is unlikely to enter the market and whether it should instead take steps to better align the capacity market’s principal parameters with the goals of the state in which it operates.