Docket No. ER22-772-001
I concur with today’s order for the following reasons.
I strongly support NYISO’s proposal to adopt a marginal capacity accreditation design that would accredit resource types based on their marginal contribution to power system reliability thereby aligning capacity payments with a resource’s reliability value and reflecting a resource’s marginal value to the system.[1] The use of marginal valuations is more accurate, and thus superior, to a methodology that uses average valuations.[2] Getting capacity valuations right is essential both for reliability purposes and to ensure consumers do not pay for capacity that does not perform when needed.
With regard to the Buyer Side Mitigation proposal from NYISO, as I have stated before, it is critically important to my concurrence that NYISO is a single-state ISO:
We start with the proposition that each state in the United States has the sovereign authority, under its general police power, to choose the generating resources necessary to meet its own state’s power supply needs. The FPA does not contain any specific provision that pre-empts the states from exercising this authority, even if a state chooses to allow its utilities to enter an RTO. Further, FERC does not have the authority to order a state to build a certain type of generation resource, nor can FERC order a state to retire or ban certain types of resources. Congress has enacted no federal resource mandate nor given FERC the authority to enforce such a mandate, despite occasional legislative efforts to do so.
Here the record shows – and this is critically important to my analysis – that no one has suggested that this single-state ISO’s proposal to accommodate the resource decisions made by the New York legislature will harm consumers in other states. Thus, there being no evidence in this record that citizens of other states will be made to pay for New York’s policy decisions through the potential impacts of NYISO’s proposed tariff revisions, I conclude that any costs will be confined to New York. Based on the particular set of facts in this record, I do not find that the NYISO proposal “as-applied” results in rates that are “unjust, unreasonable and unduly discriminatory or preferential” under the FPA. If the people and businesses of New York do not like the impacts of their new state laws, their recourse is to the ballot box.
A similar analysis could well lead to a different outcome in a multi-state RTO, if the record showed that the RTO was implementing one state’s public policies as to preferred resources, and that implementation resulted in impacts being shifted to consumers in one or more other states in the multi-state RTO. Such impacts and cost-shifting in multi-state RTOs, if proven by the record, could well be unjust, unreasonable and unduly discriminatory or preferential under the FPA.[3]
For these reasons, I respectfully concur.
[1] “NYISO proposes to use its current capacity accreditation procedures through the Capability Year beginning on May 1, 2023, and then implement the marginal accreditation design annually thereafter.” N.Y. Indep. Sys. Operator, Inc., 179 FERC ¶ 61,102, at P 44 (2022) (citations omitted). While in this phase of its proposal NYISO has not determined whether it will use the Effective Load Carrying Capability (ELCC) methodology in its accreditation procedures, it has noted that “it would calculate Capacity Accreditation Factors using a system . . . ELCC . . . or equivalent methodology, such as the Marginal Reliability Improvement (MRI) proposed by the MMU.” Id. P 46; see also, e.g., id. P 53 (“. . . NYISO explains that it would calculate a Capacity Accreditation Resource Class’s marginal reliability contribution using either the ELCC technique or the MMU’s proposed MRI technique.”).
[2] See PJM Interconnection, L.L.C., 176 FERC ¶ 61,056 (2021) (Christie, Comm’r, dissenting at P 9) (“Not only has the [Independent Market Monitor for PJM] extensively detailed flaws in PJM’s ELCC proposal, but since [the Commission’s] April 30 Order we have received on-the-public-record evidence from Dr. David Patton, President of Potomac Economics which is the IMM or Market Monitoring Unit for several of the nation’s ISOs. Dr. Patton agrees with what is to me a fundamental point made by the PJM IMM: only a marginal valuation – not average – will accurately produce capacity accreditations for compensation and will deliver the reliability value relied upon by the RTO.”) (emphasis added) (footnotes omitted) (quoting May 25, 2021 Technical Conference regarding Resource Adequacy in the Evolving Electricity Sector, Docket No. AD21-10-000, Tr. 144:1-6; 170:1-9; 181:15-21; 182:21-25) (available at https://www.ferc.gov/news-events/news/commissioner-christies-dissent-order-concerning-pjms-proposed-elcc); Potomac Economics, January 26, 2022 Comments at 3 (“NYISO’s proposal to use marginal capacity accreditation is a major improvement to its capacity market rules. A marginal approach will pay resources based on their expected availability at times when reliability is most threatened. Marginal capacity values will naturally change over time as the resource mix and needs of the system change. This will appropriately align capacity payments with the incremental reliability impact that an investment or retirement decision would have on the system. Marginal capacity payments provide signals to invest in the most efficient mix of clean energy resources, build or maintain additional resources that are needed for reliability, and retire the surplus generators that provide the least reliability benefit.”).
[3] N.Y. Indep. Sys. Operator, Inc., 178 FERC ¶ 61,101 (2022) (Christie, Comm’r, concurring at PP 4-6) (emphases in the original and added) (available at https://www.ferc.gov/news-events/news/item-e-2-commissioner-mark-c-christie-concurrence-regarding-new-york-independent); see also N.Y. Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 174 FERC ¶ 61,110 (2021) (Christie, Comm’r, concurring at P 3) (“I also note that the NYISO is a single-state ISO and I have been able to locate no evidence in the record that the New York policies at issue in today’s order are causing cost-shifting onto consumers in other states. If consumers in other states were disadvantaged, I may well view this matter differently.”) (emphasis added) (available at https://www.ferc.gov/news-events/news/item-e-2-commissioner-mark-c-christie-concurrence-regarding-new-york-state-public); cf. Commissioner Mark C. Christie, Fair RATES Act Statement on PJM Minimum Offer Price Rule (MOPR) Revisions, Docket No. ER21-2582-000 at P 6 (Oct. 19, 2021) (“. . . I would have proposed that PJM formulate a replacement for the current MOPR based on three broad principles: (1) a state may designate specific or categorical resources as ‘public policy resources’ and such designated resources will be funded through a mechanism chosen by the state outside of the capacity market . . . and (3) non-sponsoring state consumers would not be forced to pay for another state’s designated public-policy resources.”) (footnotes omitted) (emphasis in the original and added) (available at https://www.ferc.gov/news-events/news/commissioner-christies-fair-rates-act-statement-pjm-mopr).