Commissioner Allison Clements Statements
February 18, 2021
Docket Nos. EL16-92-004, ER17-996-004
Order: E-2
I agree with today’s decision to set aside, in part, the Commission’s October 7, 2020, order. While I did not participate in the previous orders in this proceeding, the narrow question before us here is whether payments from Commercial System Distribution Load Relief Programs merit exclusion from the calculation of demand-side resource offer floors in NYISO. I agree that they do.
I write separately to express a broader concern with what are known as NYISO’s buyer-side market power mitigation rules and disagreement with the Commission’s recent findings in this proceeding. I have previously expressed my disagreement with similarly intentioned rules in PJM’s capacity market.[1] NYISO’s buyer-side mitigation rules are likewise divorced from the objective of mitigating actual monopsony power, and instead now serve only as likely impediments to New York’s public policies in the name of “protecting” markets within the Commission’s jurisdiction. FERC-jurisdictional markets operate as a means to harness competition toward the end of greater efficiency in the provision of electric service—a benefit that can lower costs for customers. NYISO’s markets cannot succeed in achieving this end by operating in a vacuum that fails to embrace the reality of state policy choices.
As an initial matter, record evidence in this proceeding does not support application of buyer-side mitigation to demand-side resources in NYISO. Ample record evidence indicates these resources do not possess the ability to exercise buyer-side market power in NYISO’s capacity market. Even NYISO, the respondent to this complaint, stated clearly that they do not and supported a blanket exemption from the buyer-side mitigation rules.[2] Based on these facts, the Commission in 2017 concluded that demand-side resources “have limited or no incentive and ability to exercise buyer-side market power to artificially suppress [capacity] market prices”[3] and directed a blanket exemption. I believe this was the correct finding. Where there is evidence that market power exists and could lead to unjust and unreasonable wholesale rates, we must address it. But NYISO’s buyer-side mitigation rules have, with the complicity of the Commission, been misappropriated toward ends unrelated to mitigating market power.
A state’s exercise of its authority under the Federal Power Act to shape the resource mix for its citizens is not an exercise of market power, and applying mitigation to such state actions is harmful to customers. Then-Commissioner Bay has proven prescient in his caution, expressed during an earlier stage of this long proceeding, that misapplication of market power mitigation in the form of minimum offer price rules was “unsound in principle and unworkable in practice,” and “places the Commission in direct and recurring conflict with the states” in a manner “that raises costs to consumers.”[4] Those criticisms ring truer today than in 2017. The State of New York has implemented increasingly ambitious policies to move toward a cleaner resource mix. Continued misapplication of NYISO’s buyer-side mitigation rules to resources developed pursuant to those policies risks over-procurement of capacity and excessive costs to NYISO customers—an outcome I view as unjust and unreasonable. NYISO’s market rules must instead acknowledge the State’s exercise of legitimate authority and provide for an efficient wholesale market framework that respects the State’s resource mix choices.
I look forward to engaging with my colleagues to work with the State of New York, NYISO, and the stakeholder community to re-examine the current capacity market construct to find a durable solution that yields just and reasonable rates for NYISO customers.
For these reasons, I respectfully concur.
________________________
Allison Clements
Commissioner
[1] Calpine Corp. v. PJM Interconnection L.L.C., 174 FERC ¶ 61,036 (2021) (Clements, Comm’r, concurring). I am also concurring in an order issued today to express similar concerns with regard to the MOPR in ISO New England. ISO New England Inc., 174 FERC ¶ 61,120 (2021) (Clements, Comm’r, concurring).
[2] NYISO July 21, 2016 Answer at 3 (“[I]t appears that no external (e.g., State or State-approved) demand response program has the ability to meaningfully increase SCR Unforced Capacity [] to suppress capacity prices in New York.”). See also NYISO July 21, 2016, Answer, attach. II ¶ 10.
[3] N.Y. Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 158 FERC ¶ 61,137, at P 30 (2017).
[4] N.Y. Pub. Serv. Comm’n v. N.Y. Indep. Sys. Operator, Inc., 158 FERC ¶ 61,137 (Bay, Comm’r, concurring).