|FERC Decisions on Buyer Side Mitigation Market Measures |
FERC issued a series of decisions regarding NYISO's buyer-side mitigation (BSM) market rules. As explained by FERC, NYISO's buyer-side market power mitigation rules work as follows, "unless exempt from mitigation, new capacity resources must enter the New York City or G-J Locality Installed Capacity (ICAP) markets (mitigated capacity zones) at a price at or above the applicable offer floor and continue to offer at or above that price until their capacity clears 12 monthly auctions. A new entrant can be exempted from the offer floor if NYISO determines that it passes either “Part A” or “Part B” of the mitigation exemption test. Under Part A, NYISO will exempt a new resource from its buyer-side market power mitigation if its capacity price forecast for the first year is higher than the default offer floor. Under Part B, NYISO will exempt a new resource from its buyer-side market power mitigation if the price forecast for the average of the next three years is higher than the net cost of new entry (CONE) of the new resource."
FERC issued an Order denying a complaint filed by the NYPSC and NYSERDA that argued that the NYISO BSM market rules are "unjust, unreasonable, and unduly discriminatory" because the rules limit electric storage resources’ entry and participation in NYISO’s capacity market and interfere with federal and state policy objectives. In rejecting the complaint, FERC reasoned that,
"While the Complainants note various energy and environmental policies in New York, they fail to demonstrate that the unmitigated entry of electric storage resources in NYISO’s mitigated capacity zones would not result in the suppression of capacity prices. Mitigation of electric storage resources in New York does not divest New York State of its jurisdiction over generation facilities or its authority to set generation-related environmental goals. New York State remains free to pursue its environmental objectives through its regulation of electricity generation. Where state policies allow uneconomic entry into the capacity market, the Commission’s jurisdiction applies, and we must ensure that wholesale rates are just and reasonable. Therefore, we find that the application of buyer-side market power mitigation to electric storage resources in NYISO appropriately protects the capacity market from the price suppressive effects of resources receiving out-of-market support while preserving the cooperative federalism approach established under the FPA."
In a separate decision, FERC decided that NYISO’s proposed 1,000 megawatt cap on the renewable resources exemption did not comply with prior Commission directives. FERC directed NYISO to make a further compliance filing to ensure the exemptions for both renewable and self-supply resources are narrowly tailored to exempt only those resources the Commission has determined should be exempt.
The full texts of the FERC Orders are available on the NEM Website.