Wednesday, September 20, 2017

FERC Grants Exemption for Renewables, Self-Supply in NY ICAP Market

By William Opalka

FERC last week granted renewable energy resources an exemption from buyer-side mitigation rules in New York’s installed capacity market, a change it said will help the state comply with federal carbon emission rules. The commission also exempted self-supply resources built by load-serving entities to meet their own ICAP obligations.

But the commission denied a request to excuse demand response and most other resources from the mitigation rules (EL15-64).

In May, the New York Public Service Commission, the New York Power Authority and the New York State Energy Research and Development Authority filed a complaint seeking to limit the application of the buyer-side market power mitigation rules to only new gas- or oil-fired simple and combined-cycle units that are 20 MW or greater — seeking an exemption for resources including renewables, controllable transmission lines, nuclear generators, DR and repowered generators.

FERC ruled Friday that NYISO can no longer apply “buyer-side market power mitigation rules to certain narrowly defined renewable and self-supply resources that have limited or no incentive and ability to exercise buyer-side market power to artificially suppress ICAP market prices.”

The complainants argued that wind and solar resources are inefficient tools for exercising buyer-side market power because they require long development lead times and incur much higher development costs. They also said their intermittency and lower capacity factors made it unlikely buyers could drive down capacity market prices.

FERC agreed but said NYISO should set a megawatt cap limiting the total amount of renewables eligible for the exemption. It directed the ISO to make a compliance filing implementing the cap and other changes in the order within 90 days.

The ISO had told FERC that it supports exempting intermittent renewable resources such as wind and solar that are eligible for New York’s renewable portfolio standard.

The commission denied exemptions for controllable transmission lines, nuclear plants and repowered plants. It also said the complainants had failed to support their request for a “blanket waiver” for DR.

Self-supply resources were allowed within “net-short and net-long thresholds,” similar to those the commission previously approved in PJM.

“A well-formulated self-supply exemption will allow a load-serving entity to procure a portfolio that best allows it to manage its assessment of the risks it faces and, as [the Large Public Power Council] contends, eliminates the risk of effectively requiring load-serving entities to pay twice for capacity in the event that a self-supplied resource does not clear the capacity market,” the commission said.

Commissioner Colette Honorable issued a concurring statement saying that the ruling will help New York comply with the Environmental Protection Agency’s Clean Power Plan.

“It is clear that New York will rely upon renewable resources, in part, to meet future Clean Power Plan emissions standards,” she said. “Actions taken by the commission today will support New York’s efforts to invest in renewable resources while protecting consumers.”

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