The Federal Energy Regulatory Commission has approved changes to NYISO’s credit requirements to protect the ISO from defaults by market participants that under-forecast their loads (ER15-470).
The new rule will require extra collateral from market participants that consistently fail to forecast their load within 90% of their actual meter data. It also prohibits those participants from using unsecured credit.
NYISO bills participants initially based on forecast load, with true-ups four months later, when meter documenting actual load is available to the ISO.
“During periods of increased prices like the 2013/2014 winter cold snaps, if a market participant is under-forecasting, the current credit requirements may not cover the exposure caused by the under-forecasting,” the ISO explained in its filing with the commission. “This potential exposure can grow the longer the market participant under-forecasts and [other] market participants could be exposed to potential bad debt losses as the NYISO may not have sufficient credit support in place to cover this true-up exposure if the market participant ultimately defaults.”
FERC said the new rules will go into effect on Feb. 18, unless NYISO requests a later date.