NYISO/NYSRC REPORT June 2014
Rich Bolbrock – NYISO Advisor
The following are highlights of recent NYISO and NYSRC activities:
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Uplift/OATT Schedule 1 Charges
Uplift for May (not including NYISO cost of operations) is $0.07/MWh, higher than the
($0.09/MWh for April. The Local Reliability Share is $0.51/MWh, up from $0.15/MWh in
April, while the Statewide Share is ($0.44)/MWh, lower than the ($0.24)/MWh in April. The
average year-to-date monthly LBMP of $108.12/MWh is a 65% increase from $65.46/MWh in
May 2013. Natural gas prices (Transco Zone 6 NY) dropped in May, down 16% from
$4.12/MMBtu the previous month. Oil prices dropped slightly in May.
The May peak load was 23,198 Mw and occurred on the 27th. This compares to the all-time
summer capability period peak load of 33,956 Mw that was set on July 19th of last year.
NYISO Issues POWER TRENDS 2014 (Evolution of the Grid)
The NYISO produces this annual report to provide stakeholders with data and analysis of the
major factors affecting the New York electric industry. [Think of it as a ‘State of the Grid’
report.]
Changing Patterns of Demand for Electricity – NYISO indicates that combinations of factors
(the economy, extreme weather events, and emerging energy technologies) are changing the
historical patterns of electricity demand. This change has significant implications for system
planning, operations, wholesale electricity markets, and demand-side management programs.
Electric load growth has been reduced with energy efficiency initiatives as well as “behind the
meter” distributed generation such as customer-sited solar photovoltaic systems. One negative
change is that peak demand is growing faster than average energy demand. From 2014 through
2024 New York peak demand is forecast to grow at an annual rate of 0.83 percent while energy
use is forecast to grow at an annual rate of 0.16 percent. [This trend in load factor suggests that
peak load reduction initiatives will need to be considered.]
What Extreme Conditions Tell Us About the Grid – New York set new seasonal peaks within a
six month period and suffered a major hurricane in October 2012. The July 19, 2013 new all
time summer peak coupled with a weeklong heat wave reinforced the need to address
transmission congestion issues. [Interestingly, for our member systems the solutions to relieving
congestion can be a two-edged sword – potentially lowering energy costs while raising capacity
costs.] The NYISO concludes that this situation reinforces the need for the Energy Highway
projects to be implemented. The January 7, 2014 new all time winter peak focused attention on
the need to address various gas/electric coordination issues given the increased reliance on
natural gas as the fuel of choice. Although there were no outages due to fuel shortages during
the winter, exceptionally high natural gas prices resulted in spikes in wholesale electricity prices.
[These price spikes proved to be a significant burden to our member systems.] The value of fuel
diversity and dual-fuel capability was demonstrated. In the aftermath of Hurricane Sandy, the
potential of distributed energy resources to enhance the resilience of the electric system was
recognized and the Governor announced a $40M initiative to develop community-based “micro
grids”. [The potential impact of micro grids and large scale distributed-energy resources is not
well understood but is likely complex in nature.]
Sustaining and Enhancing Power Resources – NYISO notes that New York’s installed reserve
margins remain positive but have been declining. [My view is that this decline is a natural event
given the relatively large excesses in recent years. It seems to me that for better or worse, the
market is functioning as intended in this regard.] The NYISO planning process is still a work in
progress. The NYISO is expanding its risk assessment analyses to include scenarios (such as a
“90/10” load forecast) to account for extreme weather conditions. In order to take full advantage
of New York’s fuel diversity (most of the renewable and hydro resources are located in the west
and north vs. the southeast with mostly gas-fired plants), the NYISO states that upgrades and
enhancements are needed to the transmission system including the Transmission Owners
TRANSCO projects and the Governor’s Energy Highway Initiative. These changes to the
transmission system will enable energy to be moved from the upstate regions to the Hudson
Valley and New York City/Long Island regions. [This will likely raise costs for our member
systems.] The addition of significant amounts of distributed energy resources poses a variety of
operational challenges for NYISO. Over the past two years more than 300 Mw of solar
resources have been installed or are under development according to the NY–Sun Initiative with
a goal of installing 3,000 Mw of solar capacity by 2023. In April of this year the New York
Public Service Commission initiated a Reforming the Energy Vision (REV) proceeding with the
ultimate goal of putting in place a mechanism for the management and coordination of
distributed energy resources on a large scale.
Maximizing Resources and Regional Collaboration - As reported in this column on numerous
occasions, the Broader Regional Market Initiative has been actively pursued by NYISO and
neighboring ISOs and has begun to realize economic and reliability benefits. In addition, the
Eastern Interconnection Planning Collaborative (EIPIC) is currently studying the region’s natural
gas infrastructure and its ability to provide for the increasing use of natural gas generation.
Markets and Grid Evolution – NYISO correctly notes that wholesale electricity market structures
are in a continual state of flux due to changes in technology, economic conditions, and public
policy. They cite the “Draft 2014 New York State Energy Plan” which states that New York’s
wholesale electricity market provides incentives “to locate generation, transmission and demand
response resources where they are most needed” and the value of markets in “putting the risk of
those investments on investors rather than on ratepayers”. [I generally disagree with the first
citation and strongly disagree with the second – but that is a discussion for another time!]
Odds and Ends
Market-to-Market Coordination (PJM) – In May the Broader Regional Market Coordination
protocol produced a cost savings to New York of $0.15M (compared to $0.30M in April) with a
year-to-date value of $6.11M.
Joint NYISO Board/Management Committee Meeting – The annual meeting utilized a new
format (previously a “panel session” format was used) of “round table” discussions. Three
topics were discussed: 1. Gas/Electric Coordination, 2. Capacity Market Evolution, and 3.
Distributed Energy Resources. [The subject of a Forward Capacity Market was raised but
fortunately there was a strong negative reaction by many stakeholders.]
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New Capacity Zone (NCZ) Litigation – As reported last month, the U.S. Court of Appeals for the
Second Circuit heard arguments in early June regarding whether it should stop the
implementation of the NCZ in the Lower Hudson Valley. Separate petitions have been brought
by Central Hudson and the New York PSC. The concern is that the NCZ will cause significant
price spikes and that the various projects being proposed as part of the Energy Highway and
other initiatives eliminates the need for the new zone. The Court subsequently has rejected the
request for a delay in implementation. [It is not clear what further action, if any, the parties will
take, but my belief is that the NCZ saga will continue.]
As always, please convey any questions or comments that you may have on the above or any
other issues related to the NYISO or NYSRC to me through the MEUA office.
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