The New York Independent System Operator (NYISO), state regulators and several other parties protested two gas generators' proposal to raise the floor prices for state-subsidized resources in NYISO capacity market auctions, in comments filed Wednesday with federal regulators.
The Cricket Valley Energy Center and Empire Generating Company in October filed a complaint with the Federal Energy Regulatory Commission, asking it to expand the Minimum Offer Price Rule (MOPR) within NYISO, in the same vein as the Commission's 2019 decision to raise the floor price for state-subsidized resources in the PJM Interconnection's capacity market auctions. Cricket Valley and Empire claim, similar to the complaint of gas generators in the PJM, that such subsidies lead to price distortion in the capacity market.
But NYISO denies that the capacity market it operates results in price suppression, in contrast with PJM, which supported the MOPR expansion. Its independent market monitor (IMM) similarly opposes the MOPR expansion within NYISO.
While Cricket Valley and Empire argue the same issue exists in NYISO as in PJM, and therefore FERC should approach the two filings exactly the same, NYISO and other stakeholders in the region disagree.
Cricket Valley complains that zero emissions credits, renewable energy credits and offshore wind credits, which compensate load-serving entities for procuring zero carbon resources in order to meet the state's clean energy goals, are suppressing market prices in the state. Both generators own or are building gas plants in the NYISO footprint and say the prices those plants had been promised have been "crushed" largely due to subsidized clean energy resources.
The Independent Power Producers of New York (IPPNY), a trade group that represents New York competitive suppliers in the state, generally supported the generators' complaints, though it noted its concern that FERC taking such a measure could "increase the tension between State policy goals and the competitive wholesale markets" that could result in "years of litigation."
As a result, IPPNY and the Electric Power Supply Association, a trade group representing competitive power suppliers across the U.S., both encouraged carbon pricing as an alternative solution in their filed comments, though EPSA added "[w]ithout such an approach … expanding the MOPR to all resources in the [New York Control Area] would be necessary to preserve the market as the grid decarbonizes."
But NYISO, the New York Public Service Commission, and others disputed this characterization of the state's capacity market. The ISO argues its buyer-side mitigation (BSM) rules are preventing price suppression, and says that expanding the MOPR within its territory "would be excessive, would result in over-mitigation, and would artificially increase capacity prices." Both the grid operator and its IMM have found that projected new resources in the state are not expected to cause price suppression, a different conclusion than that of PJM and its IMM.
"While the [IMM's] State of the Market Reports have recommended continuous improvements, many of which have been adopted by the NYISO, they have never proposed changes as radical as those set forth in the Complaint," NYISO wrote.
The New York PSC similarly finds the two generators' complaints to be "without merit."
"The Commission has found repeatedly that the NYISO BSM rules strike an appropriate balance between addressing price suppression concerns and allowing for the exercise of state authority over generation," it wrote.
Other entities that opposed the proposal included the state's investor-owned utilities, environmental groups, consumer advocates, the renewables industry and public power groups. Cricket Valley and Empire have requested the commission to act on the proposal before the end of the year.