On December 10, 2012, FERC granted a complaint that alleged that the New York Independent System Operator, Inc. (“NYISO”) violated the Federal Power Act (“FPA”) and its Market Administration and Central Area Services Tariff (“Services Tariff”) by issuing a technical bulletin that excluded certain behind-the-meter generators from participating in the NYISO’s Special Case Resources (“SCR”) program.  FERC held that the technical bulletin, NYISO’s Service Tariff, and its Installed Capacity (“ICAP”) manual were ambiguous as to which generators are able to participate in the NYISO SCR program.

The complaint centered around the NYISO-issued Technical Bulletin 217 (“Technical Bulletin”), which clarified that energy consumed from behind-the-meter generation was not eligible to participate in its SCR program.  Energy Spectrum, Inc. and Riverbay Corp. (collectively, “Complainants”), participants in the SCR program, alleged that the Technical Bulletin (1) represented significant changes to NYISO’s Services Tariff, (2) should have been approved by the NYISO stakeholders, and (3) should have been the subject of an FPA section 205 filing with the Commission.  Further, Complainants alleged that the definitions in the NYISO Services Tariff of “special case resources,” “local generator,” and “average coincident load” are not consistent with the reading of the Technical Bulletin.  Accordingly, Complainants requested that FERC declare the Technical Bulletin null and void.

NYISO responded by arguing that the Technical Bulletin was only a clarification of its existing rules, did not alter its Services Tariff, and was fully consistent with all NYISO governances.  NYISO further argued that the definition of “special case resource,” and the Services Tariff provisions implementing the SCR program, is consistent with the Technical Bulletin and requires that SCRs be able to reduce demand when directed by NYISO.

FERC stated that the question presented was whether the exclusion of certain behind-the-meter generation in the Technical Bulletin was consistent or inconsistent with SCR provisions in the Services Tariff and ICAP manual.  The Commission held that a reading of the Services Tariff and ICAP manual was ambiguous, as it could support both NYISO’s and the Complainants’ positions.  FERC reasoned that the Services Tariff definition of “special case resource” supported the Complainants argument by making a distinction between “local generation” and “demand side resources.”  In supporting NYISO’s position, FERC determined that a reading of the Services Tariff could also show that a behind-the-meter generator that does not reduce its energy consumption at NYISO’s direction or operates on a continuous basis would not qualify as SCR capacity, and was consistent with the clarification of the Technical Bulletin.

FERC ordered NYISO to resolve these ambiguities by filing a revised Services Tariff to clarify the requirements of the Technical Bulletin within 90 days of the order.

In a separate, combined dissent, Commissioners Cheryl LaFleur and Tony Clark objected to FERC granting the complaint.  Commissioners LaFleur and Clark stated that “the order properly identifies the question before it, [but] it does not answer the question…Instead, it merely recites the Complainants argument.”  They further argued that the most reasonable reading of the Services Tariff is only clarified by the Technical Bulletin, not altered, and the complaint should not have been granted.

A copy of the order and dissent is available here.