On July 14, 2017, the New York Independent System Operator, Inc. (“NYISO”) filed proposed revisions to its Market Administration and Control Area Services Tariff (“Tariff”) designed to: (i) enhance the rules governing the forecasts determined and used by the NYISO in the course of making determinations under its Buyer-Side Market Power Mitigation Measures for Installed Capacity (“BSM Rules”); and (ii) improve the rules governing the use of escalation factors and inflation rates under the BSM Rules (“July 14 Filing”).  NYISO requested that the revisions become effective September 12, 2017, and stated that this effective date would enable NYISO to apply the revised Tariff provisions when making its determinations under the BSM Rules for resources in Class Year 2017.

Within the NYISO capacity market, the BSM Rules are designed to prevent the entry of uneconomic Installed Capacity (“ICAP”) suppliers from artificially suppressing capacity prices.  Under the current NYISO Tariff, the BSM Rules include multiple provisions pertaining to the forecast of two key metrics: (i) ICAP Spot Market Auction prices, which are used to determine Offer Floors and exemptions from the Offer Floor; and (ii) Energy and Ancillary Services revenue estimates, which are used to make Unit Net Cost of New Entry (“CONE”) determinations.

In the July 14 Filing, NYISO proposed to, among other things, consolidate all forecasting provisions under the BSM Rules into a single, new section of its Tariff, and to create a single definition—“BSM Forecast”—which would encompass both ICAP Spot Market Auction forecasts and Energy and Ancillary Services revenue estimates.  NYISO also proposed extensive new rules designed to more clearly establish which categories of resources will be included in, and which will be excluded from, the BSM Forecasts.  NYISO stated that these rules were intended to “provide a framework that allows for the inclusion of resources that are reasonably expected to be available during the forecast period and the exclusion of those that are not.”  The revisions also included the introduction of a new “Net Present Value” analysis, which is designed to evaluate certain economic considerations and determine whether a resource that could return to service or continue in operation would have a positive Net Present Value under NYISO-predicted market conditions.

With respect to the use of escalation factors and inflation rates under the BSM Rules, NYISO proposed to, among other things, revise its Tariff to require the use of a specified inflation rate in the annual adjustment of Offer Floors, and to provide additional clarity regarding the use of inflation in Unit Net CONE calculations.  NYISO’s proposed Tariff revisions for escalation factors and inflation rates would annually update these figures using indices that are further spelled out in NYISO’s proposed Tariff revisions.

NYISO’s proposed Tariff revisions were unanimously approved by NYISO’s stakeholder Management Committee.

Comments on NYISO’s proposed Tariff revisions are due August 4th.

A copy of NYISO’s filing may be found here.