On September 27, 2017, FERC issued an order granting a request from the New York Independent System Operator, Inc. (“NYISO”) to waive certain sections of its Market Administration and Control Area Services Tariff (“Tariff”) as they pertain to particular transmission shortage cost provisions.  NYISO submitted the waiver request in January 2017 to allow time to correct certain discrepancies with its Tariff and software used to resolve transmission constraints. 

In February 2016, NYISO implemented the relevant Tariff provisions on transmission shortage cost pricing as a means to improve market efficiency during transmission shortages.  In August 2016, however, NYISO was informed by its Market Monitoring Unit that these provisions were not being implemented in a manner consistent with the Tariff.  The results of an internal analysis and investigation revealed that a software problem had caused a material impact on the NYISO-administered markets.  NYISO then filed for the present waiver request in order to build in time to conduct a stakeholder process on how to address the problem through both revisions to the NYISO Tariff and development of better software.

In its order, FERC determined that NYISO met the criteria for a Tariff waiver and that it had worked diligently with its Market Monitoring Unit and stakeholders to resolve the software inconsistencies and minimize the impact on customers.  In particular, FERC concluded that a waiver was appropriate because: (1) NYISO acted in good faith; (2) the scope of the requested waiver was limited; (3) the requested waiver addresses a concrete problem; and (4) the waiver would not produce undesirable consequences, such as harm to third parties.

FERC’s waiver extends from the date of NYISO’s implementation of the relevant Tariff provisions—February 11, 2016—until NYISO resolves the discrepancy between its software and Tariff provisions.

A copy of FERC’s Order can be found here.