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December 03, 2013

NYISO Seeks ICAP Demand Curve Revision

On November 27, 2013, the New York Independent System Operator, Inc. (“NYISO”) filed a petition with the Federal Energy Commission (“FERC” or the “Commission”) seeking amendments to its Services Tariff to define the Installed Capacity (“ICAP”) Demand Curves for the next three years. The new curves would help set prices for New York City, Long Island and the New York Control Area.

The ICAP Demand Curves have been used for a decade in the NYISO-administered energy markets. The Demand Curves are a central component in the design of the NYISO’s centralized capacity market and they are regularly reset.  2010 was the last time when the curves were revised after an approval by the Commission. The ICAP Demand Curves are based on the cost of different technologies that would be built in different regions to meet the minimum capacity requirements.  The curve is based on peaking units which are defined as the unit with technology that results in the lowest fixed costs and highest variable costs among all other units’ technology that are economically viable.

In its Petition, the NYISO proposed a curve for its new zone consisting of New York City and three other nearby zones.  NYISO requested that FERC phase the new curve due to potential consumer impacts of the higher capacity prices that it would produce.  Prices are determined in the NYISO’s spot auctions for capacity by separately set downward-sloping demand curves.

NYISO recommended that General Electric’s LMS100 simple cycle gas turbine be used as the basis for the curve in New York City, Long Island and the new zone because it is cheaper than other options and cleaner than the F-class frame gas turbine picked for the rest of state zone.

NYISO requested FERC approval by January 28, 2014.  For further information with regards to NYISO’s petition, please visit FERC Docket ER14-500 at https://elibrary.ferc.gov/IDMWS/search/fercgensearch.asp

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