New rulings on New York power markets will protect competition, federal regulators say, while some renewable energy advocates argue that they subsidize fossil fuel resources and go against the state’s clean energy goals.
The Federal Energy Regulatory Commission announced Thursday it ruled in four orders dealing with buyer-side market power issues in the New York Independent System Operator Inc’s capacity market. Those rulings, FERC said, narrow exemptions for energy storage resources, demand response and renewables.
The commission “acted to protect competition in (the NYISO) capacity market today by improving the buyer-side market power mitigation rules to send accurate price signals to markets and to ensure adequate supplies for consumers,” the FERC release read.
Others, such as the American Council on Renewable Energy (ACORE), challenged the FERC decision as a new subsidy for fossil fuel-fired power generation and added that it interferes with renewable energy objectives set by the state.
“So-called ‘Expanded Buyer-Side Mitigation’ measures directly conflict with policies New York expressly designed to accelerate the transition to pollution-free, renewable power,” ACORE President and CEO Gregory Wetstone said in a statement. “This is an echo of FERC’s so called ‘MOPR’ (Minimum Offer Price Rule) decision in December that delivered a Christmas gift to fossil fuels in the PJM capacity market.
“FERC has once again made a decision that will lead to more pollution and higher electricity rates, this time for New Yorkers.”
FERC typically has stayed out of interfering in regional markets, by its own words, although several years ago then Energy Secretary Rick Perry pushed the commission to set rules for pricing supports for on-site fuel resources such as nuclear and coal. At the time, FERC opted against market interference.
Several of those commissioners in the unanimous 2018 decision have since left the board. Last year, FERC Chairman Neil Chatterjee expressed alarm at the pace of retiring coal-fired and nuclear plants and wondered what could be done to defend power supply resiliency.
The notion of interference went against his free market instincts, Chatterjee said, while noting that some state regulatory agencies have moved to slow the pace of fossil-fueled plant closings while others are pushing to shut them down quicker amid aggressive carbon-reduction goals.
“It’s vexing,” he told the Houston Chronicle in 2019. “But I also need these markets to operate efficiently.”
Here are the details for each of FERC’s four orders detailed Thursday:
- FERC denied rehearing of an order that rejected a complaint, saying the complainant did not show that NYISO’s tariff was unjust and unreasonable because it permits existing capacity resources needed for short-term reliability and capacity resources with repowering agreements to offer their capacity at de minimis price levels into NYISO’s capacity markets.
- FERC denied a complaint from the New York Public Service Commission and the New York State Energy Research and Development Authority seeking an exemption for electric storage resources from NYISO’s buyer-side market power mitigation rules. The application of buyer-side market power mitigation to electric storage resources in NYISO appropriately protects the capacity markets from the price suppressive effects of resources receiving out-of-market support, FERC said.
- FERC found that all new Special Case Resources (SCRs), a type of demand response resource in NYISO, should be subject to NYISO’s buyer-side market power mitigation rules. The Commission also found that payments from retail-level demand response programs designed to address distribution-level reliability needs should be excluded from the calculation of SCRs’ offer floors.
- FERC found that NYISO’s proposed megawatt cap on the renewable resources exemption fails to comply with prior Commission directives, and directed NYISO to make a further compliance filing to ensure the exemptions for both renewable and self-supply resources are narrowly tailored to exempt only those resources the Commission has determined should be exempt.