FERC Accepts NYISO’s Emergency DR Pricing Plan
July 12, 2013
The Federal Energy Regulatory Commission accepted a proposal by NYISO to better reflect scarcity conditions when emergency demand response is called on to resolve a localized reserve shortage. The ISO’s markets already had scarcity pricing when reserves go below requirements in the entire footprint or a sub-region, but it was never in place for localized issues. FERC agreed with NYSIO that when emergency DR is called on in a load zone, it is reasonable to set up energy prices there that reflect the costs of activating those resources. The higher prices will send a more accurate signal on the actual cost of providing energy in the area, the commission said. Transmission owners were the only ones to protest, arguing that NYISO’s real-time dispatch system cannot accurately reflect the scarcity prices because they are applied after the fact. That means the markets will not always be picking the cheapest option to supply ancillary services, which is the ideal outcome. NYISO said it will look at the issue of optimizing scarcity pricing.