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August 17, 2013
The Federal Energy Regulatory Commission accepted a NYISO proposal to create a new capacity zone out of some of the most densely populated areas of the state. NYISO wants to make a new zone out of Zones G, H, I, and J; the last is New York City, and the others are some of its mainland suburbs and the Hudson Valley. The ISO’s capacity market now uses three demand curves: one for New York City, one for Long Island or Zone K, and the other for the rest of the state. The city and Long Island are locational zones because they each have a separate requirement that certain minimum percentages of the zones’ generating capacity be located within them. NYISO has been looking into another zone since a FERC order four years ago, and it picked the “G-J locality” because it found transmission that limitations there make a new zone needed to send the right price signals. The new zone will become effective May 1, 2014, which is the start of the 2014/2015 capacity year. It will lead to price differentials, FERC noted, which will create incentives to alleviate them, including by building new transmission. Long Island was left out of the new zone, but it is south of the constraint that created the need for the new area.