FERC approves plans to strengthen New York ICAP market

Washington, D.C., Mar. 10, 2008 — The Federal Energy Regulatory Commission (FERC) has conditionally approved a plan by the New York Independent System Operator Inc. (NYISO) to strengthen mitigation of market power for the installed capacity (ICAP, or in-city) market for New York City.

In the order FERC found the NYISO plan to apply price mitigation to sellers that control more than 500 megawatts of capacity in the city a just and reasonable method for mitigating supplier market power while maintaining adequate revenue levels for the suppliers. The order also conditionally accepted NYISO’s proposal to address uneconomic entry.

The mitigation plan retains the existing ICAP market structure, including the current set of ICAP auctions, is similar to market mitigation plans that the Commission has approved for both the New England ISO and PJM Interconnection Inc. regions.

The order was issued concurrently with a staff report from FERC’s Office of Enforcement that closes its investigation of the ICAP market. FERC had ordered the investigation in July 2007 after allegations were made by various parties to the case that one of the suppliers of capacity had engaged in economic withholding by consistently offering its capacity at its bid cap and therefore had raised prices in the market.

The report states that Enforcement Staff found no evidence any of the generators in the case violated NYISO’s service tariff or FERC’s anti-manipulation regulations.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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