On January 23, 2020, FERC accepted New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its Tariffs to allow the aggregation of resources, including distributed energy resources (“DERs”), for purposes of participation in the NYISO markets. FERC found that NYISO’s proposed aggregation model (“Aggregation Participation Model”) provided a just and reasonable and not unduly discriminatory framework for such participation.

Beginning in 2016, NYISO entered into a multi-year effort to identify how it could better integrate DERs into its markets. Through this effort, NYISO developed a DER market participation concept proposal, which focused on rules concerning (i) aggregations and modeling, (ii) measurement and verification and monitoring and control, (iii) performance obligations, and (iv) dual participation in wholesale and retail markets.

To effectuate its DER market participation proposal, on June 27, 2019, NYISO filed revisions to its Open Access Transmission Tariff (“OATT”) and Market Administration and Control Area Services Tariff (“Services Tariff”). According to NYISO, these proposed revisions would enable multiple individual facilities, including DERs, to participate as a single unit (an “Aggregation”) in NYISO-administered Energy and Ancillary Services markets and in NYISO’s installed capacity market (“ICAP Market”). NYISO also proposed other, uncontested, OATT and Services Tariff revisions to further facilitate DER market participation, including provisions on market settlements, metering, and interconnection. Various parties intervened to contest or support other reforms in NYISO’s filing, including those pertaining to DER simultaneous participation in wholesale and retail markets, metering and telemetry, ICAP Market participation, and buyer-side mitigation (“BSM”).

In its order, FERC generally accepted NYISO’s Aggregation Participation Model as just and reasonable, and devoted most of its discussion to the contested aspects in NYISO’s filing. First, FERC rejected concerns by protestors that additional NYISO scheduling requirements would be unnecessarily duplicative and complicated, especially for behind-the-meter resources. FERC concluded that it was reasonable for NYISO to require DER and DER Aggregator bids to reflect obligations outside of NYISO. Second, FERC found that NYISO had justified its proposal for more enhanced metering data and telemetry requirements for aggregated resources and noted that NYISO is already obligated to provide additional details regarding these practices in an anticipated further compliance filing for Order No. 841. Third, FERC upheld NYISO’s proposed ICAP Market participation reforms, finding that, among other things, NYISO sufficiently supported its proposed capacity values for Aggregations. FERC directed NYISO to submit an informational filing, however, to propose a schedule whereby it will review and assess certain ICAP Market factors related to its proposal.

Finally, FERC rejected concerns over NYISO’s proposal to impose existing BSM requirements on DERs and Aggregations. As NYISO noted in its filing, although its DER market design proposal did not identify the need for additional mitigation measures, as a general rule, DER injection-based facilities would be subject to existing market mitigation protocols. Various intervenors protested against the imposition of NYISO’s existing BSM framework, that is, against the use of certain restrictions on resources to avoid artificial price suppression in NYISO’s ICAP Market. According to these parties, DER and DER Aggregations have no market power and should therefore be exempt from such restrictions. Supporters of NYISO’s proposal however, argued that BSM was appropriate and that impact of uneconomic entry of such resources could be substantial and negatively impact capacity clearing prices. In its order, FERC sidestepped criticisms of NYISO’s approach, noting that NYISO was not proposing substantive changes to its market power mitigation provisions, and that criticisms of those provisions were therefore out of scope.

A copy of the order is available here.