The New York Independent System Operator’s (NYISO) comprehensive mitigation plan for the New York Control Area (NYCA) is a milestone in the effort to design and implement competitive, fair power markets, Energy Security Analysis Inc. (ESAI) concludes in a recent client memo. But ESAI is concerned that the proposed mitigation regime for supply-deficient regions could act as a deterrent to much needed future generation and transmission investment in those areas.

In the memo, ESAI outlines the major elements of the plan and their implications, including:

While ESAI believes that the mitigation plan will go a long way toward creating transparent and efficient markets, the plan should be modified in a manner that minimizes the possibility of market power abuse, while allowing flexibility.

“Any mitigation regime must be structured in a way that encourages new generators and merchant transmission projects, while limiting the market power of existing generators,” said Jaya Bajpai, a power analyst at ESAI. “We believe the thresholds put forth in the NYISO’s plan are unduly restrictive and do not address the fundamental capacity problem of the system’s load pockets.”

One alternative would be to fix thresholds below those applicable to the rest of NYCA.”This method would recognize the constrained and concentrated nature of areas like New York City, while allowing prices to reflect congestion and not penalize generators for transmission shortcomings,” said Bajpai.

The NYISO filed the comprehensive mitigation plan at the Federal Energy Regulatory Commission last month (see Power Market Today, March 22).

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