Less than a month after FERC scolded the New York IndependentSystem Operator (NYISO) for failing in its responsibilities byrejecting commercially viable power imports, the ISO is under the gunagain, this time for computer-related snafus that rejectedcommercially viable power exports to the Pennsylvania, New Jersey andMaryland ISO (see Daily GPI, June 1).

But the charges now are much more serious and run quite a bitdeeper than computer related problems. Protesters claim the ISO isengaging in “economic protectionism” by trying to hoard availablepower in state to the detriment of the larger regional powermarket.

Last week, Niagara Mohawk Energy Marketing (NMEM) filed acomplaint, a request for fast track processing and a request for astay against the ISO claiming that the ISO violated Section 205 ofthe Federal Power Act, violated its own tariff and refused to takeaction to correct problems that occurred on May 5. NMEM urged theCommission to order the ISO to install a process that allows itsautomated export system to be overridden manually when errorsoccur.

Several other parties, including Southern Energy, PPL and EnronPower Marketing, have since come forward with similar grievancesand urged the Commission to order the ISO to find a solution beforeit cause more economic harm this summer.

NMEM told FERC that on May 5 it submitted a request for 50 MW oftransmission to export power to PJM from New York for the hours0700 through 2300 on May 8. The marketer said it entered a”price-cap-sink” bid of $9,999.99/MWh, which was well above actualmarket prices, to help ensure that it would receive the exportcapacity. The price-cap-sink is the energy price at the New Yorkborder above which the transmission customer (NMEM) does not wantits transmission request scheduled.

Despite Day Ahead Market prices in New York at only $50/MWh,however, NMEM’s bid was rejected by the ISO’s software (calledSecurity Constrained Unit Commitment software). NMEM said thecomputer glitch cost it $68,000 over just four hours.

“The flaw that led to NMEM incurring damages to the tune of morethan $17,000 per hour is endemic to the NYISO’s software,” themarketer told FERC. “Thus, it is more likely than not that NMEM andothers will be harmed by this flaw in the future absent Commissionimmediate action on this complaint.”

In addition, even after the defects were pointed out to the ISOand supported by other affected parties, the ISO refused to dealwith the problem, NMEM said.

Several subsidiaries of Southern Energy described similarcomputer glitches around the same time. “On May 8, 2000, theSouthern parties, through Southern Company Energy Marketingattempted to export power to PJM, and just as was the case withNMEM’s above described transaction, had their export transactionsimproperly rejected,” they told the Commission. “SCEM entered asink price of $9,999/MWh for hours 12 through 18 and despite thefact that [Location-Based-Marginal cost-Prices] averaged $47.88/MWhfor the hours in question, the transaction was rejected. The NY ISOpossessed adequate transmission capacity… Cutting the transactionhad an adverse effect on the PJM market, considering that the PJMprices for all of the hours in question ranged from $268 to $483compared to $37 to $50 in New York, indicating tighter supply inPJM,” Southern said.

PPL Electric Utilities said it also encountered difficulties.”Flawed SCUC software and the NYISO’s lackadaisical attitude aboutfixing it present a problem larger than the immediate economicinjury to NMEM and other market participants,” Enron PowerMarketing told FERC. “That problem is economic protectionism.”

Enron pointed to evidence presented in an affidavit thataccompanied NMEM’s complaint that shows “a complete disregard for(if not overt discrimination against) the well being of consumersin the larger power market outside of New York.

“This type of economic protectionism and discrimination offendsboth the Commerce Clause and the FPA.. This provincialism alsoshould cause the Commission to rethink earlier decisions toauthorize the configuration of ISOs or regional transmissionorganizations along state and political boundaries rather thanaround power flows and markets. ISOs, such as the NYISO, have theeffect of balkanizing the national power market into pockets ofeconomic protectionism.”

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