Given that the New York Independent System Operator (NYISO) isalready working to remedy market flaws in its system, FERC hasrejected the relief sought by Niagara Mohawk Energy Marketing Inc.(NIMO Marketing) in connection with the NYISO’s software-relatedfailure to export power to the Pennsylvania-New Jersey-Maryland(PJM) system in early May.

However, the Commission did require the NYISO to submit adetailed report in September outlining steps it has enacted tocorrect the software problems that have been identified by NIMOMarketing.

In its complaint filed in mid-June, NIMO Marketing asked thatmanual check procedures be immediately implemented to ensure thatthe NYISO’s day-ahead software – or SCUC software – does notfurther reject power exports, or that market participants becompensated for their “lost opportunity costs” when exporttransactions are wrongfully rejected.

NIMO Marketing took this action after the NYISO failed toschedule during a four-hour period its request to export 50 MW inthe day-ahead market from New York into PJM on May 5. This occurredeven though the transaction carried a “decremental bid” of$9,999/MWh to ensure it wouldn’t be denied for “economic reasons,”the marketer said.

There has been wide-scale market support for NIMO Marketing’scomplaint and its requested relief, with some market participantsgoing as far to say that the NYISO’s denial of power exportsrepresented regional economic protectionism and threatened thewell-being of consumers in the power markets outside of New York.

But the Commission wasn’t as agreeable, saying instead that thesolutions recommended by NIMO Marketing may be “impractical” atthis time. “Since the NYISO is currently implementing its softwarefix of this problem, it would be an inefficient use of theCommission’s and the affected parties’ limited resources to nowdevelop a compensation mechanism. It is likely that the period ofpeak summer demand for electricity will be over by the timespecific tariff language is proposed to and approved by theCommission” addressing the compensation issue, the order said[EL00-82].

However, FERC said it would require a “comprehensive filedstatement [on] the status of the changes the NYISO has made tocorrect the market flaws identified by NIMO Marketing in thisproceeding, and a report on the effects of the changes on theNYISO’s markets. This will be necessary in order for the Commissionto determine if any further action, such as the implementation of acompensation mechanism, is appropriate” later. Both are due Sept.1.

The report in NIMO Marketing’s case should be combined and filedtogether with another report that FERC ordered in a prior complaintcase involving the NYISO, the order said. “In this combined report,the Commission should have the information necessary to determinewhether the NYISO’s changes have solved the problems identified. Ifthe problems are not resolved, the Commission will have time toreview the data and take whatever action in then appropriate.”

Susan Parker

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