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Spring 2008
New York ISO
CONNECTIONA Newsletter for Our Market Par ticipants
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Joint Meeting: Cooperstown in June
In this issue
Operator Training 2
True Grid 4
2007 State of the Markets 8
Testing the Wind 11
2007 Annual Report 14
Summer 2008 Forecast 15
continued on page 3
continued on page 17
Issues vital to the reliability of the bulk electricity grid and the administration of the
wholesale electricity markets will be on the agenda for the NYISO’s Joint Board of Directors/
Management Committee meeting on June 9 at the Otesaga Hotel in Cooperstown.
The annual joint meeting provides a forum for intensive discussion, in a town hall meeting-
style, of strategic issues.
On the agenda for this year’s joint meeting are three principal topics: developing forward
capacity markets, the interregional planning and coordination of markets, and the
integration of wind resources into the NYISO markets.
New NYISO President & CEOStephen G. Whitley to join NYISO in July
On June 4, the NYISO Board of Directors announced the selection of
Stephen G. Whitley as President and Chief Executive Offi cer. He will join
the NYISO on July 7.
Mr. Whitley is a 38-year veteran of the energy industry, with extensive
experience in bulk power system planning and operations. In his sev-
en-year tenure as senior vice president and chief operating offi cer of
ISO New England (ISO-NE) Mr. Whitley was responsible for System Plan-
ning, System Operations, Market Operations, Settlements, Customer
Service and North American Electric Reliability Corporation/Northeast
Power Coordinating Council (NERC/NPCC) compliance for the six-state region.
He previously served as ISO-NE Vice President, System Operations from 2000 to 2001. Prior
to coming to ISO New England, he completed a 30-year career with the Tennessee Valley
Authority where he last served as General Manager, Electric System Operations of the Trans-
mission Power Supply Group and was responsible for control area operations, power supply,
economic dispatch, system protection, transmission security, and services and dispatching
for the fi ve-state, 80,000 square-mile TVA service territory.
Stephen Whitley
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The old saying — “Practice makes perfect” —
means a lot more when it comes to training the
people who operate the bulk electricity grid.
Expertly trained operators are vital not just to
the reliability of the grid, but also to the vitality
of New York’s wholesale electricity markets. The
most reliable and effi cient power grid encour-
ages market competitiveness.
System reliability is paramount. The NYISO’s op-
erators are on the job 24 hours a day, every day
of the year, and their training is continuous and
comprehensive. No matter how long they have
been on the job, they undergo refresher, infor-
mation systems, and emergency (contingency)
response training about every six weeks. New
operators receive instruction that is even more
intensive.
Grid Operator Training Exceeds Standards
NYISO’s operator training far exceeds federal
standards. North American Electric Reliability
Corporation (NERC) standards require operators
to have 200 continuing education hours every
three years. NYISO’s operators typically receive
300 hours of training.
Market participants benefi t directly from NYISO
training. Transmission Owners (TOs) send their
local control room operators to the NYISO for
supplemental training reinforcing the interac-
tion between local control areas and the bulk
electricity grid. Over the course of the past year,
140 people received NYISO instruction on the
fundamentals, intricacies, and innovations of
operating the electric power system. One hundred of
these students came from TOs around the state.
Advanced Simulator Mimics Real Life and
Emergency Conditions
A centerpiece of NYISO training is a simulator room. It
is a full duplication of the operating system that can
take operators through a regular day monitoring the
grid, as well as put them through emergency situa-
tions.
Simulator training can recreate actual past emergen-
cies or put system operators in extreme situations
they have never faced in the real world of operations.
The simulation provides the trainee with an opportu-
nity to go through an exercise in a safe environment,
work out problems with the support of other staff ,
and develop confi dence in their ability to handle dif-
fi cult situations when they actually encounter them.
It also provides a useful tool to train for bringing the
system back on line after an emergency.
Classroom work on policies and procedures is also
an important part of operator training, as are events
reviews of noteworthy occurrences on the power
system, and demonstration of new applications.
Training for Excellence
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The Operations Training Department also
participates in wide-area training events
that include regional emergency opera-
tions involving neighboring grid opera-
tors (Ontario IESO, PJM, ISO-New England,
and Hydro-Quebec). Such events include
a mock exercise to restore power after
a blackout event which aff ects multiple
areas.
Praise for NYISO Training Quality,
Eff ectiveness
A December 2007 audit by the North
American Electric Reliability Corporation
(NERC) and the Northeast Power Coor-
dinating Council (NPCC) noted that the
NYISO and its operators are doing “an
outstanding job” in meeting new federal
reliability requirements.
In 2004, the NERC Readiness Audit Program
identifi ed the NYISO among its “Examples
of Excellence” in training.
And in 2006, the NERC Readiness Audit
Report stated, “The audit team was espe-
cially impressed with NYISO’s training pro-
gram. Highlights of the program include:
employing personnel to allow operators
the opportunity to train for advancement
and exceed the NERC recommended mini-
mum hours of required training; carefully
planned course scheduling by the training
staff to ensure full operator participation;
and simulator training that includes both
NYISO and transmission owner operators.”
“Steve Whitley brings an impressive array of talents and
expertise to the NYISO. He has a well-demonstrated
commitment to excellence in the operation of the bulk
electricity grid and the administration of wholesale electricity
markets,” said NYISO Board Chair and Interim CEO Karen
Antion.
“I am deeply honored to become the President and CEO
of the NYISO,” said Mr. Whitley. “I welcome the opportunity
to work with the NYISO’s employees, stakeholders, and
government offi cials as we build upon the good work
already accomplished by this talented group of industry
professionals.”
Mr. Whitley is a member of the Electric Power Research
Institute (EPRI) Grid Operations - Power Delivery and Markets
Sector Council, member of the NPCC Board of Directors, and a
member of the Executive Committee of CIGRE (International
Council on Large Electric Systems), U.S. Committee.
He earned a Bachelor of Science degree in Electrical
Engineering from Tennessee Technological University prior to
beginning his electricity industry career with the TVA.
Mr. Whitley is a retired Colonel in the U. S. Army Reserve
and the former commanding offi cer of the 3397th Garrison
Support Unit, Fort Campbell, Kentucky. He retired after a
distinguished 30-year career, which included active duty in
Operation Desert Storm in 1990 and 1991.
The NYISO’s selection is a result of a nationwide search
conducted for the NYISO Board by Heidrick & Struggles, a
leading executive search fi rm.
New NYISO President & CEOcontinued from page 1
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continued on next page
Smart Home. Its core concept is going from a cen-
tralized to a distributed environment with millions
of sensors on the grid. Other key features include
moving from an electromechanical to a digital
grid, from manual to automated processes (such as
meter reading), from limited to transparent pric-
ing information and giving consumers an array of
choices regarding energy use and spending.
The consumer’s perspective was among the topics
addressed at the symposium. A video provided by
the Distributed Energy Financial Group showed a
Smart Home in the year 2015. Advanced meter-
ing and sensors were in place, and a display screen
installed by the local utility enabled residents to
see the amount and cost of the electricity they
were using – in real time, and an interface through
which they change their usage behavior, if desired.
For example, during a hot day with peak demand
approaching, a utility representative would ap-
pear on the screen and warn that electricity prices
were about to go up, and if the current in-home
temperature is maintained, then a pre-set budget
limit might be exceeded - demonstrating how
this technology can empower consumers to make
informed decisions about their energy use and
purchase. A gaming console showed a real-time
profi le of the home’s appliances, and the consumer
could click on each for energy use and cost infor-
mation and plan how to save electricity by making
slight modifi cations.
In sum, advanced metering and Smart Grid technolo-
gies give the consumer the option of modifying their
lifestyles for short periods of time and – with real-time
price information – gives consumers more control over
their spending.
True GridIn the same way that iPhones and Blackberries
revolutionized communications, a Smart Grid that
includes Advanced Metering Infrastructure (AMI)
can change the way consumers view and use elec-
tricity in the near future.
That was the consensus that emerged from the
two-day symposium and technology expo, “True
Grid: Smart Metering and Advanced Technologies,”
held in Albany in May. The event attracted more
than 250 participants from utilities and other
market participants, federal and state energy
regulators, legislative staff ers and technology
providers. The analogy was echoed by several
participants at the conference, who noted that the
imagination and drive that produced innovative
phones and PDAs are now being applied to Smart
Grid technologies.
The Smart Grid encompasses a complete, end-
to-end view of transmission, distribution, and the
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Many panelists at the conference pointed out that AMI
is a “system of technology systems” applying to the
transmission and distribution power grid technologies
that are already being used in other industries. Many
large customers already utilize and benefi t from these
technologies through demand response programs,
and the objective now is to make the choices and op-
tions available to the smaller business and residential
customers.
Why Now?
Federal Energy
Regulatory
Commissioner
Suedeen Kelly
discussed
the “historic
convergence of
circumstances”
driving the Smart
Grid movement, which FERC supports. They
include the diffi culty of siting new generation
and transmission, the economics of producing
electricity, concern about carbon emissions and
concern about reliability. In this regard, she
noted the need to reduce grid bottlenecks and
mentioned that much of our legacy distribution
and transmission systems – now more than 50
years old – need to be modernized.
She noted that issues, particularly including fi nanc-
ing, remain to be resolved. “At the local regulatory
level, what do utilities and vendors need to recover
their costs?” she asked. “How will utilities be left
whole when demand response – a cornerstone of
Smart Grid – grows?”
continued on next page
Commissioner Kelly co-chairs a collaborative between
FERC and the National Association of Regulatory Utility
Commissioners (NARUC) studying these issues and
others. She said that at a national level, Congress an-
nounced last year that it wants to have the nationwide
electric grid modernized along Smart Grid lines and
has directed the Department of Energy to educate the
public. Congress has authorized funding the move to
Smart Grid, but has not yet provided funds.
New York State Public Service Commission Chairman
Garry Brown, who also sits on the FERC-NARUC col-
laborative, cited the global economy and how it is
spurring the need to maximize the grid’s potential. He
noted that, with the burgeoning economic growth and
electricity use of India and China, worldwide projec-
tions of energy demand are forecast to triple by 2050.
Worldwide events can and do aff ect energy prices in
New York State, Chairman Brown noted. He suggested
that rather than become overwhelmed by forces be-
yond our control; we can do three things in New York
to aff ect our energy future. A Smart Grid, he said, has a
role in each of the three areas.
First, we can en-
hance energy effi -
ciency, which is the
goal of the state’s
ambitious “15 X 15”
strategy to lower
the use of electricity
15 percent by 2015.
Advanced metering
and Smart Grid technologies would help achieve that
goal by providing “prices to devices” that help consum-
ers to better gauge the cost of their energy use.
Suedeen Kelly
Garry Brown
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ten objectives for grid modernization that together
characterize a Smart Grid. They include increased use
of digital information to improve reliability, security
and effi ciency of the electric grid; deploying and
integrating distributed resources and generation,
including renewable resources; developing demand
response and energy effi ciency resources; deploying
“smart” technologies for metering, communications
and distribution automation; integration of smart ap-
pliances and consumer devices; providing consum-
ers with timely information and control options; and
identifying and lowering unreasonable or unneces-
sary barriers to adoption of smart grid technologies,
practices and services.
Tom Lynch, Director of Government Aff airs for the
New York State Energy Research and Development
Authority (NYSERDA), said that achieving the
Smart Grid would require the collaboration of all
stakeholders in New York.
He noted that the Governor recently issued an
Executive Order creating a new State Energy
Planning Board that will look at supply, transmission
constraints, and infrastructure changes, including
Smart Grid.
continued on next page
Second, we can develop more renewable
resources – like hydroelectric and wind resources,
and enhance fuel diversifi cation. This could
include nuclear energy, solar power and clean coal
technologies.
Third, we must deal with our energy infrastructure
– improving it and maximizing its use with Smart
Grid technologies.
“We need to be looking at how we can improve
the infrastructure, how to get the refrigerator not
to make ice on a hot summer day between 4 and
7 pm and overall, how we can give people the
price signals they need to understand how much
electricity costs at certain times,” Chairman Brown
said.
Commissioner Kelly, Chairman Brown and oth-
ers at the conference noted that all of this would
require very large investments. Chairman Brown
noted, however, that we spend $20 billion annu-
ally on electricity in New York. “We need to put the
Smart Grid’s costs in the proper context,” he said.
“At the PSC, we need to make sure the investments
are made prudently, wisely and eff ectively.”
He noted that the PSC is currently reviewing
proposals from New York utilities for an advanced
metering pilot or demonstration projects.
NYISO Board Chair Karen
Antion cited other
convergent factors ac-
celerating the develop-
ment of Smart Grid. The
Energy Independence
and Security Act of 2007,
signed into federal law
last December, off ers Karen Antion
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It’s Already Happening
According to FERC Commissioner Kelly, FERC has found
that 72 utilities in 32 states have “Smart Grid” pilot or
demonstration projects in place or pending.
With so many pilots underway, conference attendee
Tom Bautz, from Orange & Rockland Utilities, noted
that conferences like the NYISO’s aid in the “fact fi nding
process” in which utilities can learn from one another’s
experiences.
One of the largest smart metering projects underway
in the world involves Hydro One, wholly owned by
Canada’s Ontario province. With demand growing rap-
idly, Hydro One and Capgemini, its outsourcing agent
for meter installation, are under a government direc-
tive to install 800,000 smart meters by December 31 of
2008 and meter all of Ontario’s 4.5 million customers
by December 31, 2010. The aim is that by introducing
AMI and Time-of-Use rates – charging higher rates dur-
ing peak demand hours and lower rates at night and
other off -peak times when there is a surplus of gen-
erating capacity – consumers will be incented to shift
their consumption patterns in terms of when and how
they use electricity. Such a shift by millions of ratepay-
ers could reap benefi ts ranging from reducing power
plant emissions, increasing grid reliability and reducing
peak prices by lowering peak demand.
Such projects are neither cheap nor easy. Capgemini’s
CEO, Meir Shargal, noted that AMI’s initial capital
outlay is a foundation for the future. The distributed
grid, demand response and other building blocks will
give a much larger return on investment. He also said
that smart metering need to be handled by multiple
departments within a utility. His company has found
that typically it involves 80 diff erent processes at a
utility, engaging various departments, so the approach
must be interdisciplinary.
Alignment is Key
Reaction to the regulatory commissioners, repre-
sentatives from government agencies like NYSERDA,
technology developers and market participants who
presented was universally positive.
Many attendees cited “alignment” among stakeholders
as the most critical need to move Smart Grid forward –
more critical than breakthrough technologies or world
energy changes.
Reza Ghafurian of Consolidated Edison, who gave a
presentation on how the utility is applying Smart Grid
concepts to one of its distribution networks in Man-
hattan, said afterward, “I’ve found the conference very
valuable, especially hearing the comments from the
policymakers at the state and federal levels, NYSERDA
and the NYISO. It’s great to hear that the perspectives
are all aligned.”
20th versus 21st Century Grid20th Century Grid 21st Century Grid
Electromechanical
Centralized
Manual
Limited pricing info
Few customer choices
Digital
Distributed
Automated
Transparent & detailed pricing
Many customer choices
continued on next page
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Advanced Metering Infrastructure – features sys-
tems that measure, collect, and analyze energy usage,
employing advanced communications and data
management hardware and software to provide usage
information to electricity customers and utilities.
Smart Meter – an electricity meter capable of measur-
ing and recording usage data at specifi ed intervals.
It allows electricity customers, suppliers, and service
providers to participate in all types of price-based
demand response programs.
Attendee Joe Lopes, from Applied Energy Group,
said, “It’s very useful to hear the policy direc-
tion in New York State regarding AMI. Plus, the
industry is changing rapidly and it pays to keep
up. This has been a great way to hear from all
the agency and policy people, see where they’re
aligned and where things are going.”
The Wholesale Sector
Although much of the conference dealt with
the ultimate consumer experience, the Smart
Grid has positive implications for both the bulk
electricity grid and the wholesale electricity
marketplace.
Randy Bowers, Principal, Settlements Processes &
Control at the NYISO, noted that the use of digi-
tal information will enhance the ability to moni-
tor and control the transmission grid, and Smart
Grid features will help minimize transmission and
transformer losses, and maintain and enhance
regional reliability.
Conference attendee Michael Walsh, Direc-
tor of information solutions company NYSTEC,
summed up the two-day experience. “The
conference provided an excellent showcase to
demonstrate how Smart Grid and Advanced
Metering Infrastructure will enable New Yorkers to
achieve energy management goals that have been
set by federal and state leaders.”
Another attendee noted that, with so much activity
relating to Smart Grid and AMI in so many sectors,
“We don’t have to reinvent the wheel. We can all
learn from one another’s experiences, and that’s the
key value of this conference.”
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CONNECTION
New Credit Management SystemFollowing extensive discussions with market participants,
the NYISO will implement a new Credit Management Sys-
tem (CMS) to automate and integrate credit requirements
and processes for all of its wholesale electricity markets.
The NYISO initiated discussions with market participants
at an October 2007 technical conference, and continued
intensive talks in various venues, including at a March
2008 technical conference.
The new system, which will be phased in over two years,
should make the credit process more effi cient, and pro-
vide the market participants with more information.
“The new multi-market CMS will provide the NYISO with
an accurate, near real-time credit risk assessment, in total
and by market participant. It will also equip each market
participant with a user-friendly interface and enhanced
information to manage its credit position,” explained
Mary McGarvey, NYISO Vice President and Chief Financial
Offi cer.
As specifi ed by the Federal Energy Regulatory Commis-
sion (FERC), the NYISO establishes credit requirements
applicable to market participants and the basis for allocat-
ing payment default amounts to market participants. If
a participant defaults on its payment obligations to the
NYISO, other market participants are liable for a portion
of the default obligation not covered by the defaulting
participant.
The two-year project will integrate credit management for
market participants in all markets, including transmission
congestion contracts, virtual transactions, energy, ancillary
services and installed capacity (ICAP).
Karen Antion, NYISO Board Chair and interim CEO, noted
that the fi nancial integrity of the wholesale electric-
ity markets requires the credit-worthiness of all market
participants. “We continually strive to balance rigorous
protections against default with the need to avoid unrea-
sonable barriers to market entry,” she said.
Ward Joins NYISO BoardChristopher O. Ward was unanimously elected to the NYISO
Board of Directors on April 15. At the time of his election
to the Board, he was Managing Director of the General
Contractors Association of New York (GCANY), a post he
had held since 2006. On May 5, Governor David A. Paterson
announced that he would recommend Mr. Ward for appoint-
ment as the Executive Director of the Port Authority of New
York and New Jersey.
Prior to joining CGANY, Mr. Ward was Chief Executive Offi cer
of American Stevedoring, Inc. From 2002 to 2005, he served
as Commissioner of the New York City Department of Envi-
ronmental Protection, which is responsible for protecting the
environmental health, welfare, and natural resources of New
York City and its residents.
Announcing Ward’s election to the Board, NYISO Board Chair
Karen Antion, said, “Christopher Ward’s extensive experience
with environmental protection and public works infrastruc-
ture will off er valuable perspectives to the work of the NYISO
Board of Directors. His impressive record of public service and
success in the private sector will add to our Board members’
wide array of expertise and accomplishments.”
He had previously served as Chief of Planning and External
Aff airs at the Port Authority of New York and New Jersey,
where he also served as Director of Port Development. Prior
to that, he was Director of Business Development at Ameri-
can Stevedoring, Inc., Senior Vice President for Transportation
and Commerce at the New York City Economic Development
Corporation, Assistant Commissioner at the New York City
Department of Telecommunications and Energy, and Director
of Research at the New York City Department of Consumer
Aff airs.
Mr. Ward received a Master of Theological Studies from Har-
vard Divinity School and a Bachelor of Arts from Macalester
College in St. Paul, Minnesota.
His selection is the result of a nationwide search. The process
included extensive stakeholder participation and candidate
interviews with a representative group of Market Participants.
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2007 State of the Market Report
Dr. David Patton, the NYISO’s Independent Market Advisor presented his 2007 State of the
Market Report: New York Electricity Markets
to NYISO market participants and the Board of Directors in May.
The assessment of the performance of the New York electricity markets in 2007 stated that the NYISO “operates the most complete set of electricity markets in the U.S.” Among the benefi ts of NYISO markets cited by the report:
Day-ahead and real-time markets jointly optimize energy, operating reserves and regulation, which leads to prices that refl ect the value of energy at each location on the network, the lowest cost resources being started each day to meet demand, and delivery of the lowest cost energy to New York’s consumers to the maximum extent allowed by the transmission network.
Capacity markets produce effi cient long-term economic signals to inform decisions to invest in new generation and demand response resources, and maintain existing resources.
The market for transmission rights allows participants to hedge the congestion costs associated with using the transmission network.
The report also states that the “NYISO markets are at the forefront of market design and have been a model for market development in other areas.” Dr. Patton points out that the NYISO was the fi rst RTO market to:
Jointly optimize energy and operating reserve markets that effi ciently allocate resources to provide these products.
Impose locational requirements in its operating reserve and capacity markets – the locational requirements play a crucial role in signaling the need for resources in transmission-constrained areas.
Introduce capacity demand curves that refl ect the value of incremental capacity to the system and provide for increased stability in market signals.
Provide operating reserve demand curves that contribute to effi cient prices during shortage conditions when resources are insuffi cient to satisfy both the energy and operating reserve needs of the system.
The 2007 State of the Market Report also notes that the NYISO is the only market to have:
An optimized real-time commitment system to start gas turbines and schedule external transactions economically. Other organized markets rely on their operators to determine when to start gas turbines.
A mechanism that allows gas turbines to set energy prices when they are economic. Gas turbines frequently do not set prices in other
11
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areas because they are infl exible and distort the prices in the real-time market.
A real-time dispatch system that is able to optimize over multiple periods (up to 1 hour), which allows the market to anticipate upcoming needs and move resources to effi ciently satisfy the needs.
“Ex-ante” real-time prices that are consistent with the real-time market dispatch. Other organized markets use an “ex-post” pricing method that can result in less effi cient prices that are not consistent with dispatch signals.
A mechanism that allows demand-response resources to set energy prices when they needed, which is essential to maintaining effi cient price signals during shortages.
The report said that, in 2007, energy prices increased 6 to12 percent in most areas outside Long Island, primarily due to fuel prices as natural gas prices increased an average of 15 percent. Price increases were partially off set by milder summer weather and new transmission capacity that was added between New Jersey and Long Island in July 2007. The additional 660 MW of import capability led to a three percent decline in Long Island prices, according to Dr. Patton.
Among its recommendations, the report states that the NYISO should:
Continue the work with neighboring control areas to better utilize the transfer capability between regions, ideally by directly coordinating the physical interchange.
Evaluate potential improvements real-time commitment model (“RTC”) and the real-time dispatch model (“RTD”) to improve their consistency and improve the management of ramp capability at the top of the hour.
Evaluate changing two provisions in the mitigation measures that may limit competitive 10-minute reserves off ers in the Day-Ahead Market. (The provisions limit the reference levels of some GTs to $2.52/MWh and the off ers of 10-minute spinning reserves in New York City to $0/MWh.)
Consider whether additional capacity zones are needed outside of New York City and Long Island.
Evaluate whether it is feasible to enable the NYISO reliability based Emergency Demand Response resources to set clearing prices in local areas when they are needed to maintain transmission system reliability.
The full 175-page 2007 State of the Market Report:
New York Electricity Markets is available for download from the NYISO website
(www.nyiso.com)
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Governor’s Energy Planning Order Notes NYISO RoleBy Executive Order issued on April 9, Governor David
Paterson established a State Energy Planning Board
and tasked the panel with creating a new State
Energy Plan. The order names the NYISO among the
public and private entities with which the new board
will consult.
NYISO Board Chair Karen Antion, in an April 14 letter
to Gov. Paterson, off ered the NYISO’s support and
encouraged the new board to view its process as “an
opportunity to build on the NYISO’s Comprehensive
Reliability Planning Process” and “take advantage
of the knowledge and experience of our staff to
augment the resources provided by the public sector”
to the planning process.
Among the items to be included in the new state
energy plan are:
a statement of long-range energy policy objectives
and strategies appropriate to increase energy supply
and reduce energy demand
demand forecasts for periods of up to ten years,
supply requirements for the state
assessments of existing energy resources
projections of energy prices
assessments of sustainable alternatives to
traditional resources
assessments of the eff ects of electricity production
on public health and the environment
assessments of environmental policies and
programs aff ecting energy
an inventory of greenhouse gas emissions
A draft plan is required on or before March 31,
2009, with the fi nal plan due by June 30, 2009.
The board is authorized to issue new plans every
three years.
The membership of the State Energy Planning
Board includes the Governor’s Deputy Secretary
for Energy, Paul DeCotis, who will chair the panel.
The other members include the Chair of the
Public Service Commission, the Commissioner of
Environmental Conservation, the Commissioner
of Transportation, the Commissioner of Health,
the Commissioner of Economic Development,
the President of the New York State Energy
Research and Development Authority, the
Director of the Budget, the President of the
Urban Development Corporation, the Secretary
of State, and the Governor’s Deputy Secretary for
Environment.
NYISO Planning Process
Solutions Market-based & Regulatory
Reliability Plan
Needs Assessment
13
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Testing the WindWind power is a growing, renewable resource in
New York, with the NYISO and market participants
working together to develop and implement ways to
integrate wind power resources into New York’s electricity
system. There are currently about 500 megawatts of
wind generation in commercial operation in New York
State. Another 7,000 MW of proposed wind power
projects are at various stages of the grid interconnection
process administered by the NYISO.
Since wind is an “intermittent” resource, the NYISO is
conducting detailed analyses to determine how best to
accommodate such large increases in wind energy while
maintaining the reliability of the bulk electric system.
An important step will be the centralized wind
forecasting system that the NYISO plans to begin
administering this summer. Forecasts, both day-
ahead and real time, will be supplied to the NYISO
by AWS Truewind, a leading provider of advanced
atmospheric modeling and measurement services.
Market participants who operate wind projects will have
access to their individual forecasts, and the NYISO will
incorporate each forecast into its market software.
To produce the forecasts, wind generators will provide
meteorological data and the NYISO will send power
data to AWS Truewind. The company will provide wind
power forecasts, and the NYISO will use the information
to integrate wind power in balancing electricity supply
with consumer demand. The forecasts will make it easier
to gauge how much wind power will be available on the
bulk electricity grid throughout a given day, reducing the
possibility of unanticipated power gaps.
Updating Market Rules
The NYISO is also proposing wind-related revisions in
market rules, which are subject to approval by the Federal
Energy Regulatory Commission (FERC). The proposals
include:
Increasing the amount of wind generation eligible for
exemption from under-generation penalties and full
compensation for over-generation,
Requiring wind projects to fi nance the costs of the cen-
tralized forecasting service, and
Establishing penalties for wind generators who con-
tinually fail to deliver meteorological data to the NYISO
forecaster.
Karen Antion, NYISO Board Chair, reinforced the NYISO’s
interest in diversifi ed fuel resources. “As fuel costs climb
and the need for emission-free electricity grows,” she said,
“it is important to realize the full potential of renewable
energy resources such as wind. The NYISO is committed
to accommodating the market entry of any and all new
technologies and renewable resources.”
14
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March 19, 2008:
FERC letter order granting NYISO a tariff waiver
regarding its request to post the results of the April
auction
March 20, 2008:
FERC tolling order granting rehearing for further con-
sideration regarding the NYISO v. Hudson Transmis-
sion Partners proceeding
FERC letter order approving tariff revisions to change
the calculation of charges assessed to transmission
customers to recover costs related to various transmis-
sion facilities and black start and restoration services
FERC letter order accepting unredacted pages fi led in
response to a 2/8/08 order
March 21, 2008:
FERC guidance order on the conceptual proposal to
codify the deliverability plan
FERC order denying the Black Oak Energy complaint
v NYISO regarding alleged tariff violations concerning
price corrections and an inappropriate penalty
March 26, 2008:
FERC order accepting and suspending tariff sheets
subject to conditions and granting waivers regarding
implementation of market power mitigation of ICAP
suppliers in the NYC market
March 28, 2008:
FERC order accepting tariff sheet regarding establish-
ing a NY gas-electric coordination protocol
FERC letter order accepting errata tariff sheets regard-
ing the ICAP demand curve tariff fi ling
FERC letter announcing an audit of NYISO OASIS in-
formation postings to ensure compliance with Order
No. 890
FERC order accepting tariff revisions regarding the
2008 – 2011 ICAP Demand Curves
FERC Orders as of May 19, 2008 April 2, 2008:
FERC letter order accepting NYISO’s informational fi ling
report regarding price validations
April 3, 2008:
FERC letter order accepting NYISO’s thirteenth quarterly
report regarding penalty exemptions for grouped generat-
ing facilities the output of which is measured at a single
location
April 11, 2008
FERC letter order accepting NYISO’s compliance fi ling to
include the phrase “or zero” in order to clarify that all TCC
bids are subject to the term-based minimums included in
the bid component
April 16, 2008
FERC order accepting long-term transmission rights pro-
posal subject to modifi cation and compliance fi lings
April 28, 2008
FERC order accepting tariff revisions regarding the credit
requirements for holding Transmission Congestion Con-
tracts
April 29, 2008
FERC order accepting a large generator interconnection
agreement between NYISO, Consolidated Edison and Lin-
den VFT regarding a merchant transmission project
May 7, 2008
FERC order conditionally accepting NYISO’s compliance
fi lings regarding Order No. 890 pro forma OATT require-
ments
May 15, 2008
FERC letter order accepting an executed Large Generator
Interconnection Agreement between NYISO, the Village of
Arcade, and Noble Bliss Windpark, LLC
May 16, 2008
FERC letter order accepting a large generator interconnec-
tion agreement between NYISO, NYPA and Noble Ellenburg
Windpark, LLC
May 19, 2008
FERC notice granting NYISO an extension of time until July
21, 2008 to fi le tariff revisions regarding its deliverability
plan
15
CONNECTION
NYISO Governance Committee Roster
Management Committee (MC)
Ray Kinney (NYSEG/RG&E) - Chair
Bill Palazzo (NYPA) - Vice Chair
Budget & Priority Working Group (BPWG)
Patti Caletka (NYSEG/RG&E)
Board Selection Subcommittee (BSSC)
Ray Kinney (NYSEG/RG&E)
Stay Review Subcommittee
Paul Gioia (Dewey & LeBoeuf )
Market Participant Audit Advisory Subcommittee (MPAASS)
Les Pardo (NYPA) - Chair
MC By-Laws Subcommittee:
Neil Butterklee (ConEd)
Business Issues Committee (BIC)
Glen McCartney (Constellation) - Chair
Stuart Nachmias (ConEd) - Vice Chair
Market Issues Working Group (MIWG)
Norman Mah (ConEd)
Installed Capacity Working Group (ICAPWG)
Glenn Haake (Dynegy)
Billing & Accounting Working Group (BAWG)
Kathy Logan (U.S. Power Generating Co.)
Price Responsive Load Working Group (PRLWG)
Stephen Lynch (Energy Curtailment Specialist)
Interconnections Issues Task Force (IITF)
Glen Haake (Dynegy)
Operating Committee (OC)
Liam Baker (U.S. Power Gen) - Chair
Ted Pappas (KeySpan/LIPA) - Vice Chair
Communication Data Advisory Subcommittee (CDAS)
Ray A’Brial (Central Hudson)
Transmission Planning Advisory Subcommittee (TPAS)
John Marczewski (EIG)
System Operations Advisory Subcommittee (SOAS)
Doug Voos (Keyspan Energy)
System Protection Advisory Subcommittee (SPAS)
Ralph Mazzatto (ConEd)
Electric System Planning Working Group (ESPWG)
Tariq Niazi (New York State Consumer Protection
Board)
Restoration Working Group (RWG)
Len Panzika (NYPA)
Reactive Power Working Group (RPWG)
Janos Hajagos (LIPA)
Schedules for NYISO Governance working groups and committees can be found at:
www.nyiso.com/public/committees/calendar/index.jsp
16
sm
The NYISO and its
market participants
ultimately serve the
same consumers,
the electricity cus-
tomers of
New York State,
who are high-
lighted by
the NYISO’s
2007 Annual
Report.
An opening letter from NYISO Chair
and Interim CEO Karen Antion notes, “Our informa-
tion technologies are sophisticated and we operate
in a complex environment of diverse market partici-
pants, generating units and transmission facilities,
with programs and engineering analyses that
contain the alphabet soup of acronyms that char-
acterize the energy industry. On a daily basis, we
cut through that complexity to responsibly serve
our ultimate customers – New York’s 19.3 million
people and thousands of vital businesses and or-
ganizations, including world centers for commerce,
culture, education, and health care.”
The report covers the NYISO’s 2007 activities under
three theme sections: reliable, economic, and
responsible. It provides the annual fi nancial state-
ment, a listing of market participants, and closes
with a memorial tribute to Peter Berle.
This edition of the annual report has a different
look, Elaine Robinson, Director of Regulatory Af-
fairs and Acting Vice President for External Affairs,
explained. “We went out of our way to make this
report especially reader friendly,” she said. For
example, we summarized the benefi ts of competi-
tion on one page. We employed a more readable
type size and eliminated unbroken pages of solid
text in favor of headlines and manageable text
summaries.”
Some highlights of the report, organized by theme
section, include:
Reliable
New Yorkers used more electricity than ever
before in 2007, setting a new annual record,
167,341 GWh.
A December 2007 audit by the North American
Electric Reliability Corporation and the Northeast
Power Coordinating Council concluded, “…the
NYISO is doing an outstanding job” in meeting
the federal reliability standards implemented
earlier in the year.
Economic
Transactions in the NYISO-administered whole-
sale electricity markets in 2007 totaled $9.5
billion. Market transactions since the NYISO’s
inception in late 1999 total $59.2 billion.
NYISO-administered markets have enabled
development of innovative demand response
resources and the NYISO continued to expand
those programs last year. A new “targeted de-
mand response” program called upon program
participants to address localized power supply
situations twice in the summer of 2007. continued on next page
2007 Annual Report Focuses on Ultimate Customers
New
York In
dep
end
ent S
ystem O
perato
r 2007 A
NN
UA
L RE
PO
RT
Reliable
Economic
Responsible
sm
17
CONNECTION
A March 2007 report, A Cost-Benefi t Analysis of
the New York Independent System Operator: The
Initial Years, found the annual savings to consumers
from NYISO-administered markets to be in the “hun-
dreds of millions of dollars.”
Responsible
With open access to the grid easing the entry of re-
newable energy projects, there were almost 7,000 MW
of proposed wind generation projects in the NYISO
interconnection queue by the end of the year.
The NYISO’s shared governance system with market
participants facilitates collaborative decision-making
and consensus building. In an order relating to an
Installed Capacity Demand Curves proposal fi led in
2007, the Federal Energy Regulatory Commission
lauded the results of the NYISO’s shared governance,
stating: “The Commission commends NYISO and the
stakeholders for working together to resolve many
issues … the proposal represents a reasonable com-
promise between the parties’ interests in a proceeding
that was contentious, with a number of parties hold-
ing divergent views.”
The 2007 Annual Report, mailed to Market Participants
and others in early May, is also downloadable from the
NYISO web site, www.nyiso.com.
Summer 2008 Electricity ForecastThe NYISO projects that suffi cient resources will be
available to meet this summer’s peak electricity usage,
which is expected to rise more than 5% above last
summer’s peak.
The forecast for the 2008 summer peak is 33,809
megawatts (MW); about 1,640 MW higher than the
2007 peak but slightly lower than the record peak
demand of 33,939 MW set on August 2, 2006. The
summer of 2006 was the second warmest on record in
the nation since 1936. The U.S. National Oceanic and
Atmospheric Administration’s temperature outlook for
this summer shows an increased probability of above
average temperatures for New York.
On hand to meet the need on the bulk electricity grid,
the NYISO projects, will be 38,920 MW of New York
State resources. That exceeds the installed capacity
requirement to meet the load including the 15 % reli-
ability reserve margin.
New York City and Long Island, where nearly half the
state’s summer load is located, are expected to have
more than suffi cient capacity to meet their needs. For
New York City, the actual installed “in-city” capacity is
480 MW above the requirement. Long Island is expect-
ed to exceed its requirement by 530 MW.
Summer 2008 electricity supply for New York State is
expected to be adequate – barring unexpected ex-
tremes in weather conditions – despite the retirement of
electricity generating facilities such as the Lovett units in
the Hudson Valley and Russell Station in the Rochester
metropolitan area. New generation, transmission up-
grades, and vigorous demand response programs that
cut peak demand all contribute to providing suffi cient
resources for New York’s electricity needs.
18
sm
MANAGEMENT COMMITTEE
By-Laws Subcommitteewww.nyiso.com/public/committees/documents.jsp?com=mc_bls
Budget & Priorities Working Group www.nyiso.com/public/committees/documents.jsp?com=mc_bpwg
Liaison Subcommitteewww.nyiso.com/public/committees/documents.jsp?com=mc_ls
MP Audit Advisory Subcommittee (MPAAS)www.nyiso.com/public/committees/documents.jsp?com=mc_mpaas
Sector Meetingswww.nyiso.com/public/committees/documents.jsp?com=mc_sector_meetings
BUSINESS ISSUES COMMITTEE
Billing & Accounting Working Group (BAWG)www.nyiso.com/public/committees/documents.jsp?com=bic_bawg
Business Intelligence Task Force (BITF)http://www.nyiso.com/public/committees/documents.jsp?com=bic_bawg_bitf
Credit Policy Task Force (CPTF)www.nyiso.com/public/committees/documents.jsp?com=bic_spwg_cptf
ICAP Working Group (ICAPWG)www.nyiso.com/public/committees/documents.jsp?com=bic_icapwg
Interconnection Issues Task Force (IITF)www.nyiso.com/public/committees/documents.jsp?com=oc_tpas_iitf
Market Issues Working Group (MIWG) www.nyiso.com/public/committees/documents.jsp?com=bic_miwg
Price Responsive Load Working Group (PRLWG)www.nyiso.com/public/committees/documents.jsp?com=bic_prlwg
Resource Adequacy Issues Task Force (RAITF)www.nyiso.com/public/committees/documents.jsp?com=bic_icapwg_raitf
Scheduling & Pricing Working Group (S&PWG)www.nyiso.com/public/committees/documents.jsp?com=bic_spwg
BUSINESS ISSUES COMMITTEE (continued)
OPERATING COMMITTEE
Communication & Data Advisory Subcommittee (CDAS)www.nyiso.com/public/committees/documents.jsp?com=oc_cdas
Electric System Planning Working Group (ESPWG)www.nyiso.com/public/committees/documents.jsp?com=bic_espwg
Interconnections Projects Facilities Study Working Group (IPFSWG)
www.nyiso.com/public/committees/documents.jsp?com=oc_
tpas_iitf
Reactive Power Work Group (RPWG)www.nyiso.com/public/committees/documents.jsp?com=oc_rpwg
Restoration Working Group (RWG) www.nyiso.com/public/committees/documents.jsp?com=oc_rwg
System Operations Advisory Subcommittee (SOAS)www.nyiso.com/public/committees/documents.jsp?com=oc_soas
System Protection Advisory Subcommittee (SPAS)www.nyiso.com/public/committees/documents.jsp?com=oc_spas
Transmission Planning Advisory Subcommittee (TPAS)www.nyiso.com/public/committees/documents.jsp?com=oc_tpas
NYISO Governance Web Links
19
CONNECTION
Connection is published electronically by the External Affairs Group of the New York Independent System Operator (NYISO) for the benefi t of NYISO Market Participants. For more information, or to make comments and suggestions, please contact NYISO External Affairs.
Debra Murley, Editor
NYISO Communications Specialist
Marilyn Albright
NYISO Communications
Webmaster Specialist
Gary Paslow
NYISO Manager, Communications
Jim Alcombright
NYISO Manager,
Committee Support
Elaine Robinson
Director, Regulator Aff airs
Disclaimer: Connection is for informational purposes only. The NYISO does not warrant the information contained herein, and Market Participants are referred to NYISO tariffs, manuals and other technical documents for complete statements of their contents.
The New York Independent System Operator
(NYISO) – www.nyiso.com – is a not-for-profi t
corporation that began operations in 1999. The
NYISO operates New York’s bulk electricity grid,
administers the state’s wholesale electricity
markets, and performs comprehensive
reliability planning for the state’s bulk electricity
system.
Each of the three main topics considers a host of related
issues and questions. With the forward capacity market,
for example, participants are being asked to consider 11
detailed questions such as: What are the most important
considerations in the market’s design? Are there unique
conditions for demand response participation? And
how is the success of the forward capacity market to be
determined?
The topic of interregional coordination encompasses,
among other considerations, how should we approach
the establishment of broader regional markets with
our neighboring ISOs and Regional Transmission
Organizations (RTOs)? What are the specifi c benefi ts
for New York from expanding regional markets? The
discussion will also seek to identify the current obstacles
to improving interregional coordination in the Northeast.
The third agenda topic, integrating wind power, will
consider if the wind generation connected to the New
York Control Area grid results in “bottled generation,”
how should curtailments be handled? Participants will
also be discussing several aspects of funding to support
transmission expansion for renewable resources.
Cooperstown in Junecontinued from page 1
Joint BOD/MC Meeting – EventsIn addition to the annual Joint Board of Directors/Management Committee Meeting, the agenda includes other events.
On June 9, immediately following morning meeting, a golf outing will be held at the Leatherstocking Golf Course at the Otesaga. Tee times will begin at 12:50 p.m.
For non-golfi ng participants, a group tour of the National Baseball Hall of Fame has been arranged for Monday, June 9. The group will depart from the Otesaga at 2 PM. The cost per person is $15. Space is limited to 20, and will be available on a fi rst come, fi rst served basis. The Otesaga also off ers lake and pool swimming, tennis, canoe rent-als, fi shing and hiking trails.
For more information, please contact Debbie Eckels ([email protected]).