FERC greenlight changes to NYISO’s demand response pricing
Changes to demand response pricing had wide approval from generators and transmission owners, but New York Department of State’s Utility Intervention Unit said it was concerned about the efficiency of generation dispatch under the proposal. Regulators responded that gains in transparency and more accurate pricing signals trumped those possibilities.
“We find that the benefits of increasing price transparency and incorporating scarcity pricing in the real-time market software outweigh such concerns,” the commission wrote. “NYISO’s proposal increases price transparency by ensuring consistency between resource schedules and pricing outcomes in real-time when NYISO activates SCR/EDRP resources, thereby reducing the potential for uplift costs.”
The problem, FERC outlined in its order, is that NYISO’s existing ex post scarcity pricing logic had the potential to cause “inconsistencies between resource schedules and pricing outcomes, which could result in uplift costs.”
The changes will increase the value of Southeastern New York 30-minute reserves from $25 per MW to $500 per MW, as well as increasing the New York Control Area 30-minute reserve demand curve values “priced at less than $500 per MW to $500 per MW, effective in real-time during any SCR/EDRP resource activation.”