FERC Orders Could Hinder Renewables, Electric Storage in New York Power Markets

The Federal Energy Regulatory Commission on Feb. 20 issued a series of orders to narrow the resources exempt from the New York grid operator’s buyer-side market power mitigation rules. The agency dismissed a complaint from the Public Service Commission and the New York State Energy Research and Development Authority seeking an exemption for electric storage resources, saying that the rules protect the capacity markets from the price-suppressive effects of resources receiving out-of-market support. FERC rejected the grid operator’s proposed exemption for one gigawatt of renewable resources, citing failure to comply with the agency’s prior directives and called for a narrower proposal. The federal regulator also ruled that a type of demand response should be subject to market power mitigation.

Commissioner Richard Glick dissented on the three orders concerning storage, renewables, and demand response, saying that they are not actually focused on buyers with market power, instead they “illustrate the extent to which the commission has perverted buyer-side market power mitigation in order to prop up prices, lock in the current resource mix, and attack state policies that promote clean energy.”

The orders could make it harder for New York to meet its aggressive clean energy targets, including a goal to source 70 percent of its electricity from renewable sources by 2030, increasing to 100 percent a decade later.

The American Council on Renewable Energy criticized the move calling it a subsidy to the fossil fuel industry at expense of New York ratepayers. The group noted that the orders “directly conflict with policies New York expressly designed to accelerate the transition to pollution-free, renewable power.”

Glick issued a concurrence on the fourth order, which upholds the agency’s denial of a complaint by Independent Power Producers of New York Inc., against the grid operator’s rules permitting existing capacity resources needed for reliability and capacity resources with repowering agreements to offer their capacity at de minimis price levels. Glick noted that the order “affirms the commission’s decision not to extend NYISO’s buyer-side market power mitigation rules to resources retained pursuant to a Reliability Support Service Agreement,” as buyer-side market power mitigation should apply only to buyers with market power.