After the Northeast blackout in 1965, the New York Power Pool was created, along with the New England Power Pool. In 1998, FERC authorized NYISO to control New York’s grid and wholesale electricity markets, approving a settlement entered into by the region’s utilities, energy customers, the state, and other stakeholders (grid operation responsibilities officially transferred from the New York Power Pool to NYISO the following year).
With over 400 market participants and 11,000 miles of high-voltage transmission lines, NYISO is responsible for operating the bulk power system in New York, running short- and long-term power markets, conducting long-term planning, and maintaining bulk power system reliability. Unlike other RTOs/ISOs (including CAISO, which includes a small section of Nevada and not all of California), NYISO is a single-state entity, serving only New York.
SUSTAINABLE FERC PROJECT PRIORITIES
- System planning for high levels of clean energy resources.
- Ensuring that clean energy resources are properly valued and can fairly participate in ensuring resource adequacy.
- Maximizing the efficiency of the current grid through grid-enhancing technologies, upgrading existing transmission lines, and energy storage.
Check out NYISO-focused comments and other filings by the Sustainable FERC Project and other organizations in our library.
Thanks in part to the passage of the state’s landmark Climate Leadership and Community Protection Act in 2019, which requires 70% renewable electricity by 2030 and 100% emissions-free electricity by 2040, renewable energy is quickly becoming an increasingly large share of NYISO’s resource mix. As of 2019, New York got approximately 28 percent of its electricity from renewable sources, with the vast majority of this coming from large hydropower facilities owned and operated by the New York Power Authority. Scaling up to 70 percent in ten years will require a massive amount of new clean generation to come online. Most of the recently proposed projects in NYISO’s generation interconnection queue are either wind or solar projects.
NYISO’s capacity market, which currently applies buyer-side mitigation to state-supported renewable sources in certain constrained capacity zones in the state, is making it difficult and more expensive for the state to meet its clean energy objectives. The New York Public Service Commission has launched a proceeding to examine alternatives to the current capacity market structure.
- Service territory: 54,556 square miles
- Generating units: 760
- Miles of transmission: 11,173
- Peak demand (2019): 30,397 MW
NYISO operates day-ahead and real-time energy and reserves markets, and a set of mandatory capacity markets. In the late 1990s, New York restructured its retail electricity sector. Utilities largely divested themselves of power plants, and the electricity supply price is largely determined by market forces rather than cost-of-service regulation.
The primary transmission owners in NYISO include:
- Central Hudson Gas & Electric Corp.
- Consolidated Edison Co. of New York (Con Ed)
- Long Island Power Authority (LIPA)
- New York Power Authority (NYPA)
- New York State Electric and Gas Corp. (NYSEG)
- National Grid
- Orange & Rockland Utilities
- Rochester Gas and Electric Corp.
Installed Capacity (Winter 2018)
Source: S&P Global Market Intelligence
Source: S&P Global Market Intelligence
Like other RTOs, NYISO oversees and operates competitive wholesale electricity markets. NYISO dispatches generation, and manages various wholesale markets and services (including day-ahead and real-time energy), capacity market, and ancillary services.
The day-ahead market allows market participants in NYISO to secure prices for electric energy the day before the operating day and hedge against price fluctuations that can occur in real time. One day ahead of actual dispatch, participants submit supply offers and demand bids for energy. These bids are applied to each hour of the day and for each pricing location on the system.
Generators and offers scheduled in the day-ahead settlement are paid the day-ahead LMP for the megawatts accepted. Scheduled suppliers must produce the committed quantity during real-time or buy power from the real-time marketplace to replace what they did not produce.
NYISO coordinates the dispatch of generation and demand resources to meet the instantaneous demand for electricity. Supply or demand for the operating day can change for a variety of reasons, including unforeseen generator or transmission outages, transmission constraints or changes from the expected demand. While the day-ahead market produces the schedule and financial terms for most physical transactions, a number of factors usually change the day-ahead result. Thus, NYISO operates a spot market for energy, the real-time energy market, to meet actual energy needs within each hour of the operating day.
The real-time market financially settles the differences between the day-ahead scheduled amounts of load and generation and the actual real-time load and generation. In real-time, NYISO issues dispatch rates and dispatch targets. These are five-minute price and megawatt signals based on the aggregate offers of generators, which will produce the required energy production.
Check out NYISO’s Real-Time Dashboard for current market operating conditions.
NYISO is responsible for managing ancillary services necessary to support the power system. NYISO offers four cost-based ancillary services (scheduling, system control and dispatch, voltage control and black start) and two market-based ancillary services (regulation and operating reserve, and energy imbalance). The two most important types of ancillary services are operating reserves and regulation. Operating reserves and regulation are typically provided by generators, but NYISO allows demand-side providers to participate in these markets as well. Operating reserve resources can either be spinning (online with additional ramping ability) or nonspinning (off-line, but able to start and synchronize quickly). NYISO relies on regulating resources that can quickly adjust their output or consumption in response to constantly changing load conditions to maintain system balance.
The NYISO relies on the following types of ancillary services:
- Ten-Minute spinning reserves: provided by resources already synchronized to the grid and able to provide output within 10 minutes.
- Ten-Minute nonspinning reserves: provided by resources not currently synchronized to the grid but capable of starting and providing output within 10 minutes.
- Thirty-Minute nonspinning reserves: provided by resources not currently synchronized to the grid but capable of starting and providing output within 30 minutes.
- Regulation: provided by resources with the capability to increase or decrease their generation output within seconds in order to control changes on the system.
The New York Installed Capacity (ICAP) market is intended to ensure that NYISO can meet peak energy demand as set forth in the Installed Reserve Margin (IRM), which is established by the New York State Reliability Council. They also are intended to provide economic incentives to attract investment in new and existing supply-side and demand-side capacity resources in New York as needed to maintain bulk power system reliability requirements.
The NYISO conducts auctions for three different service durations: the capability period auction (covering six months), the monthly auction and the spot market auction.
New York has capacity requirements for four zones: New York City, Long Island, Lower Hudson Valley, and New York-Rest of State. The resource requirements do not change in the monthly auctions and ICAP spot market auctions relative to the capability period auction. The shorter monthly auctions are designed to account for incremental changes in LSE’s load forecasts.
The Northeast Power Coordinating Council (NPCC) and the New York State Reliability Council (NYSRC) require NYISO to conduct a review of resource adequacy for the region (New York Bulk Power System) annually. The review examines whether the New York Control Area will be in compliance with the NPCC RA resource adequacy criteria.
The final version of the 2018 reliability needs assessment (RNA) is available here.
As mentioned above, NYISO’s capacity market currently applies buyer-side mitigation to state-supported renewable sources in certain constrained capacity zones in the state (mainly in and around New York City). This makes it more difficult and expensive for New York to meet is clean energy mandates. The Public Service Commission has launched a proceeding to examine resource adequacy and Sustainable FERC has submitted comments recommending that the state consider alternatives to the current capacity market structure.
NYISO’s Market Monitoring Unit (MMU), currently contracted to Potomac Economics, oversees the operations of the NYISO to make sure “the markets administered by the ISO function efficiently and appropriately, and to protect both consumers and participants in the markets.” Within NYISO, “the Market Mitigation and Analysis Department (MMA) is responsible for the implementation of the ISO Market Power Mitigation Measures (MST ATT H) and work[s] collaboratively with the Market Monitoring Unit and other ISO departments to assist the ISO’s efforts to carry out its Tariff responsibilities, including the ISO’s obligation to provide adequate data and support to its Market Monitoring Unit.” The MMU, as authorized by the NYISO Market Monitoring Plan, has authority to investigate market events, conduct, and performance. It issues an annual State of the Market report.
The NYISO CSPP is comprised of four components: The Local Transmission Planning Process (LTPP), the Reliability Planning Process (RPP), the Congestion Assessment and Resource Integration Study (CARIS), and the Public Policy Transmission Planning Process.
Among other planning issues, ongoing transmission constraints in the southeastern portion of the state, around New York City and Long Island create higher prices as energy flows from the west and the north move to meet demand of the largest consumer base in the NYISO footprint.
NYISO, a nonprofit entity, is governed by an independent 10-member board of directors and management, business issues and operating committees. NYISO’s management leadership works closely with stakeholder committees to develop rules. Each committee oversees its own set of working groups or subcommittees. These committees comprise transmission owners, generation owners and other suppliers, consumers, public power and environmental entities.
Like other grid operators (except for CAISO), NYISO manages a stakeholder committee process to develop rules and practices and assess NYISO’s performance. Each committee oversees its own set of working groups or subcommittees. These committees are comprised of entities from five different sectors: Transmission Owner Sector, Generation Owner Sector, Other Supplier Sector, End Use Consumer Sector, and Public Power/Environmental Parties Sector. Tariff revisions on market rules and operating procedures filed with the Commission are largely developed through consensus by these committees.
The NYISO organizational chart illustrates the governance and stakeholder structure at NYISO. Among the key committees are:
The MC is comprised of each party to the ISO Agreement, each of which populates one of the five Sector Groups.
The BIC establishes rules related to business issues and provides a forum for discussion of those rules and issues.
The OC is a standing committee of the NYISO created pursuant to the ISO Agreement which coordinates operations, develops procedures, evaluates proposed system expansions and acts as a liaison to the NYSRC.