On January 28, 2025, FERC accepted the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its Market Administration and Control Area Services Tariff (“Services Tariff”). The revisions define the demand curves in the Installed Capacity (“ICAP”) Market for the 2025/2026 Capability Year and implement a quadrennial process, known as the Demand Curve reset (“DCR”), which outlines the methodologies and inputs for subsequent annual updates to the ICAP Demand Curves for the 2026/2027, 2027/2028, and 2028/2029 Capability Years.
NYISO’s Services Tariff mandates that NYISO determine the amount of ICAP that each load serving entity within NYISO must acquire to ensure resource adequacy, considering reliability contingencies. NYISO uses an auction process to determine the amount and price of ICAP required, utilizing administratively established, downward-sloping ICAP Demand Curves.
NYISO explained in its proposal that the 2025-2029 DCR is the first reset after implementing NYISO’s capacity accreditation construct. NYISO identified several economically viable technologies for the peaking unit for the 2025-2029 DCR, including fossil-fired gas frame turbines and lithium-ion battery energy storage system (“BESS”) with various durations, and ultimately selected a two-hour lithium-ion BESS unit. NYISO also proposed to update parameters for the seasonal ICAP Demand Curves, remove outdated data entries, revise gross cost and net energy and ancillary services offset values used for determining the ICAP Demand Curves for the first year of the reset period, and remove tariff language that is no longer relevant.
In its January 28, 2025, order, FERC accepted NYISO’s proposed ICAP demand curves and methodologies for the 2025-2029 Capability Years as just and reasonable and noted that the two-hour BESS unit has the lowest fixed costs and highest variable costs among the economically viable technologies that NYISO evaluated and therefore meets the definition of a peaking unit under NYISO Services Tariff. FERC also accepted NYISO’s proposed financial parameters, including a 14.5% cost of equity and a 7.2% cost of debt for the two-hour BESS for purposes of cost estimates under NYISO’s DCR analysis, with a 50-basis point risk adder to account for the higher investment risk associated with BESS projects.
Commissioner Chang did not participate in the underlying proceeding.
FERC’s order, issued in Docket No. ER25-596, can be found here.