Subject: RE: NYPA study-Winter Locational ICAP requirements
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked]
Date: Tue, 24 Apr 2001 00:54:00 -0700 (PDT)

"Roy J. Shanker" <[email-masked]> writes to the 
NYISO_TECH_EXCHANGE Discussion List:

I agree with Mark. Further, in setting the baseline, the LOLP study
obviously assumed an annual structure for maintenance scheduling and a lack
of diversity in terms of outage rates for summer versus winter. These
assumptions no longer are valid if the time step for planning becomes a
capability period. Each reliability period would have to stand on its own,
and you would have to entirely redo the assumptions about scheduled outages
and come up with seasonal availabilities. My guess is that given the
incentive to be around in the summer for the higher energy payments, these
values should be highly skewed.

Finally, lets also just cut to the chase. Even if this study were correct in
its current form, what obviously is going on is an attempt to "evade" 50% of
the deficiency charge. Applying this type of argument on seasonal installed
requirement to deficiency payments just doesn't fly. If you believe that the
current values for the deficiency payments are "correct" to begin with, it
would make sense to me to at minimum allocate the deficiency charges by the
LOLP incurrence, e.g. if 90% of the annual LOLP is in the summer period,
then 90% of the deficiency should probably follow this allocation. Remember,
the incentive is to force people to build, the cost of being short ever
really should stay the same, or you diminish the incentive and thus undercut
the entire reliability structure.

Roy J. Shanker
9009 Burning Tree Road
Bethesda, MD 20817
301-365-3654
301-365-3657 FAX
[email-masked]

-----Original Message-----
From: [email-masked]
[mailto:[email-masked]]On Behalf Of Mark Younger
Sent: Monday, April 23, 2001 4:18 PM
To: William Palazzo
Cc: Tech Team EMail List,
Subject: RE: NYPA study-Winter Locational ICAP requirements

"Mark Younger" <[email-masked]> writes to the NYISO_TECH_EXCHANGE
Discussion List:

How do you get from an initial estimate of "75% and 92% of the summer peak
load ... for NYC and LI, respectively" to "having an ICAP requirement for
summer and winter seasons based on the LSE's peak load for the respective
season would send the proper ICAP price signal."   The summer and winter
ICAP requirements are based upon the summer peak load.  Basing the winter
ICAP requirement on the winter peak load would be a substantial change in
the ICAP market.  If we are going to consider a change in this direction
then we also have to apply most of the annual deficiency rate to the summer
period.

-----Original Message-----
From:   [email-masked]
[mailto:[email-masked]] On Behalf Of Palazzo,
William
Sent:   Monday, April 23, 2001 3:42 PM
To:     [email-masked]'
Subject:        NYPA study-Winter Locational ICAP requirements

<< File: NYPA_LR_wint.PDF >>  << File: TRAN_SYS_001129.PDF >>          At
NYPA's
request ISO staff conducted a limited analysis of
the winter locational ICAP requirements for Long Island and New York City
areas.  While such ICAP requirements have historically been set as a single
number for the entire year, it is NYPA's belief that this holdover from the
old way of doing business must be re-examined.  It is NYPA's belief that
most if not all of the contribution to loss of load risk occurs in the
summer months.  As such, some reduction in winter ICAP requirements should
be possible with no impact on the Loss of Load criterion of one day in ten
years.

NYPA requested that the ISO start with the database that
resulted in the
locational requirements of 80% and 98% for New York City and Long Island,
respectively.   At NYPA's request the ISO modeled winter ratings on the
transmission interfaces into NYC and LI and determined how much the 80% and
98% could be reduced in the winter before any impact on the statewide Loss
Of Load  occurred.  The report indicates that winter requirements of 75% and
92% of the summer peak load resulted for NYC and LI, respectively.

While this in no way reflects an exhaustive analysis of winter
locational
requirements, the results from this study suggest that some reduction in the
winter  requirement may be warranted and a consideration of seasonal
requirements should be incorporated in future ICAP requirement studies.
NYPA believes that having an ICAP requirement for summer and winter seasons
based on the LSE's peak load for the respective season would send the proper
ICAP price signal.

NYPA is sharing the study results in the attached report in
an effort to
begin a dialog which we hope will lead to a broader examination of
locational requirements when the issue is revisited again next year.  We
would appreciate hearing the views of other market participants.

<<NYPA_LR_wint.PDF>>  <<TRAN_SYS_001129.PDF>>