July (pdf) - New York Power Authority

continuing business relationship with any Market Participant. The President of the NYISO is chosen by the
other nine directors and is responsible for the day-to-day operation of the NYISO. The Authority is adequately
represented on each of the NYISO’s several committees, which are subject to the oversight of the Board of
Directors, and on the Executive Committee of the Reliability Council, which consists of thirteen members
which govern the Reliability Council.
On December 1, 1999, the NYISO officially assumed control of New York State’s electric power grid
pursuant to tariffs and market rules approved by FERC.
The NYISO dispatches power from generating facilities, including the Authority’s units, based on the
bid curves submitted by each of the generators. The NYISO coordinates the reliable dispatch of power and
operates markets for the sale of electricity and ancillary services within New York State. The NYISO
collects charges associated with the use of the transmission facilities and the sale of energy, capacity, and
services through the markets that it operates and remits those proceeds to the owners of the facilities in
accordance with its tariff and to the sellers of the electricity and services in accordance with their
respective bids and applicable NYISO market procedures. See ‘‘NYISO Market Procedures’’ and ‘‘Certain
Authority Plant Outage Risks’’ below.
Under the NYISO Open Access Transmission Tariff, certain charges for ancillary services (which
include NYISO operating costs), congestion, losses, and a portion of the Authority’s transmission costs
are assessed against the Authority and other entities responsible for serving ultimate customers. Because
such costs are currently passed through to most Authority customers, the Authority remains active in its
participation in the governance affairs of the NYISO markets.
NYISO Market Procedures
Under NYISO procedures, Load Serving Entities (‘‘LSEs’’) represent electricity end-users in
dealings with the NYISO. The Authority is an LSE for large segments of its load in New York State and must
ensure it has sufficient installed capacity to meet its customers’ needs and NYISO reliability rules, either
through ownership of such capacity, bilateral installed capacity purchase contracts or auction purchases
conducted by the NYISO (for a discussion of these installed capacity requirements relating to New York City
and Long Island, see ‘‘NYISO Capacity Requirements Matters,’’ below, and ‘‘PART 2— CERTAIN FACTORS
AFFECTING THE ELECTRIC UTILITY INDUSTRY—New York State Electric Utility Industry
Restructuring Matters —Long Island Local Reliability Rule’’).
As an LSE, the Authority is also obligated to ensure that it has enough energy to meet its customers’ load
requirements. The energy needs can be met in the NYISO regime through the Authority’s own
generation, bilateral purchases from others, or purchases of energy in the NYISO ‘‘day-ahead’’ market
(‘‘DAM’’) (wherein bids are submitted for energy to be delivered the next day) or in the NYISO ‘‘real time’’
market. A bilateral purchase is a transaction where a generator or a power marketer which has access to
power and an LSE agree upon a specified amount of energy being supplied to the LSE by the generator or
power marketer at specified prices.
Generators may bid their energy into the DAM and/or the real time market. However, generators whose
installed capacity has been sold must then bid the energy from such claimed capacity into the DAM. To
satisfy this requirement, the Authority bids into the DAM all of the Authority generation it claims to meet
installed capacity requirements, which consists of virtually all of its generation. The Authority also bids the
generation into the real time market in such amounts and at such bids as the Authority deems appropriate.
The NYISO evaluates the bids submitted in the DAM and the real time markets by generators and in the
real time market dispatches the units on the basis of economic and reliability considerations to meet load
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