July (pdf) - New York Power Authority

NYISO Capacity Requirements Matters
The installed capacity (‘‘ICAP’’) market in New York was created administratively to ensure the
reliability of the electricity system. The Reliability Council annually sets New York State’s minimum capacity
requirement which is currently 115.5% of the State’s peak load, and the NYISO has set the current New York
City and Long Island locational ICAP requirements at 81% and 101.5% of their peak load levels,
respectively. The New York City and Long Island ICAP requirements must be met with resources located
within those areas, while the ICAP quantities above these locational ICAP requirement levels up to the
minimum 115.5% level can be procured from anywhere in New York State and from external resources.
The requirements are allocated among LSEs in proportion to the load they serve.
These capacity requirements must be met monthly for two capability periods: a summer period
extending from May to October and a winter period ranging from November to April. The NYISO
currently conducts auctions for each capability period (also known as ‘‘strip auctions’’), as well as monthly
auctions to account for load-shifting and to resolve deficiencies. LSEs may meet their capacity
requirements by self-supplying the capacity from their own resources, or with capacity acquired through
bilateral contracts, or by purchasing the capacity through the auctions conducted by the NYISO. A
deficiency price is imposed on any LSE that does not meet its capacity requirement.
The NYISO employs an ICAP demand curve which provides payments to ICAP providers for ICAP
above the minimum level required for reliability in order to encourage the construction of new generating
facilities in New York. Generally, these provisions have increased the amount of ICAP an LSE will be
obligated to obtain to meet NYISO requirements, including separate requirements applicable for New York
City and Long Island. The Authority has been able, as an LSE, to meet these revised requirements through its
own units, contracts with other generators, and purchases in the capacity markets, and expects to be able to
do so in the future.
2-15