A new report questions the need for such a new market mechanism. The report, New York State Capacity Market Review finds that the existing framework in New York is working.
Generation investment in New York is driven by both non-market standards and by market incentives. The non-market standards, many of which are set by non-NYISO institutions, include obligations to serve, reliability standards, renewable portfolio standards, and environmental regulations. Market incentives are provided by the revenues that can be gained or the costs that can be avoided: a) in NYISO-administered short-term markets for energy, ancillary services, and capacity; b) through long-term bilateral transactions; and (c) through self-supply or ownership of generation. Thus, the NYISO-administered markets are only one part of the overall framework for providing generation capacity and assuring reliability.The report was prepared for the American Public Power Association (APPA), the National Rural Electric Cooperative Association, (NRECA) and New York Association of Public Power (NYAPP), by Laurence D. Kirsch and Mathew J. Morey, Christensen Associates Energy Consulting LLC. NYAPP is an association of municipal utilities and rural electric cooperatives serving approximately 450,000 customers / members across New York State.
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there is no need to fix what is not broken. The existing capacity market structure has provided generation capacity where it is most highly valued, using diverse fuels and meeting a variety of renewable resources and environmental policy goals. This success has been achieved without resorting to a mandatory forward market such as those used by PJM and ISO-New England. The current design does not require replacement by a mandatory forward centralized capacity market.
The Press Release for the Report is here.
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