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January 28, 2014
FERC Adopts Brattle Economist’s Recommended Proxy Unit for Installed Capacity Market Demand Curve in NYISO

On January 28, 2014, the Federal Energy Regulatory Commission (FERC) accepted the New York Independent System Operator (NYISO) tariff filing which included a recommendation from The Brattle Group that an F Class Frame simple-cycle combustion turbine unit with selective catalytic reduction (SCR) should serve as the “proxy unit” for setting installed capacity market demand curves.

The issue regarding the appropriate proxy unit arose last year during the NYISO Demand Curve Reset process, when the NYISO consultants and Staff had initially selected a more expensive aeroderivative combustion turbine unit with SCR for Southeastern New York. Based on several opposing stakeholder comments, however, the NYISO Board of Directors engaged The Brattle Group to examine this issue more fully before selecting the proxy unit.

On November 1, 2013, The Brattle Group (with Licata Energy & Environmental Consulting) issued a report, "Independent Evaluation of SCR Systems for Frame-Type Combustion Turbines: Report for the ICAP Demand Curve Reset," which concluded that the less expensive F Class Frame unit coupled with SCR was economically viable. The NYISO Board adopted The Brattle Group recommendation in its November 29, 2013 filing at FERC, which included the affidavit of Marc W. Chupka, a Brattle Principal and the Brattle co-author of the report. After reviewing the filing and subsequent protests/answers, the FERC determined that The Brattle Group recommendation was reasonable and compliant with the NYISO Tariff, and therefore overcame the objections of filed protests. Compared to the initially selected proxy unit, using The Brattle Group’s recommended proxy unit to set installed capacity market demand curves could reduce electricity costs for New York ratepayers by a substantial amount over the next three years.

The FERC Docket is ER14-500-000. The Brattle report is available for download below.