The New York Independent System Operator (NYISO) operates a capacity market to ensure resource adequacy and reliability in New York. These capacity markets are administered in four capacity zones: the New York Control Area (“NYCA”), and three localities – New York City (Zone J), Long Island (Zone K) and the G-J Locality. The requirement for installed capacity is maintained by an administratively-determined demand curve that reflects, among other considerations, the estimated net cost of new entry (CONE) of a proxy generating unit. In selecting a specific proxy generating unit, previous FERC orders affirm that “only reasonably large scale, standard generating facilities that could be practically constructed in a particular location should be considered,” and the NYISO Market Services Tariff requires the NYISO to base the net CONE estimate on a proxy unit with “the lowest fixed and highest variable cost among all other units’ technology that are economically viable.”

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