NYISO Changing ICAP Methodology for 2021 Capacity Year
Earlier this year, it was confirmed that the weekend peak of summer 2019 will be used to calculate the current ICAP values for May 2020-April 2021. As a result of the ICAP tags being set based on a weekend for the first time (and the resulting capacity cost allocation complications), the New York Independent System Operator (NYISO) submitted a revision of the Service Tariff to the Federal Energy Regulatory Commission (FERC) that will change how ICAP tags are set moving forward. Read on to learn more about the proposed change and how this will affect your utility bills.
In 2019, the grid had set its peak on Saturday, July 20th between 4-5 PM at 30,397MW – the first time the overall New York system peaked on a non-weekday. This meant a significant decrease in ICAP values for commercial real estate in Zone J NYC, as most properties were not operating at full occupancy over weekend/off peak hours. Most decreases have been between 20-30%, with some as much as 40% lower. The potential savings from your ICAP can be seen starting on your May 2020 invoice if you are currently on a capacity adjust or pass through product. For those on a full fixed deal, the change would not be realized unless your contract ends before March 2021.
The current tariff allocates capacity requirements based on the highest peak hour, regardless of when that hour may occur (such as a weekend). Traditionally, that peak hour occurs during the late afternoon on a hot summer weekday. The new approved changes by the NYISO Management Committee and the NYISO Board of Directors would modify the date and day type criteria used for ICAP determination. The peak load forecast calculations remain the same.
For the 2021-2022 capacity year, the peak hour from Summer 2020 will be used. If the proposed changes are approved by FERC, the peak hour must occur between July and August, on a non-holiday weekday. Historically, about 80% of the peak hours have occurred in those months. As of August 18th, 2020, the current peak hour for summer 2020 occurred on July 27th at 5 PM. NYISO has requested FERC to approve and accept this revision by September 29, 2020, so there is no delay in calculating the 2021 Capacity Year.
To learn more about how you can manage and reduce your capacity cost through peak load management and procurement strategy, contact us for a demo of our WatchWire utility data management platform or download the 2020 Watchwire Solution Brief.