Beginning in the third quarter of 2006, the New York Independent System Operator (NYISO) began the process for its second triennial review. After soliciting proposals from qualified consultants, NYISO selected a team of NERA consultants and subcontractor Sargent and Lundy (S&L) to assist with the review and to update NYISO’s Installed Capacity (ICAP) Demand Curve for 2008–2011.
The NERA team—led by Senior Vice President Eugene Meehan and Vice President Jonathan Falk—estimated the cost of new entry through two new methodologies, which estimated energy and ancillary service revenues using an econometric model and derived demand curves for new capacity that took into account the fact that the shapes of those curves themselves add risk to the entry decision. S&L provided engineering estimates of the capital and operating costs of new entrant units. In the end, the NYISO adopted almost all of the NERA/S&L methodology.
NERA submitted its report to the NYISO Board of Directors, which on 30 November 2007 filed a revised tariff incorporating the NERA methodologies for energy revenue estimation and demand curve derivation to the US Federal Energy Regulation Commission (FERC). Notice of NYISO’s filing was published in the Federal Register, with interventions and comments due on or before 28 December. On 29 January 2008, the FERC approved the NYISO’s proposed update as filed, and rejected all proposed modifications to the NYISO’s proposal.