The New York Independent System Operator (NYISO) asked NERA to assist with developing proposed revisions to its Market Administration and Control Area Services Tariff to update the Installed Capacity (ICAP) demand curves for three upcoming capability years: 2011–2012, 2012–2013, and 2013–2014.
In January 2011, the Federal Energy Regulatory Commission (FERC) accepted NYISO’s proposals. Companies that supply electricity to New York City requested a rehearing, arguing that some of the projections used to develop NYISO’s proposals were flawed.
NERA developed the energy and ancillary services revenue estimates for the three upcoming years that NYISO submitted to the FERC. NERA Vice President Jonathan Falk defended the estimates against New York City suppliers’ claims that the estimates should have been based on a longer period of historical data than NERA used in its analysis. Mr. Falk argued that there were no statistical errors in NERA’s estimates and that the revised estimates proposed by the New York City suppliers were implausible.
NERA Senior Vice President Gene Meehan also submitted an affidavit supporting the methodology NYISO used for estimating inflation in coming years.
In May 2011, the FERC denied the requests for a rehearing, stating “we agree with Mr. Falk that a conclusion that energy prices do not respond to changes in supply when demand is fixed, as suggested by the model advocated by the New York City Suppliers, is not reasonable.” The Commission also cited Mr. Meehan in its decision not to reconsider NYISO’s inflation projections, noting Mr. Meehan’s conclusion that the projections are “reasonably consistent with the long-term assumptions that are reflected in the NERA report.”