At NYPA's request ISO staff conducted a limited analysis of
the winter locational ICAP requirements for Long Island and New York City
areas.  While such ICAP requirements have historically been set as a single
number for the entire year, it is NYPA's belief that this holdover from the
old way of doing business must be re-examined.  It is NYPA's belief that
most if not all of the contribution to loss of load risk occurs in the
summer months.  As such, some reduction in winter ICAP requirements should
be possible with no impact on the Loss of Load criterion of one day in ten
years.

  NYPA requested that the ISO start with the database that
resulted in the locational requirements of 80% and 98% for New York City and
Long Island, respectively.   At NYPA's request the ISO modeled winter
ratings on the transmission interfaces into NYC and LI and determined how
much the 80% and 98% could be reduced in the winter before any impact on the
statewide Loss Of Load  occurred.  The report indicates that winter
requirements of 75% and 92% of the summer peak load resulted for NYC and LI,
respectively.

 While this in no way reflects an exhaustive analysis of winter
locational requirements, the results from this study suggest that some
reduction in the winter  requirement may be warranted and a
consideration of seasonal requirements should be incorporated in future ICAP
requirement studies.   NYPA believes that  having an ICAP requirement
for summer and winter seasons based on the LSE's peak load for the
respective season would send the proper ICAP price signal.


  NYPA is sharing the study results in the attached report in
an effort to begin a dialog which we hope will lead to a broader examination
of locational requirements when the issue is revisited again next year.  We
would appreciate hearing the views of other market participants.

 <<NYPA_LR_wint.PDF>>  <<TRAN_SYS_001129.PDF>>


 - NYPA_LR_wint.PDF
 - TRAN_SYS_001129.PDF