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New York grid operator sets Oct. 21 vote on data center rules that cut off flexible loads at $200 a megawatt-hour

Credited to Rackline · Michael Anderson · nyiso.com · 9h ago

Photograph · Rackline · Michael Anderson

New York's grid operator will ask its members next Wednesday, Oct. 21, to approve rules setting how data centers and other big power users connect to the state's grid, and on what terms. Loads that don't bring new generation or pay for grid upgrades could be offered only interruptible service, cut off whenever power at their location costs $200 a megawatt-hour or more.

The New York Independent System Operator had planned to split the votes between its Business Issues Committee on Oct. 14 and its Operating Committee on Oct. 15. Neither committee's agenda for this week's meetings included the item. NYISO's Oct. 7 materials instead set a joint presentation and vote for both committees on Oct. 21, and its calendar lists a special joint session that day. The Management Committee votes a week later, on Oct. 28. If members and NYISO's board sign off, NYISO plans to file the rules with the Federal Energy Regulatory Commission on Nov. 16.

That deadline comes from Washington. On June 18, FERC ordered NYISO and the state's transmission owners to show why their rules for large and co-located loads remain just and reasonable, in Docket No. EL26-69. NYISO asked on Aug. 3 for a 90-day pause to write its own rules with stakeholders. FERC granted it on Aug. 14, saying the process would give NYISO, the transmission owners and others "an opportunity to consider region-specific solutions." Responses to the order are now due Nov. 16.

The queue explains the urgency. FERC's June order cites NYISO figures showing six large-load projects totaling 1,045 megawatts in the queue in 2022, against more than 40 projects that could add more than 10,000 MW as of November 2025. NYISO's Oct. 7 transition plan puts about 3.6 gigawatts of projects far enough along to be grandfathered, and 9.8 GW more that would go through a one-time transitional study. Both figures are preliminary.

Under the proposal, a large load is a commercial or industrial site with peak demand of 50 MW or more on the state's transmission system. Sites within two miles of each other and in the same capacity region count as one. A separate "Computational Large Load" category covers data centers used for AI training and deployment, cryptocurrency mining and other computing. Loads in service before June 18 come under the new rules only if they grow by 50 MW or more or change how they operate.

New projects would go through a study cycle NYISO calls Large Load Integration Procedures, starting with a 90-day resource adequacy review and a 90-day system impact study. The first regular cycle would begin in the third quarter of 2027. Applicants pay a $10,000 nonrefundable fee, a study deposit of $100,000 to $200,000 depending on size and, to reach the final assessment, a refundable readiness deposit of $4,000 per MW.

The study results decide which service a load can take. A load that causes no reliability problems, or pays for upgrades and brings enough new capacity to cover its impact, gets Firm Withdrawal Service: the right to draw power regardless of price, subject to emergency procedures. A load offered firm service cannot choose non-firm instead.

Loads whose problems can be solved by flexibility get Non-Firm Withdrawal Service. Their bids are capped at $200/MWh, so they must stop drawing once the price at their node reaches that level. They must also follow out-of-merit orders from NYISO or the local utility, including orders to disconnect. NYISO says the cap "serves to prevent large loads from driving up LBMPs and mitigates the likelihood they will cause reliability issues." A single load can take a mix of firm and non-firm service.

NYISO's Sept. 22 market design added a third category, Zero Withdrawal Service. It covers all or part of a load that is served only by generation behind its own meter and has no right to draw from the grid. NYISO said it suits developers whose grid connection is too small for the whole campus, or who don't want to wait for their generator to clear the interconnection study. A co-located plant serving only that load would not need grid interconnection rights.

Non-firm and zero-withdrawal load is left out of New York's capacity requirement, so no capacity is bought for it. Instead, it pays a monthly System Reliability Benefit Fee based on its contracted kilowatts, the statewide capacity requirement and the monthly spot capacity auction price, however much energy it uses. The proceeds go to load-serving entities to offset capacity costs for existing customers. Without the fee, NYISO said, those loads "would receive the benefits of stable and reliable system operations without correspondingly contributing to costs incurred to maintain reliable system operations."

Generators that pair with a large load to earn it firm service face a 15-year commitment. Partner plants must be proposed projects in the same capacity region as the load, whether the rest of the state, the Lower Hudson Valley, New York City or Long Island, and must obtain capacity interconnection rights. If a partner or on-site plant is mothballed or retires before the 15 years are up, all or part of the load drops to non-firm service. NYISO would also exempt those plants from buyer-side mitigation, the rules that stop subsidized plants from undercutting capacity prices, because the new supply is meant to offset the load's own demand.

NYISO took comments on the draft tariff language through Oct. 9 and scheduled one more working-group session on the planning rules for Oct. 14. Its posted materials are still marked as drafts.

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