As of April 2026, the New York Independent System Operator (NYISO) warned of dangerously thin reliability margins for the summer 2026 season, with a mere 417 MW margin. Rising demand, the threat of extreme weather, and generator retirements, particularly in New York City and Long Island, present the grid with historic risks of shortage.
The New York Independent System Operator (NYISO) operates and manages three distinct markets in the power realm: the installed capacity market (resources ready to run), the day-ahead unforced capacity market (energy generated by those resources), and the spot markets for energy.1 With respect to these markets, competitive auctions are conducted in which market participants bid to provide resources and energy. NYISO is also charged with ensuring that certain adequacy requirements are met. Those requirements are established each year by the New York State Reliability Council (NYSRC), which sets the Installed Reserve Margin (IRM) for the system.
For the capability year beginning May 1, 2026 (CY2026/7), the Council recommended an IRM percentage of 24.5%. That percentage means that the system needs to have on hand enough resources to meet consumers' expected peak demand on the hottest summer day, plus 24.5% more in case demand goes higher or a generator or transmission line trips off. For this capability year, the total is 39,315 megawatts (MWs). But capacity doesn’t keep the lights on…energy does. And, through a series of calculations, the IRM leads to a minimum energy requirement—the unforced capacity requirement. For CY2026/7, that amount is 34,198 MWs, 2620 MWs over the projected heaviest load in the system.
This is where the rubber hits the road. Late last month, NYISO noted that this reliability margin is “the lowest…in recent history” and that, even with 417 MWs of headroom (34,615 MWs are projected to be available), bad things could happen if we were to experience a summer heat wave. And it’s not just a problem for the grid-congested northeast. A few days ago, the North American Electric Reliability Corporation issued a “Level 3” alert, requiring members (including NYISO) to undertake emergency actions by August 3. This alert focused on the unpredictability of large loads such as data centers. Last year’s Level 3 alert focused on the unpredictability of green generation, such as wind and solar.
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The grid’s reliability is being whipsawed by capriciousness on both the production and consumption side. In between these two “poles” is our aging transmission system, which was the subject of a massive editorial in the New York Times on May 2, 2026. Steadying the generation mix and the evolving load profile will take decades. Transmission would seem to be the low-hanging fruit. What is needed is a consensus that the transmission system must be reinforced, reinvented, and made more resilient.
The Hodgson Russ Energy & Environment Practice serves transmission and generation developers. For questions about this post, contact William Helmer, Daniel Spitzer, or a member of our Energy Practice.
1 Participants are also compensated for ancillary services, such as “blackstart.”
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