152 FERC ¶ 61,110
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Norman C. Bay, Chairman;
Philip D. Moeller, Cheryl A. LaFleur,
Tony Clark, and Colette D. Honorable.
Consolidated Edison Company of New York, Inc., Orange and Rockland Utilities, Inc.,
New York State Electric and Gas Corp.,
Rochester Gas and Electric Corp., and
Central Hudson Gas and Electric Corp.
v.Docket No.EL15-26-001
New York Independent System Operator, Inc.
New York Independent System Operator, Inc.Docket No. ER15-1498-000
ORDER ON CLARIFICATION, REHEARING, AND COMPLIANCE
(Issued August 4, 2015)
1. On February 26, 2015, the Commission issued an order granting in part the
complaint filed by Consolidated Edison Company of New York, Inc., Orange and
Rockland Utilities, Inc., New York State Electric and Gas Corp., Rochester Gas and Electric Corp., and Central Hudson Gas and Electric Corp. (collectively, Complainants) against the New York Independent System Operator, Inc. (NYISO) (Complaint Order), and requiring NYISO to make a compliance filing to add a competitive entry exemption to the rules governing buyer-side market power mitigation in NYISO’s Market
Administration and Control Area Services Tariff (Services Tariff).1
1 Consolidated Edison Co. of New York, Inc. v. New York Indep. Sys. Operator, Inc., 150 FERC ¶ 61,139, at PP 1, 14 (2015) (Complaint Order).
Docket Nos. EL15-26-001 and ER15-1498-000- 2 -
2. On March 30, 2015, Entergy Nuclear Power Marketing, LLC (Entergy) and the
PSEG Companies2 (jointly), the NRG Companies,3 and Potomac Economics, Ltd., as the Market Monitoring Unit for NYISO (MMU), filed requests for rehearing and clarification of the Complaint Order.
3. On April 13, 2015,4 NYISO submitted in Docket No. ER15-1498-000, pursuant to section 206 of the Federal Power Act (FPA),5 compliance revisions to its Services Tariff and Open Access Transmission Tariff (OATT) to address the Commission’s directives in the Complaint Order (Compliance Filing).
4. For the reasons discussed below, we grant in part and deny in part the requests for
clarification, deny the requests for rehearing, conditionally accept NYISO’s Compliance
Filing, and direct NYISO to submit a further compliance filing within 60 days of the date
of this order.
5. In particular, we grant the NRG Companies’ request for clarification that the
Commission did not pre-judge in the Complaint Order how NYISO chooses to apply the competitive entry exemption to merchant transmission projects. We deny all other
requests for clarification and rehearing for the reasons discussed below.
6. As to NYISO’s Compliance Filing, we find that the applicability of the
competitive entry exemption to Additional Capacity Resource Interconnection Service MWs is beyond the scope of this proceeding. In addition, we find that NYISO’s
proposed tariff revisions concerning the eligibility of the competitive entry exemption to Class Year 2012 are ambiguous and direct NYISO to submit further tariff revisions to clarify that the competitive entry exemption is not available to members of completed Class Years. We conditionally accept NYISO’s other proposed tariff revisions and reject all other protests for the reasons discussed below.
2 The PSEG Companies consist of PSEG Power LLC, PSEG Energy Resources & Trade LLC, and PSEG Power New York LLC.
3 The NRG Companies consist of NRG Power Marketing LLC and GenOn Energy Management, LLC.
4 On March 31, 2015, the Commission granted NYISO a two-week extension of time to submit its Compliance Filing.
5 16 U.S.C. § 824e (2012).
Docket Nos. EL15-26-001 and ER15-1498-000- 3 -
I.Background
7.New York State’s Installed Capacity (ICAP) market, which NYISO administers, is
designed to send appropriate economic signals to investors to ensure sufficient capacity is
available to satisfy New York State’s peak demand along with its planning reserve
margin. NYISO’s ICAP market uses administratively-determined demand curves for
each ICAP pricing zone and includes market power mitigation rules in the New York
City and G-J Locality zones to prevent the exercise of both buyer and seller market
power. These mitigation rules ensure that market clearing capacity prices reflect a
competitive outcome even when buyers and sellers may have the ability and incentive to
exercise market power.6
8. In 2012 and 2013, NYISO and its stakeholders discussed tariff revisions that
would have provided for a competitive entry exemption to the mitigation rules.7
Specifically, NYISO had proposed to exempt projects that have “no direct or indirect (i)
contracts with, (ii) financial support from, or (iii) in kind support from any NY electric
distribution company, Municipal Utility, or any NY state or local governmental entity,
including but not limited to Public Authorities.”8 However, during a stakeholder vote in
May 2014, only thirty-two percent of the sector-weighted vote of stakeholders supported
the proposal, failing to garner the fifty-eight percent support required to enable it to
submit the proposal to the Commission pursuant to section 205 of the FPA.9
6 New York Indep. Sys. Operator, Inc., 143 FERC ¶ 61,217, at P 3 (2013).
7 Consolidated Edison Company of New York, Inc., Orange and Rockland
Utilities, Inc., New York State Electric and Gas Corp., Rochester Gas and Electric Corp.,
and Central Hudson Gas and Electric Corp. December 4, 2014 Complaint (Complaint),
Exhibit A, Affidavit of Richard B. Miller ¶ 28 (Miller Aff.); Complaint, Exhibit C,
Management Committee Meeting May 28, 2014 Final Motions (Management Committee
Motions).
8 Complaint, Exhibit D, NYISO, Proposed ICAP Buyer-Side Mitigation Modifications at 7 (May 28, 2014) (NYISO Presentation).
9 Management Committee Motions; NYISO, NYISO Agreements, Foundation
Agreements, ISO Agreement §§ 7.10, 19.01 (Mar. 5, 2013), http://www.nyiso.com/
public/webdocs/markets_operations/documents/Legal_and_Regulatory/Agreements/NYI SO/iso_agreement.pdf.
Docket Nos. EL15-26-001 and ER15-1498-000- 4 -
9. On December 4, 2014, Complainants filed a complaint against NYISO, alleging
that the rules governing buyer-side market power mitigation in section 23 of NYISO’s
Services Tariff10 were unjust, unreasonable, or unduly discriminatory or preferential
without a competitive entry exemption. On February 26, 2015, the Commission issued
the Complaint Order, granting in part the complaint and requiring NYISO to make a
compliance filing to add a competitive entry exemption to its Services Tariff.
II.Summary of the Complaint Order
10.In the Complaint Order, the Commission found that the Complainants had
demonstrated that NYISO’s Services Tariff is unjust, unreasonable, or unduly
discriminatory or preferential pursuant to section 206 of the FPA without a competitive
entry exemption to the buyer-side market power mitigation rules. The Commission also
found that the Complainants’ proposed tariff revisions providing for a competitive entry
exemption to the rules governing buyer-side market power mitigation in NYISO’s
Services Tariff, as modified in the Complaint Order, are just and reasonable.11
11. The Commission agreed that, while the purpose of buyer-side market power
mitigation is to deter the exercise of buyer-side market power and the resulting price
suppression, NYISO’s existing buyer-side market power mitigation rules acted as a
barrier to entry for merchant resources. The Commission found that NYISO’s then-
existing buyer-side market power mitigation rules should not be applied to competitive
unsubsidized merchant resources because these resources do not have the incentive to
exercise buyer-side market power.12 Moreover, the Commission found that subjecting
such resources to an offer floor serves no competitive objective or market efficiency,
regardless of whether the resources are judged uneconomic according to NYISO’s
10 NYISO’s buyer-side market power mitigation rules provide that, unless exempt from mitigation, new capacity resources must enter the New York City or G-J Locality markets at a price at or above the applicable offer floor and continue to meet the offer floor until their capacity clears twelve monthly auctions. A new entrant can be exempted from the offer floor if NYISO determines that it passes either part of the mitigation
exemption test. NYISO, Services Tariff, § 23.4.5.7 (9.0.0).
11 Complaint Order, 150 FERC ¶ 61,139 at PP 3-4, 53.
12 As used in this order, “merchant” projects are those projects that are funded
privately, rather than with subsidies, and recover their costs only through market
revenues.
Docket Nos. EL15-26-001 and ER15-1498-000- 5 -
existing buyer-side market power mitigation exemption test, because customers do not bear the risk or costs of uneconomic entry of such resources.13
12. Although the Commission largely adopted the Complainants’ proposed
competitive entry exemption in part, it also required a number of modifications.
Specifically, the Commission addressed: (1) the extent to which any subsidy should be
allowed; (2) certification requirements to ensure that a resource is purely merchant; and
(3) penalty provisions for submitting false information.
13. First, the Commission rejected the Complainants’ proposed de minimis exception,
which would have allowed a new entrant to qualify for a competitive entry exemption
with a certain “de minimis” level of non-qualifying contractual relationships.14 The
Commission found that permitting any subsidy contradicts a seminal principle underlying
the buyer-side market power mitigation rules: that uneconomic entities with market
power should not be permitted to lower capacity market prices by adding uneconomic
capacity.15
14. While the Commission rejected the de minimis exception, the Commission
adopted a modified version of the Complainants’ proposed list of contracts in section
23.4.5.7.8.1.3, which would not be considered non-qualifying contractual relationships,
meaning that these contracts would not disqualify a new entrant for the competitive entry
exemption. The Commission also adopted the MMU’s suggestion to remove from that
same list of contracts those contracts providing financial hedges with Non-Qualifying
Entry Sponsors. The Commission also ordered NYISO to remove from the list of
allowable contracts reliability-must-run contracts. The Commission further agreed with
TDI USA Holdings Corp. (TDI) that including on the list entities outside of New York
could be over-inclusive and discriminate against owners of generation supply who have
no reason or ability to depress prices in New York. The Commission reasoned that
13 Complaint Order, 150 FERC ¶ 61,139 at PP 45-51.
14 Non-qualifying contractual relationships are contracts related to the planning,
siting, interconnection, operation, or construction of the project, contracts for the energy
or capacity produced by or delivered from or by the project, or contracts that provide
services, financial support, or tangible goods to the project that are entered into with a
Non-Qualifying Entry Sponsor. A Non-Qualifying Entry Sponsor is a Transmission
Owner, a Public Power Entity, or any other entity with a Transmission District in the
New York Control Area, or an agency or instrumentality of New York State, or a
political subdivision thereof. Proposed Services Tariff § 23.4.5.7.9.1.1.
15 Complaint Order, 150 FERC ¶ 61,139 at P 64.
Docket Nos. EL15-26-001 and ER15-1498-000- 6 -
expanding the list of Non-Qualifying Entry Sponsors to include entities outside of New York is unnecessary given the lack of support for the notion that such entities would benefit from low prices in New York.16
15. The Commission also found that the Complainants’ proposed certification
provisions,17 which included fewer requirements than NYISO’s, was significantly weaker
than the oversight provisions NYISO proposed in its answer. As such, the Commission
found that NYISO’s proposed certification provisions, as further modified to reflect the
MMU’s suggestions, are just and reasonable. The Commission directed NYISO to revise
its tariffs accordingly, and also required that NYISO include the certification form in its
Services Tariff.18
16. In addition, the Commission declined to adopt the penalty structure NYISO
proposed in its answer19 because allowing NYISO to impose financial penalties for
behavior that is not “objectively identifiable” is inconsistent with Commission rules and relevant precedent.20 However, the Commission required NYISO to propose revocation provisions that achieve similar objectives to those provisions used by PJM
Interconnection, L.L.C. (PJM).21
16 Id. PP 101-106.
17 The certification provisions require that an applicant for a competitive entry
exemption certify that the project does not have any non-qualifying contractual
relationships. NYISO reviews the certification to determine the applicant’s eligibility for the exemption.
18 Complaint Order, 150 FERC ¶ 61,139 at PP 79-83.
19 The proposed penalty structure would have allowed NYISO to revoke a new entrant’s competitive entry exemption and impose a financial penalty if the new entrant provided false, misleading, or inaccurate information as part of its certification.
20 Complaint Order, 150 FERC ¶ 61,139 at PP 88-89.
21 Id. PP 90-91 (citing PJM Interconnection, L.L.C., Intra-PJM Tariffs, OATT,
Attachment DD, § 5.14(h)(10) (17.0.0)). When PJM “reasonably believes” that an
application for a competitive entry exemption included fraudulent or material
misrepresentations or omissions, and that the exemption would not have been granted had the application not contained those misrepresentations or omissions, PJM can revoke the exemption, subject to certain notice requirements.
Docket Nos. EL15-26-001 and ER15-1498-000- 7 -
17. Finally, the Commission rejected the vintaging proposal put forth by New York Power Authority (NYPA) and the Long Island Power Authority’s (LIPA).22 Under
existing rules, if a resource does not obtain an exemption from the buyer-side market power mitigation rules in advance of operation, based on NYISO’s forecast of future revenues, mitigation continues until it is demonstrated that the resource is needed in the market by clearing in twelve, not-necessarily-consecutive, monthly auctions. Therefore, the Commission found NYPA/LIPA’s proposal challenged the existing mitigation
exemption calculation methodology, which was not at issue.23
III.Requests for Rehearing and Clarification of the Complaint Order - Docket
No. EL15-26-001
18. On March 30, 2015, Entergy and the PSEG Companies jointly filed a timely request for rehearing of the Complaint Order, and the NRG Companies and the MMU filed timely requests for rehearing and/or clarification.
19. As discussed more fully below, Entergy, the PSEG Companies, and the NRG Companies seek rehearing regarding the Commission’s finding that the Complainants met their burden of proof under FPA section 206 to show that NYISO’s existing
mitigation rules were unjust and unreasonable.
20. Entergy and the PSEG Companies also seek rehearing of issues related to
structuring of the exemption, including: (1) requiring developers to certify that no entity
in their chain of suppliers and customers received subsidies to support the project; (2)
adding out-of-state entities to the definition of Non-Qualifying Entry Sponsors; (3)
expanding the definition of non-qualifying contractual relationships beyond contracts,
agreements, arrangements, and relationships to ensure that all forms of subsidy are
covered; and (4) new entrants notifying NYISO and the MMU if they receive any subsidy
to support the construction of a project after the initial certification, even after service
commences.
21. The MMU requests clarification of the Commission’s rejection of the MMU’s
proposed requirement that new entrants certify that none of their suppliers or customers,
and no entity in the chain of their contractual relationships with its suppliers or
customers, is party to non-qualifying contractual relationships that are contingent on the
22 The vinataging proposal would have allowed projects previously subjected to mitigation under NYISO’s buyer-side market power mitigation rules to continue to be judged against the system they entered.
23 Complaint Order, 150 FERC ¶ 61,139 at P 113.
Docket Nos. EL15-26-001 and ER15-1498-000- 8 -
project’s completion. If the Commission does not grant the request for clarification, the MMU requests rehearing of the Commission’s rejection of the MMU’s proposed
certification requirement concerning supply- and customer-chain relationships.
22. The NRG Companies assert on rehearing that the Commission erred in approving a competitive entry exemption allowing new entrants to bid at substantially less than their actual costs. The NRG Companies also request two clarifications. First, the NRG
Companies seek clarification that the Commission is not intending to limit NYISO’s
consideration of whether to allow certain transmission lines to be exempt from the buyerside market power mitigation rules that NYISO proposes in its compliance filing in
Docket No. ER15-1498-000. Second, the NRG Companies request that existing projects in NYISO’s interconnection queue that fit the qualifications of the competitive entry
exemption be allowed to apply for the exemption.
A.Procedural Matters
23.On April 14, 2015, TDI filed an answer to the requests for rehearing.
24.Rule 713(d) of the Commission’s Rules of Practice and Procedure24 prohibits an
answer to a request for rehearing. Accordingly, we reject TDI’s answer to the requests
for rehearing filed in this proceeding.
B.Substantive Matters
1.Sufficiency of the Existing Mitigation Measures
a.Requests for Rehearing
25.The NRG Companies argue that the Commission ignored compelling evidence
that NYISO’s existing buyer-side market power mitigation rules remained just and
reasonable without a competitive entry exemption. According to the NRG Companies,
the Commission failed to address the fact that two merchant projects cleared under the
existing tariff rules.25 Rather, they state that the Commission dismissed the arguments
with the non sequitur that it did not base its decision on “whether there are flaws with the
24 18 C.F.R. § 385.713(d)(1) (2014).
25 NRG Companies Request for Rehearing at 5-6 (citing Complaint Order,
150 FERC ¶ 61,139 at P 32 (citing IPPNY/EPSA January 15, 2015 Protest at 13); id.
P 51).
Docket Nos. EL15-26-001 and ER15-1498-000- 9 -
calculation methodology underlying NYISO’s existing mitigation test.”26 To support
their argument, the NRG Companies refer to the Bayonne Energy Plant, which was a new project that passed NYISO’s existing buyer-side market power mitigation exemption test and entered into service in 2012.27
26. Entergy and the PSEG Companies contend that the Commission erred in finding that the Complainants met their burden of proof under FPA section 206 because,
according to Entergy and the PSEG Companies, the Complainants failed to submit any evidence that the mitigation rules had prevented any economic entry, and were, thus, unjust and unreasonable.28 Further, they argue that the Commission ignored arguments that improvements in the forecasting process were already underway, and since this was the Complainants’ primary concern, the forecasting improvements should have been adopted in place of the competitive entry exemption.29
b.Commission Determination
27.We deny the requests for rehearing on this issue. The Commission continues to
find that the Complainants sufficiently demonstrated that NYISO’s Services Tariff was
unjust, unreasonable, or unduly discriminatory or preferential without a competitive entry
exemption to the buyer-side market power mitigation rules.30 The Complainants
presented ample evidence in this proceeding to demonstrate that NYISO’s buyer-side
market power mitigation rules were unnecessarily applied to unsubsidized competitive
entrants who have no incentive to inappropriately suppress capacity market prices.31
26 Id. at 6 (citing Complaint Order, 150 FERC ¶ 61,139 at P 51; Bangor HydroElec. Co. v. FERC, 78 F.3d 659, 663 n.3 (D.C. Cir. 1996); Morall v. Drug Enforcement Admin., 412 F.3d 165, 178 (D.C. Cir. 2005); Native Ecosystems Council v. U.S. Forest Serv., 428 F.3d 1233, 1241 (9th Cir. 2005)).
27 Id. at 6-7 (citing Astoria Generating Co. L.P. v. New York Indep. Sys. Operator,
Inc., 140 FERC ¶ 61,189, at PP 1, 41-42, 64 (2012), order on reh’g, 151 FERC ¶ 61,044
(2015)).
28 Entergy and PSEG Companies Request for Rehearing at 15 (citing Entergy January 15, 2015 Protest at 8-10).
29 Id. (citing Entergy January 30, 2015 Answer at 8-9).
30 Complaint Order, 150 FERC ¶ 61,139 at P 45.
31 Id. PP 45-51.
Docket Nos. EL15-26-001 and ER15-1498-000- 10 -
As the Commission explained in the Complaint Order, NYISO’s application of an offer floor to such resources “serves no competitive objective or market efficiency . . . because customers do not bear the risk or costs of uneconomic entry of such resources.”32
28. Further, as described in the Complaint Order, NYISO agreed with the
Complainants, expressing its strong support for a competitive entry exemption on the
basis that competitive entrants should not be prohibited from taking the risk of entry
based on their projections of future capacity prices.33 Several parties agreed that, while
the purpose of buyer-side market power mitigation is to deter the exercise of buyer-side
market power and the resulting price suppression, NYISO’s existing buyer-side market
power mitigation rules act as a barrier to entry for merchant resources, thus rendering the
existing buyer-side market power mitigation rules unjust and unreasonable.
29. According to the NRG Companies, the Commission also failed to address
arguments that two merchant projects cleared under the existing tariff rules.34 However,
as the Commission explained in the Complaint Order, the relevant issue in this
proceeding is not whether new entrants are properly judged uneconomic according to the
existing mitigation exemption test, but, rather, whether the correct parties are being
subjected to the test in the first place. Merchant resources should not be subjected to the
test if they can qualify for the competitive entry exemption.35 The fact that two merchant
projects managed to clear under the existing mitigation exemption test is not dispositive
of the issues in this case. Rather, the Commission applied economic theory to support its
determination that a purely merchant entity only benefits from higher prices and thus,
with the proper rules in place, should not be subjected to the mitigation exemption test.36
Accordingly, we reaffirm the determination that Complainants demonstrated that the
32 Id. P 46.
33 Id.
34 NRG Companies Request for Rehearing at 5-6 (citing Complaint Order,
150 FERC ¶ 61,139 at P 32 (citing IPPNY/EPSA January 15, 2015 Protest at 13); id.
P 51).
35 Complaint Order, 150 FERC ¶ 61,139 at P 51.
36 The D.C. Circuit has held that the Commission may rely on economic theory to
support its conclusions if it has applied the relevant economic principles in a reasonable
manner and adequately explained its reasoning. See, e.g., Sacramento Mun. Util. Dist.
v. FERC, 616 F.3d 520, 531 (D.C. Cir. 2010).
Docket Nos. EL15-26-001 and ER15-1498-000- 11 -
existing mitigation rules were not just and reasonable without a competitive entry
exemption to the buyer-side market power mitigation rules.
2.Issues with the Competitive Entry Exemption
a.Requests for Rehearing and Clarification
30.The MMU requests clarification of the Commission decision to reject the MMU’s
proposed requirement that new entrants certify that none of their suppliers or customers,
and no entity in the chain of its contractual relationships with their suppliers or
customers, is party to non-qualifying contractual relationships that are contingent on the
project’s completion.37 According to the MMU, NYISO’s proposed definition of
“indirect, non-qualifying contractual relationship”38 limits the certification requirements
the Commission approved to disclosing non-qualifying contracts with only “direct” and
“indirect” entities, meaning direct customers, suppliers, and contractors, or entities that
have contracts with those direct customers, suppliers, and contractors.39 The MMU gives
the example of a new entrant building a generating plant that has a contract to sell the
plant to a second entity that is not a Non-Qualifying Entry Sponsor; the second entity
sells its plant output in the form of a long-term bilateral contract to a broker that is also
not a Non-Qualifying Entry Sponsor. The MMU contends that, if the broker re-sells the
output to a third entity that is a Non-Qualifying Entry Sponsor in a long-term bilateral
contract, the competitive entry exemption could still be granted because the certification
only requires disclosure through the broker.40
37 MMU Request for Rehearing at 4-5 (citing Complaint Order, 150 FERC ¶ 61,139 at P 82).
38 The MMU quotes NYISO’s proposed Services Tariff section 23.4.5.7.9.1.2 as
defining “indirect, non-qualifying contractual relationships” as “any contract between the
[entrant] and an entity (for purposes of this section 23.4.5.7.9, a ‘third party’) if the third
party has a non-qualifying contractual relationship with a Non-Qualifying Entry Sponsor,
the recital, purpose, or subject of which includes, or has the effect of including [the
entrant’s project].” An applicant for a competitive entry exemption is ineligible if it has
contracts that fit within this definition and that are not otherwise allowed.
39 MMU Request for Rehearing at 4, 6.
40 Id. at 6-7.
Docket Nos. EL15-26-001 and ER15-1498-000- 12 -
31. The MMU proposes that, as an alternative to the MMU’s suggestion that the
Commission previously rejected, the Commission clarify that the revocation clause the
Commission ordered can be used in instances where NYISO and the MMU find that a
subsidy is provided to the new entrant via a contract or affiliation with a Non-Qualifying
Entry Sponsor that is further removed than direct or indirect entities.41 Specifically, the
MMU requests that the Commission clarify as follows: “The NYISO revocation clause
should include measures that would revoke an entrant’s [competitive entry exemption] if
it becomes known that one of the suppliers in the entrant’s supply or customer chain is a
[Non-Qualifying Entry Sponsor] whose contractual relationship is contingent on the
project’s completion and is providing material support to the project.”42 The MMU asserts that, by creating this liability, the new entrant would be motivated to engage in contracts that would ensure that non-qualifying contractual relationships are not used to convey subsidies (e.g., through liquidated damages clauses).
32. If the Commission does not grant the request for clarification, the MMU requests rehearing of the Commission’s rejection of the MMU’s proposed certification
requirement concerning supply- and customer-chain relationships.43 Entergy and the
PSEG Companies seek rehearing of the same.44 The MMU argues that confining the
contractual restrictions to direct and indirect relationships is an error because it will allow new entrants to circumvent the buyer-side market power mitigation measures relatively easily by using an additional intermediary in the supply or customer chain to bypass the rules. While Entergy previously expressed concern about how NYISO would effectively verify the certifications, it clarifies that it did not mean that new entrants should be
excused from providing these verifications to NYISO in the first place and, as the
Commission stated, the burden is on the new entrant.45
33. The MMU, Entergy, and the PSEG Companies disagree with the Commission that
the MMU’s proposed expanded certification is too burdensome, stating that any burden
can be eased by contractual mechanisms that transfer the liability to any entities that
41 Id. at 5.
42 Id. at 7.
43 Id. at 8 (citing MMU January 15, 2015 Comments; Complaint Order, 150 FERC ¶ 61,139 at P 82).
44 Entergy and PSEG Companies Request for Rehearing at 4, 6 (citing Complaint Order, 150 FERC ¶ 61,139 at PP 79, 81-82, 106).
45 Id. at 8-9 (citing Complaint Order, 150 FERC ¶ 61,139 at PP 80-81).
Docket Nos. EL15-26-001 and ER15-1498-000- 13 -
engage in a non-qualifying contractual relationship.46 Entergy and the PSEG Companies contend that no project can obtain financing without a clear picture of where its money will come from and how much can reasonably be expected, so it is not credible to suggest that a subsidized resource would not be acutely aware of all of the sources and amounts of its subsidies and other revenues.47 They also note that similar certifications are
common in seeking financing and for participating in solicitation processes, and are
accepted as routine aspects of doing business.48
34. Entergy and the PSEG Companies also argue that the Commission erred by failing
to close potential loopholes.49 According to Entergy and the PSEG Companies, the
Commission was unresponsive to evidence in the record that the basic structure of the
competitive entry exemption enables uncompetitive entry.50 They quote from Mr.
Schnitzer’s affidavit, which asserted that “[t]he basic problem with the whole approach is
that it is focused on who the counterparty is, and what the contract payments are, neither
of which are dispositive as to whether the contract provides a subsidy.”51
35. Entergy and the PSEG Companies also argue that the Commission erred by failing
to include out-of-state entities in the definition of Non-Qualifying Entry Sponsors.52
They explain that the most likely source of out-of-state subsidies is from other
governmental entities sponsoring sales into New York, such as the Canadian government
46 MMU Request for Rehearing at 9-10; Entergy and PSEG Companies Request for Rehearing at 9-10 (quoting Complaint Order, 150 FERC ¶ 61,139 at P 82).
47 Entergy and PSEG Companies Request for Rehearing at 9.
48 Id. at 10 (providing the example of New York state agencies that issue requests
for proposals seeking competitive power bids) (citing New York State Office of General
Services, Procurement Guidelines, Appendix A, http://ogs.ny.gov/About/appendixa.asp
(Jan. 2014)).
49 Id. at 4.
50 Id. at 5.
51 Id. (citing Schnitzer Aff. 15:3-14) (emphasis added by Entergy and the PSEG Companies).
52 Id. at 11 (citing Complaint Order, 150 FERC ¶ 61,139 at PP 95-96, 106).
Docket Nos. EL15-26-001 and ER15-1498-000- 14 -
in the case of TDI.53 According to Entergy and the PSEG Companies, these entities may have their own financial motivations to sell power into New York irrespective of the
artificially suppressive impact on market clearing prices; for example, the State of New York might pay back the subsidy to an out-of-state entity through a “myriad of
interrelated transactions.”54
36. Entergy and the PSEG Companies further contend that the Commission erred by
failing to directly respond to Entergy’s request that the definition of non-qualifying
contractual relationships be “expanded beyond contracts, agreements, arrangements, and
relationships to ensure that all forms of subsidy are covered, including those achieved via
special tariff treatment or discriminatory tax credits.”55 They contend that the current
definition of non-qualifying contractual relationships is incomplete and will result in the
competitive entry exemption failing to achieve its purpose, whereas the proposed
clarification would result in all forms of project subsidies disqualifying a new project
from receiving the exemption.56
37. Entergy and the PSEG Companies also ask that the Commission confirm that new
entrants have a continuing obligation to notify NYISO if they receive subsidies to support
their project, even after the project enters into service.57 They contend that this
clarification is particularly important given NYISO’s and the MMU’s own past assertions
that they are not in a position to be able to effectively monitor contractual
arrangements.58
38. By accepting the competitive entry exemption without the improvements Entergy
and the PSEG Companies propose, they contend the Commission made several additional
errors. First, they assert that the Commission failed to address record evidence that
53 Id. Entergy and the PSEG Companies contend that the Canadian government subsidizing TDI would enable significant sales from publicly-owned Canadian facilities into New York.
54 Id. at 11-12 (citing Complaint Order, 150 FERC ¶ 61,139 at P 106).
55 Id. at 12 (quoting Complaint Order, 150 FERC ¶ 61,139 at PP 100, 106).
56 Id.
57 Id. at 12-13 (citing Complaint Order, 150 FERC ¶ 61,139 at P 80).
58 Id. at 13 (citing NYISO Request for Clarification or, in the Alternative, Rehearing, Docket No. EL07-39 (filed Apr. 7, 2008)).
Docket Nos. EL15-26-001 and ER15-1498-000- 15 -
eligibility for the competitive entry exemption should not be based exclusively on the
existence or non-existence of certain affiliate and contractual relationships.59 Second,
they contest the Commission’s finding that, from an “administrative aspect,” a “generic
exemption” was preferable to NYISO “engag[ing] in detailed reviews of individual
projected costs, revenues, capacity levels, and other factors that may lead to litigation
before the Commission.”60 Entergy and the PSEG Companies counter that the “generic
exemption” is only preferable if properly structured and safeguarded to apply only to
purely competitive entry. Third, they argue that the Commission failed to address unique
aspects of the NYISO markets that render them particularly susceptible to subsidized new
entry.61 They state, however, that the improvements they seek should be sufficient to
remedy the principal shortcomings of the competitive entry exemption.62
b.Commission Determination
39.We deny the following requests for rhearing and clarification: (1) the MMU’s and
Entergy and the PSEG Companies’ requests for rehearing concerning the Commission’s
rejection of the MMU’s proposal to require that new entrants certify that there are no
non-qualifying contractual relationships in their entire supply and customer chain that are
contingent on the project’s completion and the MMU’s request for clarification on this
issue; (2) Entergy and the PSEG Companies’ request for rehearing regarding the
Commission’s decision not to include out-of-state entities in the definition of Non-
Qualifying Entry Sponsors; (3) Entergy and the PSEG Companies’ request for rehearing
of the Commission’s decision to not expand the definition of non-qualifying contractual
relationships beyond contracts, agreements, arrangements, and relationships; (4) Entergy
and the PSEG Companies’ request that the Commission confirm that new entrants have a
continuing obligation to notify NYISO if they receive subsidies for their projects; (5)
Entergy and the PSEG Companies’ argument that, by accepting the competitive entry
exemption without certain modifications, the Commission made additional errors; and (6)
Entergy and the PSEG Companies’ assertion that the Commission failed to address
unique aspects of NYISO’s markets in designing the competitive entry exemption. Each
of these requests for rehearing and clarification are discussed in more detail below.
59 Id.
60 Id. at 14 (quoting Complaint Order, 150 FERC ¶ 61,139 at P 48).
61 Id. (citing Complaint Order, 150 FERC ¶ 61,139 at P 47; Schnitzer Aff. 16:13-
20; Entergy January 15, 2015 Protest at 8-9 & nn.20, 21; Entergy January 30, 2015
Answer at 5-6).
62 Id. at 15.
Docket Nos. EL15-26-001 and ER15-1498-000- 16 -
40. First, we deny the MMU’s and Entergy and the PSEG Companies’ requests for
rehearing, and the MMU’s request for clarification, regarding the Commission’s rejection
of the MMU’s proposed requirement that new entrants certify that there are no non-
qualifying contractual relationships that exist in the entire supply and customer chain that
are contingent on the project’s completion. The Commission found that “certifying the
inputs and financing of the entire supply chain for complex generation and transmission
facilities is too burdensome on developers and insufficiently supported by the MMU or
any other participant.”63 On rehearing, Entergy and the PSEG Companies state that no
project can obtain financing without a clear picture of its money flow and similar
certifications are common in seeking financing and for participating in solicitation
processes.64 They assert that, without the proposed certification, subsidies could still be
provided to the new entrant using a chain of contracts. However, we find Entergy and the
PSEG Companies’ concerns to be speculative and unsupported by record evidence. As
the Commission found in the Complaint Order, requiring an examination of every
contractual relationship, regardless of how far removed the contract is from the project
itself, imposes a significant burden upon developers.65 Such a requirement also creates
significant risk of liability for not discovering and disclosing every possible contract that
might be deemed to be non-qualifying. This risk could serve as an unreasonable barrier
for new entrants to even apply for the competitive entry exemption in the first place. The
MMU suggests that new entrants could pass this risk on to their contractors using
liquidated damages clauses,66 but we are not convinced that this is a risk that their
contractors would be willing, or should be required, to accept. For these reasons, we
deny the requests for rehearing and clarification on this issue.
41. We deny Entergy and the PSEG Companies’ request for rehearing regarding the
Commission’s decision not to include out-of-state entities in the definition of Non-
Qualifying Entry Sponsors. We reaffirm the finding in the Complaint Order that
including out-of-state entities “could be over-inclusive and discriminate against owners
of generation supply who have no reason or ability to depress prices in New York.”67
The Commission found in the Complaint Order that there was insufficient support for the
notion that entities outside of New York would benefit from low prices in New York.
63 Complaint Order, 150 FERC ¶ 61,139 at P 82.
64 Entergy and the PSEG Companies Request for Rehearing at 9-10.
65 Complaint Order, 150 FERC ¶ 61,139 at P 82.
66 MMU Request for Rehearing at 9-10.
67 Complaint Order, 150 FERC ¶ 61,139 at P 106.
Docket Nos. EL15-26-001 and ER15-1498-000- 17 -
Entergy and the PSEG Companies have not presented convincing evidence to the contrary here.
42. We similarly deny Entergy and the PSEG Companies’ request for rehearing of the
Commission’s decision to not expand the definition of non-qualifying contractual
relationships beyond contracts, agreements, arrangements, and relationships. We
disagree that the current definition will result in the competitive entry exemption failing
to achieve its purpose. We find that the definition of “non-qualifying contractual
relationships” as “includ[ing] but not be[ing] limited to any contract, agreement,
arrangement, or relationship”68 to be sufficiently broad to capture improper subsidies,
including special tariff treatment or discriminatory tax credits. We confirm our finding
that the Complainants’ definition of non-qualifying contractual relationship is just and
reasonable.69
43. We further deny Entergy and the PSEG Companies’ request that the Commission confirm that new entrants have a continuing obligation to notify NYISO of new
subsidies, even after they enter into operation. The Commission considered this request in the Complaint Order and found that the safeguards provided by the applicant’s
certification, the fact that NYISO’s oversight and review will not cease when an entrant begins operating, combined with the requirement that NYISO report false, misleading, or inaccurate information to the Commission’s Office of Enforcement, are sufficient.70 We continue to find that these protections are just and reasonable, and that adding a
continuing reporting obligation is unnecessary.
44. With regard to Entergy and the PSEG Companies’ argument that, by accepting the
competitive entry exemption without certain modifications, the Commission made
additional errors, we deny rehearing. First, they argue that the Commission failed to
address record evidence that the focus on the existence of certain affiliate and contractual
relationships is not necessarily indicative of improper subsidies under those contracts.71
In defining competitive entry exemption eligibility on the basis of whether certain
affiliate and contractual relationships exist, rather than through analyzing whether each
contract provides a subsidy, the Commission sought to balance the need for a competitive
entry exemption with administrative efficiency. As the Commission explained in the
68 Proposed Services Tariff § 23.4.5.7.9.1.2 (emphasis added).
69 Complaint Order, 150 FERC ¶ 61,139 at P 53.
70 Id. P 81.
71 Entergy and PSEG Companies Request for Rehearing at 5, 13.
Docket Nos. EL15-26-001 and ER15-1498-000- 18 -
Complaint Order, creating a generic exemption “eliminates the need for NYISO to
engage in detailed review of individual projected costs, revenues, capacity levels, and
other factors that may lead to litigation before the Commission.”72 We confirm our
findings that the competitive entry exemption ordered in the Complaint Order, as
modified in this order, is just and reasonable and provides sufficient safeguards to make a “generic exemption” preferable to individualized review that “may lead to litigation
before the Commission.”73
45. As for Entergy and the PSEG Companies’ assertion that the Commission failed to
address unique aspects of NYISO’s markets in designing the competitive entry
exemption,74 we deny rehearing. The Commission considered the unique aspects of the
NYISO markets when it found that the safeguards provided by the applicant’s
certification, the fact that NYISO’s oversight and review will not cease when an entrant
begins operating, and the requirement that NYISO report false, misleading, or inaccurate
information to the Commission’s Office of Enforcement are sufficient.75 Recognizing
that NYISO is a single-state regional transmission organization and that New York State
is active in providing public funding for energy projects, the Commission carefully
considered the structure of the competitive entry exemption and made modifications to
the Complainants’ proposal to put adequate safeguards in place.76
3.Ability to Recover Fixed Costs
a.Requests for Rehearing
46.The NRG Companies contend that the Complaint Order denies suppliers any
“reasonable opportunity” to recover their fixed costs. They point to Commission
precedent describing the Commission’s statutory obligation as requiring a regulatory
72 Complaint Order, 150 FERC ¶ 61,139 at P 48.
73 Id.
74 Entergy and PSEG Companies Request for Rehearing at 14 (citing Complaint Order, 150 FERC ¶ 61,139 at P 47; Schnitzer Aff. 16:13-20; Entergy January 15, 2015 Protest at 8-9 & nn.20, 21; Entergy January 30, 2015 Answer at 5-6).
75 Complaint Order, 150 FERC ¶ 61,139 at P 81.
76 See, e.g., id. PP 64 (rejecting the de minimis exception), 79-83 (adopting
additional certification requirements), 90 (requiring NYISO to propose a revocation mechanism).
Docket Nos. EL15-26-001 and ER15-1498-000- 19 -
regime that provides generators a “reasonable opportunity” to earn a return of and on
equity, over a sufficiently long period of time.77 The NRG Companies argue that without
meeting this standard, the compensation scheme risks violating both the FPA and the
Fifth Amendment to the U.S. Constitution.78 The NRG Companies assert that the
Commission fundamentally altered the regulatory structure that the NRG Companies,
along with other suppliers, relied on in making their investments, such that, instead of
competing against economically-efficient supply, existing suppliers must compete with
economically inefficient suppliers as well.79 The NRG Companies argue that allowing
uneconomic generation resources to enter the market with no price floor exposes existing
suppliers to “predatory pricing” for which there is no obvious defense or remedy.80
47. The NRG Companies further contend that the competitive entry exemption
significantly weakens buyer-side market power protections in NYISO, despite the
Commission’s recognition, according to the NRG Companies, that the exercise of market
77 NRG Companies Request for Rehearing at 8 (citing Bridgeport Energy, LLC, 113 FERC ¶ 61,311, at P 29 (2005); ISO New England Inc., 125 FERC ¶ 61,102 (2008); Devon Power LLC, 115 FERC ¶ 61,340 (2006); Devon Power LLC, 103 FERC ¶ 61,082 (2003); Devon Power LLC, 107 FERC ¶ 61,240 (2004); ISO New England Inc., 135
FERC ¶ 61,029, at P 254 (2011)).
78 Id. (citing Bridgeport Energy, LLC, 113 FERC ¶ 61,311, at P 29 (2005); ISO
New England Inc., 125 FERC ¶ 61,102, order on clarification, 125 FERC ¶ 61,324
(2008), order on clarification, 130 FERC ¶ 61,089 (2010); Devon Power LLC, 115 FERC
¶ 61,340 (2006), order on appeal sub nom. Maine Pub. Utils. Comm’n v. FERC 520 F.3d
464 (D.C. Cir. 2008), reversed in part sub nom. NRG Power Mktg., LLC v. Maine Pub.
Utils. Comm’n, 558 U.S. 165 (2010); Devon Power LLC, 103 FERC ¶ 61,082 (2003);
Devon Power LLC, 107 FERC ¶ 61,240, order on reh’g, 109 FERC ¶ 61,154 (2004),
orders on reh’g, 110 FERC ¶ 61,313, 110 FERC ¶ 61,315 (2005); ISO New England Inc.,
135 FERC ¶ 61,029, at P 254 (2011), order on reh’g, 138 FERC ¶ 61,027 (2012); U.S.
Const. Amend. V).
79 Id. at 9 (citing Panhandle E. Pipe Line Co. v. FERC, 196 F.3d 1273, 1275 (D.C. Cir. 1999); EPA’s Proposed 111(d) Rule for Existing Power Plants: Legal and Cost
Issues Before the Subcomm. on Energy & Power of the H. Comm. on Energy &
Commerce, 114th Cong. 31-32 (2015) (testimony of Laurence H. Tribe, Professor,
Harvard University and Harvard Law School)).
80 Id. at 9-10 (citing Pac. Bell Tel. Co. v. linkLine Communs., Inc., 555 U.S. 438 (2009)).
Docket Nos. EL15-26-001 and ER15-1498-000- 20 -
power is one of the greatest threats to its obligation to ensure just and reasonable rates.81
The NRG Companies assert that the existing buyer-side market power mitigation rules
are already easy to pass. Specifically, the NRG Companies point to the Commission’s
recent order re-affirming its decision to set the offer floor in NYISO at 75 percent of the
mitigation net cost of new entry, which is already well below the actual estimated cost of
bringing a new facility to the market.82 The NRG Companies contend that, with this
already low offer floor, economic new entry should be able to clear the market without a competitive entry exemption and, if not, they state that it is a small administrative burden to show actual costs instead.
b.Commission Determination
48.We deny the NRG Companies’ request for rehearing on this issue because it is
beyond the scope of this proceeding. The NRG Companies’ arguments constitute an
inquisition into buyer-side market power mitigation and exemptions from minimum offer
price rules in general.83 While we maintain here that a market participant that does not
have the ability or incentive to exercise buyer-side market power, or has otherwise
proven itself to be economic, should not be subjected to buyer-side market power
mitigation, this proceeding is not a forum to discuss the virtues of exemptions from
minimum offer price rules in general. Rather, this proceeding is limited to the
competitive entry exemption and its related provisions in NYISO’s Services Tariff and
OATT.84
49. Specifically, the Commission found in the Complaint Order that NYISO’s existing
buyer-side market power mitigation rules act as a barrier to entry for merchant resources
and that those rules should not be applied to competitive unsubsidized merchant
resources because those resources do not have the incentive to exercise buyer-side market
power.85 We also maintain here that the competitive market process alone is sufficient to
81 Id. at 10-11 (citing Astoria Generating Co., 140 FERC ¶ 61,189 at P 64;
PJM Interconnection, L.L.C., 137 FERC ¶ 61,145, at P 62 (2011), reh’g denied,
138 FERC ¶ 61,194, at P 19 (2012); ISO New England Inc., 135 FERC ¶ 61,029 at P 61).
82 Id. at 11 (citing New York Indep. Sys. Operator, Inc., 150 FERC ¶ 61,208 (2015)).
83 Id. at 8-10.
84 Complaint Order, 150 FERC ¶ 61,139 at PP 45-46.
85 Id. P 46.
Docket Nos. EL15-26-001 and ER15-1498-000- 21 -
discipline competitive unsubsidized merchant entry because purely merchant generators
that place their own capital at risk have the incentive to bid their true costs into the
auction, and will thus only clear the market when it is cost-effective. Moreover,
merchant generators and Unforced Capacity Deliverability Rights projects are wholly
reliant on ICAP revenues to recover their fixed costs and generate a reasonable return.
50. Therefore, we find that any inclination to bid below costs and engage in predatory
pricing, as described by the NRG Companies,86 would be an unsustainable strategy for
merchant resources, and that the incentive to bid at costs and potentially increase market
revenues outweighs any potential incentive to bid below costs and suppress market
prices. While we acknowledge that the competitive entry exemption creates the ability of
a market participant to be a price taker, as does any exemption from buyer-side market
power mitigation, the importance of recovering the costs of entry for a merchant
generator or Unforced Capacity Deliverability Rights project in the ICAP market exceeds
that of resources not eligible for the competitive entry exemption. Thus, while we
dismiss as beyond the scope of this proceeding the NRG Companies’ allegation that
exempt resources would engage in price suppressive and predatory behavior in general,
we find that argument to be particularly without merit as applied to resources eligible for
the competitive entry exemption.
51. As to the NRG Companies’ assertion that the Commission fundamentally altered the regulatory structure that the NRG Companies and other suppliers relied on,87 we are not persuaded that the benefits of the revisions directed here and in the Complaint Order are outweighed by any settled expectations of market participants, especially because the new competitive entry exemption is only available prospectively as of the Class Year 2015. It will not affect any previous year’s Class Year cost allocation.88
4.Application of the Competitive Entry Exemption
a.Requests for Clarification
52.The NRG Companies also request two clarifications or, if the Commission denies
the clarifications, rehearing. First, they ask for clarification that the Complaint Order
does not pre-judge how NYISO chooses to apply the competitive entry exemption to
“merchant” transmission projects, such as TDI’s Champlain Hudson Project (Champlain
86 NRG Companies Request for Rehearing at 9-10.
87 Id. at 9.
88 Complaint Order, 150 FERC ¶ 61,139 at P 117.
Docket Nos. EL15-26-001 and ER15-1498-000- 22 -
Hudson). Specifically, the NRG Companies seek clarification that the Commission is not
intending to limit NYISO’s consideration of whether to allow transmission lines like
those which TDI proposes to be exempt from the buyer-side market power mitigation
rules that NYISO proposes in its compliance filing to the Complaint Order in Docket No.
ER15-1498-000.89 The NRG Companies argue that if the Champlain Hudson Project,
which receives generation from a state-owned utility, is granted the competitive entry
exemption, NYISO would essentially be allowing state-subsidized investment into the
market.
53. Second, the NRG Companies request that existing projects in NYISO’s
interconnection queue that fit the qualifications of the competitive entry exemption be
allowed to apply for the exemption. They argue that it would be unduly discriminatory to provide a competitive entry exemption to new projects without also making the same rules available to existing projects.90
b.Commission Determination
54.We grant the NRG Companies’ first request for clarification of the Complaint
Order. The NRG Companies ask for clarification that the Complaint Order does not pre-
judge how NYISO chooses to apply the competitive entry exemption to merchant
transmission projects, such as TDI’s Champlain Hudson.91 On December 16, 2014, TDI
filed a complaint against NYISO, alleging that applying NYISO’s buyer-side market
power mitigation rules to Champlain Hudson was unjust and unreasonable, and seeking a
Commission order exempting Champlain Hudson from the mitigation exemption test on a
prospective basis. In an order issued on February 26, 2015 (TDI Complaint Order),92 the
Commission dismissed as moot TDI’s request for an individual exemption for Champlain
Hudson from NYISO’s buyer-side market power mitigation exemption test. The
Commission noted that it was concurrently, in this proceeding, directing NYISO to
change its existing buyer-side market power mitigation rules to provide a process by
which resources such as TDI could seek the same relief it requested for Champlain
Hudson in its complaint.93 Accordingly, the Commission found TDI’s request for an
89 NRG Companies Request for Rehearing at 12-13.
90 Id. at 13 (citing 16 U.S.C. § 824e (2012)).
91 Id. at 12-13.
92 TDI USA Holdings Corp. v. New York Indep. Sys. Operator, Inc., 150 FERC ¶ 61,140 (2015).
93 Id. PP 41-42.
Docket Nos. EL15-26-001 and ER15-1498-000- 23 -
individual exemption to be moot. We clarify here that the Commission did not pre-judge
or intend to limit how NYISO chooses to apply the competitive entry exemption to
merchant transmission projects, such as TDI’s Champlain Hudson. In the TDI Complaint
Order, the Commission stated that TDI could apply for the competitive entry exemption
and “receive notification from NYISO regarding its eligibility for the exemption before
any financial obligation is triggered.”94 The Commission did not find that TDI, nor any
other transmission project, was necessarily eligible for the competitive entry exemption.
Rather, the Commission only required that NYISO create a competitive entry exemption,
in accordance with the Complaint Order, and follow the process provided for therein.
55. We deny the NRG Companies’ second request for clarification, in which they ask that existing projects in NYISO’s interconnection queue be allowed to apply for the competitive entry exemption, to the extent applicable. The NRG Companies state that they only seek clarification that NYISO is permitted to address these and other concerns in its compliance filing.95 This issue is also raised on compliance, and we find that it is more appropriately addressed in that context.96
IV. NYISO’s Compliance Filing - Docket No. ER15-1498-000
56. On April 13, 2015, NYISO submitted proposed revisions to its Services Tariff to address the Commission’s directives in the Complaint Order. Specifically, NYISO proposes tariff language to, in pertinent part: (1) clarify that Additional Capacity
Resource Interconnection Service (CRIS) MWs are ineligible to request a competitive
entry exemption; (2) explain that a proposed new generator or Unforced Capacity
Deliverability Rights project, in Class Year 2013 or later, may request to be evaluated for
a competitive entry exemption; (3) clarify the certification requirements; (4) provide that
revocation may be invoked against applicants that submit false, misleading, or inaccurate
information; (5) add a certification requirement that specifies that no unexecuted
agreements with a Non-Qualifying Entry Sponsor, written or unwritten, exist that would
support the development of the project; (6) describe the eligibility requirements,
including the definitions of Non-Qualifying Entry Sponsor and Entry Date; and (7)
provide clarification, as necessary, to implement the competitive entry exemption.
NYISO also requests limited waiver for the Class Year 2015 of the requirement that
developers provide the executed Certification and Acknowledgement form set forth in
94 Id. P 42.
95 NRG Companies Request for Rehearing at 13.
96 See infra section IV.C.2.
Docket Nos. EL15-26-001 and ER15-1498-000- 24 -
Proposed Services Tariff section 23.4.5.7.9.2.1 by the deadline for them to give notice of
their intent to join Class Year 2015.
A.Notice of Filing and Responsive Pleadings
57.Notice of the Compliance Filing was published in the Federal Register, 80 Fed.
Reg. 22,172 (2015), with interventions and protests due on or before May 4, 2015. The
New York Public Service Commission (NYPSC) filed a notice of intervention. HQ
Energy Services (U.S.) Inc. and the NRG Companies filed motions to intervene. TDI, the
Independent Power Producers of New York, Inc. (IPPNY), the City of New York (City of
NY), Entergy, Cogen Technologies Linden Venture, L.P. (Linden Cogen), and the
Indicated New York Transmission Owners (Indicated TOs)97 filed motions to intervene
and comments. The Electric Power Supply Association (EPSA) filed an out-of-time
motion to intervene.
58.On May 13, 2015, NYISO filed an answer to IPPNY’s and TDI’s protests.
B.Procedural Matters
59.Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,98 the
notice of intervention and timely, unopposed motions to intervene serve to make the entities that filed them parties to this proceeding.
60. Pursuant to Rule 214(d) of the Commission’s Rules of Practice and Procedure,99 we will grant EPSA’s late-filed motion to intervene given its interest in this proceeding, the early stage of the proceeding, and the absence of undue prejudice or delay.
61. Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure100 prohibits an answer to a protest or an answer unless otherwise ordered by the decisional authority. We will accept NYISO’s answer because it has provided information that assisted us in our decision-making process.
97 The Indicated TOs consist of Consolidated Edison Company of New York, Inc.,
Orange and Rockland Utilities, Inc., New York State Electric & Gas Corporation,
Rochester Gas and Electric Corporation, and Central Hudson Gas & Electric Corporation.
98 18 C.F.R. § 385.214 (2014).
99 18 C.F.R. § 385.214(d).
100 18 C.F.R. § 385.213(a)(2).
Docket Nos. EL15-26-001 and ER15-1498-000- 25 -
C.Substantive Matters
62.We find that NYISO’s Compliance Filing partially complies with the directives in
the Complaint Order. Accordingly, we conditionally accept NYISO’s Compliance
Filing, to become effective February 26, 2015, as requested, as discussed below. We
direct NYISO to submit a further compliance filing within 60 days of the date of issuance
of this order. Consistent with the conditional acceptance of NYISO’s Compliance Filing,
and the Commission’s extension of the notification deadline for Class Year 2015 in the
Complaint Order,101 we grant NYISO’s limited waiver request, applicable only to Class
Year 2015, of the requirement that developers provide the executed Certification and
Acknowledgement form set forth in Proposed Services Tariff section 23.4.5.7.9.2.1 by
the deadline for them to give notice of their intent to join Class Year 2015.
1.The Applicability of Additional CRIS MWs
a.Compliance Filing
63.NYISO proposes to add a sentence to clarify that Additional CRIS MWs are not
eligible to apply for the competitive entry exemption. NYISO states that, subsequent to
the Commission’s issuance of the Complaint Order, NYISO made a filing in Docket No.
ER15-1281-000102 to define the term Additional CRIS MW in the Services Tariff.103
101 Complaint Order, 150 FERC ¶ 61,139 at P 117.
102 NYISO’s filing was accepted via delegated authority on May 6, 2015, subject
to the outcome of tariff revisions ultimately accepted in ongoing proceedings in Docket
Nos. ER10-2371-000, ER12-2414-000, ER14-2518-000, and ER14-2518-001. New York
Indep. Sys. Operator, Inc., Docket No. ER15-1281-000 (May 6, 2015) (delegated letter
order).
103 “Additional CRIS MW” means “the MW of Capacity for which CRIS was
requested for an Examined Facility pursuant to the provisions in the ISO OATT Sections
25, 30, or 32 (OATT Attachments S, X, or Z), including either: (i) all, or a portion, of the
MW of Capacity of that Examined Facility for which CRIS had not been obtained in
prior Class Years through a prior Class Year process or through a transfer completed in
accordance with OATT Section 25 (OATT Attachment S); and/or (ii) all, or a portion, of
an increase in the Capacity of that Examined Facility. Additional CRIS MW does not
include any MW quantity of CRIS that is exempt from an Offer Floor pursuant to Section
23.4.5.7.7(a) or (b), Section 23.4.5.7.8, or an increase of 2 MW or less in an Examined Facility’s MW quantity of CRIS obtained pursuant to Section 30.3.2.6 of Attachment X to the OATT.” NYISO, Services Tariff, § 23.2.1 (7.0.0).
Docket Nos. EL15-26-001 and ER15-1498-000- 26 -
NYISO contends that, although the competitive entry exemption tariff provisions
provided with the complaint and in the Compliance Filing specify that an eligible project is a “proposed new Generator or [Unforced Capacity Deliverability Rights] project,”
NYISO proposes to add a sentence to section 23.4.5.7.6 to make clear that Additional
CRIS MWs are tested under that section, and, thus, are ineligible to request a competitive entry exemption. NYISO explains that it is not opposed to the eligibility of Additional CRIS MWs for a competitive entry exemption and states that eligibility appears to be
consistent with the Complaint Order’s underlying rationale. However, NYISO states that because providing for Additional CRIS MWs was not addressed in the pleadings, or
specified in the Services Tariff before the issuance of the Complaint Order, NYISO
believes it is beyond the scope of its Compliance Filing.104
64. In addition, NYISO states that further revisions to apply a competitive entry
exemption to requests for Additional CRIS MWs would differ substantially in some
respects from the rules for new entrants.105 Therefore, NYISO requests that the
Commission direct it to make a further compliance filing to address the applicability of a competitive entry exemption to Additional CRIS MWs after a sufficient period to
develop such further revisions in its stakeholder process. Further, NYISO suggests that, should the Commission direct such a compliance filing, it make the filing due no sooner than December 31, 2015.106
b.Protests and Comments
65.Entergy notes that, while the competitive entry exemption complaint was pending,
NYISO filed an unrelated tariff proposal to establish rules for applying buyer-side market
power mitigation to Additional CRIS MWs, including certain exemptions.107 Entergy
contends that NYISO appropriately proposed to add tariff language to clarify that the
pending buyer-side market power mitigation rules for Additional CRIS MWs will be
applied to parties seeking Additional CRIS MWs, but that these parties are not eligible to
104 NYISO April 13, 2015 Transmittal at 11.
105 Id. at 11-12.
106 Id. at 12.
107 Entergy May 4, 2015 Protest at 5; see also New York Indep. Sys. Operator, Inc., Docket No. ER15-1281-000 (May 6, 2015) (delegated letter order).
Docket Nos. EL15-26-001 and ER15-1498-000- 27 -
apply the new competitive entry exemption rules. Entergy states that, without this clarification, the tariff would be unclear about which rules apply.108
66. Entergy agrees with NYISO that applying the competitive entry exemption to
Additional CRIS MWs would require tariff revisions that would differ substantially in
some respects from the rules for new entrants.109 Entergy avers that, since the Additional CRIS MWs rules were complex and required extensive stakeholder development,
attempting to combine the two rule sets would require the development of new rules that will differ substantially from those developed, approved, and filed to date.110 Entergy
also states that directing a compliance filing could improperly prejudge the merits of
applying the competitive entry exemption to Additional CRIS MWs.111 Entergy contends that imposing an obligation on a regional transmission organization to submit a
compliance filing could be viewed as an improper, advance Commission stamp of
approval that such rules are necessary and appropriate.112
67. Entergy explains that the NYISO Agreement is a tariff on file with the
Commission and it only permits NYISO to file tariff changes under FPA section 205
upon receiving at least 58 percent approval of NYISO’s stakeholders (requiring that,
otherwise, NYISO must file proposed tariff changes under FPA section 206 and meet the mandated additional showing that the existing rate is unjust and unreasonable).113
Therefore, Entergy concludes that the Commission would improperly bypass these tariff protections if it ordered a compliance filing for issues that NYISO admits are outside the scope of this proceeding.114
68. IPPNY and Entergy contend that NYISO’s proposed approach is an improper
attempt to make a material modification to the tariff and is in violation of the requirement that NYISO obtain the Management Committee’s approval before proposing a tariff
108 Entergy May 4, 2015 Protest at 5-6.
109 Id. at 6.
110 Id.
111 Id. at 7.
112 Id. at 8.
113 Id. at 7.
114 Id.
Docket Nos. EL15-26-001 and ER15-1498-000- 28 -
change to the Commission.115 IPPNY and Entergy also assert that the Commission
should not allow NYISO to request a compliance filing as a vehicle to bypass the
Management Committee voting process.116 IPPNY states that consideration of whether to combine the Additional CRIS MWs rules and the competitive entry exemption rules will raise complex market power and manipulation issues.117 Therefore, IPPNY asserts that the Commission should reject NYISO’s request that the Commission direct it to make a further compliance filing to address the applicability of a competitive entry
exemption to Additional CRIS MWs.118
69. The City of NY explains that it has encouraged existing owners to replace,
upgrade, or modernize their facilities in order to decrease emissions and update currently
inefficient technologies.119 However, the City of NY states that upgrades to existing
units may be subject to mitigation and this fact is causing owners to be reluctant to make
substantial new investments in their facilities.120 The City of NY points out that the
Commission did not distinguish in the Complaint Order between new generating facilities
and actions by existing generation owners that upgrade and expand existing facilities.121
The City of NY claims that there is no reason to treat projects by existing generation
owners differently than developers of entirely new projects, and to subject the former to
the buyer-side market power mitigation test, while exempting the latter.122 Therefore, the
City of NY protests NYISO’s proposal to prohibit existing generators seeking Additional
CRIS MWs from accessing the competitive entry exemption.123 In addition, the City of
115 IPPNY May 4, 2015 Protest at 7; Entergy May 4, 2015 Protest at 6. 116 IPPNY May 4, 2015 Protest at 7; Entergy May 4, 2015 Protest at 6. 117 IPPNY May 4, 2015 Protest at 6.
118 Id. at 6-7.
119 City of NY May 4, 2015 Protest at 5.
120 Id.
121 Id.
122 Id. at 6.
123 Id. at 2.
Docket Nos. EL15-26-001 and ER15-1498-000- 29 -
NY states that the Commission should direct NYISO to submit an additional compliance filing extending the competitive entry exemption to Additional CRIS MWs.124
70. The Indicated TOs contend that making the competitive entry exemption available
to Additional CRIS MWs is within the scope of NYISO’s Compliance Filing.125 The
Indicated TOs explain that NYISO had to add proposed tariff language that would
exclude Additional CRIS MWs because otherwise Additional CRIS MWs would be
eligible for a competitive entry exemption.126 The Indicated TOs explain that a capacity
addition to an existing facility is a project that would be considered a new generator or
Unforced Capacity Deliverability Rights project that may request to be evaluated for a
competitive entry exemption under Section 23.4.5.7.9.1.127 The Indicated TOs state that
it would be unjust and unreasonable if NYISO did not allow an existing facility that is
increasing its CRIS MWs to qualify for a competitive entry exemption if it were qualified
to do so. The Indicated TOs point to the Commission’s statement that, “while the
existing unit-specific exemption review process is necessary as a general matter, it is
unjust and unreasonable for NYISO to apply the existing buyer-side [market power]
mitigation test to a merchant resource that has no incentive to artificially suppress
capacity market prices.”128 The Indicated TOs request that the Commission approve the
Compliance Filing and direct NYISO to make a further compliance filing to address the
applicability of a competitive entry exemption to Additional CRIS MWs after it has been
reviewed in its stakeholder process.129
124 Id. at 7.
125 Indicated TOs May 4, 2015 Protest at 2. 126 Id. at 4.
127 Id.
128 Id. at 4-5.
129 Id. at 3.
Docket Nos. EL15-26-001 and ER15-1498-000- 30 -
c.Commission Determination
71.We find that the applicability of the competitive entry exemption to Additional
CRIS MWs is beyond the scope of this proceeding, which is limited to the consideration of whether NYISO has complied with the directives in the Complaint Order.130 In the Complaint Order, the Commission did not require NYISO to make tariff revisions related to, or to otherwise address issues related to, Additional CRIS MWs. As various parties note, NYISO has submitted a filing with the Commission concerning Additional CRIS MWs subsequent to the Complaint Order.131
72. While we decline to require NYISO to submit a further compliance filing on this
issue, we note that the competitive entry exemption is intended to apply to any resource
relying solely on market revenues. As stated in the Complaint Order, because a purely
merchant generator places its own capital at risk when it invests in a new resource, any
such resource will have a strong incentive to bid its true costs into the auction, and it will
clear the market only when it is cost-effective.132 Therefore, we expect that NYISO and
its stakeholders will discuss this issue in the stakeholder process and file any proposed
tariff revisions with the Commission under section 205 or section 206, as appropriate.
130
The Commission has long established that compliance filings must be limited
to the specific directives ordered by the Commission. The purpose of a compliance filing
is to make the directed changes and the Commission’s focus in reviewing them is
whether they comply with the Commission’s previously-stated directives. See Pacific
Gas & Elec. Co., 109 FERC ¶ 61,336, at P 5 (2004); Midwest Indep. Transmission Sys.
Operator, Inc., 99 FERC ¶ 61,302, at 62,264 (2002); ISO New England, Inc., 91 FERC
¶ 61,016, at 61,060 (2000); Sierra Pacific Power Co., 80 FERC ¶ 61,376, at 62,271
(1997); Delmarva Power & Light Co., 63 FERC ¶ 61,321, at 63,160 (1993).
131 NYISO April 13, 2015 Transmittal at 11. We note that this filing was made in Docket No. ER15-1281-000 and requires Additional CRIS MWs to be subject to the
mitigation exemption test. NYISO’s filing was accepted via delegated authority on May 6, 2015, subject to the outcome of tariff revisions ultimately accepted in ongoing
proceedings in Docket Nos. ER10-2371-000, ER12-2414-000, ER14-2518-000, and
ER14-2518-001. New York Indep. Sys. Operator, Inc., Docket No. ER15-1281-000
(May 6, 2015) (delegated letter order).
132 Complaint Order, 150 FERC ¶ 61,139 at P 46 (citing PJM Interconnection, L.L.C., 143 FERC ¶ 61,090, at P 57 (2013)).
Docket Nos. EL15-26-001 and ER15-1498-000- 31 -
2.Eligibility of the Exemption to Class Year 2012
a.Compliance Filing
73.NYISO’s proposed tariff language states that a proposed new generator or
Unforced Capacity Deliverability Rights project that becomes a member of a Class Year
after Class Year 2012 may request to be evaluated for a competitive entry exemption.133
Additionally, NYISO proposes that requests for competitive entry exemptions for
generators or Unforced Capacity Deliverability Rights projects in Class Years subsequent
to Class Year 2012 must be received by NYISO no later than the deadline by which a
facility must notify NYISO of its election to enter the Class Year, and that “Generators or
Unforced Capacity Deliverability Rights projects in, and that remain a member of, Class
Year 2012 or prior Class Years shall not be eligible to request or receive a Competitive
Entry Exemption.”134
b.Protests and Comments
74.Commenters express concern about potential misinterpretation of NYISO’s
proposed tariff language, such that projects in the completed Class Year 2012 or prior
Class Years may be eligible to apply for the competitive entry exemption. Specifically,
Entergy and IPPNY state they are concerned that the phrase “and that remain a member
of” could be interpreted to imply that a generator or a Unforced Capacity Deliverability
Rights project that is a member of the completed Class Year 2012 or completed Class
Years prior to 2012 could terminate its membership in such Class Year and become
eligible for the competitive entry exemption.135 Entergy states that there is nothing in the Complaint Order to suggest that resources that have already completed the Class Year
process and are members of the final Class Year 2012 (or earlier Class Years) should
now be reevaluated.136
75. IPPNY and Entergy assert that, pursuant to NYISO’s Services Tariff, a project that
elects to remain a member of a Class Year through its completion, and receives CRIS
rights in that Class Year, is bound by the determination rendered in that Class Year and
133 Proposed Services Tariff § 23.4.5.7.9.1.1.
134 Proposed Services Tariff § 23.4.5.7.9.3.2.
135 IPPNY May 4, 2015 Protest at 3; Entergy May 4, 2015 Protest at 4 (citing Proposed Services Tariff § 23.4.5.7.9.3.2).
136 Entergy May 4, 2015 Protest at 4.
Docket Nos. EL15-26-001 and ER15-1498-000- 32 -
may not be reevaluated for an exemption from offer floor mitigation.137 Moreover,
IPPNY states that Class Year 2012 and all prior Class Years have been completed, and,
thus, members of those Class Years that received offer floor determinations cannot be
reevaluated for an exemption. Therefore, IPPNY and Entergy state that the Commission
should order NYISO to revise its proposed tariff provisions to clarify that a competitive
entry exemption is not available to members of completed Class Year 2012 and prior
Class Years.138
76. IPPNY explains that NYISO authorized IPPNY to state that NYISO did not intend
to propose language that could be interpreted to make the competitive entry exemption
available to generators and Unforced Capacity Deliverability Rights projects in the
completed Class Year 2012 or prior Class Years and that NYISO does not object to
IPPNY’s proposal to clarify the tariff language.139 Specifically, IPPNY proposes to
replace NYISO’s proposed sentence containing the phrase “and that remain a member of”
with: “A Generator or [Unforced Capacity Deliverability Rights] project[] that remains a
member of a completed Class Year[,] if such Class Year is Class Year 2012 or prior
Class Years, shall not be eligible to request or receive a Competitive Entry
Exemption.”140 IPPNY states that this language is consistent with other language
proposed by NYISO to indicate the inclusion of a project in a completed Class Year.141
c.Commission Determination
77.We agree with protestors that generators or Unforced Capacity Deliverability
Rights projects that are members of completed Class Year 2012 and prior Class Years,
and have therefore already received final offer floor determinations for their respective
Class Year from NYISO, should not be eligible for the competitive entry exemption.
137 IPPNY May 4, 2015 Protest at 4; Entergy May 4, 2015 Protest at 4 (citing
NYISO, Services Tariff, §§ 23.4.5.7.3 (“The NYISO shall make such exemption and
Unit Net CONE determination for each ‘Examined Facility’…which term shall mean…
(II) each (i) existing Generator that did not have CRIS rights”), 23.4.5.7.3.5 (“An
Examined Facility under the criteria in 23.4.5.7.3 (II) that did receive CRIS rights will be
bound by the determination rendered and will not be reevaluated…”) (14.0.0)).
138 IPPNY May 4, 2015 Protest at 4; Entergy May 4, 2015 Protest at 4. 139 IPPNY May 4, 2015 Protest at 4-5.
140 Id. at 5 (citing Proposed Services Tariff § 23.4.5.7.9.3.2). 141 Id. at 5 n.7.
Docket Nos. EL15-26-001 and ER15-1498-000- 33 -
NYISO’s Services Tariff states that an Examined Facility under the criteria in section
23.4.5.7.3(II) that did receive CRIS rights will be bound by the determination rendered and will not be reevaluated, and an Examined Facility under the criteria in section
23.4.5.7.3(III) will not be reevaluated.142 Furthermore, members of completed Class
Years cannot be reevaluated, and, thus, are ineligible for the competitive entry
exemption. We do, however, maintain that generator or Unforced Capacity
Deliverability Rights projects that have not received completed Class Year
determinations from NYISO and have not entered into commercial operation (i.e.,
projects that are members of a Class Year after Class Year 2012) should be eligible to
apply for the competitive entry exemption, as was indicated in the complaint and in the
Complaint Order.143
78. Additionally, we agree with Entergy and IPPNY that the proposed language
allows for the interpretation that members of Class Year 2012 and prior Class Years
could terminate their membership in such Class Year and thereafter become eligible for
the competitive entry exemption.144 We therefore conditionally accept NYISO’s tariff
revisions regarding Class Year 2012 eligibility and direct NYISO to submit further tariff
revisions within 60 days of the date of this order to incorporate IPPNY’s proposed tariff
language,145 thereby clarifying that the competitive entry exemption is not available for
generator or Unforced Capacity Deliverability Rights projects that are members of
completed Class Years.
142 NYISO, Services Tariff, § 23.4.5.7.3.5 (14.0.0).
143 Complaint, Exhibit B, §§ 23.4.5.7.8.1.1 (“A proposed new Generator or
[Unforced Capacity Deliverability Rights] project that is a member of a Class Year after
Class Year 2012 may request to be evaluated for a “Competitive Entry Exemption” for its
CRIS MW…”), 23.4.5.7.8.3.2 (“Generators or [Unforced Capacity Deliverability Rights]
projects in Class Year 2012 or prior Class Years shall not be eligible to request or receive
a Competitive Entry Exemption.”); Complaint Order, 150 FERC ¶ 61,139 at PP 14, 45,
53.
144 IPPNY May 4, 2015 Protest at 3; Entergy May 4, 2015 Protest at 4. 145 IPPNY May 4, 2015 Protest at 5.
Docket Nos. EL15-26-001 and ER15-1498-000- 34 -
3.Information and Revocation
a.Scope of Information NYISO May Request
i.Compliance Filing
79.NYISO proposes in section 23.4.5.7.9.2.2 under Certifications and
Acknowledgements to adopt the certification requirements proposed in NYISO’s answer
to the complaint, and as directed by the Complaint Order.146 The certification
requirements state that a duly authorized officer of the Generator or Unforced Capacity
Deliverability Rights project must also submit a certification acknowledging that parents
or affiliates will provide any information or cooperation requested by NYISO.147
ii.Protests and Comments
80.TDI states that NYISO has a legitimate need to gather information, but that the
information requested by NYISO should be limited to information relevant to the
project’s request for a competitive entry exemption.148 TDI further asserts that the
proposed certification provision is overbroad and would enable NYISO to request
information from parents and affiliates of a project regarding matters that the
Commission has determined are outside of the scope of, or are not germane to, a
competitive entry exemption.149 Therefore, TDI requests that the Commission clarify the
scope of information that NYISO may request from a project’s parents or affiliates.150
iii.Answer
81.NYISO states that the Complaint Order specifically identified certification
requirements that were just and reasonable and not unreasonably burdensome and
directed that these provisions be included in the compliance filing. NYISO further
explains that one of these requirements is reflected in proposed section 23.4.5.7.9.2.2,
which states that the parents or affiliates of a project shall provide any information or
146 NYISO April 13, 2015 Transmittal at 6 (citing Complaint Order, 150 FERC ¶ 61,139 at P 79).
147 Proposed Services Tariff § 23.4.5.7.9.2.2. 148 TDI May 4, 2015 Protest at 3.
149 Id.
150 Id. at 4.
Docket Nos. EL15-26-001 and ER15-1498-000- 35 -
cooperation requested by the NYISO.151 NYISO states that the Commission should not
accept TDI’s unsupported premise that NYISO would act contrary to its directives.
NYISO asserts that there is no reason to think that it would seek information that was not
relevant to a project or its qualification for the competitive entry exemption.152 NYISO
explains that adopting TDI’s proposed tariff revision could complicate and delay
NYISO’s ability to administer the competitive entry exemption. Further, NYISO asserts
that it could enhance an applicant’s parent’s or affiliate’s ability to resist sharing material
information relevant to NYISO’s analysis of the project and its eligibility for a
competitive entry exemption by claiming that it was not sufficiently connected with a
project’s exemption request.153
iv.Commission Determination
82.We find that NYISO has complied with the Complaint Order by including section
23.4.5.7.9.2.2, which states: “A duly authorized officer of the Generator or [Unforced
Capacity Deliverability Rights] project shall also submit a certification acknowledging
that parents or Affiliates shall provide any information or cooperation requested by the
ISO.”154 Although TDI argues that this provision is overbroad, we disagree. We are
persuaded by NYISO’s explanation that it would not have any incentive to seek
information that was not relevant to a project or its qualification for the competitive entry
exemption.155 We further agree with NYISO that accepting TDI’s proposed tariff
revision could complicate and delay NYISO’s ability to administer the competitive entry
exemption.
b.Certification Resubmission
i.Compliance Filing
83.NYISO proposes, in section 23.4.5.7.9.2.4 under certifications and
acknowledgements, to adopt the certification requirements it proposed in its answer to the
151 NYISO May 13, 2015 Answer at 2.
152 Id. at 3.
153 Id.
154 Complaint Order, 150 FERC ¶ 61,139 at P 53; Proposed Services Tariff § 23.4.5.7.9.2.2.
155 TDI May 4, 2015 Protest at 3; NYISO May 13, 2015 Answer at 2-3.
Docket Nos. EL15-26-001 and ER15-1498-000- 36 -
complaint in this proceeding. NYISO also proposes to adopt the requirements that were
set out in the complaint, as directed by the Complaint Order.156
ii.Protests and Comments
84.TDI asserts that the proposed certification does not contain a limitation on the
authority NYISO has to request updated information from a developer who has received a competitive entry exemption, nor does the tariff require NYISO to have a reason for
requiring the developer to resubmit its certification.157 TDI requests that the Commission clarify that NYISO should only request updated certifications if it reasonably believes
that there have been material changes to the facts and representations contained in the
previously submitted certification.158
iii.Answer
85.NYISO states that TDI acknowledges that NYISO will likely act reasonably when
it implements this provision. However, NYISO explains that, even without that
acknowledgement, there would be no reason, and it would be inappropriate, to restrict
NYISO’s ability to require resubmittals. NYISO contends that exemption applicants
should not be empowered to obstruct mitigation analyses by requiring NYISO to
demonstrate, potentially through litigation, that it reasonably believes that material
changes have occurred.159 Rather, NYISO explains that there is no reason to suspect that
its request for resubmittals would be vexatious or overly burdensome. Therefore, NYISO
states that the Commission should not require it to spend time and resources proving its
need for information. In addition, NYISO asserts that waiting until there is sufficient
evidence for a “reasonable belief” of a material change could delay NYISO’s action on
any activity that might cause a new entrant to be ineligible for a competitive entry
exemption or result in a determination being revoked. NYISO explains that such a delay
could affect the decisions of other new entrants in the Class Year and other market
participants.160
156 NYISO April 13, 2015 Transmittal at 6 (citing Complaint Order, 150 FERC ¶ 61,139 at P 79).
157 TDI May 4, 2014 Protest at 4.
158 Id.
159 NYISO May 13, 2015 Answer at 4. 160 Id. at 5.
Docket Nos. EL15-26-001 and ER15-1498-000- 37 -
iv.Commission Determination
86.We find that NYISO has complied with the Complaint Order by including section
23.4.5.7.9.2.4. As stated in the Complaint Order, because NYISO will be relying in large
part on the certifications to determine a new entrant’s eligibility for the competitive entry
exemption, a more stringent certification requirement is reasonable because it provides
for greater assurance that the applicant meets the criteria for obtaining a competitive
entry exemption.161 We agree with NYISO that there is no reason that its request for
resubmittals would be overly burdensome. In addition, we agree with NYISO that
adhering to TDI’s request could potentially adversely impact other market participants
unnecessarily.162 Therefore, we reject TDI’s request that the Commission clarify the
limits for which NYISO can require a resubmittal of a certification.163
c.Revocation Provisions
i.Compliance Filing
87.NYISO states that the Commission directed it to propose revocation provisions
that could be invoked against applicants that submit false, misleading, or inaccurate
information in connection with a request for a competitive entry exemption. Further,
NYISO states that the Commission directed it to propose procedures for responding to
such submissions that “achieve the same objective as those adopted” by PJM.164 NYISO
states that it reviewed PJM’s revocation provisions and used them to develop the tariff
provisions set out in proposed section 23.4.5.7.9.5. According to NYISO, the proposed
revocation procedures require NYISO, if it reasonably believes that it granted a request
for a competitive entry exemption based on false, misleading, or inaccurate information,
to notify the project developer that its exemption may be revoked and provide the project
developer an opportunity to explain any statement, information, or action.165
161 Complaint Order, 150 FERC ¶ 61,139 at P 79.
162 NYISO May 13, 2015 Answer at 4-5.
163 TDI May 4, 2015 Protest at 4.
164 NYISO April 13, 2015 Transmittal at 8.
165 Id.
Docket Nos. EL15-26-001 and ER15-1498-000- 38 -
ii.Protests and Comments
88.TDI claims that NYISO provides no qualifier or threshold for the phrase
“inaccurate information,” which creates the possibility that a developer could be subject to substantial penalties for inadvertently and unintentionally submitting inaccurate
information.166 Therefore, TDI asserts that NYISO should adopt a materiality standard that would require that only intentional and material misrepresentations would result in the revocation of a competitive entry exemption.167
iii.Answer
89.NYISO argues that language concerning “intent” should not be accepted because,
if an exemption is granted based on false premises, then the project was never truly
eligible for the exemption regardless of whether the information was submitted
intentionally. Further, NYISO explains that it does not seem plausible that a project
exercising due diligence would truly be unaware of information regarding non-qualifying contractual relationships that would make it ineligible for a competitive entry
exemption.168
iv.Commission Determination
90.We find that NYISO has complied with the requirement to implement a revocation
mechanism with similar features to those adopted in PJM.169 We agree with NYISO that
intent is irrelevant for purposes of determining if a competitive entry exemption should
be revoked. Even if a new entrant submitted the inaccurate information unintentionally,
the incentive to inappropriately suppress capacity market prices could nevertheless be
present. As for materiality, NYISO’s proposed revocation provision only permits
revocation of the competitive entry exemption from a new entrant where NYISO
“reasonably believes” that it granted the request “based on false, misleading, or
inaccurate information.”170 We believe that the requirement that NYISO must have
granted the request based on the false, misleading, or inaccurate information means that
166 TDI May 4, 2014 Protest at 5.
167 Id.
168 NYISO May 13, 2015 Answer at 5-6.
169 Complaint Order, 150 FERC ¶ 61,139 at P 91.
170 Proposed Services Tariff § 23.4.5.7.9.5.2.
Docket Nos. EL15-26-001 and ER15-1498-000- 39 -
the information must necessarily have been material. We therefore reject TDI’s request
to require NYISO to clarify that only intentional and material misrepresentations would
result in the revocation of a competitive entry exemption.
4.Other Issues
a.Unexecuted Agreements
i.Compliance Filing
91.NYISO states that the proposed tariff language addressing unexecuted agreements
follows the Commission’s directive in the Complaint Order to add an additional
certification requirement proposed by the MMU. The additional certification
requirement specifies that no unexecuted agreements with a non-qualifying entity, written or unwritten, exist that would support the development of the project.
ii.Protests and Comments
92.Entergy states that NYISO’s proposed tariff language intending to deny the
exemption to a resource with “an unexecuted agreement, written or unwritten, with a
Non-Qualifying Entry Sponsor that would support the development of the project” is a
good faith attempt to address the MMU’s proposal and the Commission’s directive to
expand the certification.171 However, Entergy contends that the language opens a
loophole for a developer to rely on unexecuted subsidy agreements involving indirect
parties and, thus, improperly escape mitigation by using an intermediary.172 Entergy
explains that, under a strict reading of the tariff as drafted, a Non-Qualifying Entry
Sponsor could enter into an unexecuted agreement with a third party to support the
development of a new project; such an arrangement would not disqualify the entrant for
the competitive entry exemption, thus permitting resources that are not truly competitive
to escape mitigation.173
93. Entergy contends that the solution to this loophole is to specify in the tariff that a
direct or indirect non-qualifying contractual relationship includes any unexecuted
agreement, written or unwritten, that would support the development of the project,
171 Entergy May 4, 2015 Protest at 3.
172 Id.
173 Id.
Docket Nos. EL15-26-001 and ER15-1498-000- 40 -
except those otherwise permitted in the tariff.174 Entergy explains that this modification would clarify that a developer cannot escape mitigation simply by having a Non-
Qualifying Entry Sponsor enter into an unexecuted agreement with a third party to
support the project.175
94. IPPNY states that NYISO has proposed subpart 8 of the certification form to
incorporate the proscription against unexecuted agreements in accordance with the
Complaint Order and the competitive entry exemption prohibits both direct and indirect
agreements with Non-Qualifying Entry Sponsors. IPPNY further explains that the same
structure is required for both executed and unexecuted agreements. Therefore, IPPNY
states that this subpart should be revised as follows: “To the best of my knowledge and
having conducted due diligence that is current as of the date of this Certification, (a) no
unexecuted, direct or indirect agreements, written or unwritten, with a Non-Qualifying
Entry Sponsor exist….”176
iii.Commission Determination
95.We accept NYISO’s proposed tariff language regarding unexecuted agreements.
We are not persuaded by either Entergy’s or IPPNY’s argument that the proposed tariff
language provides a loophole for resources to potentially escape mitigation.177 We note
that this certification subjects project developers to civil penalties under section 316A of
the FPA.178 We find that an applicant certifying that it has no unexecuted agreements,
combined with the existing requirement that NYISO refer information to the
Commission’s Office of Enforcement if an applicant provides false, misleading, or
inaccurate information, will incentivize applicants to avoid negotiating and executing
prohibited contracts.179 We also find, as in the Complaint Order, that NYISO’s and the
MMU’s commitment to continued oversight, review, and scrutiny of contracts entered
174 Id.
175 Id. at 3-4.
176 IPPNY May 4, 2015 Protest at 8-9.
177 Entergy May 4, 2015 Protest at 3-4; IPPNY May 4, 2015 Protest at 8-9.
178 Complaint Order, 150 FERC ¶ 61,139 at P 80; 16 U.S.C. § 825o-1 (2012). 179 Complaint Order, 150 FERC ¶ 61,139 at P 81.
Docket Nos. EL15-26-001 and ER15-1498-000- 41 -
into with a Non-Qualifying Entry Sponsor after the entrant begins operating will provide
sufficient deterrence.180
b.Out-of-State Entities
i.Compliance Filing
96.NYISO states that the Commission directed it to file section 23.4.5.7.9.1.1, which
describes the eligibility requirements, including the definition for Non-Qualifying Entry Sponsor, for the competitive entry exemption, unchanged from the provision proposed by the Complainants.181 NYISO defines Non-Qualifying Entry Sponsor as a Transmission Owner, a Public Power Entity, or any other entity with a Transmission District in the
New York Control Area (NYCA) or an agency or instrumentality of New York State or a political subdivision thereof.182
ii.Protests and Comments
97.Linden Cogen requests that the Commission direct NYISO to amend its tariff to
include out-of-state entities sponsoring sales into New York in the definition of Non-
Qualifying Entry Sponsors.183 Linden Cogen avers that the Commission inappropriately
narrowed the list of Non-Qualifying Entry Sponsors by excluding entities outside of New
York and limiting the certification to indirect, non-qualifying contractual relationships.184
Linden Cogen reiterates its comments in support of the requests for rehearing and the
requests that all forms of subsidy be included in the definition of Non-Qualifying Entry
Sponsors.185 Linden Cogen asks that the Commission direct NYISO to amend its
Compliance Filing to include out-of-state entities in the definition of Non-Qualifying
Entry Sponsor.186
180 Id.
181 NYISO April 13, 2015 Transmittal at 5.
182 Proposed Services Tariff § 23.4.5.7.9.1.1.
183 Linden Cogen May 4, 2015 Protest at 5.
184 Id. at 6.
185 Id.
186 Id. at 7.
Docket Nos. EL15-26-001 and ER15-1498-000- 42 -
iii.Commission Determination
98.Above we deny the requests for rehearing asking that the Commission include out-
of-state entities in the definition of Non-Qualifying Entry Sponsor187 and, therefore, will
not address protests on that issue here. We accept NYISO’s proposed section
23.4.5.7.9.1.1, which includes the definition of Non-Qualifying Entry Sponsor, as filed.
c.Entry Date
i.Compliance Filing
99.NYISO states that the Commission directed it to file section 23.4.5.7.9.1.1, which
describes the eligibility requirements for the competitive entry exemption, including the
definition for Entry Date, unchanged from the provisions proposed by the
Complainants.188 NYISO defines Entry Date as the time before the generator first
produces or the Unforced Capacity Deliverability Rights project first transmits energy.189
ii.Protests and Comments
100. Linden Cogen contends that the compliance filing fails to provide for adequate
scrutiny of non-qualifying contractual relationships following each competitive entry
exemption project’s entry into service because the language only requires the applicant to confirm that the relationships do not exist “before the Generator first produces or the [Unforced Capacity Deliverability Rights] project first transmits energy” and “as of the date of Certification.”190 Linden Cogen argues that these requirements would allow
competitive entry exemption applicants to evade scrutiny upon and following entering service and would not satisfy the Complaint Order’s requirements.191
101. Linden Cogen states that both sections pertaining to the temporal restriction on the
new entrant’s obligation to disclose non-qualifying contractual relationships appear to
address a situation in which the applicant notifies NYISO of a non-qualifying contractual
relationship before the competitive entry exemption is granted and before the applicant
187 See supra section III.B.2.
188 NYISO April 13, 2015 Transmittal at 5.
189 Proposed Services Tariff § 23.4.5.7.9.1.1.
190 Linden Cogen May 4, 2015 Protest at 3.
191 Id.
Docket Nos. EL15-26-001 and ER15-1498-000- 43 -
begins commercial operation.192 Linden Cogen explains that the compliance filing does not effectuate a requirement that competitive entry exemption-exempt entities provide timely information to NYISO if the entity receives subsidies through contracts that are contingent on the project’s completion after the entrant begins operating.193 Linden
Cogen explains that there does not appear to be any requirement that the new entrant notify NYISO of, or that NYISO scrutinize, contracts entered into with a Non-Qualifying Entry Sponsor after the entrant begins operating.194
102. Linden Cogen acknowledges that NYISO’s proposed revocation procedures allow
NYISO to revoke the competitive entry exemption when NYISO reasonably believes that
a competitive entry exemption was granted based on false, misleading, or inaccurate
information, and that the competitive entry exemption may be revoked even after the
applicant’s entry date.195 However, Linden Cogen requests that the Commission direct
NYISO to require entities that obtain a competitive entry exemption to notify NYISO if
information in a certification ceases to be true or if it later enters into a non-qualifying
contractual relationship or an unexecuted agreement to support the project’s
development, even after the Entry Date.196 Linden Cogen states that this will ensure that
NYISO has all available information to reasonably determine whether a competitive
entry exemption was granted based on information that was or has become false,
misleading, or inaccurate, and would otherwise properly place the burden on the project
developer, rather than on NYISO, to ensure no contracts are executed with Non-
Qualifying Entry Sponsors after the certification is completed.197
192 Id. at 4.
193 Id.
194 Id. at 5.
195 Id.
196 Id.
197 Id.
Docket Nos. EL15-26-001 and ER15-1498-000- 44 -
iii.Commission Determination
103. We find that NYISO has complied with the Complaint Order by including section
23.4.5.7.9.2.1.1, which includes the definition of Entry Date.198 As stated in the
Complaint Order, the Commission found NYISO’s proposed certification provisions, as
further modified to reflect the suggestions by the MMU, to be just and reasonable.199
Embedded in NYISO’s proposed certification was the definition of Entry Date, which
NYISO defined, and the Commission accepted, for purposes of a competitive entry
exemption in section 23.4.5.7.9.1 of the Services Tariff as the time at which “the
Generator first produces or the [Unforced Capacity Deliverability Rights] project first
transmits energy.”200 In addition, another element of NYISO’s proposed certification
provisions was NYISO’s interpretation of the reference to the time of a project’s
“completion” as a reference to non-qualifying contracts that are contingent on a project
reaching the Entry Date.201
104. We reject Linden Cogen’s request that the Commission direct NYISO to require
entities that obtain a competitive entry exemption to notify NYISO if information in a
certification ceases to be true or if it later enters into a non-qualifying contractual
relationship or an unexecuted agreement to support the project’s development, even after
the Entry Date.202 As discussed above, we find that NYISO’s and the MMU’s continued
monitoring provides sufficient protection and that NYISO’s proposed tariff provisions, as
modified herein, are just and reasonable without this additional requirement.
d.Limited Modifications
i.Compliance Filing
105. NYISO proposes revisions to section 23.4.5.7, which it had proposed in its answer
to the complaint. NYISO explains that these revisions were developed in the stakeholder
process and were presented to the Business Issues Committee and Management
Committee in May 2014. NYISO asserts that, like the other revisions described in the
198 Complaint Order, 150 FERC ¶ 61,139 at P 53.
199 Id. P 79.
200 Id. P 74 n.138. 201 Id. P 74.
202 Linden Cogen May 4, 2015 Protest at 5.
Docket Nos. EL15-26-001 and ER15-1498-000- 45 -
Complaint Order, the revisions to section 23.4.5.7 are necessary to make the competitive entry exemption clearly operative and implementable.203
ii.Protests and Comments
106. IPPNY states that NYISO proposed the following revision: “Offer Floors applied
pursuant to Section 23.4.5.7.9.5.2 shall apply to offers for Unforced Capacity from an
Installed Capacity Supplier starting with all ICAP auction activity subsequent to the date
of the revocation.” However, IPPNY argues this language may be read to permit forward
sales for future months made prior to revocation to stand, which is contrary to the
findings of the Complaint Order. IPPNY proposes the following limited modification:
“Subsequent to the date of the revocation, Unforced Capacity from an Installed Capacity
Supplier shall participate subject to Offer Floor applied pursuant to Section
23.4.5.7.9.5.2.”204
iii.Answer
107. NYISO asserts that IPPNY’s proposed language is not in fact required to reflect the Commission’s determinations in the Complaint Order. NYISO explains that its proposed revision to section 23.4.5.7 does not create an exception that would allow a project whose competitive entry exemption was revoked pursuant to section
23.4.5.7.9.5.2 to sell its capacity pursuant to a transaction outside of the Spot Market.
Therefore, NYISO concludes that the compliance filing’s proposed language complies
with the Complaint Order and the Commission does not need to adopt IPPNY’s proposed
modification.
iv.Commission Determination
108. We find that NYISO’s proposed revision to section 23.4.5.7 does not create an
exception that would allow a project whose competitive entry exemption was revoked
pursuant to section 23.4.5.7.9.5.2 to sell its capacity pursuant to a transaction outside of
the Spot Market.205 Rather, we agree with NYISO that the proposed revision to section
23.4.5.7 is consistent with the direction provided by the Commission in the Complaint
Order.206 We therefore disagree with IPPNY that the section may be read to permit
203 NYISO April 13, 2015 Transmittal at 10.
204 IPPNY May 4, 2015 Protest at 8.
205 Id.
206 NYISO May 13, 2015 Answer at 7-8.
Docket Nos. EL15-26-001 and ER15-1498-000- 46 -
forward sales for future months made prior to revocation to stand. Accordingly, we reject IPPNY’s proposed revision to NYISO’s proposal and accept NYISO’s proposed revision to section 23.4.5.7.
The Commission orders:
(A) The requests for clarification are hereby granted in part and denied in part,
and the requests for rehearing are hereby denied, as discussed in the body of this order.
(B) NYISO’s compliance filing is hereby conditionally accepted, effective
February 26, 2015, as requested, subject to further a compliance filing, as discussed in the body of this order.
(C) NYISO is hereby directed to submit a further compliance filing, within 60 days of the date of this order, as discussed in the body of this order.
By the Commission.
( S E A L )
Nathaniel J. Davis, Sr.,
Deputy Secretary.
