148 FERC ¶ 61,044
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Cheryl A. LaFleur, Acting Chairman;
Philip D. Moeller, John R. Norris,
and Tony Clark.
New York Independent System Operator, Inc.Docket Nos. ER13-102-001
ER13-102-002
ER13-102-004
ORDER ON REHEARING AND COMPLIANCE
(Issued July 17, 2014)
Paragraph Numbers
I. Background...................................................4.
II. Request(s) for Rehearing or Clarification - Docket No. ER13-102-001............7.
III. Compliance Filing - Docket Nos. ER13-102-002 and ER13-102-004.............8.
IV. Discussion...................................................13.
A. Procedural Matters............................................13.
B. Substantive Matters............................................17.
1. Overview of NYISO Transmission Planning Process....................18.
2. Regional Transmission Planning Requirements........................25.
a. Transmission Planning Region.................................26.
i. First Compliance Order....................................28.
ii. Summary of Compliance Filing...............................31.
iii. Protests/Comments......................................34.
iv. Commission Determination.................................36.
b. Requirement to Plan on a Regional Basis to Identify More Efficient or Cost-
Effective Transmission Solutions..................................39.
i. Selecting Regional Transmission Projects in the Regional Transmission
Plan for Purposes of Cost Allocation.............................42.
(a) First Compliance Order..................................42.
(b) Summary of Compliance Filing............................45.
(c) Protests/Comments....................................54.
(d) Answer............................................62.
(e) Commission Determination...............................68.
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ii. Affirmative Obligation to Plan on a Regional Basis..................79.
(a) First Compliance Order..................................79.
(b) Summary of Compliance Filing............................81.
(c) Protests/Comments....................................83.
(d) Answer............................................85.
(e) Commission Determination...............................86.
c. Consideration of Transmission Needs Driven by Public Policy Requirements..90.
i. Incorporating Consideration of Transmission Needs Driven by Public
Policy Requirements in the Regional Transmission Planning Process........93.
(a) First Compliance Order..................................93.
(b) Summary of Compliance Filing............................98.
(c) Protests/Comments....................................109.
(d) Answer............................................114.
(e) Commission Determination...............................121.
ii. Incorporating Consideration of Transmission Needs Driven by Public
Policy Requirements in the Local Transmission Planning Process..........128.
(a) First Compliance Order..................................128.
(b) Summary of Compliance Filing............................130.
(c) Protests/Comments....................................133.
(d) Commission Determination...............................134.
3. Nonincumbent Transmission Developer Reforms.......................136.
a. Federal Rights of First Refusal.................................137.
i. First Compliance Order....................................138.
ii. Summary of Compliance Filing...............................141.
iii. Protests/Comments......................................145.
iv. Answer..............................................148.
v. Commission Determination.................................150.
b. Qualification Criteria.......................................154.
i. First Compliance Order....................................156.
ii. Requests for Rehearing or Clarification.........................162.
(a) Summary of Requests for Rehearing or Clarification..............162.
(b) Commission Determination...............................163.
iii. Compliance...........................................164.
(a) Summary of Compliance Filings............................164.
(b) Commission Determination...............................172.
c. Information Requirements....................................180.
i. First Compliance Order....................................181.
ii. Summary of Compliance Filings..............................183.
iii. Commission Determination.................................192.
d. Evaluation Process for Transmission Proposals for Selection in the Regional
Transmission Plan for Purposes of Cost Allocation......................198.
i. First Compliance Order....................................199.
ii. Requests for Rehearing or Clarification.........................202.
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(a) Summary of Requests for Rehearing or Clarification..............202.
(b) Commission Determination...............................205.
iii. Compliance...........................................210.
(a) Summary of Compliance Filings............................210.
(1) Reliability Evaluation Process...........................210.
(2) Public Policy Evaluation Process.........................217.
(b) Protests/Comments....................................226.
(c) Answers............................................234.
(d) Commission Determination...............................245.
e. Reevaluation Process for Transmission Proposals for Selection in the
Regional Transmission Plan for Purposes of Cost Allocation...............258.
i. First Compliance Order....................................259.
ii. Summary of Compliance Filings..............................261.
iii. Commission Determination.................................263.
f. Cost Allocation for Transmission Facilities Selected in the Regional
Transmission Plan for Purposes of Cost Allocation......................264.
i. First Compliance Order....................................265.
ii. Requests for Rehearing or Clarification.........................268.
iii. Compliance Filing.......................................270.
(a) Eligibility to Use the Regional Cost Allocation for Reliability Projects..271.
(b) Eligibility for Cost Recovery for Public Policy Projects............275.
iv. Protests/Comments......................................278.
v. Answer...............................................279.
vi. Commission Determination.................................281.
4. Cost Allocation.............................................284.
a. Cost Allocation for Reliability and Economic Projects..................291.
i. First Compliance Order....................................291.
ii. Summary of Compliance Filing...............................293.
iii. Commission Determination.................................296.
b. Cost Allocation for Public Policy Transmission Projects................299.
i. First Compliance Order....................................299.
ii. Summary of Compliance Filing...............................307.
iii. Protests/Comments......................................312.
iv. Answer..............................................325.
v. Commission Determination.................................330.
Docket No. ER13-102-001, et al.- 4 -
1. On April 18, 2013, the Commission issued an order accepting, subject to
modifications,1 the New York Independent System Operator, Inc.’s (NYISO) and the New York Transmission Owners’2 (together, Filing Parties) compliance filing made to comply with the local and regional transmission planning and cost allocation
requirements of Order No. 1000.3
2. On May 17, 2013, Independent Power Producers of New York, Inc. (IPPNY), Multiple Intervenors, and Pace Energy and Climate Center (PACE) jointly submitted a timely request for clarification or rehearing of the First Compliance Order.4 LS Power Transmission, LLC and LSP Transmission Holdings, LLC (collectively LS Power) also submitted a timely request for clarification of the First Compliance Order.5
3. On October 15, 2013, the Filing Parties jointly submitted, pursuant to section 206
of the Federal Power Act (FPA),6 revisions to Attachment Y of the NYISO Open Access
1 N.Y. Indep. Sys. Operator, Inc., 143 FERC ¶ 61,059 (2013) (First Compliance
Order).
2 The New York Transmission Owners comprise Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., Long Island Lighting Company d/b/a the Long Island Power Authority (the Long Island Power Authority),
New York Power Authority, New York State Electric & Gas Corp., Niagara Mohawk
Power Corp. d/b/a National Grid, Rochester Gas & Electric Corp., and Orange &
Rockland Utilities, Inc. The Filing Parties note that the Long Island Power Authority and New York Power Authority, as transmission owners not subject to the Commission’s
jurisdiction under section 205 of the Federal Power Act (FPA), have voluntarily
participated in the development of the Filing Parties’ filing.
3 Transmission Planning and Cost Allocation by Transmission Owning and
Operating Public Utilities, Order No. 1000, FERC Stats. & Regs. ¶ 31,323 (2011), order on reh’g, Order No. 1000-A, 139 FERC ¶ 61,132, order on reh’g and clarification, Order No. 1000-B, 141 FERC ¶ 61,044 (2012).
4 We note that, while Pace joined in IPPNY’s and Multiple Intervenors’ request for clarification and rehearing, Pace initially intervened and participated in the
proceeding jointly with Sustainable FERC Project and Natural Resources Defense Council as Public Interest Organizations.
5 LS Power Transmission, LLC and LSP Transmission Holdings, LLC initially
intervened and participated with Pattern Transmission LP; however, Pattern Transmission LP did not seek rehearing.
6 16 U.S.C. § 824e (2012).
Docket No. ER13-102-001, et al.- 5 -
Transmission Tariff (OATT) to comply with the First Compliance Order. For the reasons discussed below, we grant in part and deny in part rehearing and accept the Filing Parties’ proposed OATT revisions, subject to conditions, and direct the Filing Parties to submit further revisions to the NYISO OATT in a further compliance filing due within 60 days of the date of issuance of this order.7
I.Background
4.In Order No. 1000, the Commission adopted a package of reforms addressing
transmission planning and cost allocation that, taken together, are designed to ensure that Commission-jurisdictional services are provided at just and reasonable rates and on a
basis that is just and reasonable and not unduly discriminatory or preferential. In
particular, regarding regional transmission planning, Order No. 1000 amended the
transmission planning requirements of Order No. 8908 to require that each public utility transmission provider: (1) participate in a regional transmission planning process that
produces a regional transmission plan; (2) amend its OATT to describe procedures for the consideration of transmission needs driven by public policy requirements established by local, state, or federal laws or regulations in the local and regional transmission planning processes; and (3) remove federal rights of first refusal from Commission-jurisdictional tariffs and agreements for certain new transmission facilities.
5. The regional cost allocation reforms in Order No. 1000 also required each public utility transmission provider to set forth in its OATT a method, or set of methods, for allocating the costs of new regional transmission facilities selected in a regional
transmission plan for purposes of cost allocation. Order No. 1000 also required that each cost allocation method adhere to six cost allocation principles.
6. On October 11, 2012, the Filing Parties filed revisions to Attachment Y of the
NYISO OATT to comply with the local and regional transmission planning and cost
7 We note that the same or similar issues are addressed in the following orders that
have been issued: Cal. Indep. Sys. Operator Corp., 146 FERC ¶ 61,198 (2014);
PacifiCorp, 147 FERC ¶ 61,057 (2014); PJM Interconnection, L.L.C., 147 FERC
¶ 61,128 (2014); Midwest Indep. Transmission Sys. Operator, Inc., 147 FERC ¶ 61,127
(2014); S.C. Elec. & Gas Co., 147 FERC ¶ 61,126 (2014); Louisville Gas & Elec. Co.,
147 FERC ¶ 61,241 (2014); and Maine Pub. Serv. Co., 147 FERC ¶ 61,129 (2014).
8 Preventing Undue Discrimination and Preference in Transmission Service,
Order No. 890, FERC Stats. & Regs. ¶ 31,241, order on reh’g, Order No. 890-A, FERC Stats. & Regs. ¶ 31,261 (2007), order on reh’g, Order No. 890-B, 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890-C, 126 FERC ¶ 61,228, order on clarification, Order No. 890-D, 129 FERC ¶ 61,126 (2009).
Docket No. ER13-102-001, et al.- 6 -
allocation requirements of Order No. 1000.9 On April 18, 2013 the Commission
accepted the Filing Parties’ compliance filing, subject to further modifications.10
II.Request(s) for Rehearing or Clarification - Docket No. ER13-102-001
7.IPPNY, Multiple Intervenors, and PACE requested clarification or rehearing of the
provisions of the First Compliance Order regarding NYISO’s consideration of non-
transmission alternatives proposed as solutions both to reliability transmission needs and
transmission needs driven by public policy requirements. LS Power Transmission, LLC
requested clarification of the Commission’s findings on NYISO’s evaluation of whether a
transmission developer is eligible to develop a project as a solution to an identified
transmission need, the requirement that a transmission developer with an existing right-
of-way must indicate whether it would incur any incremental costs in connection with
placing new and additional facilities on such rights-of-way, and issues regarding cost
recovery. The Filing Parties submitted an answer to the above requests for rehearing and
clarification.
III.Compliance Filing - Docket Nos. ER13-102-002 and ER13-102-004
8.In response to the First Compliance Order, the Filing Parties have submitted
further revisions to Attachment Y of the NYISO OATT, as well as conforming revisions to NYISO’s Market Administration and Control Area Services Tariff (Services Tariff), to comply with the Commission’s requirements in the First Compliance Order, including
modifications regarding the regional transmission planning process requirements, the
requirement to consider transmission needs driven by public policy requirements, the
nonincumbent transmission developer reforms, and the regional cost allocation reforms.
The Filing Parties indicate that NYISO held twelve joint stakeholder meetings of the
Interregional Planning Task Force and the Electric System Planning Working Group.
They explain that interested parties were encouraged to submit comments for
consideration throughout the process and numerous parties provided input into the review and development of the compliance proposal.11 The Filing Parties request an effective
date of January 1, 2014 for the proposed revisions.
9 NYISO, Compliance Filing, Docket No. ER13-102-000, (filed October 11, 2012) (October 11, 2012 Compliance Filing).
10 First Compliance Order, 143 FERC ¶ 61,059.
11 NYISO, Compliance Filing, Docket No. ER13-102-002, Transmittal at 1-2 (filed Oct.15, 2013) (October 15, 2013 Compliance Filing).
Docket No. ER13-102-001, et al.- 7 -
9. On July 2, 2014, in Docket Number ER13-102-003, NYISO requested to defer the proposed effective date of the proposed revisions to its reliability and economic
transmission planning processes to January 1, 2016.12 In addition, NYISO requested that the OATT revisions for the public policy planning process become effective on the date the Commission issues its order on the changes proposed in the October 15, 2013
Compliance Filing. On July 3, 2014, NYISO submitted a supplemental ministerial filing to provide redline versions of the OATT and Services Tariff sections.13
10. Notice of Filing Parties’ compliance filings was published in the Federal Register,
78 Fed. Reg. 63,175 (2013), with interventions and protests due on or before
November 14, 2013. Notice of NYISO’s request to defer the effective date proposed in
the October 15, 2013 Compliance Filing was published in the Federal Register, 79 Fed.
Reg. 41,268 (2013), with interventions and protests due on or before July 14, 2014.
11. LS Power and NextEra Energy Resources, LLC filed protests to the October 15,
2013 Compliance Filing regarding the regional transmission planning requirements and the evaluation process for transmission proposals for selection in the regional
transmission plan for purposes of cost allocation. Multiple Intervenors and IPPNY,
jointly, and Entergy Nuclear Power Marketing, LLC, filed protests to the October 15,
2013 Compliance Filing regarding the regional transmission planning requirements and the regional public policy cost allocation method. The New York State Public Service
Commission and the New York Transmission Owners filed protests regarding the
proposed public policy transmission planning process. The Long Island Power Authority proposed amendments to NYISO’s OATT regarding the Long Island Power Authority’s jurisdictional responsibilities on Long Island. The Filing Parties and NextEra Energy
Resources filed answers to various comments and protests.
12. LS Power and IPPNY filed protests to NYISO’s July 3 Filing regarding NYISO’s request to defer the proposed effective date of the proposed changes in the October 15, 2013 Compliance Filing.
12 NYISO, Request to Defer Effective Date of Compliance Tariff Revisions, Docket No. ER13-102-003 (July 2, 2014).
13 NYISO, Supplement to Request to Defer Effective Date of Compliance Tariff Revisions, Docket No. ER13-102-004 (July 3, 2014) (July 3 Filing).
Docket No. ER13-102-001, et al.- 8 -
IV. Discussion
A.Procedural Matters
13.Pursuant to Rule 214 of the Commission’s Rules of Practice and Procedure,
18 C.F.R. § 385.214 (2013), the notices of intervention and timely, unopposed motions to intervene serve to make the entities that filed them parties to this proceeding.
14. Rule 213(a)(2) of the Commission’s Rules of Practice and Procedure, 18 C.F.R.
§ 385.213(a)(2) (2013), prohibits an answer to a protest or an answer unless otherwise
ordered by the decisional authority. We accept the answers filed in this proceeding
because they have provided information that assisted us in our decision-making process.
15. Rule 713(d) of the Commission's Rules of Practice and Procedure, 18 C.F.R. § 385.713(d) (2013), prohibits an answer to a request for rehearing. Accordingly, NYISO’s answer to the requests for rehearing is hereby rejected.
16. We note the Filing Parties’ compliance filing includes tariff provisions submitted on July 10, 2013 in Docket Nos. ER13-1957, ER13-1960, ER13-1946, ER13-1926,
ER13-1942, and ER13-1947 to comply with the interregional transmission coordination and cost allocation requirements of Order No. 1000. The tariff records the Filing Parties submitted in their interregional compliance filings are pending before the Commission and will be addressed in a separate order. Therefore, any acceptance of the tariff records in the instant filings that include tariff provisions submitted to comply with the
interregional transmission coordination and cost allocation requirements of Order
No. 1000 is made subject to the outcome of the Commission order addressing the Filing Parties’ interregional compliance filing in the relevant dockets.
B.Substantive Matters
17.We deny in part and grant in part the requests for rehearing or clarification, as
discussed more fully below. We also find that the Filing Parties’ compliance filing
partially complies with the directives in the First Compliance Order. Accordingly, we accept the Filing Parties’ compliance filing to be effective January 1, 2014, subject to a further compliance filing, as discussed below. We direct the Filing Parties to submit the compliance filing within 60 days of the date of issuance of this order.
1.Overview of NYISO Transmission Planning Process
18.NYISO’s regional transmission planning process, the Comprehensive System
Planning Process, consists of four components: (1) a local transmission planning
process; (2) a reliability transmission planning process; (3) an economic transmission
Docket No. ER13-102-001, et al.- 9 -
planning process; and (4) a public policy transmission planning process14 The
Comprehensive System Planning Process, a two-year planning process,15 begins with the
local transmission planning process, during which each Transmission Owner16 with a
transmission district17 in New York develops a local transmission plan.18 The reliability,
economic, and public policy transmission planning processes stem from the transmission
needs and solutions identified and evaluated during the local transmission planning
process.19
14 See First Compliance Order, 143 FERC ¶ 61,059 at PP 31-32 & n.41 (citing October 11, 2012 Compliance Filing at 7-10).
15 October 15, 2013 Compliance Filing at 18.
16 Transmission Owner is defined in the NYISO OATT as “the public utility or
authority (or its designated agent) that owns facilities used for the transmission of Energy
in interstate commerce and provides Transmission Service under the Tariff.” NYISO
OATT, Definitions-T § 1.2. Transmission Owner is defined in the NYISO Agreement as
“[a]n entity that owns, controls and operates facilities in New York State used for the
transmission of Energy in interstate commerce. A Transmission Owner must own,
individually or jointly, at least 100 circuit miles of 115 kV or above in New York State
and has become a signatory to the ISO/TO Agreement.” NYISO Agreement, Art. 1
(Definitions).
17 Transmission district refers to the “geographic area served by the [i]nvestor[o]wned Transmission Owners and the Long Island Power Authority, as well as the
customers directly interconnected with the transmission facilities of the Power Authority of the State of New York.” NYISO OATT, Attachment Y, § 1.20.
18 October 11, 2012 Compliance Filing at 10-13; see also First Compliance Order,
143 FERC ¶ 61,059 at PP 31-32; NYISO OATT, Attachment Y, § 31.2.1. The local
transmission plan is defined as the “[l]ocal Transmission Owner [p]lan, developed by
each Transmission Owner, which describes its respective plans that may be under
consideration or finalized for its own [t]ransmission [d]istrict.” NYISO OATT,
Attachment Y (New York ISO Comprehensive System Planning Procedures), § 31.1.1
(Definitions).
19 October 15, 2013 Compliance Filing at 59.
Docket No. ER13-102-001, et al.- 10 -
19. To develop local transmission plans, each Transmission Owner that has a
transmission district conducts an individual local transmission planning process.20 Each
Transmission Owner must post the planning criteria and assumptions used in its local
transmission planning process and allow market participants and other parties to review
and comment on the criteria, assumptions, data, and models.21 Additionally, each
Transmission Owner must consider the comments and explain any modifications it makes
to its local transmission plan in response to such comments. NYISO reviews each
Transmission Owner’s local transmission plan to identify any alternative solutions
proposed to meet transmission needs driven by reliability needs, congestion, or public
policy requirements of the New York Control Area region more efficiently or cost-
effectively than solutions proposed in the Transmission Owner’s local transmission
plan.22
20. NYISO then utilizes the local transmission plans in the regional reliability
transmission planning process as inputs into the base case of the Reliability Needs
Assessment - the process by which NYISO, in consultation with all interested parties,
identifies reliability transmission needs over a ten year horizon.23 NYISO solicits and
20 NYISO OATT, Attachment Y, § 31.2.1; see also First Compliance Order,
143 FERC ¶ 61,059 at P 46 (referencing the Filing Parties’ October 11, 2012 Compliance Filing at 11-12).
21 October 11, 2012 Compliance Filing at 11-12 (citing NYISO OATT,
Attachment Y, § 31.2.1.1.1); see also First Compliance Order, 143 FERC ¶ 61,059 at
P 46.
22 NYISO OATT, Attachment Y, § 31.2.1.1.3 (3.0.0).
23 October 11, 2012 Compliance Filing at 13; see NYISO OATT, Attachment Y,
§ 31.2.3 (3.0.0) (providing that the Reliability Needs Assessment is developed in
consultation with all interested parties, reviewed by NYISO’s stakeholder committees
and the Market Monitoring Unit, and approved by the NYISO Board of Directors).
NYISO’s Reliability Needs Assessment uses scenario analyses, which take into account
load growth, energy efficiency, retirements, and environmental regulations, to identify
violations, and potential violations, of reliability criteria developed by the North
American Electric Reliability Corporation, Northeast Power Coordinating Council, and
the New York State Reliability Council. See NYISO, Manual 26: Comprehensive
Reliability Planning Process, 4.2 (Develop Scenarios) at 4-5, 4-6 (1.0) (Nov. 20, 2007)
(Comprehensive Reliability Planning Process Manual), available at
http://www.nyiso.com/public/webdocs/markets_operations/documents/Manuals_and_Gui
des/Manuals/Planning/CRPPManual120707.pdf.
Docket No. ER13-102-001, et al.- 11 -
evaluates solutions proposed to address the Reliability Needs24 identified in the
Reliability Needs Assessment and reports the results of its analyses in the Comprehensive
Reliability Plan.25 For each identified Reliability Need, NYISO solicits: (1) a
regulated26 backstop solution (i.e., a solution that the Responsible Transmission Owner27
proposes for selection in the regional transmission plan for purposes of cost allocation);
(2) alternative regulated solutions (i.e., solutions a nonincumbent Transmission Owner or
Other Developer28 proposes for selection in the regional transmission plan for purposes
of cost allocation); and (3) market-based solutions (i.e., solutions a Transmission Owner
or Other Developer proposes but not for selection in the regional transmission plan for
purposes of cost allocation).29 NYISO then evaluates the proposed solutions with a
24 A Reliability Need is defined in the NYISO OATT as “a condition identified by
[NYISO] [during the Reliability Needs Assessment] as a violation or potential violation
of one or more Reliability Criteria.” NYISO OATT, Attachment Y, § 31.1.1
(Definitions).
25 See First Compliance Order, 143 FERC ¶ 61,059 at P 33 (citing October 11, 2013 Compliance Filing at 12).
26 The term “regulated” refers to a transmission solution for which the proponent
seeks to obtain regional cost allocation. See First Compliance Order, 143 FERC ¶ 61,059
at P 32 & n.45; October 15, 2013 Compliance Filing at ii n.8 (explaining that a regulated
solution refers to a transmission solution for which the developer is seeking to obtain
regional cost allocation through the NYISO OATT or a non-transmission solution for
which the developer is seeking to obtain regional cost allocation through the appropriate
state agency).
27 Responsible Transmission Owner is defined as “[t]he Transmission Owner or
Transmission Owners designated by [NYISO], pursuant to section 31.2.4.2, to prepare a
proposal for a regulated backstop solution to a Reliability Need or to proceed with a
regulated solution to a Reliability Need. The Responsible Transmission Owner will
normally be the Transmission Owner in whose Transmission District [NYISO] identifies
a Reliability Need.” NYISO OATT, Attachment Y, § 31.1.1 (Definitions).
28 Other Developers are defined in NYISO’s OATT as “[p]arties or entities
sponsoring or proposing to sponsor regulated economic projects, transmission solutions
driven by [p]ublic [p]olicy [r]equirements, or regulated solutions to Reliability Needs
who are not Transmission Owners. NYISO OATT, Attachment Y, § 31.1.1 (Definitions).
29 NYISO OATT, Attachment Y, § 31.2.4.3 (providing that NYISO shall “request
market based responses from the market place”). According to NYISO’s Comprehensive
Reliability Planning Process Manual, “market-based project developers obtain revenues
(continued…)
Docket No. ER13-102-001, et al.- 12 -
preference for market-based solutions to remedy reliability transmission needs.30 If
NYISO determines that neither market-based nor regulated proposals can satisfy the
reliability needs by the need date, NYISO will decide whether a Gap Solution31 is
necessary and will also request the Responsible Transmission Owner to seek a Gap
Solution, which may include generation, transmission, or demand side resources.32 The results of NYISO’s evaluation of proposed solutions are incorporated into the
Comprehensive Reliability Plan, which, like the Reliability Needs Assessment, is subject to stakeholder and Market Monitoring Unit review and comment as well as approval by the NYISO Board of Directors (NYISO Board).33
21. Following the reliability transmission planning process, NYISO conducts the
economic and public policy transmission planning processes.34 NYISO’s economic
transmission planning process is a two phase process through which NYISO identifies
factors that may produce or increase congestion and evaluates projects proposed to
reduce congestion.35 Specifically, in Phase I, NYISO develops the Congestion Analysis
and Resource Integration Study and prepares, with review and comment by interested
parties, a draft report that discusses NYISO’s assumptions and inputs, and the results of
through the NYISO’s energy and capacity markets, ancillary services sales, and bilateral contracting arrangements.” See NYISO, Comprehensive Reliability Planning Process
Manual at 6-2.
30 See NYISO OATT, Attachment Y, § 31.2.7 (providing that “if [NYISO]
determines that a market-based solution will not be available in time to meet a Reliability Need, and finds that it is necessary to take action to ensure reliability, it will state in the [Comprehensive Reliability Plan] that implementation of a regulated solution (regulated backstop or alternative regulated solution) is necessary”).
31 A Gap Solution is defined as “[a] solution to a Reliability Need that is designed to be temporary and to strive to be compatible with permanent market-based proposals. A permanent regulated solution, if appropriate, may proceed in parallel with a Gap
Solution.” NYISO OATT, Attachment Y, § 31.1.1 (Definitions).
32 Id. § 31.2.10.
33 First Compliance Order, 143 FERC ¶ 61,059 at P 37 & n.61 (citing NYISO OATT, Attachment Y, § 31.2.6).
34 Id. PP 38-39, 92 n.174.
35 October 11, 2012 Compliance Filing at 16-17, 41-44.
Docket No. ER13-102-001, et al.- 13 -
the analysis.36 In Phase II, NYISO evaluates specific projects, including market-based or regulated solutions proposed by New York Transmission Owners and Other
Developers.37
22. In its review of project proposals, NYISO completes a benefit-cost analysis for all types of solutions in coordination with stakeholders and uses a metric that evaluates the
cost of the project compared to the total New York Control Area-wide production cost
reduction that it would provide.38 Proposed transmission solutions are eligible to be
included in the regional transmission plan for purposes of cost allocation if the proposed project provides benefits in excess of its costs over the ten years from the expected date
of service, costs at least $25 million, and receives a positive vote from at least 80 percent of the designated beneficiaries determined on the basis of savings in zonal load payments or location-based marginal pricing.39
23. NYISO’s public policy transmission planning process includes the identification
of transmission needs driven by public policy requirements and the evaluation of
transmission solutions proposed to address those transmission needs driven by public
policy requirements identified for evaluation. NYISO provides a 60-day period for
stakeholders and other interested parties to submit, or NYISO on its own initiative to
identify, proposed transmission needs that are being driven by public policy
requirements.40 At the conclusion of the 60-day period, NYISO posts all submittals on
its website and submits them to the New York State Department of Public Service and
the New York Public Service Commission for consideration. With input from interested
parties and NYISO, the New York State Department of Public Service reviews the
36 First Compliance Order, 143 FERC ¶ 61,059 at P 39; NYISO OATT,
Attachment Y, § 31.3.1 (Congestion Assessment and Resource Integration Study for
Economic Planning); NYISO, NYISO Tariffs, MST, Attachment O (Market Monitoring Unit), § 30.4.6.8.5 (7.0.0) (providing that the draft report is reviewed in the NYISO
stakeholder process, evaluated by the Market Monitoring Unit, and approved by the
NYISO Board).
37 First Compliance Order, 143 FERC ¶ 61,059 at PP 38-41; NYISO OATT, Attachment Y, § 31.3.2 ([Congestion Assessment and Resource Integration Study] Review Process and Actual Project Proposals) (2.0.0).
38 NYISO OATT, Attachment Y, §§ 31.3.2.4, 31.5.4.3 (Project Eligibility for Cost Allocation).
39 Id. §§ 31.5.4.3, 31.5.4.6.
40 Id. § 31.4.2.
Docket No. ER13-102-001, et al.- 14 -
proposed transmission needs, identifies the transmission needs for which transmission solutions should be requested and evaluated,41 and issues a written statement with an explanation of why certain transmission needs driven by public policy requirements were identified for further evaluation and why transmission solutions to other suggested
transmission needs should not be evaluated.42
24. NYISO then provides a 60-day period during which both Transmission Owners
and Other Developers may propose specific transmission solutions to address the
transmission needs driven by public policy requirements identified for further
evaluation.43 NYISO evaluates the proposed solutions with stakeholder input and
prepares a report44 that identifies the assumptions, inputs, and methodologies that NYISO
41 Id. § 31.4.2.1. In addition, the New York State Department of Public Service may identify a transmission need driven by a public policy requirement on its own initiative, but must comply with the same submittal requirements as stakeholders (i.e., identify the public policy requirement driving the transmission need and describe how a transmission solution will fulfill that need).
42 Id. § 31.4.2.1. The provision further provides that “[t]he [New York State
Department of Public Service] statement identifying the transmission needs for which
transmission solutions will be evaluated by [NYISO] may also provide additional criteria
for the evaluation of transmission solutions and the type of analyses that it will request
from [NYISO]. If the [New York State Department of Public Service] does not identify any
transmission needs, it will provide confirmation of that conclusion to [NYISO].
[NYISO] shall post the [New York State Department of Public Service] statement on its
website.” In addition, NYISO must post the written explanation on the NYISO website.
Id.
43 Id. § 31.4.3.1. The Filing Parties note that, where a decision by the New York State Department of Public Service on a transmission need driven by public policy
requirements is under appeal, the 60-day period will commence after the resolution of the appeal. See October 11, 2012 Compliance Filing at 43.
44 As discussed more fully below in Parts IV.B.2.c and IV.B.3.d, the Filing Parties
propose a new term to refer to this report, the Public Policy Transmission Planning
Report. Specifically, the Filing Parties propose to define the Public Policy Transmission
Planning Report as “[t]he report approved by the [NYISO] Board of Directors pursuant to
this Attachment Y on the [NYISO]’s evaluation of all proposed solutions to an identified
Public Policy Transmission Need pursuant to Section 31.4.6 and the [NYISO]’s selection
of a proposed transmission solution, if any, that is the more efficient or cost effective
solution to the identified Public Policy Transmission Need pursuant to Section 31.4.8.”
(continued…)
Docket No. ER13-102-001, et al.- 15 -
used, including the results of NYISO’s analyses.45 This report is subject to stakeholder
and Market Monitoring Unit review and comment as well as approval by the NYISO
Board.46
2.Regional Transmission Planning Requirements
25.Order No. 1000 required each public utility transmission provider to participate in
a regional transmission planning process that produces a regional transmission plan and
that complies with the identified transmission planning principles of Order No. 890.47
The regional transmission planning reforms required public utility transmission providers
to consider and select, in consultation with stakeholders, transmission facilities that meet
the region’s reliability, economic, and Public Policy Requirements-related transmission
needs more efficiently or cost-effectively than solutions identified by individual public
utility transmission providers in their local transmission planning processes.48
a.Transmission Planning Region
26.Order No. 1000 required each public utility transmission provider to participate in
a transmission planning region, which is a region in which public utility transmission
providers, in consultation with stakeholders and affected states, agree to participate for
NYISO OATT, Attachment Y, §§ 31.1.1 (Definitions), 31.4.10; see October 15, 2013 Compliance Filing at 42.
45 First Compliance Order, 143 FERC ¶ 61,059 at P 99; NYISO OATT,
Attachment Y, §§ 31.4.8.2 (ISO Selection of More Efficient or Cost Effective Regulated
Transmission Solution to Satisfy Public Policy Transmission Need), 31.4.10 (Public
Policy Transmission Planning Report). As discussed more fully below in Part IV.B.2.c
(Consideration of Transmission Needs Driven by Public Policy Requirements), the Filing
Parties propose a new defined term, the Public Policy Transmission Planning Report,
which refers to the report, approved by the ISO Board of Directors, on NYISO’s
evaluation of all proposed solutions to an identified Public Policy Transmission Need and
on NYISO’s selection of a proposed transmission solution, if any, that is the more
efficient or cost-effective solution to the identified need. NYISO OATT, Attachment Y,
§§ 31.1.1, 31.4.10.
46 Id. § 31.4.10.
47 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 6, 11, 146.
48 Id. PP 11, 148.
Docket No. ER13-102-001, et al.- 16 -
purposes of regional transmission planning.49 The scope of a transmission planning
region should be governed by the integrated nature of the regional power grid and the
particular reliability and resource issues affecting individual regions.50 However, an
individual public utility transmission provider cannot, by itself, satisfy Order No. 1000.51
27. In addition, Order No. 1000 required public utility transmission providers to
explain how they will determine which transmission facilities are subject to the
requirements of Order No. 1000.52 Order No. 1000 also required public utility
transmission providers in each transmission planning region to have a clear enrollment process that defines how entities, including non-public utility transmission providers,
make the choice to become part of the transmission planning region53 and, thus, become eligible to be allocated costs under the regional cost allocation method.54 Order No. 1000 also required that each public utility transmission provider include in its OATT a list of all the public utility and non-public utility transmission providers enrolled as
transmission providers in the transmission planning region.55
i.First Compliance Order
28.In the First Compliance Order, the Commission found that the scope of the
NYISO transmission planning region complied with the requirements of Order No.
1000.56
29. However, the Commission required the Filing Parties to provide on compliance
further information on how NYISO will determine the transmission facilities within
NYISO’s local and regional transmission planning processes to which the proposed
OATT revisions will apply as of the effective date of the Filing Parties’ compliance filing
(i.e., which transmission facilities are new transmission facilities subject to evaluation or
49 Id. P 160.
50 Id. (citing Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 527).
51 Id.
52 Id. PP 65, 162.
53 Order No. 1000-A, 139 FERC ¶ 61,132 at P 275.
54 Id. PP 276-277.
55 Id. P 275.
56 First Compliance Order, 143 FERC ¶ 61,059 at PP 23-24.
Docket No. ER13-102-001, et al.- 17 -
reevaluation within the local or regional transmission planning process after the effective date of the compliance filing) and an explanation of how NYISO will evaluate
transmission projects under consideration before such effective date.57 Further, the
Commission directed the Filing Parties to establish in the compliance filing an
appropriate effective date, which the Commission explained should coincide with the
beginning of NYISO’s next reliability transmission planning cycle following the issuance of the First Compliance Order, or an alternative effective date that coincides with a full reliability transmission planning cycle and that is accompanied with an explanation of why the alternative proposed effective date is appropriate.58
30. Finally, the Commission required the Filing Parties to file OATT revisions that clearly specify the enrollment process by which entities, including non-public utility transmission providers, make the choice to become part of the NYISO transmission planning region and that include a list of all of the public utility and non-public utility transmission providers that have enrolled as transmission providers in NYISO’s
transmission planning region.59
ii.Summary of Compliance Filing
31.To comply with the Commission’s directive to submit an appropriate effective
date, the Filing Parties propose that the revisions be effective January 1, 2014. They
explain that January 1, 2014 is the start date for the next transmission planning cycle for
NYISO’s regional transmission planning process.60 Regarding the transition to the
revised regional transmission planning process, the Filing Parties state that NYISO has
identified sufficient market-based projects to meet Reliability Needs identified in prior
transmission planning cycles and has not previously had to trigger a regulated
transmission solution - a transmission solution seeking regional cost allocation - to
proceed.61 Accordingly, they explain that there will be no carry-over of transmission
57 Id. P 25.
58 Id. P 26.
59 Id. P 27.
60 October 15, 2013 Compliance Filing at 60.
61 NYISO’s reliability transmission planning process is discussed in greater detail in Part IV.B.2.b (Requirement to Plan on a Regional Basis to Identify More Efficient or Cost-Effective Transmission Solutions).
Docket No. ER13-102-001, et al.- 18 -
projects being reviewed under the existing transmission planning cycle to the next transmission planning cycle that begins on January 1, 2014.62
32. On July 2, 2014, NYISO filed a request that the Commission defer the proposed
effective date for the revisions to NYISO’s OATT to bring its Comprehensive System
Planning Process into compliance with the Order No. 1000 regional transmission
planning requirements.63 NYISO states that its request in the October 15, 2013
Compliance Filing that the OATT revisions become effective January 1, 2014 was
conditioned upon the Commission issuing an order accepting the revisions in the first
quarter of 2014. NYISO states that the Commission has not yet issued an order on the
Filing Parties’ October 15, 2013 Compliance Filing. NYISO states that without such
order, NYISO lacks clear tariff authority to implement the revised Comprehensive
System Planning Process. Under these circumstances, NYISO states that it will proceed
under its currently authorized Comprehensive System Planning Process for the 2014-
2015 planning cycle to ensure the timely development of solutions to system reliability
needs in New York. Accordingly, NYISO requests that the Commission defer the
effective date of the compliance revisions that relate to the reliability and economic
planning portions of its Comprehensive System Planning Process until January 1, 2016,
which is the start date of its next planning cycle. NYISO also requests that the OATT
revisions for the new public policy planning portion of its Comprehensive System
Planning Process become effective on the date the Commission issues its order
substantively accepting the changes proposed in its October 15, 2013 Compliance Filing.
33. The Filing Parties propose to revise Attachment Y to clarify how an interested
entity can further participate and enroll in NYISO’s transmission planning region. They
specify that an interested entity may enroll in NYISO’s transmission region to fully
participate in NYISO’s governance process by becoming a party to NYISO’s
Independent System Operator Agreement (NYISO Agreement).64 The Filing Parties also
propose to revise Attachment Y to state that any owner of transmission in New York
State may become a Transmission Owner in NYISO by (1) satisfying the definition of a
transmission owner in the NYISO Agreement and (2) executing the NYISO Transmission
Owners Agreement or an agreement with NYISO under terms comparable to the NYISO
Transmission Owners Agreement and turning over operational control of its transmission
facilities to NYISO. Moreover, the Filing Parties propose to include in Attachment Y a
62 October 15, 2013 Compliance Filing at 59.
63 On July 3, 2014, NYISO submitted a supplemental ministerial filing to provide redline versions of the OATT and Services Tariff sections.
64 Id. at 2-3; NYISO OATT, Attachment Y, § 31.1.7; see NYISO Agreement, Art. 2, § 2.02.
Docket No. ER13-102-001, et al.- 19 -
list of all of the Transmission Owners in New York as of October 15, 2013.65 They
add that NYISO will update this list as new entities enroll as Transmission Owners in
New York.66
iii.Protests/Comments
34.IPPNY asserts that despite NYISO’s claim that the lack of a Commission order
within the first quarter of 2014 will prevent it from implementing the policies required by the October 15, 2013 Compliance Filing’s tariff changes, those policies can be
implemented in the current planning cycle if the Commission issues an order within the
next three months. IPPNY states that NYISO claims that the effective date must be
deferred until 2016 because it cannot seek project qualification information from
developers until the Commission accepts NYISO’s compliance filing; however,
developers who wish to propose a solution to an identified reliability need are not
required to submit project qualification information until 60 days after NYISO issues its
notice soliciting developers for proposed solutions. IPPNY believes that, based on the
Reliability Needs Assessment schedule, no such issuance is likely to occur until
September 2014 and that NYISO should have already developed the project qualification form. IPPNY believes that developers would therefore have until November, or possibly even later, to submit their project qualification forms and therefore, the Commission
should reject NYISO’s request for deferral at this time.
35. IPPNY and LS Power also argue that the Commission has already rejected the
Filing Parties’ proposal to defer implementation of NYISO’s Order No. 1000-compliant
transmission planning process until the two-year planning cycle beginning 2016. IPPNY
and LS Power state that in the October 11, 2012 Compliance Filing, NYISO proposed an
effective date of the first planning cycle following a final order by the Commission
accepting NYISO’s proposed tariff changes, and the Commission rejected the Filing
Parties’ proposed effective date, explicitly noting that it is not necessary to delay the
effective date of the proposed revisions “until every issue in this proceeding has been
resolved.”67 IPPNY asserts that prompt implementation of the Commission’s Order
65 NYISO OATT, Attachment Y, § 31.1.7. The Transmission Owners on the list include Central Hudson Gas & Electric Corporation; Consolidated Edison Company of New York, Inc.; New York State Electric & Gas Corporation; Niagara Mohawk Power Corporation; Orange and Rockland Utilities, Inc.; Rochester Gas and Electric
Corporation; the Power Authority of the State of New York; and Long Island Lighting Company d/b/a the Long Island Power Authority.
66 October 15, 2013 Compliance Filing at 3.
67 LS Power at 2 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 26).
Docket No. ER13-102-001, et al.- 20 -
No. 1000 requirements is critical to address regional needs—whether economic,
reliability, or PPR-based—and the proper functioning of competitive energy markets. IPPNY adds that, because the Commission has clearly articulated that NYISO, not the New York Public Service Commission, is the entity that should occupy the role of
selecting transmission solutions to identified transmission needs, it should deny NYISO’s request for deferral until the 2016 planning period.
iv.Commission Determination
36.We find that the description of transmission facilities that will be subject to the
requirements of Order No. 1000 complies with the directives in the First Compliance
Order.
37. We find that the Filing Parties’ proposed effective date of January 1, 2014
complies with the directives in the First Compliance Order, and thus we accept the
proposed effective date. We deny Filing Parties’ request to change the proposed effective
date for its proposed OATT revisions from January 1, 2014 to January 1, 2016.68
NYISO states in its request for extension that it has been able to perform the initial stages
of its reliability planning process during the first half of 2014.69 In addition, as IPPNY
notes in its protest to the extension request, transmission developers who wish to propose
a transmission solution to an identified reliability need are not required to submit
transmission project qualification information until 60 days after NYISO issues its notice
soliciting transmission developers for proposed regulated backstop solutions and, based
on the schedule for the Reliability Needs Assessment, no such issuance is likely to occur
68 As the Filing Parties note in their extension request, the Commission already
found that it is not necessary to delay the effective date of the proposed revisions until
every issue in this proceeding has been resolved. NYISO Extension Request at 6 (citing
First Compliance Order, 143 FERC ¶ 61,059 at P 26 (rejecting Filing Parties’ proposal
that the proposed compliance OATT modifications become effective only upon
completion of the next reliability planning cycle following the Commission’s issuance of
a final order approving the proposed OATT changes)). We disagree with NYISO’s claim
that this finding does not apply because of the “fundamental changes” the Filing Parties
proposed to NYISO’s role in the transmission planning process, such as evaluating and
selecting transmission projects instead of the New York Public Service Commission.
NYISO Extension Request at 6. In the First Compliance Order, the Commission made
clear that NYISO must evaluate and select transmission facilities in the regional
transmission plan for purposes of cost allocation. First Compliance Order, 143 FERC
¶ 61,059 at PP 77-79.
69 NYISO Extension Request at 6.
Docket No. ER13-102-001, et al.- 21 -
until September 2014.70 Given this, and because we are issuing this order only
two weeks after NYISO submitted its extension request, we find that NYISO will have
sufficient opportunity to implement its revised transmission planning process during the
remaining 17 months of the current transmission planning cycle. We therefore reject
NYISO’s request for an extension of the effective date and accept Filing Parties’ initial
proposal to make the revisions submitted in the compliance filing effective January 1,
2014.
38. We find that the Filing Parties’ proposed OATT revisions specifying the
enrollment process by which entities, including non-public utility transmission providers, make the choice to become part of the NYISO transmission planning region comply with the directives of the First Compliance Order. We further note that the Filing Parties’ OATT revisions also include a list of all enrolled public utility and non-public utility transmission providers in NYISO’s transmission planning region, and thus comply with the Commission’s directive in the First Compliance Order.
b. Requirement to Plan on a Regional Basis to Identify More
Efficient or Cost-Effective Transmission Solutions
39. Through the regional transmission planning process, public utility transmission
providers must evaluate, in consultation with stakeholders, alternative transmission
solutions that might meet the needs of the transmission planning region more efficiently
or cost-effectively than solutions identified by individual public utility transmission
providers in their local transmission planning process.71 Public utility transmission
providers have the flexibility to develop, in consultation with stakeholders, procedures by
which the public utility transmission providers in the transmission planning region
identify and evaluate the set of potential solutions that may meet the region’s needs more
efficiently or cost-effectively.72 In addition, whether or not public utility transmission
providers within a transmission planning region select a transmission facility in the
regional transmission plan for purposes of cost allocation will depend in part on their
combined view of whether the transmission facility is a more efficient or cost-effective
solution to their needs.73
70 IPPNY Protest to Extension Request at 6.
71 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 148.
72 Id. P 149.
73 Id. P 331.
Docket No. ER13-102-001, et al.- 22 -
40. Public utility transmission providers in each transmission planning region, in
consultation with stakeholders, must propose what information and data a merchant
transmission developer74 must provide to the regional transmission planning process to
allow the public utility transmission providers in the transmission planning region to
assess the potential reliability and operational impacts of the merchant transmission
developer’s proposed transmission facilities on other systems in the region.75
41. Finally, the regional transmission planning process developed by public utility
transmission providers, in consultation with stakeholders, must result in a regional
transmission plan that reflects the determination of the set of transmission facilities that
more efficiently or cost-effectively meet the region’s transmission needs.76 Order
No. 1000 does not require that the resulting regional transmission plan be filed with the
Commission.
i.Selecting Regional Transmission Projects in the
Regional Transmission Plan for Purposes of Cost
Allocation
(a)First Compliance Order
42.The Commission accepted NYISO’s regional economic transmission planning
process, finding that the Filing Parties’ proposal complied with Order No. 1000.77 The
Commission found that NYISO’s economic transmission planning process includes a
process that culminates in a regional transmission plan reflecting NYISO’s determination
of the set of transmission facilities that more efficiently or cost-effectively meet the
transmission needs of the transmission planning region. The Commission explained that
the NYISO OATT includes a “voting mechanism for economic projects that is applied to
determine which economic transmission projects will be selected in the regional
74 Order No. 1000 defines merchant transmission projects as projects “for which the costs of constructing the proposed transmission facilities will be recovered through negotiated rates instead of cost-based rates.” Id. P 119.
75 Id. P 164; Order No. 1000-A, 139 FERC ¶ 61,132 at PP 297-298.
76 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 147.
77 First Compliance Order, 143 FERC ¶ 61,059 at PP 75-76.
Docket No. ER13-102-001, et al.- 23 -
transmission plan for purposes of cost allocation,” which complies with Order No. 1000.78
43. However, the Commission found that NYISO’s regional reliability transmission
planning process did not comply with Order No. 1000’s requirement to have a
transmission planning process that culminates in a regional transmission plan reflecting
NYISO’s determination of the set of transmission facilities that more efficiently or
cost-effectively meet the transmission needs of the transmission planning region.79 The
Commission explained that, according to the Filing Parties’ proposal, NYISO would
merely evaluate and report whether transmission projects proposed to meet identified
transmission needs would actually satisfy the transmission need and would not select
transmission solutions in the regional transmission plan for purposes of cost allocation.
In particular, NYISO would evaluate each proposed transmission solution to determine
whether that transmission solution could satisfy the transmission need in a timely
manner, but would not select transmission solutions in the regional transmission plan for
purposes of cost allocation. Instead, NYISO would rely on the New York Public Service
Commission to select the transmission facility to be included in the regional transmission
plan for purposes of cost allocation (i.e., the transmission facility eligible for regional
cost allocation).80
44. The Commission stated that “Order No. 1000 places an affirmative obligation on
public utility transmission providers to identify and evaluate, in consultation with
stakeholders, alternative transmission solutions that may meet the transmission needs of
the region more efficiently or cost-effectively.”81 The Commission found that NYISO
must do more than simply identify regional transmission needs and evaluate potential
solutions to determine whether the proposed solutions timely meet the transmission
needs.82 The Commission determined that the Filing Parties’ proposal “does not comply
with the requirement that NYISO select in the regional transmission plan for purposes of
78 Id. P 76 n.137 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 689) (“Order No. 1000 expressly found that a regional cost allocation method for one or more types of regional transmission facilities may include voting requirements for identified beneficiaries to vote on proposed transmission facilities.”).
79 Id. P 77.
80 Id.
81 Id. P 78 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 80, 148-
149).
82 Id. P 77; see also id. P 78.
Docket No. ER13-102-001, et al.- 24 -
cost allocation the more efficient or cost-effective transmission solutions from among
competing projects in the reliability planning process.”83 Therefore, the Commission
directed the Filing Parties to propose, on compliance, OATT revisions that: (1) eliminate
provisions in the reliability transmission planning process allowing a state to select
transmission solutions in the regional transmission plan for purposes of cost allocation;
and (2) include an evaluation and selection process through which NYISO will select in
the regional transmission plan for purposes of cost allocation the more efficient or
cost-effective transmission solutions from among competing projects, as well as the
developers eligible to use the regional cost allocation method for such facilities.84
(b)Summary of Compliance Filing
45.To comply with the Commission’s directive to have, as part of the regional
reliability transmission planning process, an evaluation85 and selection process through
which NYISO will select in the regional transmission plan for purposes of cost allocation
the more efficient or cost-effective transmission solutions, the Filing Parties have
proposed a two-phase evaluation process for proposed transmission and non-transmission
solutions.86
46. In phase one of the Filing Parties’ proposed two-phase evaluation process for
solutions proposed to address identified Reliability Needs, NYISO will evaluate all
proposed projects - regardless of the resource type and whether or not the proposing
developer is seeking regional cost allocation - to determine if each proposed transmission
and non-transmission project is viable and sufficient to meet the identified transmission
need by the need date.87 Specifically, for each identified Reliability Need NYISO will
83 Id. P 77.
84 Id. P 81.
85 The Filing Parties’ proposed evaluation processes for solutions proposed to address Reliability Needs and transmission needs driven by public policy requirements, including the metrics that NYISO considers in its evaluation, are discussed more fully below in Part IV.B.3.d.
86 NYISO October 15, 2013 Compliance Filing at 59 (citing First Compliance
Order, 143 FERC ¶ 61,059 at P 28). The Filing Parties also propose to revise Attachment Y to state that an objective of NYISO’s reliability transmission planning process is to provide a process by which NYISO will select for eligibility for cost allocation the more efficient or cost-effective regulated transmission solution to satisfy the Reliability Need. NYISO OATT, Attachment Y, § 31.1.2.
87 Id. § 31.2.5.2.
Docket No. ER13-102-001, et al.- 25 -
evaluate all proposed regulated transmission solutions88 (transmission solutions for which
the transmission developer seeks regional cost allocation) and market-based solutions
(transmission and non-transmission solutions for which the developer is not seeking
regional cost allocation) to determine whether: (a) the transmission or non-transmission
solution, as implemented by the proposing developer, is viable and can be completed by
the need date;89 and (b) whether the proposed transmission or non-transmission solution
is sufficient to satisfy the Reliability Need.90 In addition, for each proposed solution,
NYISO will independently analyze the lead time necessary to implement each
transmission and non-transmission solution to establish a Trigger Date91 (for regulated
88 Through the reliability transmission planning process, NYISO identifies
Reliability Needs and solicits, from both incumbent transmission owners and
nonincumbent transmission developers, regulated solutions and market-based solutions.
For each identified Reliability Need, the incumbent transmission owner (Responsible
Transmission Owner) is required to provide a “regulated backstop solution.” In addition
to the regulated backstop solution, other transmission developers may propose
“alternative regulated solutions.” Thus, for each Reliability Need, there will always be a
regulated backstop transmission solution and there may be proposed alternative regulated
solutions.
89 As discussed more fully below in Part IV.B.3.d (Evaluation Process for
Transmission Proposals for Selection in the Regional Transmission Plan for Purposes of Cost Allocation), to determine the viability of a proposed solution, NYISO will evaluate whether: (1) the developer has provided the required developer qualification data and project information data; (2) the proposed solution is technically practicable; (3) the
developer has indicated possession of, or an approach for acquiring, any necessary rightsof-way, property, and facilities that will make the proposal reasonably feasible in the
required timeframe; and (4) the proposed solution can be completed in the required
timeline. NYISO OATT, Attachment Y, § 31.2.5.3.
90 As discussed more fully below in Part IV.B.3.d (Evaluation Process for
Transmission Proposals for Selection in the Regional Transmission Plan for Purposes of Cost Allocation), to determine the sufficiency of a proposed solution, NYISO will
“perform a comparative analysis” to identify whether the proposed solution satisfies the transmission need. Id. § 31.2.5.4.
91 Trigger Date is defined as “the date by which [NYISO] must request
implementation of a regulated backstop solution or an alternative regulated solution pursuant to Section 31.2.8 in order to meet a Reliability Need.” Id. § 31.1.1.
Docket No. ER13-102-001, et al.- 26 -
transmission solutions) and a benchmark lead time (for market-based transmission and non-transmission solutions).92
47. If NYISO determines that the Trigger Date of any proposed regulated transmission
solution that it found to be viable and sufficient will occur within thirty-six months of
NYISO reporting the results of its viability and sufficiency analysis, it will continue to
the second step of the evaluation process.93 During phase two of the evaluation process,
NYISO will evaluate only regulated transmission solutions that it has found to be viable
and sufficient and that do not have a significant adverse impact on the reliability of the
New York State transmission system.94 NYISO will request all developers of proposed
regulated transmission solutions to submit additional transmission project qualification
information95 and NYISO will evaluate each transmission solution to determine whether
it is the more efficient or cost-effective regulated transmission solution. In its evaluation,
NYISO will consider each regulated transmission solution using the following metrics:
estimates of the cost of capital for all components, the cost per MW ratio,96
expandability,97 operability,98 performance,99 the extent to which the developer has
92 Id. § 31.2.5.5 (Establishment of Trigger Date of Proposed Regulated Solutions).
93 Id. § 31.2.6.1. The Filing Parties propose that if NYISO determines that none
of the proposed regulated transmission solutions that it found to be viable and sufficient
have a Trigger Date that will occur within thirty-six months of NYISO reporting the
results of its viability and sufficiency analysis, NYISO will not evaluate or select a more
efficient or cost-effective regulated transmission solution for that transmission planning
cycle. Id.
94 Id. § 31.2.6.5 (ISO Selection of More Efficient or Cost Effective Transmission Solution for Cost Allocation Purposes). As part of the second-step evaluation, NYISO will evaluate the submitted information to determine whether it is reasonable and how such information should be used in evaluating each metric.
95 Id. § 31.2.6.1. The transmission project qualification information is discussed more fully below in Part IV.B.3.c (Information Requirements).
96 In calculating the cost per MW ratio of the regulated transmission solution,
NYISO will determine the present worth, in current dollars, of the total capital cost of the proposed regulated transmission solution and divide that by the MW value of the
regulated transmission solution. Id. § 31.2.6.5.1.2.
97 NYISO will “consider the impact of the proposed [regulated transmission]
solution on future construction and the extent to which any subsequent expansion will
continue to use this proposed solution within the context of system expansion.” Id.
§ 31.2.6.5.1.3.
Docket No. ER13-102-001, et al.- 27 -
necessary property rights or “ability to obtain the property rights,” and potential issues associated with delay in constructing the proposed solution consistent with the major milestone schedule.100
48. As part of phase two of the evaluation process, NYISO will rank each proposed
regulated transmission solution based on how well it satisfies the listed metrics and select
the proposed regulated transmission solution, if any, that is the more efficient or cost-
effective transmission solution proposed to satisfy each transmission need. If NYISO
selects a regulated transmission solution as the more efficient or cost-effective solution,
the solution “shall be eligible to be triggered by [NYISO] to satisfy the identified
Reliability Need...”101
49.Following NYISO’s evaluation of the proposed market-based solutions and
regulated transmission solutions, NYISO will prepare a report, the Comprehensive
Reliability Plan, that sets forth: (1) the viability and sufficiency of all proposed solutions;
(2) the Trigger Dates of regulated transmission solutions; and (3) whether there are
sufficient market-based solutions to meet the Reliability Need by the need date and, if
not, that it is necessary to trigger a regulated transmission solution.102 By triggering a
regulated transmission solution, NYISO indicates that the developer “should submit [the
transmission solution] to the appropriate governmental agency(ies) and/or authority(ies)
98 NYISO will consider how the proposed regulated transmission solution may
affect additional flexibility in operating the system, such as dispatch of generation, access to operating reserves, access to ancillary services, or ability to remove transmission for maintenance. Id. § 31.2.6.5.1.4.
99 NYISO will consider how the proposed regulated transmission project may
affect the utilization of the system (e.g. interface flows, percent loading of facilities). Id. § 31.2.6.5.1.5.
100 Id. § 31.2.6.5.1.
101 Id. § 31.2.6.5.2.
102 Id. §§ 31.2.6.5.2 (ISO Selection of More Efficient or Cost Effective Regulated
Transmission Solution to Satisfy Reliability Need), 31.2.7 (Comprehensive Reliability
Plan), 31.2.8 (Determination of Necessity). In the public policy transmission planning
process, NYISO will report the results of its evaluation in the Public Policy Transmission
Planning Report. NYISO OATT, Attachment Y, §§ 31.4.8.2 (ISO Selection of More
Efficient or Cost Effective Regulated Transmission Solution to Satisfy Public Policy
Transmission Need), 31.4.10 (Public Policy Transmission Planning Report).
Docket No. ER13-102-001, et al.- 28 -
to begin the necessary approval process to site, construct, and operate the solution.”103 In
determining whether it is necessary to trigger a regulated transmission solution, NYISO
will consider if there are sufficient market-based solutions to meet the transmission
need.104 Assuming that implementation of a regulated solution is necessary, the draft
Comprehensive Reliability Report will also indicate: (1) whether NYISO has determined
that the Trigger Date to any regulated transmission solution will occur within thirty-six
months of NYISO’s presentation of its viability and sufficiency analysis; and
(2) NYISO’s selection of a more efficient or cost-effective transmission solution.105
50. Attachment Y sets forth the following scenarios to indicate the conditions under which NYISO will trigger the regulated transmission backstop solution, an alternative regulated transmission solution (if selected as the more efficient or cost-effective
solution), or both the selected alternative regulated transmission solution and the
regulated backstop transmission solution;
(1) NYISO will trigger the regulated backstop transmission solution if: there are no market-based solutions, the only viable and sufficient regulated solution is the Responsible Transmission Owner’s regulated backstop transmission solution, and the Trigger Date for the regulated backstop solution is within thirty-six months;106
(2) NYISO will trigger an alternative regulated transmission
solution if: there are no market-based solutions, NYISO
selects the alternative regulated solution as the more efficient
or cost-effective solution, the Trigger Date for the regulated
backstop solution is later than the Trigger Date for the
alternative regulated solution, and the Trigger Date for the
alternative regulated transmission solution is within thirty-six
months. However if NYISO determines prior to the regulated
backstop solution’s Trigger Date that it is necessary for the
regulated backstop solution to proceed in parallel with the
selected alternative regulated solution, NYISO will then
trigger the regulated backstop solution as well. The
103 See id. § 31.2.8 (Determination of Necessity of a Regulated Solution).
104 Id.
105 Id. § 31.2.7 (Comprehensive Reliability Plan).
106 NYISO OATT, Attachment Y, § 31.2.8.1.2.
Docket No. ER13-102-001, et al.- 29 -
Responsible Transmission Owner must proceed with
developing the regulated backstop solution unless or until NYISO notifies it that the regulated backstop solution is no longer needed;107
(3) NYISO will trigger both an alternative regulated
transmission solution and the regulated backstop transmission
solution if: there are no market-based solutions, NYISO
selects an alternative regulated solution as the more efficient
or cost-effective solution, the Trigger Date for the regulated
backstop solution is before the Trigger Date for the
alternative regulated solution, and the Trigger Date for the
regulated backstop transmission solution is within thirty-six
months.108
51. NYISO will submit the draft Comprehensive Reliability Plan to stakeholders for
review and comment, “mak[ing] available to any interested party sufficient information
to replicate the results of the draft Comprehensive Reliability Plan.”109 Following
completion of stakeholder review, the draft Comprehensive Reliability Plan reflecting
any revisions resulting from stakeholder review will be forwarded, first, to the NYISO
Operating Committee and, second, to the Management Committee110 for discussion and
action.111 Following the Management Committee vote, the draft report, with input from
stakeholders and the Operating and Management Committees, will be forwarded to the
NYISO Board for review and action. At the same time, the draft report will be forwarded
to the Market Monitoring Unit for its review and consideration of whether market rules
are necessary to address an identified failure. Upon final approval by the NYISO Board,
107 Id. § 31.2.8.1.3.
108 Id. § 31.2.8.1.4.
109 Id. § 31.2.7.1 (Collaborative Governance Process).
110 The Management Committee is defined as the “standing committee of
[NYISO] of that name created pursuant to the [NYISO] Agreement.” According to the NYISO Agreement, the Management Committee is comprised of each party to the NYISO Agreement. NYISO Agreement, Art. 7, § 7.01 (Membership).
111 NYISO OATT, Attachment Y, § 31.2.7.1.
Docket No. ER13-102-001, et al.- 30 -
NYISO shall issue the Comprehensive Reliability Plan to the marketplace by posting it on the NYISO website.112
52. The Filing Parties state that, with the proposed changes to the reliability
transmission planning process, NYISO should still be able to conduct each transmission
planning process in regular two-year cycles. However, they propose that, if the reliability
or public policy transmission planning process113 cannot be completed within a two-year
cycle, NYISO will notify stakeholders and provide an estimated completion date, along
with an explanation of why the additional time is needed.114 They also state that, because
the study results from the reliability transmission planning process are utilized in both the
economic and public policy transmission planning processes, revisions are needed to
establish that: (1) the Congestion Analysis and Resource Integration Study will begin
after NYISO completes its report on the viability and sufficiency of solutions proposed in the reliability transmission planning process;115 and (2) the written explanation of the
transmission needs driven by public policy requirements that were identified for further
evaluation by New York Public Service Commission and the New York Department of
Public Service will be posted after the study results from the draft Reliability Needs
Assessment are posted.116
53. Finally, the Filing Parties propose to relocate an existing provision that states that
if a market participant or interested party “raises a dispute solely within the [New York
Public Service Commission’s] jurisdiction concerning [NYISO’s] final determination in
the [Comprehensive Reliability Plan] that a proposed solution will or will not meet a
112 Id. § 31.2.7.2 (Board Review, Consideration, and Approval of [Comprehensive Reliability Plan]).
113 The public policy transmission planning process is discussed more fully below in Part IV.B.2.c.
114 See NYISO OATT, Attachment Y, §§ 31.1.8.2, 31.2.7, 31.3.1.3.2, 31.4.1
(5.0.0).
115 After NYISO determines the viability and sufficiency of solutions to
Reliability Needs, and in the course of drafting the Comprehensive Reliability Plan,
NYISO will create a base-case model to begin economic planning in the Congestion
Assessment and Resource Integration process. In order to accomplish this, NYISO adds several provisions to allow for flexibility in the timing of each planning track. NYISO October 15, 2013 Compliance Filing at 59 (citing revisions to NYISO OATT,
Attachment Y, §§ 31.1.8.2, 31.2.7, 31.3.1.3.2, 31.4.1).
116 See NYISO OATT, Attachment Y, §§ 31.1.8.2, 31.2.7, 31.3.1.3.2, 31.4.1.
Docket No. ER13-102-001, et al.- 31 -
Reliability Need,” then the party seeking review shall refer the dispute to the New York
Public Service Commission and its determination is binding subject only to judicial
review in the courts of New York.117
(c)Protests/Comments
54.LS Power and NextEra protest the Filing Parties’ proposal to allow NYISO to
trigger the Responsible Transmission Owner’s regulated backstop solution, even when NYISO has selected an alternative regulated solution as the more efficient or cost-
effective transmission solution in the regional transmission plan for purposes of cost
allocation, authorizing the Responsible Transmission Owner to develop the regulated
backstop solution until the alternative regulated solution selected as the more efficient or cost-effective solution satisfies the listed regulatory approvals118 and milestones,
including final Article VII certification.119
55. LS Power argues that this proposal shifts the decision making as to which
transmission project should be eligible to use the regional cost allocation method and
receive cost recovery away from NYISO to the New York State Public Service
Commission, particularly since the proposed provision explains that “the appropriate
governmental agency(ies) and/or authority(ies) make[] a final determination that an
alternative regulated solution should be permitted and constructed to satisfy a Reliability
Need and that the regulated backstop solution should not proceed.”120 LS Power asserts
that this directly contradicts the mandate of the First Compliance Order that NYISO
make that determination.121
117 October 15, 2013 Compliance Filing at 25 n.96; see NYISO OATT, Attachment Y, § 31.2.7.4.
118 See NYISO OATT, Attachment Y, §§ 31.2.8.1.5, 31.2.8.2.3 (5.0.0). 119 Nextera Protest at 17; LS Power Protest at 7.
120 LS Power Protest at 11-12 (citing NYISO OATT, Attachment Y, § 31.2.8.1.6). LS Power further notes that the Commission rejected the concept of a siting authority selecting the transmission project to receive cost allocation, and required the public utility transmission provider to decide which transmission developer would be eligible to use the regional cost allocation method for a transmission project selected in the regional transmission plan for purposes of cost allocation. Id. at 12 n.17 (citing Cal. Indep. Sys. Operator Corp., 143 FERC ¶ 61,057, at PP 224, 227 (2013)).
121 Id. at 5, 8 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 81
(requiring the Filing Parties to “(1) eliminate provisions in the reliability transmission
(continued…)
Docket No. ER13-102-001, et al.- 32 -
56. LS Power and NextEra argue that, contrary to the Filing Parties’ assertion, there
should be no need for a regulated backstop solution to ensure that a reliability solution is
available to address a Reliability Need in case a nonincumbent transmission developer
ceases to move forward with its selected reliability solution. NextEra argues that a
nonincumbent transmission developer selected by NYISO in the competitive process
should be as capable as the incumbent transmission owner in developing and constructing
the transmission solution and will have gone through the extensive pre-qualification
process to be eligible to compete. LS Power states that under the regional transmission
planning process, NYISO is only selecting transmission projects proposed by technically
and financially qualified entities and those entities then enter into a contractual
commitment.122 LS Power adds that the Commission has already addressed the
possibility that a transmission solution may cease to move forward in Order Nos. 1000
and 1000-A, holding that reevaluation was the appropriate mechanism to deal with
incumbent reliability concerns.123 LS Power also notes that the Filing Parties’ reliability
concerns are addressed by the proposed OATT revisions that require the transmission
developer of an alternative regulated solution to execute an agreement with NYISO
committing the transmission developer to seek all necessary approvals required for its
proposed project, provide milestones necessary to achieve the required in-service date,
develop and construct its proposed project if approvals are received, and abide by related
requirements set forth in Attachment Y and the ISO Procedures.124
planning process allowing a state to select transmission solutions in the regional
transmission plan for purposes of cost allocation; and (2) include an evaluation and
selection process . . .through which NYISO will select in the regional transmission plan
for purposes of cost allocation the more efficient or cost-effective transmission solutions
from among competing projects in the reliability transmission planning process, as well
as the developers eligible to use the regional cost allocation method for such facilities”)
(emphasis added)).
122 Id. at 13.
123 Id. at 10 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 329 for
the proposition that a transmission provider’s tariff must “describe the circumstances and procedures under which public utility transmission providers . . . will reevaluate the
regional transmission plan to determine if delays in the development of a transmission facility selected in a regional transmission plan for purposes of cost allocation require evaluation of alternative solutions . . . to ensure the incumbent transmission provider can meet its reliability needs or service obligations”).
124 Id. at 12-13.
Docket No. ER13-102-001, et al.- 33 -
57. In addition, LS Power and NextEra protest that NYISO intends to allow the
Responsible Transmission Developer to use the regional cost allocation method for costs
incurred related to a regulated backstop solution, not only prior to NYISO’s selection of a
transmission project as the more efficient or cost-effective transmission project, but also
after another transmission project is selected as the more efficient or cost-effective
transmission project. They contend that this proposal would unnecessarily require
consumers to pay the costs associated with the Article VII certification process for two
transmission projects, which could undermine alternative regulated solutions by
increasing the overall costs to consumers and give incumbent transmission owners a
significant advantage over nonincumbent transmission developers.125 LS Power argues
that at the point NYISO selects a transmission project as a more efficient or cost-effective
transmission solution in the regional transmission plan for purposes of cost allocation, the
only project to move forward under the cost allocation method in the tariff should be the
NYISO-approved more cost-effective and efficient transmission solution.126 LS Power
adds that only the transmission solution selected as more efficient or cost-effective should
move forward with cost allocation under the Commission-approved tariff for recovery of
further development expenses, including the cost of required regulatory submittals.127
58. LS Power argues that if the Filing Parties’ proposal to delay evaluation of the
more efficient or cost-effective proposal is accepted, the OATT should be revised to
provide that no entity, including those proposing regulated backstop solutions, receives
cost recovery for activities undertaken during this interim period to advance the proposed
project unless and until the project is ultimately selected as the more efficient or cost-
effective solution.128 LS Power also protests the Filing Parties’ proposal that NYISO will
not evaluate proposed regulated transmission solutions for selection in the regional
transmission plan for purposes of cost allocation until NYISO determines that the Trigger
Date of any proposed regulated transmission solution will occur within thirty-six months
125 NextEra Protest at 16-17; LS Power Protest at 10-11 & n.13 (citing NYISO
OATT, Attachment Y, § 31.2.8.1.5). LS Power states that Article VII certification refers
to the New York Public Service Commission’s process for environmental and siting
review of proposed transmission facilities. LS Power at 10 (referring to
http://www3.dps.ny.gov/W/PSCWeb.nsf/e39882fda3461f1a852574440062cc4b/a021e67
e05b99ead85257687006f393b/$FILE/Article%20VII%20Guide%20web%2010-
13%20.pdf).
126 Id. at 13.
127 Id. at 8.
128 Id. at 8, 16.
Docket No. ER13-102-001, et al.- 34 -
of NYISO’s viability and sufficiency evaluation.129 LS Power argues that in the period
before NYISO conducts its evaluation for selection as the more efficient or cost-effective
solution, the incumbent transmission provider appears to have the ability to continue to
develop its regulated backstop project, at ratepayer expense, while all other developers
must fund additional development activities at their own risk.130 As a result, LS Power
states, the potential savings of making an earlier selection of the more efficient or
cost-effective solution due to the discontinuation of this cost recovery outweigh any
alleged inefficiency of evaluating transmission projects prior to the need date.131
59. NextEra asserts that, if the Commission agrees with the Filing Parties that
regulated backstop solutions should continue, notwithstanding the anti-competitive
implications, then receipt of an Article VII certification process for environmental and
siting review should not be used as the milestone that determines when a regulated
backstop solution is halted, since an Article VII certification process can take
approximately two years to complete and is resource intensive. NextEra proposes that
the regulated backstop solution be halted at an earlier point in the Article VII process—
when the New York Public Service Commission deems an Article VII application to
meet the requirements of section 122 of the Public Service Law - or no later than when
the New York Public Service Commission deems the alternative regulated solution’s
Article VII application to be complete.132
60. LS Power also protests the Filing Parties’ proposal that, if a particular
transmission planning process cannot be completed in the proposed rolling two-year
transmission planning cycle, NYISO will notify stakeholders and provide an estimated
completion date and an explanation of the reasons the additional time is needed.133
129 Id. at 13.
130 LS Power states that two of the evaluation criteria for selecting the more
efficient or cost-effective project (property rights acquisition under Attachment Y
section 31.2.6.5.1.6 and permitting under section 31.2.6.5.1.7) go directly to matters that
the incumbent developer could proceed with at consumer expense prior to NYISO’s
selection of the more efficient or cost-effective solution; similarly, section 31.2.8.2.5
provides that “Once the Responsible Transmission Owner receives state . . . [or]
necessary regulatory approval, the entry of a market-based solution or an alternative
regulated transmission solution will not result in the halting by the ISO of the regulated
backstop solution.”Id. at 15-16.
131 Id. at 16.
132 NextEra Protest at 3.
133 LS Power Protest at 23.
Docket No. ER13-102-001, et al.- 35 -
LS Power asserts that these provisions provide an opportunity for an open-ended
transmission planning process, and asks the Commission to require NYISO not only to notify stakeholders, but also submit the information above to the Commission as an
informational filing. LS Power asserts that delays in completing the transmission
planning processes in the transmission planning cycle have the potential for significant competitive impacts, and all parties benefit from a clear end to the transmission planning cycle, with a change to that process only in exceptional circumstances.134
61. In addition, LS Power urges the deletion of the provision that, if a market
participant or other party raises a dispute solely within the jurisdiction of the New York
Public Service Commission concerning NYISO’s final determination that a proposed
solution will or will not meet a Reliability Need, that dispute will be referred to the
New York Public Service Commission for resolution and that resolution will be binding
subject only to judicial review in the courts of the State of New York.135 LS Power states
that this provision appears to preclude Commission review, and does not identify how a
dispute regarding NYISO’s determination that a proposed solution will or will not meet a
Reliability Need can ever be a dispute solely within the exclusive jurisdiction of the
New York Public Service Commission. LS Power asserts that NYISO and its tariff are
subject to Commission jurisdiction, and thus, any disputes should be handled under the
Commission-approved dispute resolution provision or by the Commission, not referred to
the New York Public Service Commission and subject to state law.136
(d)Answer
62.The Filing Parties ask the Commission to reject LS Power’s and NextEra’s
challenges to NYISO’s authority to trigger a regulated backstop solution after NYISO has
selected an alternative regulated transmission solution as the more efficient or cost-
effective transmission solution to an identified Reliability Need.137 They state that
NYISO is responsible for ensuring that Reliability Needs on the New York bulk power
system are addressed, and it must have the ability to trigger a regulated backstop solution
to meet that responsibility. The Filing Parties add that, since nonincumbent transmission
developers are not required to construct transmission and provide transmission service,
134 Id.
135 See NYISO OATT, Attachment Y, § 31.2.7.4 (relocating provision from section 31.2.6.3).
136 LS Power Protest at 20-21.
137 Filing Parties Answer at 27 (citing NextEra Protest at 16-18; LS Power Protest
at 513).
Docket No. ER13-102-001, et al.- 36 -
NYISO must have the ability to call on the Responsible Transmission Owner to develop
its regulated backstop solution and to be compensated for this additional development
until NYISO has sufficient confidence that a selected alternative regulated transmission
solution will proceed to construction and satisfy the Reliability Need. The Filing Parties
state that the New York Transmission Owners have a legal obligation to prepare a
regulated backstop solution to an identified Reliability Need if designated by NYISO as
the Responsible Transmission Owner and this obligation was memorialized by the
New York Transmission Owners in a contract with NYISO, which was approved by the
Commission.138 The Filing Parties state that nonincumbent transmission developers have
no obligation to provide service and are free to discontinue their proposed projects.
63. The Filing Parties note that, while LS Power believes that such concerns could be
addressed through a reevaluation process,139 given the length of time required to develop
and construct a transmission project, it is unlikely that NYISO would be able to solicit,
evaluate, and select an alternative project that could be implemented prior to the need
date if a nonincumbent transmission developer’s project was stalled. Rather, the Filing
Parties state, given that the Commission has indicated an incumbent utility is not
responsible for stepping in and completing a nonincumbent transmission developer’s
abandoned project, NYISO would have to turn to short-term Gap Solutions to address the Reliability Need, which would likely be less efficient than a properly planned long-term transmission solution and could require ratepayers to pay for both the Gap Solution and then a permanent solution.140
64. The Filing Parties further ask the Commission to reject NextEra’s request that
NYISO be required to halt a regulated backstop solution at the point at which the selected
alternative regulated transmission solution’s Article VII application is complete, because
the completion of the Article VII application provides no assurance that the New York
Public Service Commission will issue a certificate for the project and that such project
will proceed to construction. They additionally state that LS Power is incorrect in
asserting that NYISO’s triggering of both the regulated backstop solution and the
alternative regulated solution shifts the decision-making as to which project is selected in
138 See Agreement Between the New York Independent System Operator, Inc. and
the New York Transmission Owners on the Comprehensive Planning Process for
Reliability Needs (June 10, 2010) (NYISO/TO Reliability Agreement), available at
http://www.nyiso.com/public/webdocs/markets_operations/documents/Legal_and_Regul
atory/Agreements/NYISO/Comprehensive_Planning_Process_for_Reliability_Needs_Ag
reement.pdf.
139 Filing Parties Answer at 28 (citing LS Power Protest at 9-10). 140 Id. at 28-29.
Docket No. ER13-102-001, et al.- 37 -
the regional transmission plan for purposes of cost allocation from NYISO to the
New York Public Service Commission, because, while the New York Public Service
Commission has the authority to provide the required siting certification for a project to move forward to construction in New York State, NYISO is the entity responsible for selecting the more efficient or cost-effective solution in the regional transmission plan for purposes of allocating costs under its tariffs as required by the Commission.141
65. The Filing Parties further state that the Commission has previously determined
that a Responsible Transmission Owner may use the regional cost allocation method for
the costs of developing regulated backstop solutions,142 and that NYISO does not intend
to provide for the parallel development of both a selected alternative regulated
transmission solution and a regulated backstop solution any longer than necessary to
ensure that the alternative regulated transmission solution will proceed to construction
and meet the reliability need. The Filing Parties note that NYISO’s reliability
transmission planning process favors market-based solutions and that NYISO will halt
any regulated transmission solutions if it determines that there are sufficient market-
based solutions to ensure that the Reliability Need is met. The Filing Parties explain that,
in the absence of sufficient market-based solutions, NYISO will halt a regulated backstop
solution as soon as the nonincumbent transmission developer of a selected alternative
regulated solution satisfies certain requirements, including obtaining its Article VII
certification for the project.143
66. In response to LS Power’s protest regarding proposed revisions to the regional
transmission planning process timeline, the Filing Parties state that NYISO has every
incentive to timely complete its transmission planning processes. They add that, under
reliability organization requirements, NYISO is responsible for planning for the
reliability of the bulk power system.144 Further, they state that multiple state agencies
141 Id. at 30 nn.89-90 (citing NextEra Protest at 18 and LS Power Protest at 7-8).
142 Id. at 29 n.85 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 326 (“it is appropriate for the Responsible Transmission Owner to be permitted to recover costs that it prudently incurred to meet its obligation, even when the project is not selected, since only the Responsible Transmission Owner is required to provide the regulated
backstop solution for a reliability transmission need”)).
143 Id. at 30 n.88 (citing NYISO OATT, Attachment Y, § 31.2.8.1.5).
144 Id. at 45 (“Under . . . North American Electric Reliability Corporation
Transmission Planning Standards, and the resource adequacy planning requirements of
the Northeast Power Coordinating Council and New York State Reliability Council,
NYISO is responsible for planning for the reliability of the bulk power system.”).
Docket No. ER13-102-001, et al.- 38 -
rely on NYISO’s transmission planning process to provide information as to energy
policy and needs in New York State.145 Thus, the Filing Parties assert, LS Power’s
proposed informational filing is not necessary and would impose an unnecessary burden on both NYISO and the Commission.
67. The Filing Parties contend that the Commission should reject LS Power’s request
to delete the existing OATT provision that states that, if a party raises a dispute solely
within the New York Public Service Commission’s jurisdiction concerning NYISO’s
final determination in its Comprehensive Reliability Plan that a proposed solution will or
will not meet a Reliability Need, the dispute will be referred to the New York Public
Service Commission for resolution.146 The Filing Parties state that LS Power’s challenge
is outside the scope of the Commission’s directives in the First Compliance Order and
that the OATT language predates NYISO’s initial Order No. 1000 regional compliance
filing. The Filing Parties state that the First Compliance Order did not direct the Filing
Parties to revise this existing OATT language and that, in the October 15, 2013
Compliance Filing, the Filing Parties have not proposed any substantive changes to this
provision; rather as part of the reordering of the provisions in Attachment Y, the Filing
Parties propose to relocate the language without making any modifications. Moreover,
the Filing Parties contend that this provision does not create or alter the scope of the
Commission’s or the New York Public Service Commission’s jurisdiction; instead, it
provides that, to the extent a dispute arises that falls solely within the New York Public
Service Commission’s jurisdiction, it will be referred to the New York Public Service
Commission.147
(e)Commission Determination
68.Regarding the reliability transmission planning process, we find that the Filing
Parties’ proposed process to select transmission solutions in the regional transmission
plan for purposes of cost allocation partially complies with Order No. 1000’s requirement
that NYISO have a process to select in the regional transmission plan for purposes of cost
145 Id. (referencing the New York Public Service Commission, the New York State Siting Board, the State Energy Planning Board, the New York State Energy
Research and Development Authority, the Energy Highway Task Force, and the New York State Legislature).
146 See LS Power Protest at 20-21; see also NYISO OATT, Attachment Y, § 31.2.7.4.
147 Filing Parties Answer at 26-27.
Docket No. ER13-102-001, et al.- 39 -
allocation the more efficient or cost-effective transmission solutions.148 As discussed
below, NYISO’s reliability transmission planning process culminates in a regional
transmission plan reflecting NYISO’s determination of the set of transmission facilities
that more efficiently or cost-effectively meet the transmission needs of the transmission
planning region. Attachment Y provides that NYISO “shall select . . . the proposed
regulated transmission solution, if any, that is the more efficient or cost effective
transmission solution proposed in the planning cycle to satisfy the identified [r]eliability [n]eed.”149 In addition, the Filing Parties have eliminated provisions specifying that the “appropriate governmental agency(ies) and/or authority(ies)” will select more efficient or cost-effective regional transmission solutions in the regional transmission plan for
purposes of cost allocation, as well as the transmission developers eligible to use the
regional cost allocation method for such facilities.150
69. The Filing Parties’ proposed selection process in the reliability transmission
planning process partially complies with Order No. 1000, because the proposal includes
procedures for NYISO to select a regulated transmission solution as the more efficient or
cost-effective solution and report the selected regulated transmission solution in the
Comprehensive Reliability Plan. We find that Attachment Y provides a two-phase
process through which NYISO: (1) shall evaluate both transmission and non-
transmission solutions proposed in the reliability transmission planning process to
determine if they are viable and sufficient to address a specific reliability need; and
(2) may evaluate proposed regulated transmission solutions to determine if any is a more
efficient or cost-effective transmission solution and select that transmission solution in
the regional transmission plan for purposes of cost allocation. We note that, through this
process, NYISO will evaluate all proposed transmission and non-transmission solutions -
regardless of the resource type and whether the proposing developer seeks regional cost
148 For the reliability and public policy transmission planning processes, NYISO’s
proposal for evaluating transmission solutions for selection in the regional transmission
plan for purposes of cost allocation, including the criteria NYISO considers, is discussed
more fully below in Part IV.B.3.d. We note that for the economic transmission planning
process, the Commission accepted NYISO’s evaluation and selection process in the First
Compliance Order. First Compliance Order, 143 FERC ¶ 61,059 at P 244 (“We find that
the Filing Parties’ process for evaluating economic transmission projects complies with
Order No. 1000.”).
149 NYISO OATT, Attachment Y, § 31.2.6.5.2 (5.0.0). 150 See id. § 31.2.8.1.
Docket No. ER13-102-001, et al.- 40 -
allocation - to determine if each proposed transmission and non-transmission project satisfies the viability,151 sufficiency,152 and system impact153 requirements.154
70. In addition, NYISO will then conduct phase two if the Trigger Date of any of the
proposed regulated transmission solutions satisfying the phase-one requirements will
occur within thirty-six months of NYISO presenting the results of phase one of NYISO’s
evaluation.155 We determine that, in phase two of the two-phase process, NYISO will
evaluate those regulated transmission solutions satisfying the phase-one requirements to
determine if any is a more efficient or cost-effective transmission solution and will then
select the proposed regulated transmission solution, if any, that is the more efficient or
cost-effective transmission solution proposed to satisfy each Reliability Need. NYISO
will report the selected regulated transmission solution in the Comprehensive Reliability
Plan, indicating whether that transmission solution should be triggered.156 In this way,
NYISO’s transmission planning process culminates in a regional transmission plan
reflecting NYISO’s determination of the set of transmission facilities that more
efficiently or cost-effectively meet the transmission needs of the transmission planning
region.
151 See id. § 31.2.5.3.
152 See id. § 31.2.5.4.
153 See id. § 31.2.6.3.
154 Id. § 31.2.5.2 (5.0.0).
155 Id. § 31.2.6.5 (ISO Selection of More Efficient or Cost Effective Transmission Solution for Cost Allocation Purposes).
156 Id. §§ 31.2.6.5.2 (ISO Selection of More Efficient or Cost Effective Regulated
Transmission Solution to Satisfy Reliability Need), 31.2.7 (Comprehensive Reliability
Plan). If NYISO “makes a selection of the more efficient or cost effective transmission
solution” and the Trigger Date of the selected transmission solution has or will occur
within thirty-six months of NYISO presenting the results of phase one of NYISO’s
evaluation of proposed solutions (the viability and sufficiency analysis), NYISO will
trigger the selected transmission solution. Upon triggering the selected transmission
solution, NYISO informs the transmission developer that it should begin any necessary
approval process to site, construct, and operate the transmission solution and the
developer of the transmission solution becomes eligible to use the regional cost allocation
method for the regional transmission project. Id. §§ 31.2.6.5.2, 31.2.8.1.
Docket No. ER13-102-001, et al.- 41 -
71. However, the Filing Parties’ proposal creates an additional step that must occur
before an alternative regulated transmission solution selected in the regional transmission
plan for purposes of cost allocation is eligible for regional cost allocation, namely, that
NYISO triggers the selected transmission solution.157 In particular, we find that, while
NYISO will “select . . . the proposed regulated transmission solution, if any, that is the
more efficient or cost-effective transmission solution proposed in the planning cycle to
satisfy the identified Reliability Need,” if NYISO selects an alternative regulated
transmission solution as the more efficient or cost-effective solution in the regional
transmission plan for purposes of cost allocation, the solution is not eligible for regional
cost allocation unless NYISO triggers it.158 Tying eligibility for cost allocation to
NYISO triggering the alternative regulated transmission solution, which occurs after
NYISO selects the transmission facility in the regional transmission plan for purposes of
cost allocation, is inconsistent with Order No. 1000. In Order No. 1000, the Commission
stated that “each public utility transmission provider must participate in a regional
transmission planning process that makes each transmission facility selected in the
regional transmission plan for purposes of cost allocation eligible for such cost
allocation.”159 Therefore, the Filing Parties must propose on compliance, within 60 days
of the date of issuance of this order, revisions to clarify that, pursuant to the reliability
transmission planning process, once NYISO has identified the more efficient or
cost-effective regional transmission facility in the Comprehensive Reliability Plan, that
transmission facility is selected in the regional transmission plan for purposes of cost
allocation making the transmission developer of that solution eligible to use the regional
cost allocation method.
72. The Filing Parties also propose in the regional reliability transmission planning
process that, if NYISO selects an alternative regulated transmission solution in the
regional transmission plan for purposes of cost allocation but the Trigger Date for the
regulated backstop solution is before the Trigger Date for the selected alternative, NYISO
will trigger both the selected alternative regulated transmission solution and the regulated
backstop solution. According to the proposal, NYISO will trigger both solutions at the
Trigger Date for the regulated backstop solution.160 NYISO will notify a Responsible
Transmission Owner that its regulated backstop solution is no longer needed and should
be halted, “as soon as the non-incumbent Developer of a selected alternative regulated
157 See id. § 31.2.6.5.2 (ISO Selection of More Efficient or Cost Effective Regulated Transmission Solution to Satisfy Reliability Need).
158 Id. § 31.2.6.5.2.
159 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 335. 160 NYISO OATT, Attachment Y, § 31.2.8.1.4 (5.0.0).
Docket No. ER13-102-001, et al.- 42 -
solution satisfies certain requirements,” including receipt of Article VII certification for
the nonincumbent transmission developer’s transmission project.161 We note that the
provisions allowing NYISO to request a Responsible Transmission Owner to provide a
regulated backstop solution for an identified reliability transmission need have been a
component of NYISO’s reliability transmission planning process since the Commission
accepted NYISO’s filing to establish the comprehensive system planning process in
2004.162 We further note that these provisions are consistent with the NYISO/TO
Reliability Agreement,163 which “obligates the [New York Transmission Owners] to
develop and construct necessary facilities,”164 and helps NYISO to ensure the reliability
needs of the New York bulk power system are met in a timely manner.165 Thus, we find
that the Filing Parties’ proposal that gives NYISO the discretion to request a Responsible
Transmission Owner to provide a regulated backstop solution for an identified reliability
transmission need is not inconsistent with Order No. 1000 as nothing in Order No. 1000
required NYISO to change its existing process that allows NYISO to direct an incumbent
transmission provider to develop a regulated backstop solution for an identified reliability
transmission need.
73. As discussed above, in Order No. 1000, the Commission directed public utility
transmission providers to have a process for evaluating and selecting more efficient or
cost-effective transmission solutions to meet regional transmission needs.166 The
161 Filing Parties Answer at 29, 30 n.88; NYISO OATT, Attachment Y, §§ 31.2.8.1.5, 31.2.8.2.3 (5.0.0).
162 See N.Y. Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372, at PP 2, 34 (2004). 163 See supra note 139.
164 N.Y. Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372 at P 38; see also N.Y. Indep. Sys. Operator, Inc., 126 FERC ¶ 61,320, at P 13 (2009).
165 The regulated backstop solution is an existing, conservative reliability approach and section 215 of the FPA states “that the State of New York may establish rules that
result in greater reliability within that State, as long as such action does not result in
lesser reliability outside the State than that provided by the reliability standards.”
Consistent with this provision, on June 18, 2009, the New York Public Service
Commission issued a Revised Policy Statement on Backstop Project Cost Recovery and Allocation (Case 07-E-1507 - Proceeding to Establish a Long-Range Electric Resource Plan and Infrastructure Planning Process) which states that it addresses all constrained
interface deficiencies in a consistent manner and allocates the project costs to those zones which need resources due to a constrained interface.
166 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 80, 148-149.
Docket No. ER13-102-001, et al.- 43 -
Commission finds in this order that NYISO satisfies this obligation because it has a
process for evaluating and selecting the more efficient or cost-effective transmission
solutions in the regional transmission plan for purposes of cost allocation. NYISO’s
proposal to also direct an incumbent transmission developer to develop a backstop
solution and trigger that solution after NYISO selects a different transmission project as
the more efficient or cost-effective transmission solution is not required for NYISO to
comply with Order No. 1000, but also is not prohibited by Order No. 1000.
74. Furthermore, this separate process is consistent with statements the Commission
made related to an incumbent transmission provider’s reliability obligations. For
instance, in Order No. 1000, the Commission clarified that the reforms “are not intended
to diminish the significance of an incumbent transmission provider’s reliability needs or
service obligations”167 and noted that Order No. 1000 “continues to permit an incumbent
transmission provider to meet its reliability needs or service obligations by choosing to
build new transmission facilities that are located solely within its retail distribution
service territory or footprint and that are not submitted for regional cost allocation.”168
We note that NYISO is the entity responsible for ensuring the reliability of the
transmission system grid in the region. Therefore, contrary to protestors’ assertions, the
Filing Parties’ proposal is not inconsistent with Order No. 1000 and reasonably provides
NYISO the ability to ensure that a solution is available to timely address a reliability
transmission need.
75. We also find that it is reasonable for the transmission developer of that
transmission solution to be provided with the opportunity to recover costs prudently
incurred to meet its obligation. As the Commission found in the First Compliance Order,
“it is appropriate for the Responsible Transmission Owner to be permitted to recover
costs that it prudently incurred to meet its obligation, even when the project is not
selected, since only the Responsible Transmission Owner is required to provide the
regulated backstop solution for a reliability transmission need.”169 Additionally, as the
Filing Parties explain, NYISO does not intend to provide for the parallel development of
a selected alternative regulated transmission solution and a regulated backstop solution
any longer than necessary to ensure the reliability need will be timely addressed.170
167 Id. P 262.
168 Id. In Order No. 1000-A, the Commission clarified that it used the phrase,
“not submitted for regional cost allocation,” where it meant to use the phrase, “selected in a regional transmission plan for purposes of cost allocation.” Order No. 1000-A,
139 FERC ¶ 61,132 at P 425 n.503.
169 First Compliance Order, 143 FERC ¶ 61,059 at P 326. 170 Filing Parties Answer at 29.
Docket No. ER13-102-001, et al.- 44 -
Rather, one of NYISO’s stated objectives for the reliability transmission planning process
is to “provide an opportunity first for the implementation of market-based solutions while
ensuring the reliability of the [bulk power transmission facilities].”171 Consistent with
this stated objective, “NYISO will halt any regulated solution(s) - whether a regulated
backstop solution, a selected alternative regulated transmission solution, or both - if the
NYISO determines that there are sufficient market-based solutions to ensure the
identified [r]eliability [n]eed is met.”172 However, it is unclear in sections 31.2.8.1.3 and
31.2.8.2.1 under what circumstances NYISO will “determine[..] prior to or at the Trigger
Date for the regulated backstop solution that it is necessary for the Responsible
Transmission Owner to proceed with a regulated backstop solution in parallel with the
selected alternative regulated transmission solution” or “that it is necessary for the
Responsible Transmission Owner to proceed with a regulated backstop solution.”173
Therefore, the Filing Parties must propose on compliance, within 60 days of the date of
issuance of this order, revisions to explain the circumstances under which NYISO will
determine that it is necessary for a regulated backstop project to proceed in parallel with
the alternative regulated solution, and the circumstances under which NYISO will
determine that it is necessary for the Responsible Transmission Owner to proceed with a
regulated backstop solution.
76. As the Filing Parties point out, the New York Transmission Owners have a legal
obligation to prepare a regulated backstop solution to an identified Reliability Need if
designated by NYISO as the Responsible Transmission Owner.174 The NYISO/TO
Agreement and the OATT contain provisions requiring the Responsible Transmission
Owner to make a section 205 filing “consistent with FERC regulations” before including
the cost of a regulated backstop solution in its revenue requirement, and, thus, the
Responsible Transmission Owners must make such filings consistent with the
171 NYISO OATT, Attachment Y, § 31.1.2 (Reliability Planning Process) (5.0.0).
172 Filing Parties Answer at 29; see NYISO OATT, Attachment Y, §§ 31.2.8.2.3,
31.2.8.2.4 (5.0.0).
173 See NYISO OATT, Attachment Y, §§ 31.2.8.1.3, 31.2.8.2.1 (5.0.0).
174 NYISO/TO Reliability Agreement, Art. 2, available at
http://www.nyiso.com/public/webdocs/markets_operations/documents/Legal_and_Regul
atory/Agreements/NYISO/Comprehensive_Planning_Process_for_Reliability_Needs_Ag reement.pdf. The Commission approved this agreement in N.Y. Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372 (2004) (emphasis added).
Docket No. ER13-102-001, et al.- 45 -
Commission’s regulations.175 In addition, because the costs of a regulated backstop
solution will be allocated pursuant to the regional cost allocation method, we require the
Responsible Transmission Owner to provide project specific data related to the regulated
backstop solution when making any future section 205 filing to recover the costs of that
transmission solution. This project specific data would include the following information
related to any regulated backstop solution that is not selected in the regional transmission
plan for purposes of cost allocation but whose costs are allocated pursuant to the regional
cost allocation method: (1) a timeline of the Responsible Transmission Owner’s
expenditures; a description of the development of the backstop solution; and (2) the total cost of developing the backstop solution, including a breakdown of study, engineering and design costs, rights-of-way and land acquisition costs, equipment costs, regulatory costs, and legal costs. This project-specific data must be filed as part of the proceeding initiated by the Responsible Transmission Owner at the Commission seeking cost
recovery for the regulated backstop projects.
77. Concerning the timing of NYISO’s regional transmission planning processes, we
deny LS Power’s request to require NYISO to submit to the Commission an
informational filing regarding the explanation NYISO provides to stakeholders if it is
unable to timely complete a particular transmission planning process. As the Filing
Parties explain, NYISO, as the entity responsible for planning for the reliability of the
bulk power system, has an incentive to timely complete its transmission planning
process.176 In addition, Attachment Y requires NYISO to notify stakeholders if the
Comprehensive Reliability Plan cannot be completed within a two-year cycle and provide
stakeholders with both an estimated completion date and an explanation of the reasons
the additional time is required.177 Thus, we disagree that this proposal provides an
175 NYISO/TO Reliability Agreement, Art. 3, §§ 3.03, 3.06. In addition, NYISO’s
6 OATT Rate Schedules - 6.10 OATT Schedule 10 requires applicants to be consistent with Commission regulations on cost recovery:
“The filing will further provide for the recovery of the full
revenue requirement for a regulated reliability transmission
project consistent with FERC regulations including but not
limited to any incentives for the construction of transmission
project provided for in [s]ection 219 of the Federal Power
Act and the FERC regulations implementing that section.”
NYISO’s 6 OATT Rate Schedules - 6.10 OATT Schedule 10, § 6.10.2 (emphasis added).
176 Filing Parties Answer at 45.
177 NYISO OATT, Attachment Y, § 31.1.8.2 (5.0.0).
Docket No. ER13-102-001, et al.- 46 -
opportunity for an open-ended transmission planning process and agree with Filing Parties that requiring an informational filing would impose an unnecessary burden on NYISO and the Commission.
78. We also reject LS Power’s argument that NYISO should remove the OATT
provision concerning disputes solely within the New York Public Service Commission’s
jurisdiction. As the Filing Parties explain, the OATT language at issue predates
NYISO’s initial Order No. 1000 regional compliance filing and the Filing Parties have
not proposed any substantive changes to this provision. In accepting the provision
concerning such disputes,178 the Commission found that, since the footprint of NYISO is
contiguous with the state of New York, “the New York Commission is singularly suited
to address certain disputes relating to . . . NYISO’s final determination in the
[Comprehensive Reliability Plan],” clarifying that NYISO would continue to take the
lead responsibility in the planning process.179 The Commission also clarified its
jurisdiction and explained, “[t]o the extent that disputes regarding matters over which all
the participating commissions have jurisdiction and responsibility for action, the
Commission will entertain a request from the New York Commission or the parties for a
joint or concurrent hearing to resolve the dispute, consistent with our regulations.”180 As
these circumstances have not changed, we find that this provision continues to be just and
reasonable.
ii.Affirmative Obligation to Plan on a Regional Basis
(a)First Compliance Order
79.In the First Compliance Order, the Commission found that the Filing Parties’
proposal to expand the scope of the local transmission planning process to require
NYISO to consider regional alternatives complied with Order No. 1000.181 The
Commission determined that the Filing Parties’ proposal requires NYISO to review, in
consultation with stakeholders, New York Transmission Owners’ local transmission
plans to identify any alternative transmission solutions proposed to meet transmission
needs driven by reliability needs, congestion, or public policy requirements of the
New York Control Area region more efficiently or cost-effectively than solutions that
178 N.Y. Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372 (2004).
179 Id. P 19.
180 Id.
181 First Compliance Order, 143 FERC ¶ 61,059 at P 80 (referring to NYISO OATT, Attachment Y, § 31.2.1.1.3 (3.0.0).
Docket No. ER13-102-001, et al.- 47 -
individual public utility transmission providers identified in their local transmission planning processes.182
80. In addition, the Commission found that NYISO’s practice of requiring merchant
transmission developers to provide the data necessary for NYISO to assess the potential
reliability and operational impacts of a merchant transmission project and to develop the
Reliability Needs Assessment complied with the merchant information requirement of
Order No. 1000.183
(b)Summary of Compliance Filing
81.The Filing Parties note that the Commission accepted, in the First Compliance
Order, NYISO’s process for evaluating alternative transmission solutions that might meet
the transmission needs of the transmission planning region more efficiently or cost-
effectively than solutions identified by individual public utility transmission providers in
their local transmission planning processes.184 However, they propose additional OATT
revisions that would apply to the regional reliability and public policy transmission
planning processes to clarify the manner in which NYISO will perform its evaluation of
local transmission plans as part of NYISO’s proposed process to evaluate and select
transmission solutions proposed in the reliability and public policy transmission planning
processes.185 For both reliability and public policy projects, the Filing Parties propose
that NYISO will review local transmission plans as they relate to New York Bulk Power
Transmission Facilities and determine, “using engineering judgment, . . . whether
proposed regional transmission solutions on [the Bulk Power Transmission Facilities]
may more efficiently or cost-effectively satisfy” reliability or public policy transmission
182 Id.
183 See October 15, 2013 Compliance Filing at 29-30 (citing NYISO OATT, Attachment Y, § 31.2.2.4.1 and Attachment S, § 25.1.1).
184 Id. at 45-46.
185 Id.; see NYISO OATT, Attachment Y, §§ 31.2.6.4 (Evaluation of Proposed Regional Transmission Solutions on the Bulk Power Transmission Facilities to Address Reliability Needs Identified in Local Transmission Plans), 31.4.7 (Evaluation of
Proposed Regional Transmission Solution as More Efficient or Cost Effective Solution on the Bulk Power Transmission Facilities to Address Needs Driven by Public Policy Requirement Identified in Local Transmission Plan) (5.0.0).
Docket No. ER13-102-001, et al.- 48 -
needs identified in the local transmission plan.186 If NYISO identifies a regional
transmission solution that may potentially be a more efficient or cost-effective solution to
a reliability need or transmission need driven by public policy requirements in the local
transmission plan, the Filing Parties propose that NYISO will “perform a sensitivity
analysis to determine whether the proposed regional transmission solution on the
[Bulk Power Transmission Facilities] would satisfy” the reliability or public policy needs
identified in the local transmission plans.187 If so, the Filing Parties propose that NYISO
“will evaluate the proposed regional transmission solution” using the evaluation metrics
in the reliability or public policy regional transmission planning process “to determine
whether it may be a more efficient or cost effective solution on the [Bulk Power
Transmission Facilities]” to satisfy the transmission need identified in the local
transmission plans than the local transmission solutions included in those plans.188
82. The Filing Parties propose that NYISO will provide the results of its analysis to the Transmission Owners for their consideration and will report the results in the draft Comprehensive Reliability Plan or draft Public Policy Transmission Planning Report, which is provided to stakeholders for their review.189 However, the Filing Parties argue, Order No. 1000 does not require NYISO to supplant the New York Transmission
Owner’s local transmission plan.190
(c)Protests/Comments
83.NextEra and LS Power protest that the Filing Parties’ proposal gives too much
discretion to Transmission Owners and could ultimately undermine regional transmission
planning. NextEra protests that NYISO’s role will be limited to reviewing “whether a
regional [transmission] project meets a local transmission planning need more efficiently
and cost-effectively” and NYISO will “apparently not have authority to supplant an
inefficient local transmission project with a more efficient or cost effective regional
186 NYISO OATT, Attachment Y, § 31.2.6.4; see also id. § 31.4.7 (Evaluation of Proposed Regional Transmission Solution as More Efficient or Cost Effective Solution on the Bulk Power Transmission Facilities to Address Needs Driven by Public Policy Requirement Identified in Local Transmission Plan).
187 Id. §§ 31.2.6.4, 31.4.7.
188 Id.
189 Id. § 31.4.10.1.
190 October 15, 2013 Compliance Filing at 46.
Docket No. ER13-102-001, et al.- 49 -
solution... ”191 NextEra argues that the Commission should require OATT revisions
ensuring that NYISO has “explicit authority to reject local solutions when there is a more efficient solution under the regional transmission plan, or when it appears likely that such a solution will be developed.”192 LS Power similarly argues that NYISO’s OATT should be clarified so that adjacent incumbent transmission owners cannot piece together several connected local transmission projects through their local transmission planning processes and make a large regional transmission project, thereby bypassing the NYISO regional
transmission planning process.193
84. NextEra adds that the Filing Parties’ proposal could “lead to costly and redundant
facilities” and the Market Monitoring Unit should have the authority to point out when
local transmission planning is undermining efficient regional transmission planning.194
NextEra adds that the Commission should “consider invoking its authority . . . to exercise
jurisdiction over all interstate transmission, including the transmission component of
bundled retail sales,” as a “deterrent” to actions that would “undermine efficient regional
planning.”195
(d)Answer
85.In their answer, the Filing Parties urge the Commission to reject the protest that
(1) the New York Transmission Owners should not be able to use the local transmission
planning process to evade regional transmission planning; (2) NYISO should supplant an
inefficient local transmission plan; and (3) the Commission should consider invoking its
jurisdiction over all interstate transmission, including the transmission component of
bundled retail rates.196 The Filing Parties consider these arguments to be an untimely
request for rehearing of Order Nos. 1000 and 1000-A. They state that the Commission
has ruled that incumbent transmission owners can reserve the right to build any
transmission facilities provided they are not seeking regional cost allocation,197 and that
191 NextEra Protest at 19.
192 Id. at 20.
193 LS Power Protest at 17-18. 194 NextEra Protest at 20-21. 195 Id. at 20-21.
196 Filing Parties Answer at 42 n.130 (citing NextEra Protest at 3, 20-21).
197 Id. at 42 n.131 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 63-64).
Docket No. ER13-102-001, et al.- 50 -
NextEra’s request that the Commission extend its jurisdiction falls outside the scope of
the compliance filing.198
(e)Commission Determination
86.We find that the Filing Parties’ revisions to the reliability and public policy
transmission planning processes to clarify how NYISO evaluates proposed regional
transmission solutions to determine whether they would satisfy local transmission needs
more efficiently or cost-effectively than solutions identified by New York Transmission
Owners in their local transmission planning processes do not comply with Order
No. 1000. In the First Compliance Order, the Commission accepted the Filing Parties’
proposal, finding that Attachment Y requires that NYISO, in consultation with
stakeholders, “will review the Transmission Owner [local transmission plans] as they
relate to [Bulk Power Transmission Facilities] and will also evaluate whether other
solutions proposed to meet Reliability Needs, congestion identified in the [Congestion
Assessment and Resource Integration Study], or [p]ublic [p]olicy [r]equirements may
meet such [Bulk Power Transmission Facility] needs of the [New York Control Area]
region more efficiently or cost-effectively than the Transmission Owners’ proposed [local
transmission plan] solutions.”199 The Commission found that, by requiring NYISO to
both review local transmission plans as they relate to Bulk Power Transmission Facilities
and evaluate proposals from interested parties, this provision complied with Order
No. 1000’s requirement that NYISO “evaluate, in consultation with stakeholders,
alternative transmission solutions that might meet the transmission needs of the
transmission planning region more efficiently or cost-effectively than solutions identified
by individual public utility transmission provider in their local transmission planning
processes.”200
87. However, the Filing Parties’ clarifying revisions indicate that, while NYISO will
evaluate proposed regional transmission solutions to determine whether any proposed
transmission solution may be a more efficient or cost-effective alternative to a local
solution in a local transmission plan, absent regional transmission solutions proposed by
interested parties, NYISO has no process to determine whether alternative regional
transmission solutions might meet the needs of the transmission planning region more
efficiently or cost-effectively than transmission solutions identified by individual public
198 Id. at 42.
199 First Compliance Order, 143 FERC ¶ 61,059 at P 80.
200 Id.
Docket No. ER13-102-001, et al.- 51 -
utility transmission providers in their local transmission planning processes.201 We find
that NYISO may not rely exclusively on proposals from interested parties in evaluating
whether regional transmission solutions might meet the needs of the transmission
planning region more efficiently or cost-effectively than transmission solutions identified
by individual public utility transmission providers in their local transmission planning
processes.202 Rather, NYISO has an affirmative obligation to determine whether
alternative transmission solutions might meet the needs of the transmission planning
region more efficiently or cost-effectively than transmission solutions identified by
individual public utility transmission providers in their local transmission planning
processes, regardless of whether stakeholders, prospective transmission developers, or
other interested parties propose potential transmission solutions for the region to
consider.203 In addition, NYISO must comply with this affirmative obligation in each of
the regional transmission planning process: reliability, economic, and public policy.
Accordingly, we require the Filing Parties to submit, within 60 days of the date of
issuance of this order, a further compliance filing that revises NYISO’s OATT to clarify
how NYISO “will review the Transmission Owners’ [local transmission plans] as they
relate to [Bulk Power Transmission Facilities]” to determine whether alternative
transmission solutions might meet the reliability, congestion, or public policy
transmission needs of the transmission planning region more efficiently or cost-
effectively than transmission solutions identified by individual public utility transmission
providers in their local transmission planning processes, regardless of whether
stakeholders, prospective transmission developers, or other interested parties propose
potential transmission solutions for the region to consider.204
88. However we disagree with NextEra’s and LS Power’s assertions that the Filing
Parties’ local transmission planning process gives too much discretion to Transmission
Owners and must be revised to give NYISO the authority to supplant a local transmission
201 See NYISO OATT, Attachment Y, §§ 31.2.6.4 (Evaluation of Proposed
Regional Transmission Solutions on the Bulk Power Transmission Facilities to Address Reliability Needs Identified in Local Transmission Plans), 31.4.7 (Evaluation of
Proposed Regional Transmission Solution as More Efficient or Cost Effective Solution on the Bulk Power Transmission Facilities to Address Needs Driven by Public Policy Requirement Identified in Local Transmission Plan) (5.0.0).
202 See Tampa Elec. Co., 143 FERC ¶ 61,254, at P 56 (2013).
203 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 12, 80, 147-148; Tampa Elec. Co., 143 FERC ¶ 61,254, at P 56 (2013).
204 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 12, 80, 147-148; see also Tampa Elec. Co., 143 FERC ¶ 61,254, at P 56 (2013).
Docket No. ER13-102-001, et al.- 52 -
project with a more efficient or cost effective regional solution. Order No. 1000 is “not
intended to appropriate, supplant, or impede any local transmission planning processes
that public utility transmission providers undertake” and does not authorize a public
utility transmission provider to require Transmission Owners to revise their local
transmission plan to remove local solutions to identified transmission needs if more
efficient or cost-effective solutions are identified in the regional transmission plan.205
Order No. 1000 does “not require that the transmission facilities in a public utility
transmission provider’s local transmission plan be subject to approval at the regional or
interregional level, unless that public utility transmission provider seeks to have any of
those facilities selected in the regional transmission plan for purposes of cost allocation,”
and “nothing in Order No. 1000 explicitly or implicitly requires that any transmission
facilities be sited, permitted, or constructed.”206 Thus, the selection of a regional
transmission solution in the regional transmission plan for purposes of cost allocation
does not require the transmission owner to revise its local transmission plan to replace a
local transmission project.207
89. We also find that NextEra’s recommendation that the Commission invoke its
authority to exercise jurisdiction over all interstate transmission - including the
transmission component of bundled retail rates - is outside the scope of compliance with Order No. 1000’s requirements. We find, therefore, that this proceeding is not the proper forum for addressing the issue and reject NextEra’s recommendation.
c.Consideration of Transmission Needs Driven by Public
Policy Requirements
90. Order No. 1000 required public utility transmission providers to amend their
OATTs to include procedures for the consideration of transmission needs driven by
Public Policy Requirements in both the local and regional transmission planning
processes.208 Public Policy Requirements are requirements established by local, state or
federal laws or regulations (i.e., enacted statutes passed by the legislature and signed by
205 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 161.
206 Order No. 1000-A, 139 FERC ¶ 61,132 at PP 190-191.
207 See Pub. Serv. Co. of Colorado, 142 FERC ¶ 61,206, at P 243 (2013). 208 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 203.
Docket No. ER13-102-001, et al.- 53 -
the executive and regulations promulgated by a relevant jurisdiction, whether within a state or at the federal level).209
91. The Commission in Order No. 1000 explained that, to consider transmission needs
driven by Public Policy Requirements, public utility transmission providers must adopt
procedures to: (1) identify transmission needs driven by Public Policy Requirements; and
(2) evaluate potential solutions to meet those identified needs.210 More specifically,
public utility transmission providers must adopt procedures in their local and regional
transmission planning processes for identifying transmission needs driven by Public
Policy Requirements that give all stakeholders a meaningful opportunity to provide input
and to offer proposals regarding what they believe are transmission needs driven by
Public Policy Requirements.211 Each public utility transmission provider must explain
how it will determine at both the local and regional level, the transmission needs driven
by Public Policy Requirements for which solutions will be evaluated212 and must post on
its website an explanation of: (1) those transmission needs driven by Public Policy
Requirements that were identified for evaluation for potential solutions in the local and
regional transmission planning processes and (2) why other proposed transmission needs
driven by Public Policy Requirements were not selected for further evaluation.213
92. Order No. 1000 also required public utility transmission providers, in consultation
with stakeholders, to evaluate at the local and regional level potential solutions to
identified transmission needs driven by Public Policy Requirements, including
transmission facilities proposed by stakeholders.214 The evaluation procedures must give
209 Id. P 2. Order No. 1000-A clarified that Public Policy Requirements included local laws and regulations passed by a local governmental entity, such as a municipal or county government. Order No. 1000-A, 139 FERC ¶ 61,132 at P 319.
210 Id. P 205.
211 Id. PP 206-209; Order No. 1000-A, 139 FERC ¶ 61,132 at P 335.
212 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 208-209.
213 Id. P 209; see also Order No. 1000-A, 139 FERC ¶ 61,132 at P 325.
214 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 211 & n.191. The details of the proposed process to evaluate solutions for selection in the regional transmission plan for purposes of cost allocation in the public policy transmission planning process, including the metrics NYISO considers in its evaluation, are discussed more fully below in Part IV.B.3.d (Evaluation Process for Transmission Proposals for Selection in the Regional Transmission Plan for Purposes of Cost Allocation).
Docket No. ER13-102-001, et al.- 54 -
stakeholders the opportunity to provide input and enable the Commission and
stakeholders to review the record created by the process.215
i.Incorporating Consideration of Transmission
Needs Driven by Public Policy Requirements in the
Regional Transmission Planning Process
(a)First Compliance Order
93.In the First Compliance Order, the Commission found that the Filing Parties
partially complied with the provisions of Order No. 1000 addressing the consideration of
transmission needs driven by public policy requirements in the regional transmission
planning process. In particular, the Commission found the Filing Parties’ proposed
procedures to identify transmission needs driven by public policy requirements and
evaluate solutions proposed to address such transmission needs complied with Order
No. 1000.216 The Commission explained that, in evaluating potential solutions to meet
transmission needs driven by public policy requirements, “NYISO will use its existing
reliability, economic, and interconnection planning process tools, databases and models,
as applicable,” as well as “tools such as power flow, stability and short circuit models for
system planning analysis, probabilistic models of generator availability for resource
adequacy and production cost simulation models for economic and environmental
analysis.”217 Further, the Commission explained that “NYISO’s evaluation will compare
the costs and benefits of the proposed transmission solutions, and impacts of the proposed
transmission solution on NYISO-administered markets.”218 On this basis, the
Commission determined that the proposed process for evaluating potential transmission
solutions proposed to meet transmission needs driven by public policy requirements
complied with the requirements of Order No. 1000.219
215 Order No. 1000-A, 139 FERC ¶ 61,132 at PP 320-321.
216 First Compliance Order, 143 FERC ¶ 61,059 at PP 141,144. NYISO’s process
to evaluate solutions proposed to address transmission needs driven by public policy
requirements, including additional revisions proposed in the October 15, 2013
Compliance Filing, is discussed more fully in the Evaluation Process for Transmission
Proposals for Selection in the Regional Transmission Plan for Purposes of Cost
Allocation section.
217 Id. P 144.
218 Id.
219 Id.
Docket No. ER13-102-001, et al.- 55 -
94. However, the Commission found that the Filing Parties’ proposal for selecting, in
the public policy transmission planning process, more efficient or cost-effective
transmission solutions in the regional transmission plan for purposes of cost allocation
did not comply with Order No. 1000. The Commission explained that, “a public utility
transmission provider has an affirmative obligation to select more efficient or cost-
effective transmission solutions in the regional transmission plan for purposes of cost
allocation.”220 The Commission determined that the Filing Parties must provide, on
compliance, OATT revisions describing the process by which NYISO will select in the
regional transmission plan for purposes of cost allocation more efficient or cost-effective
solutions from among transmission projects proposed to meet transmission needs driven
by public policy requirements.221 The Commission added that this process must
culminate in a determination that is sufficiently detailed for stakeholders to understand
why a particular transmission project was selected or not selected in the regional
transmission plan for purposes of cost allocation.222
95. The Commission also found that the Filing Parties’ proposed definition of public
policy requirements only partially complied with the requirements of Order No. 1000.
Specifically, the Commission determined that the inclusion of the phrase “that drives the
need for expansion or upgrades to the New York State bulk transmission facilities” in the
Filing Parties’ proposed definition was inconsistent with the requirements of Order
No. 1000, which does not limit the definition of public policy requirements to those that
provide transmission related benefits.223 In addition, the Commission found that the
definition did not expressly include consideration of duly enacted laws or regulations
passed by a local governmental entity, such as a municipal or county government.224
Accordingly, the Commission ordered that the Filing Parties provide on compliance a
revised definition of public policy requirements that complies with the Commission’s
definition as specified in Order Nos. 1000 and 1000-A, including the removal of the
phrase “that drives the need for expansion or upgrades to the New York State bulk
transmission facilities” and an express clarification in the NYISO OATT that NYISO will
also consider duly enacted laws or regulations passed by a local governmental entity.225
220 Id. P 145.
221 Id.
222 Id.
223 Id. PP 137-138. 224 Id. P 139.
225 Id. P 140.
Docket No. ER13-102-001, et al.- 56 -
96. In addition, the Commission found that the Filing Parties’ proposal did not comply
with the requirements of Order No. 1000 because the proposal did not provide for
comparable treatment of non-transmission alternatives.226 The Commission found that
the Filing Parties failed to identify how stakeholders and interested parties may submit
proposals for non-transmission alternatives and how competing solutions will be
evaluated and considered on a comparable basis. The Commission ordered a further
compliance filing that identifies how, in the public policy requirements transmission
planning process, non-transmission solutions will be evaluated such that all types of
resources are considered on a comparable basis and that proposes OATT revisions
providing that stakeholders and interested parties may submit proposals for non-
transmission alternatives.227
97. With respect to OATT revisions proposed by the Long Island Power Authority to
recognize the Long Island Power Authority as responsible for the identification of
transmission needs for physical modification to the Long Island Transmission District,
the Commission determined that Order No. 1000 does not require that a public utility
transmission provider include any particular role for state regulators in the transmission
planning process.228 However, the Commission encouraged the Long Island Power
Authority, NYISO, and other interested parties to work together to develop amendments
that allow all relevant regulatory entities to participate fully in the transmission planning
process.229
(b)Summary of Compliance Filing
98.The Filing Parties propose various revisions to NYISO’s public policy
transmission planning process230 to address the Commission’s directives in the First
Compliance Order, including a revised definition of public policy requirements and a
226 Id. P 148.
227 Id. P 149.
228 Id. P 150.
229 Id.
230 The Filing Parties propose to define the Public Policy Transmission Planning
Process as “[t]he process by which [NYISO] solicits needs for transmission driven by
[p]ublic [p]olicy [r]equirements, evaluates all solutions on a comparable basis, and
selects the more efficient or cost-effective transmission solution, if any, for eligibility for
cost allocation under the ISO Tariffs.” NYISO OATT, Attachment Y, § 31.1.1
(Definitions).
Docket No. ER13-102-001, et al.- 57 -
process for NYISO to select231 in the regional transmission plan for purposes of cost allocation more efficient or cost-effective transmission solutions to transmission needs driven by public policy requirements.232 According to the Filing Parties’ proposal,
NYISO’s public policy transmission planning process includes three steps: (1) the
identification of Public Policy Transmission Needs;233 (2) a request for proposed
transmission and non-transmission solutions to address identified Public Policy
Transmission Needs and evaluation of proposed solutions; and (3) the selection of the more efficient or cost-effective transmission solution, if any, to satisfy the Public Policy Transmission Need and be eligible for cost allocation.234
99. To comply with the Commission’s directive to provide a revised definition of
public policy requirements, the Filing Parties propose to define a public policy
requirement as “[a] federal or New York State statute or regulation, including a
[New York Public Service Commission] order adopting a rule or regulation subject to
and in accordance with the State Administrative Procedure Act, any successor statute, or
any duly enacted law or regulation passed by a local governmental entity in New York
State, that may relate to transmission planning on the [Bulk Power Transmission
Facilities].”235
100. Regarding the identification of Public Policy Transmission Needs, the Filing
Parties propose new language requiring any entity that submits a proposed Public Policy
Transmission Need to include with its submittal, proposed criteria for NYISO to consider
when it evaluates transmission solutions to that Public Policy Transmission Need,
including the metrics for evaluating proposed transmission solutions for selection as more
231 The details of the proposed process to evaluate solutions for selection in the
regional transmission plan for purposes of cost allocation in the public policy
transmission planning process, including the metrics NYISO considers in its evaluation,
are discussed more fully below in the Evaluation Process for Transmission Proposals for
Selection in the Regional Transmission Plan for Purposes of Cost Allocation section.
232 October 15, 2013 Compliance Filing at 33-46.
233 The Filing Parties propose to define a Public Policy Transmission Need as a “transmission need identified by the [New York Public Service Commission/New York Department of Public Service] that is driven by a [p]ublic [p]olicy [r]equirement pursuant to [s]ection 31.4.2.1.” NYISO OATT, Attachment Y, § 31.1.1 (Definitions).
234 Id. § 31.4.1.
235 October 15, 2013 Compliance Filing at 41-42.
Docket No. ER13-102-001, et al.- 58 -
efficient or cost-effective transmission solutions in the regional transmission plan for purposes of cost allocation.236
101. The Filing Parties propose to revise the high level description of the public policy
transmission planning process to clarify that the objectives of the public policy
transmission planning process include providing a process whereby: “all solutions to
Public Policy Transmission Needs are proposed and evaluated on a comparable basis”
and NYISO “will select the more efficient or cost effective regulated transmission
solution, if any, to satisfy the Public Policy Transmission Need for eligibility for cost
allocation under the [NYISO] Tariffs.”237 Moreover, the Filing Parties propose to revise
Attachment Y to state that:
NYISO shall evaluate any proposed solution submitted by a
Developer to a Public Policy Transmission Need. [NYISO]
will evaluate whether each proposed solution is viable . . . and
is sufficient to satisfy the Public Policy Transmission Need by
the need date..The proposed solution may include
multiple components and resource types. When evaluating proposed solutions to a Public Policy Transmission Need
from any Developer, [NYISO] shall consider all resource
types - including generation, transmission, demand response, or a combination of these resource types - on a comparable basis as potential solutions.238
102. In response to the Commission’s requirement that the Filing Parties identify how
stakeholders and interested parties may submit proposals for non-transmission
alternatives, the Filing Parties propose to revise Attachment Y to provide that NYISO
will accept specific proposed non-transmission solutions to a Public Policy Transmission
Need identified by the New York Department of Public Service.239 The Filing Parties
also propose to revise Attachment Y to state that NYISO will provide 60 days for
236 Id. at 43.
237 Id.; NYISO OATT, Attachment Y, § 31.1.5. The proposed public policy
evaluation process is discussed in the Evaluation Process for Transmission Proposals for
Selection in the Regional Transmission Plan for Purposes of Cost Allocation section.
238 NYISO OATT, Attachment Y, § 31.4.6.2 (Comparable Evaluation of All Proposed Solutions).
239 October 15, 2013 Compliance Filing at 34 (referring to NYISO OATT Attachment Y, § 31.4.3).
Docket No. ER13-102-001, et al.- 59 -
developers to propose solutions, whether transmission or non-transmission, to address a Public Policy Transmission Need.240
103. To comply with the Commission’s directive to propose a process for NYISO to
select in the regional transmission plan for purposes of cost allocation more efficient or
cost-effective transmission solutions, the Filing Parties propose a two-phase evaluation
and selection process similar to the process for evaluating solutions to Reliability Needs discussed in the Requirement to Plan on a Regional Basis to Identify More Efficient or
Cost-Effective Transmission Solutions section above. In phase one, NYISO will evaluate proposed solutions from all resource types to determine whether they are viable and
sufficient solutions, using the same criteria proposed for evaluating reliability solutions, as well as any evaluation criteria provided by the New York Public Service Commission or the New York Department of Public Service. NYISO will present the results of the
viability and sufficiency analysis to NYISO’s stakeholders, interested entities, and the
New York Department of Public Service for comment.241
104. In phase two, the Filing Parties propose that NYISO will evaluate, for selection as
the more efficient or cost-effective transmission solution in the regional transmission plan
for purposes of cost allocation, proposed transmission solutions that NYISO has
determined are viable and sufficient to meet the identified Public Policy Transmission
Need.242 The Filing Parties propose that NYISO will rank each proposed solution based
on its satisfaction of the metrics243 and will evaluate each viable and sufficient
transmission solution to determine “the impacts on the [NYISO]-administered wholesale
electricity markets.”244
105. At the completion of this two-phase evaluation process, the Filing Parties explain,
NYISO selects the more efficient or cost-effective transmission solution, if any,245 and
includes the regulated transmission solution in the Public Policy Transmission Planning
240 Id.; NYISO OATT, Attachment Y, § 31.4.3.1.
241 NYISO OATT, Attachment Y, § 31.4.6.5 (5.0.0).
242 October 15, 2013 Compliance Filing at 38 (citing NYISO OATT, Attachment Y, § 31.4.8).
243 NYISO OATT, Attachment Y, § 31.4.8.1.
244 Id. §31.4.9 (Evaluation of Impact of Proposed Transmission Solution on ISO Wholesale Electricity Markets).
245 Id. § 31.4.8.
Docket No. ER13-102-001, et al.- 60 -
Report for purposes of cost allocation.246 Specifically, NYISO staff prepares a draft
Public Policy Transmission Planning Report that includes: (1) the regulated transmission
solution, if any, that NYISO staff recommends for selection for cost allocation purposes
as the more efficient or cost-effective transmission solution to satisfy the Public Policy
Transmission Need; (2) the assumptions, inputs, and methodologies used in the
evaluation, and the results of this analysis,247 including the impacts of each proposed
transmission solution on NYISO-administered wholesale electricity markets;248 (3) a list
of qualified developers and proposed solutions; (4) the results of the viability and
sufficiency analysis of proposed transmission and non-transmission solutions; and (5) the
results of NYISO’s analysis of the local transmission plans with respect to transmission
needs driven by public policy requirements.249 The draft report will also compare the
proposed regional transmission solution identified to meet a Public Policy Transmission
Need to an interregional transmission project, which may be selected as a regulated
transmission solution.250
106. According to the Filing Parties’ proposal, NYISO will provide the draft Public
Policy Transmission Planning Report to stakeholders for review and input as accepted in
the First Compliance Order, with the following revisions.251 First, the Filing Parties
propose to formalize NYISO’s existing practice of providing the Market Monitoring
Unit’s reports to the Management Committee prior to its vote on NYISO’s reliability and
economic planning reports.252 The Filing Parties also propose to revise Attachment Y to
state that the draft Public Policy Transmission Planning Report will be submitted to the
Market Monitoring Unit for its review and consideration concurrently with its submission
to the Transmission Advisory Planning Subcommittee and the Electric System Planning
246 Id. §§ 31.4.8, 31.4.8.2.
247 Id. § 31.4.10.
248 See id. § 31.4.9.
249 October 15, 2013 Compliance Filing at 40; NYISO OATT, Attachment Y, § 31.4.10.
250 NYISO OATT, Attachment Y, § 31.4.10.
251 October 15, 2013 Compliance Filing at 40; see also First Compliance Order, 143 FERC ¶ 61,059 at P 144.
252 October 15, 2013 Compliance Filing at 40-41; NYISO OATT, Attachment Y, § 31.4.10.1.
Docket No. ER13-102-001, et al.- 61 -
Working Group.253 In addition, revised Attachment Y provides that the Market
Monitoring Unit’s evaluation will be provided to the NYISO Board concurrently with the draft Public Policy Transmission Planning Report, containing Business Issues Committee and Management Committee input.254
107. Second, NYISO255 proposes to authorize the NYISO Board to elect not to select a
transmission solution for cost allocation purposes to satisfy a Public Policy Transmission
Need if the NYISO Board determines that the project will adversely affect price signals
in NYISO’s wholesale markets.256 Specifically, NYISO proposes to revise Attachment Y
to state that “[t]he Board may approve the Public Policy Transmission Planning Report as
submitted or propose modifications on its own motion, including a determination not to
select a transmission project to satisfy the Public Policy Transmission Need.”257 NYISO
argues that if a proposed project sends price signals directly contrary to economic
investment decisions, as measured by production cost savings and installed capacity
savings compared to the cost of the proposed project, the NYISO Board reserves the
discretion to deny regulated cost recovery to fulfill its responsibility to maintain
economically competitive markets.258 However, if the NYISO Board proposes changes, the revised report is returned to the Management Committee for further comment and the NYISO Board will not make a final determination on the revised report until it has
reviewed the Management Committee’s comments.259 Upon final approval by the
NYISO Board, NYISO proposes to issue the Public Policy Transmission Planning Report to the marketplace by posting it on the NYISO website.260
253 NYISO OATT, Attachment Y, § 31.4.10.1. 254 Id. § 31.4.10.2.
255 The Filing Parties state that the New York Transmission Owners disagree with this proposed revision and will provide comments and revisions separately. See October 15, 2013 Compliance Filing at n.152.
256 Id. at 41.
257 NYISO OATT, Attachment Y, § 31.4.10.2.
258 October 15, 2013 Compliance Filing at 41.
259 NYISO OATT, Attachment Y, § 31.4.10.2 (Board Review, Consideration, and Approval of Public Policy Transmission Planning Report).
260 Id.
Docket No. ER13-102-001, et al.- 62 -
108. To ensure that a solution to address an identified Public Policy Transmission Need is available, the Filing Parties propose that the New York Public Service Commission or the New York Department of Public Service may request that a Transmission Owner or Other Developer propose a transmission solution for a transmission need driven by a
public policy requirement.261
(c)Protests/Comments
109. Several commenters object to various aspects of NYISO’s proposal to authorize
the NYISO Board to elect to not select a transmission solution for cost allocation
purposes to satisfy a Public Policy Transmission Need if the NYISO Board determines
that the project will adversely affect price signals in NYISO’s wholesale markets. Some
of these commenters argue that the Commission did not require NYISO’s proposal in the
First Compliance Order and that it should not be considered on compliance.262 The
New York Public Service Commission argues that NYISO’s newly created test based on
how a proposed solution may affect price signals is an entirely discretionary
determination that is not in line with Order No. 1000, because Order No. 1000 requires
the selection of a more efficient or cost-effective transmission project for purposes of cost
allocation.263 Similarly, the New York Transmission Owners argue that the Commission
has not given the NYISO Board the discretionary authority to refuse to select
transmission solutions proposed to meet a need driven by public policy based on
exogenous factors such as potential market impacts.264 The New York Public Service
Commission adds that, in addition to meeting federal and state public policy
requirements, a new transmission facility may broaden wholesale markets by allowing
certain generators to compete more economically, enhancing competition.265
110. Furthermore, the New York Public Service Commission and the New York
Transmission Owners argue that NYISO’s proposal may hinder the successful
261 NYISO OATT, Attachment Y, § 31.4.3.2; see October 15, 2013 Compliance Filing at 34 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 328); NYISO OATT, Attachment Y, §§ 31.4.3.2, 31.5.6.
262 New York Public Service Commission Protest at 2; New York Transmission Owners at 2-3; NextEra Protest at 21-22.
263 New York Public Service Commission Protest at 2, 4-5 (citing October 15, 2013 Compliance Filing at 41).
264 New York Transmission Owners Comments at 3.
265 New York Public Service Commission Protest at 6.
Docket No. ER13-102-001, et al.- 63 -
implementation of duly-enacted public policy requirements and deny cost allocation to
solutions for which a need has been identified and evaluated.266 The New York
Transmission Owners state that the transmission planning process created by the First
Compliance Order provides that once a determination of need is made, it becomes
NYISO’s responsibility to evaluate proposed solutions to meet that need and to select the
more efficient or cost-effective transmission solutions to meet that need. They assert that
transmission solutions, by their very nature, alter an interconnected network and will
have some impact on the competitive wholesale electricity market, whether on capacity
prices, energy prices, or other market outcomes, and that NYISO should not be permitted
to hinder the achievement of state or federal public policy objectives on this basis.267
111. NextEra similarly contends that the NYISO Board should not be given the
discretion to veto transmission projects at this late stage, at which NYISO will already
have evaluated the impact of the proposed transmission solution.268 NextEra also asserts that the Market Monitoring Unit should be provided an opportunity to offer
recommendations earlier in the process to allow stakeholders an opportunity to comment prior to any recommendation to the NYISO Board that may terminate the project.
Alternatively, NextEra recommends that if the NYISO Board is provided a late
opportunity to reject a transmission project, this decision should be constrained by
criteria defined in the NYISO OATT.269
112. The Long Island Power Authority offers an amendment to the Filing Parties’
compliance filing. The Long Island Power Authority states that after working with the
Filing Parties and the New York Department of Public Service, as encouraged in the First
Compliance Order, the Long Island Power Authority has developed OATT language that
accommodates its jurisdictional responsibilities on Long Island and allows the Long
Island Power Authority to participate in the NYISO public policy transmission planning
process.270 The Long Island Power Authority’s proposed revisions cover three areas:
(1) the identification of Public Policy Transmission Needs within the Long Island
Transmission District; (2) a requirement that any physical modification to the Long
Island Power Authority’s transmission facilities be authorized by the Long Island Power
Authority Board of Trustees; and (3) the development of cost allocation methods and
266 Id. at 3-5; New York Transmission Owners Comments at 2-4. 267 New York Transmission Owners Comments at 3-4.
268 NextEra Protest at 21 (citing NYISO OATT, Attachment Y, § 31.4.8.1). 269 Id. at 21-22.
270 Long Island Power Authority Comments at 2, 4.
Docket No. ER13-102-001, et al.- 64 -
rates for any the Long Island Power Authority-developed projects meeting a public policy
need.271
113. The Long Island Power Authority proposed tariff language to clarify that it, as
opposed to the New York Public Service Commission and New York Department of
Public Service, has jurisdiction over the identification of transmission needs requiring
physical modifications of transmission facilities within the Long Island Transmission
District. The Long Island Power Authority recognizes, however, that the New York
Department of Public Service determines whether a transmission need identified by the
Long Island Power Authority is considered a Public Policy Transmission Need for
purposes of evaluation by NYISO.272
(d)Answer
114. NYISO273 recommends that the Commission reject protests regarding the NYISO
Board’s authority not to select a transmission project to satisfy a Public Policy
Transmission Need.274 NYISO refutes protests from New York Transmission Owners,
New York Public Service Commission, and NextEra who contend that the NYISO
Board’s authority to not select a transmission solution is inconsistent with Order No.
1000.
115. NYISO states that Order No. 1000 requires a transparent and not unduly
discriminatory process to evaluate whether to select a proposed transmission facility in a
regional transmission plan for purposes of cost allocation,275 but does not mandate the
selection of a solution to a transmission need driven by public policy requirements.
NYISO also states that Order No. 1000 requires that an evaluation process be sufficiently
detailed for stakeholders to understand why a particular transmission project was or was
not selected in the regional transmission plan for purposes of cost allocation, but that the
Commission did not dictate that any particular proposals be accepted or that selected
transmission facilities be constructed.276 NYISO contends that its public policy
271 Id. at 7-8.
272 Id. at 8.
273 The New York Transmission Owners do not join NYISO in these comments. 274 Filing Parties Answer at 46.
275 Id. at 46-47 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 328).
276 Id. at 47 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 328,
331).
Docket No. ER13-102-001, et al.- 65 -
transmission planning process provides a mechanism for NYISO to select the more
efficient or cost-effective solution to satisfy the Public Policy Transmission Need, but preserves the NYISO Board’s duty and responsibility not to make a selection if it independently determines that it should not do so.277
116. In response to protests from the Transmission Owners and New York Public
Service Commission that the NYISO proposal to allow the NYISO Board to elect to not
select a proposed transmission project may frustrate enacted federal or state laws and
regulations, NYISO contends that Order No. 1000 does not make a public utility
transmission provider responsible for the fulfillment of public policy requirements.
Citing to specific language from Order No. 1000, NYISO highlights that the Commission
did not establish an independent requirement to satisfy an identified public policy
requirement and that the Commission did not mandate a public utility transmission
provider to consider the public policy requirement itself.278 NYISO clarifies that it does
not expect the NYISO Board to often decline to approve a transmission project that
addresses a public policy requirement and that NYISO does not intend to second guess or
undermine federal, state, or local public policy determinations.279 NYISO states that the
NYISO Board’s authority to approve or propose modifications to the public policy
planning report, which was not challenged in protests, logically includes the authority not
to select a transmission project. NYISO adds that its proposal is consistent with the
NYISO Board’s authority to make final and independent decisions for NYISO and is
consistent with Commission-approved OATT language authorizing the NYISO Board to
evaluate the impacts of proposed transmission projects on the NYISO-administered
competitive markets.280
117. NYISO contends that arguments from the Transmission Owners that the NYISO
proposed revision should not be selected because it was not discussed during the original
stakeholder process and was not discussed in the initial compliance filing are without
merit. NYISO argues that the Filing Parties’ initial filing proposed an evaluation and
selection process in which the New York Public Service Commission selected
transmission solutions. To comply with the First Compliance Order, NYISO states that,
in consultation with stakeholders, it began considering the implications of the NYISO
277 Id.
278 Id. at 48-49 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 109, 204, 213).
279 Id. at 49.
280 Id. (citing section 31.4.4 of the NYISO OATT accepted in the First Compliance Order, 143 FERC ¶ 61,059 at P 144).
Docket No. ER13-102-001, et al.- 66 -
Board selecting transmission projects. NYISO contends that its intentions regarding its
scope of authority were known to stakeholders and stakeholder input was considered.281
118. NYISO responds to comments from NextEra that (1) the Market Monitoring Unit
should provide input earlier in the process and that concerns regarding the adverse impact
of a proposed transmission solution should be clearly articulated and vetted with
stakeholders prior to project termination, and (2) any transmission project rejection
should be constrained by defined criteria in the NYISO OATT.282 NYISO argues that
part of NextEra’s requests are addressed in the October 15, 2013 Compliance Filing,
which states that the Market Monitoring Unit receives the draft Public Policy
Transmission Planning Report concurrently with stakeholders and will provide its
evaluation of the draft report to stakeholders prior to the NYISO stakeholder management
committee’s advisory vote on the report.283 NYISO notes that if the NYISO Board
revises the report, it will be returned to the NYISO stakeholder management committee
for review and comment, adding that the NYISO Board cannot make a final
determination on the revised report without reviewing such comments.284
119. The Filing Parties offer no objection to the OATT revisions proposed by the
Long Island Power Authority to account for its role in the transmission planning process
in the Long Island Transmission District, with one exception, and therefore offer no
objection to incorporating the Long Island Power Authority’s proposed revisions, along
with any conforming edits, into the NYISO OATT in a further compliance filing.285
However, the Filing Parties state that the Long Island Power Authority’s proposed
revisions to section 31.4.8.2, clarifying that any selection of a transmission project by
NYISO that involves the physical modification of transmission facilities within the
Long Island Transmission District shall not affect the project proponent’s responsibility
to apply for and receive all necessary permits or authorizations, may be read to limit
NYISO’s ability to include certain regional or interregional transmission projects in its
regional transmission plan or limit the effectiveness of NYISO’s interconnection
281 Id. at 49-50.
282 Id. at 50 (citing NextEra Comments at 22).
283 Id. (citing NYISO OATT, Attachment Y, §§ 31.4.10.1, 31.4.6.8.5). 284 Id. (citing NYISO OATT, Attachment Y, § 31.4.2.10).
285 Id. at 43.
Docket No. ER13-102-001, et al.- 67 -
requirements.286 The Filing Parties propose, after discussion with the Long Island Power Authority, that section 31.4.8.2 state:
Any selection of a project by the [NYISO] under this Section
31.4.8 that involves the physical modification of facilities
within the Long Island Transmission District shall not affect
the obligation and responsibility of the project proponent to
apply for, and receive all necessary authorizations or permits
required by federal or state law for such modifications.
120. The Filing Parties state that the Long Island Power Authority agrees that this formulation fulfills the Long Island Power Authority’s expressed purpose.287
(e)Commission Determination
121. We find that the Filing Parties’ proposed revisions to its regional transmission
planning process partially comply with the directives in the First Compliance Order
concerning the consideration of transmission needs driven by public policy requirements, and the evaluation288 and selection of more efficient or cost-effective transmission
solutions to meet such transmission needs.
122. We find the Filing Parties’ revised definition of public policy requirements to be consistent with the requirements of Order No. 1000. In response to the First Compliance Order, the Filing Parties have removed the clause “that drives the need for expansion or upgrades to the New York State bulk transmission facilities” and included a reference to duly enacted laws or regulations passed by a local governmental entity.
123. We further find that the Filing Parties’ proposed OATT revisions to identify how
stakeholders and interested parties in the public policy transmission planning process
may submit proposals for non-transmission alternatives meet the requirements of Order
No. 1000. The Filing Parties’ proposal provides that a proposed solution to meet a Public
286 Id. at 44 (citing the Long Island Power Authority Comments at 11-12).
287 Id.
288 NYISO’s process for evaluating, for selection in the regional transmission plan for purposes of cost allocation, solutions proposed to address transmission needs driven by public policy requirements, including the criteria NYISO considers, is discussed more fully below in the Evaluation Process for Transmission Proposals for Selection in the Regional Transmission Plan for Purposes of Cost Allocation section.
Docket No. ER13-102-001, et al.- 68 -
Policy Transmission Need may include multiple components or resource types and that NYISO will consider all resource types, including generation, transmission, demand response, or a combination of these resource types.289
124. We find that the Filing Parties’ proposal regarding the identification of Public
Policy Transmission Needs that NYISO should evaluate and request specific proposed
solutions to address, as well as the proposed process for selecting the more efficient or
cost-effective transmission solution to satisfy an identified Public Policy Transmission
Need in the regional transmission plan for purposes of cost allocation comply with the
requirements of Order No. 1000. Several commenters contend that NYISO’s proposed
OATT provisions to allow the NYISO Board to elect to not select a transmission solution to satisfy a Public Policy Transmission Need were not expressly required in the First
Compliance Order. The First Compliance Order directed NYISO to amend its previous proposal, pursuant to which the New York Public Service Commission would select
among proposed solutions, and required that NYISO select in the regional transmission plan for purposes of cost allocation the more efficient or cost-effective transmission
solution to meet transmission needs driven by public policy requirements. NYISO’s
current proposal relating to the NYISO Board’s authority to select transmission solutions falls within the context of revisions to allow NYISO to select relevant transmission
solutions; thus, we do not consider the proposed changes to be beyond the scope of the
Commission’s directives in the First Compliance Order.
125. To the extent that a transmission facility to address transmission needs driven by
public policy requirements is selected in the regional transmission plan for purposes of
cost allocation, NYISO must make that selection. However, Order No. 1000 does not
require public utility transmission providers to select any particular transmission facility
to address transmission needs driven by public policy requirements in the regional
transmission plan for purposes of cost allocation.290 Thus, we find that the Filing Parties’
proposal to allow the NYISO Board to elect to not select a transmission solution to
satisfy a Public Policy Transmission Need is reasonable and is not inconsistent with the
requirements of Order No. 1000. Nevertheless, Order No. 1000 also requires that the
process to make any such selection culminate in a determination that is sufficiently
detailed for stakeholders to understand why a particular transmission project was selected
or not selected in the regional transmission plan for purposes of cost allocation.291 As
289 NYISO OATT, Attachment Y § 31.4.6.2.
290 See Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 331 (“[T]he
Commission is not dictating that any particular proposals be accepted or that selected transmission facilities be constructed.”).
291 Id. P 328.
Docket No. ER13-102-001, et al.- 69 -
such, it is important that any decision relating to the selection of more efficient or
cost-effective transmission solutions allow for stakeholder participation and transparency. Therefore, the Filing Parties must provide on compliance, within 60 days of the date of
issuance of this order, OATT revisions that require the NYISO Board, in making a
decision regarding the more efficient or cost-effective transmission solution to a Public
Policy Transmission Need, to provide an explanation of why any proposed solutions,
determined to be sufficient and viable, were not selected in the regional transmission plan for purposes of cost allocation.
126. In addition, we note that NYISO states in its answer that the Market Monitoring
Unit will provide its evaluation of the draft Public Policy Transmission Planning Report
to stakeholders prior to NYISO’s Management Committee’s advisory vote on the report.
We expect, as this report is provided to stakeholders, any relevant stakeholder comments
related to the report’s findings will be considered by the NYISO Board in its final
decision.292
127. Regarding the Long Island Power Authority’s proposed revisions, Order No. 1000
strongly encourages state regulators to participate actively in the transmission planning
process, particularly with regard to the identification of transmission needs driven by
public policy requirements.293 As discussed in the First Compliance Order, the
Commission also encouraged the Long Island Power Authority to actively participate in
the public policy transmission planning process.294 While we recognize that the Filing
Parties offer no objection to the OATT revisions proposed by the Long Island Power
Authority, with one exception, such provisions were not included in the Filing Parties’
compliance filing and the Filing Parties have not proposed to amend their compliance
filing to reflect such provisions. Therefore, we will not require the Filing Parties to
revise the NYISO OATT to address the Long Island Power Authority’s proposal. If the
Filing Parties and the Long Island Power Authority agree to further OATT modifications,
consistent with the Commission’s findings in this order, the Filing Parties may include
those OATT revisions in a section 205 filing or in their next compliance filing and we
will consider the proposed OATT revisions at that time.
292 NYISO OATT Attachment Y, § 31.4.10.1.
293 See Order No. 1000-A, 139 FERC ¶ 61,132 at P 338.
294 First Compliance Order, 143 FERC ¶ 61,059 at P 150.
Docket No. ER13-102-001, et al.
ii.
- 70 -
Incorporating Consideration of Transmission Needs Driven by Public Policy Requirements in the Local Transmission Planning Process
(a)First Compliance Order
128. In the First Compliance Order, the Commission found that the Filing Parties’
proposal to incorporate the consideration of transmission needs driven by public policy
requirements in the local transmission planning process partially complied with the
requirements of Order No. 1000.295 The Commission stated that the Filing Parties
satisfied Order No. 1000’s requirement that each public utility transmission provider
revise its OATT to include procedures to identify at the local level transmission needs
driven by public policy requirements that allow stakeholders an opportunity to provide
input regarding the transmission needs they believe are driven by public policy
requirements. In addition, the Commission determined that the Filing Parties’ proposal
provided that there will be a posting on the Transmission Owner’s website that describes
(i) those transmission needs driven by public policy requirements that have been
identified for evaluation for potential transmission solutions in the local transmission
planning process; and (ii) those transmission needs driven by public policy requirements introduced by stakeholders that were not identified for evaluation for potential
transmission solutions in the local transmission planning process and why they were not selected for further evaluation.296
129. However, the Commission found that the Filing Parties failed to describe a just
and reasonable and not unduly discriminatory process through which the Transmission Owners will identify, out of the larger set of transmission needs driven by public policy requirements that may be proposed, those transmission needs for which transmission
solutions will be evaluated in the local transmission planning process, including an
explanation of how each Transmission Owner’s local transmission planning process
determines whether to move forward regarding transmission needs driven by public
policy requirements.297 Therefore, the Commission directed the Filing Parties to propose such a process on compliance, as well as procedures to evaluate at the local level
potential transmission solutions to identified transmission needs driven by public policy requirements, including those proposed by stakeholders.298
295 Id. P 156.
296 Id. P 157.
297 Id. P 159.
298 Id. P 160.
Docket No. ER13-102-001, et al.- 71 -
(b)Summary of Compliance Filing
130. To comply with the Commission’s directive that the NYISO OATT set forth a
process to identify transmission needs for which solutions will be evaluated in the local
transmission planning process, the Filing Parties propose that a market participant or
other interested party may submit its proposal for a transmission need driven by public
policy requirements to NYISO and the relevant New York Transmission Owner.299 The
Filing Parties propose to revise Attachment Y to state that such proposals must identify
the specific public policy requirement driving the transmission need and explain why a
local upgrade is needed to implement it. The Filing Parties propose to post all proposed
local system transmission needs on the NYISO website and will request that the New
York Department of Public Service review the proposals and provide input to the relevant
New York Transmission Owner to assist that Transmission Owner in its determination.300
131. After considering input from the New York Department of Public Service and
information submitted by the entity proposing the proposal or any other party, the
New York Transmission Owner will determine whether there are transmission needs
driven by public policy requirements for which a local transmission solution should be
evaluated. A list of such needs will be posted on the New York Transmission Owner’s
website and the Filing Parties state that the New York Transmission Owner will explain
why it identified the needs for which solutions are to be evaluated, and why it declined to
identify other such needs.301
132. In response to the Commission’s directive that the Filing Parties provide
procedures for evaluating potential transmission solutions to identified transmission
needs driven by public policy requirements in the local transmission planning process,
the Filing Parties propose that each New York Transmission Owner will evaluate
proposed transmission solutions for inclusion in its local transmission plan.302 In
consultation with the New York Department of Public Service, the Filing Parties propose
that the New York Transmission Owner will evaluate proposed transmission solutions to
determine the more efficient or cost-effective solutions by considering relative costs and
benefits of proposed transmission solutions, and their impact on the New York
299 NYISO OATT, Attachment Y, § 31.2.1.1.2.2.
300 Id.
301 October 15, 2013 Compliance Filing at 45; NYISO OATT, Attachment Y, § 31.2.1.1.2.2.
302 October 15, 2013 Compliance Filing at 45; NYISO OATT, Attachment Y, § 31.2.1.1.2.3.
Docket No. ER13-102-001, et al.- 72 -
Transmission Owner’s transmission system and customers. Any local transmission
solution identified by the New York Transmission Owner will be reviewed with
stakeholders as part of its local transmission planning process and will be included in the New York Transmission Owner’s subsequent local transmission plan posted on its
website.303 In conducting its evaluation, the New York Transmission Owner will use criteria relevant to the public policy requirement driving the transmission need, which may include published local planning criteria and assumptions.304
(c)Protests/Comments
133. NextEra expresses concerns with the local transmission planning process for local
transmission needs driven by public policy requirements. NextEra contends that the
Filing Parties’ proposal appears to grant incumbent transmission owners “unfettered
discretion” to determine whether a given public policy requirement is best served through
regional or local transmission planning by allowing a transmission owner to itself
determine whether there is a transmission need driven by a public policy requirement on
its local system and to then select the transmission solution to fit that need.305
(d)Commission Determination
134. We find that the Filing Parties’ proposed revisions to the local transmission
planning process comply with the directives of the First Compliance Order concerning
the consideration of transmission needs driven by public policy requirements. The Filing
Parties have proposed a just and reasonable and not unduly discriminatory process by
which each NYISO Transmission Owner will identify those transmission needs driven by
public policy requirements for which transmission solutions will be evaluated in the local
transmission planning process. The Filing Parties’ proposed process provides
stakeholders an opportunity to propose transmission needs driven by public policy
requirements, which will be posted on the NYISO website. Each New York
Transmission Owner will also post on its website a list of transmission needs for which
transmission solutions will be requested and evaluated, and an explanation of why other
identified transmission needs were not selected. The Filing Parties’ proposal also
includes procedures to evaluate proposed transmission solutions in the local transmission
planning process to determine the more efficient or cost-effective solution in coordination
303 October 15, 2013 Compliance Filing at 45; NYISO OATT, Attachment Y, § 31.2.1.1.2.3.
304 NYISO OATT, Attachment Y, § 31.2.1.1.2.3.
305 NextEra Protest at 19 (citing NYISO OATT, Attachment Y, §§ 31.2.1.1.2.2,
31.2.1.1.2.3).
Docket No. ER13-102-001, et al.- 73 -
with stakeholders and the New York Department of Public Service. Accordingly, we
find that the Filing Parties’ proposal complies with the Commission’s directives in the
First Compliance Order that the Filing Parties revise the NYISO OATT to: (1) describe a just and reasonable and not unduly discriminatory process through which the New York Transmission Owners will identify those transmission needs driven by public policy
requirements for which transmission solutions will be evaluated in the local transmission planning process; and (2) include procedures to evaluate at the local level potential
transmission solutions to identified transmission needs driven by public policy
requirements, including those proposed by stakeholders.
135. NextEra contends that allowing a transmission owner to identify transmission
needs driven by public policy requirements and select the more efficient or cost-effective
solution for inclusion in the transmission owner’s local transmission plan provides the
transmission owner with “unfettered discretion” to determine whether a public policy
requirement is best served through the local or regional transmission planning process.
We disagree with this assertion as the Filing Parties’ proposed process provides ample
opportunity for stakeholder engagement. Moreover, the Filing Parties’ proposed local
transmission planning process provides that NYISO will review New York Transmission
Owner local transmission plans, evaluate whether other proposed solutions may
effectively meet the local transmission need, and report these results in NYISO’s Public
Policy Transmission Planning Report.
3. Nonincumbent Transmission Developer Reforms
136. In Order No. 1000, the Commission adopted a framework of reforms to ensure
that nonincumbent transmission developers have the opportunity to participate in the
transmission development process. In particular, public utility transmission providers
must eliminate federal rights of first refusal from Commission-jurisdictional tariffs and
agreements and develop not unduly discriminatory qualification criteria and processes
governing the submission and evaluation of proposals for new transmission facilities.
a.Federal Rights of First Refusal
137. Order No. 1000 required each public utility transmission provider to remove
provisions in Commission-jurisdictional tariffs and agreements that establish a federal
right of first refusal for an incumbent transmission provider with respect to transmission
facilities selected in a regional transmission plan for purposes of cost allocation.306 The
306 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 313. In Order No. 1000-A, the Commission clarified that the phrase “a federal right of first refusal” refers only to rights of first refusal that are created by provisions in Commission-jurisdictional tariffs or agreements. Order No. 1000-A, 139 FERC ¶ 61,132 at P 415.
Docket No. ER13-102-001, et al.- 74 -
requirement to eliminate a federal right of first refusal does not apply to local
transmission facilities,307 or to the right of an incumbent transmission provider to build,
own, and recover costs for upgrades to its own transmission facilities, regardless of
whether an upgrade has been selected in the regional transmission plan for purposes of
cost allocation.308 In addition, the requirement does not remove, alter, or limit an
incumbent transmission provider’s use and control of its existing rights-of-way under
state law.309
i.First Compliance Order
138. In the First Compliance Order, the Commission determined that NYISO’s
proposal concerning federal rights of first refusal partially complied with the
requirements of Order No. 1000, finding as an initial matter that NYISO did not have a
federal right of first refusal designated in the OATT. The Commission accepted, subject
to compliance, NYISO’s proposal to add a new section to Attachment Y providing that:
307 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 226, 258, 318. Order
No. 1000 defined local transmission facilities as transmission facilities located solely
within a public utility transmission provider’s retail distribution service territory or
footprint that are not selected in the regional transmission plan for purposes of cost
allocation. Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 63. The Commission
clarified in Order No. 1000-A that a local transmission facility is one that is located
within the geographical boundaries of a public utility transmission provider’s retail
distribution service territory, if it has one; otherwise the area is defined by the public
utility transmission provider’s footprint. In the case of an RTO or ISO whose footprint covers the entire region, local transmission facilities are defined by reference to the retail distribution service territories or footprints of its underlying transmission owing
members. Order No. 1000-A, 139 FERC ¶ 61,132 at P 429.
308 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 226, 319; Order
No. 1000-A, 139 FERC ¶ 61,132 at P 426. The Commission stated in Order No. 1000 that upgrades to transmission facilities included such things as tower change outs or
reconductoring, regardless of whether or not an upgrade has been selected in the regional transmission plan for purposes of cost allocation. Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 319. The Commission clarified in Order No. 1000-A that the term
“upgrade” means an improvement to, addition to, or replacement of a part of, an existing transmission facility. The term does not refer to an entirely new transmission facility. Order No. 1000-A, 139 FERC ¶ 61,132 at P 426.
309 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 319.
Docket No. ER13-102-001, et al.- 75 -
Nothing in this Attachment Y affects the right of an
incumbent Transmission Owner to: (1) build, own, and
recover costs for upgrades to the facilities it owns, regardless of whether the upgrade has been selected in the regional
transmission plan for purposes of cost allocation; (2) retain, modify, or transfer rights-of-way subject to relevant law or
regulation granting such rights-of-way; or (3) develop a local transmission solution that is not eligible for regional cost
allocation to meet its reliability needs or service obligations in its own service territory or footprint.310
139. The Commission explained that the provision stating that “[n]othing in this
Attachment Y affects the right of an incumbent Transmission Owner to . . . retain,
modify, or transfer rights-of-way subject to relevant law or regulation granting such
rights-of-way” simply reiterates Order No. 1000’s conclusion that the “retention,
modification, or transfer of rights-of-way remain subject to relevant law or regulation
granting the rights-of-way,” and that the Order No. 1000 reforms “are not intended to
alter an incumbent transmission provider’s use and control of its existing rights-of-
way.”311
140. The Commission also found that NYISO did not define the term “upgrade” as it is
used in that section of Attachment Y. Therefore, the Commission required NYISO to
define the term consistent with the definition of upgrade in Order No. 1000, so that it
would be clear which transmission facilities may fall within the definition of upgrade in
Attachment Y.
ii.Summary of Compliance Filing
141. In response to the Commission’s directive that NYISO provide on compliance a
definition of the term “upgrade” in Attachment Y that is consistent with the definition of
upgrade in Order No. 1000, the Filing Parties propose to add a new provision to
Attachment Y that states “[f]or purposes of [s]ection 31.6.4, the term ‘upgrade’ shall refer
to an improvement to, addition to, or replacement of an existing transmission facility or
any part thereof and shall not refer to an entirely new transmission facility.”312
310 First Compliance Order, 143 FERC ¶ 61,059 at PP 168-171; see also NYISO OATT, Attachment Y, § 31.6.4 (2.0.0).
311 First Compliance Order, 143 FERC ¶ 61,059 at P 171. 312 NYISO OATT, Attachment Y, § 31.6.4.
Docket No. ER13-102-001, et al.- 76 -
142. In addition, the Filing Parties propose additional revisions to section 31.6.4 of Attachment Y to provide:
Nothing in this Attachment Y affects the right of aAn
incumbent Transmission Owner shall have the right to:
(1) build, own, and recover costs for upgrades to the
transmission facilities it owns, regardless of whether the
upgrade has been selected in the regional transmission plan
for purposes of cost allocation; (2) retain, modify, or transfer
rights-of-way subject to relevant law or regulation granting
such rights-of-way; or (3) develop, build, own, and operate a
local transmission solution that is not eligible for regional
cost allocation to meet its reliability or other needs or service
obligations in its own service territory or footprint.
143. The Filing Parties assert that the New York Transmission Owners have an express right to take the actions set forth above, and, therefore, the clarifications “eliminate
ambiguity regarding the incumbent [New York Transmission Owners’] rights concerning upgrades to their facilities and the development of transmission facilities not eligible for regional cost allocation to meet the needs of their service territories.”313
144. The Filing Parties add that removing the word local is necessary to clarify that
incumbent Transmission Owners may continue to develop and construct transmission
facilities “that pass through or are located, in part, in the neighboring [New York
Transmission Owner’s] service territory or are jointly owned by neighboring [New York
Transmission Owners]” if the incumbent Transmission Owner is not seeking regional
cost allocation.314
iii.Protests/Comments
145. LS Power argues that the intent or purpose of section 31.6.4 providing that an
“incumbent transmission owner shall have the right to build, own, and recover costs for
upgrades to the transmission facilities it owns, regardless of whether the upgrade has
been selected in the regional plan for purposes of cost allocation” is unclear. In
LS Power’s estimation, under Order No. 1000, the incumbent transmission owner has the
right to build any “local” projects and in addition, the incumbent transmission owner
retains a right of first refusal to construct “upgrades” to its transmission facilities.
LS Power thus argues that the situation the OATT provision is intended to address is
313 October 15, 2013 Compliance Filing at 57.
314 Id.
Docket No. ER13-102-001, et al.- 77 -
unclear, particularly with its reference to “regardless of whether the upgrade has been
selected in the regional plan for purposes of cost allocation.” According to LS Power, the provision adds nothing to the rights of incumbent transmission owners and should be struck. LS Power argues that upgrades, even if ultimately assigned to the incumbent
transmission owners, should not be permitted to have an end-run around an Order
No. 1000 transmission planning process.315
146. Several protesters assert that the Commission should reject the Filing Parties’
proposal to remove the term “local” from section 31.6.4 of Attachment Y. Entergy and
Multiple Intervenors and IPPNY assert that the Commission did not require Filing Parties
to remove the term “local” in the First Compliance Order and therefore the revisions
exceed the scope of the First Compliance Order.316 Multiple Intervenors and IPPNY
state that the NYISO Agreement clearly delineates the stakeholder process and
procedures required to amend the NYISO OATT and argue that the Filing Parties may
not use a compliance filing to amend the OATT in violation of the NYISO’s shared
governance procedures by including proposals beyond the scope of the directives in the
First Compliance Order.
147. In addition, Multiple Intervenors and IPPNY argue that the removal of the term
would allow incumbent transmission owners to develop, build, and operate any number
of facilities on joint systems and would permit them to do so completely outside of the
NYISO’s regional transmission planning framework, including its cost allocation and
cost recovery mechanisms. Multiple Intervenors and IPPNY assert that NYISO’s
proposal directly contradicts Order No. 1000’s directives regarding NYISO’s review of
local transmission plans and would substantially impair NYISO’s ability to serve its
planning function.317 LS Power notes that NYISO’s OATT does not include a definition
of local transmission projects,318 but does include numerous references to the
Transmission Owner’s “local system” in other sections, such as “Local Transmission
315 LS Power Protest at 23-24.
316 Multiple Intervenors and IPPNY Protest at 34-35; Entergy Nuclear Power Marketing Protest at 16-18.
317 Multiple Intervenors and IPPNY Protest at 32-33.
318 LS Power Protest at 16 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 63 and Order No. 1000-A, 139 FERC ¶ 61,132 at P 423).
Docket No. ER13-102-001, et al.- 78 -
Owner Planning Process and “Evaluation of Proposed Local Transmission Solutions.”319 LS Power argues that “local system” should be a defined term that clarifies that the local transmission plan is confined to projects within the retail distribution service territory of the transmission owner and for which the costs will be allocated exclusively to the
customers within that retail distribution service territory.320
iv.Answer
148. The Filing Parties respond that the Commission should accept the proposed
changes to section 31.6.4, because removing the term “local” furthers the intent of Order
No. 1000. They point to the Commission’s statement that Order No. 1000 applies to
facilities included in a regional transmission plan “for purposes of cost allocation,” and
that such facilities may be only a “subset of the transmission facilities in the regional
transmission plan.”321 The Filing Parties state that, rather than seeking to bypass
NYISO’s regional planning process, the removal of the term “local” from section 31.6.4
clarifies that an incumbent transmission owner may build and own transmission facilities
in another transmission owner’s service territory in order to reliably serve its own
customers without seeking regional cost allocation, as permitted by Order No. 1000.
They argue that removing the term local eliminates ambiguity and ensures that an
incumbent transmission owner retains the right to develop and construct transmission to
meet its customers’ needs, even to the extent that the facilities may pass through or be
located in a neighboring New York Transmission Owner’s service territory, provided the
incumbent transmission owner is not seeking regional cost allocation.322
149. With regard to the term “upgrade,” the Filing Parties also respond to LS Power’s
arguments that the Commission should delete the provision in section 31.6.4 that the
“incumbent transmission owner shall have the right . . . to build, own and recover costs
for upgrades to the transmission facilities it owns, regardless of whether the upgrade has
been selected in the regional plan for cost allocation purposes,” and that this language is
unclear because the incumbent transmission owner already has the right to build any local
319 Id. at 17 (referencing section 31.2.1 (Local Transmission Owner Planning Process), section 31.2.1.1.2.2 (Determination of Local Transmission Needs Driven by Public Policy Requirements) and section 31.2.1.1.2.3 (Evaluation of Proposed Local Transmission Solutions)).
320 Id.
321 Filing Parties Answer at 40 n.121 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 63).
322 Id. at 40.
Docket No. ER13-102-001, et al.- 79 -
transmission projects and retains a right of first refusal to construct upgrades.323 They
note that the Commission has ruled that an incumbent transmission owner has the right to
build, own, and recover costs for upgrades to the transmission facilities that it owns,
regardless of whether the upgrade has been selected in the regional transmission plan for
purposes of cost allocation,324 and the Filing Parties’ proposed addition to section 31.6.4
clarifies that point and tracks the language expressly approved by the Commission with
regard to the meaning of the term “upgrades.” The Filing Parties state that they have
defined “upgrade” consistent with the Commission’s definition set forth in Order
No. 1000-A, which defines an upgrade as “an improvement to, or addition to, or
replacement of a part of, an existing transmission facility.”325 They additionally note
that the Commission has required clarification on the definition of “upgrades” in other
Order No. 1000 compliance filings,326 and state that their proposed section 31.6.4
provides the necessary clarification.
v.Commission Determination
150. We find that the Filing Parties have partially complied with the Commission’s
directive in the First Compliance Order to provide a definition of an upgrade. However, we reject the additional changes NYISO proposes to section 31.6.4 as beyond the
directives of the First Compliance Order.
151. The Filing Parties propose to define the term upgrade to be “an improvement to,
addition to, or replacement of an existing transmission facility or any part thereof,”
which, for purposes of section 31.6.4(1), “shall not refer to an entirely new transmission
facility.”327 We find that the Filing Parties’ proposed definition of upgrade partially
323 Id. at 41 nn.125-26 (citing LS Power Protest at 24-25).
324 Id. at 41 n.127 (citing LS Power Protest at 23).
325 Id. at 42 (referring to October 15, 2013 Compliance Filing at 57, which cites to Order No. 1000-A, 139 FERC ¶ 61,132 at P 426).
326 Id. at 42 n.12 (citing PJM Interconnection, LLC, 142 FERC ¶ 61,214 at P 227 (2013) (requiring PJM to revise section 1.5.8(l)(i) of its Schedule 6 to clarify and define the term “upgrade” and make any necessary conforming revisions to Schedule 6, its
OATT and Agreements. PJM had proposed that “Transmission Owner(s) in whose
Zone(s) a proposed Short-term Project or Long-lead Project is to be located will be the Designated Entity for the project, when the Short-term Project or Long-lead Project is an upgrade to a Transmission Owner’s own transmission facilities . . .”)).
327 October 15, 2013 Compliance Filing at 57.
Docket No. ER13-102-001, et al.- 80 -
complies with Order No. 1000. Order No. 1000-A defines an upgrade as “an
improvement to, addition to, or replacement of a part of, an existing transmission
facility,” and provides that the term “does not refer to an entirely new transmission
facility.”328 The Filing Parties’ proposed definition is inconsistent with the definition in Order No. 1000-A because it would include as an upgrade the replacement of an entire transmission facility rather than the replacement of a part of an existing transmission
facility. We therefore direct the Filing Parties to submit, within 60 days of the issuance of this order, further compliance filings that revise the NYISO OATT to modify the
definition of upgrades so that only the replacement of part of an existing transmission facility can be considered an upgrade.
152. The Filing Parties also propose to change the language related to rights of way in
section 31.6.4. Specifically, NYISO proposes: (1) to replace the statement that
“[n]othing in this Attachment Y affects the right of an incumbent Transmission Owner
to… retain, modify, or transfer rights-of-way,” with the statement that “[a]n incumbent
Transmission Owner shall have the right to… retain, modify, or transfer rights-of way
subject to relevant law or regulation granting such rights-of-way”; and (2) to replace
language recognizing the right of an incumbent transmission owner to “develop a local
transmission solution that is not eligible for regional cost allocation to meet its reliability
needs or service obligations in its own service territory or footprint,” with language
providing that an incumbent transmission owner may “develop, build, own, and operate a
transmission solution that is not eligible for regional cost allocation to meet its reliability
or other needs or service obligations in its own service territory or footprint.” In the First
Compliance Order, the Commission accepted these aspects of section 31.6.4 as originally
proposed and, beyond defining the term upgrades, did not direct NYISO to make any
further changes. Accordingly, the Commission rejects the proposed changes to
section 31.6.4 as outside the scope of compliance with the First Compliance Order.
153. We will not require NYISO to define the term “local system” consistent with
Order No. 1000. LS Power’s request that NYISO define “local system” consistent with Order No. 1000 is beyond the directives of the First Compliance Order. In the First
Compliance Order, the Commission accepted NYISO’s proposed exceptions from the requirement to eliminate the federal right of first refusal, including an exception for local transmission projects in section 31.6.4 and did not require further changes to that part of the provision.329 Accordingly, we reject LS Power’s request.
328 Order No. 1000-A, 139 FERC ¶ 61,132 at P 426.
329 First Compliance Order, 143 FERC ¶ 61,059 at P 169.
Docket No. ER13-102-001, et al.- 81 -
b.Qualification Criteria
154. Order No. 1000 required each public utility transmission provider to revise its
OATT to establish appropriate qualification criteria for determining an entity’s eligibility
to propose a transmission project for selection in the regional transmission plan for
purposes of cost allocation.330 These criteria must not be unduly discriminatory or
preferential when applied to either an incumbent transmission provider or a
nonincumbent transmission developer.331 In addition, public utility transmission
providers must adopt procedures for timely notifying transmission developers of whether
they satisfy the region’s qualification criteria and allowing them to remedy any
deficiencies.332
155. Order No. 1000-A clarified that it would be an impermissible barrier to entry to require a transmission developer to demonstrate, as part of the qualification criteria, that it has, or can obtain, state approvals necessary to operate in a state to be eligible to
propose a transmission facility.333
i.First Compliance Order
156.The Commission found that NYISO’s proposal partially complied with Order
No. 1000’s requirement to establish qualification criteria that are not unduly
discriminatory or preferential for determining an entity’s eligibility to propose a
transmission project for selection in the regional transmission plan for purposes of cost
allocation.334 Regarding NYISO’s proposal to have a two-phase qualification process,
consisting of a pre-qualification phase and a qualification phase, the Commission
determined that “it is reasonable for NYISO to use a two stage qualification process that
considers, first, whether an entity has or can draw upon the financial resources, technical
expertise, and experience needed to develop, construct, operate and maintain a
[transmission] project, and later, after the transmission developer has proposed a
transmission project for selection in the regional transmission plan for purposes of cost
330 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 225, 323. 331 Id. P 323.
332 Id. P 324.
333 Order No. 1000-A, 139 FERC ¶ 61,132 at P 441.
334 First Compliance Order, 143 FERC ¶ 61,059 at P 191.
Docket No. ER13-102-001, et al.- 82 -
allocation, whether an entity is eligible to develop a transmission project that is selected in the regional transmission plan for purposes of cost allocation.”335
157. However, the Commission found that the Filing Parties’ proposed pre-
qualification procedures did not identify when NYISO “will inform an entity whether it is
pre-qualified and thus eligible to propose a transmission project for selection in the
regional transmission plan.”336 The Commission explained that NYISO should make this
determination before the entity submits the transmission project for selection in the
regional transmission plan for purposes of cost allocation and thus directed the Filing
Parties to file a further compliance filing proposing OATT revisions that explain when
NYISO will inform an entity whether or not it has met the pre-qualification criteria.337
158. In addition, the Commission explained that it would be inconsistent with Order
No. 1000 to permit only qualified entities to propose transmission projects for selection in
the regional transmission plan for purposes of cost allocation because Order No. 1000
specifically stated that the transmission developer qualification criteria should not be
335 Id. P 193 (internal citations omitted). In the October 11, 2012 Compliance
Filing, the Filing Parties proposed pre-qualification criteria to give entities seeking to
qualify as transmission developers an opportunity to demonstrate that they have or can
draw upon the financial resources, technical expertise, and experience needed to develop, construct, operate and maintain: (1) a project to meet identified reliability needs; (2) a
project proposed to address specific congestion identified in the Congestion Assessment and Resource Integration Study; or (3) a transmission solution to a transmission need
driven by a public policy requirement.
In addition, the Filing Parties proposed to use the following criteria to determine
whether a pre-qualified transmission developer is eligible to develop a project as a
solution to an identified reliability need: (1) the current and expected capabilities of the
entity to finance, license, and construct a proposed solution and operate and maintain it
for the life of the project; (2) the entity’s existing rights-of-way and substations that
would contribute to the project in question; (3) the experience of the entity in acquiring
rights-of-way, and the ability of the entity to acquire rights-of-way, if necessary, that
would facilitate approval and construction; (4) the financial resources of the entity;
(5) the technical and engineering qualifications and experience of the entity; and
(6) whether the entity has the ability to meet the requirements for the submission of a
valid Interconnection Request as provided in the [NYISO] OATT Attachments X or Z, or a valid transmission expansion Study Request under [NYISO] OATT [s]ection 3.7.
336 First Compliance Order, 143 FERC ¶ 61,059 at P 192.
337 Id.
Docket No. ER13-102-001, et al.- 83 -
applied to an entity proposing a transmission project if that entity does not intend to
develop the proposed transmission project.338 Therefore, the Commission directed the Filing Parties to remove provisions that require that entities be qualified in order to offer projects for consideration in the regional economic and public policy requirements
transmission planning processes.
159. Further, the Commission found that Filing Parties’ proposal did not include
sufficient detail about the demonstration that a prospective transmission developer must
make regarding its financial resources. The Commission stated that, without more
detailed qualification criteria, the Filing Parties cannot meet Order No. 1000’s
requirement that they establish not unduly discriminatory or preferential qualification
criteria for determining an entity’s eligibility to propose a transmission project for
selection in the regional transmission plan for purposes of cost allocation. The
Commission directed the Filing Parties to revise the proposed financial prequalification
and entity qualification criteria to describe the information that a potential transmission
developer must provide to demonstrate that it meets these criteria.339
160. The Commission also found that the Filing Parties’ proposed criteria that would
consider an entity’s existing rights-of-way, an entity’s experience in acquiring or ability
to acquire rights-of-way, and an entity’s current and expected capabilities to license a
proposed transmission solution did not comply with Order No. 1000.340 Therefore, the
Commission directed the Filing Parties to remove these criteria from the entity
qualification criteria. Regarding the Filing Parties’ proposal to consider whether an
entity has the ability to meet the requirements for the submission of a valid
Interconnection Request, the Commission noted that such a requirement includes a
demonstration of Site Control.341 The Commission found that “requiring an entity to
demonstrate that is has Site Control as part of the qualification criteria is inappropriate”
and “could act as a barrier to entry.”342 Therefore, the Commission required the Filing
Parties to specify which requirements associated with submitting an interconnection
request or transmission expansion study request will apply in evaluating a transmission
338 Id. P 193 (referring to Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 324
n.304).
339 Id. P 194.
340 Id. P 196.
341 Id. P 197.
342 Id.
Docket No. ER13-102-001, et al.- 84 -
developer's qualifications. Finally, the Commission required the Filing Parties to revise NYISO’s OATT to clarify that the term “entity” includes affiliates.
161. The Commission required the Filing Parties to either provide further justification
explaining why the new section providing that “[a]ll entities developing an approved
project pursuant to the provisions in this Attachment Y must register with NERC and the
Northeast Power Coordinating Council [] for appropriate reliability functions and must
comply with all applicable Reliability Criteria” is needed or to remove the provision from
the OATT.
ii.Requests for Rehearing or Clarification
(a)Summary of Requests for Rehearing or
Clarification
162. LS Power seeks clarification of the Commission’s finding that NYISO, in
evaluating a transmission developer’s qualifications to develop a transmission project,
may consider whether the transmission developer’s existing resources and commitments
provide sufficient assurance that the transmission developer will be able to operate and
maintain a transmission facility for the life of the project.343 LS Power asserts that, while
it “does not disagree with the Commission’s statement that it would be ‘reasonable’ for
[NYISO] to consider the ability to maintain and operate a project for its life,” the
Commission should require NYISO to provide additional detail on what showing NYISO
would “deem sufficient to establish that an entity has sufficient financial resources to
operate and maintain a project for its life.”344 LS Power argues that it is unclear how
NYISO, or any other entity, can evaluate the ability of a company to operate and
maintain a transmission project “whose lifespan may be in excess of 40 years.”345
(b)Commission Determination
163. We deny LS Power’s request to require NYISO to provide additional detail in
Attachment Y identifying what showing NYISO would consider adequate to establish
that a prospective transmission developer has sufficient financial resources to operate and maintain a transmission facility “for the life of the project.” As the Commission found in the First Compliance Order, it is reasonable for NYISO to consider “whether [a]
343 LS Power Request for Clarification at 1 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 195).
344 Id. at 2.
345 Id.
Docket No. ER13-102-001, et al.- 85 -
transmission developer’s existing resources and commitments provide sufficient
assurance that the transmission developer will be able to operate and maintain a
transmission facility for the life of the project” in evaluating that transmission
developer’s qualification to be eligible to propose a transmission project for selection in
the regional transmission plan for purposes of cost allocation.346 Attachment Y provides
a sufficient level of detail to allow prospective transmission developers to understand that
NYISO will consider the transmission developer’s ability to operate and maintain the
transmission facility for the life of the project when reviewing the transmission
developer’s current and expected capabilities to finance, develop, construct, operate, and
maintain a transmission facility. Additionally, in the First Compliance Order, the
Commission required NYISO to propose OATT revisions describing the information that
a potential transmission developer must provide to demonstrate sufficient financial
resources to meet the qualification criteria.347 We note that NYISO’s revised
qualification criteria are sufficiently clear as to the specific financial information that
potential transmission developers must submit to demonstrate that they satisfy NYISO’s
qualification criteria and therefore deny LS Power’s request for further revisions.348 We
also note that, as revised on compliance, Attachment Y requires NYISO to notify a
prospective transmission developer if the information submitted is incomplete and allows
the transmission developer 30 days to submit additional information.349
iii.Compliance
(a)Summary of Compliance Filings
164. The Filing Parties explain that they have concluded, after having additional
discussions with NYISO stakeholders, that a single-stage qualification process will be a faster, less confusing, and more efficient process for both NYISO and interested
Developers.350 The Filing Parties state that this single-stage process does not make
substantive or material changes to entity qualification requirements. Therefore, the Filing Parties propose revisions to consolidate the pre-qualification and qualification
346 First Compliance Order, 143 FERC ¶ 61,059 at P 195.
347 Id. P 194.
348 NYISO OATT, Attachment Y, § 31.2.4.1.1. 349 Id. §§ 31.2.5.1, 31.4.4.3.
350 See October 15, 2013 Compliance Filing at 3. Developer is defined in
NYISO’s OATT as a person or entity, including a Transmission Owner, sponsoring or
proposing a project pursuant to Attachment Y. NYISO OATT, Attachment Y, § 31.1.1.
Docket No. ER13-102-001, et al.- 86 -
requirements in all three planning processes. The Filing Parties also propose revisions to establish time frames for the developer qualification requirements and to provide the additional detail required by the Commission.351
165. As the Filing Parties state, Attachment Y requires that NYISO “shall provide each Developer with an opportunity to demonstrate that it has or can draw upon the financial resources, technical expertise, and experience needed to develop, construct, operate and maintain a transmission project to meet identified Reliability Needs,” and NYISO “shall consider the qualifications of each Developer in an evenhanded and non-discriminatory manner, treating Transmission Owners and Other Developers alike.” 352
166. The proposed OATT language states that NYISO shall make a determination on the qualification of any Developer to propose to develop a transmission project as a solution to an identified Reliability Need based on the following criteria:353
31.2.4.1.1.1 The technical and engineering qualifications and
experience of the Developer relevant to the development,
construction, operation and maintenance of a transmission facility, including evidence of the Developer’s demonstrated capability to adhere to standardized construction, maintenance, and operating practices and to contract with third parties to develop, construct, maintain, and/or operate transmission facilities;
31.2.4.1.1.2 The current and expected capabilities of the Developer
to finance, develop and construct a transmission facility and to
operate and maintain it for the life of the facility. For purposes of
this criteria, the Developer shall provide NYISO a description of
transmission facilities (not to exceed ten) that the Developer has
previously developed, constructed, maintained or operated and the
status of those facilities, including whether the construction was
completed, whether the facility entered into commercial operations,
whether the facility has been suspended or terminated for any
reason, and evidence demonstrating the ability of the Developer to
address and timely remedy any operational failure of the facilities;
and
351 First Compliance Order, 143 FERC ¶ 61,059 at P 200. 352 NYISO OATT, Attachment Y, § 31.2.4.1.1.
353 Id.
Docket No. ER13-102-001, et al.- 87 -
31.2.4.1.1.3 The Developer’s current and expected capability to finance, or its experience in arranging financing for, transmission facilities. For purposes of NYISO’s determination, the Developer shall provide NYISO:
(1) evidence of its demonstrated experience financing or
arranging financing for transmission facilities, including a
description of such projects (not to exceed ten) over the
previous ten years, the capital costs and financial structure of
such projects, a description of any financing obtained for
these projects through rates approved by the Commission or a
state regulatory agency, the financing closing date of such
projects, and whether any of the projects are in default;
(2) its audited annual financial statements from the most recent three years and its most recent quarterly financial statement, or equivalent information;
(3) its credit rating from Moody’s Investor Services, Standard
& Poor’s, or Fitch, or equivalent information, if available;
(4) a description of any prior bankruptcy declarations,
material defaults, dissolution, merger or acquisition by the
Developer or its predecessors or subsidiaries occurring within the previous five years; and
(5) such other evidence that demonstrates its current and
expected capability to finance a project to solve a Reliability
Need.
167. The Filing Parties propose to revise the developer qualification criteria set forth in sections 31.2.4.1.1 (reliability), 31.3.2.4.1.1 (economic), 31.4.4.1 (public policy) to make the specific edits required by the Commission regarding removing the provisions
regarding rights-of-way.
168. Any Developer seeking to become qualified may submit the required information,
or update previously submitted information, at any time. NYISO shall within 15 days of
a Developer’s submittal, notify the Developer if the information is incomplete. If the
submittal is deemed incomplete, the Developer shall submit the additional information
within the 30 days of NYISO’s request. NYISO shall notify the Developer of its
qualification status within 30 days of receiving all necessary information. A Developer
shall retain its qualification status for a three-year period following the notification date;
provided, however, that NYISO may revoke this status if it determines that there has been
a material change in the Developer’s qualifications and the Developer no longer meets
the qualification requirements. A Developer that has been qualified shall inform NYISO
within thirty days of any material change to the information it provided regarding its
Docket No. ER13-102-001, et al.- 88 -
qualifications and shall submit to NYISO each year its most recent audited annual
financial statement when available. At the conclusion of the three-year period or
following NYISO’s revocation of a Developer’s qualification status, the Developer may re-apply for qualification status.354
169. The Filing Parties proposed qualification criteria and timing requirements for
economic projects355 and public policy projects356 that are similar to those above for
reliability projects. Any Developer that has not been determined by NYISO to be
qualified, but that wants to propose to develop a reliability or public policy project, must
submit to NYISO the information required for Developer qualification under sections
31.2.4.1.1 or 31.4.4.1 respectively within 30 days after a request for solutions is made by NYISO.357
170. The Filing Parties propose revisions to provide that for purposes of fulfilling the
requirements of the developer qualification criteria, the term “developer” includes
“affiliates” as that term is defined in the NYISO OATT.358 The revisions further propose
that if a transmission developer relies on its affiliate to satisfy its developer qualification
criteria, the affiliate must provide NYISO with the information required to demonstrate
its capability to satisfy the applicable qualification criteria. The affiliate must also
provide NYISO with a notarized officer’s certificate, signed by an authorized officer of
the affiliate with signatory authority, certifying that the affiliate will participate in the
transmission developer’s project in the manner described by the developer and will abide
by the requirements set forth in Attachment Y, the NYISO Tariffs, and the NYISO
Procedures related and applicable to the affiliate’s participation.359
354 October 15, 2013 Compliance Filing at 4.
355 NYISO OATT, Attachment Y, § 31.3.2.4.1.1. 356 Id. § 31.4.4.1.
357 Id. §§ 31.2.5.1, 31.4.4.3.
358 Affiliate is defined in the NYISO OATT as: “[w]ith respect to a person or
entity, any individual, corporation, partnership, firm, joint venture, association, joint-
stock company, trust or unincorporated organization, directly or indirectly controlling, controlled by, or under common control with, such person or entity. The term ‘control’ shall mean the possession, directly or indirectly, of the power to direct the management or policies of a person or an entity. A voting interest of ten percent or more shall create a rebuttable presumption of control.” Id. § 31.1.
359 Id. §§ 31.3.2.4.1, 31.3.2.4.1, 31.4.4.5.
Docket No. ER13-102-001, et al.- 89 -
171. The Filing Parties propose to retain section 31.6.5, which requires that “[a]ll
entities developing an approved project pursuant to the provisions in [] Attachment Y
must register with NERC, and [Northeast Power Coordinating Council] for appropriate
reliability functions and must comply with all applicable Reliability Criteria.”360 They
assert that the requirements in this provision are not part of the developer qualification
requirements and compliance with this requirement is not required as part of the
information a developer must provide in the project information requirements or part of
the metrics evaluated by NYISO in selecting a project. The Filing Parties state that the
purpose of this provision is to provide notification to new entities developing
transmission projects in New York that they must register with the appropriate reliability
organizations and comply with the applicable Reliability Criteria. The Filing Parties
believe that it is especially appropriate to include this notice in Attachment Y in light of
the Order No. 1000 requirements that incumbents and nonincumbent transmission
Developers are to be treated in the same manner.
(b)Commission Determination
172. We find that Filing Parties’ proposed single-stage qualification process and criteria
partially comply with the directives in the First Compliance Order. While the
Commission found reasonable in the First Compliance Order the Filing Parties’ proposal
to use a two-phase qualification process,361 we find that the Filing Parties’ proposal to
adopt a single-stage qualification process instead of a two-phase qualification process is
also reasonable. The Filing Parties explain that this proposal will result in a faster, less
confusing, and more efficient process and was developed after additional discussions
with NYISO stakeholders.362
173. Regarding the Commission’s finding that the Filing Parties must propose OATT
revisions identifying when NYISO will inform an entity whether it is pre-qualified and
thus eligible to propose a transmission project for selection in the regional transmission
plan, the Filing Parties explain that NYISO will notify a Developer seeking to be
qualified whether the information submitted is incomplete within 15 days of the
submission of such information. If the submittal is incomplete, the Developer will have
30 days from NYISO’s notice to submit the additional information. After receiving all necessary information, NYISO will have 30 days to notify the Developer of its
360 NYISO OATT, Attachment Y, § 31.6.5.
361 See supra paragraph 156; see also October 15, 2013 Compliance Filing at 3. 362 See First Compliance Order, 143 FERC ¶ 61,059 at P 158.
Docket No. ER13-102-001, et al.- 90 -
qualification status. We find that NYISO complied with these directives in the First Compliance Order.363
174. Second, the Commission directed the Filing Parties to remove provisions that
require entities to be qualified to offer projects for consideration in the regional economic and public policy requirements transmission planning processes. The Filing Parties have complied with this directive by removing the provisions in the formerly proposed
sections 31.3.2.4.1.3 (economic) and 31.4.5.3 (public policy).
175. Third, the Commission directed the Filing Parties to revise the proposed financial
pre-qualification and entity qualification criteria to describe in greater detail the
information that a potential transmission developer must provide to demonstrate that it
meets certain criteria. The Filing Parties partially complied by providing a list, for each
criteria, of information a Developer can provide to demonstrate that it is qualified. In
addition, the Filing Parties explain that a Developer may submit information at any time,
or update any previous submitted information it considers relevant to its qualifications.
176. However, we find that the Filing Parties’ proposed qualification criteria requiring
a Developer to provide information regarding its technical, engineering, and financial
qualifications and experience and transmission facilities that it has already developed364
are unreasonably stringent and may effectively prohibit a prospective transmission
developer that does not have past experience in financing, developing, constructing,
operating, and maintaining transmission facilities from qualifying, even though it could
provide other evidence, such as a plan to rely on third-party contractors with such
experience.365 We find that additional flexibility is warranted where a prospective
transmission developer itself does not have previous experience financing, developing,
constructing, operating, or maintaining transmission facilities. In such a case, the
prospective transmission developer should have the option of submitting a detailed plan
for financing, developing, constructing, operating, and maintaining a transmission
facility, such as the financial, technical, and engineering qualifications and experience
and capabilities of any third parties with which it will contract for these purposes.
Moreover, the prospective transmission developer should only be required to provide
information about transmission facilities that it has already developed to the extent that it
has developed transmission facilities. Accordingly, we require the Filing Parties to
submit, within 60 days of the date of issuance of this order, a further compliance filing
revising the qualification criteria to: (1) allow a prospective transmission developer to
363 Id. P 192.
364 NYISO OATT, Attachment Y, §§ 31.2.4.1.1.1, 31.2.4.1.1.2. 365 PacifiCorp, 143 FERC ¶ 61,151, at P 158 (2013).
Docket No. ER13-102-001, et al.- 91 -
submit a detailed plan for financing, developing, constructing, operating, and maintaining
a transmission facility, such as the financial, technical, and engineering qualifications and
experience and capabilities of any third parties with which it will contract for these
purposes, in the absence of previous experience financing, developing, constructing,
operating, or maintaining transmission facilities; and (2) require a prospective
transmission developer to provide information about transmission facilities that it has
already developed to the extent that it has developed transmission facilities.
177. The Commission directed NYISO to remove the proposed criteria to consider an
entity’s existing rights-of-way and experience in acquiring rights-of-way. NYISO
removed the criteria from the qualification requirements section. Therefore, we find that
the Filing Parties have complied with this directive of the First Compliance Order. The
Commission also directed NYISO to remove the reference to the current and expected
capabilities of the entity to “license” a proposed solution. In their compliance filing, the
Filing Parties proposed to remove this reference. Therefore, we find that the Filing
Parties have complied with this directive of the First Compliance Order. Furthermore,
the Commission directed NYISO to specify which requirements associated with
submitting an interconnection request or transmission expansion study request will apply
in evaluating a transmission developer’s qualifications. The Filing Parties removed the
requirements associated with submitting an interconnection request or transmission
expansion study request that will apply in evaluating a transmission developer’s
qualifications; therefore, we find that no further explanation is required.
178. In addition, the Commission directed NYISO to revise its OATT to “clarify that
the term ‘entity’ includes affiliates.”366 The Filing Parties have now replaced the term
“entity” with Developer. The Filing Parties propose revisions to sections 31.2.4.1,
31.3.2.4.1, and 31.4.4 of NYISO’s OATT to provide that for purposes of fulfilling the
requirements of the Developer’s qualification criteria, the term Developer includes
“Affiliates” as that term is defined in NYISO’s OATT. The Filing Parties state that
NYISO shall consider the qualification of each entity in an evenhanded and non-
discriminatory manner, treating transmission owners and other developers alike.367 The
Filing Parties further propose that if a Developer relies on its affiliate to satisfy its
Developer qualification criteria, the affiliate must provide NYISO with the information
required to demonstrate its capability to satisfy the applicable qualification criteria. The
affiliate also must provide NYISO with a notarized officer’s certificate, signed by an
authorized officer of the affiliate with signatory authority, certifying that the affiliate will
participate in the Developer’s transmission project in the manner described by the
Developer and will abide by the requirements set forth in Attachment Y, the NYISO
366 First Compliance Order, 143 FERC ¶ 61,059 at P 190.
367 NYISO OATT, Attachment Y, § 31.4.5.1.
Docket No. ER13-102-001, et al.- 92 -
Tariffs, and the NYISO Procedures related and applicable to the affiliate’s participation.
However, as stated above, NYISO must revise its OATT to allow transmission
developers to satisfy these criteria by submitting a detailed plan for developing,
constructing, operating, and maintaining a transmission facility, including the technical
and engineering qualifications and experience and capabilities of any third parties with
which it will contract for these purposes, in the absence of previous experience
developing, constructing, operating, or maintaining transmission facilities.
179. On compliance, the Filing Parties explain that the provision directing entities
developing an approved transmission project to register with NERC and the Northeast
Power Coordinating Council is meant to notify new entities that they must register with
NERC. In Order No. 1000-A, the Commission explained that “procedures for registering
as a Functional Entity are set by NERC and approved-by the Commission under section
215[], and it is not appropriate for the Commission to amend or interpret those
procedures here…to provide that a potential transmission developer must register with
NERC if not otherwise required under the NERC procedures… .”368 The Filing Parties’
explanation that they want to put new transmission developers on notice that they will
need to register with NERC is consistent with the Commission’s statements in Order
No. 1000. However, the provision can still be read as requiring new transmission
developers to register with NERC while developing a transmission project, because it
states that “all entities developing an approved project … must register with NERC and
[Northeast Power Coordinating Council]… and must comply with all applicable
Reliability Criteria.”369 This would be inconsistent with Order No. 1000. Accordingly,
we require the Filing Parties to submit, within 60 days of the date of issuance of this
order, a further compliance filing revising section 31.6.5 consistent with their explanation
that the section only puts new transmission developers on notice that they must register
with NERC and does not require new transmission developers to register with NERC.
c.Information Requirements
180. Order No. 1000 required each public utility transmission provider to identify in its
OATT the information that a prospective transmission developer must submit in support
of a transmission project proposed in the regional transmission planning process.370 The
information requirements must be sufficiently detailed to allow a proposed transmission
project to be evaluated comparably to other transmission facilities proposed in the
regional transmission planning process. The information requirements must be fair and
368 Order No. 1000-A, 139 FERC ¶ 61,132 at P 444.
369 NYISO OATT, Attachment Y, § 31.6.5 (emphasis added).
370 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 325.
Docket No. ER13-102-001, et al.- 93 -
not be so cumbersome as to effectively prohibit transmission developers from proposing
transmission facilities, yet not be so relaxed that they allow for relatively unsupported
proposals.371 Order No. 1000 also required each public utility transmission provider to
identify in its OATT the date by which a transmission developer must submit information
on a proposed transmission project to be considered in a given transmission planning
cycle.372
i.First Compliance Order
181. In the First Compliance Order, the Commission found that the provisions in
NYISO’s OATT dealing with information requirements for submitting transmission
projects for selection in the regional transmission plan for purposes of cost allocation,
including reliability, economic, and public policy transmission projects, partially comply
with the requirements of Order No. 1000. The Commission found that the Filing Parties’
proposed information requirements largely identify the information that a prospective
transmission developer must submit in support of its proposed transmission project in
sufficient detail to allow a proposed transmission project to be evaluated in the regional
transmission planning process on a basis comparable to other transmission projects that
are proposed in this process.373
182. However, the Commission found the Filing Parties’ proposal to be inconsistent
with Order No. 1000 because it did not propose dates by which information in support of
any of the three types of transmission projects that may be selected in the regional
transmission plan for purposes of cost allocation must be submitted for a proposed
transmission project to be considered in a given transmission planning cycle. Thus, the
Commission ordered the Filing Parties to file a further compliance filing proposing
OATT revisions that include the date(s) by which information in support of a
transmission project must be submitted to be considered in a given transmission planning
cycle, consistent with the requirements of Order No. 1000, noting that these dates may be
flexible or rolling.374 In addition, as part of the compliance filing, the Commission
required the Filing Parties to provide further information that: (1) describes the kind of
evidence that a transmission developer proposing an alternative regulated solution must
provide to indicate “the status of any contracts (other than an Interconnection
Agreement),” “the status of any required permits,” and “evidence of financing”; and
371 Id. P 326.
372 Id. P 325.
373 First Compliance Order, 143 FERC ¶ 61,059 at P 210. 374 Id. P 212.
Docket No. ER13-102-001, et al.- 94 -
(2) clarifies why transmission developers proposing alternative regulated solutions must
provide this additional information related to the status of any contracts, the status of any
required permits, and evidence of financing while the Responsible Transmission Owner
proposing a regulated backstop solution does not have to provide this additional
information.375
ii.Summary of Compliance Filings
183. Although not required by the First Compliance Order, the Filing Parties propose to
revise the project information requirements to require developers to provide additional
information specific to each proposed solution. They explain that these revisions will
allow NYISO to obtain the information necessary to perform its new obligation to select
the more efficient or cost-effective transmission solution to identified needs. In addition,
the Filing Parties propose to align the project information required from each type of
proposed solution offered under all three planning processes, with limited exceptions for
proposed market-based solutions as NYISO does not select these projects for purposes of
cost allocation.
184. All developers proposing solutions to any type of transmission need must provide
the following information: 376 (1) contact information; (2) the lead time necessary to
complete the project, including, if available, the construction windows in which the
developer can perform construction and what, if any, outages may be required during
these periods; (3) a description of the project, including type, size, and geographic and
electrical location, as well as planning and engineering specifications as appropriate;
(4) evidence of a commercially viable technology; (5) a major milestone schedule; (6) a
schedule for obtaining any required permits and other certifications; (7) a demonstration
of Site Control or a schedule for obtaining such control; (8) status of any contracts (other
than an Interconnection Agreement) that are under negotiation or in place; (9) status of
NYISO interconnection studies and interconnection agreement; (10) status of equipment
availability and procurement; (11) evidence of financing or ability to finance the project;
(12) capital cost estimates for each segment of the project; (13) a description of
permitting or other risks facing the project at the stage of project development, including
evidence of the reasonableness of project cost estimates, all based on the information
available at the time of the submission; and (14) any other information requested by
NYISO.377
375 Id. P 211.
376 Based on this information, NYISO will establish a Trigger Date for all projects proposed to satisfy a Reliability Need.
377 NYISO OATT, Attachment Y, §§ 31.2.4.4.1, 31.3.2.4.2; 31.3.2.4.2.
Docket No. ER13-102-001, et al.- 95 -
185. As proposed, the above project information requirements apply to all developers
proposing solutions to any type of transmission need, with the exception that a developer
that proposes a market-based solution to a Reliability Need or an economic need378 is not
required to provide the detailed capital cost estimates or the risk profile information. The
Filing Parties explain that NYISO will not evaluate the cost-effectiveness or efficiency of
proposed market-based solutions for purposes of selecting a project for purposes of cost
allocation so that the submission of data related to costs is unnecessary.379
186. The Filing Parties propose to require a developer proposing a solution to an
identified Reliability Need or Public Policy Transmission Need to submit its project
qualification information within 60 days after NYISO’s request for solutions or the
New York Public Service Commission’s determination of a Public Policy Transmission
Need.380 The developer of a proposed regulated economic project may submit the
required project information at any time.381 According to the proposal, the developer of a
proposed regulated transmission project addressing a Reliability Need will submit the
required information in two phases; however, developers of solutions proposed to address
congestion identified in the Congestion Analysis and Resource Integration Study or
Public Policy Transmission Needs will submit the required information in one phase.382
187. The Filing Parties propose that developers shall submit the following information to indicate the status of any contracts: (1) copies of all final contracts that NYISO
determines are relevant to its consideration; and (2) where one or more contracts is
pending, a timeline on the status of discussion and negotiations with the relevant
documents and when the negotiations are expected to be completed. Developers must
submit any final contract to NYISO when available. The revised language also specifies
that NYISO shall treat any contract that is submitted and designated as confidential on a
378 The project information requirements for solutions proposed to congestion identified in Congestion Analysis and Resource Integration Study apply to “[a]ny [d]eveloper seeking to offer a regulated economic transmission project ” Id.
§ 31.3.2.4.2 (emphasis added). In addition, Attachment Y indicates that only proposed regulated transmission solutions, and not proposed market-based solutions or generation or demand side management projects, are eligible for regional cost allocation pursuant to NYISO’s OATT. Id. § 31.5.4.1 (emphasis added).
379 October 15, 2013 Compliance Filing at 8.
380 NYISO OATT, Attachment Y, §§ 31.2.5.1; 31.4.4.3. 381 Id. § 31.3.2.4.1.
382 October 15, 2013 Compliance Filing at 4 n.28.
Docket No. ER13-102-001, et al.- 96 -
confidential basis in accordance with the requirements of its code of conduct in Attachment F of the NYISO OATT.383
188. Also, the Filing Parties propose that, to indicate the status of any required permits, a developer must submit: (1) copies of all final permits received that NYISO determines are relevant to its consideration or; (2) where one or more permits are pending, the
completed permit applications with information on what additional actions must be taken to meet the permit requirements and a timeline providing the expected timing for
finalization and receipt of the final permit. As with any final contracts, developers must submit any final permits to NYISO when available.384
189. In addition, the Filing Parties propose to specify that, to demonstrate evidence of
financing by the developer or any affiliate, a developer must submit the following
information, as appropriate: (1) evidence of self-financing or project financing through
approved rates or the ability to do so; (2) copies of all loan commitment letters and signed
financing contracts; or (3) where such financing is pending, the status of the application
for any relevant financing, including a timeline providing the status of discussions and
negotiations of relevant documents and when the negotiations are expected to be
completed.385 In addition, the developer must submit copies of final contracts or
approved rates to NYISO when available. A developer that proposes a market-based
solution to a Reliability Need is not required to submit evidence of self-financing through
rates because it is not seeking, and will not be evaluated for, cost allocation through the
NYISO OATT.386
190. The Filing Parties propose that, if additional information is requested from a
developer, that developer is required to submit the additional project qualification
information to NYISO within 15 days of NYISO’s request. If a developer fails to submit the required project qualification information or any additional information that NYISO requests, the Filing Parties propose that NYISO will not consider the project during that transmission planning cycle.387
383 NYISO OATT, Attachment Y, § 31.2.4.4.2.
384 Id.
385 Id.
386 October 15, 2013 Compliance Filing at 9.
387 Id. at 35; NYISO OATT, Attachment Y, § 31.4.4.3.
Docket No. ER13-102-001, et al.- 97 -
191. In order to pay for the costs of the evaluation process the Commission required in
the First Compliance Order, the Filing Parties propose that the developer of a proposed
transmission solution be responsible for related study costs, consistent with the treatment
of study costs under NYISO’s interconnection process.388 The Filing Parties propose to
require the developer of a proposed public policy transmission solution to provide
NYISO with its project qualification information as well as: (1) a non-refundable
application fee of $10,000; and (2) a $100,000 study deposit. The Filing Parties explain
that NYISO charges a similar fee and study deposit to cover the cost of interconnecting
parties to the NYISO system.389 A Developer proposing a public policy transmission
solution shall pay the actual costs of NYISO’s evaluation of the Developer’s proposed
transmission solution.
iii.Commission Determination
192.We find that the Filing Parties’ proposed revisions addressing information
requirements for submitting proposals partially comply with the directives in the First Compliance Order.
193. In the First Compliance Order, the Commission stated that the Filing Party’s
information requirements must be sufficiently detailed to allow a proposed transmission
project to be evaluated comparably to other transmission facilities proposed in the
regional transmission planning process. The Commission specifically required the Filing
Parties to identify in the NYISO OATT the date by which a transmission developer must
submit information on a proposed transmission project to be considered in a given
transmission planning cycle. The Filing Parties propose time frames for the developer’s
submission of required project information. Specifically, information related to
reliability projects must be submitted 60 days after a request for solutions is made by
NYISO, as described in section 31.2.5.1, and additional requested information must be
submitted within 15 days of the request, as described in section 31.2.6.1. The Filing
Parties propose similar deadlines for submitting information related to public policy
projects, and those deadlines are set forth in section 31.4.4.3. For the economic planning
process the required information may be submitted at any time rather than upon NYISO’s
request.390 Once a developer begins this process, it will have 15 days to submit
388 October 15, 2013 Compliance Filing at 36.
389 Id. (citing NYISO OATT, Attachment X, §§ 30.3.1, 30.13.3).
390 Attachment Y section 31.3.2.4.1.3 does not provide a time frame by which a Developer must submit its project information. Rather, “the required information for project qualification may be submitted at any time, but the proposed regulated economic transmission project will be evaluated against the most recently available CARIS Phase II database.” NYISO OATT, Attachment Y, § 31.3.2.4.1.3.
Docket No. ER13-102-001, et al.- 98 -
additional project information required by NYISO. If a developer fails to provide the project information within these times frames, the developer’s project will not be considered during that transmission planning cycle.391
194. The Commission also required the Filing Parties to provide further information
that: (1) describes the kind of evidence that a transmission developer proposing an
alternative regulated solution must provide to indicate “the status of any contracts (other
than an Interconnection Agreement),” “the status of any required permits,” and “evidence
of financing”; and (2) clarifies why transmission developers proposing alternative
regulated solutions must provide this additional information related to the status of any
contracts, the status of any required permits, and evidence of financing while the
Responsible Transmission Owner proposing a regulated backstop solution does not
provide this additional information. In response to these directives, the Filing Parties
have inserted a description of the material in sections 31.2.4.4 (reliability -regulated
backstop solution), 31.2.4.6 (reliability - market-based solution), 31.2.4.8 (reliability -
regulated backstop solution), 31.3.2.4.2 (economic), and 31.4.5.1 (public policy) that a
developer must provide to indicate “the status of any contracts (other than an
Interconnection Agreement),” “the status of any required permits,” and “evidence of
financing.” All developers, including Responsible Transmission Owners proposing an
alternative regulated solution, must provide the required information.
195. The Filing Parties have established appropriate deadlines for submitting
information related to project proposals, consistent with the Commission’s directives.
The Filing Parties have described the kind of evidence that must be provided to indicate
“the status of any contracts (other than an Interconnection Agreement),” “the status of
any required permits,” and “evidence of financing” as stated above, and have revised the
NYISO OATT to require both Transmission Owners and Other Developers proposing
alternative regulated solutions to provide this additional information. We also accept the
revisions the Filing Parties made to certain information requirements to accommodate
NYISO’s obligation to select the more efficient or cost-effective transmission solution to
identified needs, finding that the revised requirements are consistent with Order
No. 1000.
196. We find that the application of a study deposit in this circumstance is consistent
with Order No. 1000.392 The Filing Parties propose to require the developer of a
proposed public policy transmission solution to submit a non-refundable application fee
of $10,000 and a $100,000 study deposit, stating that NYISO charges a similar fee and
study deposit to cover the cost of interconnecting parties to the NYISO system under
391 See NYISO OATT, Attachment Y, §§ 31.2.4.6, 31.2.4.8.3, 31.3.2.4.2, 31.4.5.1. 392 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 327.
Docket No. ER13-102-001, et al.- 99 -
Attachment X.393 Because Attachment X applies to merchant transmission facilities as
well as large generating facilities, we find that the proposed amounts of the non-
refundable application fee and study deposit are just and reasonable and not unduly
discriminatory or preferential.394 The Commission accepted the application deposit for a project sponsor proposal as high as $75,000 with a cap of $150,000, as used by California Independent System Operator (CAISO).395 Similarly, MISO proposed, and the
Commission accepted, a requirement that a transmission developer that submits a bid
must pay a deposit equaling the lesser of one percent of the projected costs or $500,000 to cover the expense of evaluating the bids.396
197. However, we find that the Filing Parties must revise the provisions regarding the
handling of the difference between a developer’s study deposit and the actual cost of the
study. The Filing Parties’ proposal requires transmission developers to pay NYISO
amounts due, with interest calculated in accordance with section 35.19a(a)(2) of the
Commission’s Rules and Regulations, for disputed study costs held in escrow, but does
not specify the interest calculation where refunds are due to the transmission
developer.397 Therefore, we require the Filing Parties to revise NYISO’s OATT to refund
to the transmission developer the difference between the study deposit and the costs of
performing the study, including interest calculated in accordance with section
35.19a(a)(2) of the Commission’s Rules and Regulations. In addition to the proposed
refund and interest provisions, the Filing Parties must provide to each transmission
developer a description of the costs to which the deposit will be applied, how those costs will be calculated, and an accounting of the actual costs. The Filing Parties must submit a further compliance filing within 60 days of the date of issuance of this order to
implement these directives.
393 Instructions for Submittal of a Large Facility Interconnection Request to the NYISO; A Developer must submit all of the following: (i) a $10,000 non-refundable application fee; (ii) a study deposit of $30,000; (iii) a completed application in the form of Appendix 1 of the LFIP; and (iv) demonstration of Site Control or a posting of an additional deposit of $10,000.
394 NYISO OATT, Attachment X, § 30.2.1.
395 Cal. Indep. Sys. Operator Corp., 146 FERC ¶ 61,237 (2014).
396 Midwest Indep. Transmission Sys. Operator, Inc., 142 FERC ¶ 61,215 (2013) (MISO First Compliance Order).
397 18 C.F.R. § 35.19a(a)(2) (2013); see, e.g., NYISO OATT, Attachment Y, § 31.2.6.2.
Docket No. ER13-102-001, et al.- 100 -
d. Evaluation Process for Transmission Proposals for
Selection in the Regional Transmission Plan for Purposes of Cost Allocation
198. Order No. 1000 required each public utility transmission provider to amend its OATT to describe a transparent and not unduly discriminatory process for evaluating whether to select a proposed transmission facility in the regional transmission plan for purposes of cost allocation.398 The evaluation process must ensure transparency and provide the opportunity for stakeholder coordination.399 In addition, the evaluation
process must culminate in a determination that is sufficiently detailed for stakeholders to understand why a particular transmission project was selected or not selected in the
regional transmission plan for purposes of cost allocation.400
i.First Compliance Order
199. In the First Compliance Order, the Commission found that NYISO’s process for
evaluating solutions proposed to address economic transmission needs complied with the
requirements of Order No. 1000.401 The Commission explained that NYISO’s evaluation
process for economic transmission solutions evaluates the benefits against the costs of
each proposed regulated economic transmission project to determine whether the benefit
of the proposed solution exceeds its costs and “explains how NYISO will consider ‘the
relative efficiency and cost-effectiveness’ of regulated economic transmission
projects.”402 The Commission also found the requirement that an economic project
receive a positive vote from at least 80 percent of its designated beneficiaries to be
eligible to be selected in the regional transmission plan for purposes of cost allocation to
be consistent with Order No. 1000 The Commission noted that NYISO will file an
informational report with the Commission explaining the substantive reasons underlying
398 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 328; Order No. 1000-A, 139 FERC ¶ 61,132 at P 452.
399 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 328; Order No. 1000-A, 139 FERC ¶ 61,132 at P 454.
400 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 328; Order No. 1000-A, 139 FERC ¶ 61,132 at P 267.
401 First Compliance Order, 143 FERC ¶ 61,059 at P 244.
402 Id.
Docket No. ER13-102-001, et al.- 101 -
any beneficiary’s vote against a transmission project’s selection in the regional transmission plan for purposes of cost allocation.403
200. In addition, the Commission found that the Filing Parties’ proposed procedures to
evaluate solutions proposed to address transmission needs driven by public policy
requirements complied with Order No. 1000.404 The Commission explained that, in
evaluating potential solutions to meet transmission needs driven by public policy
requirements, “NYISO will use its existing reliability, economic, and interconnection
planning process tools, databases and models, as applicable,” as well as “tools such as
power flow, stability and short circuit models for system planning analysis, probabilistic
models of generator availability for resource adequacy and production cost simulation
models for economic and environmental analysis.”405 Further, the Commission explained
that “NYISO’s evaluation will compare the costs and benefits of the proposed
transmission solutions, and impacts of the proposed transmission solution on NYISO-
administered markets.”406 On this basis, the Commission determined that the proposed
process for evaluating potential transmission solutions proposed to meet transmission
needs driven by public policy requirements complied with the requirements of Order
No. 1000.407
201. However, regarding the evaluation process for solutions proposed to address
reliability transmission needs, the Commission found that the Filing Parties’ proposal
partially complied with the requirements of Order No. 1000.408 The Commission
determined that, while the proposal described the process through which NYISO
evaluates proposed solutions “relative to their ability to meet identified reliability
transmission needs,”409 the proposal did not describe how NYISO evaluates whether to
select a proposed transmission facility in the regional transmission plan for purposes of
cost allocation.410 The Commission explained that the Filing Parties must provide on
403 Id. P 245.
404 Id. PP 141,144. 405 Id. P 144.
406 Id.
407 Id.
408 Id. P 238.
409 Id. (internal punctuation omitted). 410 Id. P 240.
Docket No. ER13-102-001, et al.- 102 -
compliance OATT revisions that include “a transparent and not unduly discriminatory process for evaluating whether to select a proposed transmission facility in the regional transmission plan for purposes of cost allocation, in which alternative regulated solutions are evaluated in the same detail as the regulated backstop solution in all circumstances,” and which “consider[s] the relative efficiency and cost-effectiveness of any proposed
transmission solution.”411 The Commission also directed the Filing Parties to explain how NYISO will ensure that its evaluation will culminate in a determination that is
sufficiently detailed for stakeholders to understand why a particular transmission project was selected or not selected as a more efficient or cost-effective transmission solution in the regional transmission plan for purposes of cost allocation.412
ii.Requests for Rehearing or Clarification
(a)Summary of Requests for Rehearing or
Clarification
202. LS Power seeks clarification of the Commission’s finding that while NYISO may
not consider developers’ existing rights of way or the developers’ experience in or ability
to acquire rights of way as part of its qualification criteria, “it would be appropriate for
NYISO to consider whether an entity has existing rights of way . . . as part of its process
for evaluating whether to select a proposed transmission facility in the regional plan for
purposes of cost allocation.”413 LS Power asserts that, to ensure that NYISO’s evaluation
process for selecting transmission solutions in the regional transmission plan for purposes
of cost allocation does not give inappropriate weight to the ownership of a right-of-way,
NYISO must require a transmission developer with existing rights-of-way to “indicate
whether it would incur any incremental costs in connection with placing new and
additional facilities on such existing rights-of-way.”414 LS Power notes that CAISO voluntarily offered to include this language in its OATT, and argues that there is no reason why the language cannot be incorporated in the NYISO OATT.415
411 Id. P 241 (internal punctuation omitted).
412 Id.
413 LS Power Request for Clarification at 2 (quoting First Compliance Order, 143 FERC ¶ 61,059 at P 196).
414 Id. at 3 (quoting Cal. Indep. Sys. Operator Corp., 143 FERC ¶ 61,057, at P 238 (2013) (CAISO First Compliance Order)).
415 Id.
Docket No. ER13-102-001, et al.- 103 -
203. IPPNY, Multiple Intervenors, and Pace request that the Commission clarify, or
alternatively find on rehearing, that NYISO must: (a) evaluate the relative cost-
effectiveness and efficiency of non-transmission alternatives using the same criteria and
producing comparable information as that used and produced when evaluating reliability
transmission projects and transmission needs driven by public policy requirements; and
(b) publicly identify which solution of the studied transmission and non-transmission
solutions most cost-effectively meets the transmission need.416 IPPNY, Multiple
Intervenors, and Pace argue that, to allow NYISO to use a different means of evaluating
non-transmission alternatives than it uses for transmission projects or to stop short of
identifying a non-transmission alternative as the best option would be discriminatory
because analyses of alternative solutions would be unduly truncated. They assert that
subjecting transmission and non-transmission alternatives to different methods of
analysis would lead to results that are, by definition, incomparable.417 They also contend
that allowing a non-comparable means of analysis for non-transmission alternatives
would mean that NYISO will have failed to select the most cost-effective and efficient
solution to address a given need any time that a non-transmission alternative is superior
to its transmission-based competition.418 Moreover, they contend that allowing NYISO
to use different criteria to evaluate transmission solutions and non-transmission
alternatives is unduly discriminatory because the type of evaluation performed would
depend on the type of solution proposed.419
204. IPPNY, Multiple Intervenors, and Pace also request that the Commission find that
the First Compliance Order does not require NYISO to select a transmission solution for
purposes of cost allocation if NYISO determines that the more efficient or cost-effective
solution is a non-transmission alternative.420 IPPNY, Multiple Intervenors, and Pace are
concerned that if the First Compliance Order indeed requires NYISO to select a
transmission solution when NYISO has determined that a non-transmission alternative is
more efficient or cost-effective, the requirement would conflict with Order No. 1000’s
416 IPPNY, Multiple Intervenors, and Pace Request for Rehearing at 8-9. 417 Id. at 6-7.
418 Id. at 8.
419 Id. at 14-15.
420 Id. at 2.
Docket No. ER13-102-001, et al.- 104 -
stated purpose of “meeting [transmission] needs more efficiently and cost-effectively” and unjustly burden ratepayers with unnecessary costs.421
(b)Commission Determination
205. We deny LS Power’s request for rehearing that the Commission must require
NYISO to revise its OATT to provide that a transmission developer with existing rights-
of-way must indicate any incremental costs in connection with placing new facilities on
the existing rights-of-way. We note that public utility transmission providers may
consider the effect of state laws and regulatory processes as one factor in evaluating
whether a proposed transmission project is the more efficient or cost-effective solution.
In this case, NYISO considers right-of-way ownership as one of many factors in the
evaluation process. In Order No. 1000, the Commission provided each transmission
planning region with the flexibility to develop its own process to meet the minimum
requirements of the rule and to determine the more efficient or cost-effective transmission
solution, so long as it was performed in a transparent and not unduly discriminatory
manner. The Commission did not specify how each evaluation provision should be
considered or direct how each specific cost should be addressed. Therefore, we deny
LS Power’s rehearing request.
206. However, as explained further below, the Filing Parties have proposed revisions to
the evaluation metrics that should address LS Power’s concern. Specifically, for
reliability projects, NYISO will consider, in consultation with the New York Department
of Public Service, the capital cost estimates of a proposed transmission facility, including
the accuracy of the proposed estimates.422 Similarly, for public policy projects, the Filing
421 Id. at 11-12, 16. As the basis for their concern, IPPNY, Multiple Intervenors, and Pace cite language in the First Compliance Order directing NYISO to create, as part of the reliability transmission planning process, an evaluation and selection process
“through which the NYISO will select in the regional transmission plan for purposes of cost allocation the more efficient or cost-effective transmission solutions from among
competing projects” and, as part of the public policy requirements planning process, “the process by which NYISO will select in the regional transmission plan for purposes of
cost allocation more efficient or cost-effective solutions from among transmission
projects proposed to meet transmission needs driven by public policy requirements.” See First Compliance Order, 143 FERC ¶ 61,059 at PP 81, 145.
422 NYISO OATT, Attachment Y, § 31.2.6.5.1.1 (The criterion requires that the
developer shall provide NYISO with credible capital cost estimates for its proposed
solution, with itemized supporting work sheets that identify all material and labor cost
assumptions, and related drawings to the extent applicable and available. The work
sheets should include an estimated quantification of cost variance and the estimate shall
(continued…)
Docket No. ER13-102-001, et al.- 105 -
Parties propose that NYISO will consider, and will consult with the New York
Department of Public Service regarding, the capital cost estimates for all components of the proposed solution.423 We expect that the incremental cost of placing new and
additional transmission facilities on existing rights-of-way will be a component of the capital cost estimates that NYISO considers for transmission solutions proposed in the reliability and public policy transmission planning processes.
207. We reject IPPNY’s, Multiple Intervenors’, and Pace’s request for clarification or
rehearing regarding comparable treatment of non-transmission alternatives. In the First
Compliance Order, the Commission noted its prior finding that NYISO’s comprehensive
system planning process, specifically the local, reliability, and economic transmission
planning processes, satisfied the requirements of Order No. 890, and stated that its focus
in the First Compliance Order was thus on the “incremental changes to the Filing Parties’
regional transmission planning process developed to comply with the general regional
transmission planning requirements of Order No. 1000.”424 The Commission noted that
there was no reason to reconsider its prior findings on compliance with the Order No. 890
requirements and that the NYISO OATT provides that “when NYISO evaluates proposed
solutions to reliability transmission needs ‘from any Developer,’ it will consider all
resource types on a comparable basis as potential solutions and ‘[a]ll solutions will be
evaluated in the same general timeframe.’”425 In the First Compliance Filing, the
Commission did not prescribe the method by which NYISO would evaluate and consider
non-transmission alternatives on a comparable basis.426 We agree with the Filing Parties
that the Commission’s requirement in the First Compliance Order is consistent with the
requirements of Order No. 1000.427 The Commission stated that it will not establish the
appropriate metrics to measure non-transmission alternatives against transmission
alternatives, but that those considerations are best managed among public utility
include all components that are needed to meet the Reliability Need throughout the study period.).
423 Id. § 31.4.8.1.1.
424 First Compliance Order, 143 FERC ¶ 61,059 at P 50 & n.93 (citing N.Y. Indep. Sys. Operator, Inc., 125 FERC ¶ 61,068, at P 16 (2008), order on reh’g, 126 FERC
¶ 61,320, reh’g denied, 129 FERC ¶ 61,045 (2009)).
425 Id. P 42 (citing NYISO OATT, Attachment Y, §§ 31.3.1.3.3, 31.2.5.1). 426 Id. PP 148-149.
427 See Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 155.
Docket No. ER13-102-001, et al.- 106 -
transmission providers and their stakeholders through the regional transmission planning process.428
208. While Order No. 1000 requires each public utility transmission provider to post on
its website an explanation of which transmission needs it has identified for further
evaluation, as well as an explanation of why other proposed transmission needs will not
be evaluated,429 there is no new requirement regarding the posting of project information
by a public utility transmission provider to publicly identify which transmission and
non-transmission solutions more efficiently or cost-effectively meet identified
transmission needs. Rather, as stated in Order No. 1000-A, by requiring a process that is
open and transparent and satisfies all of the transmission principles set out in Order
Nos. 890 and 1000, there is a record for the Commission and stakeholders to review to
help ensure that the identification and evaluation decisions are open and fair and not
unduly discriminatory or preferential.430
209. Similarly, while Order No. 1000 states that a public utility transmission provider
must have a process to evaluate proposed transmission solutions to identify the more
efficient or cost-effective transmission solutions from among competing projects, nothing
in Order No. 1000 prevents public utility transmission providers in a region from
deciding not to select a transmission project in the regional transmission plan for
purposes of cost allocation and instead pursuing a non-transmission alternative. Order
No. 1000 states that by requiring the evaluation of proposed transmission solutions in the
regional transmission planning process, the Commission is not dictating that any
particular transmission proposals be accepted or that selected transmission solutions be
constructed.431 Moreover, Order No. 1000 acknowledges that it may be the case that
non-transmission alternatives result in transmission providers in a regional transmission
planning process deciding that a proposed transmission facility is not a more efficient or
cost-effective solution and, accordingly, that transmission facility may not be selected in
the regional transmission plan for purposes of cost allocation.432
428 Id. P 211.
429 Id. P 209.
430 Id. P 321.
431 Id. P 331.
432 Id. P 193 n.254.
Docket No. ER13-102-001, et al.- 107 -
iii.Compliance
(a)Summary of Compliance Filings
(1)Reliability Evaluation Process
210. The Filing Parties propose to revise the reliability transmission planning process to
include a two-phase evaluation process for solutions proposed to identified reliability
transmission needs. The Filing Parties propose that in the first phase of the reliability
planning process, NYISO will evaluate projects of all resource types—generation,
transmission and demand response—to determine whether they are viable and sufficient
solutions to meet the identified transmission need by the need date and to determine the
Trigger Date for any proposed regulated solution. The proposed revisions provide that
NYISO shall consider all resource types “on a comparable basis as potential solutions to
the Reliability Needs identified” and “[a]ll solutions will be evaluated in the same general
time frame.”433
211. The Filing Parties state that this comparable evaluation of all resources will inform
NYISO and its stakeholders about the ability of all proposed solutions to meet a
Reliability Need.434 Further, the Filing Parties propose that NYISO’s evaluation will
specifically inform the New York Public Service Commission, the New York Power
Authority, and the Long Island Power Authority should any of them decide to proceed
with a non-transmission solution to satisfy a Reliability Need with cost allocation and
cost recovery under state law, as currently described under NYISO’s OATT.435
212. In determining whether a proposed solution is viable, NYISO will evaluate
whether: (1) the developer has provided the required developer qualification information
and the required project qualification information; (2) the proposed solution is technically
practicable; (3) the developer has indicated possession of, or an approach for acquiring,
any necessary rights-of-way, property, and facilities that will make the proposal
reasonably feasible in the required timeframe; and (4) the proposed solution can be
completed in the required timeframe.436 In addition, in determining whether a proposed
433 NYISO OATT, Attachment Y, § 31.2.5.2 (Comparable Evaluation of All Proposed Solutions).
434 October 15, 2013 Compliance Filing at 13.
435 NYISO OATT, Attachment Y, § 31.5.1.6 (Regulated Non-Transmission Solutions to Reliability Needs - cost recovery under state law).
436 Id. § 31.2.5.3 (Evaluation of Viability of Proposed Solution).
Docket No. ER13-102-001, et al.- 108 -
solution is sufficient, NYISO “will evaluate each solution independently to confirm that
the solution proposed by the [d]eveloper eliminates the Reliability Need(s).”437 If
NYISO determines that the proposed solution is not sufficient, and for regulated
solutions, the developer does not address any identified deficiency as required, NYISO
shall reject the proposed solution from further consideration during that transmission
planning cycle.438 NYISO will report the results of its viability and sufficiency analysis
to stakeholders, interested parties, and the New York Department of Public Service for
comment and will indicate whether any of the proposed regulated solutions found to be
viable and sufficient will have a Trigger Date within thirty-six months of this
presentation.439
213. In the second phase of the evaluation process, if NYISO determines that any
developer’s proposed regulated solution is both viable and sufficient and has a Trigger
Date that will occur within thirty-six months, as indicated above, NYISO will request all
developers of viable and sufficient regulated transmission proposals to submit additional
project qualification information, as well as a $100,000 study deposit.440 In determining
which of the proposed regulated transmission solutions is the more efficient or cost-
effective, NYISO will consider, in consultation with the New York Department of Public
Service, the following metrics: (1) capital cost estimates, including the accuracy of the
proposed estimates;441 (2) cost per MW ratio of the proposed solution;442 (3) the
expandability of the proposed transmission solution, including the impact on future
construction and the extent to which any subsequent expansion will continue to use the
proposed solution within the context of system expansion;443 (4) the operability of the
437 Id. § 31.2.5.4 (Evaluation of Sufficiency of Proposed Solution).
438 Id.
439 Id. § 31.2.5.7 (ISO Report of Evaluation Results). 440 Id. §§ 31.2.6.1, 31.2.6.2.
441 Id. § 31.2.6.5.1.1 (This criterion requires that the developer shall provide
NYISO with credible capital cost estimates for its proposed solution, with itemized
supporting work sheets that identify all material and labor cost assumptions, and related drawings to the extent applicable and available. The work sheets should include an estimated quantification of cost variance and the estimate shall include all components that are needed to meet the Reliability Need throughout the study period.).
442 Id. § 31.2.6.5.1.2.
443 Id. § 31.2.6.5.1.3.
Docket No. ER13-102-001, et al.- 109 -
proposed regulated transmission solution, including how the proposed solution may
affect the additional flexibility in operating the system and may affect the cost of
operating the system;444 (5) the performance of the proposed regulated transmission
solution, including how the proposed solution may affect the utilization of the system,
such as interface flows and percent loading of facilities;445 (6) the extent to which the
developer of a proposed regulated transmission solution has the property rights, or ability
to obtain the property rights, required to implement the solution;446 and (7) the potential
issues associated with delay in constructing the proposed regulated transmission solution
consistent with the major milestone schedule and the schedule for obtaining any permits
and other certifications as required to timely meet the Reliability Need.447
214. The Filing Parties propose that a regulated transmission solution that will have a
significant adverse impact on the reliability of the New York State Transmission System
may not be eligible for selection in the regional transmission plan for purposes of cost
allocation.448 The Filing Parties propose that, to determine whether a transmission
project will have a significant adverse impact, NYISO will evaluate the system impacts
for the entire study period of the proposed solution and will perform power flow, short
circuit, and other studies. If NYISO identifies a significant adverse impact based on
these studies, NYISO will request that the transmission developer make an adjustment to
address this impact, to remain eligible for selection in the regional transmission plan for
purposes of cost allocation. If the developer modifies its proposed regulated transmission
solution, NYISO will confirm that the adjusted solution still satisfies the viability and
sufficiency requirements.449
215. As the Filing Parties explain, following NYISO’s two-phase evaluation of all
solutions proposed to address Reliability Need(s), NYISO will prepare a draft report, the
Comprehensive Reliability Plan, that sets forth NYISO’s findings on the viability and
sufficiency of solutions and the Trigger Dates of regulated solutions. In addition, if
NYISO determines in its evaluation that a market-based solution will not be available in
444 Id. § 31.2.6.5.1.4.
445 Id. § 31.2.6.5.1.5.
446 Id. § 31.2.6.5.1.6.
447 Id. § 31.2.6.5.1.7.
448 Id. § 31.2.6.3. (Evaluation of System Impact of Proposed Regulated Transmission Solution).
449 Id.
Docket No. ER13-102-001, et al.- 110 -
time to meet a Reliability Need, it will state in this report that implementation of a
regulated solution (which may be a Gap Solution) is necessary to ensure system
reliability.450 Assuming that implementation of a regulated solution is necessary, the
draft report will also indicate: (1) whether NYISO has determined that the Trigger Date
to any regulated solution will occur within thirty-six months of NYISO’s presentation of
its viability and sufficiency analysis; and (2) NYISO’s selection of the more efficient or
cost-effective solution.451 The Filing Parties add that all of the transmission planning
processes approved by the Commission under Order No. 1000 to date call for the
evaluation and selection of transmission projects, and the Commission has not required
the selection of non-transmission projects in regional transmission plans for purposes of
cost allocation.452
216. NYISO will submit the draft Comprehensive Reliability Plan to stakeholders for
review and comment, through the Transmission Advisory Planning Subcommittee and
the Electric System Planning Working Group, “mak[ing] available to any interested party
sufficient information to replicate the results of the draft Comprehensive Reliability
Plan.”453 Following completion of stakeholder review, the draft Comprehensive
Reliability Plan reflecting any revisions resulting from stakeholder review, will be
forwarded, first, to the NYISO Operating Committee and, second, to the Management
Committee for discussion and action.454 Following the Management Committee vote, the
draft report, with input from stakeholders and the Operating and Management
Committees, will be forwarded to the NYISO Board for review and action. At the same
time, the draft report will be forwarded to the Market Monitoring Unit for its review and
consideration of whether market rules are necessary to address an identified failure.
450 A Gap Solution is defined as “[a] solution to a Reliability Need that is designed to be temporary and to strive to be compatible with permanent market-based proposals. A permanent regulated solution, if appropriate, may proceed in parallel with a Gap
Solution.” Id. § 31.1.1.
451 Id. § 31.2.7 (Comprehensive Reliability Plan).
452 October 15, 2013 Compliance Filing at 14 (citing PJM Interconnection, L.L.C., 142 FERC ¶ 61,214, at PP 52-55 (2013); Mw. Indep. Transmission Sys. Operator, Inc., 142 FERC ¶ 61,215, at PP 47-48 (2013); Sw. Power Pool, Inc., 144 FERC ¶ 61,059, at PP 46-48 (2013); Cal. Indep. Sys. Operator Corp., 143 FERC ¶ 61,057, at PP 35-37
(2013); ISO New England Inc., 143 FERC ¶ 61,150, at PP 45-50 (2013)).
453 NYISO OATT, Attachment Y, § 31.2.7.1 (Collaborative Governance Process).
454 Id.
Docket No. ER13-102-001, et al.- 111 -
Upon final approval by the NYISO Board, NYISO shall issue the Comprehensive Reliability Plan to the marketplace by posting it on the NYISO website.455
(2) Public Policy Evaluation Process
217. The Filing Parties indicate that, to comply with the Commission’s directive to
establish a process for NYISO to select more efficient or cost-effective transmission
solutions in the regional transmission plan for purposes of cost allocation and to
incorporate this process into the public policy transmission planning process, the Filing
Parties propose a two-phase evaluation and selection process. The Filing Parties explain
that this new two-phase process to evaluate for selection in the regional transmission plan
for purposes of cost allocation the more efficient or cost-effective solutions is similar to
the process for evaluating reliability solutions, discussed above. The Filing Parties
propose to clarify that when NYISO forwards proposed Public Policy Transmission
Needs to the New York Public Service Commission and New York Department of Public
Service, NYISO will include the proposed evaluation criteria, as well as any additional
evaluation criteria that NYISO identifies.456 In addition, the Filing Parties’ proposal
would establish that, in its identification of Public Policy Transmission Needs, the
New York Public Service Commission and New York Department of Public Service may
also specify criteria for NYISO’s evaluation of transmission and non-transmission
projects.457 The Filing Parties also propose to clarify that if the New York Department of
Public Service does not identify a Public Policy Transmission Need, NYISO will not
request solutions.458
218. Using the same criteria proposed for reliability solutions, as well as any evaluation
criteria provided by the New York Public Service Commission and New York
Department of Public Service, NYISO will first evaluate proposed solutions from all
resource types for viability and sufficiency. NYISO will present the results of its
evaluation, in the form of a Public Policy Transmission Planning Report, to NYISO’s
stakeholders, interested entities, and the New York Department of Public Service for
comment.459
455 Id. § 31.2.7.2 (Board Review, Consideration, and Approval of [Comprehensive Reliability Plan]).
456 Id. § 31.4.2.
457 Id. § 31.4.2.1.
458 Id.
459 Id. § 31.4.6.5.
Docket No. ER13-102-001, et al.- 112 -
219. In phase two, the Filing Parties propose that NYISO will evaluate transmission
solutions that it has determined are viable and sufficient in the Public Policy
Transmission Report for selection as the more efficient or cost-effective transmission
solution to meet the identified Public Policy Transmission Need.460 The Filing Parties
assert that the Commission has not required NYISO to select non-transmission projects
that are ineligible to use the regional cost allocation method under NYISO’s OATT.461
The Filing Parties state that the proposed metrics for evaluation and selection mirror
those used in NYISO’s reliability planning process,462 and add that NYISO will consider
any criteria specified by the New York Public Service Commission and New York
Department of Public Service and any additional metrics based on the context of the
public policy requirement identified in consultation with stakeholders.463
220. The Filing Parties propose that NYISO will rank each proposed solution based on its satisfaction of the metrics.464 Moreover, the Filing Parties propose that NYISO may engage an independent consultant to review the reasonableness and comprehensiveness of the information submitted by the developer and may rely on that independent
consultant’s analysis in evaluating each metric.465 In addition, NYISO will evaluate each viable and sufficient transmission solution to determine “the impacts on the [NYISO]administered wholesale electricity markets.”466
221. The Filing Parties propose that NYISO will utilize a ten-year period for its
evaluation, which may be extended by up to an additional 20 years as appropriate based
460 October 15, 2013 Compliance Filing at 38 (citing NYISO OATT, Attachment Y, § 31.4.8).
461 Id. at 38 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 124).
462 Id. at 39 (citing NYISO OATT, Attachment Y, § 31.4.8.1); see supra Part IV.B.3.d (Evaluation Process for Transmission Proposals for Selection in the Regional Transmission Plan for Purposes of Cost Allocation) for a discussion of the proposed evaluation metrics.
463 Id.
464 NYISO OATT, Attachment Y, § 31.4.8.1.
465 October 15, 2013 Compliance Filing at 38-39; NYISO OATT, Attachment Y, § 31.4.8.
466 NYISO OATT, Attachment Y, § 31.4.9 (Evaluation of Impact of Proposed Transmission Solution on ISO Wholesale Electricity Markets).
Docket No. ER13-102-001, et al.- 113 -
on the public policy requirement and the identified Public Policy Transmission Need.467
The Filing Parties state that NYISO will use its existing planning tools to evaluate system
benefits against project costs for up to 30 years from the study date, contending that
public policies are designed to achieve long-term societal benefits and the benefits of
such transmission projects should be extended commensurate with the useful life of new
transmission lines. The Filing Parties assert that while longer term analysis may not
produce precise cost-benefit assessments for the later years, it is better that the long-term
benefits of long-lived transmission assets be accounted for as best as practicable.468
222. The Filing Parties explain that, at the completion of this two-phase evaluation
process, NYISO selects the more efficient or cost-effective transmission solution, if
any,469 and includes the regulated transmission solution in the Public Policy Transmission
Planning Report for purposes of cost allocation.470 The Public Policy Transmission
Planning Report also includes, among other things,471 the assumptions, inputs, and
methodologies NYISO used in its evaluation; the results of NYISO’s analyses,472
including the impacts of each proposed transmission solution on NYISO-administered
wholesale electricity markets473 and the results of the viability and sufficiency evaluation;
and any input from the New York Department of Public Service.474 The draft report will
also compare the proposed regional transmission solution identified to meet a Public
467 Id. § 31.4.6.
468 October 15, 2013 Compliance Filing at 37. 469 NYISO OATT, Attachment Y, § 31.4.8. 470 Id. §§ 31.4.8, 31.4.8.2.
471 The Public Policy Transmission Planning Report is discussed in more detail above in Part IV.B.2.c.i (Incorporating Consideration of Transmission Needs Driven by Public Policy Requirements in the Regional Transmission Planning Process).
472 NYISO OATT, Attachment Y, § 31.4.10.
473 See id. § 31.4.9.
474 October 15, 2013 Compliance Filing at 40; NYISO OATT, Attachment Y, § 31.4.10.
Docket No. ER13-102-001, et al.- 114 -
Policy Transmission Need to an interregional transmission project, which may be selected as a regulated transmission solution.475
223. NYISO will provide the draft Public Policy Transmission Planning Report to
stakeholders, through the Transmission Advisory Planning Subcommittee and the
Electric System Planning Working Group, for their review and consideration.
Concurrently, NYISO will submit the draft Public Policy Transmission Planning Report
to the Market Monitoring Unit for its review and consideration.476 Following completion
of stakeholder and Market Monitoring Unit review, the draft Public Policy Transmission
Planning Report, “reflecting the revisions resulting from [Transmission Advisory
Planning Subcommittee and the Electric System Planning Working Group] review shall
be forwarded to the Business Issues Committee and the Management Committee for
discussion and an advisory vote.”477 In addition, the Market Monitoring Unit’s
evaluation will be provided to the Management Committee prior to its advisory vote.478
224. Following the Management Committee vote, NYISO forwards the draft Public
Policy Transmission Planning Report, with input from the Business Issues Committee
and the Management Committee and with the Market Monitoring Unit’s evaluation, to
the NYISO Board for review and action.479 The NYISO Board may approve the draft
Public Policy Transmission Planning Report as submitted or propose modifications on its
own motion. However, if the NYISO Board proposes changes, the revised report is
returned to the Management Committee for further comment and the NYISO Board will
not make a final determination on the revised report until it has reviewed the
Management Committee’s comments.480 Upon final approval by the NYISO Board,
475 NYISO OATT, Attachment Y, § 31.4.10 (Public Policy Transmission Planning Report).
476 October 15, 2013 Compliance Filing at 40; NYISO OATT, Attachment Y,
§ 31.4.10.1 (Collaborative Governance Process). Pursuant to NYISO’s collaborative
governance provision, NYISO will make available to any interested party sufficient
information to replicate the results of the draft Public Policy Transmission Planning
Report. Id.
477 NYISO OATT, Attachment Y, § 31.4.10.1 (Collaborative Governance Process).
478 Id.
479 Id. § 31.4.10.2 (Board Review, Consideration, and Approval of Public Policy Transmission Planning Report).
480 Id.
Docket No. ER13-102-001, et al.- 115 -
NYISO shall issue the Public Policy Transmission Planning Report to the marketplace by posting it on the NYISO website.481
225. The Filing Parties also propose to add a new section to establish the confidentiality of a developer’s proposed solution until such a time as NYISO determines the proposed
solution is sufficient and viable and the developer consents to the inclusion of the project in the Public Policy Transmission Planning Report.482 Further, the Filing Parties state
that any preliminary cost estimates that may have been provided to NYISO will not be
disclosed.483 Additionally, the Filing Parties propose various edits to clarify the OATT’s reference to NYISO’s request for, rather than evaluation of, solutions. Specifically, the
Filing Parties’ proposed revisions to Attachment Y replace references to NYISO’s
evaluation of proposed solutions to meet an identified Public Policy Transmission Need, to NYISO’s request for proposed solutions.484
(b)Protests/Comments
226. Entergy and Multiple Intervenors and IPPNY contend that the Filing Parties have
only partially complied with the Commission’s directive in the First Compliance Order,
asserting that Order No. 1000 requires NYISO to evaluate and select the more efficient or
cost-effective solution from among all competing projects, whether transmission
solutions or non-transmission alternatives.485 Entergy, Multiple Intervenors, and IPPNY
argue that because the Filing Parties have proposed that NYISO will limit its analysis of
non-transmission solutions to their viability and sufficiency, NYISO may not select the
more efficient or cost-effective solution to address a given need.486 Multiple Intervenors
and IPPNY add that subjecting transmission and non-transmission alternatives to
different methods of analysis would render consideration of non-transmission alternatives
inconsequential because NYISO would not have the means to determine whether a
non-transmission alternative was a more efficient or cost-effective solution.487 Multiple
481 Id.
482 October 15, 2013 Compliance Filing at 43.
483 Id.; NYISO OATT, Attachment Y, § 31.4.13.
484 NYISO OATT, Attachment Y, §§ 31.4.2.1, 31.4.2.2, 31.4.3.
485 Entergy Protest at 5-9; Multiple Intervenors and IPPNY Protest at 37-39. 486 Entergy Protest at 5-6; Multiple Intervenors and IPPNY Protest at 39. 487 Multiple Intervenors and IPPNY Protest at 38-39.
Docket No. ER13-102-001, et al.- 116 -
Intervenors and IPPNY argue that the Commission has found in other Order No. 1000
compliance cases that the evaluation of the efficiency and cost-effectiveness of non-
transmission alternatives’ is necessary to satisfy the comparability principle.488 In
addition, Multiple Intervenors and IPPNY state that the Commission has found that the
comparability principle is satisfied when solutions are evaluated against one another
“based on a comparison of their relative economics and effectiveness of performance.”489
227. In addition, Multiple Intervenors and IPPNY argue that NYISO is not required to
select a transmission project to satisfy a transmission need driven by public policy
requirements as long as proposed solutions are considered.490 Therefore, they contend
that the Commission should direct the Filing Parties to modify the NYISO OATT to
provide that NYISO is not required to select a transmission solution to meet a need
driven by public policy requirements if a non-transmission alternative will more
efficiently or cost-effectively meet the Public Policy Transmission Need.491 In addition,
Multiple Intervenors and IPPNY assert that for the reliability planning process, if NYISO
identifies a non-transmission alternative to be the more efficient or cost-effective
solution, the Commission should direct the Filing Parties to modify their OATT to
require that NYISO must select that project as the backstop solution to address the
reliability need.492
228. Several protesters assert that the metrics the Filing Parties propose for evaluating
more efficient or cost-effective transmission solutions are too vague and lack
transparency. NextEra and Multiple Intervenors and IPPNY protest that the Filing
488 Id. at 39-40 (citing PJM Interconnection, L.L.C., 142 FERC ¶ 61,214 (2013) (PJM First Compliance Order); Pub. Serv. Co. of Colorado, 142 FERC ¶ 61,206 (2013) (PSC Colorado First Compliance Order); NorthWestern Corp., 128 FERC ¶ 61,040, at P 38 (2009); El Paso Elec. Co., 128 FERC ¶ 61,063, at P 15 (2009); N.Y. Indep. Sys. Operator, Inc., 129 FERC ¶ 61,044, at P 35 (2009)).
489 Multiple Intervenors and IPPNY Protest at 40 (citing PSC Colorado First Compliance Order, 142 FERC ¶ 61,206 at P 68 n.108).
490 Id. at 43 (“Whether or not public utility transmission providers in a region
select a transmission facility in the regional plan for purposes of cost allocation will
depend in part on their combined view of whether the transmission facility is an efficient or cost-effective solution to their needs.” (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 331)).
491 Id. at 43-44.
492 Id. at 6.
Docket No. ER13-102-001, et al.- 117 -
Parties propose to merely list the metrics that NYISO will consider, without providing
any further detail regarding the manner in which such factors will be considered or the
relative weight assigned to various factors and argue that this process is not sufficiently
transparent for stakeholders to understand why a particular project ultimately was
selected or not selected to meet an identified need.493 NextEra contends that the
Commission should require NYISO to specify in Attachment Y how NYISO will
evaluate, weigh, and rank the score of each proposed transmission project to determine
the more efficient or cost-effective solution,494 arguing that providing more clarity will
reduce perceived arbitrariness in the decision-making process and should lead to less
litigation concerning selected transmission solutions.495 NextEra also requests that the
Filing Parties clarify whether the terms “efficient” and “cost-effective” are intended to
have different meanings. Moreover, NextEra argues it is not clear whether the evaluation
of a proposed solution’s viability has a later impact on how NYISO evaluates a project
according to the listed evaluation metrics or whether the viability analysis is just a
pass-fail evaluation. According to NextEra, NYISO should apply the evaluation metrics
independently of the viability analysis.496 NextEra asserts that NYISO should evaluate
each proposal independently and assign a score without regard to other proposals’
scores.497
229. LS Power and Multiple Intervenors and IPPNY assert that, in determining the
more efficient or cost-effective solution to identified needs, overall cost should be
weighed more heavily than non-cost factors.498 LS Power does not suggest a specific
weighting system for New York, but asserts that, if NYISO must rank each proposed
solution based on the proposal’s satisfaction of these metrics, it must have some formula
for evaluating and ranking the proposals to avoid arbitrariness. LS Power asks the
Commission to require that NYISO reveal the formula by which it will rank each
493 Id. at 6-7 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 328); NextEra Protest at 5.
494 Nextera Protest at 10-11. 495 Id. at 11-12.
496 Id. at 15-16.
497 Id. at 11-12.
498 Multiple Interventors and IPPNY Protest at 52, LS Power at 19.
Docket No. ER13-102-001, et al.- 118 -
proposed solution.499 LS Power adds that, in the absence of requiring cost factors to be weighted more heavily that non-cost factors, there is no mechanism to ensure that the more efficient or cost-effective solution is selected.500
230. Similarly, NextEra argues that, assuming a proposed solution meets threshold
technical and operability needs, the project’s cost is the most critical evaluation metric,
stating that costs are the metric that is most directly related to whether transmission rates
are just and reasonable.501 NextEra asserts NYISO must implement an evaluation
process that weighs cost over other metrics and assigns the two cost metrics a total
weight of 50 percent.502 NextEra adds that such an approach would be consistent with
the Commission’s determinations in Midwest Independent System Operator, Inc. and
Southwest Power Pool, Inc., which, NextEra asserts, recognized the importance of costs
in project selection to ensure consumer benefits.503 NextEra also asserts that NYISO
should evaluate each proposal independently and assign a score without regard to other
proposals’ scores.504 Finally, NextEra also recommends that the willingness of a
499 LS Power Protest at 19-20 (citing Order No. 1000, FERC Stats. & Regs.
¶ 31,323 at P 315); id. at 20 n.22 (asserting that the Commission has required public
utility transmission providers to include in their tariffs language that identifies how they will evaluate and select among competing solutions and resources).
500 LS Power Protest at 19 n.21 (citing to Sw. Power Pool, 144 FERC ¶ 61,059, at P 284 (2013) and Midwest Indep. Transmission Sys. Operator, 142 FERC ¶ 61,215, at
P 339 (2013)).
501 NextEra Protest at 7.
502 Id. at 10. NextEra recommends that each of the two cost metrics should be
given 25% weight in the overall evaluation, which allocates 50% overall to the costs of a
given proposed solution. NextEra believes that property access and potential issues
related to delays in construction should jointly count for 14%, or 7% each, which leaves
36% for the remaining three metrics of expandability, operability and performance.
NextEra states that it is appropriate for each of these metrics to be assigned a weight of
12%. Id. at 7.
503 Id. at 7, 8-10 (citing Midwest Indep. Sys. Operator, Inc., 142 FERC ¶ 61,215, at
P 339 (2013) and Sw. Power Pool, Inc., 144 FERC ¶ 61,059, at P 283 (2013)). Similarly,
Multiple Intervenors and IPPNY argue that these orders demonstrate the importance of
cost considerations in the evaluation process. Multiple Intervenors and IPPNY Protest at
50, 51.
504 NextEra Protest at 11-12.
Docket No. ER13-102-001, et al.- 119 -
developer to assume the risk of cost increases should be given a separate and significant ranking, as this metric can have a great impact on rate certainty. NextEra contends that even if Attachment Y is interpreted to allow developers to assume such risks, it does not explain how NYISO would treat that assumption of risk.505
231. Regarding the proposed metrics for evaluating the more efficient or cost-effective
regulated transmission solution to satisfy Public Policy Transmission Needs, LS Power
notes that in evaluating competing public policy proposals, NYISO “shall apply any
criteria specified by the Public Policy Requirement or provided by the [New York
Department of Public Service/New York Public Service Commission] and perform the
analyses requested by the [New York Department of Public Service/New York Public
Service Commission], to the extent compliance with such criteria and analyses are
feasible.” LS Power is concerned that the reference to “any criteria” provided by those
state agencies could be different from “more cost-effective and efficient” project
selection and provide a back door for non-NYISO entities, rather than NYISO, to select
the public policy projects. LS Power states that any criteria identified as part of a Public
Policy Transmission Need should be specifically identified prior to NYISO’s solicitation
of solutions, and that the proposed OATT language should be amended to delete the
language referring to the specification of criteria by the New York Department of Public
Service and the New York Public Service Commission.506
232. LS Power also asserts that, while it agrees that NYISO should make an initial
sufficiency determination, the Filing Parties’ proposal that NYISO will evaluate each
proposed solution to confirm it eliminates the Reliability Need may not encourage
cost-effective selection, could justify over-building of the grid, and is unnecessarily
vague. LS Power recommends that the language be changed to NYISO “will evaluate
each solution independently to confirm that the solution proposed by the [d]eveloper
resolves the Reliability Need(s) cost effectively,” so that NYISO can examine the full
range of options.507
233. LS Power protests the Filing Parties’ proposal to request additional project
qualification information and evaluate proposed transmission projects for selection as the
more efficient or cost-effective solution only if the Trigger Date of any Developer’s
proposed regulated solution will occur within thirty-six months of NYISO’s reporting the
results of its viability and sufficiency analysis to stakeholders.508 LS Power argues that
505 Id. at 13-15.
506 LS Power Protest at 20.
507 Id. at 18 (emphasis added).
508 Id. at 12 13 (citing NYISO OATT, Attachment Y, §§ 31.2.5, 31.2.6.1 (5.0.0)).
Docket No. ER13-102-001, et al.- 120 -
the delay provides a discriminatory advantage to incumbent transmission owners and
provides no benefit to consumers. Moreover, LS Power contends that this delay does not provide any efficiency to the regional transmission planning process and will not save consumers money.509 LS Power protests that the criteria and information NYISO
considers during the viability and sufficiency analysis appear to suggest that the more finalized a project is, the better it will fare.
(c)Answers
234. The Filing Parties assert that the Commission should reject protestor’s challenges
and proposed revisions to NYISO’s process for evaluating the more efficient or
cost-effective transmission solutions.510 The Filing Parties believe that Order No. 1000
provides each public utility transmission provider with flexibility in establishing its
approach for evaluating proposed transmission solutions to determine the more efficient
or cost-effective transmissions solution and does not require the use of specific criteria or
a particular ranking or weighting system.511 The Filing Parties state that NYISO will
evaluate all transmission solutions using the same selection metrics in a non-
discriminatory manner, regardless of whether the project is proposed by an incumbent or
nonincumbent transmission developer, and that NYISO’s evaluation and selection
process will be an open and transparent process that will culminate in a determination
that is sufficiently detailed for stakeholders to understand why a particular transmission
project was selected or not selected for cost allocation purposes in the regional
transmission plan. The Filing Parties state that NYISO’s use of the selection metrics for
purposes of selecting the more efficient or cost-effective solution will include extensive
communications and feedback with all interested parties, and NYISO will detail in a draft
report - the draft Comprehensive Reliability Plan or Public Policy Transmission Planning
Report - its analysis of the proposed transmission solutions based on the selection
metrics and its reasons for recommending the selection of a particular project based on
this analysis.512
235. The Filing Parties contend that the Commission should reject protestors’ assertion
that the Filing Parties proposal does not provide for NYISO to perform a comparable
evaluation of transmission and non-transmission alternatives to an identified Reliability
509 Id. at 16.
510 Multiple Intervenors and IPPNY Protest at 48-52; LS Power Protest at 18-20; NextEra Protest at 3-12.
511 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 223. 512 Filing Parties Answer at 16-17.
Docket No. ER13-102-001, et al.- 121 -
Need or Public Policy Transmission Need.513 The Filing Parties state that protestors’
argument that NYISO should be capable of performing a comparable evaluation of
transmission and non-transmission alternatives is inaccurate.514 The Filing Parties also
contend that neither the First Compliance Order nor Order No. 1000 require NYISO to
select among all resource types, but to provide a process for NYISO to evaluate all
resource types, including transmission, generation, and demand response, on a
comparable basis.515 The Filing Parties explain that the First Compliance Order only
required the Filing Parties to establish a mechanism for NYISO to select the more
efficient or cost-effective transmission solution for purposes of regional cost
allocation.516 The Filing Parties reiterate their argument that, consistent with NYISO’s
existing process already accepted by the Commission, NYISO will evaluate all solution
types—transmission and non-transmission—to determine if they are viable projects, and
whether the characteristics of the project are sufficient in type, scope and timing to meet
the identified transmission system need.517
236. The Filing Parties assert that nothing in the First Compliance Order or Order
No. 1000 disturbs the separation between transmission planning by a public utility
transmission provider under its Commission-approved OATT and resource portfolio
planning by the state public service commission under state law.518 The Filing Parties
argue that the New York Public Service Commission, not NYISO, carries out planning
for the state’s resource mix and therefore an evaluation by NYISO of the more efficient
or cost effective solution among transmission and non-transmission alternatives is not
necessary.519 The Filing Parties assert that the existing OATT provisions recognize that
513 Id. at 5.
514 Id. at 5, 11.
515 Id. at 6.
516 Id. at 5-6 (citing First Compliance Order, 143 FERC ¶ 61,059 at PP 81, 147). 517 Id. at 6.
518 Id. at 7.
519 See New York Public Service Commission Case No. 06-M-1017, Proceeding on Motion of the Commission As to the Policies, Practices and Procedures for Utility
Commodity Supply Service to Residential and Small Commercial and Industrial
Customers, Order Establishing Electric Supply Portfolio Standards, Goals, and Reporting Requirements (Feb. 26, 2008).
Docket No. ER13-102-001, et al.- 122 -
the state plays a lawful and legitimate role in resource planning.520 The Filing Parties
state that if the New York Public Service Commission decides that non-transmission
resources should be selected over transmission to meet an identified need, or that the
transmission is not needed and should not be sited, that state determination can obviate
the need for transmission cost allocation and recovery under NYISO’s transmission
tariffs.
237. In response to NextEra’s request that the Filing Parties clarify whether NYISO
will perform the viability analysis of proposed solutions on a pass/fail basis or as input
into NYISO’s analysis of the more efficient or cost-effective solution to an identified
need, the Filing Parties clarify that the viability analysis is part of NYISO’s initial
threshold determination that a proposed solution can satisfy an identified Reliability Need
or Public Policy Transmission Need, which NYISO will perform on a pass/fail basis. For
example, the Filing Parties’ proposal provides that NYISO will reject from further
consideration in a transmission planning cycle a proposed solution that is not viable.521
238. Regarding the evaluation metrics, the Filing Parties respond that the Commission
should also reject protestors’ assertion that cost must be the primary factor in NYISO’s
selection of the more efficient or cost-effective transmission solution since the
Commission did not direct public utility transmission providers to establish specific
selection criteria or processes and has not indicated that cost must be the primary factor
in the selection determination. The Filing Parties assert that the Commission has not
indicated in Order No. 1000 or its orders in response to filings in compliance with Order
No. 1000 that cost must constitute the primary selection factor or must outweigh other
factors. Further, the Filing Parties argue that NYISO should not be bound to select a
transmission project that may as a stand-alone project be the cheapest transmission
solution, but may not benefit the New York State Transmission System or provide the
same flexibility or long-term benefits of an alternative transmission solution.522
520 Filing Parties Answer at 10; see NYISO OATT, Attachment Y, §§ 31.5.1.6,
31.5.6.3; OATT, Rate Schedule 10 §§ 6.10.2.3, 6.10.5.3. The Filing Parties state that
consistent with its role in ensuring resource adequacy, the New York Public Service
Commission may determine that non-transmission resources - including generation
resources, demand response, or energy efficiency projects - can resolve an identified
need, the costs of which may be recovered through utilities’ bundled retail rates approved by the New York Public Service Commission under state law.
521 Filing Parties Answer at 13.
522 Id. at 19-20.
Docket No. ER13-102-001, et al.- 123 -
239. The Filing Parties state that if the Commission were to require NYISO to adopt a
particular weighting or ranking system, the Commission should reject the system
proposed by NextEra in which it recommends specific weighted values for each of
NYISO’s proposed selection criteria and a methodology for NYISO’s ranking of the
selection criteria.523 The Filing Parties argue that NextEra has not provided any
justification or support for its proposed methodology or weighted values. The Filing
Parties also believe that the Commission should reject NextEra’s proposed revision to
include an additional cost metric based on a developer’s willingness to accept cost risks
since NYISO’s evaluation and selection process is not a rate making proceeding, and
NYISO’s selection of a particular transmission project will not limit a transmission
developer’s ability to recover its prudent costs in a proceeding before the Commission.
The Filing Parties state that NYISO will evaluate proposed transmission solutions using a
variety of selection metrics, which collectively provide for NYISO’s selection of the
more efficient or cost-effective transmission solution and that the metrics defined in the
Filing Parties’ filing were developed to collectively address these two separate concepts.
They explain that NYISO’s selection of the more efficient or cost-effective transmission
solution will be based on the totality of its evaluation of the proposed transmission
solutions using these selection metrics.524
240. The Filing Parties state that the Commission should reject LS Power’s requested
revisions regarding NYISO’s proposal to proceed with its analysis only if the Trigger
Date of any Developer’s proposed regulated solution will occur within thirty-six months
of NYISO’s reporting the results of its viability and sufficiency analysis to stakeholders.
The Filing Parties state that NYISO’s process was developed at stakeholders’ behest to
avoid parties’ prematurely incurring significant costs and expending significant resources
in the development of transmission projects that may not be required since market-based
solutions are preferred. The Filing Parties state that Order No. 1000 was crafted to create
processes for the consideration of transmission projects to be built to meet actual needs,
not to launch endless analyses of merely hypothetical projects, and this is a conservative
approach that reasonably balances the benefits of advanced planning with the costs of
making a selection close in time to when a transmission solution would actually have to
be implemented to meet a Reliability Need.525 The Filing Parties believe that since
NYISO will be making its selection closer in time to the actual implementation of the
proposed transmission solution, the developer will have the opportunity to improve its
initial project proposal and cost estimates, which will enable NYISO to make its
determination based on more precise information.
523 NextEra Protest at 10-12; Filing Parties Answer at 19-20. 524 Filing Parties Answer at 20-21.
525 Id. at 23.
Docket No. ER13-102-001, et al.- 124 -
241. In response to NextEra’s request that the Filing Parties clarify whether the terms
“efficient” and “cost-effective” are intended to have different meanings and how NYISO
will select among competing projects, if one is found to be more efficient while the other
is more cost-effective, the Filing Parties clarify that for purposes of NYISO’s regional
transmission planning process, the terms “efficient” and “cost-effective” have different
meanings. They state that a project’s “efficiency” pertains to its ability to transfer power
or avoid needs in terms of megawatts of capability or total megawatt-hours of energy for
a given technology or project, compared with competing projects. By comparison, they
explain, a project’s “cost-effectiveness” pertains to the cost of the project on a per MW
basis or on a per MWh basis. The Filing Parties state that NYISO will evaluate proposed
transmission solutions using a variety of selection metrics, which collectively provide for
NYISO’s selection of the more efficient or cost-effective transmission solution and the
metrics defined in the Filing Parties’ filing were developed to collectively address these
two separate concepts.526
242. In response to the Filing Parties’ answer, NextEra argues that the lack of
weighting in NYISO’s evaluation of proposed transmission solutions is inconsistent with
Order No. 1000’s emphasis on ensuring just and reasonable rates. NextEra reiterates that
NYISO’s evaluation should assign greater weight to cost items than to other metrics in
the evaluation. NextEra adds that, while cost should not trump all other considerations,
an appropriate ranking system pursuant to weighted metrics should reveal the best overall
solution, because any advantage that an inferior technical solution can gain with regard to
costs will be outweighed by a low score on the other metrics.527 NextEra also states that
the Filing Parties already have proposed a viability analysis that should preclude
unacceptable solutions from further consideration, and thus, their concern that cheap but
technically inadequate solutions will compete with fully viable solutions at the evaluation
stage is unrealistic. Further, NextEra responds that it justified and supported its proposed
methodology and weighted values and cited to Order No. 1000’s discussion that
eliminating the right of first refusal was intended to help obtain cost savings in
transmission construction and thus ensure transmission rates are just and reasonable.528
243. In addition to its argument that the metrics proposed by the Filing Parties to
evaluate more efficient or cost-effective transmission solutions are too vague and lack
transparency, NextEra also reiterates its view that the NYISO’s evaluation scheme should
explicitly assign greater weight to cost than to other metrics. NextEra states that in its
526 Filing Parties Answer at 20-21.
527 NextEra Answer at 2 (citing Filing Parties Answer at 19-20).
528 Id. at 2-3 (citing NextEra Protest at 6-10, which referenced Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 43, 226).
Docket No. ER13-102-001, et al.- 125 -
protest, it urged the Filing Parties to include a provision by which transmission
developers could signal their willingness to assume some level of cost risks and the Filing
Parties rejected this proposal on the basis that the evaluation process is not a ratemaking
process.529 NextEra responds that its suggestion was not made in the context of
ratemaking, but rather as a means of providing developers with a way to distinguish some
proposals as being more beneficial to ratepayers than others. NextEra argues that in
Order No. 1000, the Commission made clear that allowing more competition in
transmission development could lead to cost savings.530 Thus, it argues, allowing
developers to merely provide financial estimates is less desirable than allowing
developers themselves to stand behind these estimates by specifying their own risk
tolerance. NextEra acknowledges that any rates must be approved by the Commission,
including any assumption of cost risk by a developer, but it continues to assert that
seeking to ascertain the level of risk a developer is prepared to incur at the project
selection stage is essential, because there is less incentive for a developer to propose to
incur such risks once it has already been awarded a project. Thus, NextEra disagrees
with the Filing Parties’ rejection of this feature.531
244. Additionally, NextEra urges the Filing Parties to include definitions for “efficient”
and “cost effective” in the NYISO OATT. NextEra states that the Filing Parties have
indicated that a project’s efficiency “pertains to its ability to transfer power or avoid
needs in terms of megawatts of capability or total megawatt-hours of energy,” whereas its
cost-effectiveness “pertains to the cost of the project on a per MW basis or on a per MWh
basis.”532 NextEra asks the Commission to require the Filing Parties to include these
529 Id. at 4 (citing NextEra Protest at 13-14 (“a given developer may want to
submit proposed costs that are not just estimates based on cost-of-service ratemaking and
presumed full cost recovery, but rather a bid that exposes the developer to some risk in
the event the project costs exceed a given amount. Project developers could . . . propos[e]
declining ROEs on any costs in excess of their estimate, and even . . . being at risk for
some or all recovery of costs above a given amount”) and Filing Parties Answer at 20
(“The NYISO’s evaluation and selection process is not a rate making proceeding, and the
NYISO’s selection of a particular project will not limit a Developer’s ability to recover
its prudent costs in a proceeding before the Commission, including prudent costs that
exceed its initial estimates”)).
530 Id. (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 284-285). 531 Id. at 5.
532 Id. (citing Filing Parties Answer at 21).
Docket No. ER13-102-001, et al.- 126 -
definitions in the NYISO OATT, and to provide that NYISO will select the solution that is both more efficient and more cost effective.533
(d)Commission Determination
245. We find that the provisions in Filing Parties’ filing addressing the evaluation of
proposed transmission facilities partially comply with the directives in the First
Compliance Order. The Filing Parties’ proposed revisions adequately explain how
NYISO will ensure its evaluation, in the reliability and public policy transmission
planning processes, will culminate in a determination that is sufficiently detailed for
stakeholders to understand why a particular transmission project was selected or not
selected as a more efficient or cost-effective solution in the regional transmission plan for purposes of cost allocation. NYISO’s evaluation process gives stakeholders and
interested parties the opportunity to review and comment on NYISO’s evaluation of
proposed transmission projects and NYISO’s collaborative governance process provides that NYISO staff considers stakeholder input as it compiles all aspects of the required
transmission plans.534 We find this open and transparent evaluation process ensures that stakeholders may monitor and participate in the process.
246. We reject protestors’ arguments that to provide comparable treatment of proposed
transmission solutions and non-transmission alternatives the Filing Parties’ must apply
the same methods of analysis to all proposed solutions regardless of resource type,
including evaluating the efficiency and cost-effectiveness of non-transmission
alternatives.535 In Order No. 890-A, the Commission stated that “[t]reating similarly-
situated resources on a comparable basis does not necessarily mean that the resources are
treated the same.”536 Thus, in an order on NYISO’s compliance with Order No. 890, the
Commission found that “NYISO’s role in both soliciting market-based and regulated
solutions and in evaluating competing proposals for their ability to meet the designated
[reliability transmission need] in a timely manner affords comparable treatment to all
types of competing solutions and resources, and is therefore compliant with Order
No. 890-A’s requirements.”537
533 Id. at 6.
534 NYISO OATT, Attachment Y, §§ 31.2.7.1, 31.4.10.1; see also N.Y. Indep. Sys. Operator, Inc., 129 FERC ¶ 61,044, at P 19 (2009).
535 See Multiple Intervenors and IPPNY Protest at 38-40.
536 Order No. 890-A, FERC Stats. & Regs. ¶ 31,261 at P 216.
537 N.Y. Indep. Sys. Operator, Inc., 132 FERC ¶ 61,028, at P 10 (2010).
Docket No. ER13-102-001, et al.- 127 -
247. As previously discussed, the Commission found in the First Compliance Order
that there was no reason to reconsider its prior finding that NYISO’s regional reliability
transmission planning process complies with Order No. 890 requirements, including each
of the transmission planning principles.538 The Commission noted in its prior finding that
the NYISO OATT already provides that “when NYISO evaluates proposed solutions to
reliability transmission needs ‘from any Developer,’ it will consider all resources types
on a comparable basis as potential solutions.’”539 Order No. 1000 applies to regional
transmission planning the comparability transmission planning principle stated in Order
Nos. 890 and 890-A. Thus, in the First Compliance Filing, the Commission neither
required further compliance with respect to comparability in the reliability transmission
planning processes nor prescribed a method by which NYISO would evaluate and
consider non-transmission alternatives on a comparable basis.540 We therefore find that
NYISO’s OATT continues to comply with the comparability principle as established in
Order No. 890 and as applied in Order No. 1000.
248. We also note that, as discussed above, to the extent that a transmission facility is
selected in the regional transmission plan for purposes of cost allocation as the more
efficient or cost-effective transmission solution, the public utility transmission providers
in the transmission planning region must make that selection. Additionally, neither the
First Compliance Order nor Order No. 1000 dictates that any particular transmission
solutions be selected in the regional transmission plan for purposes of cost allocation.541
In response to protestors, Order No. 1000 does not require that NYISO select a non-
transmission solution.
249. With respect to protestors’ arguments that NYISO’s evaluation criteria are vague
and that NYISO does not sufficiently explain how it selects the more efficient or
cost-effective solution or evaluates public policy requirements, we find that NYISO’s
proposal is generally consistent with the evaluation requirements of Order No. 1000 and
complies with the requirement to describe a transparent and not unduly discriminatory
process for evaluating proposed transmission solutions for selection in the regional
transmission plan for purposes of cost allocation. Attachment Y defines a reasonable
framework for NYISO’s evaluation process that allows NYISO flexibility in conducting
its evaluation and applying the evaluation metrics, while not giving NYISO unwarranted
538 First Compliance Order, 143 FERC ¶ 61,059 at P 42 (citing NYISO OATT, Attachment Y, §§ 31.3.1.3.3, 31.2.5.1).
539 Id.
540 Id. PP 148-149.
541 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 331.
Docket No. ER13-102-001, et al.- 128 -
discretion. The individual evaluation metrics in general are sufficiently detailed to
provide prospective transmission developers with an understanding of how NYISO will
evaluate their proposals. In addition, Attachment Y specifies not only the evaluation
factors that NYISO will consider when selecting among competing transmission
developers’ proposals, but also NYISO’s procedures for an open and transparent
stakeholder process through which NYISO determines the more efficient or cost-effective transmission solutions.542
250. We disagree with protestors that the Filing Parties must further clarify in
Attachment Y NYISO’s procedures for evaluating proposed transmission solutions,
including the specific evaluation metrics that NYISO considers or the relative weight
assigned to various factors. We therefore decline to require NYISO to provide additional
detail in Attachment Y regarding the relative weight attributable to the factors considered
in the evaluation process and reject the system proposed by NextEra in which it
recommends specific weighted values for each of NYISO’s proposed metrics and a
methodology for NYISO’s ranking of the selection criteria. NYISO’s evaluation criteria
are sufficiently descriptive to provide prospective transmission developers with an
understanding of how their proposals will be evaluated and are consistent with Order
No. 1000. Order No. 1000 does not require a public utility transmission provider to
specify in its OATT the relative weight of the factors considered in the evaluation
process. Furthermore, the Commission recognized in Order No. 1000 that the process for
meeting Order No. 1000’s requirements regarding evaluating whether to select a
transmission facility in the regional transmission plan for purposes of cost allocation will
likely vary from region to region.543 In addition, the Commission acknowledged that “the
selection of any transmission facility in the regional transmission plan for purposes of
cost allocation requires the careful weighing of data and analysis specific to each
transmission facility.”544
251. We agree with the Filing Parties that NextEra has not provided any justification or
support for its proposed methodology or weighted values.545 We agree with the Filing
Parties that if all other factors among proposed transmission solutions are equal from an
engineering and operational standpoint, it is clear that costs would be the primary metric
in NYISO’s selection of the more efficient or cost-effective solution.546 We also reject
542 NYISO OATT, Attachment Y, §§ 31.2.7.1, 31.4.10.1.
543 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 323. 544 Id. P 330.
545 See Filing Parties Answer at 20. 546 Id. at 19.
Docket No. ER13-102-001, et al.- 129 -
NextEra’s proposed revision to include an additional cost metric based on a transmission developer’s willingness to accept cost risks since NYISO’s evaluation and selection
process is not a rate making proceeding, and a transmission developer has the opportunity to recover its prudent costs in a proceeding before the Commission. With regard to
NextEra’s concern of whether there is an association between the metrics and the
viability analysis, we note that the Filing Parties clarify in their answer that the viability analysis is a pass-fail evaluation.547
252. We are not convinced by the arguments that cost-effectiveness is not appropriately
central to NYISO’s evaluation process. While NYISO considers capital cost estimates
and the cost per MW ratio for the proposed regulated transmission solution among
several other enumerated factors when evaluating proposed transmission solutions, we
note that the other factors that NYISO will consider in some way evaluate the cost of the
proposed transmission project to the customer. For instance, considering the potential
issues associated with delay in constructing the proposed regulated transmission solution
consistent with the major milestone schedule allows NYISO to consider the likelihood
that a transmission project will be delayed and thereby expose customers to increased
costs from a prolonged, unresolved transmission need. Given that the capital costs and
cost per MW ratio of each proposed transmission solution are separate factors, and that
cost-effectiveness is considered throughout NYISO’s other evaluation criteria, we find
that cost-effectiveness is appropriately assessed in NYISO’s proposed evaluation process.
We therefore reject the assertion that cost must be the primary factor in NYISO’s
selection of the more efficient or cost-effective transmission solution. For the same
reasons, we reject LS Power’s proposal to replace the language “eliminating the
Reliability Need(s)” with “resolves the Reliability Need(s) cost-effectively” as
unnecessary.
253. We find that the Filing Parties have complied with the requirement to provide
OATT revisions ensuring that alternative regulated solutions are evaluated in the same level of detail as the regulated backstop solution, under all circumstances, in the
reliability transmission planning process. For the proposed reliability analysis, NYISO will evaluate the viability and sufficiency of alternative regulated solutions and the
regulated backstop solutions in the same level of detail; therefore, the Filing Parties have complied with this requirement.548
254. We accept NYISO’s proposal to proceed with its analysis only if the Trigger Date
of any developer’s proposed regulated transmission solution will occur within
thirty-six months of NYISO’s reporting the results of its viability and sufficiency analysis
547 Id.at 13.
548 NYISO OATT, Attachment Y, § 31.2.5.2.
Docket No. ER13-102-001, et al.- 130 -
to stakeholders. We agree that NYISO making its selection closer in time to the actual implementation of the proposed transmission solution will allow the developer to have the opportunity to improve its initial project proposal and cost estimates, which will enable NYISO to make its determination based on more precise information and will allow NYISO to utilize more accurate load forecasts.
255. We find that the Filing Parties’ proposal for NYISO to consider, as part of the
viability and sufficiency of all proposed solutions in phase one, whether a developer has indicated possession of, or an approach for acquiring, any necessary rights-of-way,
property, and facilities that will make the proposal reasonably feasible in the required
time frame complies with Order No. 1000.549 It is appropriate for NYISO to consider
whether an entity has existing rights-of-way, as well as whether the entity has experience or ability to acquire rights-of-way, as part of the process for evaluating whether to select a proposed transmission facility in the regional transmission plan for purposes of cost
allocation. As the Commission explained in the First Compliance Order “it would be
appropriate for NYISO to consider whether an entity has existing rights of way as well as whether the entity has experience or ability to acquire rights of way as part of its process for evaluating whether to select a proposed transmission facility in the regional
transmission plan for purposes of cost allocation.”550
256. Regarding the Filing Parties’ proposal to utilize a ten-year period for its
evaluation, which may be extended by up to an additional 20 years as appropriate based
on the public policy requirement and the identified Public Policy Transmission Need,551
the Filing Parties state that NYISO proposes to use its existing planning tools to evaluate
system benefits against project costs for up to 30 years from the study date, contending
that public policies are designed to achieve long-term societal benefits and the benefits of
such transmission projects should be extended commensurate with the useful life of new
transmission lines. The Filing Parties assert that “while longer term analysis may not
produce precise cost-benefit assessments for the out years, it is better that the long-term
benefits of long-lived transmission assets be accounted for as best as practicable.”552 We
549 October 15, 2013 Compliance Filing at 37; NYISO OATT, Attachment Y,
§§ 31.2.5.3, 31.4.6.3 (providing that NYISO will evaluate the viability of a proposed
solution by considering whether, among other things, the developer has indicated
possession of, or an approach for acquiring, any necessary rights-of-way, property, and
facilities that will make the proposal reasonably feasible in the required time frame).
550 First Compliance Order, 143 FERC ¶ 61,059 at P 196.
551 NYISO OATT, Attachment Y, § 31.4.6.
552 October 15, 2013 Compliance Filing at 37.
Docket No. ER13-102-001, et al.- 131 -
accept the Filing Parties’ proposal. We are persuaded by the Filing Parties’ argument
that the benefits of public policy transmission projects “should be extended
commensurate with the useful life of new transmission lines, which can extend well
beyond thirty years.”553 While in Order No. 1000 we stated that we would “not impose
additional rules that would . . . establish[] a minimum long-term planning horizon[],”554
we nonetheless allowed “public utility transmission providers developing the regional
transmission planning processes to craft . . . requirements that work for their transmission
planning region.555 We therefore accept the Filing Parties’ proposal to utilize a ten-year
period, which may be extended by up to an additional 20 years as appropriate,
recognizing that all solutions must be evaluated in a not unduly discriminatory manner.
257. NextEra asks the Commission to require the Filing Parties to include definitions
for efficiency and cost-effectiveness in the NYISO OATT, and to provide that NYISO
will select the transmission solution that is both more efficient and more cost-effective.
We find that NextEra’s request for definitions is unnecessary because the Filing Parties’
proposed metrics explain the selection process. The Filing Parties have stated that in its
evaluation, NYISO will consider each regulated transmission solution using the
following metrics: estimates of the cost of capital for all components, the cost per MW
ratio, expandability, operability, performance, the extent to which the developer has
necessary property rights or “ability to obtain the property rights,” and potential issues
associated with delay in constructing the proposed solution consistent with the major
milestone schedule.556 Since the metrics are in NYISO’s proposed OATT, we find that
no further definition in the OATT is needed. With regard to NextEra’s request that
NYISO select the transmission solution that is both more efficient and more cost-
effective, we deny this request as it goes beyond the requirement of Order No. 1000
which used the “more efficient or cost-effective” criterion rather than “the more efficient
and cost-effective” criterion.557 Furthermore, as the Commission explained before, the
“more efficient or cost-effective” standard provides more flexibility in the evaluation
process.558
553 Id.
554 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 157.
555 Id.
556 NYISO OATT, Attachment Y, §31.2.6.5.1 (Metrics for Evaluating More
Efficient or Cost Effective Regulated Transmission Solution to Satisfy Reliability Need).
557 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 148 (emphasis added). 558 Louisville Gas & Elec. Co., 147 FERC ¶ 61,241 at P 363.
Docket No. ER13-102-001, et al.- 132 -
e. Reevaluation Process for Transmission Proposals for
Selection in the Regional Transmission Plan for Purposes of Cost Allocation
258. To ensure the incumbent transmission provider can meet its reliability needs or
service obligations, Order No. 1000 required each public utility transmission provider to
amend its OATT to describe the circumstances and procedures for reevaluating the
regional transmission plan to determine if alternative transmission solutions must be
evaluated as a result of delays in the development of a transmission facility selected in a
regional transmission plan for purposes of cost allocation.559 If an evaluation of
alternatives is needed, the regional transmission planning process must allow the
incumbent transmission provider to propose solutions that it would implement within its
retail distribution service territory or footprint, and if that solution is a transmission
facility, then the proposed transmission facility should be evaluated for possible selection
in the regional transmission plan for purposes of cost allocation.560
i.First Compliance Order
259. In the First Compliance Order, the Commission found that the Filing Parties’
proposal dealing with the reevaluation of proposed transmission projects complied with
the requirements of Order No. 1000.561 The Commission noted that Attachment Y
describes the criteria that NYISO will use to assess the continued viability of market-
based solutions, including status of final permits, interconnection studies, financing, and
equipment.562 The Commission noted that NYISO’s assessment of such projects
becomes more detailed as the Trigger Date for the relevant regulated backstop solution
proposed to meet a Reliability Need, approaches. As proposed and accepted in the First
Compliance Order, the Filing Parties’ reevaluation procedures provide that any projects
selected pursuant to the reliability planning process are monitored by NYISO to ensure
that they will be constructed in time to meet the identified reliability need.563
559 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 263, 329; Order No. 1000-A, 139 FERC ¶ 61,132 at P 477.
560 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 329.
561 First Compliance Order, 143 FERC ¶ 61,059 at P 250
562 Id.
563 This includes provisions for: (1) the halting of market-based or regulated
backstop solutions; (2) monitoring of Responsible Transmission Owner solutions;
(3) enabling requests for supplemental reliability review in the event of material
(continued…)
Docket No. ER13-102-001, et al.- 133 -
260. The Commission found that the Filing Parties’ proposal was consistent with the
requirement in Order No. 1000 that, if evaluation of an alternative is needed, the regional
transmission planning process must allow the incumbent transmission provider to
propose solutions that it would implement in its own retail distribution service territory or
footprint.564
ii.Summary of Compliance Filings
261. The Filing Parties propose to revise NYISO’s existing procedures in the reliability
transmission planning process for monitoring and reporting on the status of market-based
solutions and regulated transmission solutions to consolidate the requirements into one
section.565 They explain that revisions are non-substantive and will eliminate any
confusion regarding the application of similar monitoring requirements that previously
appeared in different sections of Attachment Y.566 Additionally, they explain that the
revisions clarify that the monitoring requirements apply to all regulated solutions,
including the regulated backstop solution, and not only to alternative regulated solutions.
modifications proposed by regulators to the regulated backstop solutions; (4) enabling
recovery of necessary and reasonable costs of a regulated backstop solution, or an
alternative regulated reliability solution selected by the New York Public Service
Commission to proceed, in the event regulatory approval is not obtained or is withdrawn;
(5) determining whether a market-based solution will be available to meet a reliability
need on a timely basis; and (6) allowing NYISO to request a Gap Solution, in the event a
market-based solution is viable but will be delayed beyond the target year. According to
Attachment Y, NYISO shall assess the continued viability of such projects using the
following criteria: (1) between three and five years before the trigger date for the project,
NYISO will use a screening analysis to verify the feasibility of the project; (2) between
one and two years before the trigger date for the project, NYISO will review the status of
the required interconnection studies, contract negotiations, permit applications, financing,
and Site Control; and (3) less than one year before the trigger date, NYISO will perform a
detailed review of the project’s status, including the status of final permits, required
interconnection studies, an effective interconnection agreement, financing, equipment,
and the implementation of construction schedules. See October 11, 2012 Compliance
Filing at 15-16.
564 First Compliance Order, 143 FERC ¶ 61,059 at P 250.
565 October 15, 2013 Compliance Filing at 31; see also NYISO OATT, Attachment Y, §§ 31.2.4.6, 31.2.4.8.
566 October 15, 2013 Compliance Filing at 31.
Docket No. ER13-102-001, et al.- 134 -
262. The Filing Parties also propose a new provision governing the monitoring of
transmission projects selected as more efficient or cost-effective solutions in the public
policy transmission planning process. Specifically, they propose to revise Attachment Y
to state that NYISO will “monitor transmission projects selected by [NYISO] as the more
efficient or cost effective transmission solutions to Public Policy Transmission Needs to
confirm that they continue to develop consistent with the conditions, actions, or schedules
for the transmission projects.”567 The Filing Parties state that this revision provides
assurance that the solution will be implemented by the need date, if any, and will enable NYISO to inform policymakers of the progress of such transmission projects.568
iii.Commission Determination
263. We find that the provisions in Attachment Y addressing NYISO’s monitoring of
transmission projects addressing Reliability Needs and Public Policy Transmission Needs
comply with the reevaluation requirements of Order No. 1000. The Commission notes
that NYISO’s Technical Bulletin 171569 clarifies that quarterly status updates are required
for each of the Transmission Owners’ updated plans that were included in the
Comprehensive Reliability Plan base case, and that were identified in the Reliability
Needs Assessment or Comprehensive Reliability Plan as affecting the identified
reliability needs of the bulk power system. Similarly, quarterly updates are required for
each Market Based Solution included in the Comprehensive Reliability Plan, from
Responsible Transmission Owners regarding regulated backstop solutions that are
triggered by NYISO to begin the regulatory approval process, and from developers of
alternative regulated solutions.
f.Cost Allocation for Transmission Facilities Selected in the
Regional Transmission Plan for Purposes of Cost
Allocation
264. Order No. 1000 required each public utility transmission provider to participate in
a regional transmission planning process that provides nonincumbent transmission
developers and incumbent transmission developers the same eligibility to use a regional
cost allocation method or methods for any transmission facility selected in the regional
567 NYISO OATT, Attachment Y, § 31.4.11.
568 October 15, 2013 Compliance Filing at 42.
569 See NYISO Technical Bulletin 171, Subject: Monitoring Viability of Solutions to Meet Reliability Needs, available at
http://www.nyiso.com/public/webdocs/markets_operations/documents/Technical_Bulleti
ns/Technical_Bulletins/Technical_Bulletins/tb_171.pdf.
Docket No. ER13-102-001, et al.- 135 -
transmission plan for purposes of cost allocation.570 Order No. 1000 also required that the regional transmission planning process have a fair and not unduly discriminatory
mechanism to grant to an incumbent transmission provider or nonincumbent transmission developer the right to use the regional cost allocation method for transmission facilities selected in the regional transmission plan for purposes of cost allocation.571
i.First Compliance Order
265. In the First Compliance Order, the Commission found that the Filing Parties’
proposal regarding cost allocation for nonincumbent transmission developer projects
complied with the requirements of Order No. 1000, explaining that NYISO’s OATT
provides that “[a]ny entity, whether Transmission Owner or Other Developer, shall be
eligible for cost allocation and cost recovery, as set forth in [s]ection 31.5 [(Cost
Allocation and Cost Recovery)] and associated rate schedules, as applicable, for any
approved reliability, economic, or public policy requirement driven transmission
project.”572
266. The Commission also found in the First Compliance Order that it was appropriate
for a Responsible Transmission Owner to be able to use the regional cost allocation
method for costs associated with developing a regulated backstop solution to an identified
reliability transmission need, even if that project was not ultimately selected as a more
efficient or cost effective transmission solution in the regional transmission plan for
purposes of cost allocation, while a nonincumbent transmission developer could only
recover such costs if selected in the regional transmission plan for purposes of cost
allocation.573 However, the Commission also stated that any transmission developer
should be permitted to use the regional cost allocation method for any prudently incurred
study costs when it has been requested to develop such a solution by the New York
Public Service Commission or the New York Department of Public Service, and that the
Filing Parties had not explained why the state agencies should be able to identify only an
570 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 332.
571 Id. P 336.
572 First Compliance Order, 143 FERC ¶ 61,059 at P 255 (citing NYISO OATT, Attachment Y, § 31.5.1. 7 (Eligibility for Cost Allocation and Cost Recovery)).
573 See id. P 326 (stating that “[w]here an alternative regulated solution receives the necessary governmental approval, a non-incumbent developer will be entitled to the same cost recovery as a Responsible Transmission Owner if the regulated backstop
solution were implemented, (i.e., full recovery of all reasonably incurred costs, including costs related to the development of the project)”).
Docket No. ER13-102-001, et al.- 136 -
incumbent Transmission Owner as the appropriate party to develop such a solution.574 Further, with regard to the proposal to allow only an “appropriate” Transmission Owner to recover costs incurred in preparing a solution to a transmission need driven by a public policy requirement, if requested by the New York Department of Public Service or the New York Public Service Commission, the Commission stated that the proposal was unduly discriminatory, and could discourage the New York Department of Public Service or the New York Public Service Commission from seeking the participation of other
transmission developers in the transmission planning process.575
267. The Commission therefore directed the Filing Parties to submit a compliance
filing revising the NYISO OATT to clarify that (1) in the event the New York Public
Service Commission or the New York Department of Public Service requests a proposed
transmission solution for a transmission need driven by a public policy requirement, the
New York Public Service Commission or the New York Department of Public Service
may request any qualified transmission developer to provide the proposed solution; and
(2) any qualified transmission developer that proposes a transmission solution for a
transmission need driven by a public policy requirement in response to a request from the New York Public Service Commission or the New York Department of Public Service should be eligible to use the regional cost allocation method for prudently incurred costs of preparing the requested solution.576
ii.Requests for Rehearing or Clarification
268. LS Power seeks clarification of the Commission’s statement that “[w]here an
alternative regulated solution receives the necessary governmental approval, a non-
incumbent developer will be entitled to the same cost recovery as a Responsible
Transmission Owner if the regulated backstop solution were implemented (i.e., full
recovery of all reasonably incurred costs, including costs related to the development of
the project).”577 LS Power asserts that the Commission should have stated that
nonincumbent transmission developers are entitled to the same cost recovery as a
Responsible Transmission Owner where the nonincumbent transmission developer’s
alternative regulated solution receives the necessary approval from NYISO, rather than
governmental approval. Thus, LS Power argues, the Commission should clarify that,
574 Id. PP 326-327.
575 Id. P 328.
576 Id.
577 LS Power Request for Clarification at 3-4 (quoting First Compliance Order, 143 FERC ¶ 61,059 at P 326).
Docket No. ER13-102-001, et al.- 137 -
where an alternative regulated solution receives the necessary approval from NYISO, a nonincumbent transmission developer will be entitled to the same cost recovery as a Responsible Transmission Owner.578
269. LS Power also asserts that the transmission solution that NYISO selects as the
more efficient or cost-effective solution in the regional transmission plan for purposes of
cost allocation should be the sole transmission project eligible to use the regional cost
allocation method. LS Power agrees that it is appropriate for a Responsible Transmission
Owner to be eligible to use the regional cost allocation method for the original
development of a proposal for a regulated backstop solution. However, LS Power argues
that, if NYISO selects an alternative regulated solution in the regional transmission plan
for purposes of cost allocation, then the Responsible Transmission Owner should not be
eligible to use the regional cost allocation method for costs incurred to challenge the
alternative regulated solution at the state siting level.579 LS Power argues that costs
incurred by a Responsible Transmission Owner to pursue such challenges would not be
“prudently incurred to meet its obligation” for cost allocation purposes under the NYISO
OATT.580
iii.Compliance Filing
270. In conjunction with their revisions to implement NYISO’s new evaluation and
selection process, the Filing Parties propose to clarify the points in NYISO’s regional
reliability and public policy transmission planning processes that a Responsible
Transmission Owner, Other Developer, or Transmission Owner becomes eligible to use
the regional cost allocation method for costs related to a proposed transmission solution.
(a) Eligibility to Use the Regional Cost
Allocation for Reliability Projects
271. In the reliability transmission planning process, the Filing Parties propose that a
Responsible Transmission Owner will be eligible to use the regional cost allocation
method for the costs for developing its regulated backstop solution proposal in response
to NYISO’s request for solutions to a Reliability Need,581 and an Other Developer or a
578 Id. at 4.
579 Id. at 4-5.
580 Id.
581 October 15, 2013 Compliance Filing at 52 (citing NYISO OATT, Attachment Y, § 31.2.4.3.2.1).
Docket No. ER13-102-001, et al.- 138 -
Transmission Owner of an alternative regulated transmission solution that is selected as
the more efficient or cost-effective transmission solution will become eligible to use the
regional cost allocation method if, and when, NYISO triggers its project to proceed.582
Specifically, Attachment Y provides that “[a]n Other Developer or Transmission Owner
of a selected alternative regulated transmission project shall not be eligible to recover
costs for its project unless its project is triggered pursuant to [s]ection 31.2.8. Once such
project is triggered, the Other Developer or Transmission Owner shall be eligible to
recover costs for the project.”583
272. In addition, according to Schedule 10, the transmission developer of an alternative
regulated solution may recover its costs pursuant to NYISO’s determination that: (1) a
regulated solution is needed to address the Reliability Need (i.e., there are no market-
based solutions);584 (2) the transmission developer is “otherwise authorized to propose,
develop or construct a regulated transmission project under applicable state and federal
law”; (3) the alternative transmission solution is the more efficient or cost-effective
solution; and (4) as discussed above, the alternative transmission solution is triggered.585
After the alternative regulated solution is triggered, and upon receipt of all necessary
federal, state, and local authorizations, the transmission developer shall commence
construction of the project. Upon completion of the project, the transmission developer
may file with the Commission the resulting revenue requirement. The Responsible
Transmission Owner may recover its costs for developing its regulated backstop
transmission solution proposal and seeking any necessary approvals (if triggered by
NYISO) under Rate Schedule 10.586
273. The Filing Parties also propose to clarify that once a transmission project becomes
eligible to use the regional cost allocation method, the developer of that project, whether
it is the Responsible Transmission Owner or a nonincumbent transmission developer of
an alternative regulated transmission solution, will be eligible to include the same types
of costs and can recover those costs even if the project is halted, does not receive
582 Id. (citing NYISO OATT, Attachment Y, § 31.2.6.5.2).
583 NYISO OATT, Attachment Y, § 31.2.6.5.2.
584 See id. § 31.2.8 (Determination of Necessity).
585 NYISO OATT, § 6.10.5 (Schedule 10 - Rate Mechanism for Recovery of the Reliability Facilities Charge) (Recovery of Costs Incurred by an Other Developer Related to an Alternative Regulated Solution).
586 NYISO OATT, Attachment Y, § 31.2.4.3.1 (Regulated Backstop Solutions).
Docket No. ER13-102-001, et al.- 139 -
necessary authorizations, or has such authorizations withdrawn.587 The Filing Parties
also propose to add that the actual point in time at which an eligible Responsible
Transmission Owner, Other Developer, or Transmission Owner can recover its costs is:
(i) the earlier of when the transmission project is completed or at the point at which its
project is halted, as set forth in the existing cost recovery requirements in Rate Schedule
10 of the NYISO OATT; or (ii) as otherwise determined by the Commission.588
274. The Filing Parties similarly clarify that Responsible Transmission Owners, Other
Developers, or Transmission Owners are entitled to full recovery of all reasonably
incurred costs related to the development, construction, operation, and maintenance
of regulated solutions, “if eligible for cost recovery under Section 31.2 of this
Attachment Y.589 The Filing Parties propose to revise the description of the formula for
the recovery of costs of regulated transmission solutions to a Reliability Need to replace
the requirement that the “formula is not applicable to that portion of a project oversized
beyond the smallest technically feasible solution that meets the Reliability Need
identified in the [Reliability Needs Assessment]” with the following: “The formula is not
applicable to that portion of a project beyond the size of the solution needed to provide
the more efficient or cost effective solution appropriate to the Reliability Need identified
in the [Reliability Needs Assessment].” The Filing Parties state that absent this change,
the smallest feasible transmission upgrade to meet a Reliability Need, which may, due to
the inherent “lumpiness” of transmission improvements, be larger than non-transmission
alternatives, would be precluded from cost recovery by those smaller non-transmission
solutions, and so would frustrate the purpose of Order No. 1000 to permit efficient or
cost-effective transmission solutions to be selected for regional cost allocation.590
(b) Eligibility for Cost Recovery for Public
Policy Projects
275. In response to the First Compliance Order, the Filing Parties propose OATT
revisions to provide that the New York Department of Public Service or the New York
Public Service Commission may request that a Transmission Owner or Other Developer
587 October 15, 2013 Compliance Filing at 52 (citing to §§ 31.2.8.2.3, 31.2.8.2.4,
31.2.8.2.7, and 31.2.8.2.8).
588 Id. at 52-53 (citing to §§ 31.2.6.5.2 and, 31.5.6.2).
589 Id. at 53 (citing to NYISO OATT, Attachment Y, § 31.5.6 ).
590 Id. (citing to NYISO OATT, Attachment Y, §§ 31.2.6.5.2, 31.5.6, Rate Schedule 10 of the NYISO OATT, and § 6.10.5.1 of Rate Schedule 10).
Docket No. ER13-102-001, et al.- 140 -
propose a transmission solution to a Public Policy Transmission Need.591 Additionally, the Filing Parties propose to clarify that, in the event the New York Public Service
Commission or the New York Department of Public Service requests that a Transmission Owner or Other Developer propose a transmission solution for a transmission need driven by a public policy requirement,592 the Transmission Owner or Other Developer is eligible to use the regional cost allocation method to recover the prudently incurred costs of
preparing the requested solution as requested by the New York Public Service
Commission or the New York Department of Public Service.593
276. In connection with the revised evaluation and selection requirements for
transmission solutions to a Public Policy Transmission Need, the Filing Parties propose to clarify that the developer of a regulated transmission project will be eligible to use the regional cost allocation method when NYISO selects its project as the more efficient or cost-effective transmission solution to satisfy the Public Policy Transmission Need.594 The Filing Parties also propose to provide that, consistent with NYISO’s reliability
transmission planning process, costs will be recovered when the transmission project is completed pursuant to a rate schedule filed with and accepted by the Commission, or as otherwise determined by the Commission.595
277. In addition, the Filing Parties propose to establish that actual project cost recovery,
including any issues related to cost recovery and project cost overruns, will be submitted
to the Commission. They also seek to clarify that Other Developers or Transmission
Owners, “if eligible for cost recovery under Section 31.4 of this Attachment Y,” are
entitled to “full” recovery of costs, including “all reasonably incurred costs, including a
reasonable return on investment and any applicable incentives, related to the
development, construction, operation and maintenance of regulated solutions” associated
591 Id. at 54-55 (citing NYISO OATT, Attachment Y, §§ 31.4.8.2, 31.5.6).
592 NYISO OATT, Attachment Y, §§ 31.4.3.2, 31.4.3.2, 31.5.6; see October 15,
2013 Compliance Filing at 34 (citing First Compliance Order, 143 FERC ¶ 61,059 at
P 328).
593 October 15, 2013 Compliance Filing at 34 (citing First Compliance Order,
143 FERC ¶ 61,059 at P 328); NYISO OATT, Attachment Y, §§ 31.4.3.2, 31.5.6.
594 October 15, 2013 Compliance Filing at 54 (citing NYISO OATT, Attachment Y, §§ 31.4.8.2, 31.5.5.3).
595 Id. (citing NYISO OATT, Attachment Y, §§ 31.4.8.2, 31.5.6.5).
Docket No. ER13-102-001, et al.- 141 -
with the implementation of a regulated transmission project undertaken to meet a Public Policy Transmission Need.596
iv.Protests/Comments
278. LS Power asks the Commission to require NYISO to delete specific language
contained in section 6.10.5 of Attachment Y, which provides for cost recovery for an
alternative regulated reliability transmission project “that is proposed, developed or
constructed by an Other Developer who is otherwise authorized to propose, develop, or
construct a regulated transmission project under applicable state law.” 597 LS Power is
concerned that this language might prohibit a transmission developer sponsoring a project
that was selected as the more efficient or cost-effective solution from being able to use
the regional cost allocation method for the selected project if the transmission developer
was denied a permit to site or construct the project and thus is not “authorized to . . .
construct a regulated transmission project under applicable state law.” 598
v.Answer
279. The Filing Parties oppose LS Power’s request that the Commission require the
deletion of the proposed language indicating that costs will be recovered “when the
project is completed,” and stating that cost recovery should only occur “pursuant to a
Rate Schedule filed with and accepted by the Commission.”599 The Filing Parties state
that they have already addressed LS Power’s concern by proposing new language
providing that a transmission developer can begin to recover its costs either when the
transmission project is completed pursuant to a rate schedule filed with and accepted by
the Commission, “or as otherwise determined by the Commission.”600
280. The Filing Parties oppose LS Power’s argument that the language limiting cost
recovery for an alternative regulated reliability transmission project “that is proposed,
developed or constructed by an Other Developer who is otherwise authorized to propose,
596 NYISO OATT, Attachment Y, § 31.5.6.
597 LS Power Protest at 21-22; see NYISO OATT, 6 OATT Rate Schedules - 6.10 OATT Schedule 10, § 6.10.2.
598 See NYISO OATT, 6 OATT Rate Schedules - 6.10 OATT Schedule 10, § 6.10.2.
599 Filing Parties Answer at 36 n.110 (citing LS Power Protest at 21-22). 600 Id. at 37.
Docket No. ER13-102-001, et al.- 142 -
develop, or construct a regulated transmission project under applicable law” should be
deleted.601 The Filing Parties argue that LS Power’s fears that this language conditions
cost recovery on state regulatory considerations are misplaced. The Filing Parties state
that, while the Commission has prohibited state siting approval as a pre-requisite to
selection of an entity as transmission developer, it allows state siting approval to be
considered as a factor in the regional transmission planning process.602 The Filing
Parties further state that it is appropriate to require transmission developers to comply
with applicable state laws, and that Order Nos. 1000 and 1000-A do not preclude
consideration of state law approvals.603 The Filing Parties state that the provision simply
limits cost recovery to transmission projects that have received the necessary approval to
construct, and does not exclude any proposed project from consideration for reasons of
state law. They further state that LS Power’s request is outside the scope of the
Commission’s directives in the First Compliance Order and should be rejected on that
basis.604
vi.Commission Determination
281.As an initial matter, we grant the first clarification requested by LS Power, and
state that a nonincumbent transmission developer must have the same eligibility to use the regional cost allocation method for costs associated with developing a regulated transmission solution to an identified reliability transmission need as a Responsible Transmission Owner, where an alternative regulated solution receives the necessary approval from NYISO (rather than from a state agency).
282. However, we deny LS Power’s request that we clarify that, when NYISO selects
an alternative regulated solution as the more efficient or cost-effective solution, only that
alternative regulated solution should be able to use the regional cost allocation method.
As we previously noted in the Requirement to Plan on a Regional Basis to Identify More
Efficient or Cost-Effective Transmission Solutions section, Order No. 1000’s reforms
“are not intended to diminish the significance of an incumbent transmission provider’s
601 Id. at 37 n.113 (citing LS Power Protest at 22).
602 Id. at 38 n.115 (citing PJM Interconnection, LLC, 142 FERC ¶ 61,214, at P 232
(2013) (“[I]t is not necessarily impermissible to consider the effect of the state regulatory
process at appropriate points in the regional transmission planning process. Indeed, the
Commission has identified points at which such consideration might be appropriate”)).
603 Id. at 38 n.116 (citing PJM Interconnection, LLC, 142 FERC ¶ 61,214, at PP 232-233 (2013)).
604 Id. at 38.
Docket No. ER13-102-001, et al.- 143 -
reliability needs or service obligations”605 and nothing in Order No. 1000 “limits public
utility transmission providers from developing mechanisms to impose an obligation to
build transmission facilities in a regional transmission plan.”606 The Commission found
in the First Compliance Order that “it is appropriate for the Responsible Transmission
Owner to be permitted to recover costs that it prudently incurred to meet its obligation,
even when the project is not selected, since only the Responsible Transmission Owner is
required to provide the regulated backstop solution for a reliability transmission need.”607 As the Filing Parties point out, the New York Transmission Owners have a legal
obligation to prepare a regulated backstop solution to an identified Reliability Need if designated by NYISO as the Responsible Transmission Owner and this obligation was memorialized by the New York Transmission Owners in a contract with NYISO.608 We therefore reject LS Power’s argument that the Responsible Transmission Owner should not be eligible to use the regional cost allocation method for costs incurred to challenge the alternative regulated solution at the state siting level.
283. We also note that there appears to be an inconsistency between section 6.10.5 and
section 31.2.8.2.7. As LS Power notes, the phrase in section 6.10.5 appears to limit a
transmission developer’s eligibility to use the regional cost allocation method for an
alternative regulated transmission solution to a transmission developer “who is otherwise
authorized to propose, develop, or construct a regulated transmission project under
applicable state law.”609 However, section 31.2.8.2.7 states that, if the “appropriate
federal, state or local agency(ies) does not approve a necessary authorization for the
regulated backstop solution or a triggered alternative regulated transmission solution, all
605 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 262.
606 Id. P 159 n.155.
607 First Compliance Order, 143 FERC ¶ 61,059 at P 326.
608 See Agreement Between the New York Independent System Operator, Inc. and
the New York Transmission Owners on the Comprehensive Planning Process for
Reliability Needs (June 10, 2010) (NYISO/TO Reliability Agreement), available at
http://www.nyiso.com/public/webdocs/markets_operations/documents/Legal_and_Regul
atory/Agreements/NYISO/Comprehensive_Planning_Process_for_Reliability_Needs_Ag
reement.pdf. The Commission approved the NYISO/TO Reliability Agreement in N.Y.
Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372 (2004) (emphasis added). This contract
provides that a transmission owner’s obligation to propose, develop, and construct a
regulated backstop transmission project is subject to “full recovery in wholesale and
retails rates of all reasonably incurred costs” related to the regulated transmission project.
609 NYISO OATT, 6 OATT Rate Schedules - 6.10 OATT Schedule 10, § 6.10.5.
Docket No. ER13-102-001, et al.- 144 -
of the necessary and reasonable costs incurred and commitments … will be
recoverable.”610 We therefore require the Filing Parties to address this inconsistency in a compliance filing made within 60 days of the date of issuance of this order.
4.Cost Allocation
284. Order No. 1000 required each public utility transmission provider to have in its
OATT a method, or set of methods, for allocating the costs of any new transmission
facility selected in the regional transmission plan for purposes of cost allocation.611 Each
public utility transmission provider must demonstrate that its cost allocation method
satisfies six regional cost allocation principles.612 In addition, while Order No. 1000
permitted participant funding, participant funding cannot be the regional cost allocation
method.613
285. Regional Cost Allocation Principle 1 requires that the cost of transmission
facilities be allocated to those within the transmission planning region that benefit from those facilities in a manner that is at least roughly commensurate with estimated benefits. The cost allocation methods must clearly and definitively specify identifiable benefits and the class of beneficiaries, and the transmission facility costs allocated must be
roughly commensurate with that benefit.614
286. Regional Cost Allocation Principle 2 requires that those that receive no benefit from transmission facilities, either at present or in a likely future scenario, not be involuntarily allocated any of the costs of those transmission facilities.615
287. Regional Cost Allocation Principle 3 specifies that, if a benefit to cost threshold is
used to determine which transmission facilities have sufficient net benefits to be selected
in a regional transmission plan for the purpose of cost allocation, the threshold must not
be so high that transmission facilities with significant positive net benefits are excluded
from cost allocation. Such a threshold may not include a ratio of benefits to costs that
610 NYISO OATT, Attachment Y, § 31.2.8.2.7 (emphasis added). 611 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at PP 558, 690. 612 Id. P 603.
613 Id. P 723.
614 Id. PP 625, 678. 615 Id. P 637.
Docket No. ER13-102-001, et al.- 145 -
exceeds 1.25 unless the transmission planning region or public utility transmission provider justifies, and the Commission approves, a higher ratio.616
288. Regional Cost Allocation Principle 4 specifies that the regional cost allocation
methods must allocate costs solely within that transmission planning region unless
another entity outside the region or another transmission planning region voluntarily
agrees to assume a portion of those costs. In addition, each regional transmission
planning process must identify consequences for other transmission planning regions,
such as upgrades that may be required in another region and, if the original region agrees to bear costs associated with such upgrades, then the original region’s cost allocation
method or methods must include provisions for allocating the costs of the upgrades
among the beneficiaries in the original region.617
289. Regional Cost Allocation Principle 5 specifies that the cost allocation method and
data requirements for determining benefits and identifying beneficiaries for a
transmission facility must be transparent with adequate documentation to allow a
stakeholder to determine how they were applied to a proposed transmission facility.618
290. Regional Cost Allocation Principle 6 specifies that a transmission planning region may choose to use a different cost allocation method for different types of transmission facilities in the regional transmission plan, but there can be only one cost allocation
method for each type of transmission facility.619 If a transmission planning region
chooses to use a different cost allocation method for different types of transmission
facilities, each cost allocation method must be determined in advance for each type of facility.620 A regional cost allocation method may include voting requirements for
identified beneficiaries to vote on proposed transmission facilities.621
616 Id. P 646.
617 Id. P 657.
618 Id. P 668.
619 Id. PP 685-686. 620 Id. P 560.
621 Id. P 689.
Docket No. ER13-102-001, et al.- 146 -
a.Cost Allocation for Reliability and Economic Projects
i.First Compliance Order
291. In the First Compliance Order, the Commission found that NYISO’s proposed cost
allocation methods for reliability and economic transmission projects largely complied
with the regional cost allocation principles of Order No. 1000. Specifically, for regulated
reliability transmission projects, Filing Parties proposed that costs be allocated according
to a three-step approach that focuses on whether there is a locational, statewide, or a
bounded regional need.622 For regulated economic transmission projects, project costs
are allocated among beneficiaries based on relative economic benefit, apportioned
according to zonal load savings.623 In particular, the Commission found that these
regional cost allocation methods addressed Regional Cost Allocation Principles 1 and 2,
by considering which areas within the New York Control Area are affected by a
particular transmission need and allocating the costs to zones in a manner that is roughly
commensurate with benefits. The Commission found that NYISO’s cost allocation
methods complied with Regional Cost Allocation Principle 3, because the Filing Parties
did not propose to apply a benefit-to-cost ratio as part of the reliability cost allocation
method and the proposed benefit-to-cost ratio that would apply to economic transmission
projects was below the maximum threshold established in Order No. 1000.624 The
Commission also found that the NYISO OATT contained sufficient detail regarding the
methodology and data requirements for identifying the beneficiaries of reliability and
economic transmission projects, satisfying Regional Cost Allocation Principle 5. Finally,
the Commission noted that it is reasonable for NYISO to distinguish among reliability,
economic, and public policy transmission projects and thus found that the Filing Parties’
proposal satisfied Regional Cost Allocation Principle 6.625
622 First Compliance Order, 143 FERC ¶ 61,059 at PP 311-314. In the first step,
the costs of upgrades in zones that have Locational Capacity Requirements for Installed
Capacity are allocated to load-serving entities in those zones. In the second step, NYISO
runs its reliability simulation model with all internal transmission constraints relaxed and,
if a state-wide reliability need is identified, costs will be allocated to all load zones based
on their coincident peak load contribution. In the third step, if no transmission needs are
identified in step two, NYISO uses a binding interface test to identify binding
transmission constraints that are preventing the deliverability of capacity throughout the New York Control Area and allocates costs accordingly.
623 Id. PP 268, 269 & n.516 (citing October 11, 2012 Compliance Filing at 32, 36). 624 Id. P 315.
625 Id. P 317.
Docket No. ER13-102-001, et al.- 147 -
292. However, the Commission determined that the Filing Parties’ did not fully comply
with Regional Cost Allocation Principle 4. The Commission explained that, while the
Filing Parties stated that the costs of reliability and economic transmission solutions are
allocated solely to entities within NYISO’s transmission planning region, the Filing
Parties’ proposal to defer addressing consequences in neighboring transmission planning
regions and the potential allocation of costs associated with upgrades in another region to
the interregional compliance proceeding did not adequately address Regional Cost
Allocation Principle 4. The Commission explained that Order No. 1000 requires that the
regional transmission planning process identify consequences of a transmission facility
selected in the regional transmission plan for purposes of cost allocation on other
transmission planning regions. The Commission therefore directed the Filing Parties to
revise NYISO’s OATT to provide for identification of the consequences of a
transmission facility selected in the regional transmission plan for purposes of cost
allocation, and to address (1) whether the NYISO transmission planning region has
agreed to bear the costs associated with any required upgrades in another transmission
planning region and (2), if so, how such costs will be allocated under the NYISO regional
cost allocation methods.626
ii.Summary of Compliance Filing
293. The Filing Parties state that, with regard to identifying the consequences of a
transmission facility selected in the regional transmission plan for purposes of cost
allocation on other transmission planning regions, the Filing Parties have worked with NYISO’s neighboring regions, PJM and ISO-NE, and developed an interregional
transmission planning process that will enable NYISO to identify the consequences of its regional transmission planning process for neighboring ISO/RTO systems, and to
coordinate with those systems to identify the consequences of an interregional
transmission project on their systems. The Filing Parties note that they made this
interregional compliance filing on July 10, 2013.627
294. In the interregional compliance filing, the Filing Parties have also proposed a
process by which the neighboring ISO/RTO regions could share the costs of an
interregional transmission project physically located in two or more regions, if such
project has been approved in each of the neighboring region’s transmission planning
process. The neighboring entities will allocate their share of the interregional
transmission project’s costs using an avoided cost method. NYISO will then allocate its
626 Id. P 316.
627 October 15, 2013 Compliance Filing at 55 (citing New York Independent
System Operator, Inc. and New York Transmission Owners, Interregional Compliance
Filing, Docket Nos. RM10-23-000, ER13-142-000 (Interregional Compliance Filing)).
Docket No. ER13-102-001, et al.- 148 -
region’s share of the costs within the NYISO region based on the type of regional
transmission project that is being displaced by the interregional transmission project, so that, for example, if the interregional transmission project displaces a regional
transmission project that is required to satisfy a Reliability Need, NYISO will allocate its region’s share of the costs through the cost allocation method under the reliability
transmission planning process. NYISO will not, however, bear the costs of projects
located in another region unless they are part of transmission projects that have been approved in the NYISO’s regional transmission planning process.628
295. The Filing Parties additionally state that they have become aware that NYISO’s
OATT does not currently provide for cost allocation for transmission projects that resolve
transmission security violations, other than those that also resolve resource adequacy
issues.629 NYISO is currently working with its stakeholders to develop a method for
allocating the costs for such projects, but has not completed that work, and the Filing
Parties therefore propose to insert a placeholder in Attachment Y stating that NYISO will
address through its stakeholder process the development of a method to allow for the
allocation of costs of transmission solutions to thermal or voltage security issues, and will
make a filing with the Commission pursuant to section 205 of the FPA by the end of the
third quarter of 2014.630
iii.Commission Determination
296. We find that Filing Parties’ proposed regional cost allocation method complies
with the Commission’s directives in the First Compliance Order. The Filing Parties have
provided sufficient explanation regarding how agreements with neighboring transmission
planning regions will allow for the identification of impacts of Required Transmission
Enhancements on other transmission planning regions. The Filing Parties have further
explained that NYISO has not agreed to bear the costs of required upgrades in other
transmission planning regions, with the exception of certain transmission facilities
subject to interregional coordination agreements between NYISO and neighboring
transmission planning regions. For such transmission facilities, allocating the costs in a
628 Id. at 55-56 (citing NYISO OATT, Attachment Y, §§ 31.2.2.7, 31.3.1.6,
31.4.3.3, 31.5.2.1 and Interregional Compliance Filing at 21, 32, 37-38).
629 Id. at 56. The Filing Parties state that currently, section 31.5.3.2.1.4 treats the
allocation of costs associated with resolving thermal or voltage security issues as a local
issue, and does not provide cost allocation and recovery through the NYISO OATT.
630 Id.
Docket No. ER13-102-001, et al.- 149 -
manner similar to Required Transmission Enhancements, as proposed by the Filing Parties, is consistent with Order No. 1000.631
297. We further find that the Filing Parties have demonstrated whether the NYISO
transmission planning region has agreed to bear the costs associated with any required
upgrades in another transmission planning region, and how such costs will be allocated
under the NYISO regional cost allocation methods. For the reliability, economic, and
public policy transmission planning processes, the Filing Parties propose Attachment Y
revisions providing that NYISO “shall not bear the costs of required upgrades in another
region.”632 The Filing Parties additionally note that, in their filing to comply with the
interregional requirements of Order No. 1000, they have proposed revisions to
Attachment Y that “enable [NYISO] to identify the consequences of its regional planning process for neighboring ISO/RTO systems . . . [and] enable [NYISO] to coordinate with neighboring ISOs/RTOs to identify the consequences on their systems of an interregional transmission project.”633
298. We note the Filing Parties’ placeholder for a method for allocating the costs of
transmission projects that resolve transmission security violations, other than those that
also resolve resource adequacy issues, as well as NYISO’s commitment to file this cost
allocation method with the Commission by the end of the third quarter of 2014. We will
address the resulting cost allocation method at the time that NYISO makes that filing.
b.Cost Allocation for Public Policy Transmission Projects
i.First Compliance Order
299. In the First Compliance Order, the Commission addressed the Filing Parties’
proposed cost allocation method for public policy transmission projects. Specifically, the
Filing Parties proposed a four-step, hierarchical method for allocating costs. First, if the
public policy requirement that results in the construction of a transmission project
prescribes the use of a particular cost allocation and recovery method, NYISO will use
that method. Second, if the public policy requirement does not prescribe a particular cost
allocation method, the transmission developer may propose and, subject to any guidance
that may be provided by the New York Public Service Commission and subject to the
approval of the Commission, use a cost allocation based on load ratio share, adjusted to
631 Consideration of other aspects of interregional coordination is outside the scope of this proceeding.
632 NYISO Attachment Y, §§ 31.2.2.7, 31.3.1.6, 31.4.3.3. 633 October 15, 2013 Compliance Filing at 55.
Docket No. ER13-102-001, et al.- 150 -
reflect the transmission needs driven by the public policy requirement, the party(ies)
responsible for compliance with the public policy requirement, and the parties who
benefit from the transmission facility. Third, if the public policy requirement does not
prescribe a particular cost allocation method, or the transmission developer’s cost
allocation method is not endorsed by the New York Public Service Commission, the
New York Department of Public Service or the New York Public Service Commission
may identify an alternative cost allocation method to be applied.634 Finally, in the
absence of any of the above cost allocation methods, NYISO will allocate the costs of the
transmission project to all load-serving entities in the New York Control Area using a
default cost allocation formula, based upon a load ratio share methodology.635
300. Regarding the regional cost allocation method for public policy transmission
projects, the Commission found that, while the Filing Parties’ proposed default load ratio
share regional cost allocation method may be reasonable, the Filing Parties did not
provide sufficient detail as to how the proposed default load ratio share regional cost
allocation method complies with Order No. 1000’s regional cost allocation principles.636
301. In particular, the Commission noted that Order No. 1000 requires the Filing
Parties to show that the regional cost allocation method allocates the costs of new
transmission facilities in a manner that is at least roughly commensurate with estimated
benefits.637 The Commission found that the Filing Parties’ statement that “public policies
established by government are generally established to benefit everyone”638 did not
explain in sufficient detail how costs are allocated in accordance with estimated benefits
(Regional Cost Allocation Principle 1) or provide assurance that those parties that receive
no benefit from transmission facilities, either at present or in a likely future scenario, will
not be involuntarily allocated the costs of those facilities (Regional Cost Allocation
634 In any of these three scenarios, NYISO, on behalf of the Transmission Owner
or Other Developer, will file the proposed cost allocation for the transmission project
with the Commission, and the filing will include a demonstration that the proposed cost
allocation is compliant with the Order No. 1000 Regional Cost Allocation Principles.
635 First Compliance Order, 143 FERC ¶ 61,059 at PP 275-276 (citing NYISO OATT, Attachment Y §§ 31.5.5.4 - 31.5.5.5).
636 Id. P 314.
637 Id. P 320 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 219). 638 Id. (citing October 11, 2012 Compliance Filing at 48).
Docket No. ER13-102-001, et al.- 151 -
Principle 2).639 The Commission further stated, with respect to the Filing Parties’
proposal to use a load ratio share method as its default cost allocation method that “such allocation of costs, without the appropriate support . . . gives too broad a meaning to the definition of benefits,” and “any [such] proposal must be based on more than a mere assertion of generalized system benefits.”640
302. Additionally, the Commission found that the Filing Parties had not explained how their proposed default cost allocation method complies with Regional Cost Allocation
Principle 4, and therefore, must submit revisions to explain how NYISO’s transmission planning process identifies consequences of a transmission facility selected in the
regional transmission plan for purposes of cost allocation for other transmission planning regions, such as upgrades that may be required in another region. If there is an agreement for the NYISO transmission planning region to bear costs associated with such upgrades, then NYISO’s cost allocation method or methods must include provisions for allocating the costs of the upgrades among the entities in NYISO.641
303. Therefore, with regard to transmission facilities for public policy projects, the
Commission directed the Filing Parties to make a compliance filing explaining how the proposed default load ratio share cost allocation method complies with the requirements of Regional Cost Allocation Principles 1, 2 and 4.642
304. In addition, while the Commission largely accepted the Filing Parties’ proposal to identify the beneficiaries of public policy projects and allocate the costs of those projects using the first three steps of its hierarchical, step-based method, the Commission noted its concern that “there is no limit to the amount of time that may pass in considering the four steps of the hierarchical cost allocation method.”643
639 Id. With regard to Regional Cost Allocation Principle 4, as discussed below, the Commission required the Filing Parties to submit revisions to NYISO’s OATT to provide for identification of the consequences of a transmission facility selected in the regional transmission plan for purposes of cost allocation. Id. P 316.
640 Id. P 321 & nn.625, 617 (citing Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 625 and Order No. 1000-A, 139 FERC ¶ 61,132 at P 683).
641 Id. P 322.
642 Id.
643 Id. P 324.
Docket No. ER13-102-001, et al.- 152 -
305. As the Commission stated, under the Filing Parties’ proposal, before a project can
use the default load ratio share regional cost allocation method: (i) NYISO must
determine whether the public policy requirement that results in the construction of a
transmission project prescribes the use of a particular cost allocation and recovery
method; (ii) the transmission developer may propose a cost allocation based on load ratio
share which must then be endorsed by the New York Public Service Commission; and
(iii) the New York Department of Public Service or the New York Public Service
Commission may identify an alternative cost allocation method. The Commission
pointed out that an entity seeking to develop a public policy transmission project could
not rely on any particular cost allocation method, or even on a date by which the default
method will be available, thus introducing additional uncertainty into the process and
leading to a lower likelihood that a public policy transmission project will be constructed.
306. The Commission therefore directed NYISO to: (1) explain how the proposed
process will not cause unnecessary delays for entities to obtain the right to use the
regional cost allocation method for their proposed public policy transmission project; and
(2) provide a timeline for the proposed process so that a transmission developer will know how the costs of its project will be allocated in a timely manner.644
ii.Summary of Compliance Filing
307. The Filing Parties645 state that they are providing additional support for their
proposed default load ratio share cost allocation method for public policy transmission
projects as the Commission required in the First Compliance Order.646 They state that
this cost allocation method, which can be quickly adopted and readily implemented, is
intended to avoid uncertainty that could present a barrier to new transmission projects
needed to meet public policy needs. They further state that a load ratio share method is a
644 Id.
645 The Filing Parties note that the Long Island Power Authority does not join this
portion of the filing, due to the still-outstanding need for language accommodating the
Long Island Power Authority’s participation in the public policy requirements
transmission planning process. The Filing Parties state that they and the Long Island
Power Authority are continuing to discuss revisions to the OATT to address the Long
Island Power Authority’s role in the public policy requirements transmission planning
process among themselves and with the New York State Department of Public Service,
and that the Long Island Power Authority intends to inform the Commission of the status
of those discussions as part of comments filed on the compliance filing. October 15,
2013 Compliance Filing at 47 n.172.
646 October 15, 2013 Compliance Filing at 50.
Docket No. ER13-102-001, et al.- 153 -
reasonable option in the context of a single-state Independent System Operator like
NYISO. The Filing Parties note that New York State is currently pursuing public policy transmission requirements that may lead to changes to the bulk power grid. According to the Filing Parties, the bulk power grid forms the “highway system” over which large amounts of power can be delivered, and this system will provide statewide benefits when used to satisfy Public Policy Transmission Needs. The Filing Parties state that therefore, it is reasonable to anticipate that public policy transmission projects will provide some level of benefits to all consumers in New York State.647
308. The Filing Parties further state that given this context, the use of a load ratio share
based ex ante allocation method for public policy transmission projects satisfies the
“roughly commensurate” requirement.648 They note that the Commission recognized that
courts have accepted region-wide allocations of costs of projects, such as an RTO’s
control center that provides region-wide benefits, regardless of whether individual loads
were shown to be direct beneficiaries.649 The Filing Parties also point to Illinois
Commerce Commission,650 in which the United States Court of Appeals for the Seventh
Circuit upheld the MISO’s region-wide cost allocation method for multi-value projects,
noting that the Court’s determination is particularly relevant since multi-value projects
are often related to satisfying state renewable energy requirements. They state that
Illinois Commerce Commission supports the proposition that “when multiple factors,
including public policy considerations, drive the need for transmission development the
use of a load ratio share cost allocation method is a just and reasonable approach to cost
allocation,”651 and that it does not have to be shown that every customer in a region
647 Id.
648 Id. at 51; see First Compliance Order, 143 FERC ¶ 61,059 at P 258 (“Regional
Cost Allocation Principle 1 specifies that the cost of transmission facilities must be
allocated to those within the transmission planning region that benefit from those
facilities in a manner that is at least roughly commensurate with estimated benefits.”).
649 October 15, 2013 Compliance Filing at 51 nn.192-193 (referring to First
Compliance Order, 143 FERC ¶ 61,059 at P 300, which cites Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361, 1369 (D.C. Cir. 2004), and Order No. 890, FERC Stats. & Regs. ¶ 31,241 at P 559 n.329, which cites Colo. Interstate Gas Co. v. FPC, 324 U.S. 581, 589 (1945)).
650 Ill. Commerce Comm’n v. FERC, 721 F.3d 764 (7th Cir. 2013) (Illinois Commerce Commission).
651 October 15, 2013 Compliance Filing at 51.
Docket No. ER13-102-001, et al.- 154 -
would specifically benefit from a regional transmission project for region-wide cost allocation to be justified.
309. They further state that the Commission has recognized that changes to bulk power
transmission facilities can provide widespread benefits to all customers, and that this is
particularly true in the case of improvements to the backbone bulk power transmission
facilities in New York State that are designed to address public policy requirements.652
The Filing Parties state that, while other cost allocation methods may be proposed that
are better suited to an individual public policy transmission project, this does not render
the load ratio share method unjust and unreasonable as the ex ante cost allocation method
for New York. The Filing Parties state that, in the specific context of NYISO, there is an
“articulable and plausible reason to believe” that the benefits that public policy
transmission projects would bring to transmission customers across New York State will be “at least roughly commensurate” with allocating the costs of such projects on a load ratio share basis.653
310. Regarding the three steps preceding the default cost allocation method, the Filing
Parties propose the following to address the Commission’s concerns regarding the timing
of the public policy cost allocation method process. They state that NYISO will apply
the cost allocation method accepted by the Commission for the transmission solution
selected to satisfy an identified Public Policy Transmission Need, but seek to clarify the
process by which a proposed cost allocation method will be filed with the
Commission.654 They propose to clarify the process in Section 31.5.5.4 as follows:
• NYISO will file with the Commission any cost allocation method prescribed by
the identified public policy requirement. If a Transmission Owner or Other
Developer files a different proposed cost allocation method under Section 205, it
must demonstrate that its proposed method is compliant with the Order No. 1000
Regional Cost Allocation Principles, taking into account the method specified in
the public policy requirement.
• The Transmission Owner or Other Developer of the project may, after
consideration of guidance that may be provided by the New York Public Service
652 Id.
653 Id. at 52.
654 Id. at 47-48. The Filing Parties state that nothing in these revisions to
Section 31.5.5.5 is intended to prevent any transmission owner from proposing any other
cost allocation method to the Commission under section 205, or to create any section 205
filing rights for any Transmission Owner, Other Developer, NYISO, or any other entity.
Docket No. ER13-102-001, et al.- 155 -
Commission or the New York Department of Public Service, propose a cost
allocation method, which may be based on load ratio share, adjusted to reflect, as
applicable, the public policy requirement or Public Policy Transmission Need, the
party(ies) responsible for complying with the public policy requirement, and the
party(ies) who benefit from the transmission facility (“Adjusted Load Ratio
Share”). If the New York Public Service Commission or the New York
Department of Public Service supports the proposed cost allocation method, the
Transmission Owner or Other Developer will file that cost allocation method and
must demonstrate its compliance with the Order No. 1000 Regional Cost
Allocation Principles.
• If the New York Public Service Commission or the New York Department of
Public Service does not support the Transmission Owner or Other Developer’s
proposed cost allocation method, the Transmission Owner or Other Developer will take reasonable steps over a 60-day period to respond to the New York Public Service Commission or the New York Department of Public Service’s concerns and to develop a mutually agreeable cost allocation method.
• If a mutually acceptable cost allocation method is developed, the Transmission
Owner or Other Developer will file it with the Commission and has the burden of
demonstrating its compliance with the Order No. 1000 Regional Cost Allocation
Principles.
• If the Transmission Owner or Other Developer does not reach an agreement with
the New York Public Service Commission or the New York Department of Public
Service, the Transmission Owner or Other Developer will promptly file with the
Commission its preferred cost allocation method and must demonstrate that its
proposed method complies with the Order No. 1000 Regional Cost Allocation
Principles, taking into consideration of the position of the New York Public
Service Commission or the New York Department of Public Service. The
Transmission or Other Developer will also include with its filing the method
supported by the New York Public Service Commission or the New York
Department of Public Service.
• If the Commission does not accept an alternative cost allocation method under the
approaches described above, the NYISO will allocate the costs of the transmission project to all Load Serving Entities in the New York Control Area based upon a load ratio share method.655
311. The Filing Parties believe that these revisions will provide for the determination of
a cost allocation method for a transmission solution to a Public Policy Transmission Need
without undue delay. The Filing Parties point specifically to the 60-day period for the
655 Id. at 48-49 (citing NYISO OATT, Attachment Y, §§ 31.5.5.4.1 - 31.5.5.4.3).
Docket No. ER13-102-001, et al.- 156 -
Transmission Owner or Other Developer and the New York Public Service Commission
or the New York Department of Public Service to work towards developing a mutually
agreeable cost allocation method. They further state that NYISO will make any
section 205 filings related to these requirements on behalf of the New York Power
Authority (a non- jurisdictional entity), to the extent requested by the New York Power
Authority, in which case the New York Power Authority must demonstrate that such a
filing is compliant with the Order No. 1000 Regional Cost Allocation Principles.656
iii.Protests/Comments
312. In its comments on the compliance proposal, the Long Island Power Authority
proposes new OATT provisions to govern the development of any cost allocation method
or rates for cost recovery for a proposed solution to a Public Policy Transmission Need
undertaken by the Long Island Power Authority and selected by the NYISO as the more
efficient or cost-effective solution. The Long Island Power Authority states that for a
solution which meets these criteria, it will have the burden of demonstrating that such
cost allocation method or rate complies with the standards set forth in the NYISO OATT
and is consistent with the Commission’s six cost allocation principles under Order
No. 1000. The Long Island Power Authority contends that the proposed OATT revisions
adequately balance its authority as the sole entity with authority over transmission
planning for the Long Island Transmission District while respecting the rights and
obligations of the New York Department of Public Service, New York Transmission
Owners, and NYISO.657
313. The Long Island Power Authority further asserts that it is a non-jurisdictional
utility pursuant to section 201(f) of the Federal Power Act.658 The Long Island Power
Authority thus proposes new section 31.5.5.4.5 to the NYISO OATT, which would
govern the development of the cost allocation method or rates for cost recovery for a
proposed solution to a Public Policy Transmission Need undertaken by the Long Island
Power Authority.659 Under new section 31.5.5.4.4.1, costs and rates allocated solely to
Long Island Power Authority customers will be established pursuant to the Long Island
656 Id. at 49-50.
657 Long Island Power Authority Protest at 13.
658 Id. at 12 n.23 (citing 16 U.S.C. § 824f (2012)).
659 Id. at 13. The proposed section exempts Long Island Power Authority projects that address a need that the New York Department of Public Service has determined to be a Public Policy Transmission Need, and has been evaluated and selected by NYISO as the more cost-effective or efficient solution.
Docket No. ER13-102-001, et al.- 157 -
Power Authority Act, and the Long Island Power Authority will provide NYISO with the adopted cost allocation and rate for inclusion in the NYISO OATT and for an
informational filing to the Commission.660
314. The Long Island Power Authority asserts that these changes are consistent with
Order No. 1000 and that the Commission has indicated that the statutory requirements of non-jurisdictional entities should be respected in the processes developed to identify
transmission needs driven by public policy requirements under Order No. 1000.661 The Long Island Power Authority states that the Commission has encouraged the Long Island Power Authority, NYISO and other interested parties to work together to develop further OATT amendments that allow all relevant regulatory entities to participate fully in the
transmission planning process and its proposed revisions satisfy these directives, but it is the sole entity that has authority to approve the cost allocation and rates for the
Long Island Power Authority projects.662
315. Multiple Intervenors and IPPNY, and Entergy, state that the Filing Parties have
failed to provide a justification for the use of a default load ratio share cost allocation
method for public policy-driven transmission projects as well as failed to demonstrate
that the proposed method complies with Regional Cost Allocation Principles 1 and 2.
They assert that the Filing Parties still rely on mere generalized statements regarding the
potential for widespread benefits. Multiple Intervenors ask the Commission to direct the
Filing Parties to adopt a default cost allocation method for public policy-driven
transmission projects based on the cost allocation formula for economic transmission
projects.663
316. Multiple Intervenors further state that one of the major potential New York State
“public policies” involves potential alternating current transmission projects that address
congestion problems on the UPNY/SENY and Central East transmission interfaces that
impact the transfer of power from the upstate region (i.e., NYISO Load Zones A-F) for
the benefit of consumers located in the southeastern or downstate region (i.e., NYISO
Load Zones G-K). Multiple Intervenors state that the [New York Department of Public
Service] has found that “congestion relief is the primary objective” of this initiative and
thus “[t]he benefits of . . . [t]he congestion relief savings and reduced environmental
660 Id. at 14.
661 Id. at 16 (citing Order No. 1000-A, 139 FERC ¶ 61,132 at PP 216, 334). 662 Id. (citing First Compliance Order, 143 FERC ¶ 61,059 at P 150).
663 Multiple Intervenors Protest at 3, 23-24.
Docket No. ER13-102-001, et al.- 158 -
impacts are likely to accrue mainly to customers in the southeastern portion of the state.”664
317. Multiple Intervenors assert that, therefore, public policy initiatives will not always
benefit all consumers; in some cases the benefits of such initiatives may flow only to
customers in certain regions of the state and may result in higher costs for consumers in
other parts of the state.665 According to Multiple Intervenors, lines bringing generation
from the northern part of New York State to downstate would benefit downstate
consumers, but would harm upstate consumers who would see their energy costs rise.
Multiple Intervenors assert, therefore, that to comply with Order No. 1000’s
beneficiaries-pay approach, downstate consumers should be allocated all or the majority
of the costs associated with such a project. Under the Filing Parties’ default proposal,
however, Multiple Intervenors state that downstate customers (approximately 60 percent
of the load) would pay only slightly more than half the costs of the project, and upstate
customers (approximately 40 percent of the load) would pay close to the other half.
Multiple Intervenors argue that this result would violate Regional Cost Allocation
Principle 1 (that costs be allocated in a manner that is at least roughly commensurate with
benefits) and Regional Cost Allocation Principle 2 (costs cannot be involuntarily
allocated to non-beneficiaries).666
318. Multiple Intervenors urge the Commission to direct the Filing Parties to adopt an
alternative cost allocation method consisting of a single, ex ante formula, and reiterate
that the most appropriate cost allocation method for public policy-driven transmission
projects is the formula utilized for allocating the costs of economic projects. They state
that that method allocates costs in accordance with the changes in wholesale market
prices that result from the addition of a new transmission facility to the system, and
consequently, the beneficiaries who experience lower prices pay for the cost of the
project in an amount proportionate to the cost savings realized, while those that do not
realize cost savings are not involuntarily forced to pay a portion of the project costs.667
664 Id. at 18 nn.47, 49 (citing to New York Public Service Commission,
Case 12-T-0502, Proceeding on Motion of the Commission to Examine Alternating
Current Transmission Upgrades, Order Instituting Proceeding (issued November 30,
2012) and New York Public Service Commission, Case 12-T-0502, Energy Highway AC Transmission Initiative Straw Proposal - Cost Allocation, Cost Recovery & Risk
Mitigation (July 10, 2013) at 5).
665 Id. at 20.
666 Id. at 20-21.
667 Id. at 29.
Docket No. ER13-102-001, et al.- 159 -
Multiple Intervenors state that, unlike the Filing Parties’ hierarchical proposal, such a
method is fully consistent with the six cost allocation principles established pursuant to
Order No. 1000, and is established, well-understood and broadly supported because of its
perceived fairness and transparency in allocating costs to beneficiaries.668 They state that
this formula complies with Order No. 1000.669 Multiple Intervenors then state that, if
arguendo the Commission determines that some modification to this formula is
warranted in order to recognize more generalized, system-wide benefits that may accrue
from public policy-driven transmission lines (which Multiple Intervenors continues to
state has not been demonstrated by the Filing Parties), they then ask the Commission to
require a hybrid allocation formula, under which the majority of project costs (i.e.,
80 percent or more) would be allocated pursuant to the existing formula for allocating
the costs associated with economic transmission projects, and the remaining portion
(20 percent or less) would be allocated pursuant to a load ratio share formula as proposed by the Filing Parties.670
319. Entergy similarly states that the Filing Parties’ proposed revisions to address the
cost allocation method for public policy projects continue to provide no detailed support
for their proposed default load ratio share method. Entergy states that the Filing Parties’
reliance on arguments that: (i) the default is intended to avoid uncertainty that could
present a barrier to new public policy transmission projects; and (ii) it is a reasonable
option in the context of a single-state transmission organization such as NYISO, which is
“a tightly integrated grid that has been centrally administered since the formation of the
New York Power Pool in 1969”671 do not show that this method satisfies the regional
cost allocation principles enumerated in Order No. 1000.672 Entergy further argues that
the recent Illinois Commerce Commission v. FERC, 72I F.3d 764 (7th Cir. 2013) is not
on point, since in that case, the Court of Appeals for the Seventh Circuit upheld MISO's
region-wide cost allocation method for certain projects on the basis that “there would be
cost savings . . . spread almost evenly across all Midwest ISO Planning Regions,” and
668 Id. at 30.
669 Id. at 15-16 (citing to Order No. 1000-A, 139 FERC ¶ 61,132 at P 576
(Benefits resulting from an entity’s use of the transmission system “include the traditional benefits that transmission facilities can provide, such as lowered congestion, increased reliability, and access to generation resources.”)).
670 Id. at 31.
671 Entergy Protest at 11 n.27 (citing to October 15, 2013 Compliance Filing at 50-51).
672 Id. at 13.
Docket No. ER13-102-001, et al.- 160 -
“the projected high-voltage lines would reduce losses of electricity . . . and save []
million[s] by reducing reserve margin losses.” 673 Entergy states that, unlike the specific
cost-benefit estimates upon which the Seventh Circuit relied, the Filing Parties make no
attempt to demonstrate that their method would assess a transmission project’s costs to
only those entities that would benefit from the project each time that this default approach
was applied, and that in fact, if this rule were applied to proceedings currently underway
before the New York Public Service Commission, consumers would be forced to bear
costs without receiving benefits.674 Entergy urges the Commission to reject the default load ratio share cost allocation method and direct NYISO to establish a default cost allocation method based on a “beneficiaries pay” principle.
320. Entergy also argues that the Filing Parties go beyond the directives of the First
Compliance Order by seeking to interpose a new step into the hierarchical cost allocation
process that will result in an ad hoc transmission planning process that is unpredictable
for transmission developers and unlikely to result in costs being allocated to consumers in
a manner that is roughly commensurate with the benefits received.675 Entergy states that,
rather than making the revisions to their proposed hierarchical cost allocation method
directed by the Commission and clarifying the time frame for the steps in that process,
the Filing Parties have proposed to add a new step to this hierarchical method, namely,
that the transmission owner or other developer of the project may, after consideration of
any guidance provided by the New York Public Service Commission, propose a cost
allocation method that may include a cost allocation based on load ratio share, adjusted to
reflect, as applicable, the public policy requirement or Public Policy Transmission
Need.676 Thus, Entergy claims, rather than clarifying the timeline, the Filing Parties have
proposed to embed a new cost allocation provision into this method that will engender
litigation and breed delay and uncertainty.677
321. Multiple Intervenors also argue that the Filing Parties went beyond the compliance
directive. They assert that the Filing Parities proposed unauthorized OATT changes that
will substantially revise the prior components of the multi-step process that the
Commission conditionally approved in the First Compliance Order, and included a
further step that will enable the transmission developer to dictate the cost allocation
673 Id. at 13-14 (citing to Illinois Commerce Commission, 721 F.3d 764, 774).
674 Id. at 14 (citing to Multiple Intervenors Protest at Point I 12-31).
675 Id. at 3.
676 Id. at 15 n.40 (citing to October 15, 2013 Compliance Filing at 48). 677 Entergy Protest at 16.
Docket No. ER13-102-001, et al.- 161 -
method to be proposed for Commission approval - a change that, according to Multiple Intervenors, renders meaningless the entire multi-step procedures previously reviewed and conditionally approved by the Commission.678
322. Multiple Intervenors point to the following new language added to section 31.5.5.4
of the NYISO OATT: “[n]othing herein shall deprive a Transmission Owner or Other
Developer of any rights it may have under Section 205 of the Federal Power Act to
submit filings proposing any other cost allocation methodology to the Commission.” 679
Multiple Intervenors state that under this provision, regardless of what would otherwise
be the result of the multi-step hierarchical cost allocation process, if the transmission
developer - including a New York Transmission Owner - does not agree with such
outcome, it retains the right to file whatever cost allocation proposal it may desire for
approval by the Commission, including the ability to propose an “adjusted load ratio
share” method.680 Multiple Intervenors state that this provision revises the cost allocation
procedures that were previously reviewed and conditionally approved by the
Commission, and that the Filing Parties must submit this proposal to the stakeholders for
consideration through NYISO’s usual process, since the Filing Parties are forestalled by
the terms of the NYISO Agreement from proposing new OATT modifications for review
under Section 205 of the FPA on their own motion. Multiple Intervenors further state
that this reservation of authority to transmission developers violates the directive in Order
No. 1000 that “if a public utility transmission provider is an RTO or ISO, then the cost
allocation method or methods must be set forth in the RTO or ISO OATT.” 681 Multiple
Intervenors add that this provision will frustrate the objectives of Order No. 1000 by
eliminating transparency and adding significant uncertainty to the cost allocation process,
and result in increased litigation before the Commission.682
678 Multiple Intervenors Protest at 23 n.57 (citing to the October 15, 2013 Compliance Filing at 47-49).
679 Id. at 24.
680 Id. at 24.
681 Id. 24 n.58 (citing to Order No. 1000-A, 139 FERC ¶ 61,132 at P 593).
682 Id. at 26 n.61 (citing to Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 499 (lack of clear ex ante cost allocation methodologies “may be impairing the ability of
public utility transmission providers to implement more efficient or cost-effective
transmission solutions identified during the transmission planning process” to the
detriment of consumers”)).
Docket No. ER13-102-001, et al.- 162 -
323. Multiple Intervenors also state that the Filing Parties have failed to provide the
required timeline for proceeding through the steps of the hierarchical cost allocation
method. Multiple Intervenors note that the Filing Parties proposed to revise the
interaction between the second step (i.e., transmission developer proposed cost
allocation) and the third step (i.e., New York Public Service Commission or the
New York Department of Public Service concurrence with the transmission developer
proposed allocation or proposal of an alternative allocation by the New York Public
Service Commission or the New York Department of Public Service) by providing that if
there is a disagreement between the transmission developer and the New York Public
Service Commission or the New York Department of Public Service as to the appropriate
cost allocation, they will try to resolve it within 60 days.683 However, the Filing Parties
fail to specify a date or time frame by which the transmission developer must propose its
preferred cost allocation or the time frame in which the New York Public Service
Commission or the New York Department of Public Service must review any such
proposal and determine whether to endorse such proposal or propose an alternative
allocation method. Thus, Multiple Intervenors assert, the proposed method results in a
process without any certainty for transmission developers as to when the final, approved
cost allocation method will be known. Multiple Intervenors assert that the Commission
should, therefore, reject in its entirety the multi-step cost allocation process that the Filing
Parties have proposed for public policy-driven transmission projects.684
324. Entergy also asserts that, although the Filing Parties have not sought to modify
section 31.5.1.6 of Attachment Y, the provision addressing cost allocation and recovery
for regulated non-transmission reliability projects, they assert that state law controls any
cost allocation associated with non-transmission solutions, ignoring the mandate in the
First Compliance Order that the Commission shall review and approve these cost
allocation methods.685 Entergy asserts that this position ignores the balance of this
OATT provision, which states that “[n]othing in this section shall affect the
Commission’s jurisdiction over the sale and transmission of electric energy subject to the
683 Id. at 27 n.63 (citing to the October 15, 2013 Compliance Filing at 48-49). 684 Id. at 27-28.
685 Entergy Protest at 4, 18 (citing to NYISO OATT, Attachment Y, § 31.5.1.6
(Regulated Non-Transmission Solutions to Reliability Needs). Costs related to regulated
non-transmission reliability projects will be recovered by Responsible Transmission
Owners, Transmission Owners and Other Developers in accordance with the provisions
of New York Public Service Law, New York Public Authorities Law, or other applicable
state law. Nothing in this section shall affect the Commission’s jurisdiction over the sale
and transmission of electric energy subject to the jurisdiction of the Commission.”).
Docket No. ER13-102-001, et al.- 163 -
jurisdiction of the Commission.”686 Entergy contends that the Commission previously clarified its exclusive authority over rates, terms and conditions of electric energy
transmission and sales at wholesale in interstate commerce and states that two recent federal district court decisions provide guidance as to the Commission’s authority over rates for wholesale power services.687 Thus, Entergy urges the Commission to clarify its authority with respect to cost allocation and cost recovery for wholesale generation
alternatives identified in the NYISO Transmission Planning Process.688
iv.Answer
325. The Filing Parties state that they have demonstrated that the public policy ex ante
default cost allocation method is reasonable, appropriate, and compliant with Order No.
1000. They state that in the First Compliance Order, the Commission directed the Filing
Parties to: “(1) explain how the proposed process will not cause unnecessary delays for
entities to obtain the right to use the regional cost allocation method for their proposed
public policy transmission project; and (2) provide a timeline for the proposed process so
that a transmission developer will know how the costs of its project will be allocated in a
timely manner.”689 The Filing Parties state that, to comply with this directive, they
proposed to clarify that transmission developers’ cost allocation proposals cannot be
delayed beyond the 60-day period provided for consultation with the New York Public
Service Commission or the New York Department of Public Service, and that the
proposed ex ante load ratio share cost allocation method is always available to the
transmission developer unless an alternative method is proposed and approved by the
Commission.690 Thus, the Filing parties assert, Multiple Intervenors’ and Entergy’s
proposal that the cost allocation method used by NYISO for economic transmission
projects should also be the ex-ante cost allocation method for all public policy
transmission projects: (a) is not required by the First Compliance Order; and (b) not
686 Id. at 18-19; see also NYISO OATT, Attachment Y, § 31.5.1.6.
687 Entergy Protest at 19-20 & n.48 (citing PPL Energyplus v. Nazarian, Civil
Action No. MJG-12-1286, 2013 WL 5432346, at *42 (D. Md. Sept. 30, 2013) and PPL Energyplus v. Hanna, Civil Action No, 11-745, 2013 WL 56038696, at *35-36 (D.N.J. Oct. 11, 2013)).
688 Id. at 17-20.
689 Filing Parties Answer at 32 (citing First Compliance Order, 143 FERC ¶ 61,059 at P 324).
690 Id. at 32 nn.96-97 (citing to October 15, 2013 Compliance Filing at 48-49).
Docket No. ER13-102-001, et al.- 164 -
necessary, because the Filing Parties’ proposal already provides transmission developers with certainty as to a definite available method.691
326. In addition, the Filing Parties state that the ex ante method proposed by Multiple
Intervenors and Entergy is not appropriate for public policy projects because the
economic test is based on a production cost simulation model that focuses only on energy
savings benefits, and does not consider the non-economic objectives and benefits that
may drive the need for public policy transmission projects. Further, the Filing Parties
note, it would permit transmission customers (including Multiple Intervenors’ large
commercial and industrial members) to avoid any contribution to the building of a
transmission project unless they receive a net economic benefit, which the Filing Parties
allege is inconsistent with the Commission’s objective of encouraging the construction of
transmission facilities to meet a broad spectrum of federal and state public policy
requirements.692 The Filing Parties also assert that the October 15, 2013 Compliance
Filing also clarifies a transmission developer’s right to make a section 205 filing to
propose an Adjusted Load Ratio Share cost allocation. Moreover, the Commission will
also be made aware of any specific method embodied in a public policy requirement and
of any cost allocation method that the New York Public Service Commission or the
New York Department of Public Service prefers. Thus, the Filing Parties state, there are
procedures available for the Commission to order a different cost allocation method if
appropriate in a particular case.693
327. The Filing Parties further state that it is reasonable for the Commission to
conclude that load ratio share is the appropriate ex ante allocation method in the context
of NYISO, a tightly integrated, centrally-administered grid that had been shaped in large
part by coordinated statewide policy initiatives. Thus, the Filing Parties state, it is
reasonable to expect that public policy transmission projects will provide some level of
benefits to all consumers in New York, so that load ratio share is a just and reasonable
ex ante method. The Filing Parties cite to cases supporting a load ratio share cost
allocation as a just and reasonable method where public policy considerations and a
variety of factors drive the need for transmission development.694 They further state that
691 Id. at 32.
692 Id. at 32-33.
693 Id. at 33.
694 Id. at 35 n.104 (citing to October 11, 2013 Compliance Filing at 51, which in
turn cites to Ill. Commerce Comm’n v. FERC, Case No.11-3421 (7th Cir. 2013) and W.
Mass Electric Co. v. FERC, 165 F.3d 922, 927 (D.C. Cir. 1999) (when a system is
integrated, any system enhancements are presumed to benefit the entire system)).
Docket No. ER13-102-001, et al.- 165 -
NYISO, the New York Transmission Owners, and the New York Public Service
Commission and New York Department of Public Service all find load ratio share to be a reasonable default ex ante method.
328. The Filing Parties disagree with Entergy’s argument that they have added a new step (undirected by the Commission) to the cost allocation process by allowing
transmission developers to file with the Commission an alternative cost allocation
method.695 They state that the process proposed in the First Compliance Filing provided that NYISO would file a proposed cost allocation on behalf of the Transmission Owner or Developer in the event that the New York Public Service Commission and
Transmission Owner disagreed on a cost allocation method,696 and that, additionally, a transmission owner or developer has the right under section 205 of the Federal Power Act to file a cost allocation method for its own transmission project.697
329. In responding to Entergy,698 the Filing Parties contend that the proceedings
Entergy cites do not disturb the states’ role in planning for adequate generation and other resources, nor their authority to provide for utilities to recover the costs of non-
transmission projects through bundled retail rates under applicable state law.699 The
Filing Parties additionally note, in response to Entergy’s assertion that they are
incorrectly seeking to eliminate the Commission's exclusive authority over cost allocation associated with non-transmission solutions, that resource planning is within the purview
of the states, and “NYISO’s existing tariff provisions recognize this state role with regard to non-transmission projects.”700
695 Id. at 35 n.106 (citing Entergy Nuclear Protest at 15-16).
696 Id. at 35 n.107 (citing October 11, 2012 Compliance Filing at 47).
697 Id. at 36 n.108 (citing Atlantic City Elec. Co. v. FERC, 295 F.3d 1, 10
(D.C. Cir. 2002) (“Section 205 . . . gives a utility the right to file rates and terms for services rendered with its assets”)).
698 Entergy Protest at 19-20 (citing PPL Energyplus v. Nazarian, Civil Action No.
MJG-12-1286, 2013 WL 5432346, at *42 (D. Md. Sept. 30, 2013) and PPL Energyplus v.
Hanna, Civil Action No, 11-745, 2013 WL 56038696, at *35-36 (D.N.J. Oct. 11, 2013)).
699 Filing Parties Answer at 9-10.
700 Id. at 10 (citing NYISO OATT, Attachment Y, § 31.5.1.6 (Regulated Non-
Transmission Solutions to Reliability Needs) (“Costs related to regulated non-
transmission reliability projects will be recovered by Responsible Transmission Owners, Transmission Owners and Other Developers in accordance with the provisions of
(continued…)
Docket No. ER13-102-001, et al.- 166 -
v.Commission Determination
330. We find that the provisions in Filing Parties’ filing addressing the regional cost
allocation method for public policy transmission projects comply with the directive in the
First Compliance Order that NYISO explain how the proposed default load ratio share
cost allocation method complies with the requirements of Regional Cost Allocation
Principles 1, 2 and 4. However, we find that NYISO has failed to explain how the
proposed process will not cause unnecessary delays for transmission developers to obtain
the right to use the regional cost allocation method for their proposed public policy
transmission project, and has not provided a timeline for the proposed process so that a
transmission developer will know how the costs of its project will be allocated in a timely
manner. We will therefore require NYISO to make a further compliance filing on this
question.
331. We accept the Filing Parties’ proposed default statewide load ratio share cost
allocation method as compliant with Regional Cost Allocation Principles 1 (all costs must
be allocated roughly commensurate with benefits) and 2 (those that receive no benefit
must not be involuntarily allocated costs). The Filing Parties have demonstrated the
reasonableness of using a load ratio share method in the context of NYISO’s specific
circumstances. NYISO is a single-state transmission organization that evolved from a
tightly integrated grid that has been centrally administered since the formation of the
New York Power Pool in 1969. As the Filing Parties point out, NYISO has been shaped
by coordinated statewide policy initiatives even prior to the formation of the New York
Power Pool,701 and New York State is currently pursuing public policy transmission
New York Public Service Law, New York Public Authorities Law, or other applicable
state law. Nothing in this section shall affect the Commission’s jurisdiction over the sale
and transmission of electric energy subject to the jurisdiction of the Commission.”) and
§ 31.5.6.3 (“A Responsible Transmission Owner, a Transmission Owner, or Other
Developer may propose and undertake a regulated non-transmission solution, provided
that the appropriate state agency(ies) has established cost recovery procedures
comparable to those provided in this tariff for regulated transmission solutions to ensure
the full and prompt recovery of all reasonably-incurred costs related to such non-
transmission solutions..”)).
701 October 15, 2013 Compliance Filing at 50.
Docket No. ER13-102-001, et al.- 167 -
requirements that may lead to changes to the bulk power grid on a unified statewide basis.702
332. We further note that this default cost allocation method is the last step of a four-
step cost allocation process that we have already accepted,703 and in earlier steps, the
transmission developer of a public policy transmission project may propose other just and
reasonable cost allocation methods. As noted above: (1) the public policy requirement
that results in the construction of a transmission project may prescribe the use of a
particular cost allocation method; (2) the transmission developer may propose another
cost allocation metho;, or (3) the New York Department of Public Service or the
New York Public Service Commission may propose another cost allocation method; in
all of those scenarios, NYISO will file the proposed cost allocation for the project with
the Commission, and seek to demonstrate that it complies with the Order No. 1000
Regional Cost Allocation Principles.704 Thus, NYISO’s cost allocation process provides
opportunities for transmission developers and state agencies to propose and support other
cost allocation methods.
333. There may be circumstances in which some parties believe that the use of a default
load ratio share cost allocation method is not just and reasonable, such as Multiple
Intervenors’ concern that one of the major potential public policies being pursued by the
state is to develop new transmission projects that will move power from the northwest to
the southeast part of the state to provide congestion relief and reduce environmental
impacts to southeastern consumers, so that broad allocation of the costs of such projects
throughout the state is inappropriate. In such a circumstance, however, parties will have
an opportunity to make those arguments during the regional planning process that leads
up to the selection of a transmission project in the regional transmission plan, and seek to
arrive at a solution that addresses those parties’ concerns.705 Additionally, in certain
702 See NEW YORK ENERGY HIGHWAY (July 14, 2014),
http://www.nyenergyhighway.com (“The New York Energy Highway Blueprint is an
overarching method for collecting ideas to . . . rebuild and rejuvenate New York State’s electric power system.”).
703 First Compliance Order, 143 FERC ¶ 61,059 at P 322. 704 See supra paragraph 299 and note 641.
705 It appears that this type of negotiation is already occurring. The New York
Transmission Owners have proposed certain transmission projects as part of their New
York Transco proposal, and they have agreed to a cost allocation method in which the
zones receiving the majority of the benefits pay the majority of the costs. See Proceeding
on Motion to Examine Alternating Current Transmission Upgrades, New York Public
Service Commission Case No. 12-T-0502, “Statement of Intent to Construct
(continued…)
Docket No. ER13-102-001, et al.- 168 -
situations the Filing Parties’ default cost allocation may be particularly appropriate for a single state such as New York, in which the state’s government, which represents all of the state’s citizens, has made a determination that addressing a particular transmission need driven by public policy requirements will benefit all of the state.706
334. Since we find that NYISO’s proposed default load share ratio cost allocation
method is just and reasonable, we will therefore reject Multiple Intervenors’ and
Entergy’s suggestion that the Commission direct the Filing Parties to adopt a default cost allocation method for public policy-driven transmission projects based on the existing cost allocation formula for economic transmission projects. This is not to say that such a cost allocation method for public policy-driven projects might not also be just and
reasonable, but it has not been proposed by the Filing Parties.
335. We find, with regard to the First Compliance Order’s directive that NYISO
explain how the proposed default load ratio share cost allocation method complies with
the requirements of Regional Cost Allocation Principle 4, that the Filing Parties have
demonstrated whether the NYISO transmission planning region has agreed to bear the
costs associated with any required upgrades in another transmission planning region, and
how such costs will be allocated under the NYISO regional cost allocation methods.707
Transmission Facilities,” filed January 25, 2013, at 21-22 (footnote omitted) (“. . . the
NYTOs have developed a cost allocation method that takes into account the wide range
of public policy, economic and reliability benefits provided by the Projects. The agreed
to cost allocation recognizes the differing levels and types of benefits that will occur in
different areas of the state.. [A]s a result of this agreement on specific cost allocation
factors and the funding requirements of each NY Transco member, the NYTOs have agreed to form the NY Transco and to move forward and build the Projects,” with specific cost allocation percentages for each transmission owner).
706 October 15, 2013 Compliance Filing at 50 (“The Filing Parties respectfully
submit that the justness and reasonableness of the proposed default load ratio share cost
allocation method is integrally related to the circumstances that it is intended to address
and in which it is likely to be applied. Consistent with Order No. 1000, the Filing
Parties’ proposed default ex ante cost allocation methodology is intended to avoid
uncertainty that could present a barrier to new transmission projects needed to meet
public policy needs,” footnote omitted); see also First Compliance Order, 143 FERC
¶ 61,059 at P 141 (explaining that the New York Department of Public Service identifies
transmission needs driven by public policy requirements for which solutions will be
evaluated).
707 See supra paragraphs 293-294.
Docket No. ER13-102-001, et al.- 169 -
336. It is essential that NYISO have a default cost allocation method in place that
parties may rely on in the absence of such other proposals, and that the timing of the steps
involved in that default cost allocation method be clearly known. However, we find that
the Filing Parties have not met the obligation to (1) explain how the proposed process
will not cause unnecessary delays for transmission developers to obtain the right to use
the regional cost allocation method for their proposed public policy transmission project;
and (2) provide a timeline for the proposed process so that a transmission developer will
know how the costs of its project will be allocated in a timely manner. As discussed
above, the Filing Parties have set forth the steps that a transmission developer may take to
propose and obtain approval of a cost allocation method for a public policy transmission
project.708 The Filing Parties state that, with regard to that part of its process in which a
transmission developer may seek an alternative cost allocation method, after
consideration of guidance that may be provided by the New York Public Service
Commission or the New York Department of Public Service, and if those agencies do not
support the developer’s proposed cost allocation method, the developer will take
reasonable steps over a 60-day period to respond to the agencies’ concerns and to develop
a mutually agreeable cost allocation method.
337. As discussed above, the Filing Parties have proposed to clarify the process by which a cost allocation method is determined as follows.
Step One: NYISO may file cost allocation method prescribed by public policy requirement.709
Step Two: Transmission developer may file cost allocation method supported by state agencies. If state agencies don’t support transmission developer’s proposed method,
transmission developer must seek to reach agreement with state agencies within 60 days.710
Step Three: If transmission developer cannot reach
agreement with state agencies, it may file cost allocation method without state agency support.711
708 See supra paragraph 332 & note 711.
709 NYISO OATT, Attachment Y, § 31.5.5.4.1 .
710 Id. §§ 31.5.5.4.1, 31.5.5.4.2 , 31.5.5.4.2.1, 31.5.5.4.2.2, 31.5.5.4.2.3. 711 Id. § 31.5.5.4.2.4.
Docket No. ER13-102-001, et al.- 170 -
Step Four: If Commission does not accept filing made by transmission developer, NYISO will allocate costs based on default load ratio share cost allocation method.712
338. Under the Filing Parties’ proposal, if NYISO files the cost allocation method
specified by the public policy requirement in question (Step One), there are no timing
considerations. If, however, the transmission developer wishes to file a proposed cost
allocation method, under the Filing Parties’ proposal, there is no limit provided as to how
long the entire process will take, and when a decision is made on the cost allocation
method for a particular public policy transmission project. The provision for a 60-day
period for Step Two is insufficient, because it only provides a specific period for a single
step within the overall cost allocation process. We therefore require the Filing Parties to
make a compliance filing, within 60 days of the date of issuance of this order, revising
the OATT to provide for: (a) the number of days between a determination that the
transmission developer does not wish to use the cost allocation method set forth in the
public policy requirement (or the public policy requirement does not prescribe a cost
allocation method) and a declaration by the transmission developer that it will file a cost
allocation method supported by state agencies, and how soon it must file that cost
allocation method (i.e., the number of days between Step One and Step Two); and
(b) alternatively, if a transmission developer cannot obtain state agency support, the
number of days between the transmission developer’s declaration to that effect, and the
date on which it must file that cost allocation method (i.e., the number of days between
Step One and Step Three). As noted above, it is essential that NYISO have a default cost
allocation method in place that parties may rely on in the absence of such other proposals,
and that the timing of the steps involved in that default cost allocation method be clearly
known.
339. Multiple Intervenors and Entergy assert that the Filing Parties have inappropriately
added an additional step to this process by providing for an opportunity for a transmission
developer to make a section 205 filing to use a different cost allocation method. We note
that the language added to Attachment Y, section 31.5.5.4.1 - “[n]othing herein shall
deprive a Transmission Owner or Other Developer of any rights it may have under
Section 205 of the Federal Power Act to submit filings proposing any other cost
allocation methodology to the Commission,” emphasis added - does not create new
rights or alter the existing rights of the parties or the signatories to the NYISO
Agreement.
340. We reject Entergy’s suggestion that the Commission clarify its authority over cost
allocation and cost recovery for non-transmission alternatives. The Nazarian and Hanna
712 Id. § 31.5.5.4.3.
Docket No. ER13-102-001, et al.- 171 -
decisions cited by Entergy dealt with specific factual circumstances relating to prices in the capacity market, rather than to the selection of solutions to needs in the NYISO
planning process. Moreover, as Attachment Y, section 31.5.1.6 states, “[n]othing in this section shall affect the Commission’s jurisdiction over the sale and transmission of
electric energy subject to the jurisdiction of the Commission.” We find that NYISO’s
existing OATT provision regarding cost recovery for non-transmission reliability projects is consistent with Order No. 1000. As the Commission acknowledged in Order No. 1000, the Final Rule in no way involves an exercise of authority over those specific substantive matters traditionally reserved for the states, including integrated resource planning.713
Therefore, we see no need for further clarification.
341. Finally, with regard to the issues raised by the Long Island Power Authority, we
note that the Long Island Power Authority, which is not a NYISO member, may not file
new provisions to the NYISO OATT. Moreover, the Filing Parties state that they and the
Long Island Power Authority “are working to complete discussions, as soon as possible,
on revisions to the OATT to address the role of [the Long Island Power Authority] with
the [p]ublic [p]olicy [r]equirements process among themselves and with the New York
State Department of Public Service.”714 Because the Long Island Power Authority may
not, alone, file a new provision to the NYISO OATT, and because the Filing Parties
indicate that they and the Long Island Power Authority are still negotiating on
appropriate provisions, we will make no findings regarding the provision suggested here
by the Long Island Power Authority. Order No. 1000 strongly encourages state
regulators to participate actively in the transmission planning process, particularly with
regard to the identification of transmission needs driven by public policy requirements.715
As discussed in the First Compliance Order, the Commission also encouraged Long
Island Power Authority to actively participate in the public policy transmission planning
process.716 While we recognize that the Filing Parties offer no objection to the OATT
revisions proposed by the Long Island Power Authority, with one exception, such
provisions were not included in the Filing Parties’ compliance filing and the Filing
Parties have not proposed to amend their compliance filing to reflect such
provisions. Therefore, we will not require the Filing Parties to revise the NYISO OATT
to address the Long Island Power Authority’s proposal. Should the Filing Parties and the
Long Island Power Authority agree to further OATT modifications, consistent with the
Commission’s findings in this order, the Filing Parties may include those OATT
713 Order No. 1000, FERC Stats. & Regs. ¶ 31,323 at P 156.
714 October 15, 2013 Compliance Filing at 47 n.172.
715 See Order No. 1000-A, 139 FERC ¶ 61,132 at P 338.
716 First Compliance Order, 143 FERC ¶ 61,059 at P 150.
Docket No. ER13-102-001, et al.- 172 -
revisions in a 205 filing or in their next compliance filing and we will consider the proposed OATT revisions at that time.
The Commission orders:
(A) The requests for rehearing and clarification are hereby denied in part and granted in part, as discussed in the body of this order.
(B) The Filing Parties’ compliance filing is hereby accepted, effective
January 1, 2014, subject to further compliance filings, as discussed in the body of this
order.
(C) The Filing Parties are hereby directed to submit further compliance filings, 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.
