UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

New York Independent System Operator, Inc.)ER13-102-000

REQUEST FOR LEAVE TO ANSWER, AND ANSWER,

OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.
AND THE NEW YORK TRANSMISSION OWNERS

Pursuant to Rule 213 of the Rules of Practice and Procedure of the Federal Energy

Regulatory Commission (“Commission”) the New York Independent System Operator, Inc.

(“NYISO”) and the New York Transmission Owners (“NYTOs”)1 (together the “Filing Parties”)
respectfully submit this request for leave to answer and answer (“Answer”). The Answer
responds to comments and protests regarding the Filing Parties’ Order No. 10002 compliance
filing submitted on October 11, 2012 in the above-captioned proceeding (“Compliance Filing”)
by: (1) E.ON Climate & Renewables North America, LLC (“E.ON”); (2) Entergy Nuclear
Power Marketing, LLC; (3) Exelon Corporation (“Exelon”); (4) the Independent Transmission
Developers (“LS Power”)3; (5) the Independent Power Producers of New York State, Inc.
(“IPPNY”); (6) the Long Island Power Authority and its operating subsidiary, Long Island
Lighting Company d/b/a/ LIPA (“LIPA”);4 (7) the Multiple Intervenors (“MI”); (8) New York

1 The NYTOs are: Central Hudson Gas & Electric Corporation, Consolidated Edison Company of
New York, Inc., Long Island Lighting Company d/b/a LIPA, 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. LIPA and NYPA as transmission owners not subject to the
FERC’s rate jurisdiction under Section 205 of the Federal Power Act have voluntarily participated in the
development of the Compliance Filing and thereby join the other NYTOs in this pleading.

2 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public

Utilities, Order No. 1000, 136 FERC ¶ 61,051 (2011), order on reh’g and clarification, Order No. 1000-
A, 139 FERC ¶ 61,132 (2012), order on reh’g and clarification, Order No. 1000-B, 141 FERC ¶ 61,044
(2012).

3 LS Power consists of LS Power Transmission, LLC, LSP Transmission Holdings, LLC, and Pattern Transmission LP.

4 The NYISO does not take a position on the limited additional tariff revisions proposed by LIPA
because they pertain to unique questions regarding LIPA’s legal authority and jurisdictional status that do

State Public Service Commission (“NYPSC”); (9) NextEra Energy Resources, LLC (“NextEra”);

(10) the PSEG Companies (“PSEG”)5; (11) the Public Interest Organizations (“PIOs”).6

The Filing Parties agree with Exelon and the NYPSC that the Compliance Filing should be accepted as filed. The Filing Parties also ask that the Commission reject the protests
contending that the Compliance Filing does not comply with Order No. 1000.7 The proposed
compliance tariff revisions enhance the NYISO’s established comprehensive regional
transmission planning process to bring it into full compliance with all Order No. 1000
requirements. They are carefully crafted to fully comply with the Commission’s requirements
while providing the flexibility necessary to foster transmission development, including
independent transmission development, in the New York Control Area (“NYCA”). 8 Further,
they are the product of an extensive stakeholder process. Finally, the proposed tariff changes
that have been unilaterally proposed by MI, the PIOs, and LS Power, should be rejected.9 Those changes would not bring the NYISO into full compliance with Order No. 1000, and, in many
cases, would undermine existing NYISO planning processes.

not directly concern the NYISO. The NYTOs (including LIPA) would like to clarify that LIPA and the other NYTOs have discussed the discrete set of tariff revisions proposed by LIPA and that the NYTOs do not object to LIPA’s filing and the inclusion of these tariff provisions in the NYISO’s tariff.

5 The PSEG Companies consist of Public Service Electric and Gas Company, PSEG Power LLC, and PSEG Energy Resources & Trade LLC.

6 The PIOs consist of the Sustainable FERC Project, Pace Energy and Climate Center, and the Natural Resources Defense Council.

7 All subsequent references in the body of this Answer to Order No. 1000, refer to the
Commission’s directives in both Order No. 1000 and Order No. 1000-A, where appropriate.

8 Capitalized terms that are not otherwise defined in this filing shall have the meaning specified in
Attachment Y of the NYISO’s Open Access Transmission Tariff (“OATT”), and if not defined therein, in
the NYISO OATT and Market Administration and Control Area Services Tariff (“Services Tariff”).

9 The Filing Parties have limited their response to those issues for which they believe that

providing additional information will best assist the Commission to reach its decision. The Filing Parties’
silence with respect to any particular argument or assertion should not be construed as acceptance or
agreement.

TABLE OF CONTENTS

I.BACKGROUND..........................................................4

II.REQUEST FOR LEAVE TO ANSWER.......................................5

III.ANSWER................................................................5

A. The Compliance Filing Does Not Reflect Bias for or Against Any Class of

Stakeholders and Properly Responds to Order No. 1000......................5

B. The Proposed PPR Planning Process Fully Complies with Order No. 1000..10

1. The Definition of the Term “Public Policy Requirements” Appropriately

Includes Orders Issued by the NYPSC..................................10

2. The Roles of the NYPSC and NYISO in the PPR Planning Process Are

Appropriately Defined..............................................14

3. The PPR Planning Process Provides for the Consideration of Non-Transmission

Alternatives.......................................................21

4. The Proposed Cost Allocation Methodology for the PPR Planning Process

Is Fully Compliant with Order No. 1000................................22

a. The Proposed Cost Allocation Methodology Complies with the Order

No. 1000 Cost Allocation Principles..................................22

b. The Existing CARIS Cost Allocation Methodology Should Not Be Applied to

Transmission Solutions Driven by PPRs...............................26

c. The PPR Planning Process Appropriately Addresses Concerns Regarding

“Forum Shopping”................................................27

C. The NYISO’s Existing Economic Planning Process Complies with Order

No. 1000...........................................................30

D. The Compliance Filing Fully Complies with the Order No. 1000 Non-Discrimination

Directives..........................................................31

1. The Reliability Planning Process as Revised in the Compliance Filing, Fully

Complies with the Order No. 1000 Non-Discrimination Directives...........33

2. The Proposed Tariff Revisions Allow for the Identification and Evaluation of the
More Efficient or Cost-Effective Projects for Selection in a Regional Transmission

Plan.............................................................38

E. The NYISO’s Proposed Entity and Project Qualification and Project Monitoring

Criteria Do Not Discriminate Against Non-Incumbents......................40

F. The Proposed Effective Date is Reasonable and Necessary to Ensure the Proper

Implementation of the PPR Planning Process..............................42

IV.CONCLUSION..........................................................44

I.BACKGROUND

The Compliance Filing was developed through an extensive stakeholder process that

included numerous meetings held between the fall of 2011 and August 28, 2012. The

Compliance Filing: (1) explains how most of the NYISO’s current reliability and economic

transmission planning processes in OATT Attachment Y already comply with, or surpass, many
of Order No. 1000’s directives; (2) proposes limited tariff revisions to the reliability and
economic planning processes to bring them into full compliance; and (3) proposes tariff revisions
to add a new Public Policy Requirements (“PPR”) transmission planning process, as required by
Order No. 1000.

In response to comments provided during the stakeholder process, numerous revisions

were made to the proposed compliance revisions, contrary to the allegations made in some of the
protests. Through the stakeholder process, the Filing Parties were able to narrow the differences
on many issues, and achieve broad consensus on others. Most of the issues raised in the protests
were discussed at length during the stakeholder process. The fact that certain protesting parties
remain opposed to certain elements of the Compliance Filing is a reflection of the controversial
nature of the PPR planning issues, and not the fairness of the stakeholder process. Nor is the

existence of disagreement evidence of a failed process. The Filing Parties fully and fairly

engaged with other stakeholders regarding the Compliance Filing and found common ground wherever possible. It was simply not possible to achieve consensus on issues where some stakeholders had diametrically opposed views.

II.REQUEST FOR LEAVE TO ANSWER

The Filing Parties may answer pleadings that are styled as comments as a matter of

right.10 The Commission has discretion to accept answers to protests when they help to clarify
complex issues, provide additional information, or are otherwise helpful in the development of
the record in a proceeding.11 This Answer satisfies those standards as it addresses inaccuracies,
and provides clarification and additional information that should be considered, along with the
initial Compliance Filing letter. The Answer will help the Commission to fairly evaluate the
arguments raised in the protests. The Filing Parties, therefore, respectfully request that the

Commission accept this Answer.

III. ANSWER

A. The Compliance Filing Does Not Reflect Bias for or Against Any Class of

Stakeholders and Properly Responds to Order No. 1000

Given the rhetorical excesses of certain protests that accuse the NYISO of bias, that

accuse the NYTOs of a conflict of interest, or criticize the stakeholder process which produced
the Compliance Filing, several points are worth re-emphasizing. The NYISO is a not-for-profit,
impartial and independent entity. The NYISO has no incentive to favor any class of stakeholder,
including the NYTOs. The NYISO’s only stake in the outcome of this proceeding is the desire
to have a regional transmission planning process that: (1) is fully compliant with all Order
No. 1000 directives; (2) will foster the efficient development of transmission in New York State;

10 See 18 C.F.R. 385.213(a)(3) (2012).

11 See, e.g., S. Cal. Edison Co., 135 FERC ¶ 61,093 at P 16 (2011) (accepting answers to protests
“because those answers provided information that assisted [the Commission] in [its] decision-making
process”); N.Y. Indep. Sys. Operator, Inc., 134 FERC ¶ 61,058 at P 24 (2011) (accepting the answers to
protests and answers because they provided information that aided the Commission in better
understanding the matters at issue in the proceeding); PJM Interconnection, L.L.C., 132 FERC ¶ 61,207 at
P 44 (2010) (accepting answers to answers and protests because they assisted in the Commission’s
decision-making process).

and (3) can be implemented in a manner consistent with the framework of the NYISO’s existing, and successful, Commission-approved planning processes.12

It is worth pointing out that even before the issuance of Order No. 1000, the Filing Parties
jointly proposed and the Commission adopted tariff provisions that contained no right of first
refusal or preference of any kind for the NYTOs. Indeed, the pre-existing tariff requires
transmission, generation and demand side proposals to be considered on an equal basis13 and,
even to the extent the NYISO determines that a regulated solution is needed, any party is eligible
to propose regulated solutions.14 It is also worth noting that in the seven years since the NYISO
has been conducting its existing planning processes there have been no substantiated claims by
project sponsors of discriminatory action on the part of the Filing Parties.
Additionally, contrary to MI’s assertions, the NYTOs’ role in the development of the PPR planning process was not inappropriate. The NYTOs neither “dictated their desired
outcomes”15 to the NYISO, nor imposed them on other stakeholders. To the contrary, the
Compliance Filing was primarily drafted by the NYISO, in consultation with all interested
parties, over the course of eleven stakeholder meetings that reviewed Order No. 1000 and
developed compliance tariff language. As a practical matter, the Commission-jurisdictional
NYTOs were required by Order No. 1000 to develop and join with the NYISO on this
Compliance Filing, as the public utility Transmission Providers for their Transmission Districts.

12 See, e.g., Order No. 1000 at P 31 (stating that the Commission’s intent “was not to disrupt the progress being made with respect to transmission planning and investment in transmission
infrastructure”) and P 204 (stating that the Order No. 1000 requirements are “intended to enhance, rather than replace, existing transmission planning obligations under Order No. 890”).

13 See OATT Attachment Y §§ 31.1.2, 31.1.4, 31.2.5.1, 31.2.4.4, 31.2.4.6.2, 31.2.1.3.3,

31.2.4.2.1. All subsequent references in this Answer to the NYISO’s tariff will be to OATT
Attachment Y, as proposed to be revised in the Compliance Filing, unless otherwise noted.

14 See § 31.2.4.6.

15 MI at 9.

It is simply wrong to claim that the NYISO stakeholder process favored the NYTOs—or any

other entity. MI merely raises the allegation, as opposed to explaining and supporting how,

under the proposed procedures, that the NYTOs directed any particular outcome, much less how
any project a NYTO may propose in the future will receive favorable treatment to the detriment
of another entity. All projects—regardless of the proponent—are and will be treated equally in
the identification, selection and ultimate determinations of which will proceed. All such
determinations will be made after full consideration of input from interested parties on all
market-based and regulated solutions. Similarly, allegations that the NYTOs’ submittal of a
proposal for Governor Cuomo’s “New York Energy Highway Initiative” represents a conflict of
interest with respect to their participation in the drafting of the Compliance Filing are
unfounded.16

The Compliance Filing balances competing stakeholder interests and fully complies with
all Order No. 1000 directives while allowing the flexibility necessary to encourage the additional
development of transmission in the NYCA. Over the course of approximately nine months of
stakeholder meetings, the proposed tariff modifications were discussed, reviewed, and revised.
Contrary to the assertions of protestors, multiple changes to the proposal were made when the
NYISO determined that they were warranted in order to account for stakeholder concerns.17 The

16 Regarding MI’s specific assertions that the NYTOs’ submittal of a proposal for the Energy

Highway Initiative represents a conflict of interest (see MI at 8-9), it should be noted that it was entirely appropriate for the NYTOs to submit a proposal in response to the request for proposals for one of the Governor’s highest priority policy initiatives. That process was open to all interested parties and the NYTOs’ proposals were among one hundred and thirty submitted in response to that request. The
proposals were posted on the Energy Highway website and the Energy Highway process provided parties with an opportunity to comment on the proposals. The Energy Highway Initiative is relevant to this
proceeding in that it demonstrates the value of establishing a NYISO process that can provide
policymakers with guidance and expert analysis concerning the relative efficiency and cost effectiveness of proposals such as those that may emerge from the Governor’s initiative.

17 For example: (1) the definition of PPR was the subject to extensive discussion and multiple revisions including the proposed “Executive Orders” qualification criteria that was substantially

fact that the different protests advocate for various incompatible, or mutually exclusive, changes demonstrates the balance achieved by the Filing Parties’ proposal.18

Assertions that, because the Compliance Filing does not enjoy total consensus support, it
must somehow require greater scrutiny or is not a “proper” compliance filing19 are devoid of
merit. As acknowledged by protesters, 20 the Commission has recognized that while achieving
consensus is encouraged, under the NYISO’s governance process compliance filings do not
require consensus support. 21 The NYISO and other ISOs/RTOs have routinely made
compliance filings that did not enjoy such support, which are accepted by the Commission.22

eliminated and limiting NYPSC orders included in the definition to those orders issued pursuant to notice
and comment under the State Administrative Procedures Act; (2) the PPR planning process was revised to
provide for the NYPSC to request consideration of non-transmission solutions, when appropriate;

(3) language was added in the PPR planning process to add a market impact evaluation; (4) language was
added to the PPR planning process to specify the type of metrics that could be used in the NYISO’s
evaluation of PPR projects; (5) revisions were made to the PPR planning process to clarify the NYPSC’s
role, including adding language to require the NYDPS to issue a written statement, to be posted on the
NYISO website, that explains why a particular transmission need was selected for further evaluation and
others were not; (6) modifications were made to the entity qualification requirements to address the
concerns of LS Power; (7) provisions were added to the PPR process to address MI and IPPNY’s
concerns regarding “forum shopping”; and (8) LIPA’s concerns regarding the role of the Long Island
Power Authority in the PPR planning process were discussed in multiple stakeholder meetings.

18 For example, the protests: (1) advocate for both a more expansive (PIO, LS Power) and a

narrower definition of Public Policy Requirement (“PPR”) (MI, IPPNY); (2) argue that the PPR process will allow for both the over-development of transmission solutions (IPPNY, MI) and constraints that will create barriers to entry from non-incumbent transmission developers (LS Power); (3) argue that the
default cost allocation methodology for PPR-driven projects is inconsistent with the “beneficiary pays” principle of Order No. 1000 (IPPNY, MI) and appropriately considers the beneficiaries of such projects (PIO); and (4) Exelon concludes that the filing is fully compliant with Order 1000 and should be
approved by the Commission while LS Power urges complete rejection.

19 MI at 11.

20 IPPNY at 31-32.

21 KeySpan-Ravenswood, Inc., 101 FERC ¶61,230 at P 29 (2002).

22 See, e.g., PJM Interconnection, 122 FERC ¶61,264 at PP 25-26 (2008) (providing that the

compliance filing process cannot be negated by the lack of stakeholder consensus); KeySpan-

Ravenswood, Inc., 101 FERC ¶61,230 at P 29 (2002) (accepting a compliance filing that did not receive stakeholder approval, noting in response to protests asserting that such approval was necessary that the “NYISO’s governance rules do not require the Management Committee’s approval of a Commissiondirected compliance filing”).

Moreover, there is no basis to assume or require a heightened level of scrutiny beyond the standard applied to any other Order 1000 Compliance Filing.

Similarly, while it is true that compliance filings must respond to Commission

“directives,”23 nothing in the Compliance Filing goes beyond the scope of Order No. 1000’s

directives. There can be no serious claim that the proposed changes are not in direct compliance
with the Commission’s order. Order No. 1000 unquestionably required the submittal of a
compliance filing. Instead of adopting specific pro forma language, the Final Rule articulated
“principles” and general guidance and left it up to individual public utility transmission providers
to fashion a compliant proposal while providing for consideration of stakeholder input during
that process.24 Other major Commission orders have taken the same approach.25 That is
precisely the process that the Filing Parties have employed in the development of the
Compliance Filing.

Order No. 1000 gave planning regions the flexibility to craft their own processes

consistent with the requirements it established.26 The NYISO did so in a manner that allowed
stakeholders to provide input into the development of the Compliance Filing. The lack of

23 See IPPNY at 31, citing Sea Robin Pipeline Co., 138 FERC ¶61,131 at P 32 (2012).

24 Order No. 1000’s broad goals include: (1) ensuring that the transmission planning processes at the regional level consider and evaluate, on a non-discriminatory basis, possible transmission alternatives and produce a regional transmission plan that can meet transmission needs more efficiently and costeffectively; (2) ensuring that the costs of transmission solutions chosen to meet transmission needs are allocated fairly to those who receive benefits from them; (3) providing for the identification and
evaluation of transmission alternatives at the regional level that may resolve the needs more efficiently or cost-effectively than solutions identified in the local transmission plans of individual public utility
transmission providers; and (4) inclusion of a process to identify and consider transmission needs driven by PPRs in the regional transmission plan, including cost allocation provisions.

25 See, e.g., Wholesale Competition in Regions with Organized Electric Markets, Order No. 719,
FERC Stats. & Regs. ¶ 31,281 (2008), order on reh’g, Order No. 719-A, 74 Fed. Reg. 37,776 (July 29,
2009), FERC Stats. & Regs. ¶ 31,292 (2009), order on reh’g, Order No. 719-B, 129 FERC ¶ 61,252
(2009).

26 See, e.g., Order No. 1000 at PP 61, 108, 157, 158; Order No. 1000-A at PP 10, 99, 223.

specific pro forma language in Order No. 1000 does not alter the fact that the Compliance Filing is a compliance filing. To the extent the protestors allege that certain aspects of the Compliance Filing are beyond the scope of Order No. 1000, they are incorrect because, as discussed below,27 they are proposed to satisfy Order No. 1000’s requirements.

B.The Proposed PPR Planning Process Fully Complies with Order No. 1000

1.The Definition of the Term “Public Policy Requirements” Appropriately

Includes Orders Issued by the NYPSC

The Commission should reject the protests challenging the Compliance Filing’s proposed definition of PPR. MI and IPPNY argue that the definition goes beyond the scope of Order No. 1000,28 while the PIOs claim that it is too narrow.29 The Compliance Filing proposes to define “Public Policy Requirements” as

a federal or New York State statute or regulation, including a NYPSC order

adopting a rule or regulation subject to and in accordance with the State

Administrative Procedure Act, or any successor statute, that drives the need for
expansion or upgrades to the New York State Bulk Power Transmission
Facilities.30

Some argue that this definition is overbroad and that the inclusion of NYPSC Orders is an

expansion of FERC’s “minimum requirements”31 because it is not limited to “federal and state
laws and regulations that drive transmission needs.”32 Others contend that the proposed
definition is too narrow and object to its application only to transmission needs33 and its

27 IPPNY specifically points to the definition of PPR, the role of the NYPSC process, the

consideration of non-transmission solutions, and the cost allocation methodology proposed for PPR

projects. Those specific issues are discussed in Sections III.B.1, III.B.2, III.B.3, and III.B.4, respectively.

28 See MI at 38-42; IPPNY at 16, n.57, 33.

29 See PIO at 5-9.

30 See §31.1.1.

31 See MI at 4; IPPNY at 16, n.57, 33.

32 IPPNY at 32.

33 PIO at 6-8.

exclusion of municipal and county laws and regulations.34 This range of diametrically opposing views demonstrates that it was impossible for the NYISO to win the affirmative support of all stakeholders on this issue.

The proposed definition fully complies with Order No. 1000’s directive that regional

transmission plans consider “transmission needs driven by public policy requirements

established by state or federal laws or regulations.”35 As the Commission explained “[b]y ‘state
or federal laws or regulations,’ we mean enacted statutes (i.e., passed by the legislature and
signed by the executive) and regulations promulgated by a relevant jurisdiction, whether within a
state or at the federal level.”36 The Commission further clarified that PPRs include any “enacted
statutes … and regulations promulgated by a relevant jurisdiction, whether within a state or at the
federal level” clarifying that the “intent of the word within” is to include “duly enacted laws or
regulations passed by a local governmental entity, such as a municipal or county government.”37
NYPSC orders established after notice and comment under the State Administrative
Procedure Act38 are in fact state regulations under New York law and, therefore, within the
definition of PPR in Order No. 1000. Thus, the proposed definition does not represent an
unwarranted grant of authority to the NYPSC. Furthermore, the definition properly
acknowledges the role played by the NYPSC in the oversight of transmission planning as well as
implementation of energy policy for New York State. The NYPSC is the agency in New York

34 Id. at 8.

35 Order No. 1000 at P 2.

36 Id.

37 Order No. 1000-A at P 319.

38 N.Y.A.P.A § 102(2)(a)(i) and (ii). It should further be noted that NYPSC Orders, pursuant to the State Administrative Procedure Act are issued subject to requirements that there be notice and
hearing, the development of a record, and a right to appeal.

State that develops energy policy39 and approves the siting of all transmission lines over a certain
size threshold. Accordingly, it is likely to be the primary source of PPRs that drive the need for
transmission in New York State. For example the NYPSC has adopted: (1) Renewable Portfolio
Standards requiring the state utilities subject to its jurisdiction to integrate wind, solar and other
renewable generation resources; 40 (2) an Energy Efficiency Portfolio Standard that directly
affects loads served by the New York bulk power system; (3) Smart Grid projects to upgrade the
New York transmission system; (4) proceedings on electric system planning; (5) procedures for
notification and evaluation of proposed generator retirements; and (6) recent orders to examine
the need for additional alternating current transmission upgrades and contingency plans to
address the possibility of generator retirements.41 Ignoring NYPSC orders that establish rules of

39 See N.Y. Pub. Serv. L. §§ 5, 65, 66 and 72; N.Y. Energy Law Art. 6.

40 As related in the Comments of the Long Island Power Authority and LIPA, the Long Island

Power Authority is not subject to the NYPSC’s jurisdiction. However, the Long Island Power Authority has independently adopted its own RPS and energy efficiency standards that are equal to, and in some cases more ambitious than, the NYPSC standards.

41 NYPSC Case No. 03-E-0188, Proceeding on Motion of the Commission Regarding a Retail
Renewable Portfolio Standard, Order Instituting Proceeding (Issued and Effective February 19, 2003);
NYPSC Case No. 03-E-0188, Proceeding on Motion of the Commission Regarding a Retail Renewable
Portfolio Standard, Order Establishing New RPS Goal and Resolving Main Tier Issues (Issued and
Effective January 8, 2010); NYPSC Case No. 07-M-0548, Proceeding on Motion of the Commission
Regarding an Energy Efficiency Portfolio Standard, Order Establishing Energy Efficiency Portfolio
Standard and Approving Programs (Issued and Effective June 23, 2008); NYPSC Cases 09-E-0310, et
al., In the Matter of the American Recovery and Reinvestment Act of 2009, Order Authorizing Recovery
of Costs Associated with Stimulus Projects (July 27, 2009) (Order Authorizing Recovery of Stimulus
Project Costs); NYPSC Cases 09-E-0310, et al., In the Matter of the American Recovery and
Reinvestment Act of 2009, Order Establishing Recovery Mechanism for Smart Grid Projects
(October 19, 2010); NYPSC Case No. 07-E-1507 - Proceeding on Motion of the Commission to Establish
a Long-Range Electric Resource Plan and Infrastructure Planning Process; NYPSC Case No. 06-M-1017

- Proceeding on Motion of the Commission as to Policies, Practices and Procedures for Utility

Commodity Supply Service to Residential and Small Commercial and Industrial Customers -Phase II,
Order Initiating Electricity Reliability and Infrastructure Planning (Issued and Effective December 24,
2007); NYPSC Case No. 0-M-0457 - In the Matter of the System Benefits Charge IV, Order Continuing
the System Benefits Charge and Approving an Operating Plan for a Technology and Market Development
Portfolio of System Benefits Charge Funded Programs ((Issued and Effective October 24, 2011); NYPSC
Case No. 12-T-0502, Proceeding on Motion to Examine Alternating Current Transmission Upgrades,
Order Instituting Proceeding (Issued and Effective November 30, 2012); NYPSC Case No. 12-E-0503 -

general application for energy policy in New York would result in an ineffective and illogical
PPR planning process and undermine the Commission’s goals of ensuring that transmission
needs driven by state PPRs be addressed. It would artificially prevent the NYISO from
addressing and evaluating transmission solutions for any PPR identified in New York State by a
law or regulation. Thus, the protests requesting a narrowing of the definition must be rejected.
The Commission should also reject protests calling for a broadening of the definition to encompass non-transmission related needs. Defining PPRs as transmission-related is fully
consistent with Order No. 1000 which clearly restricts its directives regarding the PPR planning
process, to transmission needs driven by PPRs.42 Also, the proposed PPR planning process does
allow for the identification and evaluation of non-transmission solutions to those needs, as
appropriate.43

Additionally, the assertion that the definition is too narrow because it does not include
municipal and county actions is factually incorrect.44 The definition’s reference to “New York
State statutes and regulations” already accounts for all New York State laws, which include local
laws under “Home Rule” in New York. Moreover, Order No. 1000-A already recognized the
incorporation of such local or municipal measures which rise to the level of New York State
regulation when it noted that “[w]e grant APPA’s clarification that Public Policy Requirements
established by state or federal laws or regulations includes duly enacted laws or regulations

Proceeding on Motion of the Commission to Review Generation Retirement Contingency Plans. Order Instituting Proceeding and Soliciting Indian Point Contingency Plan.

42 See, e.g. Order No. 1000 at P 203 and Order No. 1000-A at P 318 (“Order No. 1000 requires that public utility transmission providers amend their OATTs to provide for the consideration of
transmission needs driven by Public Policy Requirements.”) (emphasis added).

43 See §31.4.2.2; see also infra Section III.B.3.

44 PIO at 8.

passed by a local governmental entity, such as a municipal or county government.”45 This
clarification applies specifically to the phrase “state or federal laws or regulations” which is
included in the language proposed by the Filing Parties in the PPR definition. Accordingly, no
further modification is required to appropriately capture such duly enacted local laws or
regulations. The Commission should therefore accept the proposed definition as fully compliant
with Order No. 1000.

2.The Roles of the NYPSC and NYISO in the PPR Planning Process Are

Appropriately Defined

Some protestors allege that the compliance tariff revisions expand the authority of the
NYPSC46 beyond what Order No. 1000 contemplated for state agencies.47 They assert that the
proposed tariff revisions would provide the NYPSC with too much authority “over rates, terms
and conditions of service under a FERC-jurisdictional tariff.”48 They also contend that the
NYPSC’s ability to determine whether a PPR project should proceed to request the necessary
local, state and federal authorizations for construction and operation goes beyond what Order
No. 1000 permitted for state agencies49 and that the NYISO must assume that authority.50 They
argue that the NYPSC’s role in the PPR planning process should be modified to more closely

45 Order No. 1000-A at P 319.

46 The NYPSC is a bi-partisan legislative commission that resides within and serves as the

decision making body of the Department of Public Service. N.Y. Pub. Serv. L. § 4. The Department of Public Service (“NYDPS”) is a separate agency of the State of New York that is governed by the
Chairman of the New York Public Service Commission. N.Y. Pub. Serv. L. § 3. All references to
NYPSC in this Filing also include the NYDPS, unless otherwise noted.

47 See, e.g., PIO at 15-16; IPPNY at 8-15; see also E.ON at 2-3.

48 See IPPNY at 16.

49 IPPNY at 10, n.15, 16-20.

50 IPPNY at 14, 17.

resemble the role it plays in the reliability planning process.51 These assertions are without merit and should be rejected.

Order No. 1000 required public utility transmission providers to establish a process that
would consider transmission needs driven by PPRs, through: “(1) the identification of
transmission needs driven by Public Policy Requirements; and (2) the evaluation of potential
solutions to meet those needs.”52 The proposed PPR planning process clearly complies with this
directive, proposing a two-step process that: “(1) requires the identification of transmission
needs driven by Public Policy Requirements that should be evaluated by the ISO [(“Step One”)];
and (2) solicits requests for specific proposed transmission solutions to address those identified
public policy needs, and the evaluation of those specific solutions [(“Step Two”)].”53 The
NYISO will request stakeholder input regarding the identification of PPR driven transmission
needs and evaluate identified needs, as well as specific PPR solutions.54 The NYPSC determines
which needs require the solicitation of PPR solutions. The NYISO then conducts an extensive
evaluation of each of the proposed solutions to the identified need. Based on the NYISO’s
analysis, the NYPSC then selects which projects should move forward to seek the necessary
local, state, and federal approvals, including construction.55 That project will be included in the
NYISO’s regional transmission plan and posted on the NYISO public website.56

51 See id. at 9, n.30.

52 Order No. 1000 at P 205.

53 See §31.4.1.

54 See §31.4.2, 31.4.3, 31.4.3.1.

55 See N.Y. Pub. Serv. L. §§ 120, et seq. (“Article VII”).

56 See §31.4.2.1, 31.4.4.

Contrary to protestors’ allegations, this allocation of responsibilities does not

inappropriately shift the NYISO’s obligations to the NYPSC57 nor does it contravene Order
No. 1000.58 The NYPSC has always and appropriately played a significant part in the NYCA
planning process.59 In recognition of the NYPSC’s role as the primary regulator of energy
policy in New York State, the proposed regional planning process for PPRs appropriately
provides a central role to the NYPSC. The Commission has clearly acknowledged the powers of
state commissions, holding that “nothing [in Order No. 1000] … is intended to preempt or
otherwise conflict with state authority over the siting, permitting, and construction of
transmission facilities or over integrated resource planning and similar processes.”60 The
Commission expressly stated that:

state regulators play an important and unique role in the transmission planning process given their oversight over transmission siting, permitting, and construction, as well as integrated resource planning and similar processes.61

Thus, the Commission contemplated a significant role for state regulators in the PPR

planning process although it did not prescribe a specific responsibilities or limitations for them:62

57 See PIO at 15-17.

58 IPPNY at 17.

59 The Filing Parties recognize that the Long Island Power Authority and LIPA have filed

comments in support of language recognizing the Long Island Power Authority’s responsibility for

planning responsibilities on Long Island and the adoption of a parallel role by the Long Island Power

Authority in the PPR planning process with respect to actions relating to the physical modification of

transmission facilities in the Long Island Transmission District. The arguments herein regarding the role and responsibility of the NYPSC do not preclude the adoption of the language proposed by LIPA.

60 Order No. 1000-A at P 186. The NYPSC is the state agency that has such authorities under NY State Law. See N.Y. Pub Serv. L. §§ 5, 65, 66 and 72.

61 Order No. 1000-A at P 337.

62 Order No. 1000-A at PP 294 (stating that “the Commission believes that each state

commission, or the state commissions collectively in a region, is in the best position, in the first instance
and in consultation with the transmission providers subject to their jurisdiction, to define the appropriate
role for the state commissions in a particular region. This role will take into account the authorities and
restrictions conferred by their own states’ statutes and their own policy preferences. Thus, the
Commission believes it would be inappropriate for us to define the role of all state commissions in every

Our expectation is that state regulators should play a strong role and that public
utility transmission providers will consult closely with state regulators. … this
will be particularly true in the case of state-level Public Policy Requirements,
where state regulators are likely to have unique insights as to how transmission
needs driven by those state-level Public Policy Requirements should be
satisfied.63

The protestors ignore this explicit recognition of the role of the states and the opportunity for
cooperative federalism presented in meeting transmission needs driven by PPRs. Indeed, the
Commission in Order No. 1000 was very clear: “[w]e strongly encourage states to participate
actively in both the identification of transmission needs driven by Public Policy Requirements
and the evaluation of potential solutions to the identified needs.”64 Obviously this is particularly
true in the case of a single state ISO. Consistent with the Commission’s expectation, the PPR
planning process set forth in the Compliance Filing appropriately recognizes a significant role
for the NYPSC.

The Commission also should reject assertions that the proposed process does not allow
the NYISO to properly manage the needs identification process65 or that it does not provide the
NYISO the ability to propose solutions.66 The Compliance Filing assigns to the NYISO the roles
required by Order No. 1000. In Step One, the NYISO solicits input from all interested parties

regional transmission planning process in a single generic proceeding, both because a state commission’s
authority and responsibility is established by its own state’s laws—not by this Commission—and because
a one-size-fits-all state role would not accommodate the wide range of views expressed by state
commissions) and 337 (stating that “the Commission will not require … a particular status for state
regulators in the transmission planning process. To do so would ignore the wide range of roles that state
regulators themselves tell us that they are permitted to take under their various state laws”).

63 Order No. 1000-A at 338 (emphasis added).

64 Order No. 1000 at P 212; see also n.189.

65 PIO at 14.

66 Id. at 24.

regarding transmission needs that are being driven by a PPR.67 The NYISO may also submit its
proposed needs. The NYISO must post all submittals on its public website and send them to the
NYPSC for review.68 This clearly complies with the requirement that transmission providers
allow all interested parties to propose transmission needs driven by PPRs in a “process that is
open and transparent … and [creates] 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.”69

Concerns that the NYISO does not choose a solution, or make a determination regarding
what PPRs require the solicitation of proposed solutions are also misguided.70 Order No. 1000-A
clearly stated that the Commission “was not requiring public utility transmission providers to
make any substantive determinations as to what PPRs may qualify under these reforms or to
identify them in their OATTs.”71 The Commission also held that it was “not mandating” the
building, or identification, of any particular transmission facility to address needs driven by
PPRs.72 Order No. 1000 does not require the transmission provider to make a selection - it
simply requires that it establish a process for the identification and evaluation of needs driven by
PPRs and have a regional plan that allows for the selection of such facilities.73

67 See §31.4.2 (establishing the process through which the NYISO will manage the needs identification process).

68 See §31.4.2 (providing that the “ISO on its own initiative [may] identify a proposed transmission need that it believes is being driven by a [PPR]”).

69 Order No. 1000-A at P 321.

70 PIO at 25.

71 Order No. 1000-A at P 327.

72 Id. at P 329.

73 Order No. 1000 at P 148 (requiring the transmission provider to “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 … in [the] local transmission planning

The NYPSC was appropriately assigned the role of reviewing the needs proposed by

stakeholders, the NYISO, and other interested parties, and identifying the transmission needs for
which solutions should be requested and evaluated for two primary reasons. First, the Filing
Parties believe that because the NYISO is a single state ISO it must be recognized that the
NYPSC already has a significant role in determining if the construction of a transmission facility
is warranted. The simple fact that a transmission project bears some relationship to the
implementation of a PPR does not mean that the project, and the assumption of related costs,
reflects the state PPR. Second, the Filing Parties sought to avoid expending the NYISO’s limited
resources on the evaluation of a large number of transmission projects that may not are not
consistent with state policy goals and are unlikely, therefore, to receive State siting approval.74
Moreover, assertions that the level of discretion provided to the NYPSC in the PPR
planning process are too broad ignore the fact that the Commission has previously authorized a
similar role for the NYPSC to play in the NYISO’s reliability planning process.75 Like the PPR
planning process, the reliability planning process provides that, where the NYISO determines
that a regulated reliability solution is needed because a market-based solution is not available,

process” and requiring that the analysis be performed so that the “more efficient or cost-effective solution can be selected in the regional transmission plan for purposes of cost allocation”).

74 See Order No. 1000 at PP 206-208 (stating that the use of screens to identify “out the larger set of needs, those needs for which transmission solutions will be evaluated” was appropriate, in response to concerns raised by commenters regarding the “open-ended obligation to undertake costly and time-
consuming studies”).

75 See, N.Y. Indep. Sys. Operator, Inc., 132 FERC ¶ 61,188 at P 9 (2010) (approving the NYISO’s
tariff provisions and stating that “[w]hile NYISO’s tariff does not provide that it will actually choose
among competing solutions (whether they be market-based, regulated, or gap solutions) or resources, it
does provide that NYISO will evaluate the competing proposals for their ability to meet the designated
Reliability Need in a timely manner” and that “ultimately the decision as to which regulated proposals
will be implemented lies with the governmental authorities with jurisdiction over the implementation or
siting”).

the NYPSC or the appropriate governmental authority will ultimately select the regulated solution to be built to meet Reliability Needs.76

NYISO’s role in the existing reliability and economic planning processes is to provide for
participation by all interested parties, and to perform the technical evaluations necessary to
determining whether a proposed project will meet the identified needs in a cost effective and
efficient manner. This is precisely the role proposed for the NYISO in the Compliance Filing
with respect to PPRs. The NYISO’s lead role in the reliability planning process is reasonable
because one of the NYISO’s primary duties under its agreements and tariffs is to administer a
planning process to ensure the reliability of the Bulk Power Transmission Facilities (“BPTFs”) in
the NYCA, and because the NYISO is the NERC registered Transmission Planner and Planning
Coordinator for the New York Control Area. In contrast, the PPR planning process is intended
to allow for the identification and evaluation of PPRs, which, particularly because the NYISO is
a single state ISO, must necessarily involve the NYPSC in a central way. As Order No. 1000
explained, the requirement that a PPR planning process be included in a public utility
transmission provider’s tariff is not intended usurp the role of the states. Rather it is intended to
incorporate the state’s views on PPR needs into the Commission-jurisdictional federal tariff.77
Similarly, objections regarding the role of the NYPSC in dispute resolution78 should be rejected. The proposed tariff revisions provide for dispute resolution through the NYPSC only with respect to the identification of transmission needs.79 The process provides for resolution of such disputes through the NYPSC, because the NYDPS makes the determination and, as such,

76 § 31.2.5.7.1.

77 Order No. 1000-A at P 330.

78 See IPPNY at 14, n.54.

79 See § 31.4.2.2.

the dispute is most appropriately resolved through a NYPSC process. Nothing precludes any

dispute that falls within the Commission’s jurisdiction from being resolved by the Commission. This role is completely consistent with the NYISO’s Commission-approved dispute resolution provisions for reliability planning disputes.80

3.The PPR Planning Process Provides for the Consideration of Non-

Transmission Alternatives

The Commission should reject IPPNY’s and the PIOs’ assertions that the Commission
should require the NYISO to evaluate non-transmission solutions to needs driven by PPRs in all
cases.81 The proposed PPR planning process already provides for such consideration, requiring
the NYISO to conduct an evaluation of non-transmission alternatives as responses to PPR driven
needs, when requested by the NYPSC.82 Nothing in the proposed tariff revisions limits an
entity’s right to propose a non-transmission alternative to address a PPR and to be considered by
the NYPSC. Requiring the NYISO to conduct an extensive evaluation of proposed non-
transmission solutions, where the State entity responsible for the implementation of non-
transmission solutions has expressed no interest in them, would be inefficient and could be
unduly burdensome. Further, Order No. 1000 is clearly directed at the identification of
transmission needs driven by PPRs and the evaluation of transmission solutions to address those
needs.83

80 See §§ 31.2.3.3 (RNA disputes) and 31.2.6.3 (CRP disputes).

81 IPPNY at 7-8; PIO at 6-8.

82 See §31.4.2.1.

83 See, e.g., Order No. 1000 at PP 2, 82, 203.

4.The Proposed Cost Allocation Methodology for the PPR Planning Process Is

Fully Compliant with Order No. 1000

a.The Proposed Cost Allocation Methodology Complies with the Order

No. 1000 Cost Allocation Principles

Protestors’ assertions that the PPR planning process cost allocation methodology does not satisfy Order No. 1000’s cost allocation principles should be rejected.84 Protestors argue that the proposed methodology would allocate costs of PPR projects to those who do not benefit, lacks
transparency, and is not an ex ante methodology.85 As explained in the Compliance Filing, the
proposed cost allocation methodology is ex ante, transparent, and allocates costs on a
“beneficiaries pay” basis.86 The proposal also allows for the flexibility necessary to ensure that where the default methodology does not result in an appropriate cost allocation among
beneficiaries, alternatives can be proposed to more closely allocate costs to them. However, it
also ensures that project sponsors know that a cost allocation method exists in all cases that
ensures costs will be allocated to those that benefit.

Those arguing that the proposed PPR planning process does not include an ex ante, and
transparent, cost allocation methodology gloss over the fact that the tariff explicitly includes a
default ex ante methodology that is available to transmission developers. They also argue
inconsistently against the default methodology as prescribing what they contend is the wrong
kind of ex ante formula. The Compliance Filing contains a specific cost allocation methodology
to be applied to any PPR project selected in the regional transmission plan, unless an alternate
methodology is proposed by the transmission developer and approved by the Commission. The
proposed cost allocation methodology is compliant with Order 1000, as it provides advance

84 MI at 23-25; IPPNY at 16-17, 19-22; PIO at 26-30.

85 MI at 2-3, 11; IPPNY at 25; PIO at 28-29; see also E.ON at 4.

86 Compliance Filing Letter at 46-48.

assurance to transmission developers that there is a Commission approved cost allocation

methodology. It also provides the flexibility and transparency necessary for the PPR planning process to properly allocate the costs of PPR projects.

Section 31.5.5.487 provides that the default methodology will allocate “costs of the

transmission project to all Load Serving Entities in the NYCA using a default cost allocation
formula, based upon a load ratio share methodology.” As explained in the Compliance Filing,
this methodology complies with the Order No. 1000 cost allocation principles because “public
policies established by government are generally established to benefit everyone”88 making it
reasonable to allocate costs to all loads across the NYCA to reflect the generalized benefit being
realized by such loads. The default cost allocation methodology is applicable to any PPR project
that does not propose an alternative methodology, making it ex ante and transparent.
Some protests argue that there is no basis for the NYISO determining that PPR driven projects benefit everyone.89 However, protestors fail to offer an adequate basis for their
contention that the default cost allocation methodology is unreasonable or that a different
methodology should be adopted. In the absence of an express provision in the PPR with respect
to benefits and the allocation of costs or the proposal of a more appropriate methodology by the
developer, it is reasonable for the load ratio share cost allocation methodology to be in place as
the default methodology. Moreover, these protests fail to recognize that Congress, state
legislatures, and executive agencies are all charged, by their constitutions or enabling statutes,
with serving the public interest of everyone. If a PPR expressly provides that it is intended to

87 Note that IPPNY points out an incorrect section reference in the Compliance Filing. Section

31.5.5.2.4 should refer to 31.5.5.4, not 31.5.4.4.

88 Compliance Filing Letter at 48. Note also that PIO, though protesting the alternative

methodologies, supports the default methodology, arguing that it is appropriate to allocate costs across all loads, because PPRs solutions are likely to benefit all consumers. PIO at 30.

89 See MI at 19, IPPNY at 20.

benefit a certain region or segment of the population, the tariff provides that the default cost allocation methodology will be used.

Further, the Commission has approved load ratio share cost allocation methodologies for transmission upgrades in other RTO planning processes. 90 Indeed, just because MI envisions
transmission projects that it believes that its members may not want to pay for does not mean
that MI’s members will not receive any benefits from such projects. This type of cost allocation has also been upheld by the D.C. Circuit in the context of a control center constructed by the
Midwest Independent Transmission System Operator, Inc. (“MISO”). In the decision, the court affirmed the allocation of the costs of the MISO control center to all loads independent of
whether they were a direct beneficiary. In that decision, then Judge John Roberts analogized the MISO to the federal court system91 stating that:

In this sense, MISO is somewhat like the federal court system. It costs a

considerable amount to set up and maintain a court system, and these costs - the costs of having a court system - are borne by the taxpayers, even though the vast majority of them will have no contact with that system (will not use that system) in any given year.92

MI’s position is similar to “saying that if they are not a litigant, they should not be made to pay
for any of the costs of having a court system.”93 Thus, in the context of a PPR project, it makes
sense to have socialization as the default cost allocation because benefits are generally
widespread and not specific. MI’s position that costs cannot be socialized must be rejected.

90 See, e.g., PJM Interconnection, LLC, 138 FERC ¶ 61,230 (2012) (reaffirming the

Commission’s decision accepting, as just and reasonable, a proposal that would allocate the costs of

certain facilities that benefit all entities in a region, across the region); Southwest Power Pool, Inc.,

131 FERC ¶61,252 (2010), reh’g, 137 FERC ¶61,075 (2011) (accepting a regional cost allocation for the cost of certain transmission facilities that benefit all entities in a region).

91 Midwest ISO Transmission Owners v. FERC, 373 F.3d 1361 at 1369 (D.C. Cir. 2004) (finding that costs of facilities that benefit entities in a region may be allocated across a region, even where entities in the region may disagree that they are receiving a benefit).

92 Id.

93 Id.

The Compliance Filing also recognizes that there may be circumstances in which the

default cost allocation may not be appropriate. Thus, it includes tariff provisions that allow for
alternative methodologies to be proposed where warranted, subject to Commission approval.94
This flexibility is necessary to account for the fact that the nature of future PPRs cannot be
known with certainty. There may be circumstances in which a cost allocation based on load ratio
share would not be the best method for aligning the costs and benefits of a selected PPR project.
Section 31.5.5.4 of the tariff provides that an alternative cost allocation methodology may be
proposed in the PPR, by the project developer, or identified by the NYPSC. Any such alternate
cost allocation methodology must be submitted to the Commission for approval as just and
reasonable.95 Therefore, assertions that a developer can “dictate” its preferred methodology96 or
that the methodology does not allow for a proper allocation of costs are unfounded. Ultimately,
any such proposal will require a finding by the Commission that the cost allocation is just and
reasonable and compliant with the Order No. 1000 cost allocation principles.97
Finally, no clarification98 is necessary regarding whether Commission review and
approval of any cost allocation other than the default method is required. The proposed tariff
revisions already clearly require Commission approval.

94 See §31.5.5.4.

95 See §31.5.5.4.4.

96 MI at 27-28.

97 Also, note that under §31.5.6.5, any proposal for ultimate cost recovery, whether based on the
default cost allocation methodology or an alternative cost allocation methodology, for a PPR project must
be reviewed by the Commission to determine whether the actual project costs are just and reasonable.

98 IPPNY at 14, n.54.

b.The Existing CARIS Cost Allocation Methodology Should Not Be

Applied to Transmission Solutions Driven by PPRs

Protestors contend that one of the existing cost allocation methodologies in the tariff (i.e., the methodology applied to projects selected as solutions to congestion identified in the CARIS) must be applied to PPR projects. However, the Final Rule expressly allows different cost
allocation methods for different types of transmission projects and does not require a single cost allocation methodology for all transmission projects.99 And, contrary to protestors’ assertions, adoption of the economic planning processes’ cost allocation methodology would be
inappropriate and may result in unjust and unreasonable rates.

The CARIS methodology is structured for a solution designed to address congestion only
and thus determines cost allocation using economic measures.100 Since PPR projects may have
no economic benefits, or may have economic benefits that are incidental, inconsequential, or
practically unquantifiable, the blanket application of the CARIS methodology would not provide
a proper measure for cost allocation. Protestors simply fail to draw a rational connection
between a PPR that calls for the construction of transmission for one or more myriad policy
reasons and having ratepayers pay for such upgrades based upon the economic effects in every
instance.101

Moreover, allocating the costs of PPR solutions based solely on the CARIS methodology
runs the risk of nullifying the PPR planning process. This is because it would allow parties,

99 Order No. 1000 at P 689.

100 See §31.5.4.4.

101 Further, MI’s suggestion that where there are no known economic benefits, cost allocation

should be determined by the NYPSC (MI at 31) is based on the flawed premise that the costs of meeting PPRs should be paid for based on relative economic benefits. MI’s suggestion also contradicts both their objections to the uncertainty regarding the NYPSC’s role in the PPR process and to the creation of cost allocation uncertainty. The proposed compliance tariff revisions allow the NYPSC to identify an
alternate cost allocation methodology up front, and if no methodology is forthcoming, provides for
certainty through the default load ratio share cost allocation methodology.

including MI’s members, which constitute some of the largest industrial companies in New York State, to avoid paying for such costs, unless they gained a net economic benefit from the
construction of the facility. This is unworkable, given that PPRs will not necessarily provide
economic benefits and will more likely have some more generalized public interest benefit (e.g., encouraging energy conservation, incenting the use of renewable energy resources,
environmental benefits, etc.), which is what is anticipated by the Commission’s requirement that planning processes include provisions for PPR projects. Requiring economic benefits for the allocation of the cost of a PPR project would actually undermine the Commission’s fundamental objective in requiring a process to identify, evaluate and promote the construction of
transmission projects that solve transmission needs driven by PPRs.

c.The PPR Planning Process Appropriately Addresses Concerns

Regarding “Forum Shopping”

Protestors allege that the proposed PPR process may lead to “forum shopping” and

request that the Commission direct modifications to prevent developers from circumventing the
existing reliability and economic planning process, by proposing projects that could be submitted
under those processes, as PPR projects.102 These protestors believe developers have varying
motives for “evading” the NYISO’s existing planning process in favor of the proposed PPR
process and that such “evasions” may harm competitive markets.103 These claims should also be
rejected for the reasons described below. Indeed, they are in direct conflict with Order No. 1000,
which allows for different types of transmission with different cost allocation methods.
The Commission has required the identification and evaluation of transmission needs driven by PPRs in the NYISO’s regional transmission plan. The proposed tariff provisions do

102 MI at 3, 11; IPPNY at 35, n.63, 37-38.

103 MI at 29; IPPNY at 36.

provide that where a project has been selected as part of the regional or economic process it must proceed to cost allocation under those provisions.104 In contrast, however, adoption of the
language proposed by MI would erect barriers to entry.

The “forum shopping” that protesters fear would only be a danger if the developer could
be assured it satisfies a PPR and could be expected to simply ignore the reliability and economic
planning processes, in favor of the PPR process. However, it is not up to a developer to
determine that there is a transmission need driven by a PPR for which its project would qualify.
Such determination is made by the NYPSC, with significant input by the NYISO and all
interested parties. 105

Moreover, there is no reason to assume that a project that is suited primarily to address a reliability or economic need would also be the preferred project to address a transmission need driven by a PPR. A developer that engaged in such “forum shopping” would be taking great risk that its project would not be approved under any of the NYISO’s planning processes. Claims that the PPR planning process is more lenient in allowing transmission projects to be built with tariff cost recovery are unsubstantiated.106 Simply because the PPR planning process does not follow the same steps used in economic planning does not diminish the multidimensional
planning steps (e.g., with respect to interested party participation, metrics evaluation, and
regulatory oversight) provided by the PPR planning process.

104 See §31.5.5.1.

105 Further, the proposed tariff modifications will allow for due consideration of a PPR project’s
potential impacts on competitive markets. The compliance tariff revisions include provisions which
require the NYISO to analyze the effects of PPR projects and issue a result on its findings. That report is
then revised by the independent Market Monitoring Unit which will identify any such impacts. That
MMU report will be provided to the NYISO Board of Directors and the NYPSC which would, to the
extent appropriate, address such issues. See §31.4.7 and Services Tariff Attachment O at §3.4.6.8.5.

106 IPPNY at 28

Additionally, requiring the NYISO to determine whether a project proposed to address a
need driven by a PPR would have met the criteria for reliability or economic projects is contrary
to the notion of separate categories of transmission sanction by Order No. 1000. Moreover, it
would be completely unworkable. This is an impossible task, since it cannot be known in
advance whether there would ever be a Reliability Need that a given transmission project may
resolve, nor can it be predicted whether a given project could potentially be a solution to an
economic need which may appear sometime in the future under different system and economic
conditions. It would also contravene existing and proposed tariff language107 that allows a
developer to select which process they wish to have their project evaluated under. Indeed, the
whole point of the PPR process is to allow developers that have projects that fulfill transmission
needs that are not fully accounted for by economic and reliability planning to propose their
project for selection in the regional transmission plan for purposes of cost allocation.108 Any
attempt to override those provisions would likely be controversial and result in disputes that
would be brought to the Commission for resolution.

The PPR planning process, as currently drafted, properly limits the NYISO’s

responsibility to the evaluation of all projects proposed to meet the identified need driven by a

PPR. There is no basis in Order No. 1000 for a requirement that the NYISO determine whether a
project is more appropriately included in one of the other processes. Nor is there any basis for
the NYISO to preclude a developer from proposing its transmission project if, as MI proposes, it
is eligible for selection in the reliability planning process and is not selected by the NYPSC, or is
eligible for selection in the economic planning process but does not receive a supermajority vote.

107 See §§ 3.2.4.4, 31.2.4.6, 31.2.4.8, 31.2.5,10.4, 31.3.2.4, 31.4.3.

108 Order No. 1000 at P 82 (noting that “existing transmission planning processes generally were not designed to account for, and do not explicitly consider, transmission needs driven by Public Policy Requirements”).

Even if a transmission project is not built for reliability or economic reasons, it may nevertheless be determined by the NYPSC to fulfill a PPR, such as promoting renewable energy, fuel
diversity, energy independence and security. As stated above, the purpose of the Order 1000
planning process is to avoid overlooking transmission projects that address PPRs beyond just
reliability and congestion relief.

C. The NYISO’s Existing Economic Planning Process Complies with Order No. 1000

LS Power argues that the Compliance Filing’s retention of the Commission-approved

rule that a project receive 80 percent approval by project beneficiaries in order to be selected as a solution to congestion identified in the CARIS violates Order No. 1000.109 As the Filing Parties demonstrated in the Compliance Filing, Order No. 1000 expressly allows the use of this kind of voting mechanism.110 Additionally, the Commission has found that the NYISO’s CARIS voting mechanism is just and reasonable.111

LS Power asserts that the tariff is non-compliant based only on its observation that, to

date, there has not been a single project submitted for vote under the economic planning

process.112 It wrongly presumes that this fact is a problem and then speculates that it must be the
result of the “mere existence of the rule [which] has been a deterrent to submission of economic

109 LS Power at 23-27.

110 Order No. 1000 at P 689.

111 N.Y. Indep. Sys. Operator, Inc., 129 FERC ¶61,045 at P 130 (2008) (finding the voting

mechanism to be “a useful check to ensure that a project has net benefits, by requiring that most of those whom the NYISO expects to benefit from a project agree that they actually will benefit” ); N.Y. Indep. Sys. Operator, Inc., 126 FERC ¶ 61,320 at P 36 (2009) (rejecting arguments on rehearing that the voting process should be eliminated as discriminatory, holding that “voting mechanisms, such as NYISO’s meet the Commission’s expressed desire in Order No. 890-A that beneficiaries who must pay for projects
should have the right to determine if other solutions are superior to economic projects”); see also N.Y. Indep. Sys. Operator, Inc., 127 FERC ¶ 61,136 (2009).

112 LS Power at 24.

projects to address New York’s substantial congestion.”113 LS Power proffers no evidence

whatsoever that the supermajority voting requirement has prevented economic transmission

projects from coming to fruition. In the first two CARIS planning cycles, transmission projects
have been proposed to the NYISO, and they may proceed so long as they meet tariff eligibility
requirements to produce net production cost savings and exceed $25 million in cost. Of the two
projects proposed, one project withdrew its request and the other is still under evaluation.

Additionally, LS Power’s assertion that incumbent transmission owners will bar any

CARIS project must also be rejected. Such concerns were addressed by the Commission in prior orders accepting that proposal and addressed through the adoption of provisions that require all votes to reject a proposal to be explained by the beneficiaries and submitted to the
Commission.114 Neither has LS Power submitted any evidence that the process results in such discriminatory behavior. Thus, assertions that the CARIS voting requirement does not comply with Order No. 1000 should be rejected as unsupported.

D.The Compliance Filing Fully Complies with the Order No. 1000 Non-Discrimination

Directives

LS Power, 115 and others,116 make numerous allegations concerning the NYISO’s existing
reliability planning process, urging the Commission to find it non-complaint with Order
No. 1000. As noted above, the Commission determined that planning entities did not have to re-
justify existing planning processes that were previously found to be compliant with Order

113 Id.

114 See §31.4.5.6.5 (requiring beneficiaries voting against approval to submit to the ISO their
rational for their vote, including a “detailed explanation of the substantive reasons underlying the
decision”).

115 LS Power at 9-23.

116 See, NextEra at 5-7; PSEG at 6-8.

No. 890, as is the case with the NYISO’s reliability and economic planning process.117

Nevertheless LS Power incorrectly raises arguments that Order No. 1000 called for precisely such a reexamination and alleges that the existing process run afoul of Order No. 1000 for the reasons specified below.

As an initial matter, LS Power’s assertions that the Commission should direct the NYISO
to revise the tariff to establish a single reliability and PPR planning process has absolutely no
basis in Order No. 1000.118 To the contrary, as discussed above, Order No. 1000 clearly states
that “nothing in this Final Rule prohibits the development of a separate class of transmission
projects” and noting that “public utility transmission providers might comply with this Final
Rule by implementing procedures to consider transmission needs driven by Public Policy
Requirements separately from transmission addressing reliability needs or economic
considerations.”119 The Commission further indicated that separate cost allocation
methodologies may be adopted for regional reliability, economic and PPR projects.120 The fact
that Order No. 1000 might allow transmission providers to develop a single planning process
does not mean that LS Power can convert such permission into a mandate that the such a process
must be established in New York.

This unsubstantiated, and contradictory, assertion should be rejected.

117 See, e.g., Order No. 1000 at P 31 (stating that the Commission’s intent “was not to disrupt the progress being made with respect to transmission planning and investment in transmission
infrastructure”) and P 204 (stating that the Order No. 1000 requirements are “intended to enhance, rather than replace, existing transmission planning obligations under Order No. 890”).

118 LS Power at 11-17. Other than this assertion, LS Power provides no explanation of this statement elsewhere in their comments.

119 Order No. 1000 at P 220.

120 Id. at PP 686, 747.

1.The Reliability Planning Process as Revised in the Compliance Filing, Fully

Complies with the Order No. 1000 Non-Discrimination Directives

LS Power,121 and to some extent, NextEra122 and PSEG,123 contend that the NYISO’s

reliability planning process discriminates against non-incumbent transmission providers. To the
contrary, the NYISO’s reliability planning process expressly requires that all solutions be
considered on a non-discriminatory basis. Protestors’ assertions either demonstrate a
misunderstanding of the NYISO’s reliability planning process or mischaracterize its provisions.
The NYISO’s reliability planning process identifies any Reliability Needs over the
NYISO’s ten-year planning horizon. If a Reliability Need is identified, the NYISO solicits
market-based solutions to address them, and asks the NYTO designated as a Responsible
Transmission Owner to prepare a regulated backstop solution.124 At the same time, the NYISO
solicits alternative regulated solutions from both the NYTOs and non-incumbent transmission
developers.125 The tariff provides all entities with an opportunity to demonstrate that they are
qualified to meet an identified Reliability Need and provides that the qualifications of each entity
will be considered “in an evenhanded and non-discriminatory manner, treating Transmission
Owners and Other Developers alike.”126

LS Power, in particular, focuses solely on the provision of regulated solutions to a

Reliability Need and ignores the Commission-approved market-based planning framework that is the foundation of the NYISO’s planning processes. Only in limited instances where an

121 LS Power at 11-17.

122 NextEra at 5-7.
123 PSEG at 6-7.
124 See § 31.2.4.2.
125 See §31.2.4.6.
126 See §31.2.4.1.1.

acceptable market based solution is not available, does the NYISO determine the need for a

regulated reliability solution.127 These “last resort” provisions for regulated solutions are used
only in the event that the market does not respond to a need and treat all project sponsors
equally.128 It provides that the NYISO will solicit alternative regulated solutions from the
NYTOs and from non-incumbent transmission developers, at the same time.129 Each proposed
solution that is found by the NYISO to meet a reliability need is included in the NYISO’s
Comprehensive Reliability Plan (“CRP”).130 LS Power’s focus on provisions that are meant to
be used only in exceptional circumstances creates a distorted impression of the NYISO’s
comprehensive planning process.

There is nothing unduly discriminatory about the NYISO’s ability to direct a Responsible
Transmission Owner to submit a proposal for a regulated backstop solution to the appropriate
governmental agencies so that necessary approval processes may begin.131 Nor is there undue
discrimination in the provision of cost recovery for Responsible Transmission Owner solutions
prior to their submittal for agency approval, as non-incumbent developers are not similarly
situated to the NYTOs.132 Those provisions are justified because the NYTOs have the legal
obligation to prepare a regulated backstop solution to an identified Reliability Need, if

127 See §§31.2.4.2 (regulated backstop solutions) and 31.2.4.6 (alternative regulated solutions).

128 See §31.2.4.2.1 (noting that a regulated backstop solution will be requested if there is “a lack of sufficient viable market-based solutions to meet [identified] Reliability Needs”).

129 See § 31.2.4.6.

130 See §31.2.6.

131 See §31.2.5.7.1.

132 See, e.g., Cal. Indep. Sys. Operator Corp., 119 FERC ¶ 61,061 (2007) at P 69 (stating that

“[t]he Commission has determined that discrimination is undue when there is a difference in rates or

services among similarly situated customers that is not justified by some legitimate factor,” citing, El

Paso Natural Gas Co., 104 FERC ¶ 61,045 at P 115 (2003); Order No. 436, FERC Stats. & Regs.

¶ 30,655, at 31,541 (1985)); Transmission Agency of N. Cal. v. FERC, 628 F.3d 538, 547 (D.C. Cir. 2010) (“A rate is not ‘unduly’ preferential or ‘unreasonably discriminatory if the utility can justify the disparate effect”, citing, Ark. Elec. Energy Consumers v. FERC, 290 F.3d 362, 367 (D.C. Cir. 2002)).

designated by the NYISO as the Responsible Transmission Owners(s) when no market-based

solution is available. This obligation was assumed by the NYTOs in a contract with the NYISO, approved by the Commission.133 Accordingly, acknowledgment of this obligation in the
NYISO’s reliability planning process by minor differences in nomenclature for reliability
backstop solutions and alternative regulated solutions does not mean that one type of solution is preferred over the other or that any undue discrimination is present.

One of the conditions for the NYTOs’ assumption of this obligation was their recovery of costs reasonably incurred in the preparation of a regulated backstop solution at the direction of
the NYISO. Non-incumbent developers like LS Power on the other hand, are not obligated to
submit a proposed solution and can discontinue any of its proposed projects at any time. LS
Power protests that it would be willing to obligate itself to a project it were allowed to assume
that burden.134 But LS Power is eligible to be selected as the backstop solution under the
NYISO’s tariff, and if its project is selected by the NYPSC, LS Power will enjoy such
obligations as a matter of state law.

Proponents of alternative regulated solutions may submit their projects to the appropriate
governmental agencies for review in the same timeframe as the Responsible Transmission
Owner submits its proposal.135 Pursuant to the tariff, a non-incumbent transmission developer
that qualifies to develop a regulated reliability solution is eligible for cost allocation and cost
recovery, if its project receives regulatory approval.136 Where an alternative regulated solution

133 See, N.Y. Indep. Sys. Operator, Inc., 109 FERC ¶ 61,372 at PP 38-39 (2004) and N.Y. Indep. Sys. Operator, Inc., 111 FERC ¶ 61,182 at P 19 (2005) (accepting unsigned agreements between the
NYISO and the NYTOs providing for the NYTOs participation in the NYISO’s comprehensive reliability planning process, filed by the NYISO on August 24, 2004, and revised on February 25, 2005).

134 LS Power at n.23.

135 See § 31.2.5.7.1.

136 See §31.2.7.3.6.

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 ).137 It is not reasonable for a project proposed by a non-incumbent to
receive full cost recovery prior to its approval. Contrary to LS Power, the NYTOs are not
entitled to recover all of their development costs for projects even if they are never built. Rather,
NYTOs face the potential for denial of cost recovery if it were determined that their costs were
not prudently incurred.138

The Commission should also reject LS Power’s contention that the Commission should
mandate a mechanism for the blanket recovery of all development costs for all proposed
solutions. Many projects are proposed that are never developed, and the costs of such projects
should not always be recovered through rates. Fundamentally, LS Power’s proposed unqualified
right to recover planning and development costs would eliminate the financial risks for
proposing a project, regardless of whether the project is likely to be viable or to receive the
necessary regulatory approvals. Such a process would likely result in New York consumers
paying for a non-incumbents’ planning or development costs regardless of the viability or merits
of the proposal. The Filing Parties note that a non-incumbent developer may always petition the
Commission for transmission rate incentives under Section 219 of the Federal Power Act and
Order No. 679 to mitigate the financial risks of proposing a project. Those incentives include,

137 See § 31.5.6.

138 See, e.g., New England Power Co., 31 FERC ¶ 61,047 at 61,085 (1985), enforced, Violet v. FERC, 800 F.2d 280 (1st Cir. 1986).

among others, the recovery of pre-commercial costs and the recovery of prudently incurred costs in the event the project is abandoned for reasons beyond the developer’s control.139
Also, when the Commission approved the NYISO’s existing Comprehensive System Planning Process, it 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 Need in a timely manner affords comparable treatment to all types of competing
solutions and resources.”140 LS Power has presented no evidence to the contrary and its
unsupported arguments141 must be rejected.

Further, contrary to protestors’ arguments,142 there is nothing in Order No. 1000 that
requires the NYISO to determine which solution will be implemented. It is appropriate,
particularly in New York State, for the governmental agencies with jurisdiction over
implementation, permitting and siting of transmission to make the determinations regarding
which regulated solution will be implemented.143 This is because the selection of a regulated
reliability project, the costs of which will be borne by New York consumers, is not based simply
on the developer’s projected cost. Other important factors are considered, including the

139 Further, where an alternative regulated solution is selected as the best solution by the NYPSC and proceeds to attempt to obtain necessary approvals, but such approvals are either not granted or are granted and then withdrawn, an alternative regulated solution may recover all reasonably incurred costs to implement an orderly termination of the project. See §31.2.7.3.6.

140 N.Y. Indep. Sys. Operator, Inc., 132 FERC ¶ 61,028 at P 10 (2010).

141 LS Power at 13. LS Power’s objections to the cost recovery provisions for Responsible

Transmission Owners in the PPR planning process must be rejected for the same reasons. See LS Power
at 16.

142 PSEG at 7.

143 See § 31.2.5.7.1. The provisions also show that NextEra’s concerns regarding what the

process is for selecting projects to meet identified Reliability Needs are unfounded. The NYISO’s tariff clearly has a process which provides sufficient details regarding how competing projects to address
Reliability Needs will be evaluated, including what factors will be considered, and how they will be weighed. See NextEra at 5-7.

experience and capability of the developer, the estimated time of completion, the environmental
impacts and benefits of the project, the likelihood of obtaining necessary property rights and
other approvals, and the nature of the technology to be used. The consideration and weighing of
these factors is appropriately left to the state regulatory bodies entrusted with those
determinations.144

There is no reason to assume that a regulated project proposed by a non-incumbent

transmission developer will not be selected as the preferred project, over a project proposed by an incumbent transmission provider, if the non-incumbent’s project would provide greater
benefits to the public and be more cost-effective and efficient. On the other hand, even if the NYISO did include only a single project in its plan, there is no assurance that, after considering all relevant factors, that project would receive a determination that it is in the public interest under the state’s transmission siting law.145

2. The Proposed Tariff Revisions Allow for the Identification and Evaluation of

the More Efficient or Cost-Effective Projects for Selection in a Regional Transmission Plan

LS Power’s assertion that the tariff does not include a regional transmission plan is also
baseless and must be rejected. The tariff clearly provides that the NYISO will produce a
regional transmission plan. Specifically, OATT Attachment Y, Sections 31.2 (establishing the
reliability planning process) and 31.3 (establishing the economic planning process) and 31.4
(establishing the PPR planning process) provide that these processes culminate in the preparation

144 See N.Y. Public Serv. L. §§ 65 (safe and adequate service), 66(2), 72 (improvements to the provision of electric service), 120, et seq. (Article VII - transmission siting).

145 See N.Y. Public Serv. L. § 126(1)(g).

of a regional transmission plan for the NYCA planning region which includes selected solutions.146

LS Power,147 and others,148 also claim that the NYISO’s reliability planning process does not select a “most” efficient or cost effective solution and that it does not result in a regional plan.149 These assertions must be rejected, as the reliability planning process, as modified in the Compliance Filing, fully complies with the Order No. 1000 requirements.150 As a threshold
matter, it must be noted that the LS Power proposal would have the NYISO evaluate and select the “most efficient and cost effective” project to include in the CRP and to proceed to permitting, if required.151 However, Order No. 1000 clearly provides that the NYISO

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. … [and if it is]
determine[d] that an alternative transmission solution is more efficient or cost-
effective than transmission facilities in one more local transmission plans, then
the transmission facilities associated with that more efficient or cost-effective
transmission solution can be selected in the regional transmission plan for
purposes of cost allocation.152

146 See, e.g., 2012 Reliability Needs Assessment Final Report (9/18/2012), available at

,http://www.nyiso.com/public/webdocs/services/planning/reliability_assessments/2012_RNA_Final_Rep
ort_9-18-12_PDF.pdf >; 2010 Comprehensive Reliability Plan Final Report (1/11/2011), available at ,
,http://www.nyiso.com/public/webdocs/services/planning/reliability_assessments/CRP_2010_FINAL_RE
PORT_January_11__2011.pdf .; and 2011 Congestion Assessment and Resource Integration Study,
CARIS - Phase I Final Report (3/20/2012), available at

<http://www.nyiso.com/public/webdocs/services/planning/Caris_Report_Final/2011_CARIS_Final_Repo
rt__3-20-12.pdf>.

147 LS Power at 10.
148 PSEG at 6-7.
149 LS Power at 9-11.

150 §§ 31.2.2.4.2 and 31.2.1.1.3. 151 LS Power at 22-23.

152 Order No. 1000 at P 148.

There is no requirement that the transmission provider must “select” a specific project as the “most” efficient or cost effective. Additionally, Order No. 1000 requires the identification and evaluation of such solutions, as well as the ability of the solutions to be identified in the regional transmission plan, it does not require that a project be built.153 The proposed process clearly complies with these requirements.154

E. The NYISO’s Proposed Entity and Project Qualification and Project Monitoring

Criteria Do Not Discriminate Against Non-Incumbents

LS Power also alleges that the proposed entity qualification criteria discriminate against
non-incumbent developers and act as barriers to entry.155 They take issue with the criteria that
would allow the NYISO to evaluate an entity’s ability to acquire rights of way,156 the rule that a
developer must have the ability to meet the requirements of a valid interconnection request, and
that it must possess the capability to operate and maintain a facility for the life of the project.157
LS Power, however, fails to acknowledge that the listed qualification criteria are not “gateway”
minimum pre-requisites. The proposed language unambiguously provides that the criteria will
be considered, as appropriate, as factors in determining the viability of a project.

As to the objections to specific criteria, the Filing Parties submit that all are reasonable
considerations when making a determination that an entity is qualified to propose a solution.
The ability to acquire rights of way is not a reference to eminent domain, as alleged by LS Power

153 Id. at P 49.

154 Additionally, PSEG’s suggestion that the proposed tariff revisions should be amended to add
language specifying how the NYTOs would address a finding that a more efficient or cost effective
solution exists is unwarranted and goes beyond the scope of this proceeding. See PSEG at 6-7. The
NYISO process complies with the requirements of both Order No. 890 and Order No. 1000 with respect
to regional planning. But, nothing in those Orders limit what a Transmission Owner may do as part of its
local planning process.

155 LS Power at 27-31. 156 Id. at 27-28.

157 Id. at 28.

since rights of way may be acquired through means other than eminent domain, such as by

voluntary purchase or licensing of easements. Further, it is reasonable for one of the

considerations to potentially be whether an entity can operate and maintain a facility for the life
of the project. If an entity submits a project that is selected as a solution, they will reasonably be
expected to be able to operate and maintain such facility for its useful life. There is nothing
discriminatory or onerous about allowing the NYISO, when appropriate, to evaluate an entity’s
ability to do so.

With respect to the objection on the interconnection request criteria, LS Power’s concern
is that incumbent Transmission Owners could use the site control requirements to erect barriers
to entry.158 This concern is unsupported however, as the procedures that would be used in the
interconnection process are the Commission-accepted interconnection procedures that require the
provision of interconnection service on an open access non-discriminatory basis. It should not
be presumed that the incumbent Transmission Owners would not comply with existing tariff

interconnection requirements or that the Commission would permit them to do so.

LS Power also asserts that the Compliance Filing does not include a process to qualify
entities prior to project submittal.159 This argument is incorrect. The proposed qualification
process is a two-step process that provides for pre-qualification prior to the submittal of any
project.160

LS Power’s objections to the use of a trigger date that is tied to a regulated reliability
solution in its project monitoring criteria are unfounded.161 LS Power’s characterization of the

158 Id. at 29.

159 Id. at 30-31.

160 See §§ 31.2.4.1.1, 31.3.4.1.1, 31.4.5.1 (entity pre-qualification criteria) and 31.2.4.1.3,

31.3.2.4.1.3, 31.4.5.3 (entity qualification criteria).

161 LS Power at 12.

trigger date as the “standard by which all other projects must live” is an incorrect representation
of the process. After a reliability need is identified, the NYISO continues to solicit market-based
solutions, which are favored. The trigger date is established to ensure that there will be sufficient
time to implement a regulated solution to be available to provide service by the need date, if no
viable market-based solution is available. However, if a developer has a project with a longer
implementation time and an earlier trigger date, there is nothing in the NYISO planning process
that prevents the developer from seeking siting approval for its project, provided that it has been
found by the NYISO to meet the reliability need. The NYPSC has developed procedures for the
consideration of alternative regulated reliability solutions that are expressly designed to ensure
consideration of alternative regulated solutions with longer lead times than the regulated
backstop solution, including the commencement of a NYPSC proceeding to consider such
solutions.162

Finally, the Filing Parties clarify that the term “entity” in its proposed tariff revisions includes affiliates.163

F.The Proposed Effective Date is Reasonable and Necessary to Ensure the Proper

Implementation of the PPR Planning Process

LS Power objects to the Compliance Filing’s proposed effective date, alleging that it is
unreasonable.164 They assert that it is the “longest effective date proposed to date” and claim

162 Policy Statement on Backstop Project Approval Process, Proceeding to Establish a Long-
Range Electric Resource Plan and Infrastructure Planning Process, Case No. 07-E-1507 (February 18,
2009).

163 LS Power at 30. The Filing Parties have no objection to the Commission ordering an

amendment to the definition of “Other Developer” in Section 31.1.1 to include “and their affiliates” to state “Parties or entities and their affiliates sponsoring or proposing to sponsor regulated economic projects, transmission solutions driven by Public Policy Requirements, or regulated solutions to
Reliability Needs, who are not Transmission Owners.”

164 Id. at 31-32.

that it will give the NYTOs an advantage, due to the Energy Highway Initiative.165 These concerns are without merit and must be rejected.

The effective date requested ensures that the PPR planning process is implemented in a manner that does not disrupt the NYISO’s existing reliability and economic planning
processes.166 As explained in the Compliance Filing, this effective date will allow the analysis of transmission needs driven by PPRs to be based on the most current CRP.167 Accordingly, the
assertion that it is the longest effective date proposed to date is meritless because the proposal simply seeks to conduct PPR planning using the first Comprehensive Reliability Plan that is
approved following approval of the PPR planning process so that public policy planning is
conducted on the foundation of a reliable power grid.

165 Id. at 31.

166See, e.g., Order No. 1000 at P 31 (stating that the Commission’s intent “was not to disrupt the progress being made with respect to transmission planning and investment in transmission
infrastructure”) and P 204 (stating that the Order No. 1000 requirements are “intended to enhance, rather than replace, existing transmission planning obligations under Order No. 890”).

167Compliance Filing Letter at 67-68.

IV. CONCLUSION

WHEREFORE, the New York Independent System Operator, Inc. and the New York

Transmission Owners respectfully request that the Commission: (1) expeditiously issue an order accepting the Compliance Filing, including the proposed Public Policy Requirements planning process, in order to provide regulatory certainty to the NYISO and its stakeholders; and (2) take action on the protests and comments as specified herein.

Respectfully submitted,

NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

By: /s/ Carl F. Patka

Robert E. Fernandez, General Counsel
Ray Stalter, Director of Regulatory Affairs
Carl F. Patka, Assistant General Counsel
New York Independent System Operator, Inc.

10 Krey Boulevard

Rensselaer, NY 12144

Email: rfernandez@nyiso.com Email: rstalter@nyiso.com

Email: cpatka@nyiso.com

Ted J. Murphy
Vanessa A. Colón

Hunton & Williams LLP
2200 Pennsylvania Ave, NW
Washington, DC 20037
Email: tmurphy@hunton.com
Email: vcolon@hunton.com

J. Kennerly Davis

Hunton & Williams LLP 951 East Byrd Street

Richmond, VA 23219
Email: kdavis@hunton.com

NEW YORK TRANSMISSION OWNERS

By: /s/ Elias G. Farrah

Elias G. Farrah

Winston & Strawn, LLP 1700 K Street, NW

Washington, DC 2006-3817
Email: efarrah@winston.com

*Paul L. Gioia

Whiteman Osterman & Hanna LLP One Commerce Plaza

Albany, NY 12260

Email: pgioia@plg26.com

/s/ John Borchert/s/ Neil H. Butterklee

John BorchertConsolidated Edison Company of New York, Inc.

Manager of Electric Engineering ServicesOrange and Rockland Utilities, Inc.

Central Hudson Gas & Electric CorporationNeil H. Butterklee

284 South AvenueAssistant General Counsel

Poughkeepsie, NY 12601Consolidated Edison Co.

Email: jborchert@cenhud.comof New York, Inc.

4 Irving Place
Room 1815-s

New York, NY 10003

Email: butterkleen@coned.com

/s/ Jacqueline Hardy/s/ Andrew Neuman

Jacqueline HardyNew York Power Authority

Assistant General CounselAndrew Neuman, Esq.

Long Island Power AuthorityNew York Power Authority

333 Earle Ovington Boulevard123 Main Street

Suite 403White Plains, NY 10601-3170

Uniondale, NY 11553Email: andrew.neuman@nypa.gov

Email: jhardy@lipower.org

William Palazzo, Director Market Issues

David ClarkeNew York Power Authority

Director of Power Markets Policy123 Main Street

LIPAWhite Plains, NY 10601-3170

99 Washington AvenueEmail: william.palazzo@nypa.gov

10th Floor

Albany, NY 12210-2822

Email: dclarke@lipower.org

/s/ Daniel Galaburda

/s/ R. Scott MahoneyNiagara Mohawk Power Corporation

R. Scott Mahoney, Esq.d/b/a/ National Grid

New York State Electric & Gas CorporationNational Grid USA Service Company, Inc.

Rochester Gas and Electric CorporationAssistant General Counsel and Director

Durham Hall, 52 Farm View Drive40 Sylvan Road

New Gloucester, ME 04260Waltham, MA 02451-1120

Email: scott.mahoney@iberdrolausa.comEmail: daniel.galaburda@us.nrid.com

Bart Franey

Director of Federal Regulation

Niagara Mohawk Power Corporation d/b/a National
Grid

300 Erie Boulevard West
Syracuse, NY 13202

CERTIFICATE OF SERVICE

I hereby certify that I have this day caused the foregoing document to be served upon each person designated on the official service list compiled by the Secretary in this proceeding in accordance with the requirements of Rule 2010 of the Commission Rules of Practice and Procedure, 18 C.F.R. § 385.2010 (2012).

Dated at Washington, D.C. this 11th day of December, 2012.

/s/ Catherine Karimi

Catherine Karimi

Sr. Professional Assistant

Hunton & Williams LLP

2200 Pennsylvania Ave., NW
Washington, DC 20037
Tel: (202) 955-1500
Fax: (202) 778-2201