Amanda C. Downey
Counsel

December 19, 2014

The Honorable Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First Street, NE

Washington, DC 20426

Re:Niagara Mohawk Power Corporation, d/b/a National Grid

Docket No. ER15-___-000

Filing of Cost Reimbursement Agreement with New York Power Authority

Dear Secretary Bose:

Pursuant to Section 205 of the Federal Power Act (“FPA”),1 and Part 35 of the
Federal Energy Regulatory Commission’s (“Commission”) regulations,2 Niagara
Mohawk Power Corporation d/b/a/ National Grid (“National Grid”) submits a Cost
Reimbursement Agreement (“Reimbursement Agreement”) between National Grid and
the New York Power Authority (“NYPA”). The Reimbursement Agreement is
designated as Service Agreement No. 2177 under the New York Independent System
Operator, Inc.’s (“NYISO”) Open Access Transmission Tariff (“OATT”).

The Reimbursement Agreement is an undisputed agreement between National
Grid and NYPA pursuant to which National Grid will engineer, design, procure,
construct, test, and commission replacement or upgrade facilities on the National Grid
transmission system that are directly affected by NYPA’s planned installation of new
Series Compensation Equipment on the existing Edic-Frazier 345 kV transmission line.
National Grid respectfully requests that the Commission accept the Reimbursement
Agreement for filing effective as of November 21, 2014, the effective date set forth in
the Reimbursement Agreement.

I.Background

National Grid is a public utility with a transmission system in the State of New
York. NYPA is a corporate instrumentality of the State of New York with its own
transmission system in the State of New York. Both National Grid and NYPA have
placed their transmission systems under the operational control of the NYISO.

16 U.S.C. § 824d.

18 C.F.R. Part 35.

The Honorable Kimberly D. Bose December 19, 2014

Page 2

NYPA plans to install new Series Compensation Equipment on the existing

Edic-Frazier 345 kV transmission line (the Marcy South Series Compensation Project
or the “Project”). NYPA has undertaken a study of adjoining transmission facilities and
has identified equipment on National Grid’s transmission system that will require
National Grid to engineer, design, procure, construct, test, and commission replacement
or upgrade facilities as part of the Project. The scope of this work addressed in the
Reimbursement Agreement covers National Grid facilities that are directly affected by
the Project.3

II. Description of the Reimbursement Agreement and Filing Requirements

Pursuant to the Reimbursement Agreement, NYPA will reimburse National Grid
for the actual costs and expenses incurred in connection with work performed by
National Grid as part of the Project. The Reimbursement Agreement sets forth the
terms and conditions of this work and certain related commitments by NYPA. The
Reimbursement Agreement includes provisions addressing the performance and
schedule of the work, liability and indemnification, insurance, and various standard
provisions for utility cost reimbursement agreements. National Grid and NYPA entered
into the Reimbursement Agreement on November 21, 2014, the effective date specified
in the Reimbursement Agreement.

Section 205 of the FPA authorizes the Commission to require public utilities to
file all rates and charges that are “for or in connection with,” and all agreements that
“affect or relate to,” jurisdictional transmission service or sales of electric energy.4 In
the Prior Notice Order, the Commission stated that the types of agreements that a public
utility must file include “a jurisdictional CIAC agreement,” which is defined as an
“agreement providing for the customer payment of contributions-in-aid-of-
construction” of facilities used to provide jurisdictional service, either in a single lump
sum or over a period of time.5 Commission precedent also indicates that engineering
and pre-construction agreements related to jurisdictional facilities can be construed as
CIAC agreements.6

The Reimbursement Agreement relates to the recovery of costs for facilities which include jurisdictional facilities and for engineering, procurement, and

Reimbursement Agreement, Recitals and Schedule A.

16 U.S.C. §§ 824d(a)-(c) (2006).

Prior Notice and Filing Requirements Under Part II of the Federal Power Act, 64 FERC ¶

The Honorable Kimberly D. Bose December 19, 2014

Page 3

construction services covering National Grid replacement or upgrade facilities that are directly affected by the Project. Therefore, the Commission will likely find it to be a CIAC agreement that must be filed.

National Grid is performing these services at actual cost as set forth in Article 1
to the Reimbursement Agreement and has not collected any funds pursuant to the
Reimbursement Agreement prior to its submittal of the instant filing.7 The costs of
these services are properly allocated to NYPA because these services have been
requested by NYPA to facilitate the construction of the Project. The Commission
should find the price of the services to be performed pursuant to the Reimbursement
Agreement to be just and reasonable because National Grid will perform these services
at actual cost.

III.Effective Date

The Commission’s regulations provide for service agreements to be filed not more than 30 days after service under the agreements has commenced.8 As discussed above, National Grid and NYPA intend that the Reimbursement Agreement go into effect as of November 21, 2014, i.e., fewer than 30 days before National Grid filed the Reimbursement Agreement. Therefore, National Grid requests that the Commission accept the Reimbursement Agreement effective November 21.

See Reimbursement Agreement, Section 1.0, definition of “Company Reimbursable Costs.” See

also id. at Section 11.1 (stating that National Grid “is not in the business of performing design,

engineering, or construction services for profit and is not receiving any fee or profit (as contrasted with cost reimbursement) for its performance of the work hereunder”). Section 7.1 of the Reimbursement Agreement states that National Grid will invoice NYPA for an initial prepayment of $590,000 within 30 days after the effective date of the Reimbursement Agreement, and NYPA will pay the initial prepayment to National Grid within 30 days after NYPA receives the invoice. National Grid has not yet issued the invoice for the initial prepayment and NYPA has not yet paid it.

The Honorable Kimberly D. Bose December 19, 2014

Page 4

IV.Communications and Service

Communications regarding this filing should be addressed to the following

individuals, whose names should be entered on the official service list maintained by

the Secretary for this proceeding:

Amanda C. Downey Counsel

National Grid USA
Service Company, Inc.

40 Sylvan Road

Waltham, MA 02451 Tel: 781-907-2136

amanda.downey@nationalgrid.com

William L. Malee

Director, Transmission Commercial National Grid USA

40 Sylvan Road

Waltham, MA 02451 (781) 907-2422

bill.malee@nationalgrid.com

Sean A. Atkins

Bradley R. Miliauskas Alston & Bird LLP The Atlantic Building 950 F Street, NW

Washington, DC 20004 Tel: 202-239-3300

Fax: 202-239-3333

sean.atkins@alston.com
bradley.miliauskas@alston.com

Copies of this filing have been served on NYPA, the NYISO, and the New York State Public Service Commission.

V.Conclusion

For the reasons stated herein, National Grid respectfully requests that the

Commission accept the Reimbursement Agreement effective as of November 21, 2014.

Respectfully submitted,

/s/ Amanda C. Downey

Amanda C. Downey
Counsel

National Grid USA

Service Company, Inc.

40 Sylvan Road

Waltham, MA 02451

Attorney for Niagara Mohawk Power
Corporation d/b/a National Grid