REQUEST FOR LEAVE TO ANSWER AND LIMITED ANSWER OF
THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

In accordance with Rule 213 of the Commission’s Rules of Practice and Procedure,1 the
NYISO respectfully submits this request for leave to answer and limited answer to the Motion
for Leave to Answer and Answer of Hudson Transmission Partners, LLC (“HTP Answer”) in this
proceeding. The HTP Answer responded to the answer that the NYISO filed on March 31, 2014
in this proceeding (“March Answer”).2 This Limited Answer is confined to addressing the HTP
Answer’s assertions: (i) related to Ancillary Services3 revenues, which are principally contained
in the confidential portion of the HTP Answer; and (ii) that the NYISO has somehow “reversed
its position” regarding the nature of the scaling factor calculation. While the NYISO strongly
disagrees with all of the other assertions in the HTP Answer, it is not responding to them in

deference to the Commission’s procedural rules and because it is confident that the deficiencies

1 18 C.F.R. § 385.213 (2012).

2 Request for Leave to Answer and Answer of the New York Independent System Operator, Inc.,
(filed Mar. 31, 2014). The March Answer was filed in response to HTP’s March 14, 2014 protest of the
NYISO’s February 21, 2014 filing in compliance with the Commission’s November 21, 2013 order in this
proceeding. See Protest of Hudson Transmission Partners, LLC (filed Mar. 14, 2014) (“HTP Protest”),
Initial Compliance Filing (filed Feb. 21, 2014) (the “February Filing”); and Hudson Transmission
Partners, LLC v. New York Indep. Sys. Operator, Inc., 145 FERC ¶ 61,156 (2013) (“November Order”).

3 Capitalized terms not otherwise defined herein shall have the meaning specified in the Services
Tariff.

PUBLIC VERSION -- THIS PLEADING DOES NOT CONTAIN ANY PRIVILEGED OR CONFIDENTIAL INFORMATION. ATTACHMENTS A AND B CONTAIN HIGHLY SENSITIVE PROTECTED MATERIALS AND PRIVILEGED AND CONFIDENTIAL INFORMATION, AND ARE SUBMITTED SEPARATELY.

of those assertions will be obvious to the Commission.4 The NYISO’s silence on these matters therefore should not be interpreted as agreement with or acquiescence to them.

I. REQUEST FOR LEAVE TO ANSWER AND ANSWER

The Commission has discretion5 to accept answers to other answers and has done so

when they help to clarify complex issues, provide additional information, or are otherwise

helpful to its decision-making process.6 The Commission should accept the NYISO’s answer in this instance because it will clarify the record with respect to the assertions made in the
confidential portion of the HTP Answer and correct HTP’s misleading statements and
characterizations.

A.The NYISO’s Approach to Projecting the HTP Project’s Ancillary Services

Revenues Was Reasonable

The HTP Protest claimed that the NYISO had failed “to take into account all sources of
non-capacity revenues that a merchant transmission facility may earn, in particular revenues
from ancillary services..... ”7 Confidential Attachment B to the March Answer responded to

this claim. The HTP Answer states that the assertions in Confidential Attachment B were

partially incorrect for reasons specified in its own confidential attachment. The HTP Answer
also contends that the NYISO’s statement has raised issues that “go beyond the appropriate

4 The NYISO would note, however, that it takes strong exception to the HTP Answer’s inaccurate claim, at n. 4, that the NYISO’s compliance with the Protective Order in this proceeding was in any way “improper.” The NYISO adhered to the Protective Order’s express requirements, which did not give it the discretion to make the kind of exception that HTP apparently wanted.

5 See 18 C.F.R. § 385.213(a)(2).

6 See, e.g., PJM Interconnection, L.L.C., 119 FERC ¶ 61,318 at P 36 (2007) (answer to answer accepted that “provided information that assisted . . . decision-making process”) and California
Independent System Operator Corporation, 110 FERC ¶ 61,007 (2005) (answer to answer permitted to assist Commission in decision-making process).

7 HTP Protest at 2.

method and data for projecting HTP’s energy revenues . . . ,” that “[s]uch issues should only be addressed (if at all) in a separate Commission proceeding . . . ,” and that the Commission should not make any determinations in this docket “regarding HTP’s eligibility to receive compensation for ancillary services it provides.”8

The NYISO responds fully to HTP’s first assertion, concerning the accuracy of the March
Answer, and corrects the limited error, which was only temporal in nature, in Confidential
Attachments A and B to this Answer.9 As is explained in Confidential Attachment B, the
Supplemental Affidavit of Daniel A. Jerke, the NYISO staff and outside counsel that participated
in the preparation of the March Answer were unaware of certain facts, notwithstanding diligent
efforts to ensure the completeness and accuracy of the March Answer. The NYISO regrets the
inclusion of the erroneous phrase, fully understands the importance of avoiding errors in its
communications with the Commission, and is taking internal steps to ensure that such an error
will not recur.

The NYISO’s error does not, however, lend any support to the HTP Protest’s claims that
the NYISO should have accounted for Ancillary Services revenues when it applied a scaling
factor to the HTP Project, nor in any other aspect of the buyer-side mitigation determination for
the HTP Project. Its irrelevance is explained in greater detail in the Confidential Attachments.
HTP’s remaining assertions are irrelevant and misleading. The NYISO has not asked the Commission to make any determination regarding the eligibility of HTP’s merchant transmission

8 HTP Answer at 2

9 The body of this Answer does not contain any Confidential Information or Highly Sensitive

Protected Material. The NYISO incorporated into the body of this Answer the information on the topics set forth in Confidential Attachments A and B that is not Confidential Information and Highly Sensitive Protected Materials, making the provision of a redacted version unnecessary. Therefore, redacted
versions of Attachments A and B, blacking out certain information, are not provided.

facility (the “HTP Project”) to provide Ancillary Services. It therefore agrees that there is no
reason to do so in this proceeding. The March Answer, like the February Filing in compliance
with the November Order’s directive, was confined to demonstrating that the NYISO employed
the “appropriate method and data for projecting HTP’s energy revenues... ” As Confidential

Attachments A and B hereto explain, nothing in the HTP Answer should give rise to a concern that the method and data used by the NYISO in the scaling factor (or in any other aspect of the buyer-side mitigation determination issued for the HTP Project) were incorrect. In addition, as explained in the March Answer, “[t]he scaling factor was applied solely to determine the HTP
Project’s projected net Energy revenues so consideration of HTP’s assertion [regarding Ancillary Services], although disposed of by confidential Attachment A [to the March Answer], is beyond the scope of the Compliance Filing.”10

B.The March Answer Did Not “Reverse” or “Contradict” Any Prior NYISO

Statements

The HTP Answer claims that the March Answer “reversed” or “contradicted” statements
made in earlier NYISO filings regarding the nature of the scaling factor calculation.11 HTP goes
so far as to suggest that there is “no legal basis for the Commission to affirm the NYISO’s
approach where the NYISO changes its position from filing to filing and even within the same
filing.”12

10 March Answer at 7.

11 See HTP Answer at 2-4.

12 Id. at 7.

HTP’s assertions are based on a misinterpretation of the NYISO’s earlier pleadings, and
are misleading. The HTP Answer, like the HTP Protest,13 distorts the clear meaning of the
February Filing. To clarify any confusion in the record due to the HTP Answer, the NYISO
emphasizes that all of its statements on this issue are entirely consistent. The HTP Answer
makes them appear to be otherwise by taking the statements out of context and by dropping
relevant language from when it quotes them.14 Simply stated, it was consistent for the March
Answer to both: (i) state that the HTP Protest’s proposed “multi-value” scaling factor function is
flawed, in that it appropriately depends on the magnitude of individual price spreads; and (ii)
reiterate the February Filing’s statement that the consistency of the direction of price spreads, as
illustrated by average spreads, is materially different for UDR projects sinking in Long Island as
compared to UDR projects sinking in New York City, and that this is relevant to the scaling
factor calculation.

II.CONCLUSION

WHEREFORE, the NYISO respectfully requests that the Commission accept this limited Answer and renews its request that the Commission accept the February Filing without requiring any modifications or imposing any conditions and reject all relief sought by HTP in its various pleadings for the reasons set forth above.

Respectfully Submitted,

/s/ Gloria Kavanah

Gloria Kavanah
Senior Attorney

New York Independent System Operator, Inc.

13 See, e.g. HTP Protest at 3, 16.

14 See e.g. id. at n. 8.

CERTIFICATE OF SERVICE

I hereby certify that I have this day caused a public version of the foregoing document to
be served on the official service list compiled by the Secretary in this proceeding, and have
caused to be served the confidential version of the foregoing, which consists solely of
Confidential Attachments A and B, on individuals who are Reviewing Representatives for
Highly Sensitive Protected Materials pursuant to paragraph 10(b) of the Protective Order issued
in this docket.

Dated at Washington, D.C. this 23rd day of April, 2014.

/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

ATTACHMENT A

ATTACHMENT B