10 Krey Boulevard  Rensselaer, NY 12144

May 18, 2015

By Electronic Delivery

Ms. Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First St, NE

Washington, DC 20426

Re: New York Independent System Operator, Inc. and New York Transmission Owners,
Compliance Filing, Docket Nos. ER13-102-005, -006

Dear Ms. Bose:

The New York Independent System Operator, Inc. (“NYISO”) and the New York

Transmission Owners (“NYTOs”)1 hereby jointly submit this compliance filing to fulfill the

directives of the Federal Energy Regulatory Commission (“Commission”) in its April 16, 2015, Order on Rehearing and Compliance in the above-captioned proceedings (“April 2015 Order”).2 The NYISO and NYTOs are referred to jointly in this filing as the “Filing Parties.”3

The Filing Parties submit the proposed revisions described in Parts IV through VI of this
filing letter to the NYISO’s Open Access Transmission Tariff (“OATT”). The proposed tariff
revisions comply with the Order No. 1000 regional transmission planning requirements4 and the

1 The NYTOs are Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., Long Island Lighting Company d/b/a LIPA (“LIPA”), New York Power Authority
(“NYPA”), New York State Electric & Gas Corp., Niagara Mohawk Power Corp. d/b/a National Grid, Rochester Gas & Electric Corp., and Orange & Rockland Utilities, Inc. The Filing Parties note that LIPA and NYPA, as transmission owners not subject to the Commission’s jurisdiction under section 205 of the Federal Power Act, have voluntarily participated in the development of this filing. The Filing Parties each reserve the right to comment separately on this filing.

2 New York Independent System Operator, Inc., Order on Rehearing and Compliance, 151 FERC ¶ 61,040 (2015) (“April 2015 Order”).

3 Capitalized terms that are not otherwise defined in this filing letter shall have the meaning

specified in Attachment Y of the NYISO OATT, and if not defined therein, in the NYISO OATT and the NYISO Market Administration and Control Area Services Tariff.

4 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public
Utilities, Order No. 1000, 136 FERC ¶ 61,051 (2011) (“Order No. 1000”), order on reh’g and
clarification, Order No. 1000-A, 139 FERC ¶ 61,132 (2012) (“Order No. 1000-A”), order on reh’g and
clarification, 141 FERC ¶ 61,044 (2012) (“Order No. 1000-B”). For convenience, unless otherwise

Commission’s directives in its April 2015 Order. The proposed tariff revisions are expressly
required by the directives in the April 2015 Order, are necessary to implement or clarify the
existing tariff language to accommodate those directives, or are non-substantive organizational
or clarifying adjustments. Including all of these revisions in this compliance filing will make the
NYISO’s Order No. 1000-related tariff provisions clearer and more accurate, and are therefore
consistent with Commission precedent.5 As described in Part VII below, the Filing Parties
request that the Commission accept the proposed tariff revisions with an effective date of
January 1, 2014, which was the date on which the NYISO’s current 2014-2015 transmission
planning cycle commenced, and is the effective date for which the Commission has accepted all
of the Filing Parties’ prior Order No. 1000 regional transmission planning related revisions to the
NYISO’s tariffs.

The Filing Parties respectfully submit that - with the proposed tariff revisions set forth in this supplemental compliance filing - they fully comply with the requirements set forth in Order No. 1000 and the April 2015 Order.

I.COMMUNICATIONS

Communications and correspondence regarding this filing should be directed to:

specified, references in this filing to “Order No. 1000” should be understood to encompass Order Nos.
1000, 1000-A, and 1000-B. The NYISO’s and the NYTOs’ compliance with the Order No. 1000
interregional transmission planning requirements is addressed in Docket No. ER13-1942-000. On May
14, 2015, the Commission largely accepted, subject to further compliance filings due in 60 days, the July
10, 2013, joint interregional planning compliance filings by the NYISO, PJM Interconnection, L.L.C.,
ISO New England Inc., and the NYTOs in their respective regions, to expand the Northeastern ISO/RTO
Planning Coordination Protocol and provide for consideration and cost allocation for potential
interregional transmission projects.

5 The Commission has previously authorized the NYISO to include these kinds of limited, but
necessary, clarifications in compliance filings and should follow that precedent here. See New York
Independent System Operator, Inc., 125 FERC ¶ 61,206 (2008), reh’g, 127 FERC ¶ 61,042 (2009)
(accepting proposed additional tariff revisions that were necessary to implement the modifications
directed by the Commission and to correct drafting errors or ambiguities in a compliance filing).

6 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3) (2014)) is requested to the extent necessary to permit service on counsel for the NYISO in Rensselaer, NY, Richmond, VA and
Washington, DC.

cpatka@nyiso.com

Company representatives listed in Attachment I

*Persons designated to receive service

II.LIST OF DOCUMENTS SUBMITTED

Riverfront Plaza, East Tower 951 East Byrd Street

Richmond, VA 23219
Tel: (804) 788-8712
Fax: (804) 343-4646

mmessonnier@hunton.com

*Elias G. Farrah

Winston & Strawn LLP 1700 K Street, NW

Washington, DC 20006-3817 Tel: (202) 282-5503

efarrah@winston.com

*Paul L. Gioia

Whiteman Osterman & Hanna LLP One Commerce Plaza

Albany, NY 12260
Tel: (518) 487-7624
pgioia@woh.com

The Filing Parties respectfully submit the following documents:

1. This filing letter;

2. A list of the company representatives for the NYTOs (“Attachment I”);

3. A blacklined version of the NYISO OATT sections 31.1, 31.2, 31.4, and 31.7
containing the proposed compliance modifications (“Attachment II”);7

4. A clean version of the NYISO OATT sections 31.1, 31.2, 31.4, and 31.7 containing
the proposed compliance modifications (“Attachment III”); and

5. A clean version of the NYISO OATT section 31.2 incorporating the revisions to
Section 31.2 that became effective May 1, 2015 (“Attachment IV”).

7 Section 31.2 of the NYISO OATT included in Attachments II and III does not reflect language
that is presently effective as accepted in New York Independent Operator, Inc., Order Conditionally
Accepting In Part and Rejecting In Part Proposed Tariff Changes and Directing Compliance Filing, 151
FERC ¶ 61,075 (2015) (accepting revisions to Section 31.2.10 of the NYISO OATT, effective May 1,
2015). The revisions to Section 31.2.10 effective May 1, 2015, have been omitted from Section 31.2 in
Attachments II and III solely for purposes of the etariff filing because the Filing Parties have requested
that the tariff language proposed in this filing have an earlier effective date, i.e., January 1, 2014, as
described in Part VII below.

III.BACKGROUND

In response to the Order No. 1000 regional transmission planning and cost allocation
directives, the Filing Parties have submitted compliance filings to revise the NYISO’s tariff
requirements for its Comprehensive System Planning Process (“CSPP”), which is composed of
the NYISO’s reliability, economic, and public policy planning processes.8 The Commission has
largely accepted the NYISO’s revised CSPP as compliant with the Order No. 1000
requirements.9 The April 2015 Order directed the Filing Parties to submit a further compliance
filing to make a small number of additional tariff revisions and to include within the NYISO’s
tariffs a pro forma development agreement between the NYISO and the developer of an
alternative regulated transmission solution selected in the NYISO’s reliability planning process
as the more efficient or cost-effective solution to a Reliability Need (“Development
Agreement”). The NYISO discussed the tariff revisions developed in response to the directives
of the April 2015 Order with stakeholders in its Electric System Planning Working Group
(“ESPWG”) on May 4, 2015 and May 12, 2015, and made additional revisions based on
stakeholder input. As described below, these stakeholder discussions were in addition to
previous stakeholder discussions and comments regarding the Development Agreement.

In response to the April 2015 Order’s directives, the Filing Parties propose the additional revisions to the NYISO’s tariffs, including the submission of a pro forma Development
Agreement, as described in Parts IV through VI of this filing letter.

IV.JURISDICTION OVER DISPUTES RELATED TO PUBLIC POLICY

TRANSMISSION PLANNING PROCESS

Under the NYISO’s Public Policy Transmission Planning Process, the New York Public
Service Commission (“NYPSC”) is responsible for identifying the Public Policy Transmission
Needs for which the NYISO must solicit and evaluate transmission solutions. Similarly, the
Long Island Power Authority (“LIPA”) is responsible for identifying transmission needs driven
by Public Policy Requirements within the Long Island Transmission District. Sections 31.4.2.2
and 31.4.2.3(vi) of Attachment Y of the NYISO OATT indicate that a dispute regarding a
NYPSC or LIPA determination to accept or deny a proposed transmission need “shall be
addressed through judicial review in the courts of the State of New York pursuant to Article 78
of the New York Civil Practice Law and Rules.” As directed by the April 2015 Order,10 the
Filing Parties propose to revise these provisions to clarify that these dispute processes apply only
to disputes “solely within the NYPSC’s jurisdiction” or “solely within the Long Island Power
Authority’s jurisdiction.”

8 See New York Independent System Operator, Inc. and New York Transmission Owners,

Compliance Filing, Docket No. ER13-102-001, -002, -004 (September 15, 2014); New York Independent System Operator, Inc. and New York Transmission Owners, Compliance Filing, Docket No. ER13-102-
002 (October 15, 2013); New York Independent System Operator, Inc. and New York Transmission
Owners, Compliance Filing, Docket No. ER13-102-000 (October 11, 2012).

9 See April 2015 Order; New York Independent System Operator, Inc., Order on Rehearing and Compliance, 148 FERC ¶ 61,044 (2014) (“July 2014 Order”); New York Independent System Operator, Inc., Order on Compliance Filing, 143 FERC ¶ 61,059 (2013).

10 April 2015 Order at PP 58-59, 91.

V.RELIABILITY PLANNING PROCESS

To ensure that Reliability Needs will be timely satisfied, the NYISO may under certain
circumstances direct a Responsible Transmission Owner to proceed with the development of a
regulated backstop solution in parallel with an alternative regulated transmission solution that
has been selected by the NYISO as the more efficient or cost-effective solution to the Reliability
Need. Section 31.2.8.1.3 addresses one such scenario in which the Trigger Date for a selected
alternative regulated transmission solution precedes the Trigger Date for a regulated backstop
solution.11 In such case, assuming there are not sufficient market-based solutions to satisfy a

Reliability Need, the NYISO will trigger the selected alternative regulated transmission solution to proceed at its Trigger Date.

Prior to the later Trigger Date of the regulated backstop solution, the NYISO will review
the status of the development of the selected alternative regulated transmission solution to
determine whether it is necessary to trigger the regulated backstop solution as well to ensure that
the identified Reliability Need is satisfied. In making its triggering decision, the NYISO will
consider a number of factors in reviewing the status of the selected alternative regulated
transmission solution, including whether the developer has “received its Article VII certification
or other applicable siting permits or authorizations under New York State law.” The April 2015
Order found that, as currently described in Section 31.2.8.1.3, the permits or authorizations
factor could be read as “a de facto condition, rather than one of numerous factors, that NYISO
considers in determining whether to trigger a regulated backstop solution.”12 The April 2015
Order directed the Filing Parties to clarify that the permits or authorizations factor “be treated as
just one factor in NYISO’s determination whether to trigger the regulated backstop solution.”13

The Filing Parties propose to revise Section 31.2.8.1.3 to make clear that the NYISO will consider a non-exhaustive list of factors in reviewing the status of the selected alternative
regulated transmission solution, which will include, but not be limited to: (i) whether the
Developer has executed a Development Agreement or requested that it be filed unexecuted with the Commission; (ii) whether the Developer is timely progressing against the milestones set forth in the Development Agreement, and (iii) the status of the Developer’s obtaining required permits or authorizations, including whether the Developer has received its Article VII certification or other applicable siting permits or authorizations under New York State law.

The April 2015 Order also noted the existence of similar requirements in Section

31.2.8.2.2 (now Section 31.2.8.2.1) describing the factors the NYISO will consider in reviewing
the status of the selected alternative regulated transmission solution when determining whether to
halt a previously-triggered regulated backstop solution. For purposes of maintaining internally
consistent requirements, the Filing Parties propose to revise Section 31.2.8.2.1 to provide that the

11 As defined in Section 31.1.1 of Attachment Y of the OATT, “Trigger Date” means “[t]he date by which the ISO must request implementation of a regulated backstop solution or an alternative
regulated solution pursuant to Section 31.2.8 in order to meet a Reliability Need.”

12 April 2015 Order at P 50.

13 Id. at P 51.

NYISO will consider the same factors regarding the status of the selected alternative regulated transmission solution in determining whether to halt a regulated backstop solution as it does when it considers whether to trigger the regulated backstop solution.

VI.DEVELOPMENT AGREEMENT

A.Background of Development Agreement

The Filing Parties’ Order No. 1000-related tariff revisions to the NYISO’s reliability
planning process established a requirement that the Developer14 of an alternative regulated
transmission solution that is selected by the NYISO as the more efficient or cost-effective
solution to a Reliability Need must execute an agreement with the NYISO concerning the
development and construction of its project, including providing construction milestones
necessary for the project to achieve its required in-service date.15 This requirement applies

equally to a Transmission Owner or an Other Developer that proposed the selected alternative regulated transmission solution.16

The purpose of the agreement is to provide the NYISO with a mechanism for ensuring
that the selected project will be constructed and placed in-service in time to satisfy an identified
Reliability Need. Without the agreement, the Developer of the selected alternative regulated
transmission solution would not be contractually obligated to timely develop and construct its
project, which was selected by the NYISO and is needed to preserve transmission system
reliability.17 The agreement bridges the gap between the NYISO’s tariff requirements for the
selection of the project and the Developer turning over operational control of the completed
transmission facilities to the NYISO in accordance with an operating agreement entered into
with the NYISO.

14 The Developer of an alternative regulated transmission solution may be either a Transmission Owner or an Other Developer. See OATT, Att. Y, Section 31.1.1.

15 OATT, Att. Y, Section 31.2.8.1.6.

16 The Responsible Transmission Owner of a regulated backstop solution is not required under

Attachment Y to enter into a development agreement, as it is already obligated to develop and construct a
regulated backstop solution to address Reliability Needs pursuant to its legal obligations under New York
State law and the Agreement Between the New York Independent System Operator, Inc. and the New York
Transmission Owners on the Comprehensive Planning Process for Reliability Needs entered into in June
2010.

17 This is particularly true of a non-incumbent Developer that has not entered into operation and
that may not have any legal obligation under the New York Public Service Law to prevent it from
abandoning its project, and that is not bound to provide safe and adequate electric service, build power
lines and other improvements, and provide electric service as an electric corporation as defined under
New York law. See, e.g., N.Y. Pub. Serv. L. § 2(13) (defining “electric corporation); N.Y. Pub. Serv. L. §

65 (requiring “electric corporations” to “furnish and provide such service, instrumentalities and facilities
as shall be safe and adequate and in all respects just and reasonable”); N.Y. Pub. Serv. L. § 66(2)
(requiring “electric corporations” to make “reasonable improvements and extensions of the works, wires,
poles, lines, conduits, ducts and other such reasonable devices, apparatus and property of . . . electric
corporations”).

Subsequent to the Commission’s acceptance in its July 2014 order of the tariff

requirement that a developer enter into a Development Agreement (OATT § 31.2.8.1.6), the

NYISO began to develop a pro forma Development Agreement for inclusion as Appendix C in
Section 31.7 of Attachment Y of the OATT, as well as related revisions to Section 31.2 of
Attachment Y of the NYISO OATT to accommodate the terms of the agreement.18 In
developing the agreement, the NYISO drew in part on the terms and conditions included in
related agreements and tariff provisions already reviewed and accepted by the Commission,
including the Designated Entity Agreement developed by PJM Interconnection, L.L.C.
(“PJM”),19 the Approved Project Sponsor Agreement developed by the California Independent
System Operator Corporation (“CAISO”),20 the NYISO’s pro forma Large Generating
Interconnection Agreement (“LGIA”) contained in Attachment X of the NYISO OATT, and the
NYISO’s existing tariffs. Beginning in January 2015, the NYISO reviewed the draft agreement
and related tariff revisions with stakeholders on several occasions in its ESPWG.21 Stakeholders
provided written comments and suggested amendments to the draft agreement and the related
tariff revisions. The NYISO reviewed and made certain revisions based on stakeholder input.

The April 2015 Order directed the Filing Parties to file the pro forma Development
Agreement in a supplemental compliance filing.22 Following the order, the NYISO held
additional stakeholder discussions regarding the Development Agreement and related tariff
revisions at the May 4 and May 12 ESPWG meetings. Notwithstanding the numerous

18 Before the Commission issued the April 2015 Order, the NYISO was already developing tariff
changes that would require a Developer to enter into a Development Agreement for a Public Policy
Transmission Project, as well as other tariff changes to clarify the Public Policy Transmission Planning
Process for its implementation for the first time later this year. Those tariff changes have been approved
by the appropriate NYISO stakeholder committees and will be reviewed by the NYISO’s Board of
Directors at its June 2015 meeting. The NYISO intends to file the tariff changes by the end of June 2015,
and will begin developing a separate pro forma Development Agreement for Public Policy Transmission
Projects in anticipation of a Commission determination approving the tariff clarifications. With respect to
the economic planning process, the NYISO does not believe that a pro forma Development Agreement is
required at this time because economic planning projects may only proceed based upon a voluntary 80
percent weighted super-majority vote of the NYISO’s stakeholders. Because it is purely voluntary, and is
not driven by reliability imperatives or governmental policy priorities, an economic congestion project
could enter into service based on the schedule determined by the Developer and stakeholders supporting
the project.

19 See PJM Interconnection, L.L.C., Ltr. Order, Docket Nos. ER13-198-005, ER14-2426-001
(November 18, 2014); PJM Interconnection, L.L.C., Order Conditionally Accepting Proposed
Agreements Subject to Further Compliance Filing, 148 FERC ¶ 61,187 (2014) (“PJM September 2014
Order”).

20 See California Independent System Operator Corporation, Ltr. Order, Docket No. ER14-2824-
001 (February 12, 2015); California Independent System Operator Corporation, Order Conditionally Accepting Tariff Revisions, 149 FERC ¶ 61,107 (2014) (“CAISO November 2014 Order”).

21 Prior to the April 2015 Order, the NYISO discussed the draft Development Agreement and related tariff revisions with stakeholders at the January 6, 2015, February 3, 2015, and March 3, 2015 ESPWG meetings and solicited and received additional written comments from stakeholders.

22 April 2015 Order at P 23.

stakeholder discussions, full stakeholder consensus was not achievable on certain aspects of the Development Agreement. Responses to significant, substantive stakeholder comments are
included in the description of the agreement below.

B. Description of the Development Agreement

The Development Agreement sets forth the rights and obligations of: (i) the Developer of
an alternative regulated transmission solution that was selected by the NYISO as the more
efficient or cost-effective transmission solution to an identified Reliability Need (“Transmission
Project”) and (ii) the NYISO, with regard to the Developer’s development, construction, and
placing in-service of the Transmission Project in time to satisfy an identified Reliability Need by
the need date (“Required Project In-Service Date”). The NYISO has no responsibility under the
agreement to develop or construct the Transmission Project. Rather, the NYISO is responsible
for monitoring the Developer’s development of the Transmission Project and evaluating
proposed changes to the timing and parameters of the Transmission Project to provide that it is
developed and constructed consistent with the proposal selected in the NYISO’s competitive
selection process and is placed in-service by the Required Project In-Service Date.

A summary and explanation of the sections of the Development Agreement follows.

1.Recitals

The recitals describe the background of, and the parties’ reasons for entering into, the

Development Agreement. In short: The NYISO has selected Developer’s Transmission Project
in its reliability planning process as the more efficient or cost-effective solution to a Reliability
Need and directed the Developer to proceed with the construction of its project. The Developer
has agreed to obtain the required authorizations and approvals needed for its project, to develop
and construct the Transmission Project, and to abide by the related requirements in the NYISO’s
tariffs and procedures. The parties have entered into the Development Agreement to ensure that
the Transmission Project will be constructed and in-service by the Required Project In-Service
Date.

2.Article 1 - Definitions

Article 1 provides the definitions for the capitalized terms used throughout the

Development Agreement. Capitalized terms that are not defined in Article 1 have the meaning specified in the definition provisions in Section 31.1.1 of Attachment Y of the OATT, or, if not therein, in the general definition provisions in Article 1 of the OATT.

3.Article 2 - Effective Date and Term

Article 2.1 provides that the Development Agreement will become effective: (i) upon the date it is executed by all parties, or (ii) if filed with the Commission as an unexecuted or nonconforming agreement, upon the effective date accepted by the Commission. Article 2.2 requires the NYISO to file a non-conforming or unexecuted agreement with the Commission, and directs the Developer to cooperate with the NYISO with regard to such filing.

Article 2.3 specifies that the agreement shall remain in effect until: (i) the Developer
executes an operating agreement with the NYISO, and (ii) the Transmission Project has been
completed in accordance with the terms and conditions of the agreement and is in-service.

4. Article 3 - Transmission Project Development and Construction

a. Milestones

Article 3.3 establishes milestone requirements, which constitute the key mechanism in
the agreement by which the NYISO can monitor the development of the Transmission Project
and provide that it will be in-service in time to satisfy the Reliability Need. The NYISO will
provide the Required Project In-Service Date to the Developer, and the NYISO and Developer
will agree to both Critical Path Milestones and Advisory Milestones that provide for the
development, construction, and operation of the project by the Required Project In-Service
Date.23 The Critical Path Milestones are those milestones that must be met for the Transmission
Project to be constructed and in-service by the Required Project In-Service Date. Given their
importance, there are more stringent requirements for meeting and updating Critical Path
Milestones than for Advisory Milestones.

Article 3.3.2 specifies that the Developer must meet a Critical Path Milestone. Because
the timely completion of the project is essential to preserving reliability in New York, a
Developer’s inability or failure to meet a Critical Path Milestone will constitute a breach of the
agreement. The Developer may, however, under Article 3.3.4 request in writing that the NYISO
consent to extend a Critical Path Milestone. In such instance, the Developer must: (i) inform the
NYISO of the proposed change to the Critical Path Milestone and the reasons for the change, (ii)
provide a list of revised milestones that demonstrates that the project will still be in-service by
the Required Project In-Service Date, and (iii) submit a notarized officer’s certificate certifying
the Developer’s capability to complete the Transmission Project on the modified schedule.24 If
the Developer demonstrates to the NYISO’s satisfaction that the delay in meeting the Critical
Path Milestone will not delay the in-service date of the Transmission Project beyond the
Required Project In-Service Date, the NYISO’s consent to the extension will not be
unreasonably withheld, conditioned, or delayed.25

Given the importance of a Developer satisfying the Critical Path Milestones, it is

essential that a Developer notify the NYISO as soon as possible after identifying a potential
delay in its ability to satisfy an upcoming milestone, so that the parties can determine whether
the milestones can be revised to provide for project completion by the Required Project In-

23 Development Agreement Article 3.3.1. As described below, the NYISO is proposing related revisions to Section 31.2.8.1.6 as the milestones will be identified and agreed-upon by the parties as part of the process for finalizing the Development Agreement.

24 Article 3.3.4 establishes that the Developer will be responsible for the NYISO’s costs for any study work regarding its evaluation.

25 Article 3.3.5 provides that the Developer may extend an Advisory Milestone simply upon
notifying the NYISO, except if the delayed Advisory Milestone will delay a Critical Path Milestone.

Service Date. Article 3.3.3 establishes notification requirements to enable the NYISO to monitor
the status of the development of the project and to identify as soon as possible whether any
issues are arising that may endanger the project’s ability to be in-service by the Required Project
In-Service Date.

b. Project Modifications

The NYISO expects that the Developer will construct the Transmission Project consistent
with the parameters of its project proposal, which formed the basis for the NYISO’s selection of
the project as the more efficient or cost-effective transmission solution in the NYISO’s
competitive selection process. Variations from the project proposal have the potential to affect
both the NYISO’s transmission planning process and the reliable operation of the transmission
grid in New York. For this reason, Article 3.4 establishes that the Developer cannot make a
Significant Modification to the Transmission Project without the NYISO’s prior written
consent.26 A Significant Modification includes a modification that: (i) could impair the
Transmission Project’s ability to meet the Reliability Need, (ii) could delay the project’s in-
service date beyond the Required Project In-Service Date, or (iii) would constitute a material
change to the project information submitted for use by the NYISO in its selection of the project.
The NYISO’s consent to a Significant Modification will not be unreasonably withheld,
conditioned, or delayed if the proposed modification: (i) does not impair the Transmission
Project’s ability to satisfy the identified Reliability Need, (ii) does not delay the project’s in-
service date beyond the Required Project In-Service Date, and (iii) does not change the grounds
upon which the NYISO selected the project as the more efficient or cost-effective solution to the
identified Reliability Need. The Commission has accepted in PJM’s and CAISO’s related
agreements the requirement that they must consent to project modifications.27

c. Other

Article 3.1 requires the Developer to timely seek and obtain all necessary governmental
authorizations and approvals required for the Transmission Project and to notify the NYISO if:

(i) it has reason to believe that it may be unable to timely obtain or is denied an approval or authorization, or (ii) if such approval or authorization is withdrawn or modified.

Article 3.2 provides that the Developer will design, engineer, procure, construct, test, and commission the Transmission Project in accordance with: (i) the terms of the Development
Agreement, (ii) Applicable Reliability Requirements, (iii) Applicable Laws and Regulations, (iv) Good Utility Practice, (v) the Transmission Owner Technical Standards, and (vi) applicable
interconnection agreements.

26 Article 3.4 establishes that the Developer will be responsible for the NYISO’s costs for any study work regarding its evaluation.

27 See, e.g., PJM September 2014 Order at P 58 (“We agree with PJM that it must be able to

approve all proposed modifications to projects that are selected in the RTEP in order to ensure efficient
and effective transmission planning as well as to protect the reliable operation of the transmission
system.”).

Article 3.5 establishes the requirements for the NYISO to charge, and Developer to pay,
the costs of the study or project inspection work performed by the NYISO or its subcontractors
under the agreement. Articles 3.6 and 3.7 establish requirements by which the NYISO may
monitor and inspect the development of the Transmission Project. Articles 3.8 makes clear that
the Developer is solely responsible for all of the work associated with the Transmission Project
and that the NYISO “shall have no responsibility and shall have no liability regarding the
management or supervision of the Developer’s development of the Transmission Project or
compliance with” applicable laws, regulations, reliability requirements, and technical standards.
This provision makes clear that the NYISO is not responsible in any way for the activities
associated with the development or construction of the Transmission Project. Article 3.8 also
indicates that the NYISO will cooperate with the Developer in good faith in providing
information to assist the Developer in obtaining required governmental approvals and
authorizations. The remaining provisions in Articles 3.9 through 3.11 provide that: (i) the parties
may use subcontractors, but remain fully responsible for their obligations under the agreement;
(ii) the NYISO is not providing transmission, interconnection, or any of its market services or
products under the agreement; and (iii) the parties will cooperate to maintain the other party’s tax
status to the extent impacted by the agreement.

5.Article 4 - Coordination with Third Parties

Articles 4.1 and 4.2 align the requirements in the Development Agreement with the

Developer’s requirements under the NYISO’s interconnection and transmission expansion

processes. Specifically, Article 4.1 describes the requirements in the NYISO’s interconnection
and transmission expansion processes that the Developer must satisfy to interconnect the
Transmission Project. In addition, Article 4.1 describes how the Developer will participate in the interconnection or transmission expansion process if the developer of another facility proposes to interconnect to the Transmission Project. Article 4.2 provides further that if the Transmission
Project will affect the facilities of another system, the Developer is responsible for satisfying the interconnection requirements of that other system. Finally, Article 4.3 provides that if the
Transmission Project is or seeks to be an Interregional Transmission Project, the Developer will be responsible for coordinating its responsibilities and satisfying applicable requirements in both New York and the relevant neighboring region(s).

6. Article 5 - Operation Requirements for the Transmission Project

Article 5 establishes the requirements that a Developer must satisfy to ensure the safe and
reliable operation of the Transmission Project if the Developer is not already subject to the
operating requirements in the Agreement Between the New York Independent System Operator
and Transmission Owners (“ISO/TO Agreement”). The requirements include: (i) entering into
an interconnection agreement for the Transmission Project, (ii) satisfying the applicable
requirements in the interconnection agreement and NYISO procedures for the safe and reliable
operation of the Transmission Project, (iii) entering into the operating protocols required by the
NYISO, (iv) registering with NERC as a Transmission Owner, being certified as a Transmission
Operator, and complying with applicable reliability requirements, and (iv) executing an
operating agreement with the NYISO.

Certain stakeholders have requested that the NYISO specify in the agreement that a non-
incumbent Developer must execute the ISO/TO Agreement as the operating agreement, whereas
other stakeholders have requested that the non-incumbent Developer be required to execute a
comparable operating agreement. The NYISO does not believe it is necessary to make the
requested specifications in the Development Agreement. The Commission has accepted in the
enrollment requirements in Section 31.1.7 of Attachment Y of the OATT that “[a]n owner of
transmission in New York State may become a Transmission Owner by: (i) satisfying the
definition of a Transmission Owner in Article 1 of the ISO Agreement and (ii) executing the
ISO/TO Agreement or an agreement with the ISO under terms comparable to the ISO/TO
Agreement and turning over operational control of its transmission facilities to the ISO.”28 The
language proposed in Article 5 is consistent with the requirement in Section 31.1.7 of
Attachment Y.

The determination regarding which operating agreement would be executed by a non-
incumbent Developer will depend on a number of factors. The NYISO believes that the
appropriate time to address this matter is as part of the development of a comparable operating
agreement. Given the length of time that it will take for the selection of transmission under one of the NYISO’s planning processes, for permitting/certification of that project, and for
construction and commissioning of new transmission facilities, the NYISO does not anticipate
that there will be a non-incumbent Developer in position to execute an operating agreement with the NYISO for several years. In the near-term, the NYISO has informed stakeholders that it
plans to bring a draft comparable operating agreement for their review later this year, and to file it with the Commission when it is approved.

7.Article 6 - Insurance

Article 6 sets forth the insurance requirements. The NYISO adopted these requirements
from Article 18.3 of the NYISO’s pro forma LGIA, as amended based on the NYISO’s review of
current insurance practices and conditions in New York for the development of a large
infrastructure project.29 As part of its modifications, the NYISO: (i) required that it be named as
an additional insured on the policies, (ii) updated certain minimum insurance limits to reflect
current practices in New York, (iii) required the Developer to carry Builder’s Risk Insurance in a
reasonably prudent amount consistent with Good Utility Practice, (iv) required that the insurance
coverages be with insurers authorized to do business in New York and rated “A- (minus) VII” or
better by A.M. Best & Co., (v) required that the insurance be provided under the relevant
coverage form or an equivalent form acceptable to the NYISO, and (vii) required that the
Developer maintain any additional insurance coverage types and amounts that are required under
Applicable Laws and Regulations, including New York State law, and Good Utility Practice, for
the work performed by the Developer and its subcontractors under the agreement.

28 Emphasis added. The Commission accepted the NYISO’s enrollment requirements in its January 2014 order in this proceeding. July 2014 Order at P 38.

29 Consistent with the insurance requirements in the NYISO’s pro forma LGIA, the pro forma
Development Agreement also provides the option of self-insurance by entities that can meet minimum
criteria.

8.Article 7 - Breach and Default

Article 7.1 establishes that a breach of the agreement will occur when: (i) the Developer
notifies the NYISO that it will not proceed to develop the Transmission Project, (ii) the
Developer fails to meet a Critical Path Milestone, (iii) the Developer makes a Significant
Modification to the Transmission Project without the NYISO’s consent, (iv) the Developer fails
to pay a monthly invoice under the agreement, (v) the Developer misrepresents a material fact of
its representations and warranties, (vi) the agreement is assigned in a manner inconsistent with
the assignment provisions, (vii) the Developer fails to comply with any other material term or
condition of the agreement, or (viii) the developer enters into or is placed into a bankruptcy or
related proceeding.

Article 7.2 provides that in the event of a breach, the breaching party will have a thirty day period to cure the breach or such other period that may be agreed upon the party. If the
breach is the result of a Developer’s inability or failure to meet a Critical Path Milestone, the
Developer may only cure the breach if either: (i) it meets the Critical Path Milestone within the cure period and demonstrates to the NYISO’s satisfaction that, notwithstanding its failure to
timely meet the Critical Path Milestone, the Transmission Project will be in-service no later than the Required Project In-Service Date, or (ii) the Developer requests in writing within the cure period, and the NYISO consents to, a change to the missed Critical Path Milestone. If the
breaching party does not or cannot cure any breach in a manner that provides for the
Transmission Project to be completed by the Required Project In-Service Date, the non-
breaching party may declare a default and terminate the agreement.

Article 7.3 sets forth that in the event a party is in default, the non-defaulting party may:

(i) commence an action to require the defaulting party to remedy such default and specifically perform its duties and obligations under the agreement, and (ii) exercise such other rights and remedies as it may have in equity or at law. These remedies are not intended to be exclusive, and any remedy is to be cumulative and in addition to other remedies.

9.Article 8 - Termination

a. Termination

Article 8.1 establishes that the NYISO may terminate the agreement if: (i) the

Transmission Project is halted pursuant to the halting requirements in the NYISO tariffs, (ii) the
Developer is unable to or has not received it required governmental approvals or authorizations,
(iii) such authorizations have been withdrawn, (iv) the Developer cannot complete the
Transmission Project by the Required Project In-Service Date for any reasons, including the
occurrence of a Force Majeure event, or (v) the NYISO declares a default pursuant to the default
provisions.30

30 Article 8.1 provides that the NYISO will provide written notice of termination that specifies the date of termination within fifteen business days of determining or being notified of the grounds for
termination. If the agreement had been filed with the Commission, the NYISO would also file a notice of termination with the Commission for its acceptance.

Certain stakeholders have argued that the NYISO should not have the right to terminate
the agreement under Article 8.1(iv) if a Developer cannot complete the agreement by the
Required Project In-Service Date for reasons beyond their control, including the occurrence of
Force Majeure events and delays caused by third parties. The Commission should accept the
requirements of Article 8.1 without modification. The NYISO has selected, and is relying on,
the Transmission Project for purposes of satisfying an identified Reliability Need. Given the
importance of preserving reliability, the NYISO must have the opportunity to take action as soon
as possible to find another means of satisfying the Reliability Need by the need date if the
Developer’s Transmission Project is unable to achieve the purpose for which it was selected.
The Commission has found just and reasonable similar termination requirements in PJM’s
Designated Entity Agreement.31

If a Force Majeure event or a delay caused by another party were to occur, the NYISO
would certainly take these factors into account in reviewing any Developer request to extend
individual Critical Path Milestones. As described above, assuming that the Developer
demonstrates to the NYISO’s satisfaction that it is still capable of completing the Transmission
Project with the modified milestones by the Required Project In-Service Date, the NYISO’s
consent to modify the Critical Path Milestones will not be unreasonably withheld. However,
given the importance of timely completing the transmission project to satisfy a system reliability
need, the agreement provides that Force Majeure is not an excuse for non-performance. In
response to concerns raised by certain stakeholders about the potential for third party delays, the
Filing Parties have included language in Section 31.2.8.1.7 of Attachment Y of the OATT that
provides that the New York Transmission Owners that are identified in the NYISO’s
interconnection process as the Connecting Transmission Owner or Affected Transmission Owner
in connection with the selected project and therefore, as having a key role in the timely
completion of the Developer’s project, must act in good faith in timely performing their
obligations that are required for the Developer to satisfy its obligations under the Development
Agreement.

Article 8.1 also describes that if the agreement is terminated for the reasons described in
Articles 8.1(i) through (iii), the Developer may be eligible for cost recovery under the NYISO
OATT. This provision simply reflects the NYISO’s existing tariff requirements that provide for
cost recovery in the case that a project is halted by the NYISO under specific halting
requirements, or if the project does not receive or a governmental authority withdraws its
required authorizations.32 The NYISO’s tariff does not provide for cost recovery for a Developer
whose project has been terminated for the reasons set forth in Articles 8.1(iv) or (v). Article 8.1
does not create any new tariff rights for a Developer to recover any of its costs under these
circumstances. It merely indicates that the Developer would have to seek any such cost recovery
from the Commission. Finally, Article 8.1 provides that in the event of termination for any
reason, the Developer must use commercially reasonable efforts to mitigate the costs, damages,
and charges arising as a consequence of termination and any transfer or winding up of the
Transmission Project. This provision mirrors an existing requirement in the NYISO’s pro forma

31 See PJM September 2014 Order at P 101.

32 OATT, Att. Y, §§ 31.2.8.2.2, 31.2.8.2.5, and 31.2.8.2.6.

LGIA in Attachment X of the OATT33 and is required in this instance to minimize the costs of a
terminated project that could be passed onto consumers in the event the Commission allows cost
recovery.

b. Project Transfer

Article 8.3 establishes that, in the event the NYISO terminates the Development

Agreement, it may request that an entity other than the Developer complete the Transmission
Project. The NYISO may exercise this right within sixty days after the termination date. If the NYISO exercises this right, the Developer is required to work cooperatively with the NYISO’s designee to implement the transition, including entering into good faith negotiations with the
NYISO’s designee to transfer the Transmission Project. The requirements for the project
transfer are located in Section 31.2.10.1.4 of Attachment Y of the NYISO OATT and are
described below. All liabilities under the agreement existing prior to such transfer shall remain with the Developer, unless otherwise agreed to by the Developer and the NYISO’s designee that agrees to assume and complete the project.

c. Other

Article 8.2 requires that each party notify the other party when it becomes aware of its

inability to comply with the provisions of the agreement and provides for the parties to cooperate with each other and provide necessary information regarding such inability to comply.

10. Article 9 - Liability and Indemnification

Article 9 addresses the NYISO’s limited liability under the Development Agreement and
the Developer’s indemnification obligations. Article 9.1 provides that the NYISO will not be
liable for any damages resulting from its acts or omissions under the agreement, unless the
NYISO is found liable for gross negligence or intentional misconduct in the performance of its
obligations under the agreement, in which case the NYISO’s liability will be limited only to
direct actual damages. Article 9.2 provides that the Developer will indemnify and save harmless
the NYISO and its directors, officers, employees, trustees, and agents from damages arising out
of, resulting from, or associated with this agreement, except to the extent the loss results from the
gross negligence or intentional misconduct of the NYISO. The limitations on the NYISO’s
liability and its right to indemnification are consistent with the general limitation of liability and
indemnification requirements applicable to the NYISO under Sections 2.11.2 and 2.11.3(b) of
the NYISO OATT.

11.Article 10 - Assignment

Article 10 establishes that the agreement may only be assigned by a party with the prior written consent of the other party with limited exception described below and that any attempt to assign the agreement that violates Article 10 will be void and constitutes a breach of the

33 OATT, Att. X, § 30.14, NYISO LGIA (Appx. 6) § 2.4.

agreement.34 The NYISO’s consent to a Developer’s assignment of the agreement is contingent upon the Developer or its assignee demonstrating that the assignee: (i) satisfies the NYISO’s developer qualification requirements, and (ii) has the capability to comply with the requirements in the agreement and to construct and place in-service the Transmission Project by the Required Project In-Service Date consistent with the assignor’s cost estimates for the project. This
requirement is necessary to ensure that the assignee has the capability to develop and construct the Transmission Project and will do so on time and in a manner consistent with the project as it was selected by the NYISO in its competitive selection process.

A Developer has a right to assign the agreement, without the NYISO’s consent, for
collateral security purposes to aid in the financing of the project. However, such assignment
must provide that the secured party: (i) will provide the NYISO with notice prior to its exercise
of assignment rights, and (ii) must demonstrate to the NYISO’s satisfaction that any entity that it
proposes to complete the Transmission Project satisfies the qualification requirements for the
assignee described above to ensure it is capable of developing and constructing the Transmission
Project and will do so on time and in a manner consistent with the project as it was selected by
the NYISO.

12. Article 11 - Information Exchange and Confidentiality

Article 11.1 establishes that each party will make available to the other party the

information necessary to carry out its obligations and responsibilities under the agreement.

Article 11.2 provides that: (i) the NYISO will treat any Confidential Information35 it receives in
accordance with the requirements of the NYISO Code of Conduct in Attachment F of the
NYISO OATT, and (ii) the Developer will hold any Confidential Information it receives in
confidence, employing at least the same standard of care to protect the received information as it
employs to protect its own Confidential Information. Article 11.2 sets forth that the parties will
not disclose the other party’s Confidential Information absent the prior written consent of the
other party, except: (i) to the extent required for the parties to perform their obligations under the
agreement or the NYISO’s tariffs, agreements, and procedures, or (ii) to fulfill legal or
regulatory requirements, provided in the latter case that the disclosing party must request that

34 Article 10 restricts a Developer’s using a transfer of control of the Developer to a third party as
an end run around the assignment provisions. The NYISO believes that it is reasonable that the
Developer demonstrate that any new party taking over the construction of the Transmission Project,
whether affiliated or unaffiliated with the original Developer, is qualified and capable of constructing the
project in a timely manner consistent with the parameters of the project that was approved by the NYISO
Board.

35 As defined in Article 11.2.1, Confidential Information means: “(i) all detailed price information and vendor contracts; (ii) any confidential and/or proprietary information provided by one Party to the other Party that is clearly marked or otherwise designated ‘Confidential Information’; and (iii)
information designated as Confidential Information by the NYISO Code of Conduct contained in
Attachment F of the OATT; provided, however, that Confidential Information does not include
information: (i) in the public domain or that has been previously publicly disclosed; (ii) required by an order of a Governmental Authority to be publicly submitted or divulged (after notice to the other Party); or (iii) necessary to be divulged in an action to enforce this Agreement.”

any information requested by a governmental authority on a confidential basis be treated as confidential and non-public by the requesting governmental authority.

13. Article 12 - Representations, Warranties, and Covenants

Article 12 sets forth representations, warranties, and covenants by the Developer

regarding Good Standing (Article 12.2), Authority (Article 12.3), No Conflict (Article 12.4), and Consent and Approval (Article 12.4) that are consistent with the related provisions in Article 28 of the NYISO’s pro forma LGIA. In addition, Article 12.5 provides that the Developer will comply with all Applicable Laws and Regulations, Applicable Reliability Requirements, and applicable Transmission Owner Technical Standards.

14.Article 13 - Dispute Resolution

Article 13 provides that in the event a dispute arises under the Development Agreement, the parties will use the dispute resolution process described in Article 11 of the NYISO Market Administration and Control Area Services Tariff (“Services Tariff”). Article 11 of the Services Tariff provides for the parties to first attempt to resolve a dispute through informal discussions. In the event the parties are unable to resolve the issue, they may enter into non-binding
mediation, may submit all or a portion of the dispute to arbitration, or may commence legal proceedings at the Commission or in a court competent jurisdiction.

15.Article 14 - Survival

Article 14 establishes that the rights and obligations of the parties shall survive the

termination, expiration, or cancellation of the agreement to the extent necessary to provide for
the determination or enforcement of said obligations arising from acts or events that occurred
while the agreement was in effect. Article 14 also specifically states that the provisions of
Articles 7.3 and 8.3 concerning termination, Article 9 concerning liability and indemnity, and
Article 3.5 concerning billing and payment will survive the agreement’s termination, expiration,
or cancellation.

16.Article 15 - Miscellaneous

Article 15 includes various standard contract-related miscellaneous provisions, including:
Notices (15.1), Entire Agreement (15.2), Binding Effect (15.3), Disclaimer (15.5), Amendment
(15.7), No Third Party Beneficiaries (15.8), Waiver (15.9), Rules of Interpretation (15.10),
Severability (15.11), Multiple Counterparts (15.12), No Partnership (15.13), and Headings
(15.14).

In addition, Article 15.4 states, as described above, that the occurrence of a Force

Majeure event will not excuse non-performance of any obligations under the agreement. Article

15.6 provides that the NYISO’s or its subcontractors’ review or approval of materials proposed by the Developer or carrying out of an inspection does not relieve Developer from any liability in the preparation of such material or for its failure to comply with Applicable Laws and
Regulations, Applicable Reliability Requirements, and Transmission Owner Technical

Standards. This provision makes clear that the Developer is solely liable for its own negligence
in the preparation of materials associated with the Transmission Project. Finally, Articles 15.15
and 15.16 set forth the requirements regarding governing law and jurisdiction and venue. As set
forth in Article 15.15, the agreement shall be governed, as applicable, by the Federal Power Act
and New York State law. As set forth in Article 15.16, disputes arising under the agreement will
be addressed at the Commission if they fall within its primary or exclusive jurisdiction.

Otherwise, disputes will be addressed, as applicable, in either the courts of the State of New

York situated in Albany County, New York or the United States District Court of the Northern District of New York situated in Albany, New York.

17.Appendices

The appendices to the Development Agreement will specify the details regarding the development, construction, and operation of the Transmission Project. The Developer and the NYISO will develop the description in the appendices for each project.

Appendix A (Project Description) will include a detailed description of the Transmission Project that is consistent with the project selected by the NYISO Board. Appendix B (Scope of Work) will include the description of the work required to implement the Transmission Project, including a description of: the acquisition of required rights of way, all phases of the work
associated with the development and construction of the project, the relevant technical
requirements pursuant to which the work will be performed, the major equipment and facilities to be constructed or installed, and the cost estimates for the work. Finally, Appendix C
(Development Schedule) will set forth the schedule of Critical Path Milestones and Advisory
Milestones. The pro forma Appendix C includes as a placeholder a list of example milestones for the parties’ consideration in developing the Development Schedule. The precise milestones and their designation as Critical Path Milestones or Advisory Milestones will be determined by the NYISO and the Developer in developing the agreement.36

C. Conforming Revisions to Attachment Y of the OATT

In developing the Development Agreement, the NYISO identified certain revisions that are required in Section 31.2 of Attachment Y to accommodate the inclusion of the Development Agreement. The Filing Parties propose the following revisions to Section 31.2.

1. Execution Requirements

The Filing Parties propose to revise Section 31.2.8.1.6 to set forth the process by which
the NYISO and the Developer of the Transmission Project will negotiate and enter into the
Development Agreement.37 The proposed process is consistent with the NYISO’s process for

36 The replacement by the parties of the placeholder examples with the final agreed-upon

milestones will constitute a conforming revision that does not necessitate the filing of the agreement with the Commission.

37 As part of the revisions to Section 31.2.8.1.6, the Filing Parties are removing the existing
language describing the requirements for the Development Agreement as those requirements are now

negotiating and entering into an LGIA with a Developer and Connecting Transmission Owner in Section 30.11 of Attachment X of the NYISO OATT.

As soon as practicable considering the project’s Trigger Date following the NYISO’s
selection of the Transmission Project,38 the NYISO will tender to the Developer a draft
Development Agreement with draft appendices that have been completed by the NYISO to
extent practicable. The draft agreement will be in the form of the pro forma Development
Agreement included in Appendix C in Section 31.7 of Attachment Y of the NYISO OATT. The
NYISO and the Developer will finalize the agreement and appendices and negotiate concerning
any disputed provisions. As part of this process, the NYISO will provide the Developer with the
Required Project In-Service Date, and the parties will develop the milestones necessary to
develop and construct the project by the Required Project In-Service Date. Unless otherwise
agreed upon by the parties, the Developer must execute the agreement within three months of the
NYISO’s tendering the draft agreement. If the executed agreement does not conform to the pro
forma version in Appendix C, the NYISO will file it with the Commission for its acceptance
within thirty business days of its execution.

If the negotiations are at an impasse, the Developer may request that the NYISO file the
agreement in unexecuted form with the Commission. In such case, the NYISO will file the
unexecuted agreement with the Commission within thirty business days. The NYISO will draft
to the extent practicable those provisions that are in dispute and explain to the Commission the
matters to which the parties disagree. The Developer will provide in a separate filing any
comments that is has on the unexecuted agreement, including any alternative positions regarding
the disputed provisions.

The Filing Parties propose to insert a new Section 31.2.8.1.7 that provides that, upon the execution or filing of unexecuted version of the Development Agreement, the NYISO and
Developer shall perform their respective obligations under the agreement that are not in dispute. In addition, as described above, this provision requires that the New York Transmission Owners that are identified in the NYISO’s interconnection process as the Connecting Transmission
Owner or Affected Transmission Owner associated with the selected project act in good faith in timely performing their obligations that are required for the Developer to satisfy its obligations under the Development Agreement.

incorporated into the terms of the pro forma Development Agreement included as Appendix C in Section

31.7 of Attachment Y of the NYISO OATT.

38 The timing of the NYISO’s tendering of the Development Agreement to a Developer will be tied to the Trigger Date of the project, which is the date upon which the Developer must proceed to
develop its project to timely satisfy the Reliability Need. There may not be an immediate need for the
NYISO to tender the agreement following the NYISO’s selection of a Transmission Project as there may be a lengthy period of time between the NYISO’s selection of the project and its Trigger Date. In
addition, there may be sufficient market-based solutions developing that would obviate the need for the NYISO to trigger the selected project.

2. Inability to Complete Project

The Filing Parties propose to insert a new Section 31.2.10.1 that addresses the

consequences if: (i) the Developer of a selected alternative regulated transmission solution does
not execute the Development Agreement or request that it be filed unexecuted, or (ii) an effective
Development Agreement is terminated under the terms of the agreement prior to the completion
of the term of the agreement.39 In such case, the NYISO may revoke its selection of the
alternative regulated transmission solution and the eligibility of the Developer to recover its costs
for the project under the NYISO tariffs.40 Notwithstanding this requirement, the Developer will
remain eligible to recover certain project costs to the extent explicitly provided for in the halting
provisions in Section 31.2.8.2.2 of Attachment Y or the provisions in Sections 31.2.8.2.5 and

31.2.8.2.6 concerning a project that has not received its required authorizations from

governmental authorities or had them withdrawn. The OATT does not otherwise provide for
cost recovery for a Developer whose project is terminated based on its inability to complete the
project or the NYISO’s declaration of a default of the Development Agreement. In such
circumstances, the Developer will only be eligible for cost recovery if, and to the extent, allowed
by the Commission.

In addition, if due to the failure of the project, the NYISO determines that it must identify a solution to satisfy the identified Reliability Need prior to its approval of the Comprehensive Reliability Plan for the next planning cycle, the NYISO may take one or more of the following actions to provide for the Reliability Need to be satisfied: (i) direct the Responsible Transmission Owner to proceed with its regulated backstop solution if it has not yet been halted, (ii) proceed with a Gap Solution, or (iii) request that the Responsible Transmission Owner complete the
selected alternative regulated transmission solution.

Section 31.2.10.1.4 sets forth the requirements if a Responsible Transmission Owner
agrees to complete the selected alternative regulated transmission solution. In such case, the
Responsible Transmission Owner and the initial Developer of the project are required to work
cooperatively with each other to implement the transition, including negotiating in good faith
with each other to transfer the project. The Commission has previously approved a similar
approach proposed by CAISO to provide for the transfer of a transmission solution to reliability
needs that cannot timely be completed by the initial Developer.41 The Responsible Transmission
Owner and initial Developer will determine the terms of the transfer of the Transmission Project
as part of their good faith negotiations. Section 31.2.10.1.4 provides that any transfer is subject
to any required approvals by the appropriate governmental agencies and authorities. In addition,
the Developer’s capability to transfer its rights-of-way for the project is subject to any
requirements and restrictions on such transfer under law, conveyance, or contract. Finally, in the
event that the initial Developer was a New York public authority - NYPA or LIPA, any transfer

39 The Filing Parties propose to revise cross-references throughout Sections 31.1 and 31.2 to
address changes to the section numbering in Section 31.2 resulting from the tariff changes proposed in
this filing.

40 Section 31.2.10.1.1 sets forth that the NYISO will, upon terminating the agreement, file a notice of termination with the Commission if the Development Agreement had been filed with and accepted by the Commission.

41 CAISO Tariff § 24.6.4.

will be subject to the restrictions or limitations regarding such transfer under the New York

Public Authorities Law. In the event of a dispute between the Responsible Transmission Owner and Developer regarding the transfer of the Transmission Project, the parties will address the dispute in accordance with the NYISO’s standard dispute resolution procedures set forth in
Article 11 of the NYISO’s Services Tariff.

The Filing Parties also propose to relocate from Section 31.2.8.2.1 to Section 31.2.10.2
and to make certain revisions to the requirements setting forth how the NYISO will address a
potential delay in the development of a transmission project. These provisions are more
appropriately located in Section 31.2.10 than in the halting provisions in Section 31.2.8.2. As
revised, the provision will only apply to potential delays in the development of a Responsible
Transmission Owner’s regulated backstop solution, as the related requirements for the
Developers of an alternative regulated transmission solution are now addressed in Section

31.2.10.1, as described above. In addition, given the importance of the projects for preserving
reliability, the revised provision adds that: (i) the NYISO may take action under the provision if
the Responsible Transmission Owner “is otherwise not taking the actions necessary to construct
the project to satisfy the Reliability Need by the need date,” and (ii) the NYISO may “take such
actions as it reasonably considers is appropriate to ensure that the Reliability Need is satisfied by
the need date.” Such actions could include proceeding with a Gap Solution to meet a Reliability
Need by the need date. Consistent with the proposed requirements in Section 31.2.10.1 for the
Developers of alternative regulated transmission solutions, these revisions are required to

provide the NYISO with the ability to take necessary actions to preserve reliability in the event that a Responsible Transmission Owner’s regulated backstop solution may not be completed by the need date of the Reliability Need.

VII. EFFECTIVE DATE

The Commission has previously established a January 1, 2014, effective date for the

Filing Parties’ Order No. 1000 regional transmission planning related revisions to the NYISO’s
tariffs.42 As directed by the Commission, the NYISO commenced its 2014-2015 planning cycle
on January 1, 2014 to implement its revised CSPP. The actions taken by the NYISO to date in
the current planning cycle, which include: (i) completing its reliability planning process for the
planning cycle, (ii) beginning its economic planning process, and (iii) soliciting proposed Public
Policy Transmission Needs as the first step of its Public Policy Transmission Planning Process,
are unaffected by the tariff changes proposed in this filing. The tariff changes proposed in this
compliance filing are not needed at this stage of the 2014-2015 planning cycle as there were no
Reliability Needs to be fulfilled in this round of the reliability planning process (OATT § 31.2).
Moreover, there are no changes that affect the NYISO’s current implementation of the

congestion planning process in its Congestion Assessment and Resource Integration Study

(OATT § 31.3), and the tariff changes do not affect the implementation of the Public Policy

Transmission Planning Process as the New York State Public Service Commission is not

scheduled to determine if there are any Public Policy Transmission Needs for this planning cycle until this fall. The Filing Parties, therefore, submit the proposed tariff revisions for filing with a January 1, 2014 effective date.

42 July 2014 Order at P 37.

VIII. SERVICE

The NYISO will send an electronic copy of this filing to the official representative of
each party to this proceeding, to the official representative of each of its customers, to each
participant on its stakeholder committees, to the New York Public Service Commission and the
New Jersey Board of Public Utilities. In addition, the complete public version of this filing will
be posted on the NYISO’s website at www.nyiso.com.

IX.CONCLUSION

WHEREFORE, the New York Independent System Operator, Inc. and the New York Transmission Owners respectfully request that the Commission accept this compliance filing without requiring any modifications and determine that the NYISO and the NYTOs have fully complied with the regional planning requirements of Order No. 1000.

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

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

Michael Messonnier
Hunton & Williams LLP
951 East Byrd Street
Richmond, VA 23219

Email: mmessonnier@hunton.com

/s/ John Borchert

John Borchert
Senior Director of Energy Policy and

NEW YORK TRANSMISSION OWNERS

By: /s/ Elias G. Farrah

Elias G. Farrah

Winston & Strawn LLP 1700 K Street, NW

Washington, DC 20006-3817
Email: efarrah@winston.com

*Paul L. Gioia

Whiteman Osterman & Hanna LLP One Commerce Plaza

Albany, NY 12260
Email: pgioia@woh.com

/s/ Richard B. Miller

Consolidated Edison Company of New York, Inc. Orange and Rockland Utilities, Inc.

Transmission DevelopmentRichard B. Miller

Central Hudson Gas & Electric CorporationDirector of Energy Markets Policy Group

284 South AvenueConsolidated Edison Co.

Poughkeepsie, NY 12601of New York, Inc.

Email: jborchert@cenhud.com4 Irving Place

Room 2315-s

New York, NY 10003

Email: millerrich@coned.com

/s/Kristina Nifora

Consolidated Edison Company of New York, Inc. Orange and Rockland Utilities, Inc.

Kristina Nifora, Esq.

Associate Counsel

Consolidated Edison Co. of New York, Inc.

4 Irving Place

Room 1850-s

New York, NY 10003

Email: niforak@coned.com

/s/ Jon R. Mostel/s/ Andrew Neuman

Jon R. MostelAndrew Neuman, Esq.

General CounselNew York Power Authority

Long Island Lighting Company123 Main Street

333 Earle Ovington BoulevardWhite Plains, NY 10601-3170

Suite 403Email: andrew.neuman@nypa.gov

Uniondale, NY 11553

Email: jmostel@lipower.org/s/ Andrew Antinori

Andrew Antinori

/s/ David ClarkeDirector Market Issues

David ClarkeNew York Power Authority

Director of Power Markets Policy123 Main Street

Long Island Power AuthorityWhite Plains, NY 10601-3170

99 Washington AvenueEmail: andrew.antinori@nypa.gov

10th Floor

Albany, NY 12210-2822

Email: dclarke@lipower.org

/s/ Joseph B. Nelson

Joseph B. Nelson

Van Ness Feldman, LLP

1050 Thomas Jefferson Street, NW Washington, DC 20007

Email: jbn@vnf.com

/s/ R. Scott Mahoney

R. Scott Mahoney, Esq.

New York State Electric & Gas Corporation Rochester Gas and Electric Corporation

Iberdrola USA

18 Link Drive
P.O. Box 5224

Binghamton, NY 13902-5224
Email: scott.mahoney@iberdrolausa.com

/s/ David Lodemore

David Lodemore
Senior Counsel

Niagara Mohawk Power Corporation d/b/a National Grid

40 Sylvan Road

Waltham, MA 02451-1120
david.lodemore@nationalgrid.com

/s/ Bart Franey

Bart Franey

Director of Federal Regulation

Niagara Mohawk Power Corporation d/b/a National Grid

300 Erie Boulevard West Syracuse, NY 13202

bart.franey@nationalgrid.com