10 Krey Boulevard  Rensselaer, NY 12144

June 29, 2015

By Electronic Delivery

Kimberly D. Bose, Secretary

Federal Energy Regulatory Commission 888 First Street N.E.

Washington, D.C. 20426

Re: New York Independent System Operator, Inc., Proposed Tariff Revisions
Regarding Public Policy Transmission Planning Process;

Docket No. ER15-___-000

Dear Ms. Bose:

Pursuant to Section 205 of the Federal Power Act,1 the New York Independent System Operator, Inc. (“NYISO”) hereby submits proposed revisions to the Public Policy Transmission Planning Process (“Public Policy Process”) portion of its Comprehensive System Planning
Process (“CSPP”).2 The NYISO’s proposed revisions to the tariff requirements of the Public Policy Process set forth in Attachment Y of the NYISO Open Access Transmission Tariff
(“OATT”) will clarify and enhance the process.3

I.List of Documents Submitted

The NYISO submits the following documents:

1. This filing letter;

2. A clean version of the proposed revisions to the OATT (Attachment I); and

3. A blacklined version of the proposed revisions to the OATT (Attachment II).

1 16 U.S.C. § 824d.

2 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.

3 Unless otherwise indicated, the tariff references in this filing letter are to Attachment Y of the NYISO OATT.

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

10 Krey Boulevard

Rensselaer, NY 12144
Tel: (518) 356-6000
Fax: (518) 356-4702
rfernandez@nyiso.com
rstalter@nyiso.com

cpatka@nyiso.com

* -- Persons designated for service.

*Ted J. Murphy

Hunton & Williams LLP
2200 Pennsylvania Avenue, NW Washington, D.C. 20037
Tel: (202) 955-1500

Fax: (202) 778-2201
tmurphy@hunton.com

*Michael J. Messonnier, Jr.4 Hunton & Williams LLP

951 E. Byrd Street
Richmond, VA 23219
Tel: (804) 788-8200
Fax: (804) 344-7999

mmessonnier@hunton.com

III.Background

On January 1, 2014, the NYISO began the 2014-2015 planning cycle for its CSPP in accordance with the tariff requirements set forth in Attachment Y of the OATT, as amended to meet the requirements of Order No. 1000. 5 The NYISO commenced its reliability planning process in January 2014 by conducting reviews under its Local Transmission Planning Process, and conducting a Reliability Needs Assessment.6

The NYISO initiated the Public Policy Process portion of the CSPP on August 1, 2014,
by soliciting from interested parties proposed transmission needs driven by Public Policy
Requirements, as called for in its OATT. Following its receipt of such submissions, the NYISO
provided the proposed transmission needs to the New York State Public Service Commission

4 The NYISO respectfully requests waiver of 18 C.F.R. § 385.203(b)(3) (2014) to permit service on counsel for the NYISO in both Washington, D.C. and Richmond, VA.

5 The Commission accepted a January 1, 2014, effective date for the Order No. 1000-related

revisions to Attachment Y of the NYISO OATT to provide for their implementation in the current 2014-
2015 planning cycle. See New York Independent System Operator, Inc., Order on Rehearing and
Compliance, 148 FERC ¶ 61,044 (2014) at P 37 (“July 2014 Order”).

6 At its May 2015 meeting, the NYISO’s Management Committee recommended that the NYISO’s Board of Directors approve the draft 2014 Comprehensive Reliability Plan. The Board is scheduled to take action on the Comprehensive Reliability Plan in July.

Kimberly D. Bose, Secretary June 29, 2015

Page 3

(“NYPSC”) on October 3, 2014. The NYPSC is responsible under the NYISO OATT for

evaluating the proposed transmission needs and identifying whether there are any Public Policy
Transmission Needs for which the NYISO will solicit and evaluate solutions under the Public
Policy Process. The NYPSC has stated its intent to issue an order later this year that identifies
any Public Policy Transmission Needs for the current planning cycle.7 If the NYPSC identifies
any Public Policy Transmission Needs, the NYISO will, for the first time, solicit and evaluate
solutions to such needs. The NYISO will evaluate the viability and sufficiency of all types of
solutions (generation, transmission and demand response) and subsequently may select the more
efficient or cost-effective transmission solution to each identified need for purposes of cost

allocation and recovery under the NYISO’s tariffs.

In light of its experience thus far in implementing the new Order No. 1000-related

requirements, the NYISO reviewed the tariff requirements for the Public Policy Process and

identified clarifications and enhancements, as described in Part IV of this letter, necessary to

implement the next steps of the process later this year. The NYISO reviewed the proposed tariff revisions with its stakeholders, which, with requested modifications, approved the tariff
amendments at NYISO governance committee meetings without objection. The NYISO Board
of Directors approved the changes on June 16, 2015 and directed the changes to be filed with the Commission under Section 205 of the Federal Power Act. The NYISO requests that the
Commission accept the proposed tariff revisions with an effective date of August 28, which is 60 days after the date of this filing.

IV. Description of Proposed Tariff Revisions

A. Cost Allocation and Cost Recovery Requirements

1. Rejection or Withdrawal of Necessary Authorizations

Under the Public Policy Process, the Developer of a transmission project selected by the
NYISO as the more efficient or cost-effective transmission solution to a Public Policy
Transmission Need is eligible to recover certain costs if its project cannot proceed because it
does not receive necessary authorizations from federal, state, or local agencies or has the
authorizations withdrawn.8 The NYISO OATT does not currently specify the manner in which
the NYISO would allocate these costs. The NYISO proposes to revise Section 31.5.5.3 to clarify
that the NYISO will allocate these costs to all Load Serving Entities using the default load ratio
share methodology of the Public Policy Process as set forth in Section 31.5.5.4.3, except as
otherwise determined by the Commission.9 This revision ensures that there is a cost allocation

7 See NYPSC Case 12-T-0502, et al., AC Transmission Proceedings, Order Establishing

Modified Procedures for Comparative Evaluation (issued December 16, 2014); see also NYPSC Case 12-
T-0502, et al., AC Transmission Proceedings, Letter from Kathleen H. Burgess, Secretary (May 20, 2015) (extending certain timeframes in the NYPSC proceeding).

8 OATT, Att. Y, Section 31.5.6.5.2 (previously 31.5.6.5).

9 The NYISO proposes to insert the same requirements in new Section 31.4.12.1.

Kimberly D. Bose, Secretary June 29, 2015

Page 4

methodology in place in the event the NYISO must allocate these costs - the same load ratio
share methodology accepted by the Commission as the default methodology for the Public
Policy Process.10 The revision also provides parties with the opportunity to use an alternative
methodology if accepted by the Commission. In addition, the NYISO proposes to revise Section

31.5.6.5.2 to clarify that the Developer may begin to recover these costs as determined by the Commission.11

The NYISO proposes to make two further revisions regarding a Developer’s need to
obtain required federal, state, and local authorizations. First, the NYISO proposes to insert a
new Section 31.4.12.1 that sets forth that the Developer of a selected project: (i) must seek to
obtain necessary authorizations to site, construct, and operate the project to the extent such
authorizations have not already been requested or obtained, and (ii) may recover certain costs if
the requested authorization is rejected or such authorization is withdrawn. These provisions
incorporate requirements on project permitting and cost recovery that are parallel to those in the
reliability planning process and described in part in the Public Policy Process cost recovery
provisions in Section 31.5.6.5.12 Second, the NYISO proposes to clarify that the Developer will
become eligible for certain cost recovery if the appropriate agency “rejects,” rather than “does
not approve,” the authorization.13 The use of “rejects” in place of “does not approve” establishes
a clearer threshold for when the Developer may become eligible to recover certain costs.

2. Consolidation of Cost Recovery Requirements

The cost recovery requirements for the Public Policy Process are spread throughout

Sections 31.5.5.3, 31.5.6, and 31.5.6.5 of Attachment Y. For purposes of clarity and to avoid the
potential for discrepancies inadvertently arising between the related tariff provisions, the NYISO
proposes to consolidate the cost recovery requirements for the Public Policy Process in Section

31.5.6.5.14

B.Post-Selection Requirements

The current tariff requirements for the Public Policy Process do not establish the

Developer’s responsibilities to proceed with its project following the selection of its transmission

10 See New York Independent System Operator, Inc., Order on Rehearing and Compliance, 151 FERC ¶ 61,040 (2015) at P 121 (accepting timeline for applying cost allocation methodology for Public Policy Process); July 2014 Order at PP 330-340 (accepting load ratio share as default cost allocation
methodology for Public Policy Process and directing filing parties to provide timeline for applying cost allocation methodology).

11 As described in Section 31.5.6.5, the Developer will make a filing at the Commission under Section 205 of the Federal Power Act for approval of its costs for its cost recovery.

12 OATT, Att. Y, Sections 31.2.8.1.2, 31.2.8.1.3, 31.2.8.1.4, 31.5.6.5.2 (previously 31.5.6.5).

13 OATT, Att. Y, Sections 31.4.12.1 (new), 31.5.5.3, 31.5.6.5.2 (previously 31.5.6.5).

14 The NYISO has also clarified in Section 31.5.6.5.3 (previously 31.5.6.5) in what circumstances the NYISO would make a filing on behalf of the New York Power Authority.

Kimberly D. Bose, Secretary June 29, 2015

Page 5

project as the more efficient or cost-effective transmission solution, nor do they set forth the consequences if the Developer does not or is unable to proceed with its project. The NYISO proposes to insert a new Section 31.4.12 that sets forth these requirements.

1.Development Agreement

The NYISO proposes to require in new Section 31.4.12.2 that the Developer of a

transmission project selected by the NYISO in the Public Policy Process enter into a

development agreement with the NYISO. The agreement would provide for the project to be
timely developed and constructed in a manner consistent with the project proposal selected by
the NYISO Board. The Commission has previously accepted the requirement that the Developer of a transmission project selected by the NYISO in its reliability planning process enter into a
development agreement with the NYISO.15 As recently directed by the Commission,16 the
NYISO has submitted a pro forma development agreement for the reliability planning process as part of its and the New York Transmission Owners’ supplemental Order No. 1000 regional
compliance filing on May 18, 2015.17

The NYISO has included a placeholder as Appendix D in Section 31.7 of Attachment Y of the OATT for a separate pro forma development agreement for the Public Policy Process. The NYISO will begin to develop this agreement with stakeholders later this summer.18 The NYISO will use the development agreement developed for the reliability planning process as a model for this agreement, modified as appropriate to take into account the differences between the purpose and requirements of the reliability and public policy processes.

The NYISO proposes to set forth in Section 31.4.12.2 the process by which the NYISO
and the Developer will negotiate and enter into the development agreement. The proposed
process is consistent with the NYISO’s process for negotiating and entering into a Large
Generator Interconnection Agreement with a Developer and Connecting Transmission Owner in
Section 30.11 of Attachment X of the NYISO OATT and the process proposed by the NYISO in
the May 18, 2015, compliance filing for negotiating and entering into the reliability version of
the development agreement. The process provides for the NYISO to tender to the Developer a
draft development agreement following the selection of the transmission project, and requires the
parties to execute the agreement within three months unless otherwise agreed by the parties. The
process also establishes the method by which the NYISO will file a non-conforming or

15 OATT, Att. Y, Section 31.2.8.1.6.

16 New York Independent System Operator, Inc., Order on Rehearing and Compliance, 151 FERC ¶ 61,040 (2015) at P 23.

17 New York Independent System Operator, Inc. and New York Transmission Owners, Compliance Filing, Docket No. ER13-102-007 (May 18, 2015) (“May 2015 Compliance Filing”) (describing the
proposed development agreement for the reliability planning process).

18 The NYISO has no objection to a further compliance directive to file a pro forma development agreement for the Public Policy Process related to the Commission’s acceptance of these tariff changes requiring execution of a development agreement.

Kimberly D. Bose, Secretary June 29, 2015

Page 6

unexecuted agreement with the Commission. Upon the execution or filing of an unexecuted version of the agreement, the NYISO and Developer will perform their respective obligations under the terms and conditions of the agreement that are not in dispute.

2.Inability to Complete Selected Project

The NYISO proposes to establish in new Section 31.4.12.3 the consequences if: (i) the

Developer of the selected project does not timely execute the development agreement or does not
request that it be filed unexecuted, or (ii) an effective development agreement is terminated
under the terms of the agreement. In such cases, the NYISO will submit a report to the NYPSC
and/or the Commission as appropriate and may take such actions as are reasonably necessary,
following consultation with the NYPSC, to provide that the Public Policy Transmission Need is
satisfied.19 Such action could include the NYISO revoking its selection of the transmission
project and the eligibility of the Developer to recover its costs for the project under the NYISO
tariffs. Notwithstanding this requirement, the Developer will remain eligible to recover certain
project costs to the extent expressly provided in the OATT: (i) if the project was directed to
participate in the Public Policy Process by the NYPSC or the Long Island Power Authority
(“LIPA”), or (ii) if, as described above, a governmental agency rejects, or withdraws, required
authorizations.20 The OATT does not otherwise provide for cost recovery for a Developer
whose project is not completed. In such circumstances, the Developer will only be eligible for
cost recovery if, and to the extent, allowed by the Commission.

3.Other Requirements

As described above, the NYISO has inserted a new Section 31.4.12.1 to address the
Developer’s requirement to obtain necessary authorizations to site, construct, and operate its
project. In addition, the NYISO proposes to insert a new Section 31.4.12.4 to clarify that the
Developer of a selected project must execute the Agreement Between the New York Independent
System Operator and Transmission Owners or a comparable operating agreement prior to
energizing the project.21

C.Developer’s Election to Proceed

The NYISO’s evaluation of solutions to a Public Policy Transmission Need is performed
in two stages. In the initial stage, the NYISO evaluates proposed solutions to determine whether
each is viable and sufficient to satisfy the identified need. The NYISO will then evaluate the

19 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. OATT, Att. Y, Section 31.4.12.3.1.1 (new).

20 See OATT, Att. Y, Sections 31.4.3.2, 31.4.12.1 (new).

21 As described in its recent compliance filing, the NYISO plans to bring a draft comparable

operating agreement to stakeholders later this year and to file the agreement with the Commission. See May 2015 Compliance Filing at p. 12.

Kimberly D. Bose, Secretary June 29, 2015

Page 7

viable and sufficient transmission solutions for purposes of selecting the more efficient or cost-
effective transmission solution to the need. The NYISO proposes to insert a process step in new
Section 31.4.6.6 that requires the Developer of a viable and sufficient transmission project to
indicate its intent to be evaluated for possible selection by the NYISO Board.22 For its project to
be considered in the selection process, the Developer must consent to the NYISO disclosing
previously confidential details regarding the proposed project that may be made public as part of
the NYISO’s transparent selection process. As described in Part IV.H below, the tariff provides
that certain other information, such as contract information and preliminary cost estimates, will
remain confidential. The Developer must also demonstrate that it has executed, as applicable, an
Interconnection Feasibility Study agreement or a System Impact Study agreement, as described
below.

D. Alignment of Planning and Interconnection/Transmission Expansion Processes

The NYISO proposes to insert certain interconnection and transmission expansion

milestones within the Public Policy Process requirements to better align these separate, but

related, processes. Specifically, the NYISO proposes to require that the Developer demonstrate
with the submission of its project information that it has submitted, as applicable, a valid
Interconnection Request or Study Request.23 In addition, as indicated above, if the Developer of
a viable and sufficient transmission project intends for its project to proceed to be evaluated for
purposes of possible selection, the Developer must demonstrate that it has executed, as
applicable, an Interconnection Feasibility Study agreement or a System Impact Study
agreement.24 Finally, the NYISO proposes to revise its selection requirements to clarify that it
will give due consideration to the status and results of any completed interconnection or
transmission expansion studies in evaluating the proposed project for purposes of selection.25
These revisions provide that a proposed transmission project will progress through and timely
satisfy its interconnection or transmission expansion requirements in parallel with its progress
through the transmission planning process. In addition, the revisions enable the NYISO to take
into account in its selection process the detailed project information that is developed in the
interconnection and transmission expansion processes, as applicable.

22 The NYISO proposes conforming revisions to Section 31.4.8 to specify that only Developers
that have elected to proceed under Section 31.4.6.6 are eligible for possible selection by the NYISO.

23 OATT, Att. Y, Section 31.4.4.3.1 (new). The applicable request form and studies that a

Developer must complete will depend on whether the Developer is required under the NYISO tariffs to interconnect its project through the interconnection process contained in Attachment X of the NYISO OATT or the transmission expansion process contained in Sections 3.7 and 4.5 of the OATT.

24 OATT, Att. Y., Section 31.4.6.6 (new).

25 OATT, Att. Y, Section 31.4.8. For purposes of its evaluation, the NYISO proposes to require a Developer to notify the NYISO upon the completion of any interconnection/ transmission expansion
studies and provide, upon the NYISO’s request, any study report and related materials. OATT, Att. Y, Sections 31.4.5.1.5 (new), 31.4.5.2.5 (new).

Kimberly D. Bose, Secretary June 29, 2015

Page 8

E.Flexibility for Deadlines

The NYISO proposes the addition of Sections 31.1.8.6 and 31.1.8.7 to establish

flexibility in the NYISO’s ability to address minor delays in the satisfaction of deadlines for the
CSPP, so that the NYISO is not automatically required to disqualify projects based on a minor,
acceptable delay or to impose an unnecessary burden on the Commission to address such delays
through multiple tariff waiver requests. The provisions establish that the NYISO will use
reasonable efforts to meet all deadlines in Attachment Y.26 In the event the NYISO is unable to
meet a deadline, it may extend the deadline if the extension will not result in a reliability
violation, provided that the NYISO must inform interested parties, explain the reasons for
missing the deadline, and provide an estimated time to complete the action. The NYISO may
also extend other parties’ deadlines set forth in Attachment Y for a reasonable period of time, so
long as the extension is applied equally to all parties that must meet the deadline and will not
result in a reliability violation. These provisions do not apply to any deadlines set forth in a
development agreement entered into under Attachment Y. The proposed provisions also do not
alter the NYISO’s existing requirement to conduct the Public Policy Process on a two-year cycle
and to notify stakeholders and provide an explanation and estimated completion date if
additional time beyond the two-year period is required.27

F. Continuation of Public Policy Process in the Event of a Dispute

The NYISO proposes to revise Section 31.4.3.1 to clarify that it will proceed with its

Public Policy Process in the event of a dispute regarding a Public Policy Transmission Need

identified by the NYPSC, except where the NYPSC’s order identifying the need has been stayed
pending the resolution of an appeal. This revision will avoid unnecessary delays in
implementing the Public Policy Process with the aim of completing the process within a two-
year period.

G.Base Case for Public Policy Process

The NYISO proposes to revise Section 31.4.6.1 to clarify the scope of the base case that
the NYISO will use to study proposed solutions to a Public Policy Transmission Need.
Specifically, the NYISO proposes to use “(i) the most recent base case from the reliability
planning process, (ii) updates in accordance with ISO Procedures, and (iii) compensatory MWs
as needed to resolve the Reliability Needs over the ten-year Study Period.” The revision will
enable the NYISO to perform the Public Policy Process using the most recent information
available.

26 The Commission has previously accepted the NYISO’s use of “reasonable efforts” to satisfy
certain deadlines in its tariffs. See, e.g., OATT, Att. Z, Section 32.4.1 (requiring NYISO to use
reasonable efforts in satisfying deadlines in its Small Generator Interconnection Procedures); OATT, Att.
X, Section 30.6.3 (requiring NYISO to use reasonable efforts in completing Interconnection Feasibility
Study within 45 days).

27 OATT, Att. Y, Section 31.4.1.

Kimberly D. Bose, Secretary June 29, 2015

Page 9

H.Confidentiality Requirements

The NYISO proposes to revise Section 31.4.15 to further clarify what project information
the NYISO may disclose or must maintain as confidential throughout the Public Policy Process.
The revisions to the confidentiality requirements: (i) specify the basic project information that
will not be considered confidential information and may be disclosed by the NYISO at any time,
(ii) provide that the NYISO may disclose certain confidential information if, as described above,
the Developer of a viable and sufficient transmission project elects for its project to be evaluated
in the selection stage of the Public Policy Process, and (iii) specify what information the NYISO
will maintain as confidential, notwithstanding a Developer’s election for its project to proceed to
the selection stage - namely contract information, preliminary cost estimates, and non-public

financial qualification information.

I.Project Information and Developer Qualification Information Submission

Requirements

The NYISO proposes to revise Section 31.4.4.3 to clarify the requirements for

Developer’s submission of project information and developer qualification information.

Specifically, the NYISO proposes to divide the requirements into separate subsections that more
clearly delineate the requirements applicable to the Developer’s separate provision of project
information and developer qualification information. In addition, the NYISO proposes to clarify
in the new Section 31.4.4.3.1 that it may request additional information if a Developer’s
submission of its project information is incomplete or if the NYISO determines at any time that
additional information is required. The NYISO also proposes to relocate to this Section

31.4.4.3.1 the existing requirement that the NYISO will not consider a project further if the

Developer fails to provide the requested data.28 Further, the NYISO proposes to make clear that a Developer will have fifteen days to provide any project information or Developer qualification information requested under this Section 31.4.4.3. Finally, the NYISO proposes to expressly provide in Section 31.4.4.3.3 that, if Developer’s submission is incomplete, the NYISO may request additional Developer qualification information and that, subsequent to receipt of such information, the NYISO will notify the Developer of its qualification status.

The NYISO also proposes to insert a new Section 31.4.5.2 that sets forth the project

information that the Developer of a non-transmission or a partial transmission (or “hybrid”)

project must submit for the NYISO’s evaluation of the viability and sufficiency of the proposed
solution. Currently, Section 31.4.5 only specifies the project information that the Developer of a
transmission project must submit. The NYISO’s proposed project information requirements for
non-transmission or hybrid projects are generally consistent with the requirements for
transmission projects in Section 31.4.5.1, as modified to account for the different attributes of the
projects and the fact that the projects will not be evaluated for purposes of selection. For
example, the NYISO has inserted “as applicable” for project information concerning Site
Control, as certain non-transmission projects, such as demand response, would not have to

28 This requirement has been relocated from Section 31.4.5.1 of Attachment Y.

Kimberly D. Bose, Secretary June 29, 2015

Page 10

demonstrate Site Control. Similarly, the project information requirements for a non-transmission or hybrid project do not require that the Developer submit capital cost estimates for the project, as the NYISO will not be evaluating such projects for purposes of selection, but only for their viability and sufficiency to satisfy the identified need.

Finally, the NYISO proposes to revise Section 31.4.6.3 to clarify that the NYISO will

consider all of the project information and Developer qualification information submitted by the Developer when determining whether its project is viable and sufficient.

J. Required Timeframe for Satisfying Public Policy Transmission Need

The NYISO proposes to remove references in Section 31.4 to satisfying a Public Policy
Transmission Need “by the need date.”29 The “need date” tariff language was included in
Section 31.4 as part of tariff language that was initially developed for the NYISO’s reliability
planning process, where an identified Reliability Need must be satisfied by a certain date to
maintain system reliability in New York State. The same timing concerns may not apply to a
Public Policy Transmission Need. As revised, Section 31.4 establishes that the NYPSC may
include with a Public Policy Transmission Need the required timeframe, if any, for the
completion of a project to satisfy the need.30 The NYISO will then take this timeframe into
account, along with any other additional evaluation criteria identified by the NYPSC, when
evaluating the proposed solutions.31

K.Study Agreement for Selection Process

Section 31.4.4.4 currently provides that the NYISO will charge, and the Developer will pay, the actual costs of the NYISO’s study work for evaluating the Developer’s transmission project for purposes of possible selection. The tariff also currently states that the Developer will provide a $10,000 application fee and a $100,000 study deposit in connection with this
evaluation. The NYISO proposes to add in Section 31.4.4.4 that the Developer will enter into a study agreement with the NYISO for purposes of the study work the NYISO will perform for its evaluation of the project for possible selection.32

L.Defined Terms

The NYISO proposes to create two new defined terms in Section 31.1.1 of Attachment Y
to standardize the terminology currently used throughout Attachment Y to describe transmission

29 OATT, Att. Y, Sections 31.4.6.2, 31.4.6.5.

30 OATT, Att. Y, Section 31.4.2.1.

31 OATT, Att. Y Section 31.4.6.3.

32 The NYISO has developed a form study agreement with stakeholder input. The agreement will be included as an attachment to the NYISO’s Public Policy Transmission Planning Process Manual, a draft of which is under review in the NYISO’s stakeholder review process.

Kimberly D. Bose, Secretary June 29, 2015

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projects and non-transmission or hybrid projects participating in the Public Policy Process. Specifically, the NYISO proposes to insert the following two new defined terms:

Public Policy Transmission Project: A transmission project or a portfolio of

transmission projects proposed by Developer(s) to satisfy an identified Public Policy
Transmission Need and for which the Developer(s) seek to be selected by the ISO for
purposes of allocating and recovering the project’s costs under the ISO OATT.

Other Public Policy Project: A non-transmission project or a portfolio of transmission and non-transmission projects proposed by a Developer to satisfy an identified Public Policy Transmission Need.

The NYISO proposes to make conforming changes throughout Attachment Y to incorporate these new terms.

M. Additional Proposed Revisions

The NYISO proposes to make the following additional clean-ups and clarifications:

Tariff Section(s)

Section 31.1.1

Sections 31.1.5, 31.4.1,

31.4.2, 31.4.3.1, 31.4.8.1,

31.4.8.2, 31.4.11, 31.4.11.2 Sections 31.1.5, 31.4.1,

31.4.2

Section 31.1.7
Section 31.1.8.1
Section 31.4.2.1

Section 31.4.2.3(ii)

Sections 31.4.2.3(iii) and (v)

Reason for Modification

Revised definition of “Other Developer”: (i) to replace “parties or entities” with the term “Developer,” which is already defined to include “a person or entity” and (ii) to clarify that an “Other

Developer” is not a “Transmission Owner.”

Clarified, using words such as “each” and “any”, that there may
be more than one Public Policy Transmission Need in a planning
cycle for which the NYISO will solicit and evaluate solutions.
Clarified that the NYISO evaluates proposed solutions, but does
not formally evaluate or identify Public Policy Transmission

Needs, which is the role of the NYPSC.

Inserted “d/b/a National Grid” after Niagara Mohawk Power Corporation in list of New York Transmission Owners.

Removed reference to the Comprehensive System Planning Process Manual, which no longer exists.

Replaced “develop” with “maintain” as the NYPSC has now developed its procedures for identifying Public Policy

Transmission Needs.

Revised to clarify that the Long Island Power Authority will explain whether a Public Policy Requirement “does or does not” drive the need for transmission within the Long Island
Transmission District.

Revised to clarify that the NYISO evaluates solutions to
identified needs and other non-substantive clean-ups to improve readability.

Section 31.4.3.1

Sections 31.4.3.1, 31.4.8,

31.5.5.4, 31.5.6, and

31.5.6.5

Section 31.4.3.2

Sections 31.4.3.3 (previous),

31.4.4.4, 31.4.6.7, and

31.4.9 (new)

Sections 31.4.4.2 (previous),

31.4.5

Section 31.4.8.2

Section 31.4.8.2
Section 31.4.11

Section 31.5.1.2

Section 31.5.1.6

Section 31.5.5.3

General

Revised to include cross-reference to project information submission requirements.

Replaced “Transmission Owner or Other Developer” with
Developer, which term covers both a Transmission Owner and an Other Developer.

Revised Section 31.4.3.2 to remove reference to the New York Department of Public Service (“NYDPS”), as the NYPSC will be the entity identifying Public Policy Transmission Needs.

Relocated previous Section 31.4.3.3 to Section 31.4.9, which
location is consistent with the NYISO’s performance of the
provision’s requirements in the selection stage of the Public

Policy Process. Revised cross-references in Sections 31.4.4.4 and

31.4.6.7 to account for this component of the NYISO’s evaluation and selection process.

Deleted Section 31.4.4.2 and introductory language in Section

31.4.5, as they duplicate existing requirements.
Revised to clarify that a Developer of a project that was not
selected by the NYISO may be eligible to recover certain project
costs if provided for in Section 31.4.3.2 when the NYPSC or
Long Island Power Authority directs the Developer to participate
in the Public Policy Process, or as otherwise determined by the
Commission.

Replaced “project proponent” with the defined term “Developer.” Revised to indicate that the information provided in the Public Policy Transmission Planning Report is subject to the

confidentiality requirements in Section 31.4.15.

Inserted “Other Public Policy Projects” in the list of projects for
which the cost allocation methodologies in Attachment Y do not
apply.

Revised to clarify that this provision describes state law based cost recovery options for all non-transmission projects, not simply non-transmission reliability projects.

Revised to clarify language indicating that the Developer of a
selected project will be eligible for cost allocation under the
methodology set forth in Section 31.5.5.4, with the exception,

described above, for projects for which authorizations are rejected or withdrawn.

The NYISO also proposes non-substantive clarifications and
ministerial modifications to Attachment Y of the NYISO OATT.
For example, the NYISO propose to revise Section 31.1.5 to
replace “Public Policy Requirements Planning Process” with the
correct defined term “Public Policy Transmission Planning
Process.”

Kimberly D. Bose, Secretary June 29, 2015

Page 13

V. Proposed Effective Date

The NYISO respectfully requests that the Commission accept the proposed tariff

revisions for filing with an effective date of August 28, which is 60 days after the date of this
filing.

VI. Requisite Stakeholder Approval

The tariff revisions proposed in this filing were discussed with stakeholders in numerous
working group meetings, at the April 15, 2015, Business Issues Committee meeting, at the April
16, 2015, Operating Committee meeting, and at the April 29, 2015, Management Committee
meeting. The tariff revisions were approved by the Management Committee unanimously, with
abstentions. On June 16, 2015, the NYISO Board of Directors approved the proposed tariff
revisions for filing with the Commission, pursuant to Section 205 of the Federal Power Act.

VII. Service List

This filing will be posted on the NYISO’s website at www.nyiso.com. In addition, the

NYISO will e-mail an electronic link to this filing to each of its customers, to each participant on its stakeholder committees, to the New York Public Service Commission, and to the New Jersey Board of Public Utilities.

VIII.Conclusion

WHEREFORE, for the foregoing reasons, the New York Independent System Operator,
Inc. respectfully requests that the Commission accept the proposed tariff changes identified in
this filing.

Respectfully submitted,

/s/ Carl F. Patka

Carl F. Patka

Assistant General Counsel

New York Independent System Operator, Inc.

cc:Michael A. Bardee

Gregory Berson
Anna Cochrane
Morris Margolis
David Morenoff

Daniel Nowak

Kathleen Schnorf
Jamie Simler
Kevin Siqveland

31.1New York Comprehensive System Planning Process (“CSPP”)

31.1.1Definitions

Throughout Sections 31.1 through 31.7, the following capitalized terms shall have the meanings set forth in this subsection:

Affected TO: The Transmission Owner who receives written notification of a dispute related to a Local Transmission Planning Process pursuant to Section 31.2.1.3.1.

Bounded Region: A Load Zone or Zones within an area that is isolated from the rest of the NYCA as a result of constrained interface limits.

CARIS: The Congestion Assessment and Resource Integration Study for economic planning developed by the ISO in consultation with the Market Participants and other interested parties pursuant to Section 31.3 of this Attachment Y.

CRP: The Comprehensive Reliability Plan as approved by the ISO Board of Directors pursuant to this Attachment Y.

CSPP: The Comprehensive System Planning Process set forth in this Attachment Y, and in the
Interregional Planning Protocol, which covers reliability planning, economic planning, Public
Policy Requirements planning, cost allocation and cost recovery, and the interregional planning
process.

Developer: A person or entity, including a Transmission Owner, sponsoring or proposing a project pursuant to this Attachment Y.

ESPWG: The Electric System Planning Work Group, or any successor work group or
committee designated to fulfill the functions assigned to the ESPWG in this tariff.

Gap Solution: A solution to a Reliability Need that is designed to be temporary and to strive to be compatible with permanent market-based proposals. A permanent regulated solution, if
appropriate, may proceed in parallel with a Gap Solution.

Interregional Planning Protocol: The Amended and Restated Northeastern ISO/RTO Planning Coordination Protocol, or any successor to that protocol.

Interregional Transmission Project: A transmission facility located in two or more

transmission planning regions that is evaluated under the Interregional Planning Protocol and proposed to address an identified Reliability Need, congestion identified in the CARIS, or a transmission need driven by a Public Policy Requirement pursuant to Order No. 1000 and the provisions of this Attachment Y.

IPTF: The Interregional Planning Task Force, or any successor ISO stakeholder working group or committee, designated to fulfill the functions assigned to the IPTF in this tariff.

ISO/RTO Region: One or more of the three ISO or RTO regions known as PJM, ISO-New England, and NYISO, which are the “Parties” to the Interregional Planning Protocol.

LCR: An abbreviation for the term Locational Minimum Installed Capacity Requirement, as defined in the ISO Open Access Transmission Tariff.

Loss of Load Expectation (“LOLE”): A measure used to determine the amount of resources needed to minimize the possibility of an involuntary loss of firm electric load on the New York State Bulk Power Transmission Facilities.

LTP: The Local Transmission Owner Plan, developed by each Transmission Owner, which describes its respective plans that may be under consideration or finalized for its own
Transmission District.

LTP Dispute Resolution Process (“DRP”): The process for resolution of disputes relating to a Transmission Owner’s LTP set out in Section 31.2.1.3.

LTPP: The Local Planning Process conducted by each Transmission Owner for its own Transmission District.

Management Committee: The standing committee of the ISO of that name created pursuant to the ISO Agreement.

Net CONE: The value representing the cost of new entry, net of energy and ancillary services revenues, utilized by the ISO in establishing the ICAP Demand Curves pursuant to Section 5 of the ISO Market Services Tariff.

New York State Bulk Power Transmission Facilities (“BPTFs”): The facilities identified as the New York State Bulk Power Transmission Facilities in the annual Area Transmission
Review submitted to NPCC by the ISO pursuant to NPCC requirements.

NPCC: The Northeast Power Coordinating Council, or any successor organization.

NYCA Free Flow Test: A NYCA unconstrained internal transmission interface test, performed by the ISO to determine if a Reliability Need is the result of a statewide resource deficiency or a transmission limitation.

NYDPS: The New York State Department of Public Service, as defined in the New York Public Service Law.

NYISO Load and Capacity Data Report: As defined in Section 25 of the ISO OATT.

NYPSC: The New York Public Service Commission, as defined in the New York Public Service Law.

Operating Committee: The standing committee of the NYISO of that name created pursuant to the ISO Agreement.

Order No. 1000: The Final Rule entitled Transmission Planning and Cost Allocation by

Transmission Owning and Operating Public Utilities, issued by the Commission on July 21,

2011, in Docket RM10-23-001, as modified on rehearing, or upon appeal. (See FERC Stats &
Regs. ¶ 31,323 (2011) (“Order No. 1000”), on reh’g and clarification, 139 FERC ¶ 61,132
(“Order No. 1000-A”), on reh’g and clarification, 141 FERC ¶ 61,044 (2012) (“Order No. 1000-
B”).

Other Developer: A Developer, other than a Transmission Owner, sponsoring or proposing to sponsor a regulated economic project, a Public Policy Transmission Project, an Other Public Policy Project, or a regulated solution to a Reliability Need.

Other Public Policy Project: A non-transmission project or a portfolio of transmission and non-transmission projects proposed by a Developer to satisfy an identified Public Policy
Transmission Need.

Public Policy Transmission Planning Process: The process by which the ISO solicits needs for transmission driven by Public Policy Requirements, evaluates all proposed Public Policy
Transmission Projects and Other Public Policy Projects on a comparable basis, and selects the more efficient or cost effective Public Policy Transmission Project, if any, for eligibility for cost allocation under the ISO Tariffs.

Public Policy Transmission Need: A transmission need identified by the NYPSC that is driven by a Public Policy Requirement pursuant to Sections 31.4.2.1 through 31.4.2.3.

Public Policy Transmission Planning Report: The report approved by the ISO Board of

Directors pursuant to this Attachment Y on the ISO’s evaluation of all Public Policy

Transmission Projects and Other Public Policy Projects proposed to satisfy an identified Public Policy Transmission Need pursuant to Section 31.4.6 and the ISO’s selection of a proposed Public Policy Transmission Project, if any, that is the more efficient or cost effective solution to the identified Public Policy Transmission Need pursuant to Section 31.4.8.

Public Policy Requirement: 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, any successor statute, or any duly enacted law or regulation passed by a local governmental entity in New York State, that may relate to transmission
planning on the BPTFs.

Public Policy Transmission Project: A transmission project or a portfolio of transmission

projects proposed by Developer(s) to satisfy an identified Public Policy Transmission Need and for which the Developer(s) seek to be selected by the ISO for purposes of allocating and
recovering the project’s costs under the ISO OATT.

Reliability Criteria: The electric power system planning and operating policies, standards, criteria, guidelines, procedures, and rules promulgated by the North American Electric

Reliability Corporation (“NERC”), Northeast Power Coordinating Council (“NPCC”), and the
New York State Reliability Council (“NYSRC”), as they may be amended from time to time.

Reliability Need: A condition identified by the ISO as a violation or potential violation of one or more Reliability Criteria.

Responsible Transmission Owner: The Transmission Owner or Transmission Owners

designated by the ISO, pursuant to Section 31.2.4.3, to prepare a proposal for a regulated

backstop solution to a Reliability Need or to proceed with a regulated solution to a Reliability

Need. The Responsible Transmission Owner will normally be the Transmission Owner in whose Transmission District the ISO identifies a Reliability Need.

RNA: The Reliability Needs Assessment as approved by the ISO Board under this Attachment.

RNA Base Case: The model(s) representing the New York State Power System over the Study
Period.

Site Control: Documentation reasonably demonstrating: (1) ownership of, a leasehold interest
in, or a right to develop a site or right of way for the purpose of constructing a proposed project;

(2) an option to purchase or acquire a leasehold site or right of way for such purpose; or (3) an exclusivity or other business relationship between the Transmission Owner, or Other Developer, and the entity having the right to sell, lease, or grant the Transmission Owner, or Other
Developer, the right to possess or occupy a site or right of way for such purpose.

Study Period: The ten-year time period evaluated in the RNA and the CRP.

Target Year: The calendar year in which a Reliability Need arises, as determined by the ISO pursuant to Section 31.2.

TPAS: The Transmission Planning Advisory Subcommittee, or any successor work group or
committee designated to fulfill the functions assigned to TPAS pursuant to this Attachment.

Trigger Date: The 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.

Viability and Sufficiency Assessment: The results of the ISO’s assessment of the viability and sufficiency of proposed solutions to a Reliability Need under Section 31.2.5 or a Public Policy Transmission Need under Section 31.4.6, as applicable.

All other capitalized terms shall have the meanings provided for them in the ISO’s

Tariffs.

31.1.2Reliability Planning Process

Sections 31.2.1 through 31.2.13 of this Attachment Y describe the process that the ISO,
the Transmission Owners, and Market Participants and other interested parties shall follow for
planning to meet the Reliability Needs of the BPTFs. The objectives of the process are to:

(1) evaluate the Reliability Needs of the BPTFs pursuant to Reliability Criteria (2) identify,

through the development of appropriate scenarios, factors and issues that might adversely impact the reliability of the BPTFs; (3) provide a process whereby solutions to identified needs are
proposed, evaluated on a comparable basis, and implemented in a timely manner to ensure the reliability of the system; (4) provide a process by which the ISO will select the more efficient or cost effective regulated transmission solution to satisfy the Reliability Need for eligibility for cost allocation under the ISO Tariffs; (5) provide an opportunity first for the implementation of market-based solutions while ensuring the reliability of the BPTFs; and (6) coordinate the ISO’s reliability assessments with neighboring Control Areas.

The ISO will provide, through the analysis of historical system congestion costs,

information about historical congestion including the causes for that congestion so that Market Participants and other stakeholders can make appropriately informed decisions. See
Appendix A.

31.1.3 Transmission Owner Planning Process

The Transmission Owners will continue to plan for their transmission systems, including
the BPTFs and other NYS Transmission System facilities. The planning process of each
Transmission Owner is referred to herein as the LTPP, and the plans resulting from the LTPP are
referred to herein as LTPs, whether under consideration or finalized. Each Transmission Owner
will be responsible for administering its LTPP and for making provisions for stakeholder input

into its LTPP. The ISO’s role in the LTPP is limited to the procedural activities described in this Attachment Y.

The finalized portions of the LTPs periodically prepared by the Transmission Owners
will be used as inputs to the CSPP described in this Attachment Y. Each Transmission Owner
will prepare an LTP for its transmission system in accordance with the procedures described in
Section 31.2.1.

31.1.4Economic Planning Process

Sections 31.3.1 and 31.3.2 of this Attachment Y describe the process that the ISO, the
Transmission Owners, and Market Participants shall follow for economic planning to identify
and reduce current and future projected congestion on the BPTFs. The objectives of the
economic planning process are to: (1) project congestion on the BPTFs over the ten-year
planning period of this CSPP, (2) identify, through the development of appropriate scenarios,
factors that might produce or increase congestion, (3) provide a process whereby projects to
reduce congestion identified in the economic planning process are proposed and evaluated on a
comparable basis in a timely manner, (4) provide an opportunity for the development of market-
based solutions to reduce the congestion identified, and (5) coordinate the ISO’s congestion
assessments and economic planning process with neighboring Control Areas.

31.1.5 Public Policy Transmission Planning Process

Section 31.4 of this Attachment Y describes the planning process that the ISO, and all
interested parties, shall follow to consider Public Policy Requirements that drive the need for
expansions or upgrades to BPTFs. The objectives of the Public Policy Transmission Planning
Process are to: (1) allow Market Participants and other interested parties to propose transmission
needs that they believe are being driven by Public Policy Requirements and for which

transmission solutions should be evaluated, (2) provide a process by which the NYPSC will, with
input from the ISO, Market Participants, and other interested parties, identify the transmission
needs, if any, for which transmission solutions should be evaluated, (3) provide a process
whereby Public Policy Transmission Projects and Other Public Policy Projects are proposed to
satisfy each identified Public Policy Transmission Need and are evaluated by the ISO on a
comparable basis, (4) provide a process by which the ISO will select the more efficient or cost
effective regulated Public Policy Transmission Project, if any, to satisfy each identified Public
Policy Transmission Need for eligibility for cost allocation under the ISO Tariffs; (5) provide a
cost allocation methodology for regulated Public Policy Transmission Projects that have been
selected by the ISO, and (6) coordinate the ISO’s Public Policy Transmission Planning Process
with neighboring Control Areas.

31.1.6Interregional Planning Process

The ISO, the Transmission Owners, and Market Participants and other interested parties
shall coordinate system planning activities with neighboring planning regions (i.e., the ISO/RTO
Regions and adjacent portions of Canada). The Interregional Planning Protocol includes a
description of the committee structure, processes, and procedures through which system planning
activities are openly and transparently coordinated by the ISO/RTO Regions. The objective of
the interregional planning process is to contribute to the on-going reliability and the enhanced
operational and economic performance of the ISO/RTO Regions through: (1) exchange of
relevant data and information; (2) coordination of procedures to evaluate certain interconnection
and transmission service requests; (3) periodic comprehensive interregional assessments; (4)
identification and evaluation of potential Interregional Transmission Projects that can address
regional needs in a manner that may be more efficient or cost-effective than separate regional

solutions, in accordance with the requirements of Order No. 1000; (5) allocation of costs among the ISO/RTO Regions of Interregional Transmission Projects, identified in accordance with the Interregional Planning Protocol and approved by each region, pursuant to the cost allocation
methodology set forth in Section 31.5.7 herein. The planning activities of the ISO/RTO Regions shall be conducted consistent with the planning criteria of each ISO/RTO Region’s regional
reliability organization(s) as well as the relevant local reliability entities. The ISO/RTO Regions shall periodically produce a Northeastern Coordinated System Plan that integrates the system
plans of all of the ISO/RTO Regions.

31.1.7 Enrollment in the ISO’s Transmission Planning Region

For purposes of any matter addressed by this Attachment Y, participation in the ESPWG,
IPTF and TPAS shall be open to any interested entity, irrespective of whether that entity has
become a Party to the ISO Agreement. Any entity may enroll in the ISO’s transmission planning
region in order to fully participate in the ISO’s governance process by becoming a Party to the
ISO Agreement, as set forth in Section 2.02 of the ISO Agreement. An 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. As of October 15, 2013,
the Transmission Owners are: (1) Central Hudson Gas & Electric Corporation, (2) Consolidated
Edison Company of New York, Inc., (3) New York State Electric & Gas Corporation, (4)
Niagara Mohawk Power Corporation d/b/a National Grid, (5) Orange and Rockland Utilities,
Inc., (6) Rochester Gas and Electric Corporation, (7) the Power Authority of the State of New
York, and (8) Long Island Lighting Company d/b/a LIPA.

31.1.8NYISO Implementation and Administration

31.1.8.1The ISO shall adopt procedures for the implementation and administration

of the CSPP set forth in this Attachment Y and the Interregional Planning

Protocol, and shall revise those procedures as and when necessary. Such

procedures will be incorporated in the ISO’s manuals. The ISO Procedures shall
provide for the open and transparent coordination of the CSPP to allow Market
Participants and all other interested parties to have a meaningful opportunity to
participate in each stage of the CSPP through the meetings conducted in
accordance with the ISO system of collaborative governance. Confidential
Information and Critical Energy Infrastructure Information exchanged through the
CSPP shall be subject to the protections for such information contained in the
ISO’s tariffs and procedures, including this Attachment Y and Attachment F of
the NYISO OATT.

31.1.8.2 The ISO Procedures shall include a schedule for the collection and

submission of data and the preparation of models to be used in the studies

contemplated under this tariff. That schedule shall provide for a rolling two-year
cycle of studies and reports conducted in each of the ISO planning processes
(reliability, economic and public policy) as part of the Comprehensive System
Planning Process. Each cycle commences with the LTPP providing input into the
reliability planning process. The CARIS study under Section 31.3 of this
Attachment Y will commence upon completion of the viability and sufficiency
analysis performed pursuant to Section 31.2.5.7, as part of the CRP process. The
Public Policy Transmission Planning Process will to the extent practicable run in
parallel with the reliability planning process, provided that the NYPSC’s issuance

of a written statement pursuant to Section 31.4.2.1 will occur after the draft RNA
study results are posted. If the CRP cannot be completed within a two-year cycle,
the ISO will notify stakeholders and provide an estimated completion date and an

explanation of the reasons the additional time is required. As further detailed in
Sections 31.2, 31.3, 31.4, and 31.5, the interregional planning process shall be
conducted in parallel with the reliability planning process, the economic planning

process, and the Public Policy Transmission Planning Process to identify and
evaluate Interregional Transmission Projects that may more efficiently or cost-
effectively meet the needs of the region than a regional transmission project.

31.1.8.3 The ISO Procedures shall be designed to allow the coordination of the

ISO’s planning activities with those of the ISO/RTO Regions, NERC, NPCC, the NYSRC, and other regional reliability organizations so as to develop consistency of the models, databases, and assumptions utilized in making reliability and
economic determinations.

31.1.8.4 The ISO Procedures shall facilitate the timely identification and resolution

of all substantive and procedural disputes that arise out of the CSPP. Any party
participating in the CSPP and having a dispute arising out of the CSPP may seek
to have its dispute resolved in accordance with ISO governance procedures during
the course of the CSPP. If the party’s dispute is not resolved in this manner as a
part of the plan development process, the party may invoke formal dispute
resolution procedures administered by the ISO that are the same as those available
to Transmission Customers under Section 11 of the ISO Market Administration

and Control Area Services Tariff. Disputes arising out of the LTPP shall be
addressed by the LTP DRP set forth in Section 31.2.1.3 of this Attachment Y.

31.1.8.5 Except for those cases where the ISO OATT provides that an individual

result of its administration of the CSPP will be recovered from all customers through and in accordance with Rate Schedule 1 of the ISO OATT.

31.1.8.6 The ISO shall make reasonable efforts to meet all deadlines provided in

this Attachment Y; provided, however, that the ISO must meet all deadlines set
forth in a development agreement entered into pursuant to this Attachment Y in
accordance with the terms of that agreement. If the ISO cannot meet a deadline
set forth in this Attachment Y and an extension of that deadline will not result in a
reliability violation, the NYISO may extend the deadline, provided that it shall
notify Market Participants and other interested parties, explain the reason for the
failure to meet the deadline, and provide an estimated time by which it will
complete the applicable action.

31.1.8.7 With the exception of the deadlines set forth in a development agreement

entered into pursuant to this Attachment Y, the ISO may extend, at its discretion, a deadline applicable to another party under this Attachment Y for a reasonable period of time if the extension: (i) is applied equally to all parties that are required to meet the deadline, and (ii) will not result in a reliability violation.

31.4Public Policy Transmission Planning Process

31.4.1General

The Public Policy Transmission Planning Process shall consist of three steps: (1)

identification of Public Policy Transmission Needs; (2) requests for proposed Public Policy

Transmission Projects and Other Public Policy Projects to address those Public Policy

Transmission Needs and the evaluation of those projects; and (3) selection of the more efficient
or cost-effective Public Policy Transmission Project, if any, to satisfy each Public Policy
Transmission Need to be eligible for cost allocation under the ISO OATT. Sections 31.4.2.1
through 31.4.2.3 provide for the identification of transmission needs driven by Public Policy
Requirements and warranting evaluation by the ISO. The ISO shall request and evaluate
proposed Public Policy Transmission Projects and Other Public Policy Projects to address such
needs. The ISO shall select the more efficient or cost-effective Public Policy Transmission
Project, if any, to satisfy each need. The Public Policy Transmission Planning Process will be
conducted on a two-year cycle, unless requested by the NYPSC to be conducted out of that
cycle. If the Public Policy Transmission Planning Process cannot be completed in the two-year
cycle, the ISO will notify stakeholders and provide an estimated completion date and an
explanation of the reasons the additional time is required. The NYPSC’s issuance of a written
statement pursuant to Section 31.4.2.1 below will occur after the draft RNA study results are
posted.

31.4.2Identification and Posting of Proposed Transmission Needs Driven by

Public Policy Requirements

At the start of each cycle for the Public Policy Transmission Planning Process, the ISO
will provide a 60-day period to allow any stakeholder or interested party to submit to the ISO, or

for the ISO on its own initiative to identify, any proposed transmission need(s) that it believes

are being driven by Public Policy Requirement(s) and for which transmission solutions should be requested and evaluated. Each submittal will identify the Public Policy Requirement(s) that the party believes is driving the need for transmission, propose criteria for the evaluation of
transmission solutions to that need, and describe how the construction of transmission will fulfill the Public Policy Requirement(s).

For submittals to identify transmission needs pursuant to Section 31.4.2.1, the ISO will post all submittals on its website after the end of the 60-day period, and will submit to the
NYPSC all submittals proposed by stakeholders, other interested parties, and any additional
transmission needs and criteria identified by the ISO. For submittals to identify transmission
needs that require a physical modification to transmission facilities in the Long Island
Transmission District pursuant to Section 31.4.2.3, the ISO will post all submittals on its website after the end of the 60-day period, and will provide to the NYPSC and the Long Island Power
Authority all submittals proposed by stakeholders, other interested parties, and any additional
transmission needs and criteria identified by the ISO.

31.4.2.1 Identification and Determination of Transmission Needs Driven by
Public Policy Requirements

The NYPSC will review all proposed transmission need(s) and, with input from the ISO
and interested parties, identify the transmission needs, if any, for which specific transmission
solutions should be requested and evaluated. The NYPSC will maintain procedures to govern
the process by which it will review proposed transmission need(s), which procedures shall:
ensure that such process is open and transparent, provide the ISO and interested parties a
meaningful opportunity to participate in such process, provide input regarding the NYPSC’s
considerations, and result in the development of a written determination as required by law,

inclusive of the input provided by the ISO and interested parties. In addition, the NYPSC may, on its own, identify a transmission need driven by a Public Policy Requirement. Any such
transmission need identified by the NYPSC on its own shall be described by the NYPSC in
accordance with the requirements for stakeholder submittals set forth in Section 31.4.2, and shall be identified and posted to the ISO’s website prior to NYPSC’s issuance of the required written statement discussed below in this Section 31.4.2.1 so as to provide the ISO and interested parties an opportunity to provide input to the NYPSC relating thereto.

The ISO shall assist the NYPSC in its analyses as requested. The NYPSC may also request that the ISO, pursuant to Section 3.8.1 of the ISO OATT, conduct an evaluation of alternative options to address the transmission needs.

The NYPSC shall issue a written statement that identifies the relevant Public Policy
Requirements driving transmission needs and explains why it has identified the Public Policy
Transmission Needs for which transmission solutions will be requested by the ISO. The
statement shall also explain why transmission solutions to other suggested transmission needs
should not be requested. The NYPSC’s statement may also provide: (i) additional criteria for the
evaluation of transmission solutions and non-transmission projects, (ii) the required timeframe, if
any, for completion of the proposed solution, and (iii) the type of analyses that it will request
from the ISO.

If the NYPSC does not identify any transmission needs driven by Public Policy

Requirements, it will provide confirmation of that conclusion to the ISO, and the ISO shall not request solutions. The ISO shall post the NYPSC’s statement on the ISO’s website.

31.4.2.2 Disputes of NYPSC Determinations

In the event that a dispute is raised solely within the NYPSC’s jurisdiction relating to any NYPSC decision to either accept or deny a proposed transmission need as one for which
transmission solutions should be requested, the dispute 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.

31.4.2.3 Identification and Determination of Transmission Needs Within the Long
Island Transmission District Driven by Public Policy Requirements

The Long Island Power Authority, pursuant to its jurisdiction under Title 1-A of Article 5
(§1020 et seq.) of the Public Authorities Law of the State of New York, shall identify and
determine whether a Public Policy Requirement drives the need for a physical modification to
transmission facilities in the Long Island Transmission District. The identification and
determination of such transmission needs shall be consistent with Section 31.4.2.1, as further
supplemented by this Section 31.4.2.3. The Long Island Power Authority shall have no authority
to identify a transmission need outside of the Long Island Transmission District.
Based on the information provided by the ISO pursuant to Section 31.4.2, the Long
Island Power Authority shall review whether a proposed Public Policy Requirement drives the
need for a physical modification to transmission facilities in the Long Island Transmission
District. In addition, the following requirements shall apply to the Long Island Power Authority:

(i) The Long Island Power Authority shall consult with the NYDPS on the

identification of transmission needs driven by a Public Policy Requirement solely within the Long Island Transmission District;

(ii) Upon completion of its review, the Long Island Power Authority shall issue a

written statement explaining whether a Public Policy Requirement does or does

not drive the need for a physical modification to transmission facilities solely within the Long Island Transmission District, and describing the consultation undertaken with the NYDPS;

(iii) In conjunction with the issuance of its written statement, the Long Island Power

Authority shall transmit to the NYPSC and request that it review and determine
whether a transmission need solely within the Long Island Transmission District
identified by the Long Island Power Authority as being driven by a Public Policy
Requirement should be considered a Public Policy Transmission Need for
purposes of the evaluation of solutions by the ISO and the potential eligibility of
transmission solutions for selection and regional cost allocation under the ISO
OATT. Any transmission need within the Long Island Transmission District that
has been identified by the Long Island Power Authority, but which the NYPSC
has not determined to be a Public Policy Transmission Need that would be
evaluated by the ISO, shall be addressed under the Long Island Power Authority’s
Local Transmission Plan.

(iv)The determination of whether there is a transmission need solely within the Long

Island Transmission District is the sole responsibility of the Long Island Power

Authority;

(v) The NYDPS and Long Island Power Authority shall consult and coordinate on

procedures to be adopted by the NYPSC and Long Island Power Authority to

the ISO, are completed, publicly posted and transmitted to the ISO at the same
time as the NYPSC makes its final determinations pursuant to Section 31.4.2.1;
and

(vi) In the event that a dispute is raised solely within the Long Island Power

Authority’s jurisdiction relating to a decision by the Long Island Power Authority to either accept or deny a proposed transmission need solely within the Long
Island Transmission District, the dispute 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.

31.4.3Request for Proposed Solutions

The ISO will request proposed Public Policy Transmission Projects to satisfy each Public
Policy Transmission Need identified pursuant to Sections 31.4.2.1 through 31.4.2.3, including
any proposed Interregional Transmission Project that has been identified and evaluated in
accordance with the “Analysis and Consideration of Interregional Transmission Projects” section
of the Interregional Planning Protocol. The ISO shall also accept specific proposed Other Public
Policy Projects to satisfy a Public Policy Transmission Need identified pursuant to Sections

31.4.2.1 through 31.4.2.3.

31.4.3.1 Timing of ISO Request for Proposed Solutions

Following posting of a determination pursuant to Sections 31.4.2.1 through 31.4.2.3, the
ISO will provide a 60-day period for Developers to propose specific solutions, whether Public
Policy Transmission Project(s) or Other Public Policy Project(s), to satisfy each identified Public
Policy Transmission Need in accordance with the requirements set forth in Section 31.4.4.3.
Any proposed transmission needs that are under appeal pursuant to Section 31.4.2.2 or Section

31.4.2.3(vi) may be addressed with proposed solutions, if required, except where the NYPSC order has been stayed pending the resolution of that appeal.

31.4.3.2 NYPSC and LIPA Requests for Solutions

To ensure that there will be a response to a Public Policy Transmission Need, the NYPSC may request the appropriate Transmission Owner(s) or Other Developer, as identified by the
NYPSC, to propose a Public Policy Transmission Project. With respect to a transmission need
identified by the Long Island Power Authority and determined to be a Public Policy
Transmission Need by the NYPSC pursuant to Section 31.4.2.3, the Long Island Power
Authority’s Board of Trustees may request that an appropriate Transmission Owner(s) or Other
Developer propose a Public Policy Transmission Project or Other Public Policy Project. A
request for the provision of a Public Policy Transmission Project or -an Other Public Policy
Project by either the NYPSC or the Long Island Power Authority’s Board of Trustees, pursuant
to this section, is supplementary to, and not to the exclusion of, the submission of proposed
projects pursuant to Section 31.4.3.1. Costs incurred by a Transmission Owner or Other
Developer in preparing a proposed transmission solution in response to a request under this
Section 31.4.3.2 will be recoverable under Section 31.5.6.

31.4.4 Eligibility and Qualification Criteria for Developers and Projects

(ii) a notarized officer’s certificate, signed by an authorized officer of the Affiliate with signatory authority, in a form acceptable to the ISO, certifying that the Affiliate will participate in the
Developer’s project in the manner described by the Developer and will abide by the requirements set forth in this Attachment Y, the ISO Tariffs, and ISO Procedures, related and applicable to the Affiliate’s participation.

31.4.4.1 Developer Qualification and Timing

The ISO shall provide each Developer with an opportunity to demonstrate that it has or can draw upon the financial resources, technical expertise, and experience needed to finance, develop, construct, operate, and maintain a Public Policy Transmission Project. The ISO shall consider the qualification of each Developer in an evenhanded and non-discriminatory manner, treating Transmission Owners and Other Developers alike.

31.4.4.1.1 Developer Qualification Criteria

The ISO shall make a determination on the qualification of a Developer to propose to develop a Public Policy Transmission Project based on the following criteria:

31.4.4.1.1.1 The technical and engineering qualifications and experience of the

Developer relevant to the development, construction, operation and maintenance of a transmission facility, including evidence of the Developer’s demonstrated capability to adhere to standardized construction, maintenance, and operating
practices and to contract with third parties to develop, construct, maintain, and/or operate transmission facilities;

operated transmission facilities, the Developer shall provide the ISO a description
of the transmission facilities (not to exceed ten) that the Developer has previously
developed, constructed, maintained or operated and the status of those facilities,

including whether the construction was completed, whether the facility entered

into commercial operations, whether the facility has been suspended or terminated for any reason, and evidence demonstrating the ability of the Developer to address and timely remedy any operational failure of the facilities; and

31.4.4.1.1.3 The Developer’s current and expected capability to finance, or its

experience in arranging financing for, transmission facilities. For purposes of the ISO’s determination, the Developer shall provide the ISO:

(1) evidence of its demonstrated experience financing or arranging financing for

transmission facilities, if any, including a description of such projects (not to

exceed ten) over the previous ten years, the capital costs and financial structure of
such projects, a description of any financing obtained for these projects through
rates approved by the Commission or a state regulatory agency, the financing

closing date of such projects, and whether any of the projects are in default;

(2) its audited annual financial statements from the most recent three years and its

most recent quarterly financial statement or equivalent information, if available;

(3) its credit rating from Moody’s Investor Services, Standard & Poor’s, or Fitch or

equivalent information, if available;

(4) a description of any prior bankruptcy declarations, material defaults, dissolution,

merger or acquisition by the Developer or its predecessors or subsidiaries occurring within the previous five years; and

(5)such other evidence that demonstrates its current and expected capability to

finance a project to solve a Public Policy Transmission Need.

31.4.4.1.1.4 A detailed plan describing how the Developer - in the absence of previous
experience financing, developing, constructing, operating, or maintaining
transmission facilities - will finance, develop, construct, operate, and maintain a
transmission facility, including the financial, technical, and engineering
qualifications and experience and capabilities of any third parties with which it
will contract for these purposes.

31.4.4.1.2 Developer Qualification Determination

Any Developer seeking to be qualified may submit the required information, or update
any previously submitted information, at any time. The ISO shall treat on a confidential basis in
accordance with the requirements of its Code of Conduct in Attachment F of the ISO OATT any
non-public financial qualification information that is submitted to the ISO by the Developer
under Section 31.4.4.1.1.3 and is designated by the Developer as “Confidential Information.”
The ISO shall within 15 days of a Developer’s submittal, notify the Developer if the information
is incomplete. If the submittal is deemed incomplete, the Developer shall submit the additional
information within 30 days of the ISO’s request. The ISO shall notify the Developer of its
qualification status within 30 days of receiving all necessary information. A Developer shall
retain its qualification status for a three-year period following the notification date; provided,
however, that the ISO may revoke this status if it determines that there has been a material
change in the Developer’s qualifications and the Developer no longer meets the qualification
requirements. A Developer that has been qualified shall inform the ISO within thirty days of any
material change to the information it provided regarding its qualifications and shall submit to the

ISO each year its most recent audited annual financial statement when available. At the

conclusion of the three-year period or following the ISO’s revocation of a Developer’s

qualification status, the Developer may re-apply for a qualification status under this section.

Any Developer determined by the ISO to be qualified under this section shall be eligible
to propose a regulated Public Policy Transmission Project and shall be eligible to use the cost
allocation and cost recovery mechanism for regulated Public Policy Transmission Projects set
forth in Section 31.5 of this Attachment Y and the appropriate rate schedule for any approved
project.

31.4.4.3 Timing for Submittal of Project Information and Developer Qualification
Information and Opportunity to Provide Additional Information

31.4.4.3.1 The Developer of a Public Policy Transmission Project or an Other Public

Policy Project proposed to satisfy a Public Policy Transmission Need shall submit
to the ISO within 60 days of the ISO’s request for solutions to a Public Policy
Transmission Need the project information required under Section 31.4.5.
Simultaneous with its submission of this project information, a Developer must
demonstrate to the ISO that it has submitted, as applicable, a valid Interconnection
Request for the project pursuant to Section 30.3.3 of Attachment X of the ISO
OATT or a Study Request for the project pursuant to Sections 3.7.1 or 4.5.1 of the
ISO OATT. If: (i) the ISO determines that the Developer’s submission of its
project information is incomplete, or (ii) the ISO determines at any time in the
planning process that additional project information is required, the ISO shall
request that the Developer provide additional project information within the
timeframe set forth in Section 31.4.4.3.4. A Developer’s failure to provide the
data requested by the ISO within the timeframes provided in Sections 31.4.4.3.1

and 31.4.4.3.4 of this Attachment Y will result in the rejection of the Developer’s proposed Public Policy Transmission Project or Other Public Policy Project from further consideration during that planning cycle.

31.4.4.3.2 Any Developer that the ISO has determined under Section 31.4.4.1.2 of

this Attachment Y to be qualified to propose to develop a transmission project as
a transmission solution to a Public Policy Transmission Need may submit the
required project information for its proposed Public Policy Transmission Project;
provided, however, that based on the actual identified need that requires
resolution, the ISO may request that the qualified Developer provide additional
Developer qualification information within the timeframe set forth in Section

31.4.4.3.4.

31.4.4.3.3 Any Developer that has not been determined by the ISO to be qualified,

but that wants to propose to develop a Public Policy Transmission Project, must
submit to the ISO the information required for Developer qualification under
Section 31.4.4.1 within 30 days after a request for solutions is made by the ISO.
The ISO shall within 30 days of a Developer’s submittal of its Developer
qualification information, notify the Developer if this information is incomplete
and request that the Developer provide additional Developer qualification
information within the timeframe set forth in Section 31.4.4.3.4. The ISO shall
notify a Developer that has submitted the requested Developer qualification
information whether it is qualified to propose to develop a Public Policy
Transmission Project to be considered in that planning cycle.

31.4.4.3.4The Developer shall submit additional Developer qualification

information or project information required by the ISO within 15 days of the ISO’s request.

31.4.4.3.5 If a Developer fails to timely submit the additional Developer qualification

information requested by the ISO, the Developer will not be eligible for its

proposed Public Policy Transmission Project to be considered in that planning
cycle.

31.4.4.4. Application Fee and Study Deposit for Proposed Regulated Public Policy
Transmission Project

Within sixty (60) days of the ISO’s request for solutions to a Public Policy Transmission
Need, a Developer that proposes a Public Policy Transmission Project shall, at the same time that
it provides project information pursuant to Section 31.4.4.3.1, (i) execute a study agreement with
the ISO for purposes of the ISO’s evaluation of the proposed Public Policy Transmission Project
under Sections 31.4.7, 31.4.8, 31.4.9, and 31.4.10, and (ii) submit to the ISO: (A) a non-
refundable application fee of $10,000, and (B) a study deposit of $100,000, which shall be
applied to study costs and subject to refund as described in this Section 31.4.4.4.
The ISO shall charge, and a Developer proposing a regulated Public Policy Transmission Project shall pay, the actual costs of the ISO’s evaluation of the Developer’s proposed Public Policy Transmission Project for purposes of the ISO’s selection of the more efficient or cost
effective Public Policy Transmission Project to satisfy a Public Policy Transmission Need for
cost allocation purposes, including costs associated with the ISO’s use of subcontractors. The
ISO will track its staff and administrative costs, including any costs associated with using
subcontractors, that it incurs in performing the evaluation of a Developer’s proposed Public
Policy Transmission Project under Sections 31.4.7, 31.4.8, 31.4.9, and 31.4.10 and any

supplemental evaluation or re-evaluation of the proposed Public Policy Transmission Project. If the ISO or its subcontractors perform study work for multiple proposed Public Policy
Transmission Projects on a combined basis, the ISO will allocate the costs of the combined study work equally among the applicable Developers.

The ISO shall invoice the Developer monthly for study costs incurred by the ISO in

evaluating the Developer’s proposed Public Policy Transmission Project as described above.

Such invoice shall include a description and an accounting of the study costs incurred by the ISO
and estimated subcontractor costs. The Developer shall pay the invoiced amount within thirty

(30) calendar days of the ISO’s issuance of the monthly invoice. The ISO shall continue to hold
the full amount of the study deposit until settlement of the final monthly invoice; provided,
however, if a Developer: (i) does not pay its monthly invoice within the timeframe described
above, or (ii) does not pay a disputed amount into an independent escrow account as described
below, the ISO may draw upon the study deposit to recover the owed amount. If the ISO must
draw on the study deposit, the ISO shall provide notice to the Developer, and the Developer shall
within thirty (30) calendar days of such notice make payments to the ISO to restore the full study
deposit amount. If the Developer fails to make such payments, the ISO may halt its evaluation
of the Developer’s proposed Public Policy Transmission Project and may disqualify the
Developer’s proposed Public Policy Transmission Project from further consideration. After the
conclusion of the ISO’s evaluation of the Developer’s proposed Public Policy Transmission
Project or if the Developer: (i) withdraws its proposed Public Policy Transmission Project or (ii)
fails to pay an invoiced amount and the ISO halts its evaluation of the proposed Public Policy
Transmission Project, the ISO shall issue a final invoice and refund to the Developer any portion
of the Developer’s study deposit submitted to the ISO under this Section 31.4.4.4 that exceeds

outstanding amounts that the ISO has incurred in evaluating that Developer’s proposed Public Policy Transmission Project, including interest on the refunded amount calculated in accordance with Section 35.19a(a)(2) of FERC’s regulations. The ISO shall refund the remaining portion within sixty (60) days of the ISO’s receipt of all final invoices from its subcontractors and
involved Transmission Owners.

In the event of a Developer’s dispute over invoiced amounts, the Developer shall: (i)

timely pay any undisputed amounts to the ISO, and (ii) pay into an independent escrow account
the portion of the invoice in dispute, pending resolution of such dispute. If the Developer fails to
meet these two requirements, then the ISO shall not be obligated to perform or continue to
perform its evaluation of the Developer’s proposed Public Policy Transmission Project.
Disputes arising under this section shall be addressed through the Dispute Resolution Procedures
set forth in Section 2.16 of the ISO OATT and Section 11 of the ISO Services Tariff. Within
thirty (30) Calendar Days after resolution of the dispute, the Developer will pay the ISO any
amounts due with interest calculated in accordance with Section 35.19a(a)(2) of FERC’s
regulations.

31.4.5Project Information Requirements

31.4.5.1 Requirements for Public Policy Transmission Projects

31.4.5.1.1 A Developer proposing a Public Policy Transmission Project to satisfy a

Public Policy Transmission Need must provide, at a minimum, the following

details: (1) contact information; (2) the lead time necessary to complete the

project, including, if available, the construction windows in which the Developer
can perform construction and what, if any, outages may be required during these
periods; (3) a description of the project, including type, size, and geographic and

electrical location, as well as planning and engineering specifications as

appropriate; (4) evidence of a commercially viable technology; (5) a major

milestone schedule; (6) a schedule for obtaining any required permits and other

certifications; (7) a demonstration of Site Control or a schedule for obtaining such control; (8) status of any contracts (other than an interconnection agreement) that are under negotiations or in place, including any contracts with third-party
contractors; (9) status of ISO interconnection studies and interconnection
agreement; (10) status of equipment availability and procurement; (11) evidence of financing or ability to finance the project; (12) capital cost estimates for the
project; (13) a description of permitting or other risks facing the project at the
stage of project development, including evidence of the reasonableness of project cost estimates all based on the information available at the time of the submission; and (14) any other information requested by the ISO.

31.4.5.1.2 A Developer shall submit the following information to indicate the status

of any contracts: (i) copies of all final contracts the ISO determines are relevant to its consideration, or (ii) where one or more contracts are pending, a timeline on
the status of discussions and negotiations with the relevant documents and when the negotiations are expected to be completed. The final contracts shall be
submitted to the ISO when available. The ISO shall treat on a confidential basis in accordance with the requirements of its Code of Conduct in Attachment F of
the ISO OATT any contract that is submitted to the ISO and is designated by the Developer as “Confidential Information.”

31.4.5.1.3A Developer shall submit the following information to indicate the status

of any required permits: (i) copies of all final permits received that the ISO

determines are relevant to its consideration, or (ii) where one or more permits are pending, the completed permit application(s) with information on what additional actions must be taken to meet the permit requirements and a timeline providing the expected timing for finalization and receipt of the final permit(s). The final permits shall be submitted to the ISO when available.

31.4.5.1.4 A Developer shall submit the following information, as appropriate, to

indicate evidence of financing by it or any Affiliate upon which it is relying for
financing: (i) evidence of self-financing or project financing through approved
rates or the ability to do so, (ii) copies of all loan commitment letter(s) and signed
financing contract(s), or (iii) where such financing is pending, the status of the
application for any relevant financing, including a timeline providing the status of
discussions and negotiations of relevant documents and when the negotiations are
expected to be completed. The final contracts or approved rates shall be

submitted to the ISO when available.

31.4.5.1.5 Upon the completion of any interconnection or transmission expansion

study of a proposed Public Policy Transmission Project that is performed under Sections 3.7 or 4.5 of the ISO OATT or Attachment X of the ISO OATT, the Developer of the proposed project shall notify the ISO that the study has been completed and, at the ISO’s request, shall submit to the ISO any study report and related materials prepared in connection with the study.

31.4.5.2 Requirements for Other Public Policy Projects

31.4.5.2.1 A Developer proposing an Other Public Policy Project to satisfy a Public

Policy Transmission Need must provide, at a minimum: (1) contact information;

(2) the lead time necessary to complete the project, including, if available, the

construction windows in which the Developer can perform construction and what,
if any, outages may be required during these periods; (3) a description of the
project, including type, size, and geographic and electrical location, as well as
planning and engineering specifications and drawings as appropriate; (4) evidence
of a commercially viable technology; (5) a major milestone schedule; (6) a
schedule for obtaining any required permits and other certifications; (7) a
demonstration of Site Control or a schedule for obtaining Site Control, as
applicable; (8) the status of any contracts (other than an interconnection
agreement) that are under negotiation or in place; (9) the status of ISO
interconnection studies and interconnection agreement; (10) the status of
equipment availability and procurement; (11) evidence of financing or ability to
finance the project; and (12) any other information requested by the ISO.

31.4.5.2.2 A Developer shall submit the following information to indicate the status

of any contracts: (i) copies of all final contracts the ISO determines are relevant to
its consideration, or (ii) where one or more contracts are pending, a timeline on
the status of discussions and negotiations with the relevant documents and when
the negotiations are expected to be completed. The final contracts shall be
submitted to the ISO when available. The ISO shall treat on a confidential basis
in accordance with the requirements of its Code of Conduct in Attachment F of

the ISO OATT any contract that is submitted to the ISO and is designated by the Developer as “Confidential Information.”

31.4.5.2.3 A Developer shall submit the following information to indicate the status

of any required permits: (i) copies of all final permits received that the ISO

31.4.5.2.4 A Developer shall submit the following information, as appropriate, to

indicate evidence of financing by it or any Affiliate upon which it is relying for
financing: (i) copies of all loan commitment letter(s) and signed financing
contract(s), or (ii) where such financing is pending, the status of the application
for any relevant financing, including a timeline providing the status of discussions
and negotiations of relevant documents and when the negotiations are expected to
be completed. The final contracts shall be submitted to the ISO when available.

31.4.5.2.5 Upon the completion of any interconnection or transmission expansion

study of a proposed Other Public Policy Project that is performed under Sections

3.7 or 4.5 of the ISO OATT or Attachment X of the ISO OATT, the Developer of the proposed project shall notify the ISO that the study has been completed and, at the ISO’s request, shall submit to the ISO any study report and related materials prepared in connection with the study.

31.4.6ISO Evaluation of Proposed Solutions to Public Policy Transmission

Needs

31.4.6.1 Evaluation Time Period

The ISO will study proposed Public Policy Transmission Projects and Other Public
Policy Projects using: (i) the most recent base case from the reliability planning process, (ii)
updates in accordance with ISO Procedures, and (iii) compensatory MWs as needed to resolve
the Reliability Needs over the ten-year Study Period. The ISO will extend the most recent
reliability and economic planning models for modeling solutions for Public Policy Transmission
Needs by up to an additional twenty years following the Study Period, as appropriate based upon
the Public Policy Requirement and the identified Public Policy Transmission Need.

31.4.6.2 Comparable Evaluation of All Proposed Solutions

The ISO shall evaluate any proposed Public Policy Transmission Project or Other Public Policy Project submitted by a Developer to a Public Policy Transmission Need. The ISO will
evaluate whether each proposed solution is viable pursuant to Section 31.4.6.3 below and is
sufficient to satisfy the Public Policy Transmission Need pursuant to Section 31.4.6.4. The
proposed solution may include multiple components and resource types. When evaluating
proposed solutions to a Public Policy Transmission Need from any Developer, the ISO shall
consider all resource types - including generation, transmission, demand response, or a
combination of these resource types - on a comparable basis as potential solutions. All solutions will be evaluated in the same general time frame.

31.4.6.3 Evaluation of Viability of Proposed Solution

The ISO will determine the viability of a Public Policy Transmission Project or Other

Public Policy Project - whether transmission, generation, demand response, or a combination of

these resource types - proposed to satisfy a Public Policy Transmission Need. For purposes of
its analysis, the ISO will consider: (i) the Developer qualification data provided pursuant to
Section 31.4.4 and the project information data provided under Section 31.4.5; (ii) whether the
proposed solution is technically practicable; (iii) the Developer’s possession of, or approach for
acquiring, any necessary rights-of-way, property, and facilities that will make the proposal
reasonably feasible in the required timeframe; and (iv) whether the proposed solution can be
completed in the required timeframe, if any. If the ISO determines that the proposed solution is
not viable, the ISO shall reject the proposed solution from further consideration during that
planning cycle.

31.4.6.4 Evaluation of Sufficiency of Proposed Solution

The ISO will perform a comparable analysis of each proposed Public Policy

Transmission Project or Other Public Policy Project - whether transmission, generation, demand response, or a combination of these resource types - to confirm that the proposed solution
satisfies the Public Policy Transmission Need. The ISO will evaluate each solution to measure the degree to which the proposed solution independently satisfies the Public Policy Transmission Need, including the evaluation criteria provided by the NYPSC. If the ISO determines that the proposed solution is not sufficient, the ISO shall reject the proposed solution from further
consideration during that planning cycle.

31.4.6.5 Viability and Sufficiency Assessment

The ISO will present its Viability and Sufficiency Assessment to stakeholders, interested
parties, and the NYPSC for comment. The ISO shall report in the Public Policy Transmission
Planning Report the results of its evaluation under this Section 31.4.6 of whether each proposed

Public Policy Transmission Project or Other Public Policy Project is viable and is sufficient to satisfy the identified Public Policy Transmission Need.

31.4.6.6Developer’s Determination to Proceed

Within 30 Calendar Days following the ISO’s presentation of the Viability and

Sufficiency Assessment pursuant to Section 31.4.6.5, the Developer of a proposed Public Policy
Transmission Project that the ISO has determined satisfies the viability and sufficiency
requirements in this Section 31.4.6 shall notify the ISO whether it intends for its project to
proceed to be evaluated by the ISO for purposes of the ISO’s selection of the more efficient or
cost effective Public Policy Transmission Project to satisfy an identified Public Policy
Transmission Need. To proceed, the Developer must include with its notification to the ISO
under this Section 31.4.6.6: (i) its consent to the ISO’s disclosure of the details of its proposed
Public Policy Transmission Project in the Public Policy Transmission Planning Report, except
for the information that shall remain confidential in accordance with Section 31.4.15, and (ii) a
demonstration that it has executed, as applicable, an Interconnection Feasibility Study
Agreement pursuant to Section 30.6.1 of Attachment X of the ISO OATT or a System Impact
Study Agreement pursuant to Section 3.7.2 of the ISO OATT. If a Developer: (i) notifies the
ISO that it does not intend for its proposed Public Policy Transmission Project to proceed to be
evaluated for purposes of the ISO’s selection, or (ii) does not provide the required notification to
the ISO under this Section 31.4.6.6, the ISO will remove the project from further consideration
during that planning cycle.

31.4.6.7 NYPSC Determination on Whether to Proceed with Evaluation of

Transmission Solutions to a Public Policy Transmission Need

Following the ISO’s presentation of the Viability and Sufficiency Assessment, the

NYPSC will review the Viability and Sufficiency Assessment and will issue an order, subject to

and in accordance with the State Administrative Procedure Act, explaining whether the ISO
should continue to evaluate transmission solutions to a Public Policy Transmission Need or
whether non-transmission solutions should be pursued. If the NYPSC concludes that non-
transmission solutions should be pursued, the NYPSC will indicate in its order that there is no longer a transmission need driven by a Public Policy Requirement that requires the ISO’s
evaluation of potential transmission solutions. In such case, the ISO will not perform an
evaluation, or make a selection of, a more efficient or cost-effective transmission solution under Sections 31.4.7 through 31.4.11 for that planning cycle.

31.4.7Evaluation of Regional Public Policy Transmission Projects to

Address Local and Regional Needs Driven by Public Policy

Requirements More Efficiently or More Cost Effectively Than Local Transmission Solutions

The ISO will review the LTPs as they relate to the BPTFs. The ISO will include the

results of its analysis in its Public Policy Transmission Planning Report, as approved by the ISO
Board.

31.4.7.1 Evaluation of Regional Public Policy Transmission Projects to Address
Local Needs Driven By Public Policy Requirements Identified in Local
Transmission Plans More Efficiently or More Cost Effectively than Local
Transmission Solutions

The ISO, using engineering judgment, will determine whether any proposed regional
Public Policy Transmission Project on the BPTFs more efficiently or cost-effectively satisfies
any needs driven by a Public Policy Requirement identified in the LTPs. If the ISO identifies
that a regional Public Policy Transmission Project has the potential to more efficiently or cost
effectively satisfy the needs driven by a Public Policy Requirement identified in the LTPs, it will
perform a sensitivity analysis to determine whether the proposed regional Public Policy
Transmission Project on the BPTFs would satisfy the needs driven by a Public Policy

Requirement identified in the LTPs. If the ISO determines that the proposed regional Public

Policy Transmission Project would satisfy the need, the ISO will evaluate the proposed regional
Public Policy Transmission Project using the metrics set forth in Section 31.4.8.1 below to
determine whether it may be a more efficient or cost effective solution on the BPTFs to the needs
driven by a Public Policy Requirement identified in the LTPs than the local solutions proposed in
the LTPs.

31.4.7.2 Evaluation of Regional Public Policy Transmission Project to Address

Regional Pubic Policy Transmission Needs More Efficiently or More Cost Effectively than Local Transmission Solutions

As referenced in Section 31.2.1.3, the ISO, using engineering judgment, will determine
whether a regional Public Policy Transmission Project might more efficiently or more cost
effectively satisfy an identified regional Public Policy Transmission Need on the BPTFs that
impacts more than one Transmission District than any local transmission solutions identified by
the Transmission Owners in their LTPs in the event the LTPs specify that such transmission
solutions are included to address local transmission needs driven by Public Policy Requirements.

31.4.8ISO Selection of More Efficient or Cost Effective Public Policy

Transmission Project to Satisfy a Public Policy Transmission
Need

A proposed regulated Public Policy Transmission Project submitted by a Developer that
the ISO has determined has provided the required notification to proceed under Section 31.4.6.6
shall be eligible under this Section 31.4.8 for selection in the Public Policy Transmission
Planning Report for the purpose of cost allocation under the ISO Tariffs. The ISO shall evaluate
any proposed regulated Public Policy Transmission Projects that are eligible for selection in the
planning cycle of the Public Policy Transmission Planning Process using the metrics set forth in
Section 31.4.8.1 below. For purposes of this evaluation, the ISO will review the information

submitted by the Developer and determine whether it is reasonable and how such information
should be used for purposes of the ISO evaluating each metric. In its review, the ISO will give
due consideration to the status of, and the results of any completed, interconnection or
transmission expansion studies concerning the proposed Public Policy Transmission Project.
The ISO may engage an independent consultant to review the reasonableness and
comprehensiveness of the information submitted by the Developer and may rely on the
independent consultant’s analysis in evaluating each metric. The ISO shall select in the Public
Policy Transmission Planning Report for cost allocation purposes the more efficient or cost
effective transmission solution to satisfy a Public Policy Transmission Need in the manner set
forth in Section 31.4.8.2 below.

31.4.8.1 Metrics for Evaluating More Efficient or Cost Effective Regulated Public
Policy Transmission Project to Satisfy Public Policy Transmission Need

In determining which of the eligible proposed regulated Public Policy Transmission Projects is the more efficient or cost effective solution to satisfy a Public Policy Transmission Need, the ISO will consider, and will consult with the NYDPS regarding, the metrics set forth below in this Section 31.4.8.1 and rank each proposed project based on the quality of its
satisfaction of these metrics:

31.4.8.1.1 The capital cost estimates for the proposed regulated Public Policy

Transmission Project, including the accuracy of the proposed estimates. For this
evaluation, the Developer shall provide the ISO with credible capital cost
estimates for its proposed project, with itemized supporting work sheets that
identify all material and labor cost assumptions, and related drawings to the extent
applicable and available. The work sheets should include an estimated

quantification of cost variance, providing an assumed plus/minus range around the capital cost estimate.

The estimate shall include all components that are needed to meet the

Public Policy Transmission Need. To the extent information is available, the

Developer should itemize: material and labor cost by equipment, engineering and
design work, permitting, site acquisition, procurement and construction work, and
commissioning needed for the proposed project, all in accordance with Good

Utility Practice. For each of these cost categories, the Developer should specify
the nature and estimated cost of all major project components and estimate the
cost of the work to be done at each substation and/or on each feeder to physically

and electrically connect each facility to the existing system. The work sheets
should itemize to the extent applicable and available all equipment for: (i) the
proposed project, (ii) interconnection facilities (including Attachment Facilities

and Direct Assignment Facilities), and (iii) System Upgrade Facilities, System Deliverability Upgrades, Network Upgrades, and Distribution Upgrades.

31.4.8.1.2 The cost per MW ratio of the proposed regulated Public Policy

Transmission Project. For this evaluation, the ISO will first determine the present worth, in dollars, of the total capital cost of the proposed project in current year dollars. The ISO will then determine the cost per MW ratio by dividing the
capital cost by the MW value of increased transfer capability.

31.4.8.1.3 The expandability of the proposed regulated Public Policy Transmission

Project. The ISO will consider the impact of the proposed project on future
construction. The ISO will also consider the extent to which any subsequent

expansion will continue to use this proposed project within the context of system expansion.

31.4.8.1.4 The operability of the proposed regulated Public Policy Transmission

Project. The ISO will consider how the proposed project may affect additional
flexibility in operating the system, such as dispatch of generation, access to
operating reserves, access to ancillary services, or ability to remove transmission for maintenance. The ISO will also consider how the proposed project may affect the cost of operating the system, such as how it may affect the need for operating generation out of merit for reliability needs, reducing the need to cycle generation, or providing more balance in the system to respond to system conditions that are more severe than design conditions.

31.4.8.1.5 The performance of the proposed regulated Public Policy Transmission

Project. The ISO will consider how the proposed project may affect the

utilization of the system (e.g. interface flows, percent loading of facilities).

31.4.8.1.6 The extent to which the Developer of a proposed regulated Public Policy

Transmission Project has the property rights, or ability to obtain the property
rights, required to implement the project. The ISO will consider whether the
Developer: (i) already possesses the rights of way necessary to implement the
project; (ii) has completed a transmission routing study, which (a) identifies a
specific routing plan with alternatives, (b) includes a schedule indicating the
timing for obtaining siting and permitting, and (c) provides specific attention to
sensitive areas (e.g., wetlands, river crossings, protected areas, and schools); or

(iii) has specified a plan or approach for determining routing and acquiring property rights.

31.4.8.1.7 The potential issues associated with delay in constructing the proposed

regulated Public Policy Transmission Project consistent with the major milestone schedule and the schedule for obtaining any permits and other certifications as required to timely meet the need.

31.4.8.1.8 The ISO shall apply any criteria specified by the Public Policy

Requirement or provided by the NYPSC and perform the analyses requested by
the NYPSC, to the extent compliance with such criteria and analyses are feasible.

31.4.8.1.9 The ISO, in consultation with stakeholders, shall, as appropriate, consider

other metrics in the context of the Public Policy Requirement, such as: change in production costs; LBMP; losses; emissions; ICAP; TCC; congestion; impact on transfer limits; and deliverability.

31.4.8.2 ISO Selection of More Efficient or Cost Effective Regulated Public Policy
Transmission Project to Satisfy a Public Policy Transmission Need

The ISO shall identify under this Section 31.4.8 the proposed regulated Public Policy
Transmission Project, if any, that is the more efficient or cost effective transmission solution
proposed in the planning cycle for the Public Policy Transmission Planning Process to satisfy a
Public Policy Transmission Need. The ISO shall include the more efficient or cost effective
transmission solution in the Public Policy Transmission Planning Report. The Developer of a
regulated Public Policy Transmission Project shall be eligible to recover costs for the project
only if the project is selected by the ISO, except as otherwise provided in Section 31.4.3.2 or as
otherwise determined by the Commission. Costs will be recovered when the project is

completed pursuant to a rate schedule filed with and accepted by the Commission in accordance

with the cost recovery requirements set forth in Section 31.5.6.5, or as otherwise determined by the Commission. Actual project cost recovery, including any issues related to cost recovery and project cost overruns, will be submitted to and decided by the Commission.

Any selection of a Public Policy Transmission Project by the ISO under Section 31.4.8, including but not limited to the selection of a project that involves the physical modification of facilities within the Long Island Transmission District, shall not affect the obligation and
responsibility of the Developer to apply for, and receive, all necessary authorizations or permits required by federal or state law for such project.

31.4.9Consequences for Other Regions

The ISO will coordinate with the ISO/RTO Regions to identify the consequences of a
transmission solution driven by Public Policy Requirements on neighboring ISO/RTO Regions using the respective planning criteria of such ISO/RTO Regions. The ISO shall report the results in its Public Policy Transmission Planning Report. The ISO shall not bear the costs of required upgrades in another region.

31.4.10 Evaluation of Impact of Proposed Public Policy Transmission Project on
ISO Wholesale Electricity Markets

The ISO shall evaluate using the metrics set forth in Section 31.4.8.1.9 the impacts on the ISO-administered wholesale electricity markets of a proposed Public Policy Transmission
Project that the ISO has determined under Section 31.4.6 is viable and sufficient. The ISO shall include the results of its analysis in the Public Policy Transmission Planning Report.

31.4.11 Public Policy Transmission Planning Report

Following the ISO’s evaluation of the proposed solutions to Public Policy Transmission
Need(s), the ISO will prepare a draft Public Policy Transmission Planning Report that sets forth

The draft Public Policy Transmission Planning Report shall include a comparison of a
proposed Public Policy Transmission Project to an Interregional Transmission Project proposed
in the Public Policy Transmission Planning Process, if any, identified and evaluated under the
“Analysis and Consideration of Interregional Transmission Projects” section of the Interregional
Planning Protocol. An Interregional Transmission Project proposed in the ISO’s Public Policy
Transmission Planning Process may be selected as a regulated Public Policy Transmission

Project under the provisions of this process.

31.4.11.1 Collaborative Governance Process

The draft Public Policy Transmission Planning Report shall be submitted to both TPAS
and the ESPWG for review and comment. Concurrently, the draft report will be provided to the

Market Monitoring Unit for its review and consideration. The Market Monitoring Unit’s

evaluation will be provided to the Management Committee prior to the Management

Committee’s advisory vote. The ISO shall make available to any interested party sufficient

information to replicate the results of the draft Public Policy Transmission Planning Report. The
information made available will be electronically masked and made available pursuant to a
process that the ISO reasonably determines is necessary to prevent the disclosure of any
Confidential Information or Critical Energy Infrastructure Information contained in the
information made available. Following completion of that review, the draft report reflecting the
revisions resulting from the TPAS and ESPWG review shall be forwarded to the Business Issues
Committee and the Management Committee for discussion and an advisory vote.

31.4.11.2 Board Review, Consideration, and Approval of Public Policy
Transmission Planning Report

Following the Management Committee vote, the draft Public Policy Transmission

Planning Report, with Business Issues Committee and Management Committee input, will be
forwarded to the ISO Board for review and action. Concurrently, the Market Monitoring Unit’s
evaluation will be provided to the Board. The Board may approve the Public Policy
Transmission Planning Report as submitted or propose modifications on its own motion,
including a determination not to select a Public Policy Transmission Project to satisfy a Public
Policy Transmission Need. If any changes are proposed by the Board, the revised report shall be
returned to the Management Committee for comment. The Board shall not make a final
determination on a revised report until it has reviewed the Management Committee comments,
including comments regarding the Market Monitoring Unit’s evaluation. Upon approval by the
Board, the ISO shall issue the report to the marketplace by posting it on its website. If the ISO

Board determines not to select a Public Policy Transmission Project under this Section 31.4.11.2, the Board shall state the reasons for its determination.

The responsibilities of the Market Monitoring Unit that are addressed in the above

Section of Attachment Y to the ISO OATT are also addressed in Section 30.4.6.8.5 of the Market Monitoring Plan, Attachment O to the ISO Services Tariff.

31.4.12Developer’s Responsibilities Following Selection of Its Public Policy

Transmission Project

31.4.12.1Developer’s Responsibility to Obtain Necessary Approvals and

Authorizations

Upon its selection of a Public Policy Transmission Project, the ISO will inform the
Developer that it should submit the selected Public Policy Transmission Project to the
appropriate governmental agency(ies) and/or authority(ies) to begin the necessary approval
process to site, construct, and operate the project. In response to the ISO’s request, the
Developer shall make such a submission to the appropriate governmental agency(ies) and/or
authority(ies) to the extent such authorization has not already been requested or obtained.
If the appropriate federal, state or local agency(ies) either rejects a necessary
authorization, or approves and later withdraws authorization, for the selected Public Policy
Transmission Project, all of the necessary and reasonable costs incurred and commitments made
up to the final federal, state or local regulatory decision, including reasonable and necessary
expenses incurred to implement an orderly termination of the project, will be recoverable by the
Developer. The ISO shall allocate these costs among Load Serving Entities in accordance with
Section 31.5.5.4.3, except as otherwise determined by the Commission. The ISO shall recover
such costs in accordance with Section 31.5.6.5.

31.4.12.2Development Agreement

As soon as reasonably practicable following the ISO’s selection of the proposed project,
the ISO shall tender to the Developer that proposed the selected Public Policy Transmission
Project a draft Development Agreement with draft appendices completed by the ISO to the
extent practicable for review and completion by the Developer. The draft Development
Agreement shall be in the form of the ISO’s Commission-approved Development Agreement,
which is in Appendix D in Section 31.7 of this Attachment Y. The ISO and the Developer, as
applicable, shall finalize the Development Agreement and appendices and negotiate concerning
any disputed provisions. Unless otherwise agreed by the ISO and the Developer, the Developer
must execute the Development Agreement within three (3) months of the ISO’s tendering of the
draft Development Agreement; provided, however, if, during the negotiation period, the
Developer determines that negotiations are at an impasse, it may request in writing that the ISO
file the Development Agreement in unexecuted form with the Commission. If the Development
Agreement resulting from the negotiation between the ISO and the Developer does not conform
with the Commission-approved standard form in Appendix D in Section 31.7 of this Attachment
Y, the ISO shall file the agreement with the Commission for its acceptance within thirty (30)
Business Days after the execution of the Development Agreement by both parties. If the
Developer requests that the Development Agreement be filed unexecuted, the ISO shall file the
agreement at the Commission within thirty (30) Business Days of receipt of the request from the
Developer. The ISO will draft to the extent practicable the portions of the Development
Agreement and appendices that are in dispute and will provide an explanation to the Commission
of any matters as to which the parties disagree. The Developer will provide in a separate filing
any comments that it has on the unexecuted agreement, including any alternative positions it may
have with respect to the disputed provisions. Upon the ISO’s and the Developer’s execution of

the Development Agreement or the ISO’s filing of an unexecuted Development Agreement with the Commission, the ISO and the Developer shall perform their respective obligations in
accordance with the terms of the Development Agreement that are not in dispute, subject to modifications by the Commission.

31.4.12.3Process for Addressing Inability of Developer to Complete Selected

Public Policy Transmission Project

31.4.12.3.1 If one of the following events occur: (i) the Developer that proposed the

selected Public Policy Transmission Project does not execute the Development Agreement, or does not request that it be filed unexecuted with the Commission, within the timeframes set forth in Section 31.4.12.2, or (ii) an effective
Development Agreement is terminated under the terms of the agreement prior to the completion of the term of the agreement, the ISO may take the following actions as soon as practicable after the occurrence of the event:

31.4.12.3.1.1 If the Development Agreement has been filed with and accepted by the

Commission, the ISO shall, upon terminating the Development Agreement under
the terms of the agreement, file a notice of termination with the Commission.

31.4.12.3.1.2 The ISO may: (i) submit a report to the NYPSC and/or the Commission,
as appropriate, for its consideration and determination of whether action is
appropriate under state or federal law, and (ii) take such action as it reasonably
considers is appropriate, following consultation with the NYPSC, to ensure that
the Public Policy Transmission Need is satisfied, including, but not limited to,
revoking its selection of the Public Policy Transmission Project and the eligibility
of the Developer to recover its costs for the project; provided, however, the

Developer may recover its costs to the extent provided in Sections 31.4.3.2 and

31.4.12.1 or as otherwise determined by the Commission.

31.4.12.4 Execution of ISO/TO Agreement or Comparable Agreement

The Developer of a selected Public Policy Transmission Project shall execute the ISO/TO Agreement or an agreement with the ISO under terms comparable to the ISO/TO Agreement prior to energizing the Public Policy Transmission Project.

31.4.13 ISO Monitoring of Selected Public Policy Transmission Projects

The ISO shall monitor Public Policy Transmission Projects selected by the ISO as the

more efficient or cost effective transmission solutions to Public Policy Transmission Needs to

confirm that they continue to develop consistent with the conditions, actions, or schedules for the projects.

31.4.14 Posting of Approved Solutions

The ISO shall post on its website a list of all Developers who have accepted the terms and conditions of an Article VII certificate under the New York Public Service Law, or any successor statute, or any other applicable permits to build a Public Policy Transmission Project in response to a need driven by a Public Policy Requirement.

31.4.15 Confidentiality of Solutions

31.4.15.1 The term “Confidential Information” shall include all proposed solutions

to Public Policy Transmission Needs that are submitted to the ISO in response to
a request for solutions under Section 31.4.3 of this Attachment Y if the Developer
of that solution designates the solution as “Confidential Information”; provided,
however, that “Confidential Information” shall not include: (i) the identity of the

Developer, (ii) the proposed facility type, (iii) the proposed facility size, (iii) the
proposed location of the facility, (v) the proposed in-service date for the facility,
and (vi) information regarding the proposed facility that the ISO is required to

disclose under its interconnection or transmission expansion process pursuant to Sections 3.7 or 4.5 of the ISO OATT or Attachment X of the ISO OATT.

31.4.15.2 The ISO shall maintain the confidentiality of the Developer’s proposed

solution and plans designated as “Confidential Information” until the ISO

determines that the Developer’s proposed solution and plans are viable and

sufficient to meet the Public Policy Transmission Need and the Developer

provides its consent to the ISO’s inclusion of the proposed solution in the Public
Policy Transmission Planning Report under Section 31.4.6.6. Thereafter, the ISO
shall disclose the proposed solution and plans to Market Participants and other
interested parties; provided, however, any preliminary cost estimates that may
have been provided to the ISO, any non-public financial qualification information
provided under Section 31.4.4.1.2, and any contract provided under Sections

31.4.5.1.2 or 31.4.5.2.2, that is designated as “Confidential Information” shall not be disclosed.

31.5Cost Allocation and Cost Recovery

31.5.1The Scope of Attachment Y Cost Allocation

31.5.1.1 Regulated Responses

The cost allocation principles and methodologies in this Attachment Y cover only

regulated transmission solutions to Reliability Needs, regulated transmission responses to

congestion identified in the CARIS, and regulated Public Policy Transmission Projects whether
proposed by a Responsible Transmission Owner or a Transmission Owner or Other Developer.
The cost allocation principles and methodology for: (i) regulated transmission solutions to
Reliability Needs are contained in Sections 31.5.3.1 and 31.5.3.2 of this Attachment Y, (ii)
regulated transmission responses to congestion identified in the CARIS are contained in Sections

31.5.4.1 and 31.5.4.2 of this Attachment Y, and (iii) regulated Public Policy Transmission Projects are contained in Sections 31.5.5 and 31.5.6 of this Attachment Y.

31.5.1.2 Market-Based Responses

The cost allocation principles and methodologies in this Attachment Y do not apply to market-based solutions to Reliability Needs, to market-based responses to congestion identified in the CARIS, or to Other Public Policy Projects. The cost of a market-based project shall be the responsibility of the developer of that project.

31.5.1.3 Interconnection Cost Allocation

The cost allocation principles and methodologies in this Attachment Y do not apply to the interconnection costs of generation and merchant transmission projects. Interconnection costs
are determined and allocated in accordance with Attachment S, Attachment X and Attachment Z of the ISO OATT.

31.5.1.4 Individual Transmission Service Requests

The cost allocation principles and methodologies in this Attachment Y do not apply to the cost of transmission expansion projects undertaken in connection with an individual request for Transmission Service. The cost of such a project is determined and allocated in accordance with Section 3.7 or Section 4.5 of the ISO OATT.

31.5.1.5 LTP Facilities

The cost allocation principles and methodologies in this Attachment Y do not apply to the
cost of transmission projects included in LTPs or LTP updates. Each Transmission Owner will
recover the cost of such transmission projects in accordance with its then existing rate recovery
mechanisms.

31.5.1.6 Regulated Non-Transmission Projects

Costs related to regulated non-transmission projects will be recovered by Responsible
Transmission Owners, Transmission Owners and Other Developers in accordance with the
provisions of New York Public Service Law, New York Public Authorities Law, or other
applicable state law. Nothing in this section shall affect the Commission’s jurisdiction over the
sale and transmission of electric energy subject to the jurisdiction of the Commission.

31.5.1.7 Eligibility for Cost Allocation and Cost Recovery

Any entity, whether a Responsible Transmission Owner, Other Developer, or

Transmission Owner, shall be eligible for cost allocation and cost recovery as set forth in Section

31.5 of this Attachment Y and associated rate schedules, as applicable, for any transmission

project proposed to satisfy an identified Reliability Need, regulated economic transmission

project, or Public Policy Transmission Project that is determined by the ISO to be eligible under

Sections 31.2, 31.3, or 31.4, as applicable. Interregional Transmission Projects identified in

accordance with the Interregional Planning Protocol, and that have been accepted in each

region’s planning process, shall be eligible for interregional cost allocation and cost recovery, as set forth in Section 31.5 of this Attachment Y and associated rate schedules. The ISO’s share of the cost of an Interregional Transmission Project selected pursuant to this Attachment Y to meet a Reliability Need, congestion identified in the CARIS, or a Public Policy Transmission Need
shall be eligible for cost allocation consistent with the cost allocation methodology applicable to the type of regional transmission project that would be replaced through the construction of such Interregional Transmission Project.

31.5.2Cost Allocation Principles Required Under Order No. 1000

31.5.2.1In compliance with Commission Order No. 1000, the ISO shall implement

the specific cost allocation methodology in Section 31.5.3.2, 31.5.4.4, and

31.5.5.4 in accordance with the following Regional Cost Allocation Principles (“Order No. 1000 Regional Cost Allocation Principles”):

Regional Cost Allocation Principle 1: The ISO shall allocate the cost of
transmission facilities to those within the transmission planning region that
benefit from those facilities in a manner that is at least roughly commensurate
with estimated benefits. In determining the beneficiaries of transmission
facilities, the ISO’s CSPP will consider benefits including, but not limited to, the
extent to which transmission facilities, individually or in the aggregate provide for
maintaining reliability and sharing reserves, production cost savings and
congestion relief, and/or meeting Public Policy Requirements.

Regional Cost Allocation Principle 2: The ISO shall not involuntarily allocate any of the costs of transmission facilities to those that receive no benefit from transmission facilities.

Regional Cost Allocation Principle 3: In the event that the ISO adopts a benefit to cost threshold in its CSPP to determine which transmission facilities have
sufficient net benefits to be selected in a regional transmission plan for the
purpose of cost allocation, such benefit to cost threshold will not be so high that transmission facilities with significant positive net benefits are excluded from cost allocation. If the ISO chooses to adopt such a threshold in its CSPP it will not
include a ratio of benefits to costs that exceeds 1.25 unless the ISO justifies and
the Commission approves a higher ratio.

Regional Cost Allocation Principle 4: The ISO’s allocation method for the cost of a transmission facility selected pursuant to the process in the CSPP shall
allocate costs solely within the ISO’s transmission planning region unless another entity outside the region or another transmission planning region voluntarily
agrees to assume a portion of those costs. Costs for an Interregional Transmission Project must be assigned only to regions in which the facility is physically
located. Costs cannot be assigned involuntarily to another region. The ISO shall not bear the costs of required upgrades in another region.

Regional Cost Allocation Principle 5: The ISO’s cost allocation method and
data requirements for determining benefits and identifying beneficiaries for a
transmission facility shall be transparent with adequate documentation to allow a
stakeholder to determine how they were applied to a proposed transmission

facility, as consistent with confidentiality requirements set forth in this

Attachment Y and the ISO Code of Conduct in Attachment F of the OATT.

Regional Cost Allocation Principle 6: The ISO’s CSPP provides a different cost allocation method for different types of transmission facilities in the regional
transmission plan and each cost allocation method is set out clearly and explained in detail in this Section 31.5.

31.5.2.2 In compliance with Commission Order No. 1000, the ISO shall implement

the specific cost allocation methodology in Section 31.5.7 of this Attachment Y in
accordance with the following Interregional Cost Allocation Principles:
Interregional Cost Allocation Principle 1: The ISO shall allocate the cost of
new Interregional Transmission Projects to each region in which an Interregional
Transmission Project is located in a manner that is at least roughly commensurate
with estimated benefits of the Interregional Transmission Project in each of the
regions. In determining the beneficiaries of Interregional Transmission Projects,
the ISO will consider benefits including, but not limited to, those associated with
maintaining reliability and sharing reserves, production cost savings and
congestion relief, and meeting Public Policy Requirements.
Interregional Cost Allocation Principle 2: The ISO shall not involuntarily
allocate any of the costs of an Interregional Transmission Project to a region that
receives no benefit from an Interregional Transmission Project that is located in
that region, either at present or in a likely future scenario.

Interregional Cost Allocation Principle 3: In the event that the ISO adopts a
benefit-cost threshold ratio to determine whether an Interregional Transmission

Project has sufficient net benefits to qualify for interregional cost allocation, this
ratio shall not be so large as to exclude an Interregional Transmission Project with
significant positive net benefits from cost allocation. If the ISO chooses to adopt
such a threshold, they will not include a ratio of benefits to costs that exceeds 1.25
unless the Parties justify and the Commission approves a higher ratio.
Interregional Cost Allocation Principle 4: The ISO’s allocation of costs for an
Interregional Transmission Project shall be assigned only to regions in which the
Interregional Transmission Project is located. The ISO shall not assign costs
involuntarily to a region in which that Interregional Transmission Project is not
located. The ISO shall, however, identify consequences for other regions, such as
upgrades that may be required in a third region. The ISO’s interregional cost
allocation methodology includes provisions for allocating the costs of upgrades
among the beneficiaries in the region in which the Interregional Transmission
Project is located to the transmission providers in such region that agree to bear
the costs associated with such upgrades.

Interregional Cost Allocation Principle 5: The ISO’s cost allocation

methodology and data requirements for determining benefits and identifying

beneficiaries for an Interregional Transmission Project shall be transparent with adequate documentation to allow a stakeholder to determine how they were applied to a proposed Interregional Transmission Project, as consistent with the confidentiality requirements set forth in this Attachment Y and the ISO Code of Conduct in Attachment F of the OATT.

Interregional Cost Allocation Principle 6: Though Order No. 1000 allows the ISO to provide a different cost allocation methodology for different types of
interregional transmission facilities, such as facilities needed for reliability,
congestion relief, or to achieve Public Policy Requirements, the ISO has chosen to adopt one interregional cost allocation methodology for all Interregional
Transmission Planning Projects. The interregional cost allocation methodology is set out clearly and explained in detail in Section 31.5.7 of this Attachment Y. The share of the cost related to any Interregional Transmission Project assigned to the ISO shall be allocated as described in Section 31.5.7.1.

31.5.3 Regulated Responses to Reliability Needs

31.5.3.1 Cost Allocation Principles

The ISO shall implement the specific cost allocation methodology in Section 31.5.3.2 of this

Attachment Y in accordance with the Order No. 1000 Regional Cost Allocation Principles as set
forth in Section 31.5.2.1. This methodology shall apply to cost allocation for a regulated
transmission solution to an identified Reliability Need, including the ISO’s share of the costs of
an Interregional Transmission Project proposed as a regulated transmission solution to an
identified Reliability Need allocated in accordance with Section 31.5.7 of this Attachment Y.
The specific cost allocation methodology in Section 31.5.3.2 incorporates the following elements:

31.5.3.1.1The focus of the cost allocation methodology shall be on solutions to

Reliability Needs.

31.5.3.1.2 Potential impacts unrelated to addressing the Reliability Needs shall not be

considered for the purpose of cost allocation for regulated solutions.

31.5.3.1.3Primary beneficiaries shall initially be those Load Zones identified as

contributing to the reliability violation.

31.5.3.1.4 The cost allocation among primary beneficiaries shall be based upon their

relative contribution to the need for the regulated solution.

31.5.3.1.5 The ISO will examine the development of specific cost allocation rules

based on the nature of the reliability violation (e.g., thermal overload, voltage, stability, resource adequacy and short circuit).

31.5.3.1.6Cost allocation shall recognize the terms of prior agreements among the

Transmission Owners, if applicable.

31.5.3.1.7Consideration should be given to the use of a materiality threshold for cost

allocation purposes.

31.5.3.1.8 The methodology shall provide for ease of implementation and

administration to minimize debate and delays to the extent possible.

31.5.3.1.9 Consideration should be given to the “free rider” issue as appropriate.

The methodology shall be fair and equitable.

31.5.3.1.10The methodology shall provide cost recovery certainty to investors to the

extent possible.

31.5.3.1.11The methodology shall apply, to the extent possible, to Gap Solutions.

31.5.3.1.12Cost allocation is independent of the actual triggered project(s), except

when allocating cost responsibilities associated with meeting a Locational

Minimum Installed Capacity Requirement (“LCR”), and is based on a separate process that results in NYCA meeting its LOLE requirement.

31.5.3.1.13Cost allocation for a solution that meets the needs of a Target Year

assumes that backstop solutions of prior years have been implemented.

31.5.3.1.14 Cost allocation will consider the most recent values for LCRs. LCRs must

be met for the Target Year.

31.5.3.2 Cost Allocation Methodology

31.5.3.2.1 General Reliability Solution Cost Allocation Formula:

The cost allocation mechanism under this Section 31.5.3.2 sets forth the basis for

allocating costs associated with a Responsible Transmission Owner’s regulated backstop solution or an Other Developer’s or Transmission Owner’s alternative regulated transmission solution
selected by the ISO as the more efficient or cost-effective transmission solution to an identified
Reliability Need.

The formula is not applicable to that portion of a project beyond the size of the solution
needed to provide the more efficient or cost effective solution appropriate to the Reliability Need
identified in the RNA. Nor is the formula applicable to that portion of the cost of a regulated
transmission reliability project that is, pursuant to Section 25.7.12 of Attachment S to the ISO
OATT, paid for with funds previously committed by or collected from Developers for the
installation of System Deliverability Upgrades required for the interconnection of generation or
merchant transmission projects. The same cost allocation formula is applied regardless of the
project or sets of projects being triggered; however, the nature of the solution set may lead to
some terms equaling zero, thereby dropping out of the equation. To ensure that appropriate
allocation to the LCR and non-LCR zones occurs, the zonal allocation percentages are developed
through a series of steps that first identify responsibility for LCR deficiencies, followed by
responsibility for remaining need. This cost allocation process can be applied to any solution or

set of solutions that involve single or multiple cost allocation steps. One formula can be applied to any solution set:

+**100%

Where i is for each applicable zone, n represent the total zones in NYCA, m represents
the zones isolated by the binding interfaces, IRM is the statewide reserve margin, and where
LCR is defined as the locational capacity requirement in terms of percentage and is equal to zero
for those zones without an LCR requirement, LCRdefi is the applicable zonal LCR deficiency,
SolnSTWdef is the STWdef for each applicable project, SolnCIdef is the CIdef for each
applicable project, and Soln_Size represents the total compensatory MW addressed by each
applicable project.

Three step cost allocation methodology for regulated reliability solutions:

31.5.3.2.1.1 Step 1 - LCR Deficiency

31.5.3.2.1.1.1 Any deficiencies in meeting the LCRs for the Target Year will be referred
to as the LCRdef. If the reliability criterion is met once the LCR deficiencies
have been addressed, that is LOLE  0.1 for the Target Year is achieved, then the
only costs allocated will be those related to the LCRdef MW. Cost responsibility
for the LCRdef MW will be borne by each deficient locational zone(s), to the
extent each is individually deficient.

For a single solution that addresses only an LCR deficiency in the applicable LCR zone, the equation would reduce to:

Where i is for each applicable LCR zone, LCRdefi represents the applicable zonal LCR
deficiency, and Soln_Size represents the total compensatory MW addressed by the applicable
project.

31.5.3.2.1.1.2 Prior to the LOLE calculation, voltage constrained interfaces will be

recalculated to determine the resulting transfer limits when the LCRdef MW are
added.

31.5.3.2.1.2 Step 2 - Statewide Resource Deficiency. If the reliability criterion is not
met after the LCRdef has been addressed, that is an LOLE > 0.1, then a NYCA
Free Flow Test will be conducted to determine if NYCA has sufficient resources
to meet an LOLE of 0.1.

31.5.3.2.1.2.1 If NYCA is found to be resource limited, the ISO, using the transfer limits
and resources determined in Step 1, will determine the optimal distribution of
additional resources to achieve a reduction in the NYCA LOLE to 0.1.

31.5.3.2.1.2.2 Cost allocation for compensatory MW added for cost allocation purposes
to achieve an LOLE of 0.1, defined as a Statewide MW deficiency (STWdef), will
be prorated to all NYCA zones, based on the NYCA coincident peak load. The
allocation to locational zones will take into account their locational requirements.
For a single solution that addresses only a statewide deficiency, the equation
would reduce to:

**100%

Where i is for each applicable zone, n is for the total zones in NYCA, IRM is the
statewide reserve margin, and LCR is defined as the locational capacity
requirement in terms of percentage and is equal to zero for those zones without an
LCR requirement, Soln STWdef is the STWdef for the applicable project, and
Soln_Size represents the total compensatory MW addressed by the applicable
project.

31.5.3.2.1.3 Step 3 - Constrained Interface Deficiency. If the NYCA is not resource
limited as determined by the NYCA Free Flow Test, then the ISO will examine
constrained transmission interfaces, using the Binding Interface Test.

31.5.3.2.1.3.1 The ISO will provide output results of the reliability simulation program
utilized for the RNA that indicate the hours that each interface is at limit in each
flow direction, as well as the hours that coincide with a loss of load event. These
values will be used as an initial indicator to determine the binding interfaces that
are impacting LOLE within the NYCA.

31.5.3.2.1.3.2 The ISO will review the output of the reliability simulation program
utilized for the RNA along with other applicable information that may be
available to make the determination of the binding interfaces.

31.5.3.2.1.3.3 Bounded Regions are assigned cost responsibility for the compensatory
MW, defined as CIdef, needed to reach an LOLE of 0.1.

31.5.3.2.1.3.4 If one or more Bounded Regions are isolated as a result of binding

interfaces identified through the Binding Interface Test, the ISO will determine

the optimal distribution of compensatory MW to achieve a NYCA LOLE of 0.1.
Compensatory MW will be added until the required NYCA LOLE is achieved.

31.5.3.2.1.3.5 The Bounded Regions will be identified by the ISO’s Binding Interface
Test, which identifies the bounded interface limits that can be relieved and have
the greatest impact on NYCA LOLE. The Bounded Region that will have the
greatest benefit to NYCA LOLE will be the area to be first allocated costs in this
step. The ISO will determine if after the first addition of compensating MWs the
Bounded Region with the greatest impact on LOLE has changed. During this
iterative process, the Binding Interface Test will look across the state to identify
the appropriate Bounded Region. Specifically, the Binding Interface Test will be
applied starting from the interface that has the greatest benefit to LOLE (the
greatest LOLE reduction per interface compensatory MW addition), and then
extended to subsequent interfaces until a NYCA LOLE of 0.1 is achieved.

31.5.3.2.1.3.6 The CIdef MW are allocated to the applicable Bounded Region isolated as
a result of the constrained interface limits, based on their NYCA coincident peaks.
Allocation to locational zones will take into account their locational requirements.
For a single solution that addresses only a binding interface deficiency, the
equation would reduce to:

**100%

Where i is for each applicable zone, m is for the zones isolated by the binding

interfaces, IRM is the statewide reserve margin, and where LCR is defined as the

locational capacity requirement in terms of percentage and is equal to zero for those zones without an LCR requirement, SolnCIdef is the CIdef for the
applicable project and Soln_Size represents the total compensatory MW
addressed by the applicable project.

31.5.3.2.1.4 If, after the completion of Steps 1 through 3, there is a thermal or voltage
security issue that does not cause an LOLE violation, it will be deemed a local
issue and related costs will not be allocated under this process. The ISO will
address through its stakeholder process the development of a methodology to
allow for the allocation of costs of transmission solutions to thermal or voltage
security issues.

31.5.3.2.1.5 Costs related to the deliverability of a resource will be addressed under the
ISO’s deliverability procedures.

31.5.3.2.1.6 This cost allocation methodology would be used for any regulated

backstop solution identified by the ISO prior to January 1, 2016 or alternative

regulated transmission solution selected by the ISO prior to the completion of the
planning cycle commencing January 1, 2014, that is required to meet Reliability
Needs identified in the RNA. Costs associated with any regulated transmission
backstop solution identified by the ISO on or after January 1, 2016 or alternative
regulated transmission solution selected by the ISO as part of the planning cycle
commencing January 1, 2016 will be allocated according to a methodology,

which, after proper consideration within the ISO stakeholder process, will be filed
by the ISO for the Commission’s approval prior to January 1, 2016, in accordance

with the ISO governance process. The filing may provide for a continuation of the foregoing methodology or a revised methodology.

31.5.4Regulated Economic Projects

31.5.4.1 The Scope of Section 31.5.4

As discussed in Section 31.5.1 of this Attachment Y, the cost allocation principles and methodologies of this Section 31.5.4 apply only to regulated economic transmission projects (“RETPs) proposed in response to congestion identified in the CARIS.

This Section 31.5.4 does not apply to generation or demand side management projects,
nor does it apply to any market-based projects. This Section 31.5.4 does not apply to regulated
backstop solutions triggered by the ISO pursuant to the CSPP, provided, however, the cost
allocation principles and methodologies in this Section 31.5.4 will apply to regulated backstop
solutions when the implementation of the regulated backstop solution is accelerated solely to
reduce congestion in earlier years of the Study Period. The ISO will work with the ESPWG to
develop procedures to deal with the acceleration of regulated backstop solutions for economic
reasons.

Nothing in this Attachment Y mandates the implementation of any project in response to the congestion identified in the CARIS.

31.5.4.2 Cost Allocation Principles

The ISO shall implement the specific cost allocation methodology in Section 31.5.4.4 of this Attachment Y in accordance with the Order No. 1000 Regional Cost Allocation Principles as set forth in Section 31.5.2.1. The specific cost allocation methodology in Section 31.5.4.4
incorporates the following elements:

31.5.4.2.1The focus of the cost allocation methodology shall be on responses to

specific conditions identified in the CARIS.

31.5.4.2.2Potential impacts unrelated to addressing the identified congestion shall

not be considered for the purpose of cost allocation for RETPs.

31.5.4.2.3Projects analyzed hereunder as proposed RETPs may proceed on a market

basis with willing buyers and sellers at any time.

31.5.4.2.4 Cost allocation shall be based upon a beneficiaries pay approach. Cost

allocation under the ISO tariff for a RETP shall be applicable only when a super majority of the beneficiaries of the project, as defined in Section 31.5.4.6 of this Attachment Y, vote to support the project.

31.5.4.2.5Beneficiaries of a RETP shall be those entities economically benefiting

from the proposed project. The cost allocation among beneficiaries shall be based

upon their relative economic benefit.

31.5.4.2.6Consideration shall be given to the proposed project’s payback period.

31.5.4.2.7The cost allocation methodology shall address the possibility of cost

overruns.

31.5.4.2.8Consideration shall be given to the use of a materiality threshold for cost

allocation purposes.

31.5.4.2.9The methodology shall provide for ease of implementation and

administration to minimize debate and delays to the extent possible.

31.5.4.2.10Consideration should be given to the “free rider” issue as appropriate. The

methodology shall be fair and equitable.

31.5.4.2.11The methodology shall provide cost recovery certainty to investors to the

extent possible.

31.5.4.2.12Benefits determination shall consider various perspectives, based upon the

agreed-upon metrics for analyzing congestion.

31.5.4.2.13 Benefits determination shall account for future uncertainties as appropriate

(e.g., load forecasts, fuel prices, environmental regulations).

31.5.4.2.14 Benefits determination shall consider non-quantifiable benefits as

appropriate (e.g., system operation, environmental effects, renewable integration).

31.5.4.3 Project Eligibility for Cost Allocation

The methodologies in this Section 31.5.4.3 will be used to determine the eligibility of a proposed RETP to have its cost allocated and recovered pursuant to the provisions of this
Attachment Y.

31.5.4.3.1 The ISO will evaluate the benefits against the costs (as provided by the

Developer) of each proposed RETP over a ten-year period commencing with the
proposed commercial operation date for the project. The Developer of each
project will pay the cost incurred by the ISO to conduct the ten-year benefit/cost
analysis of its project. The ISO, in conjunction with the ESPWG, will develop
methodologies for extending the most recently completed CARIS database as
necessary to evaluate the benefits and costs of each proposed RETP.

31.5.4.3.2 The benefit metric for eligibility under the ISO’s benefit/cost analysis will

be expressed as the present value of the annual NYCA-wide production cost
savings that would result from the implementation of the proposed project,

measured for the first ten years from the proposed commercial operation date for the project.

31.5.4.3.3 The cost for the ISO’s benefit/cost analysis will be supplied by the

Developer of the project, and the cost metric for eligibility will be expressed as

the present value of the first ten years of annual total revenue requirements for the project, reasonably allocated over the first ten years from the proposed
commercial operation date for the project.

31.5.4.3.4 For informational purposes only, the ISO will also calculate the present

value of the annual total revenue requirement for the project over a 30 year period commencing with the proposed commercial operation date of the project.

31.5.4.3.5 To be eligible for cost allocation and recovery under this Attachment Y,

the benefit of the proposed project must exceed its cost measured over the first ten
years from the proposed commercial operation date for the project, and the
requirements of section 31.5.4.2 must be met. The total capital cost of the project
must exceed $25 million. In addition, a super-majority of the beneficiaries must
vote in favor of the project, as specified in Section 31.5.4.6 of this Attachment Y.

31.5.4.3.6 In addition to calculating the benefit metric as defined in Section

31.5.4.3.2, the ISO will calculate additional metrics to estimate the potential
benefits of the proposed project, for information purposes only, in accordance
with Section 31.3.1.3.5, for the applicable metric. These additional metrics shall
include those that measure reductions in LBMP load costs, changes to generator
payments, ICAP costs, Ancillary Service costs, emissions costs, and losses. TCC
revenues will be determined in accordance with Section 31.5.4.4.2.3. The ISO

will provide information on these additional metrics to the maximum extent practicable considering its overall resource commitments.

31.5.4.3.7 In addition to the benefit/cost analysis performed by the ISO under this

Section 31.5.4.3, the ISO will work with the ESPWG to consider the development
and implementation of scenario analyses, for information only, that shed
additional light on the benefit/cost analysis of a proposed project. These
additional scenario analyses may cover fuel and load forecast uncertainty,
emissions data and the cost of allowances, pending environmental or other
regulations, and alternate resource and energy efficiency scenarios. Consideration
of these additional scenarios will take into account the resource commitments of
the ISO.

31.5.4.4 Cost Allocation for Eligible Projects

As noted in Section 31.5.4.2 of this Attachment Y, the cost of a RETP will be allocated to
those entities that would economically benefit from implementation of the proposed project. This
methodology shall apply to cost allocation for a RETP, including the ISO’s share of the costs of
an Interregional Transmission Project proposed as a RETP allocated in accordance with Section

31.5.7 of this Attachment Y.

31.5.4.4.1 The ISO will identify the beneficiaries of the proposed project over a ten-

year time period commencing with the proposed commercial operation date for the project. The ISO, in conjunction with the ESPWG, will develop
methodologies for extending the most recently completed CARIS database as necessary for this purpose.

31.5.4.4.2 The ISO will identify beneficiaries of a proposed project as follows:

31.5.4.4.2.1 The ISO will measure the present value of the annual zonal LBMP load
savings for all Load Zones which would have a load savings, net of reductions in
TCC revenues, and net of reductions from bilateral contracts (based on available
information provided by Load Serving Entities to the ISO as set forth in
subsection 31.5.4.4.2.5 below) as a result of the implementation of the proposed
project. For purposes of this calculation, the present value of the load savings will
be equal to the sum of the present value of the Load Zone’s load savings for each
year over the ten-year period commencing with the project’s commercial
operation date. The load savings for a Load Zone will be equal to the difference
between the zonal LBMP load cost without the project and the LBMP load cost
with the project, net of reductions in TCC revenues and net of reductions from
bilateral contracts.

31.5.4.4.2.2 The beneficiaries will be those Load Zones that experience net benefits

measured over the first ten years from the proposed commercial operation date for
the project. If the sum of the zonal benefits for those Load Zones with load
savings is greater than the revenue requirements for the project (both load savings
and revenue requirements measured in present value over the first ten years from
the commercial operation date of the project), the ISO will proceed with the
development of the zonal cost allocation information to inform the beneficiary
voting process.

31.5.4.4.2.3 Reductions in TCC revenues will reflect the forecasted impact of the
project on TCC auction revenues and day-ahead residual congestion rents
allocated to load in each zone, not including the congestion rents that accrue to

any Incremental TCCs that may be made feasible as a result of this project. This
impact will include forecasts of: (1) the total impact of that project on the
Transmission Service Charge offset applicable to loads in each zone (which may
vary for loads in a given zone that are in different Transmission Districts); (2) the
total impact of that project on the NYPA Transmission Adjustment Charge offset
applicable to loads in that zone; and (3) the total impact of that project on
payments made to LSEs serving load in that zone that hold Grandfathered Rights
or Grandfathered TCCs, to the extent that these have not been taken into account
in the calculation of item (1) above. These forecasts shall be performed using the
procedure described in Appendix B to this Attachment Y.

31.5.4.4.2.4 Estimated TCC revenues from any Incremental TCCs created by a

proposed RETP over the ten-year period commencing with the project’s

commercial operation date will be added to the Net Load Savings used for the cost allocation and beneficiary determination.

31.5.4.4.2.5 The ISO will solicit bilateral contract information from all Load Serving
Entities, which will provide the ISO with bilateral energy contract data for
modeling contracts that do not receive benefits, in whole or in part, from LBMP
reductions, and for which the time period covered by the contract is within the
ten-year period beginning with the commercial operation date of the project.
Bilateral contract payment information that is not provided to the ISO will not be
included in the calculation of the present value of the annual zonal LBMP savings
in section 31.5.4.4.2.1 above.

31.5.4.4.2.5.1 All bilateral contract information submitted to the ISO must identify the
source of the contract information, including citations to any public documents
including but not limited to annual reports or regulatory filings

31.5.4.4.2.5.2 All non-public bilateral contract information will be protected in

accordance with the ISO’s Code of Conduct, as set forth in Section 12.4 of
Attachment F of the ISO OATT, and Section 6 of the ISO Services Tariff.

31.5.4.4.2.5.3 All bilateral contract information and information on LSE-owned
generation submitted to the ISO must include the following information:

(1)Contract quantities on an annual basis:

(a)For non-generator specific contracts, the Energy (in MWh) contracted to serve

each Zone for each year.

(b) For generator specific contracts or LSE-owned generation, the name of the

generator(s) and the MW or percentage output contracted or self-owned for use by Load in each Zone for each year.

(2)For all Load Serving Entities serving Load in more than one Load Zone, the

quantity (in MWh or percentage) of bilateral contract Energy to be applied to each

Zone, by year over the term of the contract.

(3)Start and end dates of the contract.

(4)Terms in sufficient detail to determine that either pricing is not indexed to LBMP,

or, if pricing is indexed to LBMP, the manner in which prices are connected to

LBMP.

(5)Identify any changes in the pricing methodology on an annual basis over the term

of the contract.

31.5.4.4.2.5.4 Bilateral contract and LSE-owned generation information will be used to
calculate the adjusted LBMP savings for each Load Zone as follows:
AdjLBMPSy,z, the adjusted LBMP savings for each Load Zone z in each year y, shall be calculated using the following equation:

Where:

TLy,z is the total annual amount of Energy forecasted to be consumed by Load in year y in Load Zone z;

By,z is the set of blocks of Energy to serve Load in Load Zone z in year y that are sold under bilateral contracts for which information has been provided to the ISO that meets the requirements set forth elsewhere in this Section 31.5.4.4.2.5

BCLb,y,z is the total annual amount of Energy sold into Load Zone z in year y under bilateral contract block b;

Indb,y,z is the ratio of (1) the increase in the amount paid by the purchaser of Energy,

under bilateral contract block b, as a result of an increase in the LBMP in Load Zone z in year y
to (2) the increase in the amount that a purchaser of that amount of Energy would pay if the
purchaser paid the LBMP for that Load Zone in that year for all of that Energy (this ratio shall be
zero for any bilateral contract block of Energy that is sold at a fixed price or for which the cost of
Energy purchased under that contract otherwise insensitive to the LBMP in Load Zone z in year

y);

SGy,z is the total annual amount of Energy in Load Zone z that is forecasted to be served by LSE-owned generation in that Zone in year y;

LBMP1y,z is the forecasted annual load-weighted average LBMP for Load Zone z in year y, calculated under the assumption that the project is not in place; and
LBMP2y,z is the forecasted annual load-weighted average LBMP for Load Zone z in year y, calculated under the assumption that the project is in place.

31.5.4.4.2.6 NZSz, the Net Zonal Savings for each Load Zone z resulting from a given
project, shall be calculated using the following equation:

Where:

PS is the year in which the project is expected to enter commercial operation; AdjLBMPSy,z is as calculated in Section 31.5.4.4.2.5;

TCCRevImpacty,z is the forecasted impact of TCC revenues allocated to Load Zone z in year y, calculated using the procedure described in Appendix B in Section 31.7 of this
Attachment Y; and

DFy is the discount factor applied to cash flows in year y to determine the present value of that cash flow in year PS.

31.5.4.4.3 Load Zones not benefiting from a proposed RETP will not be allocated

any of the costs of the project under this Attachment Y. There will be no “make whole” payments to non-beneficiaries.

31.5.4.4.4 Costs of a project will be allocated to beneficiaries as follows:

31.5.4.4.4.1 The ISO will allocate the cost of the RETP based on the zonal share of
total savings to the Load Zones determined pursuant to Section 31.5.4.4.2 to be
beneficiaries of the proposed project. Total savings will be equal to the sum of

load savings for each Load Zone that experiences net benefits pursuant to Section

31.5.4.4.2. A Load Zone’s cost allocation will be equal to the present value of the following calculation:

31.5.4.4.4.2 Zonal cost allocation calculations for a RETP will be performed prior to
the commencement of the ten-year period that begins with the project’s
commercial operation date, and will not be adjusted during that ten-year period.

31.5.4.4.4.3 Within zones, costs will be allocated to LSEs based on MWhs calculated
for each LSE for each zone using data from the most recent available 12 month
period. Allocations to an LSE will be calculated in accordance with the following
formula:

31.5.4.4.5Project costs allocated under this Section 31.5.4.4 will be determined as

follows:

31.5.4.4.5.1 The project cost allocated under this Section 31.5.4.4 will be based on the
total project revenue requirement, as supplied by the Developer of the project, for
the first ten years of project operation. The total project revenue requirement will
be determined in accordance with the formula rate on file at the Commission. If
there is no formula rate on file at the Commission, then the Developer shall
provide to the ISO the project-specific parameters to be used to calculate the total
project revenue requirement.

31.5.4.4.5.2 Once the benefit/cost analysis is completed the amortization period and
the other parameters used to determine the costs that will be recovered for the
project should not be changed, unless so ordered by the Commission or a court of
applicable jurisdiction, for cost recovery purposes to maintain the continued
validity of the benefit/cost analysis.

31.5.4.4.5.3 The ISO, in conjunction with the ESPWG, will develop procedures to
allocate the risk of project cost increases that occur after the ISO completes its
benefit/cost analysis under this Attachment Y. These procedures may include
consideration of an additional review and vote prior to the start of construction
and whether the developer should bear all or part of the cost of any overruns.

31.5.4.4.6 The Commission must approve the cost of a proposed RETP for that cost

to be recovered through the ISO OATT. The developer’s filing with the

Commission must be consistent with the project proposal evaluated by the ISO under this Attachment Y in order to be cost allocated to beneficiaries.

31.5.4.5 Collaborative Governance Process and Board Action

31.5.4.5.1 The ISO shall submit the results of its project benefit/cost analysis and

beneficiary determination to the ESPWG and TPAS, and to the identified

beneficiaries of the proposed RETP for comment. The ISO shall make available
to any interested party sufficient information to replicate the results of the
benefit/cost analysis and beneficiary determination. The information made
available will be electronically masked and made available pursuant to a process
that the ISO reasonably determines is necessary to prevent the disclosure of any
Confidential Information or Critical Energy Infrastructure Information contained

in the information made available. Following completion of the review by the ESPWG and TPAS of the project benefit/cost analysis, the ISO’s analysis
reflecting any revisions resulting from the TPAS and ESPWG review shall be forwarded to the Business Issues Committee and Management Committee for discussion and action.

31.5.4.5.2 Following the Management Committee vote, the ISO’s project benefit/cost

analysis and beneficiary determination will be forwarded, with the input of the
Business Issues Committee and Management Committee, to the ISO Board for
review and action. In addition, the ISO’s determination of the beneficiaries’
voting shares will be forwarded to the ISO Board for review and action. The
Board may approve the analysis and beneficiary determinations as submitted or
propose modifications on its own motion. If any changes to the benefit/cost

analysis or the beneficiary determinations are proposed by the Board, the revised
analysis and beneficiary determinations shall be returned to the Management
Committee for comment. If the Board proposes any changes to the ISO’s voting
share determinations, the Board shall so inform the LSE or LSEs impacted by the
proposed change and shall allow such an LSE or LSEs an opportunity to comment
on the proposed change. The Board shall not make a final determination on the
project benefit/cost analysis and beneficiary determination until it has reviewed
the Management Committee comments. Upon final approval of the Board,
project benefit/cost analysis and beneficiary determinations shall be posted by the
ISO on its website and shall form the basis of the beneficiary voting described in
Section 31.5.4.6 of this Attachment Y.

31.5.4.6 Voting by Project Beneficiaries

31.5.4.6.1 Only LSEs serving Load located in a beneficiary zone determined in

accordance with the procedures in Section 31.5.4.4 of this Attachment Y shall be eligible to vote on a proposed project. The ISO will, in conjunction with the
ESPWG, develop procedures to determine the specific list of voting entities for each proposed project.

31.5.4.6.2The voting share of each LSE shall be weighted in accordance with its

share of the total project benefits, as allocated by Section 31.5.4.4 of this

Attachment Y.

31.5.4.6.3 The costs of a RETP shall be allocated under this Attachment Y if eighty

percent (80%) or more of the actual votes cast on a weighted basis are cast in favor of implementing the project.

31.5.4.6.4 If the proposed RETP meets the required vote in favor of implementing

the project, and the project is implemented, all beneficiaries, including those voting “no,” will pay their proportional share of the cost of the project.

31.5.4.6.5 The ISO will tally the results of the vote in accordance with procedures set

forth in the ISO Procedures, and report the results to stakeholders. Beneficiaries
voting against approval of a project must submit to the ISO their rationale for
their vote within 30 days of the date that the vote is taken. Beneficiaries must
provide a detailed explanation of the substantive reasons underlying the decision,
including, where appropriate: (1) which additional benefit metrics, either
identified in the tariff or otherwise, were used; (2) the actual quantification of
such benefit metrics or factors; (3) a quantification and explanation of the net
benefit or net cost of the project to the beneficiary; and (4) data supporting the

metrics and other factors used. Such explanation may also include uncertainties, and/or alternative scenarios and other qualitative factors considered, including
state public policy goals. The ISO will report this information to the Commission in an informational filing to be made within 60 days of the vote. The
informational filing will include: (1) a list of the identified beneficiaries; (2) the
results of the benefit/cost analysis; and (3) where a project is not approved,
whether the developer has provided any formal indication to the ISO as to the
future development of the project.

31.5.5Regulated Transmission Solutions to Public Policy Transmission Needs

31.5.5.1 The Scope of Section 31.5.5

As discussed in Section 31.5.1 of this Attachment Y, the cost allocation principles and
methodologies of this Section 31.5.5 apply only to regulated Public Policy Transmission
Projects. This Section 31.5.5 does not apply to Other Public Policy Projects, including
generation or demand side management projects, or any market-based projects. This Section

31.5.5 does not apply to regulated reliability solutions implemented pursuant to the reliability

planning process, nor does it apply to RETPs proposed in response to congestion identified in the
CARIS.

A regulated transmission solution shall only utilize the cost allocation methodology set
forth in Section 31.5.3 where it is: (1) a Responsible Transmission Owner’s regulated backstop
solution, (2) an alternative regulated transmission solution selected by the ISO as the more
efficient or cost effective regulated transmission solution to satisfy a Reliability Need, or (3)
seeking cost recovery where it has been halted or cancelled pursuant to the provisions of Section

31.2.8.2. A regulated economic transmission solution proposed in response to congestion

identified in the CARIS, and approved pursuant to Section 31.5.4.6, shall only be eligible to utilize the cost allocation principles and methodologies set forth in Section 31.5.4.

31.5.5.2Cost Allocation Principles

The ISO shall implement the specific cost allocation methodology in Section 31.5.5.4 of this Attachment Y in accordance with the Order No. 1000 Regional Cost Allocation Principles as set forth in Section 31.5.2.1. The specific cost allocation methodology in Section 31.5.5.4
incorporates the following elements:

31.5.5.2.1The focus of the cost allocation methodology shall be on regulated Public

Policy Transmission Projects.

31.5.5.2.2Projects analyzed hereunder as Public Policy Transmission Projects may

proceed on a market basis with willing buyers and sellers at any time.

31.5.5.2.3Cost allocation shall be based on a beneficiaries pay approach.

31.5.5.2.4Project benefits will be identified in accordance with Section 31.5.5.4.

31.5.5.2.5Identification of beneficiaries for cost allocation and cost allocation

among those beneficiaries shall be according to the methodology specified in Section 31.5.5.4.

31.5.5.3 Project Eligibility for Cost Allocation

The Developer of a Public Policy Transmission Project will be eligible for cost allocation
in accordance with the process set forth in Section 31.5.5.4 when its project is selected by the
ISO as the more efficient or cost effective regulated Public Policy Transmission Project;
provided, however, that if the appropriate federal, state, or local agency(ies) rejects the selected
project’s necessary authorizations, or such authorizations are withdrawn, the costs the Developer
is eligible to recover under Section 31.4.12.1 shall be allocated in accordance with Section

31.5.5.4.3, except as otherwise determined by the Commission. The Developer of the selected regulated transmission solution may recover its costs in accordance with Section 31.5.6.

31.5.5.4 Cost Allocation for Eligible Projects

As noted in Section 31.5.5.2 of this Attachment Y, the identification of beneficiaries for
cost allocation and the cost allocation of a selected Public Policy Transmission Project will be
conducted in accordance with the process described in this Section 31.5.5.4. This Section will
also apply to the allocation within New York of the ISO’s share of the costs of an Interregional
Transmission Project proposed as a solution to a Public Policy Transmission Need allocated in
accordance with Section 31.5.7 of this Attachment Y. The establishment of a cost allocation
methodology and rates for a proposed solution that is undertaken by LIPA or NYPA as an

Unregulated Transmitting Utility to a Public Policy Transmission Need as determined in

Sections 31.4.2.1 through 31.4.2.3, as applicable, or an Interregional Transmission Project shall
occur pursuant to Section 31.5.5.4.4 through 31.5.5.4.6, as applicable. Nothing herein shall
deprive a Transmission Owner or Other Developer of any rights it may have under Section 205
of the Federal Power Act to submit filings proposing any other cost allocation methodology to
the Commission or create any Section 205 filing rights for any Transmission Owner, Other
Developer, the ISO, or any other entity. The ISO shall apply the cost methodology accepted by
the Commission.

31.5.5.4.1 If the Public Policy Requirement that results in the identification by the

deprive a Transmission Owner or Other Developer of any rights it may have

under Section 205 of the Federal Power Act to submit filings proposing any other
cost allocation methodology to the Commission or create any Section 205 filing
rights for any Transmission Owner, Other Developer, the ISO, or any other entity.
If the Developer files a different proposed cost allocation methodology under
Section 205 of the Federal Power Act, it shall have the burden of demonstrating
that its proposed methodology is compliant with the Order No. 1000 Regional
Cost Allocation Principles taking into account the methodology specified in the
Public Policy Requirement.

31.5.5.4.2 Subject to the provisions of Section 31.5.5.4.1, the Developer may submit

to the NYPSC for its consideration - no later than 30 days after the ISO’s

selection of the regulated Public Policy Transmission Project - a proposed cost
allocation methodology, which may include a cost allocation based on load ratio
share, adjusted to reflect, as applicable, the Public Policy Requirement or Public
Policy Transmission Need, the party(ies) responsible for complying with the
Public Policy Requirement, and the party(ies) who benefit from the transmission
facility.

31.5.5.4.2.1 The NYPSC shall have 150 days to review the Developer’s proposed cost
allocation methodology and to inform the Developer regarding whether it
supports the methodology.

31.5.5.4.2.2. If the NYPSC supports the proposed cost allocation methodology, the

Developer shall file that cost allocation methodology with the Commission for its
acceptance under Section 205 of the Federal Power Act within 30 days of the

NYPSC informing the Developer of its support. The Developer shall have the
burden of demonstrating that the proposed cost allocation methodology is
compliant with the Order No. 1000 Regional Cost Allocation Principles.

31.5.5.4.2.3 If the NYPSC does not support the proposed cost allocation methodology,
then the Developer shall take reasonable steps to respond to the NYPSC’s
concerns and to develop a mutually agreeable cost allocation methodology over a
period of no more than 60 days after the NYPSC informing the Developer that it
does not support the methodology.

31.5.5.4.2.4 If a mutually acceptable cost allocation methodology is developed during
the timeframe set forth in Section 31.5.5.4.2.3, the Developer shall file it with the
Commission for acceptance under Section 205 of the Federal Power Act no later
than 30 days after the conclusion of the 60 day discussion period with the
NYPSC. The Developer shall have the burden of demonstrating that the proposed
cost allocation methodology is compliant with the Order No. 1000 Regional Cost
Allocation Principles.

31.5.5.4.2.5 If no mutually agreeable cost allocation methodology is developed, the
Developer shall file its preferred cost allocation methodology with the
Commission for acceptance under Section 205 of the Federal Power Act no later
than 30 days after the conclusion of the 60 day discussion period with the
NYPSC. The Developer shall have the burden of demonstrating that its proposed
methodology is compliant with the Order No. 1000 Regional Cost Allocation
Principles in consideration of the position of the NYPSC. The filing shall include
the methodology supported by NYPSC for the Commission’s consideration. If the

Developer elects to use the load ratio share cost allocation methodology

referenced below in Section 31.5.5.4.3, the Developer shall notify the

Commission of its intent to utilize the load ratio share methodology and shall include in its notice the NYPSC supported methodology for the Commission’s consideration.

31.5.5.4.3. Unless the Commission has accepted an alternative cost allocation

methodology pursuant to this Section, the ISO shall allocate the costs of the
Public Policy Transmission Project to all Load Serving Entities in the NYCA
using the default cost allocation methodology, based upon a load ratio share
methodology.

31.5.5.4.4 The NYISO will make any Section 205 filings related to this Section on

behalf of NYPA to the extent requested to do so by NYPA. NYPA shall bear the
burden of demonstrating that such a filing is compliant with the Order No. 1000
Regional Cost Allocation Principles. NYPA shall also be solely responsible for
making any jurisdictional reservations or arguments related to their status as non-
Commission-jurisdictional utilities that are not subject to various provisions of the
Federal Power Act.

31.5.5.4.5 The cost allocation methodology and any rates for cost recovery for a

proposed solution to a Public Policy Transmission Need undertaken by LIPA, as an Unregulated Transmitting Utility (for purposes of this section a “LIPA
project”), shall be established and recovered as follows:

31.5.5.4.5.1 For costs solely to LIPA customers. The cost allocation methodology and
rates to be established for a LIPA project, for which cost recovery will only occur

from LIPA customers, will be established pursuant to Article 5, Title 1-A of the
New York Public Authorities Law, Sections 1020-f(u) and 1020-s. Prior to the
adoption of any cost allocation mechanism or rates for such a LIPA project, and
pursuant to Section 1020-f(u), the Long Island Power Authority’s Board of
Trustees shall request that the NYDPS provide a recommendation with respect to
the cost allocation methodology and rate that LIPA has proposed and the Board of
Trustees shall consider such recommendation in accordance with the requirements
of Section 1020-f(u). Upon approval of the cost allocation mechanism and/or
rates by the Long Island Power Authority’s Board of Trustees, LIPA shall provide
to the ISO, for purposes of inclusion within the ISO OATT and filing with FERC
on an informational basis only, a description of the cost allocation mechanism and
the rate that LIPA will charge and collect within the Long Island Transmission
District.

31.5.5.4.5.2 For Costs for a LIPA Project That May be Allocated to Other

to Section 1020-f(u), the Long Island Power Authority’s Board of Trustees shall
request that the NYDPS provide a recommendation with respect to the cost
allocation methodology and rate that LIPA has proposed and the Board of
Trustees shall consider such recommendation in accordance with the requirements
of Section 1020-f(u). LIPA shall inform the ISO of the cost allocation
methodology and rate that has been approved by the Long Island Power
Authority’s Board of Trustees for filing with the Commission.
Upon approval by the Long Island Power Authority’s Board of Trustees, LIPA shall submit and request that the ISO file the LIPA cost allocation
methodology for approval with the Commission. Any cost allocation
methodology for a LIPA project that allocates costs to market participants outside
of the Long Island Transmission District shall be reviewed as to whether there is
comparability in the derivation of the cost allocation for market participants such
that LIPA has demonstrated that the proposed cost allocation is compliant with
the Order No. 1000 cost allocation principles, there are benefits provided by the
project to market participants outside of the Long Island Transmission District,
and that the proposed allocation is roughly commensurate to the identified
benefits.

Article 5, Title 1-A of the New York Public Authorities Law, Sections

Section 1020-f(u), LIPA shall submit, and request that the ISO file, the LIPA rate with the Commission for review under the same comparability standard as applied to the review of changes in LIPA’s TSC under Attachment H of this tariff.

In the event that the cost allocation methodology or rate approved by the Long Island Power Authority’s Board of Trustees did not adopt the NYDPS recommendation, the NYDPS recommendation shall be included in the filing for the Commission’s consideration.

31.5.5.4.5.3 Support for Filing. LIPA shall intervene in support of the filing(s) made
pursuant to Section 31.5.5.4.5 at the Commission and shall take the responsibility
to demonstrate that: (i) the cost allocation methodology and/or rate approved by
the Long Island Power Authority’s Board of Trustees meets the applicable
standard of comparability, and (ii) the Commission should accept such
methodology or rate for filing. LIPA shall also be responsible for responding to,
and seeking to resolve, concerns about the contents of the filing that might be
raised in such proceeding.

31.5.5.4.5.4 Billing of LIPA Charges Outside of the Long Island Transmission District.
For Transmission Districts other than the Long Island Transmission District, the
ISO shall bill for LIPA, as a separate charge, the costs incurred by LIPA for a
solution to a Public Policy Transmission Need allocated using the cost allocation
methodology and rates established pursuant to Section 31.5.5.4.5.2 and accepted
for filing by the Commission and shall remit the revenues collected to LIPA each
Billing Period in accordance with the ISO’s billing and settlement procedures.

31.5.5.4.6The inclusion in the ISO OATT or in a filing with the Commission of the

cost allocation and charges for recovery of costs incurred by NYPA or LIPA

related to a solution to a transmission need driven by a Public Policy Requirement
or Interregional Transmission Project as provided for in Sections 31.5.5.4.4 and

31.5.5.4.5 shall not be deemed to modify the treatment of such rates as nonjurisdictional pursuant to Section 201(f) of the FPA.

31.5.6Cost Recovery for Regulated Projects

31.5.6.5 of this Attachment Y.

31.5.6.1 The Responsible Transmission Owner, Transmission Owner or Other

Developer will receive cost recovery for a regulated solution it undertakes to meet
a Reliability Need pursuant to Section 31.2 of this Attachment Y that is
subsequently halted in accordance with the criteria established pursuant to Section

31.2.8.2 of this Attachment Y. Such costs will include reasonably incurred costs
through the time of cancellation, including any forward commitments made.

31.5.6.2 The Responsible Transmission Owner, Transmission Owner or Other

Developer will recover its costs described in this Section 31.5 incurred with

respect to the implementation of a regulated transmission solution to Reliability
Needs in accordance with the provisions of Rate Schedule 10 of this ISO OATT,
or as determined by the Commission. Provided further that cost recovery for
regulated transmission projects undertaken by a Transmission Owner pursuant to
this Attachment Y shall be in accordance with the provisions of the NYISO/TO
Reliability Agreement.

31.5.6.3 Costs related to non-transmission regulated solutions to Reliability Needs

will be recovered by Responsible Transmission Owners, Transmission Owners
and Other Developers in accordance with the provisions of New York Public
Service Law, New York Public Authorities Law, or other applicable state law. A
Responsible Transmission Owner, a Transmission Owner, or Other Developer
may propose and undertake a regulated non-transmission solution, provided that
the appropriate state agency(ies) has established cost recovery procedures
comparable to those provided in this tariff for regulated transmission solutions to
ensure the full and prompt recovery of all reasonably-incurred costs related to
such non-transmission solutions. Nothing in this section shall affect the
Commission’s jurisdiction over the sale and transmission of electric energy
subject to the jurisdiction of the Commission.

31.5.6.4For a regulated economic transmission project that is approved pursuant to

Section 31.5.4.6 of this Attachment Y, the Transmission Owner or Other

Developer shall have the right to make a filing with the Commission, under

Section 205 of the Federal Power Act, for approval of its costs associated with
implementation of the project. The filing of the Transmission Owner or Other
Developer must be consistent with its project proposal made to and evaluated by the ISO under Section 31.5.4 of this Attachment Y. Costs will be recovered when the project is completed pursuant to a rate schedule filed with and accepted by the Commission in accordance with the cost recovery requirements set forth in this Section, or as otherwise determined by the Commission. Upon request by NYPA, the ISO will make a filing on behalf of NYPA.

31.5.6.5 For a regulated Public Policy Transmission Project, the Developer shall

have the right to make a filing with the Commission under Section 205 of the
Federal Power Act, for approval of its costs eligible for recovery under Section

31.4 and this Section 31.5.6.5.

31.5.6.5.1 The Developer of a Public Policy Transmission Project selected by the

ISO as the more efficient or cost-effective Public Policy Transmission Project will
be entitled to full recovery of all reasonably incurred costs, including a reasonable
return on investment and any applicable incentives, related to the development,
construction, operation, and maintenance of the selected Public Policy
Transmission Project. Such cost recovery will include reasonable costs incurred
by the Developer to provide a more detailed study or cost estimate for such
project at the request of the NYPSC, and to prepare the application required to

comply with New York Public Service Law Article VII, or any successor statute
or any other applicable permits, and to seek other necessary authorizations. The
filing of the Developer must be consistent with its project proposal submitted to,
evaluated by and selected by the ISO under Section 31.4 of this Attachment Y.
The period for cost recovery, if any cost recovery is approved, will be determined
by the Commission and will begin if and when the project is completed, or as

otherwise determined by the Commission.

31.5.6.5.2 If the appropriate federal, state or local agency(ies) either rejects a

necessary authorization, or approves and later withdraws authorization, for the
selected Public Policy Transmission Project, all of the necessary and reasonable
costs incurred and commitments made up to the final federal, state or local
regulatory decision, including reasonable and necessary expenses incurred to
implement an orderly termination of the project, will be recoverable by the
Developer. The period for cost recovery will be determined by the Commission
and will begin as determined by the Commission. 31.5.6.5.3 Upon request

by NYPA, the ISO will make a filing on behalf of NYPA under this Section

31.5.6.5.

31.5.6.6 To the extent that Incremental TCCs are created as a result of a regulated

economic transmission project that has been approved for cost recovery under the
NYISO Tariff, those Incremental TCCs that can be sold will be auctioned or
otherwise sold by the ISO. The ISO shall determine the amount of Incremental
TCCs that may be awarded to an expansion in accordance with the provisions of
Section 19.2.2 of Attachment M of the ISO OATT. The ISO will use these

revenues to offset the revenue requirements for the project. The Incremental
TCCs shall continue to be sold for the depreciable life of the project, and the
revenues offset will commence upon the first payment of revenues related to a
sale of Incremental TCCs on or after the charge for a specific RETP is
implemented.

31.5.7 Cost Allocation for Eligible Interregional Transmission Projects

31.5.7.1 Costs of Approved Interregional Transmission Projects

The cost allocation methodology reflected in this Section 31.5.7.1 shall be referred to as the “Northeastern Interregional Cost Allocation Methodology” (or “NICAM”), and shall not be modified without the mutual consent of the Section 205 rights holders in each region.

The costs of Interregional Transmission Projects, as defined in the Interregional Planning
Protocol, evaluated under the Interregional Planning Protocol and selected by ISO-NE, PJM and
the ISO in their regional transmission plans for purposes of cost allocation under their respective
tariffs shall, when applicable, be allocated to the ISO-NE region, PJM region and the ISO region
in accordance with the cost allocation principles of FERC Order No. 1000, as follows:

(a) To be eligible for interregional cost allocation, an Interregional Transmission

Project must be selected in the regional transmission plan for purposes of cost allocation in each
of the transmission planning regions in which the transmission project is proposed to be located,
pursuant to agreements and tariffs on file at FERC for each region. With respect to Interregional
Transmission Projects and other transmission projects involving the ISO and PJM, the cost
allocation of such projects shall be in accordance with the Joint Operating Agreement (“JOA”)
among and between the ISO and PJM. With respect to Interregional Transmission Projects and
other transmission projects involving the ISO and ISO-NE, the cost allocation for such projects

shall be in accordance with this Section 31.5.7 of Attachment Y of the NYISO Open Access Transmission Tariff and with the respective tariffs of ISO-NE.

(b) The share of the costs of an Interregional Transmission Project allocated to a

region will be determined by the ratio of the present value of the estimated costs of such region’s displaced regional transmission project to the total of the present values of the estimated costs of the displaced regional transmission projects in all regions that have selected the Interregional Transmission Project in their regional transmission plans.

(i) The present values of the estimated costs of each region’s displaced regional

transmission project shall be based on a common base date that will be the

beginning of the calendar month of the cost allocation analysis for the subject Interregional Transmission Project (the “Base Date”).

(ii) In order to perform the analysis in this Section 31.5.7.1(b), the estimated cost of

the displaced regional transmission projects shall specify the year’s dollars in which those estimates are provided.

(iii) The present value analysis for all displaced regional transmission projects shall

use a common discount rate. The regions having displaced projects will mutually
agree, in consultation with their respective transmission owners, and for purposes
of the ISO, its other stakeholders, on the discount rate to be used for the present
value analysis.

(iv) For the purpose of this allocation, cost estimates shall use comparable cost

estimating procedures. In the Interregional Planning Stakeholder Advisory

Committee review process, the regions having displaced projects will review and
determine, in consultation with their respective transmission owners, and for

purposes of the NYISO, its other stakeholders, that reasonably comparable
estimating procedures have been used prior to applying this cost allocation.

(c) No cost shall be allocated to a region that has not selected the Interregional Transmission Project in its regional transmission plan.

(d) When a portion of an Interregional Transmission Project evaluated under the
Interregional Planning Protocol is included by a region (Region 1) in its regional transmission
plan but there is no regional need or displaced regional transmission project in Region 1, and the
neighboring region (Region 2) has a regional need or displaced regional project for the
Interregional Transmission Project and selects the Interregional Transmission Project in its
regional transmission plan, all of the costs of the Interregional Transmission Project shall be
allocated to Region 2 in accordance with the NICAM and none of the costs shall be allocated to
Region 1. However, Region 1 may voluntarily agree, with the mutual consent of the Section 205
rights holders in the other affected region(s) (including the Long Island Power Authority and the
New York Power Authority in the NYISO region) to use an alternative cost allocation method
filed with and accepted by the Commission.

(e) The portion of the costs allocated to a region pursuant to the NICAM shall be further allocated to that region’s transmission customers pursuant to the applicable provisions of the region’s FERC-filed documents and agreements, for the ISO in accordance with Section 31.5.1.7 of Attachment Y of the ISO OATT.

(f) The following example illustrates the cost allocation for such an Interregional Transmission Project:

A cost allocation analysis of the costs of Interregional Transmission Project Z is to be

performed during a given month establishing the beginning of that month as the Base
Date.

 Region A has identified a reliability need in its region and has selected a transmission

project (Project X) as the preferred solution in its regional plan. The estimated cost of
Project X is: Cost (X), provided in a given year’s dollars. The number of years from
the Base Date to the year associated with the cost estimate of Project (X) is: N(X).  Region B has identified a reliability need in its region and has selected a transmission
project (Project Y) as the preferred solution in its Regional Plan. The estimated cost
of Project Y is: Cost (Y), provided in a given year’s dollars. The number of years
from the Base Date to the year associated with the cost estimate of Project (Y) is:
N(Y).

 Regions A and B, through the interregional planning process have determined that an

Interregional Transmission Project (Project Z) will address the reliability needs in

both regions more efficiently and cost-effectively than the separate regional projects. The estimated cost of Project Z is: Cost (Z). Regions A and B have each determined that Interregional Transmission Project Z is the preferred solution to their reliability needs and have adopted that Interregional Transmission Project in their respective regional plans in lieu of Projects X and Y respectively. If Regions A and B have
agreed to bear the costs of upgrades in other affected transmission planning regions, these costs will be considered part of Cost (Z).

The discount rate used for all displaced regional transmission projects is: D

Based on the foregoing assumptions, the following formulas will be used:

 Present Value of Cost (X) = PV Cost (X) = Cost (X) / (1+D)N(X)

 Present Value of Cost (Y) = PV Cost (Y) = Cost (Y) / (1+D)N(Y)

 Cost Allocation to Region A = Cost (Z) x PV Cost (X)/[PV Cost (X) + PV
Cost (Y)]

 Cost Allocation to Region B = Cost (Z) x PV Cost (Y)/[PV Cost (X) + PV
Cost (Y)]

 Applying those formulas, if:

Cost (X) = $60 Million and N(X) = 8.25 years Cost (Y) = $40 Million and N(Y) = 4.50 years Cost (Z) = $80 Million

D = 7.5% per year
Then:

PV Cost (X) = 60/(1+0.075) 8.25 = 33.039 Million
PV Cost (Y) = 40/(1+0.075)4.50 = 28.888 Million

Cost Allocation to Region A = $80 x 33.039/(33.039 + 28.888) = $42,681 Million
Cost Allocation to Region B = $80 x 28.888/(33.039+28.888) = $37.319 Million

31.5.7.2 Other Cost Allocation Arrangements

(a) Except as provided in Section 31.5.7.2(b), the NICAM is the exclusive means by which any costs of an Interregional Transmission Project may be allocated between or among PJM, the ISO, and ISO-NE.

(b) Nothing in the FERC-filed documents of ISO-NE, the ISO or PJM shall preclude
agreement by entities with cost allocation rights under Section 205 of the Federal Power Act for
their respective regions (including the Long Island Power Authority and the New York Power

Authority in the ISO region) to enter into separate agreements to allocate the cost-of

Interregional Transmission Projects proposed to be located in their regions as an alternative to the NICAM, or other transmission projects identified pursuant to assessments and studies
conducted pursuant to Section 6 of the Interregional Planning Protocol. Such other cost-
allocation methodologies must be approved in each region pursuant to the Commission-approved rules in each region, filed with and accepted by the Commission, and shall apply only to the
region's share of the costs of an Interregional Transmission Project or other transmission projects pursuant to Section 6 of the Interregional Planning Protocol, as applicable.

31.5.7.3 Filing Rights

Nothing in this Section 31.5.7 will convey, expand, limit or otherwise alter any rights of ISO-NE, the ISO, PJM, each region’s transmission owners, market participants, or other entities to submit filings under Section 205 of the Federal Power Act regarding interregional cost
allocation or any other matter.

Where applicable, the regions have been authorized by entities that have cost allocation rights for their respective regions to implement the provisions of this Section 31.5.7.

31.5.7.4. Merchant Transmission and Individual Transmission Owner Projects

Nothing in this Section 31.5.7 shall preclude the development of Interregional Transmission Projects that are funded solely by merchant transmission developers or by individual transmission owners.

31.5.7.5 Consequences to Other Regions from Regional or Interregional
Transmission Projects

Except as provided herein in Sections 31.5.7.1 and 31.5.7.2, or where cost responsibility
is expressly assumed by ISO-NE, the ISO or PJM in other documents, agreements or tariffs on

APPENDIX A - REPORTING OF HISTORIC AND PROJECTED CONGESTION

1.0General

As part of its CSPP, the ISO will prepare summaries and detailed analysis of historic and
projected congestion across the NYS Transmission System. This will include analysis to identify
the significant causes of historic congestion in an effort to help Market Participants and other
interested parties distinguish persistent and addressable congestion from congestion that results
from one time events or transient adjustments in operating procedures that may or may not recur.
This information will assist Market Participants and other stakeholders to make appropriately
informed decisions.

2.0Definition of Cost of Congestion

The ISO will report the cost of congestion as the change in bid production costs that

results from transmission congestion. The following elements of congestion-related costs also will be reported: (i) impact on load payments; (ii) impact on generator payments; and
(iii) hedged and unhedged congestion payments.

The determination of the change in bid production costs and the other elements of
congestion will be based upon the difference in costs between the actual constrained system
prices computed in the ISO’s Day-Ahead Market and a simulation of an unconstrained system.
The simulation shall be developed by the use of the PROBE model approved by the ISO
Operating Committee on January 22, 2004 or by such other software as may provide the required
congestion information.

3.0Analysis

Each RNA will include the ISO’s summaries and detailed analysis of the prior year’s congestion across the NYS Transmission System. The ISO’s analysis will identify the
significant causes of the historic congestion.

Each study of projected congestion for economic planning will include the results of the ISO’s analysis conducted in accordance with Section 31.3.1 of this Attachment Y. The ISO’s analysis will identify the significant causes of the projected congestion.

4.0Detailed Cause Analysis for Unusual Events

The ISO will perform an analysis to identify unusual events causing significant

congestion levels. Such analysis will include the following elements: (i) identification of major transmission or generation outages; and (ii) quantification of the market impact of relieving
historic constraints.

Some of the information necessary to this analysis may constitute critical energy infrastructure information and will need to be handled with appropriate confidentiality limitations to protect national security interests.

5.0Summary Reports

The ISO will prepare various reports of historic and projected congestion costs. Historic
congestion reports will be based upon the actual congestion data from the ISO Day-Ahead
Market, and will include summaries, aggregated by month and calendar year, such as: (i) NYCA;
(ii) by zone; (iii) by contingency in rank order; (iv) by constraint in rank order; (v) total dollars;
and (vi) number of hours. Results of projected congestion studies conducted pursuant to Section

31.3.1 of this Attachment Y will include summaries of selected additional metrics and scenarios.

These reports will be based upon the foregoing definitions of congestion.

APPENDIX B - PROCEDURE FOR FORECASTING THE NET REDUCTIONS IN
TCC REVENUES THAT WOULD RESULT FROM A PROPOSED
PROJECT

For the purpose of determining the allocation of costs associated with a proposed project as

described in Section 31.5.4.4 of this Attachment Y, the ISO shall use the procedure described herein to forecast the net reductions in TCC revenues allocated to Load in each Load Zone as a result of a proposed project.

Definitions

The following definitions will apply to this appendix:

Pre-CARIS Centralized TCC Auction: The last Centralized TCC Auction that had been completed as of the date the input assumptions were determined for the CARIS in which the Project was
identified as a candidate for development under the provisions of this Attachment Y.

Project: The proposed transmission project for which the evaluation of the net benefits forecasted
for Load in each Load Zone, as described in Section 31.5.4.4.2 of this Attachment Y, is being
performed.

TCC Revenue Factor: A factor that is intended to reflect the expected ratio of (1) revenue realized in
the TCC auction from the sale of a TCC to (2) the Congestion Rents that a purchaser of that TCC
would expect to realize. The value to be used for the TCC Revenue Factor shall be stated in the ISO
Procedures.

Steps 1 Through 6 of the Procedure

For each Project, the ISO will perform Steps 1 through 6 of this procedure twice for each of the ten

(10) years following the proposed commercial operation date of the Project: once under the

assumption that the Project is in place in each of those years, and once under the assumption that the Project is not in place in each of those years.

Forecasting the Value of Grandfathered TCCs and TCC Auction Revenue

Step 1. The ISO shall forecast Congestion Rents collected on the New York electricity system in each year, which shall be equal to:

(a) the product of:

(i) the forecasted Congestion Component of the Day-Ahead LBMP for each hour at each Load Zone or Proxy Generator Bus and

(ii) forecasted withdrawals scheduled in that hour in that Load Zone or Proxy Generator Bus,

summed over all locations and over all hours in that year, minus:

(b) the product of:

(i) the forecasted Congestion Component of the Day-Ahead LBMP for each hour at each Generator bus or Proxy Generator Bus and

(ii) forecasted injections scheduled in that hour at that Generator bus or Proxy Generator Bus,

summed over all locations and over all hours in that year. Step 2. The ISO shall forecast:

(a) payments in each year associated with any Incremental TCCs that the ISO projects would be awarded in conjunction with that Project (which will be zero for the calculation that is performed under the assumption that the Project is not in place);

(b) payments in each year associated with any Incremental TCCs that the ISO has awarded, or that the ISO projects it would award, in conjunction with other projects that have entered commercial operation or are expected to enter commercial operation before the Project enters commercial operation; and

(c) payments that would be made to holders of Grandfathered Rights and imputed payments that would be made to the Primary Holders of Grandfathered TCCs that would be in effect in each year, under the following assumptions:

(i) all Grandfathered Rights and Grandfathered TCCs expire at their stated expiration
dates;

(ii) imputed payments to holders of Grandfathered Rights are equal to the payments that would be made to the Primary Holder of a TCC with the same Point of Injection and Point of Withdrawal as that Grandfathered Right; and

(iii) in cases where a Grandfathered TCC is listed in Table 1 of Attachment M of the ISO OATT, the number of those TCCs held by their Primary Holders shall be set to the number of such TCCs remaining at the conclusion of the ETCNL reduction
procedure conducted before the Pre-CARIS Centralized TCC Auction.

Step 3. The ISO shall forecast TCC auction revenues for each year by subtracting:

(a) the forecasted payments calculated for that year in Steps 2(a), 2(b) and 2(c) of this procedure

from:

(b) the forecasted Congestion Rents calculated for that year in Step 1 of this procedure, and multiplying the difference by the TCC Revenue Factor.

Forecasting the Allocation of TCC Auction Revenues Among the Transmission Owners Step 4. The ISO shall forecast the following:

(a) payments in each year to the Primary Holders of Original Residual TCCs and

(b) payments in each year to the Primary Holders of TCCs that correspond to the amount of ETCNL remaining at the conclusion of the ETCNL reduction procedure conducted before the Pre-CARIS Centralized TCC Auction,

and multiply each by the TCC Revenue Factor to determine the forecasted payments to the Primary
Holders of Original Residual TCCs and the Transmission Owners that have been allocated ETCNL.

Step 5. The ISO shall forecast residual auction revenues for each year by subtracting:

(a) the sum of the forecasted payments for each year to the Primary Holders of Original

Residual TCCs and the Transmission Owners that have been allocated ETCNL, calculated in Step 4 of this procedure

from:

(b) forecasted TCC auction revenues for that year calculated in Step 3 of this procedure.

Step 6. The ISO shall forecast each Transmission Owner’s share of residual auction revenue for each year by multiplying:

(a) the forecast of residual auction revenue calculated in Step 5 of this procedure and

(b) the ratio of:

(i) the amount of residual auction revenue allocated to that Transmission Owner in the Pre-CARIS Centralized TCC Auction to

(ii) the total amount of residual auction revenue allocated in the Pre-CARIS Centralized TCC Auction.

Steps 7 Through 10 of the Procedure

The ISO will perform Steps 7 through 10 of this procedure once for each of the ten (10) years

following the proposed commercial operation date of the Project, using the results of the preceding calculations performed both under the assumption that the Project is in place in each of those years, and under the assumption that the Project is not in place in each of those years.

Forecasting the Impact of the Project on TSC Offsets and the NTAC Offset

Step 7. The ISO shall calculate the forecasted net impact of the Project on the TSC offset for each megawatt-hour of electricity consumed by Load in each Transmission District (other than the NYPA Transmission District) in each year by:

(a) summing the following, each forecasted for that Transmission District for that year under the assumption that the Project is in place:

(i) forecasted Congestion Rents associated with any Incremental TCCs that the ISO

has awarded, or that the ISO projects it would award, as calculated in Step 2(b) of this
procedure, in conjunction with other projects that have entered commercial operation
or are expected to enter commercial operation before the Project enters commercial
operation, if those Congestion Rents would affect the TSC for that Transmission
District;

(ii) forecasted Congestion Rents associated with any Grandfathered TCCs and

forecasted imputed Congestion Rents associated with any Grandfathered Rights held
by the Transmission Owner serving that Transmission District that would be paid to
that Transmission Owner for that year, as calculated in Step 2(c) of this procedure, if
those Congestion Rents would affect the TSC for that Transmission District;

(iii) the payments that are forecasted to be made for that year to the Primary Holders
of Original Residual TCCs and ETCNL that have been allocated to the Transmission
Owner serving that Transmission District, as calculated in Step 4 of this procedure;
and

(iv) that Transmission District’s forecasted share of residual auction revenues for that year, as calculated in Step 6 of this procedure for the Transmission Owner serving that Transmission District;

(b) subtracting the sum of items (i) through (iv) above, each forecasted for that Transmission District for that year under the assumption that the Project is not in place; and

Transmission District in that year, stated in terms of megawatt-hours, net of any Load served by municipally owned utilities that is not subject to the TSC.

Step 8. The ISO shall calculate the forecasted net impact of the Project on the NTAC offset for each megawatt-hour of electricity consumed by Load in each year by:

(a) summing the following, each forecasted for that year under the assumption that the Project is in place:

(i) forecasted Congestion Rents associated with any Incremental TCCs that the ISO

has awarded, or that the ISO projects it would award, as calculated in Step 2(b) of this
procedure, in conjunction with other projects that have entered commercial operation

or are expected to enter commercial operation before the Project enters commercial operation, if those Congestion Rents would affect the NTAC;

(ii) forecasted Congestion Rents associated with any Grandfathered TCCs and

forecasted imputed Congestion Rents associated with any Grandfathered Rights held by NYPA that would be paid to NYPA for that year, as calculated in Step 2(c) of this procedure, if those Congestion Rents would affect the NTAC;

(iii) the payments that are forecasted to be made for that year to NYPA in association with Original Residual TCCs allocated to NYPA, as calculated in Step 4 of this
procedure; and

(iv) NYPA’s forecasted share of residual auction revenues for that year, as calculated in Step 6 of this procedure;

(b) subtracting the sum of items (i) through (iv) above, each forecasted for that year under the assumption that the Project is not in place; and

(c) dividing this difference by the amount of Load expected to be served in the NYCA in that year, stated in terms of megawatt-hours, net of any Load served by municipally owned
utilities that is not subject to the NTAC.

Forecasting the Net Impact of the Project on TCC Revenues Allocated to Load in Each Zone

Step 9. The ISO shall calculate the forecasted net impact of the Project in each year in each Load Zone on payments made in conjunction with TCCs and Grandfathered Rights that benefit Load but which do not affect TSCs or the NTAC, which shall be the sum of:

(a) Forecasted Congestion Rents paid or imputed to municipally owned utilities serving Load in that Load Zone that own Grandfathered Rights or Grandfathered TCCs that were not
included in the calculation of the TSC offset in Step 7(a)(ii) of this procedure or the NTAC offset in Step 8(a)(ii) of this procedure, which the ISO shall calculate by:

(i) summing forecasted Congestion Rents that any such municipally owned utilities serving Load in that Load Zone would be paid for that year in association with any such Grandfathered TCCs and any forecasted imputed Congestion Rents that such a municipally owned utility would be paid for that year in association with any such Grandfathered Rights, as calculated in Step 2(c) of this procedure under the
assumption that the Project is in place; and

(ii) subtracting forecasted Congestion Rents that any such municipally owned utilities
would be paid for that year in association with any such Grandfathered TCCs, and
any forecasted imputed Congestion Rents that such a municipally owned utility
would be paid for that year in association with any such Grandfathered Rights, as
calculated in Step 2(c) of this procedure under the assumption that the Project is not
in place.

(b) Forecasted Congestion Rents collected from Incremental TCCs awarded in conjunction with projects that were previously funded through this procedure, if those Congestion Rents are used to reduce the amount that Load in that Load Zone must pay to fund such projects, which the ISO shall calculate by:

(i) summing forecasted Congestion Rents that would be collected for that year in association with any such Incremental TCCs, as calculated in Step 2(b) of this procedure under the assumption that the Project is in place; and

(ii) subtracting forecasted Congestion Rents that would be collected for that year in association with any such Incremental TCCs, as calculated in Step 2(b) of this
procedure under the assumption that the Project is not in place.

Step 10. The ISO shall calculate the forecasted net reductions in TCC revenues allocated to Load in each Load Zone as a result of a proposed Project by summing the following:

(a) the product of:

(i) the forecasted net impact of the Project on the TSC offset for each megawatt-hour of electricity consumed by Load, as calculated for each Transmission District (other than the NYPA Transmission District) in Step 7 of this procedure; and

(ii) the number of megawatt-hours of energy that are forecasted to be consumed by Load in that year, in the portion of that Transmission District that is in that Load Zone, for Load that is subject to the TSC;

summed over all Transmission Districts;

(b) the product of:

(i) the forecasted net impact of the Project on the NTAC offset for each megawatt-
hour of electricity consumed by Load, as calculated in Step 8 of this procedure; and

(ii) the number of megawatt-hours of energy that are forecasted to be consumed by
Load in that year in that Load Zone, for Load that is subject to the NTAC; and

conjunction with TCCs and Grandfathered Rights that benefit Load but which do not affect TSCs or the NTAC, as calculated in Step 9 of this procedure.

Additional Notes Concerning the Procedure

For the purposes of Steps 2(c) and 4(b) of this procedure, the ISO will utilize the currently effective version of Attachment L of the ISO OATT to identify Existing Transmission Agreements and
Existing Transmission Capacity for Native Load.

TABLE OF CONTENTS

Page

ARTICLE 1.DEFINITIONS..................................................2

ARTICLE 2.EFFECTIVE DATE AND TERM....................................5

2.1.Effective Date...................................................5

2.2.Filing..........................................................6

2.3.Term of Agreement...............................................6

ARTICLE 3.TRANSMISSION PROJECT DEVELOPMENT AND CONSTRUCTION...6

3.1.Application for Required Authorizations and Approvals..................6

3.2.Development and Construction of Transmission Project..................6

3.3.Milestones......................................................7

3.4.Modifications to Transmission Project................................8

3.5.Billing and Payment..............................................8

3.6.Project Monitoring...............................................9

3.7.Right to Inspect..................................................9

3.8.Exclusive Responsibility of Developer................................9

3.9.Subcontractors..................................................10

3.10.No Services or Products Under NYISO Tariffs........................10

3.11.Tax Status.....................................................10

ARTICLE 4.COORDINATION WITH THIRD PARTIES..........................10

4.1.Interconnection Requirements for Transmission Project..................10

4.2.Interconnection with Affected System................................11

4.3.Coordination of Interregional Transmission Project.....................11

ARTICLE 5.OPERATION REQUIREMENTS FOR THE TRANSMISSION PROJECT ...11

ARTICLE 6.INSURANCE..................................................11

ARTICLE 7.BREACH AND DEFAULT.......................................14

7.1.Breach........................................................14

7.2.Default........................................................14

7.3.Remedies......................................................15

ARTICLE 8.TERMINATION................................................15

8.1.Termination by the NYISO........................................15

8.2.Reporting of Inability to Comply with Provisions of Agreement...........16

8.3.Transmission Project Transfer Rights Upon Termination................16

ARTICLE 9.LIABILITY AND INDEMNIFICATION............................16

9.1.Liability.......................................................16

9.2.Indemnity.....................................................16

ARTICLE 10. ASSIGNMENT.................................................17

ARTICLE 11. INFORMATION EXCHANGE AND CONFIDENTIALITY.............18

11.1.Information Access..............................................18

11.2.Confidentiality.................................................18

ARTICLE 12. REPRESENTATIONS, WARRANTIES AND COVENANTS............18

12.1.General.......................................................18

12.2.Good Standing.................................................18

12.3.Authority......................................................19

12.4.No Conflict....................................................19

12.5.Consent and Approval............................................19

12.6.Compliance with All Applicable Laws and Regulations.................19

ARTICLE 13. DISPUTE RESOLUTION.........................................20

ARTICLE 14. SURVIVAL....................................................20

ARTICLE 15. MISCELLANEOUS.............................................20

15.1.Notices.......................................................20

15.2.Entire Agreement...............................................20

15.3.Binding Effect..................................................21

15.4.Force Majeure..................................................21

15.5.Disclaimer.....................................................21

15.6.No NYISO Liability for Review or Approval of Developer Materials......21

15.7.Amendment....................................................21

15.8.No Third Party Beneficiaries.....................................21

15.9.Waiver.......................................................22

15.10.Rules of Interpretation...........................................22

15.11.Severability....................................................22

15.12.Multiple Counterparts...........................................22

15.13.No Partnership..................................................23

15.14.Headings......................................................23

15.15.Governing Law.................................................23

15.16.Jurisdiction and Venue............................................23

Appendices

THIS DEVELOPMENT AGREEMENT (“Agreement”) is made and entered into this ___ day of ______ 20__, by and between _______________, a [corporate description] organized and existing under the laws of the State/Commonwealth of _________ (“Developer”), and the New York Independent System Operator, Inc., a not-for-profit corporation organized and existing under the laws of the State of New York (“NYISO”). Developer or NYISO each may be referred to as a “Party” or collectively referred to as the “Parties.”

RECITALS

WHEREAS, the NYISO administers the Comprehensive System Planning Process (“CSPP”) in the New York Control Area pursuant to the terms set forth in Attachment Y of the NYISO’s
Open Access Transmission Tariff (“OATT”), as accepted by the Federal Energy Regulatory
Commission (“FERC”);

WHEREAS, as part of the CSPP, the NYISO administers a reliability planning process pursuant to which the reliability of the New York State Bulk Power Transmission Facilities is assessed over a ten-year Study Period; Reliability Need(s) that may arise over this period are identified; proposed solutions to the identified need(s) are solicited by the NYISO; and the more efficient or cost-effective transmission solution to satisfy the identified need(s) is selected by the NYISO and reported in the NYISO’s Comprehensive Reliability Plan report;

WHEREAS, the Developer has proposed an alternative regulated transmission solution to satisfy an identified Reliability Need (“Transmission Project”);

WHEREAS, the NYISO has selected the Developer’s Transmission Project as the more efficient or cost-effective transmission solution to satisfy an identified Reliability Need and has directed the Developer to proceed with the Transmission Project pursuant to Section 31.2.8.1 of
Attachment Y of the OATT;

WHEREAS, the Developer has agreed to obtain the required authorizations and approvals from Governmental Authorities needed for the Transmission Project, to develop and construct the Transmission Project, and to abide by the related requirements in Attachment Y of the OATT, the ISO Tariffs, and the ISO Procedures;

WHEREAS, the Developer and the NYISO have agreed to enter into this Agreement pursuant to Section 31.2.8.1.6 of Attachment Y of the OATT for the purpose of ensuring that the
Transmission Project will be constructed and in service in time to satisfy the Reliability Need (“Required Project In-Service Date”); and

WHEREAS, the Developer has agreed to construct, and the NYISO has requested that the Developer proceed with construction of, the Transmission Project to address the identified Reliability Need by the Required Project In-Service Date.

NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein, it is agreed:

ARTICLE 1. DEFINITIONS

Whenever used in this Agreement with initial capitalization, the following terms shall have the

meanings specified in this Article 1. Terms used in this Agreement with initial capitalization that are not defined in this Article 1 shall have the meanings specified in Section 31.1.1 of
Attachment Y of the OATT or, if not therein, in Article 1 of the OATT.

Advisory Milestones shall mean the milestones set forth in the Development Schedule in Attachment C to this Agreement that are not Critical Path Milestones.

Applicable Laws and Regulations shall mean: (i) all duly promulgated applicable federal, state
and local laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders, permits and other duly authorized actions of any Governmental Authority,
and (ii) all applicable requirements of the ISO Tariffs, ISO Procedures, and ISO Related
Agreements.

Applicable Reliability Organizations shall mean the NERC, the NPCC, and the NYSRC.
Applicable Reliability Requirements shall mean the requirements, criteria, rules, standards, and guidelines, as they may be amended and modified and in effect from time to time, of: (i) the Applicable Reliability Organizations, (ii) the Connecting Transmission Owner(s), (iii) [to insert the name(s) of any other Transmission Owners or developers whose transmission facilities the NYISO has determined may be impacted by the Transmission Project], and (iv) any Affected System Operator as defined in Attachment X of the OATT; provided, however, that no Party shall waive its right to challenge the applicability or validity of any requirement, criteria, rule, standard, or guideline as applied to it in the context of this Agreement.

Breach shall have the meaning set forth in Article 7.1 of this Agreement.

Breaching Party shall mean a Party that is in Breach of this Agreement.

Business Day shall mean Monday through Friday, excluding federal holidays.

Calendar Day shall mean any day including Saturday, Sunday, or a federal holiday.

Change of Control shall mean a change in ownership of more than 50% of the membership or ownership interests or other voting securities of the Developer to a third party in one or more related transactions, or any other transaction that has the effect of transferring control of the Developer to a third party.

Confidential Information shall mean any information that is defined as confidential by Article

11.2.

Connecting Transmission Owner shall have the meaning set forth in Attachment X of the
OATT.

Critical Path Milestones shall mean the milestones identified as such in the Development

Schedule in Attachment C to this Agreement that must be met for the Transmission Project to be constructed and operating by the Required Project In-Service Date.

Default shall mean the failure of a Party in Breach of this Agreement to cure such Breach in accordance with Article 7.2 of this Agreement.

Developer shall have the meaning set forth in the introductory paragraph.

Development Schedule shall mean the schedule of Critical Path Milestones and Advisory Milestones set forth in Appendix C to this Agreement.

Distribution System shall mean the Transmission Owner’s facilities and equipment used to distribute electricity that are subject to FERC jurisdiction, and are subject to the NYISO’s
Standard Large Facility Interconnection Procedures or Small Generator Interconnection
Procedures under FERC Order Nos. 2003 and/or 2006. The term Distribution System shall not include LIPA’s distribution facilities.

Effective Date shall mean the date upon which this Agreement becomes effective as determined in Article 2.1 of this Agreement.

FERC shall mean the Federal Energy Regulatory Commission or its successor.

Force Majeure shall mean any cause or occurrence affecting the ability of a Party hereto to

perform its obligations under this Agreement, which cause or occurrence is beyond the

reasonable control of the Party affected, not reasonably foreseeable by such Party, not due to an act or omission of the Party affected, and which could not have been avoided by the exercise of reasonable diligence.

Good Utility Practice shall mean any of the practices, methods and acts engaged in or approved
by a significant portion of the electric industry during the relevant time period, or any of the
practices, methods and acts which, in the exercise of reasonable judgment in light of the facts
known at the time the decision was made, could have been expected to accomplish the desired
result at a reasonable cost consistent with good business practice, reliability, safety and
expedition. Good Utility Practice is not intended to be limited to the optimum practice, method,
or act to the exclusion of all others, but rather to delineate acceptable practices, methods, or acts
generally accepted in the region.

Governmental Authority shall mean any federal, state, local or other governmental regulatory or administrative agency, public authority, court, commission, department, board, or other
governmental subdivision, legislature, rulemaking board, tribunal, or other governmental
authority having jurisdiction over any of the Parties, their respective facilities, or the respective services they provide, and exercising or entitled to exercise any administrative, executive, police, or taxing authority or power; provided, however, that such term does not include the NYISO, the Developer, the Connecting Transmission Owner(s), or any Affiliate thereof.

In-Service Date shall mean that date upon which the Transmission Project is available to
transmit electricity consistent with the Project Description set forth in Appendix A to this
Agreement and available to provide Transmission Service under the NYISO Tariffs.

ISO/TO Agreement shall mean the Agreement Between the New York Independent System
Operator and Transmission Owners, as filed with and accepted by the Commission in Cent.
Hudson Gas & Elec. Corp., et al., 88 FERC ¶ 61,138 (1999) in Docket Nos. ER97-1523, et al.,
and as amended or supplemented from time to time, or any successor agreement thereto.

New York State Transmission System shall mean the entire New York State electrical

transmission system, which includes: (i) the Transmission Facilities Under ISO Operational Control; (ii) the Transmission Facilities Requiring ISO Notification; and (iii) all remaining transmission facilities within the New York Control Area.

NERC shall mean the North American Electric Reliability Corporation or its successor organization.

NPCC shall mean the Northeast Power Coordinating Council or its successor organization.
NYSRC shall mean the New York State Reliability Council or its successor organization.

OATT shall mean the NYISO’s Open Access Transmission Tariff, as filed with the

Commission, and as amended or supplemented from time to time, or any successor tariff thereto.

Party or Parties shall mean the NYISO, the Developer, or both.

Point of Interconnection shall mean the point or points at which the Developer’s Transmission
Project will interconnect to the New York State Transmission System or Distribution System.

Project Description shall mean the description of the Transmission Project set forth in

Appendix A to this Agreement that is consistent with the project selected by the NYISO Board of Directors as the more efficient or cost-effective transmission solution to the identified
Reliability Need.

Reliability Planning Process Manual shall mean the NYISO’s manual adopted by the NYISO
stakeholder Operating Committee describing the NYISO’s procedures for implementing the
reliability planning process component of the NYISO’s Comprehensive System Planning
Process, as the manual is amended or supplemented from time to time, or any successor manual
thereto.

Required Project In-Service Date shall mean the In-Service Date by which the Transmission Project must be constructed and operating to satisfy the Reliability Need, as specified in the Development Schedule set forth in Appendix C to this Agreement.

Services Tariff shall mean the NYISO’s Market Administration and Control Area Services Tariff, as filed with the Commission, and as amended or supplemented from time to time, or any
successor tariff thereto.

Significant Modification shall mean a Developer’s proposed modification to its Transmission Project that: (i) could impair the Transmission Project’s ability to meet the identified Reliability Need, (ii) could delay the In-Service Date of the Transmission Project beyond the Required
Project In-Service Date, or (iii) would constitute a material change to the project information
submitted by the Developer under Attachment Y of the OATT for use by the NYISO in its
selection of the Transmission Project as the more efficient or cost-effective transmission solution to meet the identified Reliability Need.

Scope of Work shall mean the description of the work required to implement the Transmission
Project as set forth in Appendix B to this Agreement. The Scope of Work shall be drawn from
the Developer’s submission of the Required Data Submission for Solutions to Reliability Needs,
which is set forth in Attachment C of the NYISO Reliability Planning Manual, as may be
updated as agreed upon by the Parties, and shall include, but not be limited to, a description of:
the acquisition of required rights-of-ways, the work associated with the licensing, design,
financing, environmental and regulatory approvals, engineering, procurement of equipment,
construction, installation, testing, and commissioning of the Transmission Project; the relevant
technical requirements, standards, and guidelines pursuant to which the work will be performed;
the major equipment and facilities to be constructed and/or installed in connection with the

Transmission Project, and the cost estimates for the work associated with the Transmission
Project.

Transmission Owner Technical Standards shall mean the technical requirements and

standards (e.g, equipment or facilities electrical and physical capabilities, design characteristics, or construction requirements), as those requirements and standards are amended and modified and in effect from time to time, of: (i) the Connecting Transmission Owner(s), (ii) [to insert the name(s) of any other Transmission Owners or developers whose transmission facilities the NYISO has determined may be impacted by the Transmission Project], and (iii) any Affected System
Operator as defined in Attachment X of the OATT.

Transmission Project shall mean Developer’s proposed alternative regulated transmission

solution selected by the NYISO as the more efficient or cost-effective transmission solution to
satisfy a Reliability Need as described in the Project Description set forth in Appendix A to this
Agreement..

ARTICLE 2. EFFECTIVE DATE AND TERM

2.1.Effective Date

This Agreement shall become effective on the date it has been executed by all Parties; provided, however, if the Agreement is filed with FERC as a non-conforming or an unexecuted agreement pursuant to Section 31.2.8.1.6 of Attachment Y of the OATT, the Agreement shall become effective on the effective date accepted by FERC.

2.2.Filing

If the Agreement must be filed with FERC pursuant to Section 31.2.8.1.6 of Attachment
Y of the OATT, the NYISO shall file this Agreement for acceptance with FERC within the
timeframe set forth for the filing in Section 31.2.8.1.6 of Attachment Y of the OATT. The
Developer shall cooperate in good faith with the NYISO with respect to such filing and provide
any information requested by the NYISO to comply with Applicable Laws and Regulations.
Any Confidential Information shall be treated in accordance with Article 11.2 of this Agreement.

2.3.Term of Agreement

Subject to the termination provisions in Article 8 of this Agreement, this Agreement shall
remain in effect from the Effective Date until: (i) the Developer executes an operating agreement
with the NYISO, and (ii) the Transmission Project: (A) has been completed in accordance with
the terms and conditions of this Agreement, and (B) is in-service; provided, however, that the
terms of this Agreement shall continue in effect to the extent provided in Article 14 of this
Agreement.

ARTICLE 3. TRANSMISSION PROJECT DEVELOPMENT AND CONSTRUCTION

3.1. Application for Required Authorizations and Approvals

The Developer shall timely seek and obtain all authorizations and approvals from

Governmental Authorities required to develop, construct, and operate the Transmission Project
by the Required Project In-Service Date. The required authorizations and approvals shall be
listed in the Scope of Work in Appendix B to this Agreement. The Developer shall seek and
obtain the required authorizations and approvals in accordance with the milestones set forth in
the Development Schedule in Appendix C to this Agreement. The milestones for obtaining the
required authorizations and approvals shall be included in the Development Schedule as Critical
Path Milestones and Advisory Milestones, as designated by the Parties under Article 3.3.1. The
Developer shall notify the NYISO in accordance with the notice requirements in Article 3.3 if it
has reason to believe that it may be unable to timely obtain or is denied an approval or
authorization by a Governmental Authority required for the development, construction, or
operation of the Transmission Project, or if such approval or authorization is withdrawn or
modified.

3.2. Development and Construction of Transmission Project

The Developer shall design, engineer, procure, install, construct, test and commission the Transmission Project in accordance with: (i) the terms of this Agreement, including, but not
limited to, the Project Description in Appendix A to this Agreement, the Scope of Work in
Appendix B to this Agreement, and the Development Schedule in Appendix C to this
Agreement; (ii) Applicable Reliability Requirements; (iii) Applicable Laws and Regulations; (iv) Good Utility Practice; (v) the Transmission Owner Technical Standards, and (vi) any
interconnection agreement(s) entered into by and among the NYISO, Developer, and Connecting Transmission Owner(s) for the Transmission Project to interconnect to the New York State
Transmission System or Distribution System.

3.3.Milestones

3.3.1. The NYISO shall provide the Developer with the Required Project In-Service Date in

accordance with Section 31.2.8.1.6 of Attachment Y of the OATT. Prior to executing

and/or filing this Agreement with FERC, the NYISO and the Developer shall agree to the
Critical Path Milestones and Advisory Milestones set forth in the Development Schedule
in Appendix C to this Agreement for the development, construction, and operation of the
Transmission Project by the Required Project In-Service Date in accordance with Section

31.2.8.1.6 of Attachment Y of the OATT.

3.3.2. The Developer shall meet the Critical Path Milestones in accordance with the

Development Schedule set forth in Appendix C to this Agreement. The Developer’s
inability or failure to meet a Critical Path Milestone specified in the Development
Schedule, as such Critical Path Milestone may be amended with the agreement of the
NYISO under this Article 3.3, shall constitute a Breach of this Agreement under Article

7.1.

3.3.3. The Developer shall notify the NYISO thirty (30) Calendar Days prior to the date of each

Critical Path Milestone specified in the Development Schedule whether it will meet the Critical Path Milestone by the specified date; provided, however, that notwithstanding this requirement:

(i) the Developer shall notify the NYISO as soon as reasonably practicable, and no later
than fifteen (15) Calendar Days, following the Developer’s discovery of a potential delay
in meeting a Critical Path Milestone, including a delay caused by a Force Majeure event;
and

(ii) the NYISO may request in writing at any time, and Developer shall submit to the

NYISO within five (5) Business Days of the request, a written response indicating

whether the Developer will meet, or has met, a Critical Path Milestone and providing all required supporting documentation for its response.

3.3.4. The Developer shall not make a change to a Critical Path Milestone without the prior

written consent of the NYISO. To request a change to a Critical Path Milestone, the

Developer must: (i) inform the NYISO in writing of the proposed change to the Critical
Path Milestone and the reason for the change, including the occurrence of a Force
Majeure event, (ii) submit to the NYISO a revised Development Schedule containing any
necessary changes to Critical Path Milestones and Advisory Milestones that provide for
the Transmission Project to be completed and achieve its In-Service Date no later than
the Required Project In-Service Date, and (iii) submit a notarized officer’s certificate
certifying the Developer’s capability to complete the Transmission Project in accordance
with the modified schedule. If the Developer: (i) must notify the NYISO of a potential
delay in meeting a Critical Path Milestone in accordance with one of the notification
requirements in Section 3.3.3 or (ii) is requesting a change to a Critical Path Milestone to
cure a Breach in Section 7.2, the Developer shall submit any request to change the
impacted Critical Path Milestone(s) within the relevant notification timeframe set forth in
Section 3.3.3 or the cure period set forth in Section 7.2, as applicable. The NYISO will
promptly review Developer’s requested change. The Developer shall provide the NYISO
with all required information to assist the NYISO in making its determination and shall
be responsible for the costs of any study work the NYISO performs in making its
determination. If the Developer demonstrates to the NYISO’s satisfaction that the delay
in meeting a Critical Path Milestone will not delay the Transmission Project’s In-Service
Date beyond the Required Project In-Service Date, then the NYISO’s consent to
extending the Critical Path Milestone date will not be unreasonably withheld,
conditioned, or delayed. The NYISO’s written consent to a revised Development
Schedule proposed by the Developer will satisfy the amendment requirements in Article

15.7, and the NYISO will not be required to file the revised Development Schedule with
FERC.

3.3.5. Within fifteen (15) Calendar Days of the Developer’s discovery of a potential delay in

meeting an Advisory Milestone, the Developer shall inform the NYISO of the potential delay and describe the impact of the delay on meeting the Critical Path Milestones. The Developer may extend an Advisory Milestone date upon informing the NYISO of such
change; provided, however, that if the change to the Advisory Milestone will delay a
Critical Path Milestone, the NYISO’s written consent to make such change is required as described in Article 3.3.4.

3.4.Modifications to Transmission Project

The Developer shall not make a Significant Modification to the Transmission Project
without the prior written consent of the NYISO, including, but not limited to, modifications
necessary for the Developer to obtain required approvals or authorizations from Governmental
Authorities. The NYISO’s determination regarding a Significant Modification to the
Transmission Project under this Agreement shall be separate from, and shall not replace, the
NYISO’s review and determination of Material Modifications to the Transmission Project under
Attachment X of the OATT. The Developer may request that the NYISO review whether a
modification to the Transmission Project would constitute a Significant Modification. The
Developer shall provide the NYISO with all required information to assist the NYISO in making
its determination regarding a Significant Modification and shall be responsible for the costs of
any study work the NYISO must perform in making its determination. If the Developer
demonstrates to the NYISO’s satisfaction that its proposed Significant Modification: (i) does not
impair the Transmission Project’s ability to satisfy the identified Reliability Need, (ii) does not
delay the In-Service Date of the Transmission Project beyond the Required Project In-Service
Date, and (iii) does not change the grounds upon which the NYISO selected the Transmission
Project as the more efficient or cost-effective transmission solution to the identified Reliability
Need, the NYISO’s consent to the Significant Modification will not be unreasonably withheld,
conditioned, or delayed. The NYISO’s performance of this review shall not constitute its
consent to delay the completion of any Critical Path Milestone.

3.5.Billing and Payment

The NYISO shall charge, and the Developer shall pay, the actual costs of: (i) any study
work performed by the NYISO or its subcontractor(s) under Articles 3.3 and 3.4, or (ii) any
assessment of the Transmission Project by the NYISO or its subcontractor(s) under Article 3.7.
The NYISO will invoice Developer on a monthly basis for the expenses incurred by the NYISO
each month, including estimated subcontractor costs, computed on a time and material basis.
The Developer shall pay invoiced amounts to the NYISO within thirty (30) Calendar Days of the
NYISO’s issuance of a monthly invoice. In the event the Developer disputes an amount to be
paid, the Developer shall pay the disputed amount to the NYISO, pending resolution of the
dispute. To the extent the dispute is resolved in the Developer’s favor, the NYISO will net the
disputed amount, including interest calculated from Developer’s date of payment at rates
applicable to refunds under FERC regulations, against any current amounts due from the
Developer and pay the balance to the Developer. This Article 3.5 shall survive the termination,
expiration, or cancellation of this Agreement.

3.6.Project Monitoring

The Developer shall provide regular status reports to the NYISO in accordance with the monitoring requirements set forth in the Development Schedule, the Reliability Planning Process Manual and Attachment Y of the OATT.

3.7.Right to Inspect

Upon reasonable notice, the NYISO or its subcontractor shall have the right to inspect the Transmission Project for the purpose of assessing the progress of the development and
construction of the Transmission Project and satisfaction of milestones. The exercise or non-
exercise by the NYISO or its subcontractor of this right shall not be construed as an endorsement or confirmation of any element or condition of the development or construction of the
Transmission Project, or as a warranty as to the fitness, safety, desirability or reliability of the same. Any such inspection shall take place during normal business hours, shall not interfere
with the construction of the Transmission Project and shall be subject to such reasonable safety and procedural requirements as the Developer shall specify.

3.8. Exclusive Responsibility of Developer

As between the Parties, the Developer shall be solely responsible for all planning, design,
engineering, procurement, construction, installation, management, operations, safety, and
compliance with Applicable Laws and Regulations, Applicable Reliability Requirements, and
Transmission Owner Technical Standards associated with the Transmission Project, including,
but not limited to, scheduling, meeting Critical Path Milestones and Advisory Milestones, timely
requesting review and consent to any project modifications, and obtaining all necessary permits,
siting, and other regulatory approvals. 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 the compliance of the Developer with Applicable Laws and Regulations,
Applicable Reliability Requirements, and Transmission Owner Technical Standards. The
NYISO shall cooperate with the Developer in good faith in providing information to assist the
Developer in obtaining all approvals and authorizations from Governmental Authorities required
to develop, construct, and operate the Transmission Project by the Required Project In-Service
Date, including information describing the NYISO’s basis for selecting the Transmission Project
as the more efficient or cost-effective transmission solution to satisfy an identified Reliability
Need.

3.9.Subcontractors

3.9.1. Nothing in this Agreement shall prevent a Party from using the services of any

subcontractor as it deems appropriate to perform its obligations under this Agreement;

provided, however, that each Party shall require, and shall provide in its contracts with its subcontractors, that its subcontractors comply with all applicable terms and conditions of this Agreement in providing such services; provided, further, that each Party shall remain primarily liable to the other Party for the performance of such subcontractor.

3.9.2. The creation of any subcontractor relationship shall not relieve the hiring Party of any of
its obligations under this Agreement. The hiring Party shall be fully responsible to the
other Party for the acts or omissions of any subcontractor the hiring Party hires as if no
subcontract had been made.

3.10. No Services or Products Under NYISO Tariffs

This Agreement does not constitute a request for, nor agreement by the NYISO to provide, Transmission Service, interconnection service, Energy, Ancillary Services, Installed Capacity,
Transmission Congestion Contracts or any other services or products established under the ISO
Tariffs. If Developer wishes to receive or supply such products or services, the Developer must
make application to do so under the applicable provisions of the ISO Tariffs, ISO Related
Agreements, and ISO Procedures.

3.11. Tax Status

Each Party shall cooperate with the other Party to maintain each Party’s tax status to the extent the Party’s tax status is impacted by this Agreement. Nothing in this agreement is
intended to affect the tax status of any Party.

ARTICLE 4. COORDINATION WITH THIRD PARTIES

4.1. Interconnection Requirements for Transmission Project

The Developer shall satisfy all requirements set forth in Attachments X and S of the
OATT applicable to a “Merchant Transmission Facility” to interconnect the Transmission
Project to the New York State Transmission System or Distribution System by the Required
Project In-Service Date, including, but not limited to, submitting an Interconnection Request,
participating in all necessary studies, and executing, and/or requesting the NYISO to file for
FERC acceptance, an interconnection agreement; provided, however, if the Developer is a

Transmission Owner, the Developer shall instead satisfy all applicable transmission expansion requirements set forth in Sections 3.7 and 4.5 of the OATT.

If the NYISO determines that the proposed interconnection of a Large Generating

Facility, Small Generating Facility, or Merchant Transmission Facility under Attachments X or Z
of the OATT could affect the Transmission Project, the Developer shall participate in the
interconnection process as an Affected System Operator in accordance with the requirements set
forth in Section 30.3.5 of Attachment X of the OATT. If the NYISO determines that a proposed
transmission expansion under Sections 3.7 and 4.5 of the OATT could affect the Transmission
Project, the Developer shall participate in the transmission expansion process as an affected
Transmission Owner in accordance with the requirements set forth in Sections 3.7 and 4.5 of the
OATT.

4.2. Interconnection with Affected System

If part of the Transmission Project will affect the facilities of an Affected System as

defined in Attachment X of the OATT, the Developer shall satisfy the requirements of the

Affected System Operator, as defined in Attachment X of the OATT, for the interconnection of the Transmission Project.

4.3.Coordination of Interregional Transmission Project

If the Transmission Project is or seeks to become an Interregional Transmission Project
selected by the NYISO and by the transmission provider in one or more neighboring
transmission planning region(s) to address an identified Reliability Need, the Developer shall
coordinate its development and construction of the Transmission Project in New York with its
responsibilities in the relevant neighboring transmission planning region(s) and must satisfy the
applicable planning requirements of the relevant transmission planning region(s).

ARTICLE 5. OPERATION REQUIREMENTS FOR THE TRANSMISSION PROJECT

If the Developer is a Transmission Owner, the Developer shall comply with the operating
requirements set forth in the ISO/TO Agreement. If the Developer is not a Transmission Owner,
the Developer shall: (i) execute, and/or obtain a FERC accepted, interconnection agreement for
the Transmission Project in accordance with the requirements in Attachment X of the OATT; (ii)
satisfy the applicable requirements set forth in the interconnection agreement and ISO
Procedures for the safe and reliable operation of the Transmission Project consistent with the
Project Description set forth in Appendix A by the In-Service Date, including satisfying all
applicable testing, metering, communication, system protection, switching, start-up, and
synchronization requirements; (iii) enter into required operating protocols as determined by the
NYISO; (iv) register with NERC as a Transmission Owner and be certified as a Transmission
Operator, and comply with all NERC Reliability Standards and Applicable Reliability
Requirements applicable to Transmission Owners and Transmission Operators; and (v) prior to
energizing the Transmission Project, execute an operating agreement with the NYISO.

ARTICLE 6. INSURANCE

The Developer shall, at its own expense, maintain in force throughout the period of this
Agreement, and until released by the NYISO, the following minimum insurance coverages, with
insurers authorized to do business in the state of New York and rated “A- (minus) VII” or better
by A.M. Best & Co. (or if not rated by A.M. Best & Co., a rating entity acceptable to the
NYISO):

6.1 Workers’ Compensation and Employers’ Liability Insurance providing statutory benefits

in accordance with the laws and regulations of New York State under NCCI Coverage

Form No. WC 00 00 00, as amended or supplemented from time to time, or an equivalent
form acceptable to the NYISO; provided, however, if the Transmission Project will be
located in part outside of New York State, Developer shall maintain such Employers’

Liability Insurance coverage with a minimum limit of One Million Dollars ($1,000,000).

6.2 Commercial General Liability Insurance - under ISO Coverage Form No. CG 00 01

(04/13), as amended or supplemented from time to time, or an equivalent form acceptable to the NYISO - with minimum limits of Two Million Dollars ($2,000,000) per
occurrence/Four Million Dollars ($4,000,000) aggregate combined single limit for
personal injury, bodily injury, including death and property damage.

6.3 Commercial Business Automobile Liability Insurance - under ISO Coverage Form No.

CA 00 01 10 13, as amended or supplemented from time to time, or an equivalent form
acceptable to the NYISO - for coverage of owned and non-owned and hired vehicles,

trailers or semi-trailers designed for travel on public roads, with a minimum, combined single limit of One Million Dollars ($1,000,000) per occurrence for bodily injury,
including death, and property damage.

6.4 Umbrella/Excess Liability Insurance over and above the Employers’ Liability,

Commercial General Liability, and Commercial Business Automobile Liability Insurance
coverage, with a minimum combined single limit of Twenty-Five Million Dollars
($25,000,000) per occurrence/Twenty-Five Million Dollars ($25,000,000) aggregate.

6.5 Builder’s Risk Insurance in a reasonably prudent amount consistent with Good Utility

Practice.

6.6 The Commercial General Liability Insurance, Commercial Business Automobile Liability

Insurance and Umbrella/Excess Liability Insurance policies of the Developer shall name
the NYISO and its respective directors, officers, agents, servants and employees
(“NYISO Parties”) as additional insureds. For Commercial General Liability Insurance,
the Developer shall name the NYISO Parties as additional insureds under the following
ISO form numbers, as amended or supplemented from time to time, or an equivalent form
acceptable to the NYISO: (i) ISO Coverage Form No. CG 20 37 04 13 (“Additional
Insured - Owners, Lessees or Contractors - Completed Operations”) and (ii) (A) ISO
Coverage Form No. CG 20 10 04 13 (“Additional Insured - Owner, Lessees or
Contractors - Scheduled Person or Organization”), or (B) ISO Coverage Form No. CG

20 26 04 13 (“Additional Insured - Designated Person or Organization”). For

Commercial Business Automobile Liability Insurance, the Developer shall name the
NYISO Parties as additional insureds under ISO Coverage Form No. CA 20 48 10 13
(“Designated Insured for Covered Autos Liability Coverage”), as amended or
supplemented from time to time, or an equivalent form acceptable to the NYISO.

6.7 All policies shall contain provisions whereby the insurers waive all rights of subrogation

in accordance with the provisions of this Agreement against the NYISO Parties and

provide thirty (30) Calendar days advance written notice to the NYISO Parties prior to non-renewal, cancellation or any material change in coverage or condition.

6.8 The Commercial General Liability Insurance, Commercial Business Automobile Liability

Insurance and Umbrella/Excess Liability Insurance policies shall contain provisions that
specify that the policies are primary and shall apply to such extent without consideration
for other policies separately carried and shall state that each insured is provided coverage
as though a separate policy had been issued to each, except the insurer’s liability shall not
be increased beyond the amount for which the insurer would have been liable had only
one insured been covered. The Developer shall be responsible for its respective

deductibles or retentions.

6.9 The Commercial General Liability Insurance, Commercial Business Automobile Liability

Insurance and Umbrella/Excess Liability Insurance policies, if written on a Claims First Made Basis in a form acceptable to the NYISO, shall be maintained in full force and
effect for two (2) years after termination of this Agreement, which coverage may be in the form of an extended reporting period (ERP) or a separate policy, if agreed by the
Developer and the NYISO.

6.10The requirements contained herein as to the types and limits of all insurance to be

maintained by the Developer are not intended to and shall not in any manner, limit or
qualify the liabilities and obligations assumed by the Developer under this Agreement.

6.11 The Developer shall provide certification of all insurance required in this Agreement,

executed by each insurer or by an authorized representative of each insurer: (A) within ten (10) days following: (i) execution of this Agreement, or (ii) the NYISO’s date of
filing this Agreement if it is filed unexecuted with FERC, and (B) as soon as practicable after the end of each fiscal year or at the renewal of the insurance policy and in any event within thirty (30) days thereafter.

6.12 Notwithstanding the foregoing, the Developer may self-insure to meet the minimum

insurance requirements of Articles 6.2 through 6.10 to the extent it maintains a self-
insurance program; provided that, the Developer’s senior debt is rated at investment
grade, or better, by Standard & Poor’s and that its self-insurance program meets the
minimum insurance requirements of Articles 6.2 through 6.10. For any period of time
that the Developer’s senior debt is unrated by Standard & Poor’s or is rated at less than
investment grade by Standard & Poor’s, the Developer shall comply with the insurance
requirements applicable to it under Articles 6.2 through 6.11. In the event that the
Developer is permitted to self-insure pursuant to this Article 6.12, it shall notify the
NYISO that it meets the requirements to self-insure and that its self-insurance program
meets the minimum insurance requirements in a manner consistent with that specified in
Article 6.11.

6.13 The Developer and the NYISO agree to report to each other in writing as soon as

practical all accidents or occurrences resulting in injuries to any person, including death, and any property damage arising out of this Agreement.

6.14 Notwithstanding the minimum insurance coverage types and amounts described in this

Article 6, the Developer: (i) shall also maintain any additional insurance coverage types and amounts required under Applicable Laws and Regulations, including New York State law, and under Good Utility Practice for the work performed by the Developer and its subcontractors under this Agreement, and (ii) shall satisfy the requirements set forth in Articles 6.6 through 6.13 with regard to the additional insurance coverages, including naming the NYISO Parties as additional insureds under these policies.

ARTICLE 7. BREACH AND DEFAULT

7.1.Breach

A Breach of this Agreement shall occur when: (i) the Developer notifies the NYISO in
writing that it will not proceed to develop the Transmission Project for reasons other than those
set forth in Articles 8.1(i) through (iv); (ii) the Developer fails to meet a Critical Path Milestone,
as the milestone may be extended with the agreement of the NYISO under Article 3.3.4 of this
Agreement, set forth in the Development Schedule in Appendix C to this Agreement; (iii) the
Developer makes a Significant Modification to the Transmission Project without the prior

manner inconsistent with the terms of Article 10 of this Agreement; (vii) the Developer fails to comply with any other material term or condition of this Agreement; (viii) a custodian, receiver, trustee or liquidator of the Developer, or of all or substantially all of the assets of the Developer, is appointed in any proceeding brought by the Developer; or (ix) any such custodian, receiver,
trustee, or liquidator is appointed in any proceeding brought against the Developer that is not
discharged within ninety (90) Days after such appointment, or if the Developer consents to or
acquiesces in such appointment.

7.2.Default

Upon a Breach, the non-Breaching Party shall give written notice of the Breach to the
Breaching Party describing in reasonable detail the nature of the Breach and, where known and
applicable, the steps necessary to cure such Breach, including whether and what such steps must
be accomplished to complete the Transmission Project by the Required Project In-Service Date.
The Breaching Party shall have thirty (30) Calendar Days from receipt of the Breach notice to
cure the Breach, or such other period of time as may be agreed upon by the Parties; provided,
however, that 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 achieve its In-Service Date 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 in accordance with Article 3.3.4. If the Breach is cured within
such timeframe, the Breach specified in the notice shall cease to exist. If the Breaching Party
does not cure its Breach within this timeframe or cannot cure the Breach in a manner that
provides for the Transmission Project to be completed by the Required Project In-Service Date,
the non-Breaching Party shall have the right to declare a Default and terminate this Agreement
pursuant to Article 8.1.

7.3.Remedies

Upon the occurrence of an event of Default, the non-defaulting Party shall be entitled: (i)
to commence an action to require the defaulting Party to remedy such Default and specifically
perform its duties and obligations hereunder in accordance with the terms and conditions hereof;
and (ii) to exercise such other rights and remedies as it may have in equity or at law; provided,
however, the NYISO’s liability under this Agreement shall be limited to the extent set forth in
Article 9.1. No remedy conferred by any provision of this Agreement is intended to be exclusive
of any other remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise. The election of any one or more remedies shall not constitute a waiver of the right
to pursue other available remedies. This Article 7.3 shall survive the termination, expiration, or
cancellation of this Agreement.

ARTICLE 8. TERMINATION

8.1.Termination by the NYISO

The NYISO may terminate this Agreement by providing written notice of termination to the Developer in the event that: (i) the Transmission Project is halted pursuant to Section

31.2.8.2.2 of Attachment Y of the OATT; (ii) the Developer notifies the NYISO that it is unable
to or has not received the required approvals or authorizations by Governmental Authorities
required to develop, construct, and operate the Transmission Project by the Required Project In-
Service Date; (iii) the Developer notifies the NYISO that its required approvals or authorizations
by Governmental Authorities have been withdrawn by the Governmental Authorities; (iv) the
Developer cannot complete the Transmission Project by the Required Project In-Service Date for
any reason, including the occurrence of a Force Majeure event; or (v) the NYISO declares a
default pursuant to Article 7.2 of this Agreement. The NYISO will provide the written notice of
termination within fifteen (15) Business Days of its determination under Articles 8.1 (i), (iv), or

(v) or its receipt of notice from the Developer under Articles 8.1(ii) or (iii), which notice will specify the date of termination. If the Agreement was filed and accepted by FERC pursuant to Section 31.2.8.1.6 of Attachment Y of the OATT, the NYISO will, following its provision of a notice of termination to the Developer, promptly file with FERC for its acceptance a notice of termination of this Agreement.

In the event of termination under Articles 8.1(i), (ii), or (iii), the Developer may be

eligible for cost recovery under the OATT in the manner set forth in Attachment Y and Schedule

10 of the OATT. In the event of termination under Articles 8.1(iv) or (v), the Developer must

seek any cost recovery from FERC. In the event of termination for any reason under this Article

8.1, the Developer shall 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.

8.2. Reporting of Inability to Comply with Provisions of Agreement

Notwithstanding the notification requirements in Article 3 and this Article 8 of this

Agreement, each Party shall notify the other Party promptly upon the notifying Party becoming aware of its inability to comply with any provision of this Agreement. The Parties agree to
cooperate with each other and provide necessary information regarding such inability to comply, including the date, duration, reason for inability to comply, and corrective actions taken or
planned to be taken with respect to such inability to comply.

8.3. Transmission Project Transfer Rights Upon Termination

If the NYISO terminates this Agreement pursuant to Article 8.1, the NYISO shall have
the right, but shall not be required, to request an entity other than the Developer to complete the
Transmission Project. The NYISO may exercise this right by providing the Developer with
written notice within sixty (60) days after the date on which this Agreement is terminated. If the
NYISO exercises its right under this Article 8.3, the Developer shall work cooperatively with the
NYISO’s designee pursuant to the requirements set forth in Section 31.2.10.1.4 of Attachment Y
of the OATT to implement the transition, including entering into good faith negotiations with the
NYISO’s designee to transfer the Transmission Project to the NYISO’s designee. All liabilities

under this Agreement existing prior to such transfer shall remain with the Developer, unless otherwise agreed upon by the Developer and the NYISO’s designee as part of their good faith negotiations regarding the transfer. This Article 8.3 shall survive the termination, expiration, or cancellation of this Agreement.

ARTICLE 9. LIABILITY AND INDEMNIFICATION

9.1.Liability

Notwithstanding any other provision in the NYISO’s tariffs and agreements to the

contrary, the NYISO shall not be liable, whether based on contract, indemnification, warranty, equity, tort, strict liability, or otherwise, to the Developer or any Transmission Owner, NYISO Market Participant, third party or any other person for any damages whatsoever, including,
without limitation, direct, incidental, consequential (including, without limitation, attorneys’ fees and litigation costs), punitive, special, multiple, exemplary, or indirect damages arising or
resulting from any act or omission in any way associated with this Agreement, except in the
event the NYISO is found liable for gross negligence or intentional misconduct in the
performance of its obligations under this Agreement, in which case the NYISO’s liability for
damages shall be limited only to direct actual damages. This Article 9.1 shall survive the
termination, expiration, or cancellation of this Agreement.

9.2.Indemnity

Notwithstanding any other provision in the NYISO’s tariffs and agreements to the

contrary, the Developer shall at all times indemnify and save harmless, as applicable, the

NYISO, its directors, officers, employees, trustees, and agents or each of them from any and all damages (including, without limitation, any consequential, incidental, direct, special, indirect,
exemplary or punitive damages and economic costs), losses, claims, including claims and actions relating to injury to or death of any person or damage to property, liabilities, judgments,
demands, suits, recoveries, costs and expenses, court costs, attorney and expert fees, and all other obligations by or to third parties, arising out of, or in any way resulting from, or associated with, this Agreement, provided, however, that the Developer shall not have any indemnification
obligation under this Article 9.2 with respect to any loss to the extent the loss results from the
gross negligence or intentional misconduct of the NYISO. This Article 9.2 shall survive the
termination, expiration, or cancellation of this Agreement.

ARTICLE 10.ASSIGNMENT

This Agreement may be assigned by a Party only with the prior written consent of the other Party; provided that:

(i) any Change of Control shall be considered an assignment under this Article 10 and shall require the other Party’s prior written consent;

to construct and place in service the Transmission Project by the Required Project InService Date consistent with the assignor’s cost estimates for the Transmission Project; and (B) the assignee satisfies the requirements for a qualified developer pursuant to Section 31.2.4.1.1 of Attachment Y of the OATT; and

(iii) the Developer shall have the right to assign this Agreement, without the consent of
the NYISO, for collateral security purposes to aid in providing financing for the
Transmission Project and shall promptly notify the NYISO of any such assignment;
provided, however, that such assignment shall be subject to the following: (i) prior to or
upon the exercise of the secured creditor’s, trustee’s, or mortgagee’s assignment rights
pursuant to said arrangement, the secured creditor, the trustee, or the mortgagee will
notify the NYISO of the date and particulars of any such exercise of assignment right(s),
and (ii) the secured creditor, trustee, or mortgagee must demonstrate to the satisfaction of
the NYISO that any entity that it proposes to complete the Transmission Project meets
the requirements for the assignee of a Developer described in Article 10(ii).

For all assignments by any Party, the assignee must assume in a writing, to be provided to
the other Party, all rights, duties, and obligations of the assignor arising under this Agreement,
including the insurance requirements in Article 6 of this Agreement. Any assignment under this
Agreement shall not relieve a Party of its obligations, nor shall a Party’s obligations be enlarged,
in whole or in part, by reasons thereof, absent the written consent of the other Party. Where
required, consent to assignment will not be unreasonably withheld, conditioned, or delayed. Any
attempted assignment that violates this Article 10 is void and ineffective, is a Breach of this
Agreement under Article 7.1 and may result in the termination of this Agreement under Articles

8.1 and 7.2.

ARTICLE 11.INFORMATION EXCHANGE AND CONFIDENTIALITY

11.1. Information Access

Subject to Applicable Laws and Regulations, each Party shall make available to the other
Party information necessary to carry out obligations and responsibilities under this Agreement
and Attachment Y of the OATT. The Parties shall not use such information for purposes other
than to carry out their obligations or enforce their rights under this Agreement or Attachment Y
of the OATT.

11.2. Confidentiality

11.2.1 Confidential Information shall mean: (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.

11.2.2 The NYISO shall treat any Confidential Information it receives in accordance with the

requirements of the NYISO Code of Conduct contained in Attachment F of the OATT. If
the Developer receives Confidential Information, it shall hold such information in
confidence, employing at least the same standard of care to protect the Confidential
Information obtained from the NYISO as it employs to protect its own Confidential
Information. Each Party shall not disclose the other Party’s Confidential Information to
any third party or to the public without the prior written authorization of the Party
providing the information, except: (i) to the extent required for the Parties to perform
their obligations under this Agreement, the ISO Tariffs, ISO Related Agreements, or ISO
Procedures, or (ii) to fulfill legal or regulatory requirements, provided that if the Party
must submit the information to a Governmental Authority in response to a request by the
Governmental Authority on a confidential basis, the Party required to disclose the
information shall request under applicable rules and regulations that the information be
treated as confidential and non-public by the Governmental Authority.

ARTICLE 12.REPRESENTATIONS, WARRANTIES, AND COVENANTS

12.1. General

The Developer makes the following representations, warranties, and covenants, which are effective as to the Developer during the full time this Agreement is effective:

12.2. Good Standing

The Developer is duly organized, validly existing and in good standing under the laws of the state in which it is organized, formed, or incorporated, as applicable. The Developer is
qualified to do business in the state or states in which the Transmission Project is located. The
Developer has the corporate power and authority to own its properties, to carry on its business as now being conducted and to enter into this Agreement and carry out the transactions
contemplated hereby and to perform and carry out covenants and obligations on its part under
and pursuant to this Agreement.

12.3. Authority

The Developer has the right, power, and authority to enter into this Agreement, to

become a Party hereto, and to perform its obligations hereunder. This Agreement is a legal,

valid, and binding obligation of the Developer, enforceable against the Developer in accordance
with its terms, except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, or other similar laws affecting creditors’ rights generally and by
general equitable principles (regardless of whether enforceability is sought in a proceeding in
equity or at law).

12.4. No Conflict

The execution, delivery and performance of this Agreement does not violate or conflict with the organizational or formation documents, or bylaws or operating agreement, of the

Developer, or any judgment, license, permit, order, material agreement or instrument applicable to or binding upon the Developer or any of its assets.

12.5. Consent and Approval

The Developer has sought or obtained, or, in accordance with this Agreement will seek or obtain, such consent, approval, authorization, order, or acceptance by any Governmental
Authority in connection with the execution, delivery and performance of this Agreement, and it will provide to any Governmental Authority notice of any actions under this Agreement that are required by Applicable Laws and Regulations.

12.6. Compliance with All Applicable Laws and Regulations

The Developer will comply with all Applicable Laws and Regulations, including all approvals, authorizations, orders, and permits issued by any Governmental Authority; all Applicable Reliability Requirements, and all applicable Transmission Owner Technical Standards in the performance of its obligations under this Agreement.

ARTICLE 13.DISPUTE RESOLUTION

If a dispute arises under this Agreement, the Parties shall use the dispute resolution

process described in Article 11 of the NYISO’s Services Tariff, as such process may be amended
from time to time. Notwithstanding the process described in Article 11 of the NYISO’s Services
Tariff, the NYISO may terminate this Agreement in accordance with Article 8 of this
Agreement.

ARTICLE 14.SURVIVAL

The rights and obligations of the Parties in this Agreement shall survive the termination, expiration, or cancellation of this Agreement to the extent necessary to provide for the
determination and enforcement of said obligations arising from acts or events that occurred while this Agreement was in effect. The remedies and rights and obligation upon termination
provisions in Articles 7.3 and 8.3 of this Agreement, the liability and indemnity provisions in Article 9, and the billing and payment provisions in Article 3.5 of this Agreement shall survive termination, expiration, or cancellation of this Agreement.

ARTICLE 15.MISCELLANEOUS

15.1. Notices

Any notice or request made to or by any Party regarding this Agreement shall be made to the Parties, as indicated below:

NYISO:

[Insert contact information.] Developer:

[Insert contact information.]

15.2. Entire Agreement

Except as described below in this Section 15.2, this Agreement, including all Appendices
attached hereto, constitutes the entire agreement between the Parties with reference to the subject
matter hereof, and supersedes all prior and contemporaneous understandings of agreements, oral
or written, between the Parties with respect to the subject matter of this Agreement. There are no
other agreements, representations, warranties, or covenants that constitute any part of the
consideration for, or any condition to, either Party’s compliance with its obligation under this
Agreement.

Notwithstanding the foregoing, this Agreement is in addition to, and does not supersede or limit the Developer’s and NYISO’s rights and responsibilities, under any interconnection agreement(s) entered into by and among the NYISO, Developer, and Connecting Transmission Owner(s) for the Transmission Project to interconnect to the New York State Transmission
System or Distribution System, as such interconnection agreements may be amended,
supplemented, or modified from time to time.

15.3. Binding Effect

This Agreement, and the rights and obligations hereof, shall be binding upon and shall inure to the benefit of the successors and permitted assigns of the Parties hereto.

15.4. Force Majeure

The occurrence of a Force Majeure event shall not excuse non-performance of any obligations under this Agreement.

15.5. Disclaimer

Except as provided in this Agreement, the Parties make no other representations,

warranties, covenants, guarantees, agreements or promises regarding the subject matter of this Agreement.

15.6. No NYISO Liability for Review or Approval of Developer Materials

No review or approval by the NYISO or its subcontractor(s) of any agreement, document,
instrument, drawing, specifications, or design proposed by the Developer nor any inspection
carried out by the NYISO or its subcontractor(s) pursuant to this Agreement shall relieve the
Developer from any liability for any negligence in its preparation of such agreement, document,
instrument, drawing, specification, or design, or its carrying out of such works; or for its failure
to comply with the Applicable Laws and Regulations, Applicable Reliability Requirements, and
Transmission Owner Technical Standards with respect thereto, nor shall the NYISO be liable to
the Developer or any other person by reason of its or its subcontractor’s review or approval of an
agreement, document, instrument, drawing, specification, or design or such inspection.

15.7. Amendment

The Parties may by mutual agreement amend this Agreement, including the Appendices
to this Agreement, by a written instrument duly executed by both of the Parties. If the
Agreement was filed and accepted by FERC pursuant to Section 31.2.8.1.6 of Attachment Y of
the OATT, the NYISO shall promptly file the amended Agreement for acceptance with FERC.

15.8. No Third Party Beneficiaries

With the exception of the indemnification rights of the NYISO’s directors, officers,

employees, trustees, and agents under Article 9.2, this Agreement is not intended to and does not
create rights, remedies, or benefits of any character whatsoever in favor of any persons,
corporations, associations, or entities other than the Parties, and the obligations herein assumed
are solely for the use and benefit of the Parties, their successors in interest and their permitted
assigns.

15.9. Waiver

The failure of a Party to this Agreement to insist, on any occasion, upon strict

performance of any provision of this Agreement will not be considered a waiver of any

obligation, right, or duty of, or imposed upon, such Party. Any waiver at any time by either
Party of its rights with respect to this Agreement shall not be deemed a continuing waiver or a waiver with respect to any other failure to comply with any other obligation, right, or duty of this Agreement. Any waiver of this Agreement shall, if requested, be provided in writing.

15.10. Rules of Interpretation

This Agreement, unless a clear contrary intention appears, shall be construed and

interpreted as follows: (1) the singular number includes the plural number and vice versa; (2)

reference to any person includes such person’s successors and assigns but, in the case of a Party,
only if such successors and assigns are permitted by this Agreement, and reference to a person in
a particular capacity excludes such person in any other capacity or individually; (3) reference to
any agreement (including this Agreement), document, instrument or tariff means such
agreement, document, instrument, or tariff as amended or modified and in effect from time to
time in accordance with the terms thereof and, if applicable, the terms hereof; (4) reference to
any Applicable Laws and Regulations means such Applicable Laws and Regulations as
amended, modified, codified, or reenacted, in whole or in part, and in effect from time to time,
including, if applicable, rules and regulations promulgated thereunder; (5) unless expressly stated
otherwise, reference to any Article, Section or Appendix means such Article of this Agreement,
such Appendix to this Agreement, or such Section of this Agreement, as the case may be; (6)
“hereunder”, “hereof’, “herein”, “hereto” and words of similar import shall be deemed references
to this Agreement as a whole and not to any particular Article or other provision hereof or
thereof; (7) “including” (and with correlative meaning “include”) means including without
limiting the generality of any description preceding such term; and (8) relative to the
determination of any period of time, “from” means “from and including”, “to” means “to but
excluding” and “through” means “through and including”.

15.11. Severability

Each provision of this Agreement shall be considered severable and if, for any reason,
any provision is determined by a court or regulatory authority of competent jurisdiction to be
invalid, void, or unenforceable, the remaining provisions of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired, or invalidated, and such invalid, void,
or unenforceable provision should be replaced with valid and enforceable provision or provisions
that otherwise give effect to the original intent of the invalid, void, or unenforceable provision.

15.12. Multiple Counterparts

This Agreement may be executed in two or more counterparts, each of which is deemed an original, but all constitute one and the same instrument.

15.13. No Partnership

This Agreement shall not be interpreted or construed to create an association, joint

venture, agency relationship, or partnership among the Parties or to impose any partnership

obligation or partnership liability upon any Party. No Party shall have any right, power, or

authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative of, or otherwise bind, any other Party.

15.14. Headings

The descriptive headings of the various Articles and Sections of this Agreement have

been inserted for convenience of reference only and are of no significance in the interpretation or construction of this Agreement.

15.15. Governing Law

This Agreement shall be governed, as applicable, by: (i) the Federal Power Act, and (ii) the substantive law of the State of New York, without regard to any conflicts of laws provisions thereof (except to the extent applicable, Sections 5-1401 and 5-1402 of the New York General Obligations Law).

15.16. Jurisdiction and Venue

Any legal action or judicial proceeding regarding a dispute arising out of or relating to

this Agreement or any performance by either Party pursuant thereto that: (i) is within the primary
or exclusive jurisdiction of FERC shall be brought in the first instance at FERC, or (ii) is not
within the primary or exclusive jurisdiction of FERC shall be brought in, and fully and finally
resolved in, either, as applicable, 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.

Appendix C

Development Schedule

[To be prepared by Developer consistent with the Developer’s project information submission, pursuant to Attachment C of the Reliability Planning Process Manual, and subject to acceptance by the NYISO, as required by Article 3.3 of this Agreement.]

The Developer shall demonstrate to the NYISO that it timely meets the following Critical
Path Milestones and Advisory Milestones and that such milestones remain in good standing.

Critical Path Milestones: [To be developed with consideration of each of the work plan

requirements submitted by the Developer pursuant to Attachment C to the Reliability Planning Process Manual and presented herein according to the sequence of the critical path. The NYISO anticipates that the Developer’s critical path schedule will include many of the example
milestones set forth below and that most of the other example milestones will be included as
Advisory Milestones. The composition and sequence of the Critical Path Milestones will differ depending on the Developer’s Transmission Project and schedule.]

Advisory Milestones: [To include in Development Schedule other milestones (e.g., periodic project review meetings) that are not determined to be on the critical path, but that will be monitored by the Developer and reported to NYISO.]

[Example Milestones:

 Interconnection studies (e.g. Interconnection Feasibility Study, SIS, SRIS, Class Year
Interconnection Facilities Study)

 Siting activities (e.g. locating line routing, access roads, and substation site location
options)

 Environmental impact studies (relative to siting options)  Engineering (initial)

 Permitting and regulatory activities (e.g. Certificate of Environmental Compatibility and
Public Need)

 Public outreach plan

 Initiation of negotiation of key contracts and financing

 Acquisition of all necessary approvals and authorizations of Governmental Authorities,
including identification of all required regulatory approvals

 Closing of project financing

 Completion of key contracts

Engineering (detailed)

Procurement of major equipment and materials

Environmental management & construction plan (for Article VII certification)

Acquisition of [all or %] required rights of way and property / demonstration of site

control

Surveying and geotechnical assessment (relative to line and station layouts)

Execution, or filing of unexecuted version, of interconnection agreement

Engineering (completed)

Delivery of major electrical equipment

Line and substation site work including milestones for foundations, towers, conductor

stringing, equipment delivery and installation, substation controls and communication,

security, etc.

Construction outage and restoration coordination plan

Completion, verification and testing

Operating and maintenance agreements and instructions

In-Service Date

Required Project In-Service Date]