August 18, 2017

By Electronic Delivery

Honorable Kimberly D. Bose, Secretary

Federal Energy Regulatory Commission

888 First Street, NE

Washington, DC 20426

Re: New York Independent System Operator, Inc.’s Proposed Revisions to Its

Open Access Transmission Tariff Regarding Cost Recovery for Regulated

Transmission Facilities; Docket No. ER17-___-000

Dear Secretary Bose:

Pursuant to Section 205 of the Federal Power Act1 and Part 35 of the Commission’s

Regulations,2 the New York Independent System Operator, Inc. (“NYISO”) respectfully submits

proposed revisions to Section 6.10 (“Rate Schedule 10”) and Attachment Y of its Open Access

Transmission Tariff (“OATT”) to establish a mechanism for the recovery of the costs of any

regulated transmission project that is eligible for cost allocation and recovery in the NYISO’s

Comprehensive System Planning Process (“CSPP”).3

The NYISO’s proposed revisions replace the Reliability Facilities Charge (“RFC”) in

Rate Schedule 10 with a new Regulated Transmission Facilities Charge (“RTFC”) pursuant to

which the NYISO will recover and remit the costs associated with a regulated transmission

project eligible for cost allocation and recovery in any one of the three planning processes in the

CSPP (i.e., reliability, economic, or public policy). In addition, the revisions incorporate into

Rate Schedule 10 several enhancements that the Commission has accepted in more recently filed

rate schedules in the OATT. The revisions also align the cost recovery requirements in Rate

Schedule 10 with those in the CSPP rules located in Attachment Y. Finally, the proposed

revisions clarify the manner in which the NYISO will allocate project preparation costs that

certain Developers are eligible to recover in the NYISO’s Public Policy Transmission Planning

Process (“Public Policy Process”) and specify the location in Attachment Y for any alternative

cost allocation methodology for the Public Policy Process that is approved or accepted by the

Commission.

1 16 U.S.C. § 824d.

2 18 C.F.R. § 35.13 (2016).

3 Capitalized terms not otherwise defined herein shall have the meaning specified in Section

31.1.1 of the OATT and, if not defined therein, in Section 1 of the OATT or Section 2 of the Market

Administration and Control Area Services Tariff.

Honorable Kimberly D. Bose

August 18, 2017

Page 2

The proposed revisions were approved unanimously by NYISO stakeholders in its

Management Committee.

Documents Submitted

The NYISO respectfully submits the following documents with this filing letter:

A clean version of the proposed revisions to the OATT (“Attachment I”); and

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

II.

Background

To comply with Order No. 890,4 the NYISO and the New York Transmission Owners

jointly proposed, and the Commission accepted, Rate Schedule 10, entitled “Rate Mechanism for

the Recovery of the Reliability Facilities Charge.”5 Rate Schedule 10 established the manner in

which the Reliability Facilities Charge (“RFC”), and the Long Island Power Authority (“LIPA”)

Reliability Facilities Charge (“LIPA RFC”) as applicable, would be developed, filed, and

charged to a Load Serving Entity (“LSE”) for the recovery of costs associated with regulated

transmission solutions eligible for cost allocation and recovery under the NYISO’s reliability

planning process. In general, Rate Schedule 10 provided that Transmission Owners or Other

Developers would have rate treatments on file with the Commission, which would be used to

derive and determine the revenue requirement to be used in calculating the RFC.6 The NYISO

would apply the RFC to collect revenues from each LSE based on its Actual Energy

Withdrawals and would disburse such collections to the project’s Developer.7

Subsequent to the Commission’s acceptance of the current Rate Schedule 10, the NYISO

implemented its Congestion Assessment and Resource Integration Study (“CARIS”) process for

economic transmission planning and its Public Policy Process in accordance with Order No. 890

and Order No. 1000. However, the NYISO’s tariffs do not currently include a mechanism

comparable to the RFC for the recovery and remittance of costs associated with regulated

transmission projects eligible for cost allocation and recovery under CARIS or the Public Policy

Process. Attachment Y provides that such costs will be recovered through a rate schedule filed

with and accepted by the Commission, and no such schedule exists as the NYISO has not had a

need for designated rate schedules to provide a cost recovery mechanism for transmission

projects in those processes to date.8 The NYISO, however, is currently in the process of

4 Order No. 890, FERC Stats. & Regs. ¶ 31,241, at n.339 and P 586.

5 See generally, New York Independent System Operator, Inc., Errata Compliance Filing, Docket

No. OA08-13-002 (June 27, 2008); New York Independent System Operator, Inc., 125 FERC ¶ 61,068

(2008).

6 See Section 6.10.2 of the OATT.

7 See Section 6.10.3 of the OATT.

8 See Sections 31.3.2.4.1.1.2 and 31.4.4.1.2 of the OATT.

Honorable Kimberly D. Bose

August 18, 2017

Page 3

evaluating and selecting the more efficient or cost effective solutions to two Public Policy

Transmission Needs in its Public Policy Process. The selected Public Policy Transmission

Projects would be eligible for cost allocation and recovery under the OATT. The NYISO has,

therefore, developed the new RTFC to enhance and expand the applicability of Rate Schedule

10, so that it can be used for all regulated transmission projects that are eligible for cost

allocation and recovery under the CSPP.

Rate Schedule 10 has remained largely unchanged since its acceptance by the

Commission in 2008,9 and the NYISO has not yet used Rate Schedule 10 to recover the costs of

any transmission projects. However, Rate Schedule 10 has served as a model for other rate

schedules under the OATT for the recovery of regulated transmission costs, such as the New

York Transco, LLC Transco Facilities Charge (“Rate Schedule 13”), the New York Power

Authority (“NYPA”) Marcy South Series Compensation Facilities Charge (“Rate Schedule 15”),

the Niagara Mohawk Power Corporation, d/b/a National Grid, Western New York Facilities

Charge (“Rate Schedule 17”), and the Rate Mechanism for the Recovery of the Generator

Deactivation Facilities Charge for a Regulated Transmission Solution in the Generator

Deactivation Process (“Rate Schedule 16”).10 These subsequent rate schedules have included

enhancements to the Rate Schedule 10 model, which the Commission has accepted for filing in

Rate Schedule 13, Rate Schedule 15, and Rate Schedule 17.11 The NYISO’s proposed revisions

to Rate Schedule 10 incorporate these enhancements.

III.

Description of Proposed Tariff Revisions

Revisions to Rate Schedule 10

As detailed below, the NYISO proposes to revise Rate Schedule 10 to expand its scope to

encompass any regulated transmission project that is eligible for cost allocation and recovery

under the CSPP. In addition, the NYISO proposes to incorporate in Rate Schedule 10 the

enhancements previously accepted by the Commission in the similar rate schedules subsequently

filed for inclusion in the OATT (i.e., Rate Schedule 13, Rate Schedule 15, and Rate Schedule

17). These enhancements include: (i) re-ordering and consolidating provisions for clarity and

9 See New York Independent System Operator, Inc., 125 FERC ¶ 61,068 (2008).

10 See New York Power Authority, Filing, Docket No. ER16-835-000 (January 29, 2016); New

York Transco LLC, et al., Filing, Docket No. ER15-592-000 (December 4, 2014); New York Transco

LLC, et al., Offer of Partial Settlement, Docket No. ER15-592-000 (November 5, 2015); Niagara

Mohawk Power Corp. d/b/a National Grid, Western New York Facilities Charge Rate Schedule under

NYISO OATT Filing, Docket No. ER17-1629-001 (May 19, 2017); New York Independent System

Operator, Inc., Compliance Filing, Docket No. ER16-120-003 (September 19, 2016).

11 See, e.g., Section 6.13 of the OATT (Rate Schedule 13); Section 6.15 of the OATT (Rate

Schedule 15); Section 6.17 of the OATT (Rate Schedule 17). These improvements were similarly

proposed in Rate Schedule 16 as part of the NYISO’s proposed Generator Deactivation Process, which

revisions were submitted in September 2016 and currently remain pending before the Commission. See

New York Independent System Operator, Inc., Compliance Filing, Docket No. ER16-120-003 (September

20, 2016).

Honorable Kimberly D. Bose

August 18, 2017

Page 4

reduction of redundancy, (ii) updating the description of the treatment of revenues received from

Incremental Transmission Congestion Contracts (“TCCs”) and any applicable outage charges

relating thereto, and (iii) providing greater detail regarding the application of the charge to

projects developed by Unregulated Transmitting Utilities. Finally, the NYISO has relocated to

Rate Schedule 10 certain cost recovery requirements that were previously located in Attachment

Y of the OATT to consolidate the cost recovery requirements in one location and ensure

consistency within the OATT.

1. Applicability of the Regulated Transmission Facilities Charge

The NYISO proposes to replace the existing RFC with a new RTFC (or a LIPA RTFC or

NYPA RTFC, as applicable)12 that will enable the NYISO to recover from LSEs and remit to

Developers the costs approved or accepted by the Commission that are associated with any

regulated transmission project that is eligible for cost allocation and recovery pursuant to the

CSPP. Specifically, the RTFC will apply to all “Eligible Projects,” which include the

following:13

• Regulated backstop solutions proposed by a Responsible Transmission Owner in the

reliability planning process,

• Alternative regulated transmission solutions that the NYISO has selected as the more

efficient or cost-effective solution to a Reliability Need in the reliability planning

process,

• Regulated transmission Gap Solutions proposed by a Responsible Transmission

Owner,

• Alternative transmission Gap Solutions that have been determined by the appropriate

state regulatory agency(ies) as the preferred solution(s) to a Reliability Need,

• Regulated economic transmission projects that have been approved in CARIS,

• Public Policy Transmission Projects that the NYISO has selected as the more efficient

or cost-effective solution to a Public Policy Transmission Need in the Public Policy

Process,

• Public Policy Transmission Projects proposed by a Developer in the Public Policy

Process in response to a request by the New York State Public Service Commission

(“NYPSC”) or LIPA, and

12 For Eligible Projects proposed and developed by NYPA and LIPA, the proposed revisions

provide for billing and collection of applicable project costs under a separate LIPA RTFC and NYPA

RTFC as set forth in proposed Section 6.10.5 of the OATT.

13 In addition to specifically detailing an exclusive list of Eligible Projects, proposed Section

6.10.1.2 of the OATT lists types of projects that will not be eligible to recover their costs under Rate

Schedule 10 because cost recovery is provided elsewhere in the NYISO’s tariffs or the project does not

otherwise qualify for rate recovery under the OATT.

Honorable Kimberly D. Bose

August 18, 2017

Page 5

• The portion of an Interregional Transmission Project selected by the NYISO in the

CSPP that is allocated to the NYISO region pursuant to Section 31.5.7 of the OATT.

2. Calculation and Recovery of the RTFC

The NYISO will use a separate RTFC for each Eligible Project that will be billed to a

Responsible LSE.14 The establishment of separate RTFCs for each Eligible Project will provide

transparency in the NYISO’s billing and settlement procedures. The NYISO will calculate and

bill the RTFC (or LIPA RTFC or NYPA RTFC, as applicable) to each Responsible LSE across

all applicable Load Zones or Subzones in the New York Control Area (“NYCA”).

The NYISO will calculate the applicable RTFC charges for each Responsible LSE in a

manner largely consistent with the current formula in Rate Schedule 10.15 The NYISO will first

allocate the total charge associated with each Eligible Project to the applicable Load Zones or

Subzones. To do so, the NYISO will use the revenue requirement accepted or approved by the

Commission for the project for the appropriate Billing Period, as adjusted to account for

payments related to any Incremental TCCs awarded to the Eligible Project and any applicable

outage charges relating thereto.16 This amount will be allocated to the applicable Load Zone or

Subzone using the cost allocation methodology for the project prescribed in Section 31.5 of the

OATT or as otherwise accepted or approved by the Commission.17 The NYISO will then

determine the per-megawatt-hour (“MWh”) rate for each applicable Load Zone or Subzone. The

NYISO will calculate the charge for each applicable Responsible LSE in each Load Zone or

Subzone using the MWh rate and the Responsible LSE’s Actual Energy Withdrawals for the

relevant Billing Period. Lastly, the NYISO will calculate the total charge for each Responsible

LSE by summing all of the zonal or subzonal charges for the Responsible LSE for the relevant

Billing Period.

The proposed revisions to the RTFC calculation requirements in Section 6.10.3 of the

OATT incorporate the enhancements already accepted by the Commission in Rate Schedule 13,

14 The “Responsible LSEs” are those Transmission Owners, competitive LSEs, municipal

systems, and any other LSE serving Load in the Load Zones or Subzones that have been allocated costs of

the eligible transmission project pursuant to the applicable cost allocation methodology under Attachment

Y to the OATT.

15 Compare Rate Schedule 10 of the OATT with Proposed Rate Schedule 10 of the OATT; see

also New York Independent System Operator, Inc., Errata Compliance Filing, Docket No. OA08-13-002,

at p 12 (June 27, 2008).

16 See Proposed Section 6.10.3.5 of the OATT.

17 The Commission-approved cost allocation methodologies are set forth in Attachment Y of the

OATT. See, e.g., Section 31.5.3 of the OATT (reliability planning process cost allocation methodology);

Section 31.5.4 of the OATT (CARIS cost allocation methodology); Section 31.5.5 of the OATT (Public

Policy Process cost allocation methodology); Section 31.5.7 of the OATT (Interregional Transmission

Project cost allocation methodology).

Honorable Kimberly D. Bose

August 18, 2017

Page 6

Rate Schedule 15, and Rate Schedule 1718 and as proposed by the NYISO in its new Rate

Schedule 16.19 Specifically, the revisions clarify the treatment of revenues for Incremental

TCCs associated with an Eligible Project and any applicable outage charges relating thereto.

Proposed Section 6.10.3.3 of the OATT requires a Developer of an Eligible Project to

request Incremental TCCs in accordance with Attachment M to the OATT. To the extent that

Incremental TCCs are awarded as a result of the implementation of an Eligible Project, the

Developer will be required to offer such Incremental TCCs in all rounds of the six month Sub-

Auction of each Centralized TCC Auction conducted by the NYISO.20 The NYISO will

disburse any revenues resulting from auction sales to the Developer. To the extent that

Incremental TCCs are not sold in the Centralized TCC Auctions conducted by the NYISO, the

NYISO will provide congestion payments to the Developer for any unsold Incremental TCCs in

accordance with Section 20.2.3 of Attachment N to the OATT. The NYISO will adjust the

otherwise applicable revenue requirement for the Eligible Project to account for these settlements

related to Incremental TCCs.21

The proposed revisions also account for certain outage charges specific to Incremental

TCCs for Eligible Projects in calculating the RTFC rate. Any applicable outage charge related to

Incremental TCCs awarded for the Eligible Project shall be determined and assessed to the

Developer pursuant to Section 19.2.4 of Attachment M to the OATT.22 The NYISO will adjust

the otherwise applicable revenue requirement for the Eligible Project to account for any

applicable outage charges assessed to the Developer for any hour in the Day-Ahead Market

during which the Eligible Project is modeled as wholly or partially out of service.

3. Determining the Revenue Requirement for Calculation of the RTFC

The annual revenue requirement for an Eligible Project, used in calculating the RTFC

rate, will be determined in accordance with proposed Sections 6.10.4 and 6.10.5 of the OATT.

The proposed revisions clarify and consolidate in Rate Schedule 10: (i) the description of the

costs, rate of return, and incentives, as applicable, that may be included in the revenue

requirement; (ii) the period of cost recovery; and (iii) the manner in which the revenue

requirement will be filed with the Commission.23 As revised, Rate Schedule 10 will ensure

consistent treatment of the revenue requirement for Transmission Owners and Other Developers,

while respecting the differences in the revenue requirement for a project developed by an

Unregulated Transmitting Utility.

18 Sections 6.13, 6.15, 6.17 of the OATT.

19 See New York Independent System Operator, Inc., Compliance Filing, Docket No. ER16-120-

003, at Attachment I (September 19, 2016).

20 See Proposed Section 6.10.3.3 of the OATT.

21 See Proposed Section 6.10.3.5 of the OATT.

22 See id.

23 See Proposed Sections 6.10.2, 6.10.4, and 6.10.5 of the OATT.

Honorable Kimberly D. Bose

August 18, 2017

Page 7

For all Eligible Projects, the revenue requirement may include all reasonably incurred

costs related to the preparation of proposals for, and the development, financing, construction,

operation, and maintenance of, an Eligible Project, including those explicit costs set forth in

Attachment Y of the OATT and a reasonable rate of return on investment.24 With the exception

of an Eligible Project developed by LIPA, a reasonable rate of return may also include any

incentives for the construction of transmission projects approved by the Commission under

Section 205 or Section 219 of the Federal Power Act and associated implementing regulations.25

a. Transmission Owner or Other Developer

Revised Section 6.10.4 of the OATT provides that a revenue requirement for a project

developed by a Transmission Owner or Other Developer may be based on either a formula rate

on file with the Commission or pursuant to a Section 205 filing with the Commission.26 The

Transmission Owner or Other Developer (or, at its request, the NYISO)27 shall make either a

Section 205 filing or an informational filing under a previously approved formula rate proposing

a revenue requirement for each Eligible Project. The revenue requirement must be consistent

with the Eligible Project as it was proposed to and evaluated by the NYISO pursuant to

Attachment Y.28 The revenue requirement and the period of recovery will be determined by the

Commission, and cost recovery will begin at the time the project enters service, is halted, or as

otherwise determined by the Commission, including for the recovery of construction work in

progress (“CWIP”) or other permissible cost recovery.29

b. Unregulated Transmitting Utilities

Revised Section 6.10.5 covers the revenue requirements for the LIPA RTFC or NYPA

RTFC for Eligible Projects developed by LIPA or NYPA, respectively.30 This section accounts

for the differences related to the recovery of costs by an Unregulated Transmitting Utility and

details the Eligible Project’s revenue requirement to be used in the calculation and recovery of

24 See Proposed Sections 6.10.4.1 and 6.10.5.1 of the OATT.

25 See Proposed Sections 6.10.4.1 and 6.10.5.3 of the OATT.

26 Rate Schedule 10 previously divided the requirements applicable to Transmission Owners and

Other Developers into separate sections. As revised, the consolidated requirements are consistent for both

Transmission Owners and Other Developers as included in proposed Section 6.10.4 of the OATT. The

previous Transmission Owner and Other Developer-specific sections have been deleted.

27 Where the NYISO makes the filing, the Transmission Owner or Other Developer bears the

burden of resolving all concerns about the contents of the filing that might arise in that proceeding. See

Proposed Section 6.10.4.2 of the OATT.

28 See Proposed Section 6.10.4.2 of the OATT.

29 See id.

30 Rate Schedule 10 previously described general rules applicable to Unregulated Transmitting

Utilities with more detailed requirements for LIPA, but did not specify specific revenue requirement rules

applicable to NYPA. As proposed, Rate Schedule 10 includes specific rules for a NYPA RTFC.

Honorable Kimberly D. Bose

August 18, 2017

Page 8

the LIPA RTFC and NYPA RTFC, the period of recovery, the special considerations in filing

and determining the revenue requirement for LIPA and NYPA, and the roles of the NYISO in

the billing and settlement of the LIPA RTFC and NYPA RTFC.

The NYISO proposes to retain the provisions governing an Eligible Project developed by

LIPA but expands upon them to include any regulated transmission project proposed and/or

selected under the CSPP and to incorporate other enhancements. Notably, Rate Schedule 10

retains the distinction between billing and recovering the costs of an Eligible Project undertaken

by LIPA from LIPA customers within the Long Island Transmission District and from

Responsible LSEs in other Transmission Districts. Section 6.10.5.2.1 provides that for costs to

LIPA customers, LIPA will bill and charge each responsible entity within the Long Island

Transmission District using a rate recovery mechanism that it approves and over a period of cost

recovery established by the LIPA Board of Trustees.31

For costs to Responsible LSEs outside of the Long Island Transmission District, LIPA

will inform the NYISO of its costs incurred in undertaking an Eligible Project that are allocable

to such Responsible LSEs.32 These costs shall constitute the revenue requirement that the

NYISO will file, at LIPA’s request, with the Commission. That revenue requirement must be

consistent with LIPA’s project proposed to and evaluated by the NYISO under Attachment Y,

and LIPA shall bear the burden of resolving all concerns about the revenue requirement filing

submitted on its behalf by the NYISO.33 Once accepted or approved by the Commission, the

NYISO will (i) use that revenue requirement to calculate a separate LIPA RTFC over the period

of cost recovery determined by the Commission; (ii) bill Responsible LSEs outside of the Long

Island Transmission District; and (iii) remit the revenues collected to LIPA in accordance with

the NYISO’s billing and settlement procedures.34

The NYISO also proposes to add Section 6.10.5.3 of the OATT to address the recovery

of costs incurred by NYPA in developing an Eligible Project. Specifically, NYPA will inform

the NYISO of any costs incurred for an Eligible Project, which may include a reasonable rate of

return on investment and any incentives for construction of transmission projects available under

Section 205 and Section 219 of the FPA and the Commission’s associated implementing

regulations.35 The incurred costs will constitute the revenue requirement, provided it is

consistent with NYPA’s project as proposed to and evaluated by the NYISO under Attachment

Y.36 The revenue requirement will then be filed as an informational filing under NYPA’s

already existing formula rate approved by the Commission. NYPA will bear the burden for

resolving all concerns raised in the proceeding before the Commission related to such

31 See Proposed Sections 6.10.3.6 and 6.10.5.2 of the OATT.

32 See Proposed Section 6.10.5.2.2 of the OATT.

33 Id.

34 Id.

35 See Sections 6.10.5.1 and 6.10.5.3 of the OATT.

36 See Section 6.10.5.3.1 of the OATT.

Honorable Kimberly D. Bose

August 18, 2017

Page 9

informational filing. Once the filing is accepted or approved or otherwise allowed to go into

effect pursuant to NYPA’s formula rate, the NYISO will (i) calculate a separate NYPA RTFC

for the period of cost recovery determined by the Commission; (ii) bill Responsible LSEs; and

(iii) remit collected revenues to NYPA in accordance with the NYISO’s billing and settlement

procedures.37

4. Consolidation of Cost Recovery Requirements from Attachment Y

Attachment Y to the OATT currently includes certain cost recovery requirements for

regulated transmission projects developed under the CSPP. The NYISO proposes to relocate

certain provisions from Section 31.5.6 to Rate Schedule 10 that address the costs eligible to be

recovered, the period of recovery, the filing of a revenue requirement, and the awarding of

Incremental TCCs on a regulated transmission project under the CSPP.38

Conforming Tariff Revisions to Attachment Y to the OATT

Attachment Y to the OATT currently contains numerous requirements and references

concerning the recovery of costs associated with regulated transmission projects under the CSPP.

The NYISO proposes to align certain provisions of Attachment Y concerning cost allocation and

recovery with the revised Rate Schedule 10 to ensure consistency in the OATT and reduce

unnecessary repetition. The revisions provide the necessary linkages across the planning

processes, cost allocation provisions, and the cost recovery requirements, while consolidating the

core cost recovery requirements in Rate Schedule 10.

Section 31.5.6 of the OATT contains cost recovery requirements for the regulated

solutions under the CSPP. As discussed above, the NYISO proposes to relocate certain cost

recovery requirements from Section 31.5.6 to Rate Schedule 10. To reduce redundancy and

ensure consistency between Rate Schedule 10 and Attachment Y, the NYISO proposes to update

Section 31.5.6 to be consistent with the revised scope of Rate Schedule 10 and eliminate those

provisions that have been relocated to Rate Schedule 10.39

37 See Proposed Sections 6.10.5.1 and 6.10.5.3 of the OATT.

38 See Proposed Section 6.10.

39 See, e.g., Proposed Section 31.5.6.1 (regulated project to address a Reliability Need); Proposed

Section 31.5.6.2 (regulated economic transmission project); Proposed Section 31.5.6.3 (regulated

transmission project to address a Public Policy Transmission Need); Proposed Section 31.5.6.4

(Interregional Transmission Project selected by the NYISO in the CSPP).

Honorable Kimberly D. Bose

August 18, 2017

Page 10

The NYISO also proposes the following conforming revisions to Attachment Y:

Tariff Section

Reason for Proposed Revision

Clarified and ensured consistency with the proposed revisions to Rate

OATT Section

Schedule 10 related to the time period of a regulated transmission project’s

31.2.6.5.2

cost recovery—i.e., when the project enters into service, is halted, or as

otherwise determined by the Commission.

Clarified that the recovery of costs incurred in connection with a regulated

backstop solution that has been halted is subject to the Commission’s

regulations on abandoned plant recovery. The Commission previously

directed the NYISO to amend the cost recovery requirements for halted

OATT Section

projects in its Public Policy Process to expressly reference the

31.2.8.2.1

Commission’s regulations on abandoned plant recovery.40 The proposed

revision in Section 31.2.8.2.1 aligns the cost recovery requirements in the

reliability planning process concerning halted projects with the related

requirements in the Public Policy Process.

Clarified that the recovery of costs incurred in connection with an

alternative regulated transmission project that has been triggered and

OATT Section

subsequently halted is subject to the Commission’s regulations on

31.2.8.2.2

abandoned plant recovery to align this provision with the Commission’s

directive for the Public Policy Process to expressly reference its regulations

on abandoned plant recovery.41

Clarified that the recovery of costs incurred in connection with a regulated

backstop solution or a triggered alternative regulated transmission project

that does not receive the necessary federal, state, or local agency(ies)

OATT Section

authorizations is subject to the Commission’s regulations on abandoned

31.2.8.2.5

plant recovery, to align this provision with the Commission’s directive for

the Public Policy Process to expressly reference its regulations on

abandoned plant recovery.42

Clarified that the recovery of costs incurred in connection with a regulated

backstop solution or a triggered alternative regulated transmission project

that has its necessary federal, state, and local authorization subsequently

OATT Section

withdrawn is subject to the Commission’s regulations on abandoned plant

31.2.8.2.6

recovery, to align this provision with the Commission’s directive for the

Public Policy Process to expressly reference its regulations on abandoned

plant recovery.43

40 New York Independent System Operator, Inc., 155 FERC ¶ 61,037 at P 22 (2016).

41 Id.

42 Id.

43 Id.

Honorable Kimberly D. Bose

August 18, 2017

Page 11

Tariff Section

Reason for Proposed Revision

Incorporated the requirement that a Responsible Transmission Owner shall

be eligible to recover its costs related to developing a Gap Solution proposal

OATT Section

and seeking necessary approvals to align this provision with the cost

31.2.11.4

recovery requirements in Section 31.5.6 of Attachment Y and Rate Schedule

10.

OATT Section

Clarified that an implemented transmission Gap Solution is entitled to cost

31.2.11.6

recovery under Section 31.5.6 of Attachment Y and Rate Schedule 10.

OATT Section

Clarified that the cost recovery mechanism for a regulated transmission

31.3.2.4.1.1.2

project under CARIS is set forth in Rate Schedule 10.

OATT Section

Clarified that the cost recovery mechanism for a regulated transmission

31.4.3.2

project under the Public Policy Process is set forth in Rate Schedule 10.

OATT Section

Clarified that the cost recovery mechanism for a regulated transmission

31.4.4.1.2

project under the Public Policy Process is set forth in Rate Schedule 10.

Clarified and ensure consistency with the proposed revisions to Rate

OATT Section

Schedule 10 related to when the costs of the regulated transmission project

31.4.8.2

are recoverable—i.e., when the project enters into service, is halted, or as

otherwise determined by the Commission.

OATT Section

Clarified that the cost recovery mechanism for a regulated transmission

31.4.12.1

project under the Public Policy Process is set forth in Rate Schedule 10.

OATT Section

Replaced the generic reference to an applicable rate schedule with a

31.5.1.7

reference to Rate Schedule 10.

OATT Section

Incorporated clarifying references to Rate Schedule 10.

31.5.4.4.6

Incorporated references to Rate Schedule 10 and added a clarifying

OATT Section

reference related to cost recovery for the costs of proposing a Public Policy

31.5.5.3

Transmission Project submitted by a Developer at the request for the

NYPSC or LIPA pursuant to Section 31.4.3.2 of the OATT.

Added a cross-reference to Rate Schedule 10 under Article 8 of the pro

OATT Section

forma Development Agreement with regard to cost recovery in the event of

31.7

termination of the Development Agreement.

Proposed Revisions Related to Cost Allocation in the Public Policy

Process

The NYISO also proposes revisions to: (i) clarify the cost allocation methodology for

certain costs incurred by Developers in preparing proposed solutions to Public Policy

Honorable Kimberly D. Bose

August 18, 2017

Page 12

Transmission Needs at the request of the NYPSC or LIPA in the Public Policy Process and (ii) to

reference the location in the OATT where an alternative cost allocation methodology for a

particular Public Policy Transmission Project will be located once accepted or approved by the

Commission.44

As part of the Public Policy Process, Section 31.4.3.2 of the OATT provides that a

Developer that proposes a transmission solution to a Public Policy Transmission Need in

response to a request by the NYPSC or LIPA may recover its “[c]osts incurred . . . in preparing a

proposed transmission solution.”45 Attachment Y, however, does not specify how the NYISO

should allocate these costs for projects that it has not selected as the more efficient or cost-

effective project in its Public Policy Process.

The NYISO proposes to revise Sections 31.4.3.2 and 31.5.5.3 of the OATT to provide

that, unless otherwise determined by the Commission, costs Developers incur in preparing a

proposed transmission solution, which is prepared at the request of the NYPSC or LIPA but not

selected by the NYISO, will be allocated among all LSEs in the NYCA using the load ratio share

methodology contained in Section 31.5.5.4.3 of the OATT.46 Allocating these project

preparation costs across all LSEs in the NYCA, using the load ratio share methodology accepted

by the Commission, is just and reasonable because all ratepayers throughout the State of New

York benefit from having a robust transmission project solicitation and selection process to

satisfy transmission needs driven by Public Policy Requirements.47

The NYISO also proposes to revise Section 31.5.5.4 of the OATT to provide a cross-

reference to the alternative cost allocation methodologies that are accepted or approved by the

Commission for a particular Public Policy Transmission Project, which methodologies will be

located in Appendix E (Section 31.8) of Attachment Y.48 Currently, Attachment Y does not

specify a specific place in the OATT where such alternative cost allocation methodologies for

44 See Proposed Sections 31.4.3.2 and 31.5.5.4 of the OATT

45 This requirement does not apply to a Developer whose project is ultimately selected by the

NYISO as the more efficient or cost-effective transmission solution because that Developer will recover

its project costs that are accepted or approved by the Commission through the cost allocation

methodology applicable to that Public Policy Transmission Need, as set forth in Section 31.5.5.4 of the

OATT.

46 See Proposed Section 31.4.3.2 of the OATT.

47 Section 31.5.5.4.3 establishes a load ratio share methodology to allocate the costs of projects

selected in the NYISO’s Public Policy Process. The Commission has accepted this methodology as a just

and reasonable default methodology, which methodology the NYISO will apply to projects selected in the

Public Policy Process if no alternative methodology is proposed or determined to be just and reasonable

by the Commission.

48 See Proposed Section 31.5.5.4 of the OATT.

Honorable Kimberly D. Bose

August 18, 2017

Page 13

Public Policy Transmission Projects will be located. This clean-up revision sets aside a specific

location and, therefore, will increase the ease of locating such methodologies in Attachment Y.49

IV.

Effective Date

The NYISO respectfully requests that the Commission make the tariff revisions proposed

in this filing effective on the day following the end of the statutory sixty-day notice period—i.e.,

October 18, 2017.

Stakeholder Approval

The NYISO presented on the proposed revisions to Rate Schedule 10 and Attachment Y

at meetings of its stakeholder Electric System Planning Working Group on March 23, 2017 and

April 19, 2017. The proposed revisions were unanimously approved by the NYISO Business

Issue Committee and Operating Committee on May 17, 2017 and May 18, 2017, respectively.

Thereafter, the NYISO Management Committee unanimously approved the proposed revisions

on May 31, 2017. The NYISO Board of Directors approved the filing of these proposed

revisions on June 19, 2017.

VI.

Communications and Correspondence

All communications and service in this proceeding should be directed to:

Robert E. Fernandez, General Counsel

*Ted Murphy

Raymond Stalter, Director, Regulatory Affairs

Hunton & Williams LLP

* Carl F. Patka, Assistant General Counsel

2200 Pennsylvania Ave, NW

* Brian R. Hodgdon, Attorney

Washington, DC 20037

10 Krey Boulevard

Tel: (202) 955-1500

Rensselaer, NY 12144

tmurphy@hunton.com

Tel: (518) 356-6000

rfernandez@nyiso.com

rstatler@nyiso.com

*Michael J. Messonnier50

cpatka@nyiso.com

Hunton & Williams LLP

bhodgdon@nyiso.com

Riverfront Plaza, East Tower

951 East Byrd Street

Richmond, VA 23219

Tel: (804) 788-8712

mmessonnier@hunton.com

*Persons designated for receipt of service.

49 See, e.g., Sections 31.5.5.4.1 through 31.5.5.4.2.5 of the OATT.

50 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3) (2014)) is requested to the

extent necessary to permit service on counsel for the NYISO in Rensselaer, NY, Richmond, VA, and

Washington, DC.

Honorable Kimberly D. Bose

August 18, 2017

Page 14

VII.

Service

The NYISO will send an electronic link to this filing to the official representative of each

of its customers, to each participant on its stakeholder committees, to the New York State Public

Service Commission, and to the New Jersey Board of Public Utilities. In addition, the complete

filing will be posted on the NYISO’s website at www.nyiso.com.

VIII.

Conclusion

For the reasons stated above, the New York Independent System Operator, Inc.

respectfully requests that the Commission accept for filing the proposed revisions to the OATT

that are attached hereto with an effective date of October 18, 2017.

Respectfully submitted,

/s/ Carl F. Patka

Carl F. Patka, Assistant General Counsel

Brian R. Hodgdon, Attorney

New York Independent System Operator, Inc.

10 Krey Blvd.

Rensselaer, New York 12144

Tel: (518) 356-6000

cpatka@nyiso.com

Michael J. Messonnier Jr.

Hunton & Williams LLP

951 East Byrd Street

Richmond, Virginia 23219

mmessonnier@hunton.com

cc:

Michael Bardee

Anna Cochrane

Jette Gebhart

Kurt Longo

David Morenoff

Daniel Nowak

Larry Parkinson

J. Arnold Quinn

Douglas Roe

Kathleen Schnorf

Gary Will

6.10

Schedule 10 - Rate Mechanism for the Recovery of the Regulated Transmission

Facilities Charge (“RTFC”)

6.10.1

Applicability.

6.10.1.1 Eligible Projects

This Schedule establishes the Regulated Transmission Facilities Charge (“RTFC”) for the

recovery of the costs of a regulated transmission project that is eligible for cost recovery in

accordance with the Comprehensive System Planning Process requirements set forth in

Attachment Y of the ISO OATT.1 A Transmission Owner, Unregulated Transmitting Utility,2 or

Other Developer may recover through the RTFC the costs that it is eligible to recover pursuant to

Attachment Y of the ISO OATT related to: (i) a regulated backstop transmission solution

proposed by a Responsible Transmission Owner pursuant to Section 31.2.4.3.1 of Attachment Y

of the ISO OATT and the ISO/TO Reliability Agreement or an Operating Agreement; (ii) an

alternative regulated transmission solution that the ISO has selected pursuant to Section

31.2.6.5.2 of Attachment Y of the ISO OATT as the more efficient or cost-effective solution to a

Reliability Need; (iii) a regulated transmission Gap Solution proposed by a Responsible

Transmission Owner pursuant to Section 31.2.11.4 of Attachment Y of the ISO OATT; (iv) an

alternative regulated transmission Gap Solution that has been determined by the appropriate state

regulatory agency(ies) as the preferred solution(s) to a Reliability Need pursuant to Section

31.2.11.5 of Attachment Y of the ISO OATT; (v) a regulated economic transmission project that

has been approved pursuant to Section 31.5.4.6 of Attachment Y of the ISO OATT; (vi) a Public

Policy Transmission Project that the ISO has selected pursuant to Section 31.4.8.2 of Attachment

1 Capitalized terms used in this Schedule that are not defined in this Schedule shall have the meaning set

forth in Section 31.1.1 of Attachment Y of the ISO OATT and, if not therein, in Section 1 of the OATT.

2 An “Unregulated Transmitting Utility” is a Transmission Owner, such as LIPA and NYPA, that,

pursuant to Section 201(f) of the Federal Power Act, is not subject to the Commission’s jurisdiction under

Sections 205 and 206(a) of the Federal Power Act.

Y of the ISO OATT as the more efficient or cost-effective solution to a Public Policy

Transmission Need; (vii) a Public Policy Transmission Project proposed by a Developer in

response to a request by the NYPSC or Long Island Power Authority in accordance with Section

31.4.3.2 of Attachment Y of the ISO OATT; or (viii) the portion of an Interregional

Transmission Project selected by the ISO in the CSPP that is allocated to the NYISO region

pursuant to Section 31.5.7 of Attachment Y of the ISO OATT. For purposes of this Schedule,

such a transmission project is referred to as an “Eligible Project.” The costs incurred for an

Eligible Project by LIPA or NYPA will be billed and collected under a separate LIPA RTFC or

NYPA RTFC, as applicable, as described in Section 6.10.5.

6.10.1.2 Projects Not Eligible for Cost Recovery Through the RTFC

This Schedule does not apply to projects that are not eligible pursuant to Attachment Y of

the ISO OATT for cost allocation and recovery under the ISO OATT, including, but not limited

to: (i) projects undertaken by Transmission Owners through the Local Transmission Owner

Planning Processes pursuant to Section 31.1.3 and Section 31.2.1 of Attachment Y of the ISO

OATT; (ii) market-based solutions to transmission needs identified in the CSPP; (iii) any non-

transmission components of an Eligible Project (e.g., generation, energy efficiency, or demand

response resources); (iv) transmission Generator Deactivation Solutions selected in the Generator

Deactivation Process pursuant to Attachment FF of the ISO OATT and eligible for cost recovery

through Schedule 16 (Section 6.16) of the ISO OATT; (v) transmission facilities eligible for cost

recovery through another rate schedule of the ISO OATT; and (vi) facilities for which costs are

recovered through the Transmission Service Charge (“TSC”) or the NYPA Transmission

Adjustment Charge (“NTAC”) determined in accordance with Attachment H of the ISO OATT..

6.10.2

Revenue Requirement for RTFC

The RTFC (including a LIPA RTFC or NYPA RTFC, as applicable) shall be calculated

in accordance with the formula set forth in Section 6.10.3 using the revenue requirement of the

Transmission Owner, Unregulated Transmitting Utility, or Other Developer, as applicable,

necessary to recover the costs of an Eligible Project. The revenue requirement to be used in the

calculation and recovery of the RTFC for a Transmission Owner or Other Developer, other than

an Unregulated Transmitting Utility, is described in Section 6.10.4. The development of a

revenue requirement and recovery of costs for an Eligible Project by an Unregulated

Transmitting Utility through a NYPA RTFC or a LIPA RTFC, as applicable, is described in

Section 6.10.5.

If an Eligible Project involves the construction of a facility identified as a Highway

System Deliverability Upgrade in a completed Class Year Interconnection Facilities Study, the

Project Cost Allocation for which has been accepted and Security posted by at least one Class

Year Developer, the project cost and resulting revenue requirement will be reduced to the extent

permitted by Section 25.7.12.3.3 of Attachment S of the ISO OATT.

6.10.3

Calculation and Recovery of RTFC and Payment of Recovered Revenue

6.10.3.1

The ISO will calculate and bill an RTFC (or a LIPA RTFC or NYPA

RTFC, as applicable) separately for each Eligible Project in accordance with this

Section 6.10.3. The ISO shall collect the RTFC from LSEs. The LSEs, including

Transmission Owners, competitive LSEs, municipal systems, and any other

LSEs, serving Load in the Load Zones and/or Subzones to which the costs of the

Eligible Project have been allocated (each a “Responsible LSE”) shall pay the

RTFC. The cost of each Eligible Project shall be allocated as follows: (i) the

costs of an Eligible Project that is eligible for cost allocation and recovery through

the reliability planning process shall be allocated in accordance with Section

31.5.3 of Attachment Y of the ISO OATT; (ii) the costs of an Eligible Project that

is eligible for cost allocation and recovery through the CARIS process shall be

allocated in accordance with Section 31.5.4 of Attachment Y of the ISO OATT;

(iii) the costs of an Eligible Project that is eligible for cost allocation and recovery

through the Public Policy Transmission Planning Process shall be allocated in

accordance with Section 31.5.5 of Attachment Y of the ISO OATT; and (iv) the

costs of an Eligible Project that is eligible for cost allocation and recovery as an

Interregional Transmission Project shall be allocated in accordance with Section

31.5.7 of Attachment Y of the ISO OATT.

6.10.3.2

The revenue requirement established by the Transmission Owner or Other

Developer pursuant to Section 6.10.4 and an Unregulated Transmitting Utility

pursuant to Section 6.10.5 will be the basis for the applicable RTFC Rate

($/MWh) that shall be charged by the ISO to each Responsible LSE based on its

Actual Energy Withdrawals as set forth in Section 6.10.3.5.

6.10.3.3

The Developer shall request Incremental TCCs with respect to the Eligible

Project in accordance with the requirements of Section 19.2.4 of Attachment M of

the ISO OATT and receive any Incremental TCCs to the extent awarded by the

ISO pursuant to such request. As it relates solely to the Eligible Project, the

Developer shall not be a “Transmission Owner” for purposes of Section 20.2.5 or

Section 20.3.7 of Attachment N of the ISO OATT and accordingly shall not

receive an allocation of Net Congestion Rents under Section 20.2.5 of Attachment

N of the ISO OATT or Net Auction Revenues under Section 20.3.7 of Attachment

N of the ISO OATT.

The Developer shall in relation to any Eligible Project exercise its right to

obtain and maintain in effect all Incremental TCCs, including temporary

Incremental TCCs, to which it has rights under Section 19.2.4 of Attachment M of

the ISO OATT and shall take the actions required to do so in accordance with the

procedures specified therein. Notwithstanding Sections 19.2.4.7 and 19.2.4.8 of

Attachment M of the ISO OATT, Incremental TCCs created and awarded to the

Developer as a result of implementation of an Eligible Project shall not be eligible

for sale in Secondary Markets. Incremental TCCs that may be created and

awarded to the Developer as a result of the implementation of an Eligible Project,

shall be offered by the Developer in all rounds of the six month Sub-Auction of

each Centralized TCC Auction conducted by the ISO. The ISO shall disburse the

associated auction revenues to the Developer. The total amount of the auction

revenues disbursed to the Developer pursuant to this Section 6.10.3.3 shall be

used in the calculation of the RTFC Rate, as set forth in Section 6.10.3.5.

Incremental TCCs associated with an Eligible Project shall continue to be offered

for the duration of the Incremental TCCs, established pursuant to the terms of

Attachment M of the ISO OATT.

The revenue offset discussed in this Section 6.10.3.3 shall commence

upon the first payment of revenues related to Incremental TCCs associated with

the implementation of an Eligible Project on or after the date the RTFC is

implemented. The RTFC and the revenue offset related to Incremental TCCs

associated with the implementation of an Eligible Project shall not require and

shall not be dependent upon a reopening or review of: (i) the Developer’s revenue

requirements for the RTFC of another Eligible Project pursuant to this Section

6.10 of the ISO OATT, (ii) the Developer’s revenue requirement for charges set

forth in another rate schedule of the ISO OATT, or (iii) the Transmission Owners’

revenue requirements for the TSCs or NTAC set forth in Attachment H of the ISO

OATT. 6.10.3.3.1 With respect to the Eligible Project only, the Developer

shall receive the outage charges described herein and shall not be charged O/R-t-S

Congestion Rent Shortfall Charges, U/D Congestion Rent Shortfall Charges, O/R-

t-S Auction Revenue Shortfall Charges or U/D Auction Revenue Shortfall

Charges or be paid O/R-t-S Congestion Rent Surplus Payments, U/D Congestion

Rent Surplus Payments, O/R-t-S Auction Revenue Surplus Payments or U/D

Auction Revenue Surplus Payments under Section 20.2.4 and Section 20.3.6 of

Attachment N of the ISO OATT. Outage charges related to any Incremental

TCCs awarded by the ISO for an Eligible Project shall be assessed to the

Developer, and payable by the Developer to the ISO, pursuant to Section 19.2.4

of Attachment M of the ISO OATT for an Expander not subject to Section 20.2.5

of Attachment N of the ISO OATT for any hour in the Day-Ahead Market during

which an Expansion, associated with an Eligible Project, is modeled to be wholly

or partially out of service.

6.10.3.4

The billing units for the RTFC Rate for the Billing Period shall be based

on the Actual Energy Withdrawals available for the current Billing Period for

those Load Zones and/or Subzones allocated the costs of the project in the manner

described in Section 6.10.3.1.

6.10.3.5 Cost Recovery Methodology

The ISO shall calculate the RTFC for each Eligible Project for each Responsible LSE as

follows:

Step 1: Calculate the $ assigned to each Load Zone or Subzone (as applicable)

RTFCp,z,B = �AnnualRRp,B − IncrementalTransmissionRightsRevenuep,B + OutageCostAdjustmentp,B�

× �ZonalCostAllocationz,p�

Step 2: Calculate a per-MWh Rate for each Load Zone or Subzone (as applicable)

RTFCRatep,z,B = RTFCp,z,B/MWhz,B

Step 3: Calculate charge for each Billing Period for each Responsible LSE in each

Load Zone or Subzone (as applicable)

ChargeB,l,z,p = RTFCRatep,z,B ∗ MWhl,z,B

Step 4: Calculate charge for each Billing Period for each Responsible LSE across all

Load Zones or Subzones (as applicable)

ChargeB,l,p = ��ChargeB,l,z,p�

z∈Z

Where,

l = the relevant Responsible LSE;

p = an individual Eligible Project;

z = an individual Load Zone or Subzone, as applicable;

Z = set of ISO Load Zones or Subzones, as applicable;

B = the relevant Billing Period;

MWhz,B = Actual Energy Withdrawals in Load Zone or Subzone, as applicable, z aggregated

across all hours in Billing Period B;

MWhl,z,B = Actual Energy Withdrawals for Responsible LSE l in Load Zone or Subzone, as

applicable, z aggregated across all hours in Billing Period B;

AnnualRRp,B = the pro rata share of the annual revenue requirement for each Eligible Project p

as discussed in Section 6.10.2 above, allocated for Billing Period B;

IncrementalTransmissionRightsRevenuep,B = the auction revenue derived from the sale of

Incremental TCCs plus Incremental TCC payments received by the Developer pursuant to

Section 20.2.3 of Attachment N of the ISO OATT for each Eligible Project p, as discussed in

Section 6.10.3.3 above, allocated for Billing Period B. The revenues from the sale of

Incremental TCCs in the ISO’s six month Sub-Auctions of each Centralized TCC Auction shall

be allocated uniformly across all hours of the Billing Period;

OutageCostAdjustmentp,B = the Outage charges determined pursuant to Section 6.10.3.3.1 above

for any hour in the Day-Ahead Market during which the Eligible Project p is modeled to be

wholly or partially out of service aggregated across all hours in Billing Period B; and

ZonalCostAllocationz,p = the proportion of the cost of Eligible Project p allocated to Load Zone

or Subzone, as applicable, z, in the manner described in Section 6.10.3.1 above.

6.10.3.6

The NYISO will collect the appropriate RTFC revenues each Billing

Period and remit those revenues to the appropriate Transmission Owner,

Unregulated Transmitting Utility, or Other Developer in accordance with the

NYISO’s billing and settlement procedures; provided, however, that LIPA will be

responsible for billing and collecting the costs of an Eligible Project undertaken

by LIPA that are allocated to customers within the Long Island Transmission

District in accordance with Section 6.10.5.2.1.

6.10.4

Recovery of Costs Incurred by Transmission Owner or Other Developer

6.10.4.1

The RTFC shall be used as the cost recovery mechanism for the recovery

of the costs of an Eligible Project undertaken by a Transmission Owner or Other

Developer, other than an Unregulated Transmitting Utility, which project is

authorized by the Commission to recover costs under this rate mechanism;

provided, however, nothing in this cost recovery mechanism shall be deemed to

create any additional rights for a Transmission Owner or Other Developer to

proceed with a regulated transmission project that it does not otherwise have at

law. The costs that may be included in the revenue requirement for calculating

the RTFC pursuant to Section 6.10.3 include all reasonably incurred costs, as

determined by the Commission, related to the preparation of proposals for, and

the development, financing, construction, operation, and maintenance of, an

Eligible Project, including those costs explicitly permitted for recovery pursuant

to Attachment Y of the ISO OATT. These costs include, but are not limited to, a

reasonable return on investment and any incentives for the construction of

transmission projects approved under Section 205 or Section 219 of the Federal

Power Act and the Commission’s regulations implementing those sections.

6.10.4.2

The period for cost recovery will be determined by the Commission and

will begin if and when the Eligible Project enters into service, is halted, or as

otherwise determined by the Commission, including for the recovery of CWIP or

other permissible cost recovery. The Transmission Owner/Other Developer, or, at

its request, the ISO, shall either make a Section 205 filing with the Commission or

make an informational filing under a formula rate to provide for the

Commission’s review and approval or acceptance of the project cost and resulting

revenue requirement to be recovered through the RTFC. The filing may include

all reasonably incurred costs specified in Section 6.10.4.1 of this Schedule that are

related to the Transmission Owner’s or the Other Developer’s undertaking an

Eligible Project. The filing must be consistent with the Transmission Owner’s or

the Other Developer’s project proposal made to and evaluated by the ISO

pursuant to Attachment Y. The Transmission Owner or Other Developer shall

bear the burden of resolving all concerns about the contents of the filing that

might be raised in such proceeding. The ISO will begin to calculate and bill the

RTFC in accordance with the period for cost recovery determined by the

Commission after the Commission has accepted or approved the filing or

otherwise allowed the filing to go into effect pursuant to a formula rate.

6.10.5

Recovery of Costs by an Unregulated Transmitting Utility.

6.10.5.1

The costs that may be included in the revenue requirement for an Eligible

Project undertaken by an Unregulated Transmitting Utility include all reasonably

incurred costs related to the preparation of proposals for, and the development,

financing, construction, operation, and maintenance of, an Eligible Project,

including those costs explicitly permitted for recovery pursuant to Attachment Y

of the ISO OATT, as well as a reasonable return on investment. Except as

otherwise provided in Section 6.10.5.2.1, for any recovery of a revenue

requirement by an Unregulated Transmitting Utility under the RTFC, the period

of cost recovery will be determined by the Commission and will begin if and

when the Eligible Project enters into service, is halted, or as otherwise determined

by the Commission, including for the recovery of CWIP or other permissible cost

recovery. Except as otherwise provided in Section 6.10.5.2.1, the ISO will begin

to calculate and bill the RTFC for an Unregulated Transmitting Utility pursuant to

Section 6.10.3 in accordance with the period for cost recovery determined by the

Commission after the Commission has accepted or approved the filing of its

revenue requirement or otherwise allowed the filing to go into effect pursuant to a

formula rate.

6.10.5.2 Cost Recovery for LIPA

Any costs incurred for an Eligible Project undertaken by LIPA, as an Unregulated

Transmitting Utility, that are eligible for recovery under Section 6.10.5.1 under a LIPA RTFC

shall be recovered over the period established by Long Island Power Authority’s Board of

Trustees as follows:

6.10.5.2.1

For costs to LIPA customers: Cost will be recovered pursuant to a rate

recovery mechanism approved by the Long Island Power Authority’s Board of

Trustees pursuant to Article 5, Title 1-A of the New York Public Authorities Law,

Sections 1020-f(u) and 1020-s. Upon approval of the rate recovery mechanism,

LIPA shall provide to the ISO, for purposes of inclusion within the ISO OATT

and filing with the Commission on an informational basis only, a description of

the rate recovery mechanism, the costs of the Eligible Project, and the rate that

LIPA will charge and collect from responsible entities within the Long Island

Transmission District in accordance with the ISO cost allocation methodology

pursuant to Section 31.5 of Attachment Y of the ISO OATT.

6.10.5.2.2

For Costs to Other Transmission Districts, As Applicable: Where the ISO

determines that there are Responsible LSEs serving Load outside of the Long

Island Transmission District that should be allocated a portion of the costs of the

Eligible Project undertaken by LIPA, LIPA shall coordinate with and inform the

ISO of the amount of such costs. Such costs will be an allocable amount of the

cost base recovered through the recovery mechanism described in Section

6.10.5.2.1 in accordance with the formula set forth in Section 6.10.3.5. Such

costs of the Eligible Project allocable to Responsible LSEs serving Load outside

of the Long Island Transmission District shall constitute the “revenue

requirement.” The ISO shall file the revenue requirement with the Commission if

requested to do so by LIPA, for Commission review under the same

“comparability” standard as is applied to review of changes in LIPA’s TSC under

Attachment H of the ISO OATT. The filing must be consistent with LIPA’s

project proposal made to and evaluated by the ISO pursuant to Attachment Y.

LIPA shall intervene in support of such filing at the Commission and shall bear

the burden of resolving all concerns about the contents of the filing that might be

raised in such proceeding. Upon the Commission’s acceptance for filing of

LIPA’s revenue requirement and using the procedures described in Sections

6.10.3.1 through 6.10.3.5 of this Schedule, the ISO shall calculate a separate

LIPA RTFC based on the revenue requirement and shall bill for LIPA the LIPA

RTFC as a separate line item to the Responsible LSEs serving Load in

Transmission Districts located outside of the Long Island Transmission District.

The ISO shall remit the revenues collected to LIPA in accordance with the ISO’s

billing and settlement procedures.

6.10.5.3 Cost Recovery for NYPA

Any costs incurred for an Eligible Project undertaken by NYPA, as an Unregulated

Transmitting Utility, that are eligible for recovery under Section 6.10.5.1 shall be recovered

under a NYPA RTFC as described herein. A reasonable return on investment for an Eligible

Project undertaken by NYPA may include any incentives for construction of transmission

projects available under Section 205 or Section 219 of the Federal Power Act and the

Commission’s regulations implementing those sections, as determined by the Commission.

6.10.5.3.1

NYPA shall coordinate with and inform the ISO of the amount of the costs

it incurred in undertaking an Eligible Project. Such costs shall constitute the

revenue requirement. Either the ISO shall make a Section 205 filing with the

Commission on behalf of NYPA or NYPA shall make an informational filing

under a formula rate with the Commission, of the revenue requirement. The filing

must be consistent with NYPA’s project proposal made to and evaluated by the

ISO pursuant to Attachment Y. NYPA shall intervene in support of such filing at

the Commission and shall bear the burden of resolving all concerns about the

contents of the filing that might be raised in such proceeding, including being

solely responsible for making any arguments or reservations regarding its status

as a non-Commission-jurisdictional utility and the appropriate standard for

Commission review of its revenue requirement. After the Commission has

accepted or approved the filing or otherwise allowed the filing to go into effect

pursuant to a formula rate, the ISO shall calculate in accordance with Sections

6.10.3.1 through 6.10.3.5 of this Schedule a separate NYPA RTFC based on the

revenue requirement and bill for NYPA the NYPA RTFC to the Responsible

LSEs. The ISO shall remit the revenues collected to NYPA in accordance with

the ISO’s billing and settlement procedures.

6.10.5.4

Savings Clause. The inclusion in the ISO OATT or in a filing with the

Commission pursuant to Section 6.10.5 of the revenue requirement for recovery

31.2

Reliability Planning Process

31.2.1

Local Transmission Owner Planning Process

31.2.1.1 Scope

31.2.1.1.1 Criteria, Assumptions and Data

Each Transmission Owner will post on its website the planning criteria and assumptions

currently used in its LTPP as well as a list of any applicable software and/or analytical tools

currently used in the LTPP. Customers, Market Participants and other interested parties may

review and comment on the planning criteria and assumptions used by each Transmission

Owner, as well as other data and models used by each Transmission Owner in its LTPP. The

Transmission Owners will take into consideration any comments received. Any planning criteria

or assumptions for a Transmission Owner’s BPTFs will meet or exceed any applicable NERC,

NPCC or NYSRC criteria. The LTPP shall include a description of the needs addressed by the

LTPP as well as the assumptions, applicable planning criteria and methodology utilized and the

Public Policy Requirements considered. A link to each Transmission Owner’s website will be

posted on the ISO website.

31.2.1.1.2 Consideration of Transmission Needs Driven by Public Policy

Requirements

31.2.1.1.2.1 Procedures for the Identification of Transmission Needs Driven by

Public Policy Requirements in Local Transmission Plans and for the

Consideration of Transmission Solutions

In developing its LTP, each Transmission Owner shall consider whether there is a

transmission need on its system that is being driven by a Public Policy Requirement. The LTP

will identify any transmission project included in the LTP as a solution to a transmission need

being driven by a Public Policy Requirement. In evaluating potential transmission solutions, the

Transmission Owner will give consideration to the objectives of the Public Policy

Requirement(s) driving the need for transmission.

31.2.1.1.2.2 Determination of Local Transmission Needs Driven by Public Policy

Requirements

As part of its LTP process pursuant to Section 31.2.1.2 below, each Transmission Owner

will consider whether there is a transmission need on its local system that is being driven by a

Public Policy Requirement for which a local transmission solution should be evaluated,

including needs proposed by market participants and other interested parties. A market

participant or other interested party proposing a transmission need on a Transmission Owner’s

local system driven by a Public Policy Requirement shall submit its proposal to the ISO and the

relevant Transmission Owner, and will identify the specific Public Policy Requirement that is

driving the proposed transmission need and an explanation of why a local transmission upgrade

is necessary to implement the Public Policy Requirement. Any proposed local system

transmission need will be posted on the ISO website. The ISO will transmit proposed

transmission needs on a Transmission Owner’s local system driven by Public Policy

Requirements to the NYDPS, with a request that the NYDPS review the proposals and provide

the relevant Transmission Owner with input to assist the Transmission Owner in its

determination. The Transmission Owner, after considering the input provided by the NYDPS

and any information provided by a market participant or other party, will determine whether

there are transmission needs driven by Public Policy Requirements for which local transmission

solutions should be evaluated. The Transmission Owner will post on its website a list of the

transmission needs driven by Public Policy Requirements for which local transmission solutions

should be evaluated, with an explanation of why the Transmission Owner identified those

transmission needs and declined to identify other proposed transmission needs.

31.2.1.1.2.3 Evaluation of Proposed Local Transmission Solutions

In evaluating potential transmission solutions, if any, the Transmission Owner will give

consideration to the objectives of the Public Policy Requirement driving the need for a local

transmission solution. The Transmission Owner will evaluate solutions to identified

transmission needs, including transmission solutions proposed by market participants and other

parties for inclusion in its LTP. The Transmission Owner, in consultation with the NYDPS, will

evaluate proposed transmission solutions on its local system to determine the more efficient or

cost-effective transmission solutions. The Transmission Owner will consider the relative costs

and benefits of proposed transmission solutions and their impact on the Transmission Owner’s

transmission system and its customers. Any local transmission solution identified by the

Transmission Owner through the LTP process will be reviewed with stakeholders as part of each

Transmission Owner’s regular LTP process and will be included in the Transmission Owner’s

subsequent LTP. In conducting its evaluation the Transmission Owner will use criteria that are

relevant to the Public Policy Requirement driving the transmission need, which may include its

published local planning criteria and assumptions.

31.2.1.2 Process Timeline

31.2.1.2.1

Each Transmission Owner, in accordance with a schedule set forth in the

ISO Procedures, will post its current LTP on its website for review and comment

by interested parties sufficiently in advance of the time for submission to the ISO

for input to its RNA so as to allow adequate time for stakeholder review and

comment. Each LTP will include:

 identification of the planning horizon covered by the LTP,

 data and models used,

 reliability needs, needs driven by Public Policy Requirements, and other needs

addressed,

 potential solutions under consideration, and,

 a description of the transmission facilities covered by the plan.

31.2.1.2.2

To the extent the current LTP utilizes data or inputs, related to the ISO’s

planning process, not already reported by the ISO in Form 715 and referenced on

its website, any such data will be provided to the ISO at the time each

Transmission Owner posts criteria and planning assumptions in accordance with

Section 31.2.1.1 and will be posted by the ISO on its website subject to any

confidentiality or Critical Energy Infrastructure Information restrictions or

requirements.

31.2.1.2.3

Each planning cycle, the ISO shall hold one or more stakeholder meetings

of the ESPWG and TPAS at which each Transmission Owner’s current LTP will

be discussed. Such meetings will be held either at the Transmission Owner’s

Transmission District, or at an ISO location. The ISO shall post notice of the

meeting and shall disclose the agenda and any other material distributed prior to

the meeting.

31.2.1.2.4

Interested parties may submit written comments to a Transmission Owner

with respect to its current LTP within thirty days after the meeting. Each

Transmission Owner shall list on its website, as part of its LTP, the person and/or

location to which comments should be sent by interested parties. All comments

will be posted on the ISO website. Each Transmission Owner will consider

comments received in developing any modifications to its LTP. Any such

modification will be explained in its current LTP posted on its website pursuant to

Section 31.2.1.2.2 above and discussed at the next meeting held pursuant to

Section 31.2.1.2.3 above.

31.2.1.2.5

Each planning cycle, each Transmission Owner will submit the finalized

portions of its current LTP to the ISO as contemplated in Section 31.2.2.4.2 below

for timely inclusion in the RNA.

31.2.1.3 ISO Evaluation of Transmission Owner Local Transmission Plans in

Relation to Regional and Local Transmission Needs

The ISO will review the Transmission Owner LTPs as they relate to the BPTFs as set

forth in Section 31.2.2.4.2. The ISO will also evaluate whether a regional transmission solution

- including, but not limited to, regional transmission solutions proposed by Developers pursuant

to this Attachment Y - could satisfy an identified regional transmission need on the BPTFs that

impacts more than one Transmission District more efficiently or more cost effectively than a

local transmission solution identified in a Transmission Owner’s LTP in accordance with Section

31.2.6.4.2 for the satisfaction of a regional Reliability Need, Section 31.3.1.3.6 for the reduction

of congestion identified in CARIS, or Section 31.4.7.2 for the satisfaction of a Public Policy

Transmission Need. The ISO will report the results of its evaluation solely for informational

purposes in the relevant ISO planning report prepared under this Attachment Y, and the

Transmission Owners shall not be required to revise their LTPs based on the results of the ISO’s

evaluation.

31.2.1.4 LTP Dispute Resolution Process

31.2.1.4.1 Disputes Related to the LTPP; Objective; Notice

Disputes related to the LTPP are subject to the DRP. The objective of the DRP is to

assist parties having disputes in communicating effectively and resolving disputes as

expeditiously as possible. Within fifteen (15) calendar days of the presentation by a

Transmission Owner of its LTP to the ESPWG and TPAS, a party with a dispute shall notify in

writing the Affected TO, the ISO, the ESPWG and TPAS of its intention to utilize the DRP. The

notice shall identify the specific issue in dispute and describe in sufficient detail the nature of the

dispute.

31.2.1.4.2 Review by the ESPWG/TPAS

The issue raised by a party with a dispute shall be reviewed and discussed at a joint

meeting of the ESPWG and the TPAS in an effort to resolve the dispute. The party with a

dispute and the Affected TO shall have an opportunity to present information concerning the

issue in dispute to the ESPWG and the TPAS.

31.2.1.4.3 Information Discussions

To the extent the ESPWG and the TPAS are unable to resolve the dispute, the dispute

will be subject to good faith informal discussions between the party with a dispute and the

Affected TO. Each of those parties will designate a senior representative authorized to enter into

informal discussions and to resolve the dispute. The parties to the dispute shall make a good

faith effort to resolve the dispute through informal discussions as promptly as practicable.

31.2.1.4.4 Alternative Dispute Resolution

In the event that the parties to the dispute are unable to resolve the dispute through

informal discussions within sixty (60) days, or such other period as the parties may agree upon,

the parties may, by mutual agreement, submit the dispute to mediation or any other form of

alternative dispute resolution. The parties shall attempt in good faith to resolve the dispute in

accordance with a mutually agreed upon schedule but in no event may the schedule extend

beyond ninety (90) days from the date on which the parties agreed to submit the dispute to

alternative dispute resolution.

31.2.1.4.5 Notice of Results of Dispute Resolution

The Affected TO shall notify the ISO and ESPWG and TPAS of the results of the DRP

and update its LTP to the extent necessary. The ISO shall use in its planning process the LTP

provided by the Affected TO.

31.2.1.4.6 Rights Under the Federal Power Act

Nothing in the DRP shall affect the rights of any party to file a complaint with the

Commission under relevant provisions of the FPA.

31.2.1.4.7 Confidentiality

All information disclosed in the course of the DRP shall be subject to the same

protections accorded to confidential information and CEII by the ISO under its confidentiality

and CEII policies.

31.2.2

Reliability Needs Assessment

31.2.2.1 General

The ISO shall prepare and publish the RNA as described below. The RNA will identify

Reliability Needs. The ISO shall also designate in the RNA the Responsible Transmission

Owner with respect to each Reliability Need.

31.2.2.2 Interested Party Participation in the Development of the RNA

The ISO shall develop the RNA in consultation with Market Participants and all other

interested parties. TPAS will have responsibility consistent with ISO Procedures for review of

the ISO’s reliability analyses. ESPWG will have responsibility consistent with ISO Procedures

for providing commercial input and assumptions to be used in the development of reliability

assessment scenarios provided under Section 31.2.2.5, and in the reporting and analysis of

historic congestion costs. Coordination and communication will be established and maintained

between these two groups and ISO staff to allow Market Participants and other interested parties

to participate in a meaningful way during each stage of the CSPP. The ISO staff shall report any

majority and minority views of these collaborative governance work groups when it submits the

RNA to the Operating Committee for a vote, as provided below.

31.2.2.3 Preparation of the Reliability Needs Assessment

31.2.2.3.1

The ISO shall evaluate bulk power system needs in the RNA over the

Study Period.

31.2.2.3.2

The starting point for the development of the RNA Base Case will be the

system as defined for the FERC Form No. 715 Base Case. The ISO shall develop

this system representation to be used for its evaluations of the Study Period by

primarily using: (1) the most recent NYISO Load and Capacity Data Report

published by the ISO on its web site; (2) the most recent versions of ISO

reliability analyses and assessments provided for or published by NERC, NPCC,

NYSRC, and neighboring Control Areas; (3) information reported by neighboring

Control Areas such as power flow data, forecasted load, significant new or

modified generation and transmission facilities, and anticipated system conditions

that the ISO determines may impact the BPTFs; and (4) data submitted pursuant

to paragraph 31.2.2.4 below; provided, however, the ISO shall not include in the

RNA Base Case an RMR Generator or an interim non-RMR Generator

Deactivation Solution selected by the ISO pursuant to Attachment FF of the ISO

OATT; provided, further, the ISO will include in the RNA Base Case a

permanent non-RMR Generator Deactivation Solution selected by the ISO

pursuant to Attachment FF of the ISO OATT if it meets the base case inclusion

requirements in the ISO Procedures. The details of the development of the RNA

Base Case are contained in the ISO Procedures. The RNA Base Case shall also

include Interregional Transmission Projects that have been approved by the

NYPSC transmission siting process and meet the base case inclusion requirements

in the ISO Procedures.

31.2.2.3.3

The ISO shall assess the RNA Base Case to determine whether the BPTFs

meet all Reliability Criteria for both resource and transmission adequacy in each

year, and report the results of its evaluation in the RNA. Transmission analyses

will include thermal, voltage, short circuit, and stability studies. Then, if any

Reliability Criteria are not met in any year, the ISO shall perform additional

analyses to determine whether additional resources and/or transmission capacity

expansion are needed to meet those requirements, and to determine the Target

Year of need for those additional resources and/or transmission. A short circuit

assessment will be performed for the tenth year of the Study Period. The study

will not seek to identify specific additional facilities. Reliability Needs will be

defined in terms of total deficiencies relative to Reliability Criteria and not

necessarily in terms of specific facilities.

31.2.2.4 Planning Participant Data Input

31.2.2.4.1

At the ISO’s request, Market Participants, Developers, and other parties

shall provide, in accordance with the schedule set forth in the ISO Procedures, the

data necessary for the development of the RNA. This data will include but not be

limited to (1) existing and planned additions to the New York State Transmission

System (to be provided by Transmission Owners and municipal electric utilities);

(2) proposals for merchant transmission facilities (to be provided by merchant

Developers); (3) generation additions and retirements (to be provided by

generator owners and Developers); (4) demand response programs (to be provided

by demand response providers); and (5) any long-term firm transmission requests

made to the ISO.

31.2.2.4.2

The Transmission Owners shall submit their current LTPs referenced in

Section 31.1.3 and Section 31.2.1 to the ISO. The Transmission Owners and the

ISO will coordinate with each other in reviewing the LTPs. The ISO will review

the Transmission Owners’ LTPs, as they relate to BPTFs, to determine whether

they will meet reliability needs identified in the LTPs, recommend an alternate

means to resolve the local needs from a regional perspective pursuant to Section

31.2.6.4, and indicate if it is not in agreement with a Transmission Owner’s

proposed additions. The ISO shall report its determinations under this section in

the RNA and in the CRP.

31.2.2.4.3

All data received from Market Participants, Developers, and other parties

shall be considered in the development of the system representation for the Study

Period in accordance with the ISO Procedures.

31.2.2.5 Reliability Scenario Development

The ISO, in consultation with the ESPWG and TPAS, shall develop reliability scenarios

addressing the Study Period. Variables for consideration in the development of these reliability

scenarios include but are not limited to: load forecast uncertainty, fuel prices and availability,

new resources, retirements, transmission network topology, and limitations imposed by proposed

environmental or other legislation.

31.2.2.6 Evaluation of Reliability Scenarios

The ISO will conduct additional reliability analyses for the reliability scenarios

developed pursuant to paragraph 31.2.2.5. These evaluations will test the robustness of the needs

assessment studies conducted under paragraphs 31.2.2.3. This evaluation will only identify

conditions under which Reliability Criteria may not be met. It will not identify or propose

additional Reliability Needs. In addition, the ISO will perform appropriate sensitivity studies to

determine whether Reliability Needs previously identified can be mitigated through alternate

system configurations or operational modes. The Reliability Needs may increase in some

reliability scenarios and may decrease, or even be eliminated, in others. The ISO shall report the

results of these evaluations in the RNA.

31.2.2.7 Consequences for Other Regions

The ISO will coordinate with the ISO/RTO Regions to identify the consequences of the

reliability transmission projects on such ISO/RTO Regions using the respective planning criteria

of such ISO/RTO Regions. The ISO shall report the results in the CRP. The ISO shall not bear

the costs of required upgrades in another region.

31.2.2.8 Reliability Needs Assessment Report Preparation

Once all the analyses described above have been completed, ISO staff will prepare a draft

of the RNA including discussion of its assumptions, Reliability Criteria, and results of the

analyses and, if necessary, designate the Responsible Transmission Owner. One or more

compensatory MW/ Load adjustment scenarios will be developed by the ISO as a guide to the

development of proposed solutions to meet the identified Reliability Need.

31.2.3

RNA Review Process

31.2.3.1 Collaborative Governance Process

The draft RNA shall be submitted to both TPAS and the ESPWG for review and

comment. The ISO shall make available to any interested party sufficient information to

replicate the results of the draft RNA. 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. Market Participants and

other interested parties may submit at any time optional suggestions for changes to ISO rules or

procedures which could result in the identification of additional resources or market alternatives

suitable for meeting Reliability Needs. Following completion of the TPAS and ESPWG review,

the draft RNA reflecting the revisions resulting from the TPAS and ESPWG review, shall be

forwarded to the Operating Committee for discussion and action. The ISO shall notify the

Business Issues Committee of the date of the Operating Committee meeting at which the draft

RNA is to be presented. Following the Operating Committee vote, the draft RNA will be

transmitted to the Management Committee for discussion and action.

31.2.3.2 Board Action

Following the Management Committee vote, the draft RNA, with working group,

Operating Committee, and Management Committee input, will be forwarded to the ISO Board

for review and action. Concurrently, the draft RNA will be provided to the Market Monitoring

Unit for its review and consideration of whether market rules changes are necessary to address

an identified failure, if any, in one of the ISO’s competitive markets. The Board may approve

the RNA as submitted, or propose modifications on its own motion. If any changes are proposed

by the Board, the revised RNA shall be returned to the Management Committee for comment.

The Board shall not make a final determination on a revised RNA until it has reviewed the

Management Committee comments. Upon approval by the Board, the ISO shall issue the final

RNA to the marketplace by posting it on its web site.

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

section of this Attachment are also addressed in Section 30.4.6.8.2 of the Market Monitoring

Plan, Attachment O to the ISO Services Tariff.

31.2.3.3 Needs Assessment Disputes

Notwithstanding any provision to the contrary in this Attachment, the ISO OATT, or the

NYISO Services Tariff, in the event that a Market Participant raises a dispute solely within the

NYPSC’s jurisdiction relating to the final conclusions or recommendations of the RNA, a

Market Participant may refer such dispute to the NYPSC for resolution. The NYPSC’s final

determination shall be binding, subject only to judicial review in the courts of the State of New

York pursuant to Article 78 of the NYCPLR.

31.2.3.4 Public Information Sessions

In order to provide ample exposure for the marketplace to understand the identified

Reliability Needs, the ISO will provide various opportunities for Market Participants and other

potentially interested parties to discuss the final RNA. Such opportunities may include

presentations at various ISO Market Participant committees, focused discussions with various

industry sectors, and/or presentations in public venues.

31.2.4

Development of Solutions to Reliability Needs

31.2.4.1 Eligibility and Qualification Criteria for Developers and Projects

For purposes of fulfilling the requirements of the Developer qualification criteria in this

Section 31.2.4.1 and its subsections, the term “Developer” includes Affiliates, as that term is

defined in Section 2 of the ISO Services Tariff and Section 1 of the ISO OATT. To the extent

that a Developer relies on Affiliate(s) to satisfy any or all of the qualification criteria set forth in

Section 31.2.4.1.1.1, the Affiliate(s) shall provide to the ISO: (i) the information required in

Section 31.2.4.1.1.1 to demonstrate its capability to satisfy the applicable qualification criteria,

and (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.

31.2.4.1.1 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 transmission project to meet identified Reliability

Needs. The ISO shall consider the qualifications of each Developer in an evenhanded and non-

discriminatory manner, treating Transmission Owners and Other Developers alike.

31.2.4.1.1.1 Developer Qualification Criteria

The ISO shall make a determination on the qualification of a Developer to propose to

develop a transmission project as a solution to an identified Reliability Need based on the

following criteria:

31.2.4.1.1.1.1 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;

31.2.4.1.1.1.2 The current and expected capabilities of the Developer to develop and

construct a transmission facility and to operate and maintain it for the life of the

facility. If the Developer has previously developed, constructed, maintained or

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

31.2.4.1.1.1.3 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;

(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 Reliability Need.

31.2.4.1.1.1.4 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.

31.2.4.1.1.2 Developer Qualification Determination

Any Developer seeking to become 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 31.2.4.1.1.1.3 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 transmission project as a solution to an identified Reliability Need and

shall be eligible to use the cost allocation and cost recovery mechanism for regulated

transmission projects set forth in Section 31.5 of this Attachment Y and Rate Schedule 10,

Section 6.10, of the ISO OATT for any approved project.

31.2.4.2 Interregional Transmission Projects

Interregional Transmission Projects may be proposed under Section 31.2.5.1 of this

Attachment Y as regulated backstop solutions, alternative regulated solutions, or market-based

solutions, in response to a request by the ISO for solutions to a Reliability Need under the

relevant provisions of Section 31.2.4. Interregional Transmission Projects proposed as regulated

backstop solutions, alternative regulated solutions or market-based solutions shall be: (i)

evaluated by the ISO in accordance with the applicable requirements of the reliability planning

process of this Attachment Y, and (ii) jointly evaluated by the ISO and the relevant adjacent

transmission planning region(s) in accordance with Section 7.3 of the Interregional Planning

Protocol.

31.2.4.3 Regulated Backstop Solutions

31.2.4.3.1

When a Reliability Need is identified in any RNA issued under this tariff,

the ISO shall request and the Responsible Transmission Owner shall provide to

the ISO, as set forth in Section 31.2.5 below, a proposal for a regulated solution or

combination of solutions that shall serve as a backstop to meet the Reliability

Need if requested by the ISO due to the lack of sufficient viable market-based

solutions to meet such Reliability Needs identified for the Study Period. The

Responsible Transmission Owner shall be eligible to recover its costs for

developing its proposal and seeking necessary approvals under Rate Schedule 10

of the ISO OATT. Regulated backstop solutions may include generation,

transmission, or demand side resources. Such proposals may include reasonable

alternatives that would effectively address the Reliability Need; provided

however, the Responsible Transmission Owner’s obligation to propose and

implement regulated backstop solutions under this tariff is limited to regulated

transmission solutions. Prior to providing its response to the RNA, each

Responsible Transmission Owner will present for discussion at the ESPWG and

TPAS any updates in its LTP that impact a Reliability Need identified in the

RNA. The ISO will present at the ESPWG and TPAS any updates to its

determination under Section 31.2.2.4.2 with respect to the Transmission Owners’

LTPs. Should more than one regulated backstop solution be proposed by a

Responsible Transmission Owner to address a Reliability Need, it will be the

responsibility of that Responsible Transmission Owner to determine which of the

regulated backstop solutions will proceed following a finding by the ISO under

Section 31.2.8 of this Attachment Y. The determination by the Responsible

Transmission Owner will be made prior to the approval of the CRP which

precedes the Trigger Date for the regulated backstop solution with the longest

lead time. Contemporaneous with the request to the Responsible Transmission

Owner, the ISO shall solicit market-based and alternative regulated responses as

set forth in Sections 31.2.4.5 and 31.2.4.7, which shall not be a formal RFP

process.

31.2.4.4 Qualifications for Regulated Backstop Solutions

31.2.4.4.1

The submission of a regulated backstop solution to a Reliability Need for

purposes of the ISO’s evaluation under Section 31.2.5 of the viability and

sufficiency of the proposed solution and the determination of the Trigger Date for

the proposed solution shall include, 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 Responsible

Transmission Owner 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) the schedule for obtaining any

permits and other certifications, if available; (7) status of ISO interconnection

studies and interconnection agreement, if available; and (8) status of equipment

availability and procurement, if available.

31.2.4.4.2 The submission of a regulated backstop solution to a Reliability Need for

purposes of the ISO’s evaluation of the proposed solution for possible selection as

the more efficient or cost effective solution to the Reliability Need shall include,

at a minimum, the following details: (1) updates to the information required

under Section 31.2.4.4.1; (2) the schedule for obtaining required permits and other

certifications; (3) a demonstration of Site Control or a schedule for obtaining such

control; (4) the status of any contracts (other than an interconnection agreement)

that are under negotiation or in place, including any contracts with third-party

contractors; (5) status of ISO interconnection studies and interconnection

agreement; (6) status of equipment availability and procurement; (7) evidence of

financing or ability to finance the project; (8) capital cost estimates for the

project; (9) 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 (10) any other information requested by the ISO.

A Responsible Transmission Owner 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 Responsible Transmission Owner as

“Confidential Information.”

A Responsible Transmission Owner 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.

A Responsible Transmission Owner 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.

Upon the completion of any interconnection study or transmission expansion

study of a proposed regulated backstop solution that is performed under Sections

3.7 or 4.5 of the ISO OATT or Attachments P or X of the ISO OATT, the

Responsible Transmission Owner 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.

31.2.4.4.3

If the regulated backstop solution does not meet the Reliability Needs , the

ISO will provide sufficient information to the Responsible Transmission Owner to

determine how the regulated backstop should be modified to meet the identified

Reliability Needs. The Responsible Transmission Owner will make necessary

changes to its proposed regulated backstop solution to address reliability

deficiencies identified by the ISO, and submit a revised proposal to the ISO for

review and approval.

31.2.4.5 Market-Based Responses

At the same time that a proposal for a regulated backstop solution is requested from the

Responsible Transmission Owner under Section 31.2.4.3, the ISO shall also request market-

based responses from the market place. Subject to the execution of appropriately drawn

confidentiality agreements and the Commission’s standards of conduct, the ISO and the

appropriate Transmission Owner or Transmission Owners shall provide any party who wishes to

develop such a response access to the data that is necessary to develop its response. Such data

shall only be used for the purposes of preparing a market-based response to a Reliability Need

under this section. Such responses will be open on a comparable basis to all resources, including

generation, demand response providers, and merchant transmission Developers.

31.2.4.6 Qualifications for a Valid Market-Based Response

The submission of a proposed market-based solution must include, 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; (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.

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.”

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 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.

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.

Upon the completion of any interconnection study or transmission expansion study of a

proposed market-based solution that is performed under Sections 3.7 or 4.5 of the ISO OATT or

Attachments P or 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.

Failure to provide any data requested by the ISO within the timeframe set forth in Section

31.2.5.1 of this Attachment Y will result in the rejection of the proposed market-based solution

from further consideration during that planning cycle.

31.2.4.7 Alternative Regulated Responses

31.2.4.7.1

The ISO will request alternative regulated responses to Reliability Needs

at the same time that it requests market-based responses and regulated backstop

solutions. Such proposals may include reasonable alternatives that would

effectively address the identified Reliability Need.

31.2.4.7.2

In response to the ISO’s request, Other Developers may develop

alternative regulated proposals for generation, demand side alternatives, and/or

other solutions to address a Reliability Need and submit such proposals to the

ISO. Transmission Owners, at their option, may submit additional proposals for

regulated solutions to the ISO. Transmission Owners and Other Developers may

submit such proposals to the NYDPS for review at any time. Subject to the

execution of appropriately drawn confidentiality agreements and the

Commission’s standards of conduct, the ISO and the appropriate Transmission

Owner(s) shall provide Other Developers access to the data that is needed to

develop their proposals. Such data shall be used only for purposes of preparing

an alternative regulated proposal in response to a Reliability Need.

31.2.4.8 Qualifications for Alternative Regulated Solutions

31.2.4.8.1

The submission of an alternative regulated solution to a Reliability Need

for purposes of the ISO’s evaluation under Section 31.2.5 of the viability and

sufficiency of the proposed solution and the determination of the Trigger Date for

the proposed solution shall include, 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 Other Developer or

Transmission Owner 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) the schedule for obtaining any

permits and other certifications, if available; (7) status of ISO interconnection

studies and interconnection agreement, if available; and (8) status of equipment

availability and procurement, if available.

31.2.4.8.2

The submission of a proposed alternative regulated solution to a

Reliability Need for purposes of the ISO’s evaluation of the proposed solution for

possible selection as the more efficient or cost effective solution for the

Reliability Need must include, at a minimum: (1) updates to the information

required under Section 31.2.4.8.1;

(2) a demonstration of Site Control or a

schedule for obtaining Site Control; (3) the status of any contracts (other than an

Interconnection Agreement) that are under negotiation or in place, including any

contracts with third-party contractors; (4) the status of any interconnection studies

and interconnection agreement; (5) the schedule for obtaining any required

permits and other certifications; (6) the status of equipment availability and

procurement; (7) evidence of financing or ability to finance the project; (8) capital

cost estimates for the project; (9) 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 (10) any other information requested by the ISO.

An Other Developer or Transmission Owner 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 Other Developer or Transmission Owner as