UNITED STATES OF AMERICA
BEFORE THE

FEDERAL ENERGY REGULATORY COMMISSION

)

Reform of Generator Interconnection)Docket No. RM17-8-00_

Procedures and Agreements)

)

REQUEST FOR CLARIFICATION AND ALTERNATIVE REQUEST FOR

REHEARING OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.

Pursuant to Section 313(a) of the Federal Power Act1 and Rules 713 and 2007 of the

Commission’s Rules of Practice and Procedure,2 the New York Independent System Operator,
Inc. (“NYISO”) requests clarification, and in the alternative rehearing, of one matter in the
Commission’s April 19, 2018, Final Rule on Reform of Generator Interconnection Procedures
and Agreements in the above-captioned proceeding (“Final Rule”).3 The Final Rule adopted ten
reforms, including requiring public utility transmission providers to create a process for
interconnection customers to use surplus interconnection service at existing points of
interconnection. As discussed below, the NYISO respectfully seeks clarification, or in the
alternative rehearing, that the Final Rule does not limit the manner in which the NYISO
demonstrates independent entity variations in compliance with the Final Rule’s surplus
interconnection service requirements.

1 16 U.S.C. § 825l(a).

2 18 C.F.R. §§ 385.713, 385.2007.

3 Reform of Generator Interconnection Procedures and Agreements, Final Rule, 163 FERC ¶ 61,043 (2018) (“Final Rule”).

Robert E. Fernandez, General Counsel
Karen Georgenson Gach, Deputy General Counsel Raymond Stalter, Director Regulatory Affairs *Sara B. Keegan, Senior Attorney

New York Independent System Operator, Inc.

10 Krey Boulevard

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

* Persons designated for service.

II.BACKGROUND

*Ted J. Murphy4

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

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

*Michael J. Messonnier Jr. Hunton Andrews Kurth LLP 951 East Byrd Street

Richmond, VA 23219
Tel: (804) 788-8200
Fax: (804) 344-7999

mmessonnier@huntonAK.com

A.The Final Rule’s Surplus Interconnection Requirements and Independent

Entity Variations

On April 19, 2018, the Commission issued the Final Rule, which established ten reforms
to its pro forma Large Generator Interconnection Procedures (“LGIP”) and pro forma Large
Generator Interconnection Agreement (“LGIA”).5 The Final Rule directed public utility
transmission providers to adopt its requirements as revisions to the LGIP and LGIA in their
Open Access Transmission Tariffs.6 Consistent with all prior Commission rulemakings revising
pro forma interconnection standards, the Final Rule provided that Independent System Operators
(“ISOs”) and Regional Transmission Organizations (“RTOs”) could seek independent entity

4 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3) (2018)) is requested to the extent necessary to permit service on counsel for the NYISO in Rensselaer, NY and Washington, D.C.

5 Capitalized terms not defined herein have the meaning set forth in the NYISO’s Open Access

Transmission Tariff (“OATT”) and if not defined therein, then as defined in the NYISO’s Market Administration and Control Area Services Tariff (“Services Tariff”).

6 Final Rule at P 555.

variations under the standard initially established by Order No. 2003.7 Specifically, in Order No.
2003 and in subsequent interconnection rules, the Commission has acknowledged the differing
characteristics of ISO/RTO regions and consistently provided each ISO/RTO with broad
flexibility to seek independent entity variations “to customize its interconnection procedures and
agreements to fit regional needs.”8 Due to ISO/RTOs’ independence, the independent entity
standard “is more flexible than the ‘consistent with or superior to’ standard and the regional
differences standard.”9 The Commission has recognized that “[a]lthough there are some
common issues affecting all the regions, there are also significant differences in the nature and
scope of the problem from region to region; there may, therefore, be no one right answer … .”10
The Commission has traditionally indicated that it “will review the proposed [independent entity]
variations to ensure they do not provide an unwarranted opportunity for undue discrimination or
produce an interconnection process that is unjust and unreasonable,”11 accepting such
modifications where the changes are clarifying and/or ministerial in nature and/or the entity
requesting the variation has supplied sufficient justification.12

The Final Rule further provided that to the extent it revised ISO/RTO LGIP and LGIA provisions that had been previously accepted as independent entity variations, ISOs/RTOs could demonstrate that previously-approved variations should remain in effect.13

7 Id. at P 43.

8 Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, FERC Stats. & Regs. 31,146 at P 827 (2003) (“Order No. 2003”), order on reh’g, Order No. 2003-A, FERC Stats. & Regs.
31,160 (2004), order on reh'g, Order No. 2003-B, FERC Stats. & Regs. 31,171 (2004), order on reh’g, Order No. 2003-C, FERC Stats. & Regs. 131,190 (2005), affirmed sub nom. Nat’l Ass’n of Regulatory Util. Com’rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007).

9 Order No. 2003 at P 26.

10 Interconnection Queuing Practices, Order on Technical Conference, 122 FERC ¶ 61,252 (March 20, 2008) at P 8.

11 New York Independent System Operator, Inc., 124 FERC ¶ 61,238 at P 17 (2008).

12 Id. at P 18.

13 Id. at P 556.

Among the reforms adopted in the Final Rule, the Commission directed public utility
transmission providers to revise their LGIPs and LGIAs to establish a process for
interconnection customers to use surplus interconnection service.14 This reform is premised on
the Commission’s determination that surplus interconnection service is created because
generating facilities may not operate at full capacity at all times, but are evaluated in
interconnection studies at their full capacity. The Commission believes that it would be unjust
and unreasonable to prevent interconnected facilities from utilizing the “remaining, unused
interconnection service.”15

As the Commission recognized,16 several commenters opposed the surplus

interconnection service requirements, and some stated that there is no surplus on their systems in
the sense contemplated by the Final Rule.17 The Commission expressly acknowledged that there
is “substantial regional variation in the potential availability of surplus interconnection service
and existing or prospective processes that would facilitate its use.”18 It is because such regional
variations exist that the Commission has permitted ISO/RTOs to seek independent entity
variations that address Commission policy objectives within each region’s unique
interconnection framework. Accordingly, the Commission provided that a public utility

14 Id. at P 467.

15 Id. at P 468.

16 Id. at P 466.

17 California Independent System Operator Corporation, for example, stated that there is no surplus service
in its region. See Comments of California Independent System Operator Corporation, Docket No. RM17-8-000, at
31-32 (April 13, 2017) (explaining that “the only interconnection capacity that has already been studied is the
interconnection capacity existing generators are using or interconnection customers in queue that have completed
their Phase I and Phase II interconnection studies contemplate using. Thus there is not additional interconnection
capacity or ‘headroom’.” Similarly, PJM Interconnection L.L.C. explained that “PJM would have to define ‘energy
rights’ and add a process that parallels the [Capacity Interconnection Rights] process” to accommodate this rule. See
Comments of PJM Interconnection, L.L.C., Docket No. RM17-8-000, at P 27 (April 13, 2017). See also Comments
of ISO New England Inc., Docket No. RM17-8-000, at 47 (April 13, 2017) (opposing this requirement since
“implementation of the design proposed in the NOPR would significantly disrupt or misalign those existing
mechanisms.”)

18 Id. at P 476.

transmission provider could explain in its compliance filing that it already complied with the surplus interconnection service requirements in the Final Rule.19

[W]e note that a number of commenters seek regional flexibility in complying
with the rule to accommodate regional needs. In Order No. 2003, the
Commission stated that if, on compliance, a non-RTO/ISO transmission provider
'offers a variation from the Final Rule LGIP and Final Rule LGIA and the
variation is in response to established . . . reliability requirements, then it may
seek to justify its variation using the regional difference rationale.” … The

Commission went on to say that, for RTOs/ISOs, it would allow independent

entity variations for pricing and non-pricing provisions, and that RTOs/ISOs

“shall have greater flexibility to customize [their] interconnection procedures and agreements to fit regional needs.” In this Final Rule, we make no changes to the variations allowed by Order No. 2003. Therefore, on compliance, transmission providers may argue that they qualify for the above-mentioned variations from the requirements of this Final Rule.20

However, Paragraph 477 of the Final Rule stated that in order for an ISO/RTO’s process to qualify for an independent entity variation from the surplus interconnection service
requirements, the ISO/RTO:

must demonstrate, at a minimum, that its tariff: (1) includes a definition of surplus
interconnection service consistent with the Final Rule; (2) provides an expedited
interconnection process outside of the interconnection queue for surplus
interconnection service, consistent with the Final Rule; (3) allows affiliates of the
original interconnection customers to use surplus interconnection service for
another interconnecting generating facility consistent with the Final Rule; (4)
allows for the transfer of surplus interconnection service that the original
interconnection customer or one of its affiliates does not intend to use; and (5)
specifies what reliability-related studies and approvals are necessary to provide
surplus interconnection service and to ensure the reliable use of surplus
interconnection service.21

B.NYISO’s Independent Entity Variations

The NYISO generally follows the Commission’s pro forma LGIP and LGIA, but its
Large Facility Interconnection Procedures (“LFIP”) and LGIA have long included numerous

19 Id. at P 476.

20 Id. at P 43.

21 Final Rule at P 477.

independent entity variations. These Commission-accepted variations are specifically tailored to New York’s unique circumstances. The existence of previously accepted variations has
prompted the NYISO to obtain additional independent entity variations in response to prior
modifications to the pro forma LGIP and LGIA such as those adopted in Order No. 845. All of the NYISO’s independent entity variations have been and continue to be necessary in order to
make Commission revisions to the pro forma LFIP and LGIA consistent with NYISO's existing OATT and current practices.22 Since Order No. 2003, the NYISO has continued to implement significant revisions to its interconnection process to update and enhance the New York specific interconnection requirements. These procedures do not exist in a vacuum, but are fundamentally integrated with the NYISO’s market and planning rules.23

III. REQUEST FOR CLARIFICATION

The NYISO requests that the Commission clarify that it did not intend to limit the

manner in which ISOs/RTOs demonstrate necessary independent entity variations regarding

Surplus Interconnection Service. As discussed below, the NYISO’s need for independent entity
variations with respect to the surplus interconnection service requirements is especially acute and
there is every reason to afford it broad flexibility in developing a compliance proposal. The
Final Rule language quoted in Section II of this request clearly recognized the continued need to
accommodate independent entity variations. But Paragraph 477 may be read as dictating highly
prescriptive surplus interconnection service requirements that each ISO/RTO must include in its
interconnection procedures. If read narrowly, these prescriptions would severely limit the scope

22 New York Independent System Operator, Inc., 108 FERC ¶ 61,159 at P 17 (2004).

23 See, e.g., New York Independent System Operator, Inc., Interconnection Process Improvements, Docket No. ER18-80-000 (October 16, 2017) at pp. 30, 33-34, 70-71, 73, 84.

of the independent entity variations that an ISO/RTO may propose. The NYISO does not

interpret the Final Rule to be so limiting but seeks clarification out of an abundance of caution.

A. The Final Rule’s Key Assumptions Concerning the Need for and Benefits of

Surplus Interconnection Service Are Not Applicable to the NYISO

Establishing narrow prescriptions regarding ISO/RTO compliance with the surplus
interconnection service requirements would be very problematic. The need for flexibility in
obtaining independent entity variations is particularly important in this instance because the
rationale for the surplus interconnection service requirements is based upon the process
described by the original Order No. 2003 pro forma language. However, the NYISO, through a series of FERC orders dating back approximately seventeen years, has established unique
regional rules—and obtained independent entity variations consistent with those rules—that are fundamentally different than those that the Commission was addressing when it structured the surplus interconnection service requirement.

Specifically, the premise of the Final Rule’s surplus interconnection service requirements is that Transmission Provider’s interconnection studies assume that the generating facility being studied will operate at its full capacity. For example, in Paragraph 468 the Commission explains that “surplus interconnection service is created because generating facilities may not operate at full capacity at all times” and because “[c]onsistent with the requirements of Order No. 2003, transmission providers assume that each interconnection customer is fully utilizing its
interconnection service when studying other requests for new interconnections.”24 Similarly, in Paragraph 469 the Commission states that “Order No. 2003 mandates that transmission providers assume that generating facilities operate at their full capacity.” 25

24 Id. at P 468.

25 Id. at P 469

The Final Rule proceeds to cite the pro forma definition of Energy Resource

Interconnection Service (“ERIS”), which it characterizes as requiring that “Interconnection

Studies to be performed . . . would identify the Interconnection Facilities required as well as the
Network Upgrades needed to allow the proposed Generating Facility to operate at full output”
and “the maximum allowed output of the Generating Facility without Network Upgrades.”26
Under the NYISO’s Commission-approved variation of the definition of ERIS, however, this is
not the case.

The pro forma definition of ERIS refers to eligibility to deliver the facility’s output:

Energy Resource Interconnection Service shall mean an Interconnection Service
that allows the Interconnection Customer to connect its Generating Facility to the
Transmission Provider's Transmission System to be eligible to deliver the
Generating Facility's electric output using the existing firm or nonfirm capacity
of the Transmission Provider's Transmission System on an as available basis.
Energy Resource Interconnection Service in and of itself does not convey
transmission service.27

By contrast, the NYISO’s definition of ERIS is a Commission-approved variation from the pro forma definition28 that is based on a facility’s ability to satisfy the NYISO’s Minimum Interconnection Standard. The current NYISO OATT definition of ERIS reads:

Energy Resource Interconnection Service (“ERIS”) shall mean the service

provided by the ISO to interconnect the Developer’s Large Generating Facility or
Merchant Transmission Facility to the New York State Transmission System or to
the Distribution System, in accordance with the NYISO Minimum
Interconnection Standard, to enable the New York State Transmission System to
receive Energy and Ancillary Services from the Large Generating Facility or
Merchant Transmission Facility, pursuant to the terms of the ISO OATT.29

26 Id. (citing Order No. 2003 at P 753).

27 Id. at n 828 (citing Pro Forma LGIP Section 1) (emphasis added).

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

Conditionally Accepting Compliance, 126 FERC ¶ 61,046 (2009); New York Independent System Operator Inc. and
New York Transmission Owners, Order in Rehearing, Clarification, and Compliance, 127 FERC ¶ 61,318 (2009).

29 OATT Attachment X, Section 30 (emphasis added).

The key distinction between the pro forma and NYISO definitions of ERIS is the latter’s
reliance on the NYISO’s Minimum Interconnection Standard, which “is designed to ensure
reliable access by the proposed project to the New York State Transmission System or to the
Distribution System. The Standard does not impose any deliverability test or deliverability
requirement on the proposed interconnection.”30 The Minimum Interconnection Standard does
not assume that a generating facility is operating at its full output. Instead, it permits the re-
dispatch of the facility and/or other facilities to the extent possible under normal operating
procedures. This allows the NYISO to use re-dispatch in interconnection studies to mitigate
adverse reliability impacts that would otherwise require System Upgrade Facilities.
The definition of Minimum Interconnection Standard was accepted by the Commission in 2001.31 When the NYISO first proposed this definition it explained that the “Minimum
Interconnection Standard” is the standard “described in the System Reliability Impact Study
Criteria and Procedures developed by NYISO staff and approved by the Operating Committee in
July, 2000 (“Minimum Interconnection Standard methodology”).32 That Minimum
Interconnection Standard methodology specifies that:

Any potential adverse reliability impact identified by the [System Reliability

Impact Study] that can be managed through the normal operating procedures of
the NYISO and/or [Connecting Transmission Owner (“CTO”)] will not be
identified as a degradation of system reliability or noncompliance with the [North
America Reliability Corporation (“NERC”)], [Northeast Power Coordinating
Council (“NPCC”)], or [New York State Reliability Council (“NYSRC”)]
reliability standards.

30 Id.

31 New York Independent System Operator, Inc., Order Accepting Tariff Revisions Subject to Modifications, 97 FERC ¶ 61,118 (2001).

32 New York Independent System Operator, Inc., Filing of New Attachment S to Open Access Transmission Tariff to Implement Rules to Allocate Responsibility for the Cost of New Interconnection Facilities, Docket No, ER01-2967-000 at 5 (August 29, 2001).

The definition of Minimum Interconnection Standard has remained nearly unchanged

since it was first accepted by the Commission in 2001. It was maintained in the NYISO’s Order No. 2003 compliance filings,33 and has been affirmed through multiple subsequent orders
accepting revisions to the NYISO’s interconnection procedures.34

The Minimum Interconnection Standard methodology has also remained virtually

unchanged since first it was approved by the NYISO’s Operating Committee in July 2000. The methodology has since been incorporated in the NYISO’s Transmission Expansion and
Interconnection Manual which incorporates the original language almost verbatim, with the only change italicized in bold font below:

Any potential adverse reliability impact identified by the Interconnection Study
that can be managed through the normal operating procedures of the NYISO
and/or CTO will not be identified as a degradation of system reliability or
noncompliance with the NERC, NPCC, or NYSRC reliability standards.

Consistent with the variation in the NYISO’s definition of ERIS and its application of the
Minimum Interconnection Standard, the NYISO, in its interconnection studies, reduces the
facility’s output as necessary, to the extent possible under normal operating procedures,35 to
establish a feasible base dispatch.36 As a result, if a generator’s output is reduced to mitigate the

33 See, e.g., New York Independent System Operator, Inc. and the New York Transmission Owners, Joint Compliance on Consensus Deliverability Plan, Docket No. ER04-449-017 (August 5, 2008).

34 See, e.g., New York Independent System Operator, Inc., Interconnection Process Improvements, Letter Order, Docket No. ER18-80-000 (December 7, 2017).

35 Transmission constraints and other adverse reliability impacts internal to the New York Control Area
(“NYCA”) are typically manageable through NYISO and/or Connecting Transmission Owner normal operating
procedures. There are scenarios in which neither the NYISO or the Connecting Transmission Owner can, through
normal operating procedures, dispatch down generation to eliminate the need for System Upgrade Facilities. For
example, multiple generation projects interconnecting to various locations within the NYCA may individually or
collectively have an adverse impact on transfer limit capability over inter-area tie lines. Such impacts are not fully
manageable by NYISO and/or Connecting Transmission Owner normal operating procedures alone.

36 See, e.g., System Reliability Impact Study Report, Queue No. 497 Bull Run Wind (approved by the

NYISO’s Operating Committee March 18, 2018); System Reliability Impact Study Report, Queue No. 474 North
Slope Wind (approved by the NYISO’s Operating Committee on February 9, 2017); System Reliability Impact
Study Report, Bethlehem Energy Center Uprate Project (approved by the NYISO’s Operating Committee on
February 13, 2015).

need for System Upgrade Facilities the NYISO does not identify upgrades or facilities that could be considered “surplus.” Therefore, the underlying premise of the surplus interconnection
service requirement that transmission providers assume that generating facilities operate at their full capacity is not accurate in the NYISO’s case.

As described above, the Commission has previously provided ISO/RTOs with broad

flexibility under the independent entity variation standard to implement Commission

interconnection directives in a manner that is tailored to specific regional circumstances and well integrated with existing market and planning rules. The Commission should clarify that
Paragraph 477 was not intended to limit an ISO/RTOs’ ability to obtain independent entity
variations related to surplus interconnection service requirements or to require the NYISO to adopt rules based on premises that are not applicable to the NYISO region.

B. The Pro Forma Surplus Interconnection Requirements Are Fundamentally

Incompatible with Existing Commission-Accepted NYISO Interconnection, Planning, and Market Rules

The Final Rule’s surplus interconnection service requirements are fundamentally

incompatible with certain aspects of the NYISO interconnection process and market design. If the NYISO’s ability to demonstrate independent entity variations in compliance with these
requirements were restricted, then the NYISO anticipates that it could have the unfortunate effect of overturning long-settled and understood procedures. It could also disrupt the careful
balancing of interests in the process that already have been broadly agreed upon by NYISO
stakeholders and accepted by the Commission.

1. NYISO’s Unique Interconnection and Planning Rules

The prescribed surplus interconnection service requirements are incompatible with

numerous existing provisions under the NYISO’s planning and interconnection processes. As

discussed above in Section III.A, the Final Rule’s surplus interconnection service requirements
are premised on the assumption that, in a Transmission Provider’s interconnection studies, the
generating facility being studied is deemed to operate at its full capacity. However, through the
variation in the NYISO’s definition of ERIS and its application of the Minimum Interconnection
Standard, the NYISO, in its interconnection studies, reduces the facility’s output as necessary to
establish a feasible base dispatch.37 As a result, there are fewer System Upgrade Facilities

required for new interconnections under the NYISO’s model, but there is also not an unused

“surplus.” Therefore, the underlying premise of the surplus interconnection service requirement is not accurate in the NYISO’s case.

2. NYISO’s Unique Market Design and Capacity Market Rules

Aspects of Final Rule’s surplus interconnection service requirements do not consider and
are inconsistent with the NYISO’s existing market rules. For example, under the NYISO’s
existing market design, two projects behind the same Point of Interconnection must be modeled,
scheduled, and settled as two separate generators. Similarly, a single generator cannot consist of
two different technology types (e.g., wind and storage). Different technology types must be
separated into their own individual generator, even if they are behind the same Point of
Interconnection. This difference makes adopting various components of the proposed rule
infeasible, particularly with regard to the ability of two resources behind the same Point of
Interconnection to transfer unused interconnection service between them. This is true whether
the transfer of interconnection service between the resources is on an intermittent, short-term

37 See, e.g., System Reliability Impact Study Report, Queue No. 497 Bull Run Wind (approved by the

basis (e.g., a generation facility transferring interconnection service to another resource when the first facility it out for maintenance) or whether the transfer of interconnection service between the resources is on a continuous basis (e.g., a solar facility transferring interconnection service during night-time hours to a wind facility).

The proposed rule is also incompatible with capacity market rules. First, Installed

Capacity (“ICAP”) Suppliers have a daily requirement to offer into the Day Ahead Market for
energy in the amount of the ICAP equivalent of their capacity sold for that month.38 That
obligation would preclude them from transferring ERIS in any month for which they sold ICAP
or would establish a scenario that opens the door to a supplier failing to meet its obligations to
offer energy as required under the rules and for its expected availability.
Second, the Final Rule’s directive regarding the utilization of surplus interconnection service for two facilities behind the same Point of Interconnection on a scheduled, periodic basis for a specified number of MW available only intermittently is not feasible under the NYISO’s capacity market rules. Only one of the two suppliers in the proposed scenario would be able to offer into the NYISO’s capacity market for an obligation month because each supplier behind the same Point of Interconnection, even if the same technology type, might have different proven capabilities (i.e., for traditional technology types, their DMNC values)39 and different outage rates (i.e., EFORd values)40, both of which are used to calculate resources’ Unforced Capacity (“UCAP”), which is the quantity of capacity they are allowed to offer into the market each

38 See Section 5.12.7 of the Services Tariff. An example of the general rule when applied to a hypothetical generator that sells an ICAP equivalent of 100 MW of UCAP in a given month is that it is required to offer 100 MW of energy every day. That generator must have a corresponding amount of ERIS to validly offer that energy every day, even if the generator actually runs infrequently or even not at all.

39 A DMNC value or “Dependable Maximum Net Capability” is an annual demonstration of a generator’s
ability to generator power, specifically, its sustained maximum net output. See Section 2.4 of the Services Tariff.

40 An EFORd or “Equivalent Demand Forced Outage Rate” represents the portion of time a unit is
dispatched and unable to respond due to forced outages or derates. See Section 2.5 of the Services Tariff.

Capability Period. Thus, were the NYISO required to implement the surplus interconnection
service rule, commitment participation caps for resources at the Point of Interconnection would need to be established. Even if such a rule could reasonably be fashioned to identify the manner in which such resources would be qualified and the amount thereof, the energy market
obligations of ICAP Suppliers that have sold UCAP for an obligation month would also need to be revised to reflect the amount in which each resource, or both, would have to offer into the Day Ahead Market for energy. In any case, both resources should be subject to the NYISO’s
Supplemental Resource Evaluation if required.

3. NYISO’s Unique CRIS and Buyer-Side Mitigation Rules

a. CRIS Rules

The Final Rule’s surplus interconnection service requirements pose unique challenges
with respect the NYISO’s second level of interconnection service, Capacity Resource
Interconnection Service (“CRIS”). The NYISO should be provided an opportunity to
demonstrate in its compliance filing that the existing CRIS rules (perhaps with certain limited
modifications) adequately address the objectives identified with the surplus interconnection
service requirement.

CRIS was developed and accepted by the Commission as an independent entity variation
to Network Resource Interconnection Service (“NRIS”) based on the “unique regional
circumstances” related to the NYISO.41 When tariff revisions implementing CRIS and the

41 New York Independent System Operator, Inc., et al., 108 FERC ⁋ 61,159, at PP 24-28 (2004) (requiring
the NYISO’s LFIP to incorporate two levels of interconnection service—one of which would contain a deliverability
standard, similar to NRIS), order on reh’g, 111 FERC ⁋ 61,347, at PP 13-14 (2005) (recognizing two competing
principles—the requirement under Order No. 2003 to offer two levels of interconnection service and that the
NYISO’s region is distinct and should have flexibility to craft a system appropriate to New York’s specific needs);
see also New York Independent System Operator, Inc., et al., Letter Order, Docket No. ER04-449-020 (2009); New
York Independent System Operator, Inc., et al., 126 FERC ⁋ 61,046 (2009), order on reh’g, 127 FERC ⁋ 61,318
(2009).

associated NYISO Deliverability Interconnection Standard were submitted in 2008, it

represented the culmination of years of work with stakeholders to develop an acceptable

framework to implement a second level of interconnection service that contained a deliverability
standard as required by the Commission while also being compatible with regional
circumstances and rules.42 Under the current tariff, a facility must meet the NYISO’s
Deliverability Interconnection Standard (as well as have ERIS) before it can receive CRIS43 and
must obtain CRIS in order to become eligible to become an Installed Capacity Supplier.44
NYISO’s OATT Attachment S contains a comprehensive rule set regarding the
requirements for obtaining CRIS, maintaining CRIS, and transferring CRIS.45 A key aspect of
those rules provides for transfers of CRIS on a bilateral basis between an existing facility and a
new facility, whether the facilities are at the same or different electrical location.46 In particular,
transfers of CRIS at the same electrical location are permitted without the recipient project being
evaluated for deliverability in the NYISO’s interconnection process (although the project must
have ERIS and become operational prior to the original facility’s CRIS expiring).47
In light of the NYISO’s unique CRIS rules, and the procedures already developed to permit transfers of CRIS at the same electrical location, the NYISO should be permitted the

42 See New York Independent System Operator, Inc., et al., Compliance Filing and Request for Further

Extension of Time, Docket No. ER04-449-017 (August 5, 2008); see also New York Independent System Operator, Inc., 122 FERC ¶ 61,267 (2008) (providing guidance on NYISO’s Consensus Plan filed on October 5, 2007 and directing revisions to the OATT to be submitted by August 4, 2008); New York Independent System Operator, Inc., et al., Consensus Deliverability Plan, Docket Nos. ER04-449-003, -007, -008 (October 5, 2007) (providing the agreed-upon framework under which the NYISO and stakeholders would facilitate the development of tariff
revisions); New York Independent System Operator, Inc., et al., Compliance Filing and Request for Further
Extension of Time, Docket No. ER04-449-005 (February 7, 2005).

43 OATT Attachment S, Section 25.3.1.

44 OATT Attachment S, Section 25.7.4; Services Tariff, Section 5.12.1.

45 See, generally, OATT Attachment S.

46 OTT Attachment S, Sections 25.9.4 and 25.9.5.

47 Same location CRIS transfers are permitted if a facility deactivates an existing unit and commissions a new one at the same electrical location. The CRIS of the deactivated facility may be transferred to the new facility at that same electrical location provided that the new facility becomes operational within three years from the
deactivation of the original facility. See OATT Attachment S, Section 25.9.4.

flexibility, under an independent entity variation, to demonstrate how these existing rules satisfy the goals of the Final Rule’s surplus interconnection service requirements.

b. Intersection between the CRIS Rules and Buyer-Side Mitigation Rules

Under the NYISO’s interconnection procedures and market rules, CRIS transfers are

permitted under specific circumstances and, if the “transferee” is located in a Mitigated Capacity
Zone or a New Capacity Zone, both CRIS transfers at the same location and CRIS transfers from
a different location are subject to the buyer-side capacity market power mitigation measures
(“BSM Rules”).48 The BSM Rules are comprehensive rules and were carefully developed with
stakeholders. They provide that the examination of a recipient of transferred CRIS occurs in
conjunction with the NYISO’s examination of other proposed new projects and existing
resources’ requests for Additional CRIS MW. The processes are not merely procedural steps but
are critical to the NYISO’s ability to perform the economic analyses required to determine
whether a proposed project’s entry would be uneconomic and to establish Offer Floors.
The Commission recently recognized the closely integrated nature of the Class Year
interconnection process and the BSM Rule processes and determinations in an order denying
tariff waiver requests that implicated those rules.49 In that order, the Commission weighed how
a waiver as to a single project could disrupt the processes and have undesirable consequences.
For example, there could be delays in the development of other projects,50 “adjustments to the

48 The BSM Rules are set forth in Section 23.4.5.7, et seq. of the Services tariff.

49 See Bayonne Energy Center, LLC, 163 FERC ¶ 61,095 (2018) at PP 30-31.

50 Because these Surplus transfers could occur at any time, even after a Class Year base case was

established, they could disrupt not only the NYISO’s evaluation under the BSM Rules of other proposed capacity
resources but also “disrupt the NYISO’s administration of the Class Year rules. This would negatively affect other
members of the Class Year, and risk delaying other Class Year processes including potentially the start of the next
Class Year.” See Bayonne Energy Center, LLC, Docket No. ER 18-1301-000, Motion to Intervene and Comments
of the New York Indep. Syst. Operator, Inc. (April 18, 2018) (“NYISO Comments on BEC Waiver Request”) at pp.
11, 21.

BSM Rules to address other scenarios not specifically contemplated could result in over- or under-
mitigation of other projects from the balanced approach that is achieved by the BSM Rules.”51
Further, the processes and economic analyses used to make determinations under the BSM Rules
are reliant on information from and processes under the NYISO’s interconnection and Class
Year processes.

Requiring the NYISO to provide an expedited or alternative process for transferring

CRIS in order to comply with the Final Rule would allow the “transferees” to bypass established procedures involving the NYISO’s interconnection process that cannot be isolated from the BSM Rules. It goes to the heart of a threshold capacity market requirement to examine projects to
prevent uneconomic entry in Mitigated Capacity Zones and New Capacity Zones. Even if a
unique buyer-side market power mitigation rule set were developed that applied only to CRIS
“transferees,” so as to comply with the Final Rule’s directive, the adequacy of the buyer-side
mitigation determinations for both the subject CRIS transfer project and all other Developers
seeking to enter the market would be diminished.

The NYISO cannot envision any practicable way to implement the pro forma surplus
interconnection service requirements that would comport with its BSM Rules. Therefore, the
NYISO should be afforded the opportunity, under an independent entity variation, to
demonstrate how the NYISO’s CRIS rules adequately meet the goal of the surplus
interconnection service requirements within the structure of the NYISO’s markets.
The Final Rule’s surplus interconnection service requirement, absent a modification, would require that the Services Tariff contain an entirely new rule set so that the NYISO could conduct a BSM Rule examination of projects with CRIS transfers. Such modifications would

51 See NYISO Comments on BEC Waiver Request at 24.

also need to consider whether adjustments to rules governing examinations and the BSM

Forecasts52 used therein might be needed for projects being reviewed in isolation from projects that are currently evaluated under the BSM Rules at the same time.

The Final Rule’s directive would also require an even more complex revision to the “Renewable Exemption” under the BSM Rules which the NYISO developed in response to a Commission mandate. The Renewable Exemption includes a cap per Class Year on the number of MWs that can receive a Renewable Exemption.53 The inputs into the Self Supply Exemption in the BSM Rules would also need to be revised to ensure that they continue to appropriately capture other anticipated entrants into the market.54

As is clear from the preceding examples, the Final Rule’s generic directive regarding the utilization of surplus interconnection service did not consider, and would have broad
ramifications for, existing NYISO rules. The NYISO therefore needs flexibility to develop independent entity variations in this area without prescriptive limitations. The Commission should clarify that Paragraph 477 does not impose such limitations.

IV. ALTERNATIVE REQUEST FOR REHEARING

If the Commission denies the NYISO’s request for clarification, the NYISO requests, in the alternative, that the Commission grant rehearing and remove Paragraph 477’s limitations on independent entity variations from the surplus interconnection service requirements.

Strictly imposing the limitations set forth in Paragraph 477 on ISOs/RTOs would be
inconsistent with more than a decade of Commission precedent and practice, described above,

52 See Section 23.4.5.7.15 of the Services Tariff.

53 The Commission directed the NYISO to file tariff compliance revisions to establish a Renewable Energy Exemption. See 153 FERC ¶ 61,022 (2015). Those revisions are pending before the Commission in Docket No. ER16-1404-000.

54 The Commission directed the NYISO to file tariff compliance revisions to establish a Self Supply
Exemption. See id. Those revisions are pending before the Commission in Docket No. ER16-1404-000.

which provides ISO/RTOs with broad flexibility to satisfy the Commission’s interconnection

objectives in a manner that is tailored to regional circumstances and needs. The Final Rule

makes no attempt to justify this departure from precedent or to explain why limitations on

independent entity variations related to surplus interconnection service are necessary. It likewise offers no rationale for limiting independent entity variations in this one area while continuing to follow the traditional standard in all others.

In addition, the Final Rule neither considered nor addressed the facts (discussed in detail
in Section III above) that: (i) the core assumptions underlying its pro forma surplus
interconnection service requirements are not applicable to the NYISO; and (ii) the pro forma
surplus interconnection requirements are fundamentally incompatible with the established
Commission-accepted NYISO tariff and market rules. The Final Rule made no showing that the
pro forma surplus interconnection requirements should be applied to regions where the
assumptions driving their establishment do not exist. Similarly, it made no showing that the
existing NYISO rules that would be disrupted if the NYISO were compelled to adopt the pro
forma surplus interconnection service requirements are unjust, unreasonable, or unduly
discriminatory or that the costs of making fundamental changes to existing NYISO systems
would not greatly outweigh any benefits of the pro forma requirements.55 Finally, to the extent
that the Commission believes that limitations on independent entity variations might be

55 16 U.S. Code § 824e(a) (providing that “[w]henever the Commission … shall find … that any rule,

regulation, practice, … is unjust, unreasonable, unduly discriminatory or preferential, the Commission shall

determine the just and reasonable … rule, regulation, practice, … and shall fix the same by order. Any complaint or motion of the Commission to initiate a proceeding under this section shall state the change or changes to be made in the rate, charge, classification, rule, regulation, practice, or contract then in force, and the reasons for any proposed change or changes therein.”)

appropriate for ISO/RTO regions other than NYISO, it has not explained why such limitations should be imposed on NYISO.

Accordingly, if the Commission denies the requested clarification and adopts a strict interpretation of Paragraph 477 that limits or precludes the NYISO from seeking independent entity variations, it would not have engaged in reasoned decision-making. In such a case, the Commission should grant rehearing and remove Paragraph 477’s limitations on an ISO/RTO’s ability to establish independent entity variations.

V. SPECIFICATION OF ERRORS/STATEMENT OF ISSUES

In accordance with Rule 713(c),56 the NYISO submits the following specifications of error and statement of the issues on which it seeks rehearing of the Final Rule:

• The Commission’s requirements for surplus interconnection service are premised, with

respect to the NYISO, on assumptions derived from the generic Order No. 2003

framework that are inapplicable to the NYISO. Therefore, to the extent that the

Commission denies clarification, it must grant rehearing and reverse Paragraph 477’s
limitations on independent entity variations. The Commission has not engaged
reasoned decision-making because: (1) not all transmission providers perform
interconnection studies assuming that each interconnection customer is fully utilizing
its interconnection service; and (2) Order No. 2003 does not mandate that transmission
providers assume that generating facilities operate at their full capacity.57

• The Final Rule provides no explanation of why limitations on independent entity

variations related to surplus interconnection service are necessary. Moreover, the

Commission has not demonstrated that the requirements set forth in Paragraph 477

must be imposed uniformly across all the ISO/RTOs or shown that the various NYISO
rules and processes that Paragraph 477 threatens to disrupt would be unjust and
unreasonable. To the extent that the Commission denies the NYISO’s ability to use an
independent entity variation to establish requirements for surplus interconnection
service that are tailored to the unique circumstances in New York, such a requirement
would be inconsistent with reasoned decision-making, would represent an unexplained
departure from Commission policy and precedent, and could have needlessly costly and
disruptive impacts on the NYISO’s interconnection procedures as previously accepted
by the Commission.58

56 18 C.F.R. § 385.713(c).

57 Final Rule at PP 468-469.

58 See, e.g., Motor Vehicle Mfr. Ass 'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 at 43 (1983); National
Fuel Gas Supply Corp. v. FERC, 468 F.3d 831 at 839 (D.C. Cir. 2006); NorAM Gas Transmission Co. v. FERC, 148

VI.CONCLUSION

WHEREFORE, for the foregoing reasons, the New York Independent System Operator, Inc., respectfully requests that the Commission grant the requested clarifications, or in the
alternative grant rehearing, of the Final Rule as specified above.

Respectfully submitted,

/s/ Sara B. Keegan

Sara B. Keegan

Counsel for the

New York Independent System Operator, Inc.

May 22, 2018

cc:Anna Cochrane

James Danly
Jette Gebhart
Kurt Longo

David Morenoff
Daniel Nowak
Larry Parkinson

J. Arnold Quinn
Douglas Roe

Kathleen Schnorf Gary Will

F.3d 1158, 1165 (D.C. Cir. 1998); citing K N Energy, Inc. v. FERC, 968 F.2d 1295, 1303 (D.C. Cir. 1992); West Deptford Energy, LLC v. FERC, 766 F.3d 10, 12 (D.C. Cir. 2014).

CERTIFICATE OF SERVICE

I hereby certify that I have this day served the foregoing document upon each person

designated on the official service list compiled by the Secretary in this proceeding in accordance with the requirements of Rule 2010 of the Rules of Practice and Procedure, 18 C.F.R. §385.2010.
Dated at Rensselaer, NY this 22nd day of May 2018.

/s/ Joy A. Zimberlin

Joy A. Zimberlin

New York Independent System Operator, Inc.

10 Krey Blvd.

Rensselaer, NY 12144 (518) 356-6207