Patrick Tarmey
Senior Counsel

October 17, 2018

The Honorable Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First Street, NE

Washington, DC 20426

Re:Niagara Mohawk Power Corporation

Docket No. ER19-___-000

Filing to Revise Niagara Mohawk Depreciation Rates Under the NYISO OATT

Dear Secretary Bose:

Pursuant to Section 205 of the Federal Power Act (“FPA”),1 and Part 35 of the
Federal Energy Regulatory Commission’s (“Commission”) regulations,2 Niagara
Mohawk Power Corporation d/b/a National Grid (“Niagara Mohawk”) submits updates
to the depreciation rates set forth in the provisions of Attachment H to the New York
Independent System Operator, Inc.’s (“NYISO”) Open Access Transmission Tariff
(“OATT”) regarding Niagara Mohawk’s Wholesale Transmission Service Charge
(“Wholesale TSC”) formula rate.3 This depreciation rate update is supported by the
testimony of Tiffany M. Forsyth and supporting exhibits, including a depreciation rate
study already accepted by the New York Public Service Commission (“NYPSC”).

Niagara Mohawk submits the depreciation rate revisions as a single-issue filing
pursuant to Section 205 of the FPA and requests waiver of the full filing requirements
of Part 35 of the Commission’s regulations. Niagara Mohawk respectfully requests that
the Commission accept the revenue requirement revisions to become effective for

include Niagara Mohawk, have rights to amend the components of their respective Wholesale
TSC rates on their own initiative by making the requisite filings for Commission approval
pursuant to Section 205 of the FPA. See NYISO OATT, Attachment H, Sections 14.1.2.1.3,

14.1.9.3, 14.1.9.4.3.6. The NYISO is submitting this filing in the Commission’s eTariff system

on Niagara Mohawk’s behalf solely in its role as the Tariff Administrator. However, the burden
of demonstrating that the proposed tariff revisions are just and reasonable rests on Niagara
Mohawk, the sponsoring party. The NYISO takes no position on any substantive aspect of the
filing at this time.

40 Sylvan Road, Waltham, MA 02451

 T: 781-907-2190  patrick.tarmey@nationalgrid.com  www.nationalgrid.com

The Honorable Kimberly D. Bose October 17, 2018

Page 2

Wholesale TSC rates that will be charged as of July 1, 2019. Consistent with precedent,
Niagara Mohawk requests that the Commission allow the updated depreciation rates for
its amended revenue requirement component to take effect as of April 1, 2018, the same
date that these depreciation rates were approved to become effective by the NYPSC.

I.Background

Niagara Mohawk is a regulated utility operating in the State of New York. It is engaged in the transmission, distribution, and wholesale and retail sale of electric power and natural gas in Buffalo, Albany, Syracuse, and other portions of upstate New York. All of Niagara Mohawk’s bulk transmission facilities are subject to the operational
control of the NYISO.

Niagara Mohawk provides service to a number of customers, including

municipal electric utilities and customers external to the NYISO, pursuant to the

Niagara Mohawk Wholesale TSC formula rate set forth in Attachment H to the NYISO OATT. Among the inputs to the Annual Transmission Revenue Requirement (“RR”) component of that formula rate is Depreciation Expense for Transmission Plant in
Service, which is defined to equal depreciation expenses calculated using fixed annual depreciation rates for various specified Commission and Niagara Mohawk accounts. The definition and the depreciation rates are listed in Section 14.1.9.1.14 of Attachment H to the NYISO OATT.4 Niagara Mohawk last filed revisions to the depreciation rates in 2012, which the Commission accepted for filing as submitted.5

II.Revisions to the Depreciation Rates

As discussed in the testimony of Tiffany M. Forsyth provided in Exhibit NMP-1
to this filing and the schedule of approved rates included in Exhibit NMP-4 hereto,
Niagara Mohawk proposes to revise some of the depreciation rates listed in Section

14.1.9.1.14 of Attachment H to the NYISO OATT. Specifically, Niagara Mohawk proposes to revise the depreciation rates as shown in the table below.

Comparison of Current and Revised Depreciation Rates

Account No.Account NameCurrent RateRevised Rate

350Land - Rights of1.32%1.32% (no change)

Way and Easements

4The components of the formula rate are set forth in Section 14.1.2.1 of Attachment H to

the NYISO OATT.

The Honorable Kimberly D. Bose October 17, 2018

Page 3

352Structures and2.08%2.42%

Improvements

353Station Equipment2.44%2.53%

353.55Station Equipment -3.40%4.20%

EMS

354Towers and Fixtures1.71%1.80%

355Poles and Fixtures2.00%2.23%

356Overhead Conductors1.60%1.69%

and Devices

357Underground Conduit1.33%1.24%

358Underground1.48%1.59%

Conductors and

Devices

359Roads and Trails1.33%1.33% (no change)

370Large Meters -5.05%5.05% (no change)

Bare Costs

Large Meters -5.05%5.05% (no change)

Installation Costs

The NYPSC approved the same depreciation rates listed above in an order

issued in Docket Number 17-E-0238 on March 15, 2018.6 The rates were determined based on the Niagara Mohawk-sponsored testimony and a depreciation study by Dr. Kimbugwe A. Kateregga as well as on NYPSC Staff testimony included in Exhibits NMP-2 and NMP-3, respectively, to this filing. The methodology employed in the depreciation study is explained in detail in the testimony and the exhibits submitted by Niagara Mohawk and NYPSC Staff. The difference in the rates effective April 1, 2018 and the previously-approved rates is primarily attributable to adjustments in service life and net salvage statistics recommended in the most recent study.

The Honorable Kimberly D. Bose October 17, 2018

Page 4

For the reasons explained in this filing, the Commission should allow Niagara
Mohawk to update the depreciation rates in its Wholesale TSC formula in Attachment
H to the NYISO OATT to reflect the depreciation rates approved by the NYPSC. In
2012, the Commission accepted a comparable Niagara Mohawk filing to update the
depreciation rates in its Wholesale TSC formula to reflect depreciation rates approved
by the NYPSC in 2011.7 The Commission has allowed other public utilities to update
the depreciation rate component of their Commission-jurisdictional rates to reflect

depreciation rate decisions of state utility regulators.8

III.Effect on Transmission Charges

Based on the 2018 Annual Update to its Wholesale TSC under the NYISO

OATT submitted in Docket No. ER08-552-000, adjusted for purposes of this filing to

reflect a 21% federal income tax rate effective January 1, 2018 and removing the impact
of the tax rate change from the tax rate adjustment component of the 2018 forecasted
revenue requirement, Niagara Mohawk estimates that the proposed change in
depreciation rates would result in an annual impact on its transmission revenue
requirement of $3.82 million, reflected on line 43 of Schedule 1 in Exhibit NMP-7 to
this filing. The resulting increase to Wholesale TSC customers would be 8% of that
amount, or $294,838.

While use of the updated depreciation rates produce an estimated annual
increase to customers under the Niagara Mohawk’s formula rate of about $295
thousand, the Commission should find that the changes in depreciation rates do not
affect the total amount of costs recovered over time, only the timing of this recovery,
and thus while there is an increase in the revenue requirement, it will be offset in future
years. The Commission made similar findings when it has approved other public utility
depreciation rate changes. For example, in response to a depreciation rate filing by
Ameren Illinois Company, the Commission found that Ameren Illinois “seeks to change
one component of its rate which only affects the timing of the costs and does not change
the overall amount of recovery. The change to the depreciation accrual rates does not
change the value of the underlying asset, and would not result in any over- or under-
recovery of costs. In this circumstance, we find that it is appropriate to consider the
change in depreciation alone, consistent with [the Commission’s] Xcel and Michigan

The Honorable Kimberly D. Bose October 17, 2018

Page 5

Electric [precedent].”9 The Commission should reach a similar conclusion with regard to Niagara Mohawk’s depreciation rate revisions.

Niagara Mohawk submits these depreciation rate revisions as a single-issue

filing pursuant to Section 205 of the FPA. The Commission has found that single-issue
Section 205 filings are appropriate to update depreciation rates.10 Such filings have the
advantage of narrowing the scope of a proceeding in which only one rate component -
in this case, the depreciation rate - is being revised. Further, the use of a single-issue
Section 205 filing for revisions to depreciation rates is appropriate because such
revisions do not change the overall amount of costs recovered but instead only the
timing of the recovery.11

IV. Request for Waiver of Part 35 Filing Requirements

To the extent necessary, Niagara Mohawk requests waiver of the full

requirements of Section 35.13 of the Commission’s regulations.12 This is a single-issue
filing under Section 205 of the FPA, and Niagara Mohawk explains in the filing the
basis for the revisions to the depreciation rates and the rate impact of the revisions.
Further, the revisions will not affect the amount of depreciation recovered by Niagara
Mohawk, only the timing of that recovery. The Commission has granted waiver of the

Ameren Ill. Co., 141 FERC ¶ 61,264 at P 32 (2012)(citing Xcel Energy Services, Inc.,

The Honorable Kimberly D. Bose October 17, 2018

Page 6

full requirements of Section 35.13 in similar circumstances in other proceedings.13 For these reasons, good cause exists to grant the requested waiver.

In addition, the information submitted with this filing substantially complies
with the requirements of Part 35 of the Commission’s regulations applicable to filings
of this type. Niagara Mohawk requests a waiver of any applicable requirement of Part

35 for which a waiver is not specifically requested, if necessary, in order to permit this filing to become effective as proposed.

V.Effective Date, Request for Waiver

Pursuant to Section 35.11 of the Commission’s regulations,14 and to the extent
necessary, Niagara Mohawk respectfully requests that the Commission grant waiver of
the notice requirements set forth in Section 35.3(a)(1) of its regulations,15 to permit the
revisions to Attachment H of the NYISO OATT to reflect the modified depreciation
rates to go into effect as of April 1, 2018, the same date that the NYPSC allowed such
rates to go into effect. As noted above, the revised depreciation rate will be used for

establishing the Wholesale TSC rate to be charged beginning July 1, 2019.

Good cause exists for the Commission to grant this waiver. Niagara Mohawk is
seeking to revise the Wholesale TSC in order to ensure that the depreciation rates in the
revenue requirement for its Wholesale TSC formula rate are identical to, and become
effective on the same date as, those recently approved by the NYPSC in state-
jurisdictional Case 17-E-0238. This will permit Niagara Mohawk to have a consistent
set of depreciation rates on its books and ensure that both electric retail customers and
Wholesale TSC customers are consistently charged the same depreciation rates. In
previous orders, the Commission has authorized effective dates for depreciation rates
under Commission-jurisdictional tariffs that were the same as the effective dates
approved by state commissions for the corresponding retail depreciation rates.16 For
these reasons, the Commission should grant the requested waiver.

VI.Exhibits and Attachment

In addition to this transmittal letter, this filing includes the following exhibits

and attachment:

The Honorable Kimberly D. Bose

October17, 2018

Page7

Exhibit NMP-1 - Direct Testimony of Tiffany M. Forsyth

Exhibit NMP-2 - Depreciation Rate Study Niagara Mohawk

Exhibit NMP-3 - Depreciation Rate Study - NYPSC Staff

Exhibit NMP-4 - Depreciation and Amortization Rates approved by the

NYPSC’s March 15, 2018 order

Exhibit NMP-5 - Clean Attachment H to the NYISO OATT

Exhibit NMP-6 - Redlined Attachment H to the NYISO OATT

Exhibit NMP-7 - Summary of the Estimated Rate Changes

Exhibit NMP-8 - Formula Rate Spreadsheets - 2018 Annual Update

Exhibit NMP-9 - Formula Rate Spreadsheets - Adjusted 2018 Annual

Update before proposed changes to depreciation rates

Exhibit NMP-10 - Formula Rate Spreadsheets - Adjusted 2018 Annual

Update after proposed changes to depreciation rates

Attachment A - Service Listing

Attachment B - A clean version of Section 14.1 of the NYISO OATT

incorporating tariff revisions that have, or have been proposed to, become effective subsequent to the April 1, 2018 effective date requested for the tariff revisions proposed herein17

VII. Communications and Service

Communications regarding this filing should be addressed to the following individuals, whose names should be entered on the official service list maintained by the Secretary for this proceeding.

NYISO OATT Section 14.1 was filed on: February 15, 2018 in Docket No. ER18-861-000,

The Honorable Kimberly D. Bose October 17, 2018

Page 8

Daniel GalaburdaTiffany Forsyth

Assistant General Counsel & DirectorDirector

National Grid USAFERC Rates and Revenue

40 Sylvan RoadRequirements

Waltham, MA 024511 Metrotech Center

Tel: 781-907-1847Brooklyn, NY 11201

daniel.galaburda@nationalgrid.comTel: 929-324-4582

tiffany.forsyth@nationalgrid.com

Patrick Tarmey

Senior Counsel
National Grid

40 Sylvan Road

Waltham, MA 02451
Tel: 781-907-2190

patrick.tarmey@nationalgrid.com

Copies of this filing have been served on the entities listed in Attachment A to this filing, which include all of the customers that receive service pursuant to the
Niagara Mohawk Wholesale TSC formula rate, the NYISO, and the NYPSC.

VIII. Conclusion

For the reasons stated herein, Niagara Mohawk respectfully requests that the Commission accepts the revisions to Attachment H to the NYISO OATT contained in this filing without suspension, condition, or modification.

Respectfully submitted,

/s/ Daniel Galaburda_

Daniel Galaburda

Assistant General Counsel National Grid

40 Sylvan Road

Waltham, MA 02451

Attorney for Niagara Mohawk Power
Corporation d/b/a National Grid