10 Krey Boulevard Rensselaer, NY 12144

October 11, 2012

By Electronic Delivery

Ms. Kimberly D. Bose Secretary

Federal Energy Regulatory Commission 888 First St, NE

Washington, DC 20426

Re: New York Independent System Operator, Inc and New York Transmission Owners,
Compliance Filing, Docket Nos. RM10-23-000, ER13-_____-000

Dear Ms. Bose:

In compliance with Order No. 1000, the Commission’s Final Rule on Transmission
Planning and Cost Allocation by Transmission Owning and Operating Public Utilities,1 the
New York Independent System Operator, Inc. (“NYISO”) and the New York Transmission
Owners (“NYTOs”)2 (together the “Filing Parties”) respectfully submit this compliance filing.
This compliance filing explains how the NYISO’s current transmission planning process in
Attachment Y of the NYISO’s Open Access Transmission Tariff (“OATT”)3 already complies
with, or surpasses, most of Order No. 1000’s requirements with respect to local and regional

1 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public

Utilities, Order No. 1000, 136 FERC ¶ 61,051 (2011), order on reh’g and clarification, Order No. 1000-
A, 139 FERC ¶ 61,132 (2012).

2 The NYTOs are: Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., Long Island Lighting Company d/b/a LIPA, New York Power Authority, New York
State Electric & Gas Corp., Niagara Mohawk Power Corp. d/b/a National Grid, Rochester Gas & Electric Corp., and Orange & Rockland Utilities, Inc. The NYTOs reserve the right to comment separately on this filing. LIPA and NYPA as transmission owners not subject to the FERC’s rate jurisdiction under Section 205 of the Federal Power Act have voluntarily participated in the development of this comprehensive
filing and thereby join the other New York Transmission Owners in this pleading. Though LIPA supports the majority of this compliance filing, as further noted in Section V.A.2.d below, it disagrees with the
omission of tariff language addressing the role of the Long Island Power Authority in the identification,
evaluation, and selection of needs and solutions to needs driven by Public Policy Requirements, and the
allocation of costs related thereto, with respect to the Long Island Transmission District, and reserves its right to submit a filing with the Commission regarding that issue.

3 Capitalized terms that are not otherwise defined in this filing shall have the meaning specified in
Attachment Y of the NYISO OATT, and if not defined therein, in the NYISO OATT and Services Tariff.

Ms. Kimberly D. Bose, Secretary October 11, 2012

transmission planning and cost allocation.4 This compliance filing also proposes certain

revisions to Attachment Y to bring it into full compliance with all of the Order No. 1000 local
and regional planning and cost allocation requirements, as further explained below. The Filing
Parties submit that the proposed compliance tariff modifications fully comply with the Order No.
1000 regional transmission planning process requirements in a manner that allows the flexibility
necessary to encourage the further development of transmission in the New York Control Area
(“NYCA”).

As further explained below, Section III of this compliance filing letter provides the

background of the NYISO’s existing processes and how they have evolved in compliance with
prior Commission orders on transmission planning. Section IV explains that many of the
existing tariff provisions substantially comply with the Order Nos. 1000 and 1000-A
requirements, including, among other things, the existence of a regional transmission planning
process that produces a regional transmission plan, fully complies with all Order No. 890
principles, and does not contain a right of first refusal (“ROFR”). Section V addresses areas in
which the Filing Parties have identified and proposed compliance tariff revisions that fully
address requirements not presently covered by the Tariff, including, among other things: (1) the
addition of a Public Policy Requirements planning process (see Section V.A); (2) tariff changes
to fully comply with the Order No. 1000 directives on the regional transmission planning
process, including directives on criteria for qualification (see Section V.B.3) and monitoring of
projects (see Section V.B.4), as well as modifications to consider more efficient or cost effective
transmission solutions (see Section V.B.1); (3) additional compliance modifications (see Section
V.C); and (4) ministerial and clarifying revisions (see Section V.D). The Filing Parties also
address the unresolved issues raised during the NYISO stakeholder meetings in Sections
IV.A.1.C.i, V.A.1.a, V.A.2.c, V.A.2.d, and V.B.1.a.

The Filing Parties request that these proposed tariff modifications be made effective upon the completion of the next reliability planning cycle following the Commission’s issuance of a final order approving these tariff changes. The Filing Parties believe that the analysis of
transmission needs driven by Public Policy Requirements should be based on a current
Comprehensive Reliability Plan. This approach will provide the foundation of a reliable bulk power system upon which to build consideration of public policy needs.

I.COMMUNICATIONS

Communications and correspondence regarding this filing should be directed to:

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

cpatka@nyiso.com

Company representatives listed in Attachment I.6

*Persons designated to receive service

Tel: (202) 955-1500
Fax: (202) 778-2201
tmurphy@hunton.com
vcolon@hunton.com

*J. Kennerly Davis5
Hunton & Williams LLP
951 East Byrd Street
Richmond, VA 23219
Tel: (804) 788-8200
Fax: (804) 788-8218
kdavis@hunton.com

*Elias G. Farrah

Winston & Strawn, LLP 1700 K Street, NW

Washington, DC 2006-3817 efarrah@winston.com

*Paul L. Gioia

Whiteman Osterman & Hanna LLP 111 Washington Avenue

Suite 401

Albany, NY 12210
Tel: (518)449-3337
pgioia@plg26.com

5 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3) (2011)) is requested to the
extent necessary to permit service on counsel for the NYISO in both Richmond, VA and Washington,
DC.

6 Waiver of the Commission’s regulations (18 C.F.R. § 385.203(b)(3)) is also requested to the extent necessary to permit service on counsel for the NYTOs in both Albany, NY and Washington, DC, as well as the inclusion on the service list of all of the parties listed in Attachment I.

iii

Ms. Kimberly D. Bose, Secretary October 11, 2012

II.LIST OF DOCUMENTS SUBMITTED

The NYISO respectfully submits the following documents:

1. This filing letter;

2. A list of the company representatives for the New York Transmission Owners
(“Attachment I”);

3. The Letter of New York State Public Service Commission Chairman Garry A. Brown
to Steven G. Whitley dated September 27, 2012 (“Attachment II”);

4. A blacklined version of the NYISO OATT sections containing the proposed
compliance modifications (“Attachment III”);

5. A clean version of the NYISO OATT sections containing the proposed compliance
modifications (“Attachment IV”);

6. A blacklined version of the NYISO Market Administration and Control Area Services
Tariff (“Services Tariff”) sections containing the proposed compliance modifications
(“Attachment V”); and

7. A clean version of the NYISO Services Tariff sections containing the proposed
compliance modifications (“Attachment VI”).

Ms. Kimberly D. Bose, Secretary October 11, 2012

TABLE OF CONTENTS

I.COMMUNICATIONS.....................................................ii

II. LIST OF DOCUMENTS SUBMITTED...................................iv

III. BACKGROUND......................................................1

A. Overview of the NYISO’s Transmission Planning Process...................1

1.Origin of Attachment Y.................................................2

2.Evolution of Attachment Y in Compliance with Order No. 890..................3

B. Order No. 1000.....................................................5

C. Discussions among the NYISO, Market Participants, Other Stakeholders and Outstanding

Issues.....................................................................6

IV. THE NYISO’S EXISTING TRANSMISSION PLANNING PROCESS MEETS OR

EXCEEDS MOST OF ORDER NO. 1000’S REQUIREMENTS.....................7

A. The NYISO’s CSPP Includes a Fully Compliant Regional Transmission Planning Process

that Produces a Regional Plan..................................................8

1.The CSPP Produces a Regional Transmission Plan...........................9

a.Local Transmission Planning Processes.................................11

b. Reliability Planning Process......................................12

i.Reliability Needs Assessment.......................................12

ii.Comprehensive Reliability Plan.....................................13

c.Economic Planning Process...........................................16

i.Stakeholder Concerns with Economic Planning Process..................18

2.The CSPP Complies with the Order No. 1000 Requirement that the Regional Planning

Process Fully Comply with the Order No. 890 Transmission Planning Principles.......19

a.Coordination......................................................19

b. Openness.....................................................21

c.Comparability.....................................................22

d. Transparency..................................................24

e.Information Exchange...............................................25

f.Dispute Resolution..................................................26

g. Economic Planning.............................................26

3.The NYISO’s CSPP Complies with the Requirement that All Alternatives Be

Considered on a Comparable Basis...........................................27

4.The NYCA Is an Established Planning Region for Purposes of Order No. 1000....28

5.The NYISO’s CSPP complies with Order No. 1000’s Directives Regarding Merchant

Developer Participation in the Regional Transmission Planning Process..............29

B. The NYISO’s Existing CSPP Already Complies with Many Order No. 1000 Directives

on Non-Incumbent Transmission Developers.....................................30

1.Rights of First Refusal.................................................30

C. The NYISO’s CSPP Already Satisfies Most of Order No. 1000’s Directives on Cost

Allocation for Regional Transmission Planning, including the Regional Cost Allocation

Principles.................................................................31

1.Regional Principle #1..................................................32

Ms. Kimberly D. Bose, Secretary October 11, 2012

2.Regional Principle #2..................................................33

3.Regional Principle #3..................................................33

4.Regional Principle #4..................................................34

5.Regional Principle #5..................................................35

6.Regional Principle #6..................................................36

D. Participation by Non-Public Utilities Subject to FERC’s Reciprocity Provisions.37

V. PROPOSED COMPLIANCE TARIFF MODIFICATIONS...................37

A. Public Policy Requirements..........................................38

1.Definition of Public Policy Requirement...................................39

a.Stakeholder Concerns with the Proposed Definition of the Term “Public Policy

Requirements”.........................................................40

2.Public Policy Requirements Planning Process..............................41

a.Step One - Identification of Needs......................................41

b. Step Two - Evaluation of Proposed Transmission Solutions.............43

c.Stakeholder Concerns with the Role of the NYPSC and NYISO..............44

d. Stakeholder Concerns with the Role of Long Island Power Authority......45

3.Cost Allocation and Recovery for Transmission Solutions to Identified Transmission

Needs Driven by Public Policy Requirements...................................46

a.Cost Allocation Provisions...........................................46

b. Cost Recovery Provisions........................................48

c.Stakeholder Concerns with Cost Allocation and Recovery Methodology.......48

4.Compliance with Order No. 890 Principles.................................50

5.Additional New Sections...............................................52

6.Modifications to Existing Provisions in Other Attachment Y Sections to Reflect the

Addition of a Public Policy Requirements Planning Process.......................52

B. Additional Modifications to Ensure Full Compliance with the Regional Transmission

Plan Directives.............................................................54

1.Modification to Ensure the Consideration of “Alternative Transmission Solutions that

May Meet the Needs of the Region More Efficiently or Cost-Effectively than Local

Transmission Plans”......................................................54

a.Stakeholder Concerns with the Current and Proposed Processes’ Compliance with

the Non-Discrimination Directive..........................................54

2.Modification to Comply With ROFR Directives Regarding the Rights of Incumbent

Transmission Providers....................................................56

3.Modification to Comply With Directives Regarding Entity Qualification and Project

Information.............................................................57

4.Process for Reevaluation of Transmission Plan Due to Delays in Development....63

C. Additional Compliance Modifications..................................63

1.Applicability of Order No. 1000’s Reforms to New Facilities..................63

2.Clarification that the NYISO Does Not Select Among Solutions in the Regional

Transmission Plan for Purposes of Cost Allocation..............................64

3.Obligation of Non-Incumbent Transmission Developers to Comply with Applicable

Reliability Obligations.....................................................65

4.Revisions to Comply with Regional Cost Allocation Principles.................65

D. Additional Ministerial Modifications and Further Clarifications..............66

Ms. Kimberly D. Bose, Secretary October 11, 2012

VI. EFFECTIVE DATE..................................................67

VII. SERVICE..........................................................68

vii

Ms. Kimberly D. Bose, Secretary October 11, 2012

III. BACKGROUND

A. Overview of the NYISO’s Transmission Planning Process

The NYISO’s transmission planning process is contained in Attachment Y of the

NYISO’s OATT, and is known as the Comprehensive System Planning Process (“CSPP”). The
NYISO’s CSPP covers the New York Bulk Power Transmission Facilities (“BPTFs”) 7 and
presently contains three components: (i) a Local Transmission Planning Process (“LTPP”) by
which each NYTO with a Transmission District posts and accepts comments on its local area
plans; (ii) a Reliability Planning Process consisting of a Reliability Needs Assessment (“RNA”)
and a Comprehensive Reliability Plan (“CRP”) that identifies reliability needs over a ten-year
planning horizon and evaluates market-based solutions as well as regulated solutions—the latter
for purposes of cost allocation and recovery, if needed; and (iii) a two-phase Congestion
Analysis and Resource Integration Study (“CARIS”) process that conducts an overall analysis of
the economic benefits of relieving congestion and includes a process for developers to propose
projects to resolve congestion and to request evaluation of their eligibility for cost allocation
under the NYISO’s Tariff.

Through the CSPP, the NYISO evaluates solutions to meet both reliability and

congestion relief needs, coordinates the NYISO’s assessments with neighboring Control Areas, and provides cost allocation methodologies and recovery mechanisms for regulated reliability and economic projects that meet tariff criteria.

As explained below in Section IV, the NYISO’s CSPP currently meets or exceeds most
of the Order No. 1000 local and regional requirements. As currently effective, the CSPP (1) is
market-based and strives to achieve market-based solutions to reliability and economic needs on
the BPTFs when possible; (2) is open and transparent, engaging regulators, Market Participants
and other stakeholders in accordance with NYISO’s shared governance process; (3) considers all
resources as potential solutions to identified needs, including transmission, generation and

demand response; (4) provides for the allocation of costs of proposed solutions to identified

reliability and economic needs to project beneficiaries; (5) does not include a right of first refusal
for incumbent transmission owners for transmission projects to address regional needs; (6)
results in a regional transmission plan that evaluates solutions for identified reliability and
economic needs in the region; (7) complies with the Order No. 890 transmission planning
principles; and (8) complies with the Order No. 1000 regional cost allocation principles.

Further, as explained below in Section V, the CSPP with the additional compliance tariff
revisions proposed herein will fully comply with the Commission’s Order No. 1000 directives
including: (1) the addition of a new planning process to consider transmission needs driven by

7 The New York State Bulk Power Transmission Facilities are the transmission facilities for

which the NYISO conducts its Annual Transmission Review (“ATR”) submitted to the Northeast Power
Coordinating Council (“NPCC”) pursuant to NPCC requirements. See OATT Attachment Y § 31.1.1
Definitions.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Public Policy Requirements; (2) the inclusion of entity qualification and project information

criteria in the tariff; (3) the consideration of consequences of identified transmission solutions on
other regions; (4) the evaluation of regional transmission projects that may meet the regional
bulk power system needs more efficiently or cost-effectively than projects identified in local
transmission plans; and (5) the inclusion of the six Order No. 1000 cost allocation principles.

1.Origin of Attachment Y

The NYISO and the NYTOs initially submitted the Attachment Y transmission planning
process on a voluntary basis on August 20, 2004.8 As originally proposed, Attachment Y
implemented the NYISO’s Comprehensive Reliability Planning Process (“CRPP”).9 The CRPP
provided the mechanism through which the NYISO, its Market Participants, and the New York
State Public Service Commission (“NYPSC”) would cooperate in planning for the long-term
Reliability Needs10 of the BPTFs. Attachment Y established an all-resource planning process, an
open, transparent, and dedicated stakeholder working group (the Electric System Planning
Working Group or “ESPWG”) and a NYISO governance process to identify transmission
upgrades and other types of resources needed to meet Reliability Needs on the BPTFs. The
process was created to encourage development and deployment of market-based solutions that
recover their costs by selling their output through the NYISO markets while providing for the
construction of regulated solutions with tariff rate recovery to serve as a “backstop” if market-
based proposals did not solve the identified Reliability Need in a timely manner.

The Commission found that the original Attachment Y provided balanced consideration of market-based and regulated solutions, and was “a substantial improvement over planning processes that traditionally have depended largely or even solely on transmission owner
developed regulated solutions.”11 The Commission also stated in the order approving
Attachment Y that it “applaud[ed] NYISO and interested parties for devising a workable,
efficient process to facilitate transmission planning and expansion.”12

8 See New York Independent System Operator, Inc., Filing of Comprehensive Reliability Planning Process and Related Agreement, Docket No. ER04-1444-000 (August 20, 2004).

9 With the addition of the local transmission system planning and economic planning processes, the CRPP was renamed the Comprehensive System Planning Process (“CSPP”).

10 A Reliability Need is a “condition identified by the ISO as a violation or potential violation of one or more Reliability Criteria.” See Attachment Y § 31.1.1 Definitions. Reliability Criteria are defined as the standards, criteria and rules of the North American Electric Reliability Corporation (“NERC”), the Northeast Power Coordinating Council (“NPCC”), and the New York State Reliability Council
(“NYSRC”). See OATT Attachment Y § 31.1.1 Definitions.

11 New York Independent System Operator, Inc., 109 FERC ¶ 61,372 at P 33 (2004).

12 Id. at P 19.

Ms. Kimberly D. Bose, Secretary October 11, 2012

2. Evolution of Attachment Y in Compliance with Order No. 890

On February 16, 2007, the Commission issued Order No. 890, which reformed the

Commission’s pro forma OATT to provide for, among other things, an open, transparent, and coordinated planning process at both a regional and a local level.13 Order No. 890 required public utility transmission providers to:

submit, as part of a compliance filing in this proceeding, a proposal for a

coordinated and regional planning process that complies with the planning

principles and other requirements in this Final Rule. In the alternative, a

transmission provider (including an RTO or an ISO…), may make a compliance
filing in this proceeding describing its existing coordinated and regional planning
process, including the appropriate language in its tariff, and show that this
existing process is consistent with or superior to the requirements in this Final
Rule.14

To that end, Order No. 890 set forth nine planning principles that each transmission
provider had to address in its planning process, i.e., (1) coordination; (2) openness; (3)
transparency; (4) information exchange; (5) comparability; (6) dispute resolution; (7) regional
participation; (8) economic planning studies; and (9) cost allocation for new projects. The
Commission stated that “each of the Commission-approved RTOs in the Northeast, Midwest,
Southwest, as well as CAISO, provide for a coordinated and regional planning process with
stakeholder input from each industry segment”15 and that it “fully supports these existing
efforts….”16 The Commission further recognized that in regions where significant processes
were already in existence, such processes may not need to be drastically changed to comply with
Order No. 890.17 The Commission acknowledged that Regional Transmission Operators
(“RTOs”) and Independent System Operators (“ISOs”) had transmission planning processes in
their tariffs, and that it had found these processes to be consistent with or superior to the then
existing pro forma OATT. However, because Order No. 890 reformed the pro forma OATT, the
Commission held that each RTO and ISO would have to either reform its existing planning
process or show that such process is superior to or consistent with the pro forma OATT as
modified by Order No. 890.

13 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 72 FR 12266 (Mar. 15, 2007), FERC Stats. & Regs. ¶ 31,214 at P 435, order on reh’g, Order No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ¶ 31,261 (2007), order on reh’g and clarification, Order No. 890-B, 73 FR 39092 (July 8, 2008), 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890-C, 74 FR 12540 (Mar. 25, 2009), 126 FERC ¶ 61,228 (2009), order on clarification, Order No. 890-D, 74 FR 61511 (Nov. 25, 2009), 129 FERC ¶ 61,126 (2009).

14 Order No. 890 at P 437 (footnotes omitted).

15 Id. at P 525.

16 Id. at P 526.

17 Id.

Ms. Kimberly D. Bose, Secretary October 11, 2012

The NYISO submitted compliance filings to address the Order Nos. 890 and 890-A

directives.18 These compliance filings showed that its existing Attachment Y planning process was in many respects already consistent with, or superior to the pro forma OATT. These
compliance filings also proposed certain modifications to bring the Attachment Y transmission planning process into full compliance with Order No. 890.

Most significantly, in compliance with the Order No. 890 transmission planning

principles, the NYISO created the CSPP. The CSPP was built on the core reliability planning processes of the CRPP as modified to: (1) add an economic planning process to provide for the evaluation of congestion on the bulk power system and for cost allocation of transmission
projects to alleviate that congestion; (2) add a local transmission planning process by which
individual Transmission Owners (“TOs”) post and receive comments on their Local
Transmission Plans, which provide input to the NYISO for reliability and subsequently for
economic planning; and (3) expand upon the methodologies for reliability and economic project cost allocation and provide a mechanism for recovery of regulated reliability project costs.19 The CSPP is more specifically described in Section IV.A below.

Separately, the NYISO filed on August 24, 2004 and February 25, 2005 unsigned

agreements with the NYTOs providing for development of reliability backstop solutions. The

Commission accepted this agreement for filing, with revisions, on December 28, 200420 and May 6, 2005.21 The NYTOs consented by executing the agreement dated June 10, 2010, to, at the request of the NYISO, propose and build reliability backstop solutions in the event that market based solutions fail to materialize on a timely basis to meet reliability needs, so long as the
NYTOs receive full recovery of their costs.

Ultimately, the Commission accepted22 all of the NYISO’s compliance tariff revisions, finding that “the NYISO’s transmission planning process … complies with each of the nine planning principles and other planning requirements adopted in Order No. 890.”23

18 See Docket Nos. OA08-52, ER10-2241, and ER10-2459 on December 7, 2007, June 18, 2008, January 14, 2009, May 19, 2009, December 11, 2009, April 13, 2010, and August 30, 2010. The August 30, 2010 Compliance filing was initially submitted on August 16, 2011 in Docket No. ER10-2241-000. However, the NYISO had to withdraw it due to e-Tariff filing issues and resubmit on August 30, 2010 in Docket No. ER10-2459-000.

19 Note that the NYISO has not yet adopted a cost recovery mechanism for projects selected through the economic planning process, but intends to do so in 2013 following discussions in the stakeholder process.

20 New York Independent System Operator, Inc., 111 FERC ¶ 61,182 at PP 38-39 (2006).

21 New York Independent System Operator, Inc., 111 FERC ¶ 61,182 at P 19 (2005).

22 See, New York Independent System Operator, Inc., 125 FERC ¶ 61,068 (2008), reh’g, 126
FERC ¶ 61,320 (2009), reh’g denied, 129 FERC ¶ 61,045 (2009) (“October 2008 Order”); New York
Independent System Operator, Inc., 129 FERC ¶ 61,044 (2009) (“October 2009 Order”); New York
Independent System Operator, Inc., 132 FERC ¶ 61,028 (2010) (“July 2010 Order”); New York

Ms. Kimberly D. Bose, Secretary October 11, 2012

B.Order No. 1000

The Commission has stated that Order No. 1000 is intended to build on Order No. 890’s planning requirements.24 Order No. 1000 is aimed at achieving two “primary objectives.”25
Specifically, to:

(1) [e]nsure that transmission planning processes at the regional level consider

and evaluate, on a non-discriminatory basis, possible transmission alternatives

and produce a transmission plan that can meet transmission needs more efficiently and cost-effectively; and (2) ensure that the costs of transmission solutions chosen to meet regional transmission needs are allocated fairly to those who receive
benefits from them.26

Order No. 1000 requires participation by public utility transmission providers in regional
transmission planning processes.27 These regional processes must comply with certain Order
No. 890 principles, but must also “evaluate transmission alternatives at the regional level that
may resolve the transmission planning region’s needs more efficiently and cost-effectively than
alternatives identified by individual public utility transmission providers in their local
transmission planning processes,” including the consideration of transmission needs driven by
Public Policy Requirements.28 The Commission also directs the improvement of coordination
across regional planning processes and the establishment of cost allocation methods for facilities
identified through regional transmission plans.29 Order No. 1000 also requires the development
of interregional cost allocation mechanisms—at least with respect to each pair of neighboring
regions. Additionally, Order No. 1000 mandates that costs of new transmission facilities be
allocated “in a manner that is at least roughly commensurate with the benefits received by those
who will pay those costs” and directs that costs “not be involuntarily allocated to entities that do
not receive benefits.”30 Regional and inter-regional transmission plans must consider
transmission facilities proposed by all entities.31 Order No. 1000 also requires that “generation,

Independent System Operator, Inc., 132 FERC ¶ 61,188 (2010) (“August 2010 Order”); New York

Independent System Operator, Inc., Letter Order, Docket No. ER10-2459-000 (issued October 26, 2010) (“October 2010 Order”).

23 October 2008 Order at P 16.

24 Order No. 1000 at P 1.

25 Id. at P 4.

26 Id.

27 Id. at P 6.

28 Id.

29 Id. at PP 8-9.

30 Id. at P 10.

31 Id. at P 11.

Ms. Kimberly D. Bose, Secretary October 11, 2012

demand resources, and transmission be treated comparably in the regional transmission planning process.”32

Order No. 1000 acknowledges that some regions already have such processes in place
and that the directed reforms “are not intended to undermine progress being made in those
regions.”33 Consequently, Order No. 1000 provides that “to the extent existing transmission
planning processes satisfy the requirements of this Final Rule, public utility transmission
providers need not revise their OATTs and, instead, should describe in their compliance filing
how the relevant requirements are satisfied by reference to tariff sheets already on file with the
Commission.”34

C.Discussions among the NYISO, Market Participants, Other Stakeholders and

Outstanding Issues

The NYISO and other stakeholders have worked diligently to enhance the NYISO’s

existing process consistent with the Order No. 1000 directives. During the fall of 2011 and

through February 2012, the NYISO and the NYTOs held multiple meetings with the New York
State Department of Public Service to develop their response to Order No. 1000, including
formulation of a “strawman” proposal for Public Policy Requirements that drive the need for
transmission. Beginning in February 2012, the NYISO worked with its stakeholders to review
the requirements of Order No. 1000 and to develop the proposed compliance tariff revisions
submitted in this filing.

The NYISO and the NYTOs reviewed the Public Policy Requirements planning process
proposal with the stakeholders and received their feedback on this new process and the full host
of Order No. 1000 compliance issues. The NYISO held additional stakeholder meetings to
discuss the same on April 23, June 6, June 18, June 26, July 10, July 24, August 6, August 9, and
August 28, 2012. Additionally, the NYISO requested, received, and considered comments from
stakeholders throughout the process, including written comments received on September 7, 2012,
which were submitted to the NYISO Board of Directors for its review. Numerous revisions were
made to the proposed Tariff changes in response to these stakeholder comments.

The NYISO also discussed the stakeholders’ remaining concerns at Management

Committee meetings held on August 29th and September 28th. The Board of Directors, after

considering the sum of the comments, decided that the proposed compliance filing represented a balanced outcome that fairly reflects the interests of all stakeholders.

The open and transparent stakeholder process succeeded in narrowing the differences on
many of the issues and in achieving broad consensus on others. Full consensus on all issues was

32 Id. at P 779.

33 Id. at P 13.

34 Id. at n. 71.

Ms. Kimberly D. Bose, Secretary October 11, 2012

not achievable, however, as stakeholders did not come to agreement on all aspects of the
NYISO’s Public Policy Requirements planning process proposal and certain other issues.
Specifically, outstanding issues, which the Filing Parties expect will be raised in responsive
pleadings, include matters concerning the: (1) cost allocation process for Public Policy
Requirements;35 (2) definition of Public Policy Requirement;36 (3) role of the NYPSC/NYDPS
and the NYISO in the Public Policy Requirements planning process;37 (4) authority of the Long
Island Power Authority to propose and identify transmission needs driven by Public Policy
Requirements and to implement elements of the Public Policy Requirements planning process
otherwise exercised by the NYDPS/NYPSC relating to transmission needs relating to the Long
Island Transmission District;38 (5) existing and proposed tariff provisions governing the process
for selecting regulated reliability projects for permitting and construction, including the
NYPSC’s role in that process;39 and (6) existing tariff provisions governing the process for
choosing economic projects, most significantly the use of an 80 percent beneficiary vote to select
projects.40 The Filing Parties believe that this filing fully complies with all Order No. 1000 and
Order No. 1000-A requirements, and address each of the remaining stakeholder concerns in the
sections below.

IV. THE NYISO’S EXISTING TRANSMISSION PLANNING PROCESS MEETS OR

EXCEEDS MOST OF ORDER NO. 1000’S REQUIREMENTS

The Commission determined in Order No. 1000 that the requirements of Order No. 890 alone may not result in the development of a more efficient and cost effective set of transmission facilities on a regional basis41 concluded that additional regional transmission planning reforms were needed in order to

ensure that public utility transmission providers in each transmission planning region, in consultation with stakeholders, identify and evaluate transmission alternatives at the regional level that may resolve the region’s needs more
efficiently or cost-effectively than solutions identified in the local transmission plans of individual public utility transmission providers.42

35 The Filing Parties fully address these concerns in Section V.A.3.c, below.

36 The Filing Parties fully address these concerns in Section V.A.1.a, below.

37 The Filing Parties fully address these concerns in Section V.A.2.c, below.

38 The Filing Parties fully address these concerns in Section V.A.2.d, below.

39 The Filing Parties fully address these concerns in Section V.B.1.a, below.

40 The Filing Parties fully address these concerns in Section IV.A.1.c.i, below.

41 Order No. 1000 at P 78.

42 Id.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Order No. 1000 also recognized that each of the existing ISO and RTO regions already
have tariff provisions implementing a regional transmission planning process.43 While the
Commission declined to find that existing approved ISO and RTO regional transmission
planning processes were already in compliance with Order No. 1000,44 it stated that “public
utility transmission providers in some regions already meet or exceed this requirement.”45 The
Commission also acknowledged that in some regions Order No. 1000 compliance may require
only “modest changes” to those existing regional transmission planning processes.46

The Filing Parties show, in this Section IV, that the currently effective CSPP already

fully complies with most of the Order No. 1000 local and regional planning requirements. Thus, this compliance filing describes “how the relevant requirements are satisfied by reference to tariff sheets already on file with the Commission.”47 Where the NYISO’s CSPP does not yet fully address certain Order No. 1000 directives, the Filing Parties propose compliance tariff
modifications to address them, as explained in Section V below.

A. The NYISO’s CSPP Includes a Fully Compliant Regional Transmission

Planning Process that Produces a Regional Plan

Order No. 1000 identifies and addresses deficiencies in the Order No. 890 requirements. Specifically, Order No. 1000 finds that while Order No. 890 required regional level coordination by public utility transmission providers for the identification of system enhancements, it did not require that such transmission providers:

• Take affirmative steps to identify potential solutions at the regional level that could
better meet the needs of the region;

• Undertake analyses to evaluate potential upgrades or other investments that could
reduce congestion or integrate new resources or loads on an aggregated or regional
basis; and

• Develop a single regional transmission plan that reflects the transmission provider’s
determination of the set of transmission facilities that more efficiently or cost-
effectively meet the needs of the region.48

Thus, Order No. 1000 “builds” on the Order No. 890 transmission planning principles

and expands them “by directing public utility transmission providers to adopt these requirements

43 Id. at P 80.

44 Id. at PP 795-796.

45 Id. at P 149.

46 Id. at n.142.

47 Id. at n.71.

48 Id. at P 147.

Ms. Kimberly D. Bose, Secretary October 11, 2012

with respect to the process used to produce a regional transmission plan.”49 Order No. 1000

directs that each transmission provider “participate in a regional transmission planning process that produces a regional transmission plan and complies with existing Order No. 890
transmission planning principles.”50

1. The CSPP Produces a Regional Transmission Plan

Order No. 1000 acknowledges that although the requirement that a transmission provider participate in an Order No. 890 compliant regional transmission planning process is new, “only modest changes” may be required to bring existing regional transmission planning processes in compliance with this directive.51 As explained in further detail herein, the NYISO’s CSPP, with certain modifications,52 substantially complies with the directive that its tariff contain a regional transmission plan that complies with the Order No. 890 principles, with respect to its existing reliability and economic planning processes.

The NYISO’s CSPP is a regional transmission planning process that produces a regional
transmission plan with respect to the BPTFs. Specifically, OATT Attachment Y,53 Sections 31.2
(establishing the reliability planning process) and 31.3 (establishing the economic planning
process) establish the process used to identify Reliability Needs and congestion and evaluate
solutions, culminating in the preparation of a regional transmission plan for the NYCA planning
region. As indicated in Section 31.1.2, the objectives of the reliability planning process are to:

(1) evaluate the reliability needs of the BPTFs pursuant to Reliability Criteria; (2)
identify, through the development of appropriate scenarios, factors and issues that
might adversely impact the reliability of the BPTFs; (3) provide a process
whereby solutions to identified needs are proposed, evaluated on a comparable
basis, and implemented in a timely manner to ensure the reliability of the system;

(4) provide an opportunity first for the implementation of market-based solutions while ensuring the reliability of the BPTFs; and (5) coordinate the ISO’s
reliability assessments with neighboring Control Areas.

Pursuant to Section 31.1.4, the NYISO’s economic planning process:

(1) projects congestion on the BPTFs over the ten-year planning period of this
CSPP; (2) identifies, through the development of appropriate scenarios, factors
that might produce or increase congestion; (3) provides a process whereby

49 Id. at P 151.

50 Id. at P 68.

51 Id. at n.142.

52 See Section V, below.

53 Unless otherwise stated, further section references in this compliance filing letter will be to OATT Attachment Y.

Ms. Kimberly D. Bose, Secretary October 11, 2012

projects to reduce congestion identified in the economic planning process are

proposed and evaluated on a comparable basis in a timely manner; (4) provides an opportunity for the development of market-based solutions to reduce the
congestion identified; and (5) coordinates the ISO’s congestion assessments and economic planning with neighboring Control Areas.

The CSPP evaluates the resource adequacy and transmission system security of New
York State’s bulk power system over a 10-year period. Currently, solutions to meet reliability
needs and relieve congestion are evaluated. The CSPP currently consists of three components:

(1) a LTPP; (2) a reliability planning process; and (3) an economic planning process. The CSPP
three-part planning process is conducted over a two-year period. The LTPP component begins
with each NYTO Local Transmission Plan (“LTP”), the assumptions underlying and the results
of which are reviewed with all interested parties, and posted on each NYTO website with a link
on the NYISO’s website. The LTPs provide necessary inputs into the RNA/CRP process
component. The third component of the CSPP is an economic planning process, known as the
CARIS.54

The CSPP has two cost allocation methodologies, which are set forth in Section 31.5.55
The cost allocation and recovery provisions are applicable to: (1) regulated reliability projects
constructed in response to a Reliability Need; and (2) transmission projects constructed in
response to congestion identified in the CARIS, i.e. regulated economic transmission projects
(“RETP”). Cost allocation for both types of projects is based on the principle that beneficiaries
of the project should pay their share of the costs at least roughly proportionate to their benefits.

Further, Section 31.2.1 establishes the LTPP which provides substantial information to
Market Participants and an opportunity for them to provide input on the LTPs of the NYTOs
with Transmission Districts. Each NYTO’s LTP is used as input into the NYISO’s CSPP. The
NYISO’s CSPP considers proposed non-transmission alternatives on a basis comparable to
transmission solutions and allows for the selection of identified alternative transmission
solutions in the regional transmission plan for cost allocation purposes. As described in Section
V.B.1 below, the NYISO is also proposing compliance tariff revisions to address the directive
that a transmission provider’s regional transmission plan evaluate alternative transmission
solutions that may be more efficient or cost-effective than transmission facilities proposed in one
or more local transmission plans.56

54 Note that pursuant to the proposed revisions in this compliance filing, the Public Policy Requirements planning process will be added as a fourth component of the CSPP.

55 Note that this, and other, references to Attachment Y sections reflect revised section numbering as reflected in the modifications proposed in this compliance filing.

56 Order No. 1000 at P 148.

Ms. Kimberly D. Bose, Secretary October 11, 2012

As required by Order No. 1000, the NYISO’s CSPP provides a process that allows for the selection57 of proposed solutions for cost allocation purposes in a transparent and not unduly discriminatory manner.58 That process culminates in determinations, through the issuance of the NYISO’s CRP and CARIS (and as modified herein, the Public Policy Requirements planning process59) reports, that contain details sufficient for stakeholders, and any interested parties, to understand the reason for the selection of particular projects.60

a.Local Transmission Planning Processes

Section 31.2.1 of Attachment Y sets forth the process through which the NYTOs that

have a Transmission District will provide information and seek Market Participant input on their
plans for their transmission systems, including BPTFs and other facilities. Each NYTO with a
Transmission District must administer an individual LTPP. The LTPs describe the needs
addressed, assumptions used, and criteria and methodology for each NYTO’s BPTFs. Section

31.2.1.1.1 requires the posting of the planning criteria and assumptions used in each NYTO

LTPP, as well as review and comment by Market Participants and other parties on those criteria and assumptions, as well as the data and models to be used. This review and comment process is facilitated by the NYISO as described below. NYTOs must consider any comments received
and such planning criteria and methodology must meet or exceed any applicable Reliability
Criteria.61 LTPPs must describe the needs addressed, as well as the assumptions, planning
criteria and methodology.

The LTPP provides for transparency and input by customers, Market Participants and all
interested parties. Section 31.2.1.2 provides that during the NYISO CSPP planning cycle, in
accordance with the schedule in the NYISO’s CSPP Manual, each NYTO must post its current
LTP on its website sufficiently in advance of the time for submission to the NYISO for input into

57 As further clarified below, the NYISO does not select among solutions; in the NYISO’s CSPP
selection of solutions when more than one is identified to meet a Reliability Need (or a need driven by
Public Policy) will be made by the appropriate governmental agencies or authorities. These are the New
York State Public Service Commission for the investor-owned NYTOs, NYPA and LIPA for projects
within the state statutory authority for those entities and the Commission. With respect to the economic
planning process, those projects are selected via the super-majority beneficiary voting mechanism set

forth in Section 31.5.4.6.

58 Order No. 1000 at P 328.

59 See Section V.A for a discussion and description of the proposed modifications to add a Public Policy Requirements planning process to the NYISO’s CSPP.

60 Id. at P 328

61 Reliability Criteria are “[t]he electric power system planning and operating policies, standards,
criteria, guidelines, procedures, and rules promulgated by the North American Electric Reliability
Corporation (“NERC”), Northeast Power Coordinating Council (“NPCC”), and the New York State
Reliability Council (“NYSRC”), as they may be amended from time to time. See Attachment Y § 31.1.1
Definitions.

Ms. Kimberly D. Bose, Secretary October 11, 2012

the Reliability Needs Assessment (“RNA”), so as to allow adequate time for stakeholder review and comment.

Section 31.2.1.2.3 provides that during each planning cycle, the NYISO holds

stakeholder meetings of the Electric System Planning Working Group (“ESPWG”) and

Transmission Planning Advisory Subcommittee (“TPAS”) to discuss each current LTP. Section

31.2.1.2.4 allows all interested parties to review and comment on the planning criteria and

assumptions, as well as data and models, used by the NYTOs. Each NYTO is required to take
such input into consideration and explain any modifications it makes to its LTP in response to
such comments. Pursuant to Section 31.2.1.2.5, after review and discussion in the NYISO’s
stakeholder processes, the NYTO LTPs are included in the base case of the RNA. The LTPP
also has provisions to raise and address issues related to the process, in Section 31.2.1.3.62

b.Reliability Planning Process

Section 31.2 describes the NYISO’s reliability planning process, which is a formal,

transparent, long-term two step process, built around two primary documents, the RNA and the
CRP.

i.Reliability Needs Assessment

Section 31.2.2 sets forth the process through which the NYISO conducts the RNA with
its stakeholders. The RNA evaluates the future reliability of the New York bulk power system
using a 10-year planning horizon. Pursuant to Section 31.2.2.3, the RNA analyzes resource
adequacy, as well as transmission security and transfer capability, on the New York BPTFs. The
RNA identifies the location and nature of any potential factors and issues that could adversely
affect reliability throughout the 10-year planning horizon. The RNA identifies conditions that
are violations or potential violations of established Reliability Criteria and provides an analysis
of historic congestion costs.

The NYISO’s evaluation, in conjunction with its Market Participants, determines the

adequacy (based upon a Loss of Load Expectation criterion) and security (unanticipated loss of system elements or contingencies) through the entire bulk power system against mandatory
national standards, regional reliability standards, and New York State specific standards. Under Section 31.2.2.4, Market Participants, Developers, and other parties provide the data necessary for the development of the RNA, including providing input regarding: (1) existing and planning transmission additions; (2) proposals for merchant transmission facilities; (3) generation
additions and retirements; (4) demand response programs; and (5) any long-term firm
transmission requests made to the NYISO.

62 If disputes arise with respect to any NYTO LTP, Section 31.2.1.3 provides a Dispute

Resolution Process to be used to assist the resolution of such disputes as expeditiously as possible. These
processes include both informal discussions as well as formal alternative dispute resolution procedures.

Ms. Kimberly D. Bose, Secretary October 11, 2012

In compliance with the Order No. 1000 directive that the transmission provider identify regional solutions that may be more efficient or cost effective than solutions proposed in a local plan, Section 31.2.2.4.2 provides that:

[t]he ISO will review the Transmission Owners’ LTPs, as they relate to BPTFs, to
determine whether they will meet Reliability Needs, recommend an alternate
means to resolve the needs from a regional perspective, where appropriate, or
indicate that it is not in agreement with a Transmission Owner’s proposed
additions.63

Pursuant to Section 31.2.2.6, the NYISO considers alternate reliability scenarios, which
test the robustness of the needs assessment studies and identify conditions where Reliability
Criteria may not be met. The NYISO also performs sensitivity studies to determine whether
Reliability Needs that have been previously identified can be mitigated through alternate system
configurations or operational models. The RNA, including the determination of scenarios and
sensitivities, is developed in consultation with all interested parties and is reviewed by NYISO’s
stakeholder committees, as provided in Section 31.2.3. The NYISO publishes a report that is
reviewed by the Market Monitoring Unit (“MMU”) which must be approved by the NYISO
Board of Directors.

ii.Comprehensive Reliability Plan

Rules governing the CRP are set forth in Section 31.2.4. The CRP consists of proposed
solutions to address the needs identified in the RNA. Pursuant to the CRP, the NYISO requests
solutions to the identified needs, with the expectation that market-based solutions will be
proposed to fulfill the needs. The NYISO analyzes market-based solutions to determine whether
they are viable and fulfill identified Reliability Needs. Concurrently, the NYISO evaluates the
viability and sufficiency of regulated backstop solutions and alternative regulated solutions that
the NYISO can call upon where market-based solutions prove to be insufficient. Those analyses
include the consideration of information regarding the project that must be submitted by the
Transmission Owner, pursuant to Sections 31.2.4.3 (for regulated back-stop solutions), 31.2.4.4
(for market-based responses) and by any Other Developer pursuant to Section 31.2.4.7 (for
alternative regulated solutions). As established in Section 31.2.5.1, the NYISO considers all
types of solutions on a comparable basis, including generation, transmission and demand side
programs. In the event that market-based solutions are inadequate to meet the identified
Reliability Need(s) in a timely manner, the NYISO calls for the identification of regulated
backstop solutions or alternative regulated solutions that can be built by the NYTOs or Other
Developers, as needed.

63 Note that the Filing Parties are proposing further compliance modifications to the Attachment Y LTPP provisions, as explained in section V.B.1 below, to ensure full compliance with this Order No. 1000 directive.

Ms. Kimberly D. Bose, Secretary October 11, 2012

The NYISO evaluates all proposed solutions relative to their ability to meet the identified
needs and sets forth the results of its evaluation in the CRP. However, if more than one
regulated solution will meet an identified Reliability Need, the selection of the solution that will
be implemented will be made by the appropriate governmental agency or authority, not the
NYISO.64 The NYPSC selects the reliability backstop solution or alternative regulated solution
that would seek the necessary local, state, and federal authorizations, as appropriate, in the event
that market-based solutions do not timely fulfill identified Reliability Needs.65 The New York
Power Authority and the Long Island Power Authority select solutions to needs of their
customers under the New York Public Authorities Law.66 All Confidential Information
submitted pursuant to the reliability planning process is protected under Section 31.2.5.11.1, as
appropriate.

As provided in Section 31.2.6, the evaluations of proposed solutions are incorporated into
the CRP, which is subject to stakeholder and MMU review and comment and approval by the
NYISO Board of Directors. The CRP’s goal is to ensure the timely evaluation and planning of
all proposed solutions to identified Reliability Needs. Pursuant to Section 31.2.5.7, the CRP sets
forth the NYISO’s determination whether the market based solutions proposed will timely meet
the identified reliability needs by the need date, or whether the Responsible Transmission
Owner67 should proceed to obtain regulatory approval of a reliability backstop solution. The
Responsible Transmission Owners and Other Developers will present their regulated reliability
solutions in the stakeholder process at the same time.68 The NYISO will provide analysis of
alternative regulated solutions in parallel with NYTO regulated backstop solutions, and may
determine that a regulated solution should proceed in parallel with a market based solution.69 In
the CRP or at any time, if the NYISO determines that there is an imminent threat to reliability on
the BPTFs in between planning cycles, the NYISO may call for the Responsible Transmission

64 The NYISO is including language to further clarify this point, as explained in Section V.C.2,

below. The NYISO’s process calls for Responsible Transmission Owners to select the regulated backstop solution to meet an identified Reliability Need, which may be a transmission, generation, or demand
reduction project. The selection is filed with the NYPSC. Other developers may propose alternative
regulated solutions to the NYPSC. It is the NYPSC which makes the ultimate determination of what
project should be implemented in the public interest.

65 Policy Statement on Backstop Project Approval Process, Proceeding to Establish a Long-

Range Electric Resource Plan and Infrastructure Planning Process, Case No. 07-E-1507, (February 18,
2009).

66 See N.Y. Pub. Auth. L. §§ 1005 (for NYPA) and 1020-G (for LIPA).

67 A Responsible Transmission Owner is defined as “[t]he Transmission Owner or Transmission
Owners designated by the ISO, pursuant to Section 31.2.4.2, to prepare a proposal for a regulated
backstop solution to a Reliability Need or to proceed with a regulated solution to a Reliability Need. The
Responsible Transmission Owner will normally be the Transmission Owner in whose Transmission
District the ISO identifies a Reliability Need.” See OATT Attachment Y § 31.1.1 Definitions.

68 Attachment Y § 31.2.5.8.

69 Id. at § 31.2.5.9.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Owner to submit and seek approval to implement a Gap Solution.70 Any party may submit an

alternative gap solution to the NYISO and the NYDPS for consideration at the same time and on the same basis as NYTO gap solutions.71 Regulated NYTO backstop and alternative backstop solutions that are selected by the NYPSC and that are transmission projects are equally eligible for cost recovery under the NYISO’s Tariff.72 Such solutions that are not transmission (i.e.,
generation or demand reduction), must obtain cost recovery under state law.73 Where a dispute arises regarding the inclusion or exclusion of a solution, such disputes are referred to the NYPSC for resolution, as established in Section 31.2.6.3.

Order No. 1000 requires that transmission providers describe the process for reevaluating
the transmission plan to determine if delays in development of a transmission facility would
require reevaluation of alternative solutions “to ensure the incumbent transmission provider can
meet its reliability needs or service obligations.”74 The purpose of the requirement is to ensure
that adequate processes exist to determine whether delays of a selected transmission facility
could potentially adversely affect a transmission provider’s ability to meet its reliability needs or
service obligations.75

In compliance with Order No. 1000, projects selected pursuant to the reliability planning process are monitored by the NYISO to ensure that they will be constructed in time to meet the identified Reliability Need. Section 31.2.7 provides for monitoring of projects and the actions the NYISO will take (including evaluation of alternative solution) to ensure that Reliability
Needs will be met on a timely basis.76 This includes provisions for:

• The halting of market-based or regulated backstop solutions, in Section 31.2.7.3.1;

• The monitoring of Responsible Transmission Owner solutions, even after submittal of
applications for state regulatory approval or other necessary approvals, as required in
Section 31.2.7.3.2;

• Enabling requests for supplemental reliability review, in the event of material

modifications proposed by regulators to the regulated backstop solutions in Section

31.2.7.3.3;

70 Id. at § 31.2.5.10. A Gap Solution is “[a] solution to a Reliability Need that is designed to be
temporary and to strive to be compatible with permanent market-based proposals.” See Attachment Y §

31.1.2.

71 Id. at §31.2.5.10.4.

72 Id. at § 31.5.1.1; OATT Rate Schedule 10.

73 Attachment Y § 31.5.1.6.

74 Order No. 1000 at P 329.

75 Id.

76 The NYISO is proposing compliance modifications in Section 31.2.7 to explicitly provide the monitoring criteria for selected projects, as explained in Section V.B.4.

Ms. Kimberly D. Bose, Secretary October 11, 2012

• Enabling recovery of necessary and reasonable costs of a regulated backstop solution, or
an alternative regulated reliability solution selected by the NYPSC to proceed, in the
event regulatory approval is not obtained or is withdrawn, in Sections 31.2.7.3.4 and

31.2.7.3.6;

• Determining whether a market-based solution will be available to meet a Reliability Need
on a timely basis in Section 31.2.7.4 and its subsections; and

• Allowing the NYISO to request a Gap Solution, in the event a market-based solution is
viable but will be delayed beyond the Target Year, in Section 31.2.7.4.7.

The CRPP Manual77 includes additional criteria to assess viability in Sections 2.2, 2.3,

2.4 and 2.5.78 These criteria require the provision of updated information on an annual basis

regarding the implementation schedule, including the status of site control, contract negotiations,
interconnection milestones, permits, equipment procurement and financing information. The
CRPP Manual also provides for periodic review of feasibility and a requirement that the NYISO
make final determinations regarding viability and requires entities to inform the NYISO of
material changes in the status of projects selected as solutions in the NYISO’s transmission
planning process. As further explained in Section V.B.4 below, the Filing Parties are adding the
above information from the CRPP Manual to the Tariff to demonstrate full compliance with
Order No. 1000.

c.Economic Planning Process

The NYISO’s economic planning process is found in Section 31.3 of Attachment Y. As
explained in Section 31.3.1.1, it is a two phase process that aligns with the reliability planning
process, projecting congestion on the BPTFs over the CSPP’s 10-year planning period. The
economic planning process identifies, through the development of appropriate scenarios, factors
that may produce or increase congestion, and identifies and evaluates projects to reduce such
congestion. Phase I consists of the CARIS. Phase II is the specific project evaluation phase,
which includes the evaluation of proposed transmission projects to relieve congestion and
provide economic benefits.

Section 31.3.1.2 establishes that the CARIS is based on the most recently conducted

CRP. It is composed of three congestion and resource integration studies representing the most congested pathways on the bulk power system, as identified by the NYISO in conjunction with its stakeholder committees. Individual interested parties may also request additional congestion studies at their expense.

77 The Comprehensive Reliability Planning Process Manual explains and sets forth the procedures that the NYISO will use when performing its reliability planning process. See Comprehensive Reliability Planning Process Manual (December 17, 2007) available at

<http://www.nyiso.com/public/webdocs/documents/manuals/planning/CRPPManual120707.pdf>.

78 CRPP Manual at 2-3 to 2-10.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Section 31.3.1.3 explains how the CARIS is prepared. The CARIS identifies factors that
may affect congestion, provides information on generic solutions that could reduce congestion,
and compares the costs of generic solutions to net production cost savings over the 10-year
planning period to determine if there is a favorable benefit/cost ratio to relieving congestion.
The CARIS also evaluates additional metrics for informational purposes, including changes in
load payments, installed capacity payments, transmission congestion contract (“TCC”) payments
and generator payments. As with the RNA, Market Participants, Developers and other parties
provide the data necessary for developing the CARIS, pursuant to Section 31.3.1.4. The data
provided includes: (i) existing and planned additions and modifications to the New York State
Transmission System (to be provided by Transmission Owners and municipal electric utilities);
(ii) proposals for merchant transmission facilities (to be provided by merchant Developers); (iii)
generation additions and retirements (to be provided by generator owners and Developers); (iv)
demand response programs (to be provided by demand response providers); and (v) any long-
term firm transmission requests made to the ISO.79 As explained in Section 31.3.1.7, the Phase I
process culminates in the NYISO’s preparation of a draft report that discusses its assumptions,
inputs, and the results of the analysis. The CARIS Phase I report is reviewed in the NYISO
stakeholder process, is evaluated by the NYISO’s independent MMU, and must be approved by
the NYISO Board of Directors.80

In Phase II, as provided in Section 31.3.2, the CARIS provides opportunities for

developers to propose solutions for congestion. Under Section 31.3.2.1, the NYISO is required
to actively solicit the input of its stakeholders through its stakeholder committees. In order to
provide transparency, the NYISO completes a benefit/cost analysis for all types of solutions.
The benefit/cost analysis of each potential solution is produced in coordination with stakeholders
and uses an eligibility metric that evaluates the cost of the project compared to the total NYCA-
wide production cost reduction that would result from any potential solution. If a developer
proposes a transmission project the benefits of which exceed its costs over ten years from the
date it is expected to enter service, costs at least $25 million, and the project receives a positive
vote from at least 80 percent of the designated beneficiaries (determined on the basis of savings
in zonal load payments) or LBMP, the costs of the project are eligible for recovery from
beneficiaries through the NYISO’s Tariff.81 These analyses, the identification of project
beneficiaries, and the calculation of the project cost allocation, are all reviewed in the
stakeholder process and incorporated in a report that is approved by the Business Issues
Committee, the Management Committee and that must be approved by the Board of Directors.82

79 Attachment Y § 31.3.1.4.

80 See Attachment Y § 31.3.2.2, Services Tariff Attachment O § 30.4.6.8.5.

81 See Attachment Y §§ 31.5.4.3 and 31.5.4.6.

82 Id. at § 31.3.2.

Ms. Kimberly D. Bose, Secretary October 11, 2012

i. Stakeholder Concerns with Economic Planning Process

In the stakeholder process, LS Power expressed concerns regarding the NYISO’s

retention of the requirement that a project receive 80 percent approval by project beneficiaries in
order to be selected as a solution to congestion identified in the CARIS.83 LS Power believes
that the Order No. 1000 requirement that all solutions be treated comparably requires the
elimination of the 80 percent voting requirement. The existing process and voting requirement
was accepted by the Commission under Order No. 890, the principles of which were
incorporated into Order No. 1000. The Commission found the voting process to be “a useful
check to ensure that a project has net benefits, by requiring that most of those whom the NYISO
expects to benefit from a project agree that they actually will benefit.”84 The Commission also
rejected arguments on rehearing that the voting process should be eliminated as discriminatory,
holding that “voting mechanisms, such as NYISO’s meet the Commission’s expressed desire in
Order No. 890-A that beneficiaries who must pay for projects should have the right to determine
if other solutions are superior to economic projects.”85 Additionally, the NYISO’s process, in
compliance with the Commission’s orders, provides for the submittal of informational reports
regarding the results of each vote, the identified beneficiaries, the results of the benefit/cost
analysis, and if vetoed, any information provided by the developer regarding the future
development of the project.

Further, nothing in Order No. 1000 precludes the use of such voting mechanisms. In fact, Order No. 1000 clearly allows them, finding that:

We leave it to each transmission planning region … to propose on compliance

whether, and how to distinguish between types of transmission facilities…The

Final Rule allows a public utility transmission provider through its participation in
a transmission planning region to distinguish or not distinguish among these three
types of transmission facilities, as long as each of the three types is considered in
the regional transmission planning process and there is a means for allocating the
costs of each type of transmission facility to beneficiaries….[W]e clarify that a
regional cost allocation method for one type of regional transmission facility or
for all regional transmission facilities may include voting requirements for

identified beneficiaries to vote on proposed transmission facilities.86

83 LS Power also raised concerns with the current reliability planning process, as further explained in Section V.B.1.a.

84 October 2008 Order at P 130.

85 New York Independent System Operator, Inc., 126 FERC ¶ 61,320 at P 36 (2009); see also New York Independent System Operator, Inc., 127 FERC ¶ 61,136 (2009).

86 Order No. 1000 at P 689 (emphasis added).

Ms. Kimberly D. Bose, Secretary October 11, 2012

2. The CSPP Complies with the Order No. 1000 Requirement that the

Regional Planning Process Fully Comply with the Order No. 890 Transmission Planning Principles

Order No. 1000 holds that each regional transmission planning process must comply with
the following Order No. 890 transmission planning principles: “Coordination,” “Openness,”
“Transparency,” “Information Exchange,” “Comparability,” “Dispute Resolution,” and
“Economic Planning.”87 The Commission has previously found that the NYISO’s existing CSPP
for local, reliability and economic planning complies with all of these principles, as further
detailed below.88 There is no reason to reconsider these findings now. Accordingly, the
Commission should find that the CSPP fully complies with the Order No. 1000 directive that
transmission providers have a regional transmission planning process that satisfies the Order No.
890 principles.

a.Coordination

The Order No. 890 coordination principle requires that the transmission planning process be developed on a nondiscriminatory basis, providing all interested parties an opportunity for full participation and meaningful input into the process.89 The purpose of requiring coordination is to ensure that transmission providers, customers, affected systems, state authorities and other stakeholders engage in open communication with respect transmission to planning.90 The
NYISO’s CSPP has been found fully compliant with the coordination principle.91

The NYISO CSPP provides multiple opportunities for interested parties to fully

participate in the transmission planning process. As explained above, under the CSPP, the

NYISO develops the RNA, CRP and CARIS in consultation with Market Participants. These
processes require the NYISO to actively solicit and consider stakeholders’ input on data and
assumptions used. Specifically, Sections 31.2.2.2 (providing for interested party participation in
the development of the RNA); 31.2.6.1 (providing for interested party participation in the
development of the CRP); and 31.3.1.2.1 (providing for interested party participation in the
development of the CARIS) achieve coordination of interested parties through meetings of the
stakeholder TPAS and ESPWG. Interested parties at ESPWG and TPAS are able to review
materials and provide input during key steps in the processes. Meeting notices and agendas are

87 Id. at PP 146, 151.

88 Compliance with these principles in the new Public Policy Requirements Planning Process is addressed in Section V.A, below.

89 Order No. 890 at P 445.

90 Id. at P 452.

91 The Commission’s October 2008 Order at P 35, October 2009 Order at P 22 and July 2010

Order at P 10 found that the NYISO’s CSPP processes, as described above, fully complied with the Order No. 890 Coordination principle.

Ms. Kimberly D. Bose, Secretary October 11, 2012

issued in advance of meetings, and stakeholders comment on the draft reports and on any issues
raised.

The TPAS and ESPWG assist and provide input to the NYISO staff as it puts together all
aspects of the RNA, CRP and CARIS, including: (1) development of reliability scenarios for the
RNA, as provided in Section 31.2.2.5; (2) consideration of regulated backstop solutions and
Alternative Regulated Solutions, as provided in Section 31.2.5.7; (3) the development and
grouping of the studies contained in each CARIS, as provided in Section 31.3.2.2; (4) the
development of a process by which individual parties may request additional congestion studies,
as provided in Section 31.3.1.2.4; (5) the development of the baseline studies used in the CARIS,
as provided in Section 31.3.1.3.2.; (6) the development of the specific production costing model
used in the CARIS, as provided in Section 31.3.1.3.3; (7) the development of benefit/cost metrics
to be used in the CARIS, as provided in Section 31.3.1.3.4; (8) the development of congestion
and resource integration scenarios addressing the CARIS Study Period, as provided in Section

31.3.1.5 and (9) the development of additional metrics to be used by beneficiaries of economic upgrades in determining how to vote on such projects, as provided in Section 31.3.1.3.5.

The TPAS and ESPWG are also responsible for advising the NYISO Operating

Committee (“OC”) and the NYISO Business Issues Committee (“BIC”), which are stakeholder
governance committees. The NYISO summarizes the input of TPAS and ESPWG participants
and provides it to the OC or BIC for discussion and action. Specifically, Sections 31.2.3.1,

31.2.6.1, and 31.3.2.1 require that the draft RNA, CRP, and CARIS Phase I and CARIS project
specific reports, respectively, will be submitted to TPAS and ESPWG for review and comment
and such comments will be reflected in the drafts forwarded to the BIC and OC for action. The
OC and the BIC discuss and vote on the reports, which are then provided to the NYISO
Management Committee (“MC”), which is the highest stakeholder governance committee. The
MC votes to approve the report to be presented to the independent NYISO Board of Directors,
which is the ultimate decision maker. The NYISO Board of Directors can amend the RNA, CRP
or CARIS Phase I or project specific reports, but its changes cannot be finally approved until
after the NYISO Board of Directors considers MC comments on such amendments, pursuant to
Sections 31.2.3.2, 31.2.6.2, and 31.3.2.2. The Board also reviews and approves the identification
of beneficiaries, the benefit/cost analysis, and the calculation of cost allocation for specific
economic transmission projects in CARIS Phase II.92 Where there is disagreement with an MC
action regarding plan development, members may appeal to the NYISO Board of Directors.
Thus, interested parties are provided the opportunity to fully participate in the NYISO’s regional
transmission planning process, in compliance with the coordination principle.

As explained in Section V.A, below, the Filing Parties propose revisions to include a Public Policy Requirements planning process that contains the same provisions regarding participation and input by all interested parties in the governance process, and by the Board of Directors, and thus also fully complies with the coordination principle.

92 Attachment Y § 31.5.4.5.1.

Ms. Kimberly D. Bose, Secretary October 11, 2012

b.Openness

The openness principle requires that transmission planning meetings be open to all

affected parties, including all transmission and interconnection customers and state authorities.93 The Order No. 890 openness principle also required transmission providers to develop tariff provisions to manage concerns regarding disclosure of confidential information and Critical Energy Infrastructure Information (“CEII”). The Commission has found the NYISO’s
transmission planning process to be compliant with the openness principle.94

The CSPP includes a balanced stakeholder process providing all industry sectors, state

regulators, and public interest and consumer groups the ability to fully participate in the regional
transmission planning process. Interested parties are able to provide input on proposals
advanced by the NYISO and its stakeholders. Further, Attachment Y Section 31.1.6 ensures that
all interested parties have the ability to participate in the planning process through the ESPWG
and the TPAS, providing that it is “open to any interested party, irrespective of whether that
entity has become a party to the ISO Agreement” for purposes of the Attachment Y processes.
The NYISO’s Tariff also includes provisions to maintain the confidentiality of information as
appropriate, including Section 31.2.5.11 and the NYISO’s Code of Conduct in OATT
Attachment F. Further, as explained in Section V.A, below, the Filing Parties propose revisions
in its new Public Policy Requirements planning process, that contain the same provisions
requiring openness and enabling participation by all interested parties throughout the process,
which fully complies with the openness principle.

Additionally, since the NYISO’s inception, Market Participants and other interested

parties, as well as state agencies have actively participated in the NYISO’s stakeholder process. The NYISO remains independent of all Market Participants and reports to its Board of Directors, so it does not have an incentive to exclude any group or stakeholder from the planning process.95 The NYISO conducts public information sessions that provide exposure to the market place and all interested members of the public regarding the identified reliability and economic needs and the planning studies that are developed pursuant to the CSPP.96

93 Order No. 890 at P 460.

94 The Commission’s October 2008 Order at P 41, October 2009 Order at P 1 found that the
NYISO’s CSPP processes, as described above, fully complied with the Order No. 890 Openness
principle.

95 See, e.g., New York Independent System Operator, Inc., 133 FERC ¶ 61,072 at PP 26, 40 (2010) (finding that the NYISO’s governance process complied with the Order No. 719 ongoing responsiveness requirement).

96 Attachment Y §§ 31.2.3.4 and 31.3.2.3.

Ms. Kimberly D. Bose, Secretary October 11, 2012

c.Comparability97

The comparability principle requires that “the interests of public utility transmission providers and similarly situated customers be treated comparably in regional transmission planning.”98 The Commission has found the NYISO’s CSPP to be compliant with the
comparability principle.99

Attachment Y contains multiple provisions and processes that mandate comparable

treatment of all resource types in the CSPP. For example, Section 31.2.2.4 Market Participants
provide data to the NYISO for the RNA, and such data is to encompass all resource types:

[Market Participant] input will include but not be limited to … existing and

planned additions to the New York State Transmission System (to be provided by Transmission Owners and municipal electric utilities); proposals for merchant transmission facilities (to be provided by merchant Developers); generation
additions and retirements (to be provided by generator owners and Developers); demand response programs (to be provided by demand response providers); and any long-term firm transmission requests made to the NYISO.

Section 31.3.1.4 echoes this language in the context of proposals regarding resources to be

considered in response to congestion identified in the CARIS. Additionally, Section 31.2.4.4
provides that “[a]t the same time that a proposal for a regulated backstop solution is requested
from the Responsible Transmission Owner … the NYISO shall also request market-based
responses from the market place. …Such responses will be open on a comparable basis to all
resources including generation, demand response providers, and merchant transmission
Developers.”

Section 31.2.4.6.2 provides that, with respect to Alternative Regulated Responses, “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 NYISO.”
Section 31.2.5.1 states that “[w]hen evaluating proposed solutions to Reliability Needs, all
resource types shall be considered on a comparable basis as potential solutions to the Reliability
Needs identified: generation, transmission and demand response.”100 Sections 31.2.4.2.1 and

97 The Filing Parties provide a complete explanation regarding the NYISO’s compliance with the
Order No. 1000 requirement that all alternatives be considered on a comparable basis in Section IV.A.3,
below.

98 Order No. 1000 at P 153.

99 The Commission’s October 2008 Order at P 60, October 2009 Order at P 27 found that the
NYISO’s CSPP processes, as described above, fully complied with the Order No. 890 Comparability
principle.

100 As set forth below in Section V.B.3, the Filing Parties are also addressing stakeholders’

concerns about the timing of consideration of all types of solutions - market based, regulated backstop,

Ms. Kimberly D. Bose, Secretary October 11, 2012

31.2.5.10.1 provide that all types of resources will be considered as solutions to Reliability
Needs.

Similarly, the NYISO’s Comprehensive Reliability Planning Process Manual provides
that proposed solutions, both for reliability and congestion, may include “[n]ew generation
additions (large or small),” “[d]istributed generation,” “[n]ew transmission projects,”
“[t]ransmission upgrades,” “[d]emand-side response programs,” “[o]perating procedure
changes,” and “[m]arket rule changes.”101 The manual states that the evaluation of all resources
will be analyzed using the same models and procedures and the calculation and analyses will be
consistent with the timing, type, and magnitude of the solution being evaluated.102

Also, any interested party is able to request that an additional reliability study be

conducted to explore potential problems in the system based on its particular concerns.103

Section 31.3.1.2.3 also allows customers to request and obtain individual congestion and

resource integration studies. Additionally, in its economic and reliability planning processes, the
NYISO treats all potential solutions to an identified need on a comparable basis. Sections 31.1.2,

31.1.4, 31.2.5.1, 31.3.1.3.3 all provided for comparable evaluation of all resource types

submitted as solutions to both reliability and congestion needs. In the CARIS Phase I process,
the NYISO analyzes the impact of generic transmission, demand response and generation
projects on congestion.104 However, the NYISO’s Tariff provides cost allocation only for
transmission solutions that are proposed as specific projects evaluated under the CARIS Phase II
process to relieve congestion on the transmission system identified in the CARIS Phase I
process.105

As explained in Section V.A below, the proposed Public Policy Requirement planning process also considers solutions proposed by any interested party on a comparable basis.

Further, the NYISO’s independence ensures that it meets the comparability principle,
because as an independent entity the NYISO does not have any affiliates or ownership of any
assets within, or that do business with, New York’s wholesale electric markets. The NYISO

and alternative regulated solutions - by amending Section 31.2.5.1 to add the provision that “All solutions will be evaluated in the same general time frame.”

101 NYISO Comprehensive Reliability Planning Process Manual Section 7, at 7-1m 7-2 (December 07, 2007) available at <

http://www.nyiso.com/public/webdocs/documents/manuals/planning/CRPPManual120707.pdf> (CRPP
Manual”).

102 Id.

103 See Procedure for Study Replication (draft dated 7/14/2010) available at
<http://www.nyiso.com/public/webdocs/committees/bic/meeting_materials/2010-07-
14/Agenda_09_Procedures_for_Study_Replication_BIC_71410.pdf>.

104 Attachment Y, § 31.3.1.3.3.

105 Attachment Y, §31.5.4.1.

Ms. Kimberly D. Bose, Secretary October 11, 2012

reports to an independent Board of Directors and has a balanced stakeholder governance process. The NYISO has no incentive to give preferential treatment to any of its Market Participants.
Any interested party is able to remain apprised of and provide input into the NYISO’s regional
transmission plan.106

d.Transparency

The transparency principle requires disclosure to all customers and stakeholders, of the basic methodology, criteria, assumptions, and data used to develop transmission plans.107 Such methodology, criteria and processes, including how native retail loads are treated, must be
reduced to writing and made available to stakeholders. In order for a transmission process to
meet this principle, sufficient information must be made available to enable customers, other
stakeholders, and independent third parties to replicate the results of planning studies. The
purpose is to reduce the incidence of after the fact disputes regarding studies allegedly being
conducted in a non-discriminatory fashion. The Commission found the NYISO’s CSPP to be compliant with the transparency principle.108

The NYISO’s Attachment Y provides that all information be made available to Market Participants and other interested parties through the ESPWG and TPAS committees. The
NYISO also provides data, with appropriate confidentiality measures in place, to stakeholders as requested. NYISO’s planning manuals also provide the objectives and outline the procedures and criteria for development of market based, regulated backstop and alternative regulated
solutions. The CRPP manual provides the process for submission of data inputs to the NYISO and the drafting review and approval process for the studies.109

Attachment Y Section 31.2.3.1 further provides that “[t]he NYISO shall make available
to any interested party sufficient information to replicate the results of the draft RNA.” Sections

31.2.6.1 and 31.3.2.1 contain parallel provisions providing that that data needed to replicate the
CRP and CARIS results will be made publicly available. Also, as explained in Section V.A
below, the proposed Public Policy Requirements planning process requests provides stakeholders
sufficient information to replicate the studies conducted in that process consistent with the
NYISO’s policy to protect confidential information and CEII, and thus meets these principles.

106 See, e.g., New York Independent System Operator, Inc., 133 FERC ¶ 61,072 at PP 26, 40 (2010) (finding that the NYISO’s governance process complied with the Order No. 719 ongoing responsiveness requirement).

107 Order No. 890 at P 471.

108 The Commission’s October 2008 Order at P 48, October 2009 Order at P 1 found that the
NYISO’s CSPP processes, as described above, fully complied with the Order No. 890 Transparency
principle.

109 CRPP Manual at Section 5.

Ms. Kimberly D. Bose, Secretary October 11, 2012

e.Information Exchange

The information exchange principle requires that a transmission provider obtain data on
projected loads and resources from network customers110 on a comparable basis, as used by
transmission providers in planning for their native load.111 To comply with the information
exchange principle, transmission providers must develop guidelines and schedules for
information submittal. The information should include data on existing and planned demand
resources and their impacts on demand and peak demand, as well as information regarding the
use of demand resources. Customers can only be required to provide cost information for
transmission and generation facilities regarding economic planning studies requested by the
customer and the information must be kept confidential. The Commission has found that the
NYISO’s CSPP complies with the information exchange principle.112

Attachment Y requires that the NYISO gather and share data and assumptions to be used
in the development of RNA, CRP and CARIS. For example, Section 31.2.2.3.5 provides that the
NYISO will develop the system representation for the RNA using public data inputs. The RNA
is developed in consultation with Market Participants and requires that Market Participants,
developers and other parties provide necessary data.113 Further, Section 31.2.2.4.2 requires that
the NYTOs submit LTPs and include the LTPs as part of the inputs into the RNA. Market
Participants also provide input that is used to develop alternate reliability scenarios.114 Section

31.2.4.4 requires the NYISO and the appropriate transmission owner(s) to assist any party in developing a market-based solution or an alternative regulated solution to a reliability need by providing “any party who wishes to develop such a response access to the data that is necessary to develop its response.”115

Section 31.3 contains similar provisions requiring the same level of information exchange
for the analysis conducted to produce the CARIS.116 Market Participants are also able to request

110 Note that the NYISO’s system is not limited to network customers. Under the NYISO’s

financial reservation model, locational marginal pricing is used to manage congestion and to operate bid-
based spot markets. This allows customers more flexibility, and allows for greater use of the transmission
system, than is possible under the pro forma Network Integration Transmission Service. While the
NYISO tariff contains the pro forma Network Integration Transmission Service provisions, the NYISO
does not have network customers because no Market Participant has ever requested such service under the
NYISO OATT.

111 Order No. 890 at P 486.

112 October 2008 Order at P 55.

113 See Attachment Y Section 31.2.2.4.1. 114 See id. at § 31.2.2.5.

115 See also id. at § 31.2.4.6.2

116 See id. at §§ 31.3.1.2.1 and 31.3.1.2.2 (regarding Interested party Participation in the

Development of the CARIS), 31.3.1.4 (Planning Participant Data Input), and 31.3.1.5 (Congestion and Resource Integration Scenario Development).

Ms. Kimberly D. Bose, Secretary October 11, 2012

and fund individual congestion and resource integration studies pursuant to Sections 31.3.1.2.1
and 31.3.1.2.2 (regarding Interested party Participation in the Development of the CARIS),

31.3.1.4 (Planning Participant Data Input), and 31.3.1.5 (Congestion and Resource Integration Scenario Development). Additionally, as explained in V.A below, the proposed Public Policy Requirements planning process provides for Market Participant and other party input and is developed in consultation with stakeholders.

f.Dispute Resolution

The dispute resolution principle requires transmission providers to identify a process to manage disputes arising from the transmission planning process that addresses both procedural and substantive planning issues.117 The Commission has found the NYISO’s CSPP to be
compliant with the dispute resolution principle.118

Section 31.1.7.4 of Attachment Y provides that:

[t]he ISO Procedures shall facilitate the timely identification and resolution of all
substantive and procedural disputes that arise out of the CSPP. Any party
participating in the CSPP and having a dispute arising out of the CSPP may seek
to have its dispute resolved in accordance with ISO governance procedures during
the course of the CSPP. If the party’s dispute is not resolved in this manner as a
part of the plan development process, the party may invoke formal dispute
resolution procedures administered by the ISO that are the same as those available
to Transmission Customers under Section 11 of the ISO Market Administration
and Control Area Services Tariff. Disputes arising out of the LTPP shall be
addressed by the LTP DRP set forth in Section 31.2.1.3 of this Attachment Y.

Further, actions taken by the MC in the NYISO’s RNA, CRP and CARIS processes (and
Public Policy Requirements planning process, as described in Section V.A below) are appealable
to the NYISO Board of Directors. Minority opinions on LTP projects at the OC are reported to
the MC and the Board of Directors. Any disputes not resolved through the planning development
processes will be governed by the dispute resolution procedures contained in the Services Tariff.

g.Economic Planning

Order No. 890 required transmission providers to account for economic, as well as

reliability, considerations in the transmission planning process.119 Transmission providers are

117 Order No. 890 at P 501.

118 The Commission’s October 2008 Order at P 64, March 2009 Order at P 43, and October 2009 Order at P 1 found that the NYISO’s CSPP processes, as described above, fully complied with the Order No. 890 Dispute Resolution principle.

119 Order No. 890 at P 479.

Ms. Kimberly D. Bose, Secretary October 11, 2012

required to provide customers the opportunity to obtain studies that evaluate potential upgrades or other investments that could reduce congestion or integrate new resources and loads on an aggregated or regional basis. The Commission has found the CSPP economic planning process to be fully compliant with the economic planning principle.120

The CARIS Phase I process consists of a series of three congestion and resource

integration studies of the most congested transmission corridors in the New York system, and

measures the cost of congestion as the change in bid production costs resulting from transmission
congestion as the principal metric. The Phase I process considers all resource types on an equal
footing and the economic planning activities are performed under the CARIS. The CARIS Phase
I report provides the results of congestion integration scenarios, examining variables such as load
forecast uncertainty, fuel price uncertainty, new resources, retirements, emissions data and the
cost of allowances, and potential requirements imposed by proposed environmental and energy
efficiency mandates. This report is posted on the NYISO website and provides information to
assist developers in the preparation of proposals for consideration as economic transmission

projects for cost allocation under the NYISO Tariff.

The NYISO’s economic planning process encourages Market Participants to develop, on a voluntary basis, projects to reduce transmission congestion. Specifically, Section 31.3.1.2.3 provides the process by which customers can request and fund congestion and resource
integration studies, in addition to those included in the CARIS Phase I Report.

As described above, CARIS Phase II provides opportunities for developers to propose
transmission solutions to congestion on the NYISO system for purposes of cost allocation. If a
developer proposes a transmission project that has a favorable benefit-cost ratio, costs at least
$25 million, and the project receives a positive vote from at least 80 percent of the designated
beneficiaries, the costs of the project are eligible for recovery from beneficiaries through the
NYISO’s tariff.

3. The NYISO’s CSPP Complies with the Requirement that All

Alternatives Be Considered on a Comparable Basis

Order No. 1000 requires “the comparable consideration of transmission and non-

transmission alternatives in the regional transmission planning process” but does not prescribe minimum requirements regarding metrics or which alternatives should be considered.121 Order No. 1000 explains that the comparability principle requires comparable treatment of non-
transmission alternatives.

As explained in Section IV.A.2.c above, the NYISO’s CSPP has been found to be

compliant with the Order No. 890 comparability principle. Specifically, Sections 31.1.2, 31.1.4,

120 The October 2008 Order at P 77 found that the NYISO’s CSPP processes, as described above, fully complies with the Order No. 890 Economic Planning requirements.

121 Order No. 1000 at P 155.

Ms. Kimberly D. Bose, Secretary October 11, 2012

31.2.5.1 and 31.3.1.3.3 require that the NYISO evaluate all resource types submitted as solutions
to reliability needs on a comparable basis.122 Section 31.2.4.4 provides that “the NYISO shall
also request market-based responses from the market place. … Such responses will be open on a
comparable basis to all resources, including generation, demand response providers, and
merchant transmission Developers.” Section 31.2.4.6.2 provides that the NYISO will consider
“alternative regulated proposals for generation, demand side alternatives, and/or other solutions
to address a Reliability Need.” Therefore, the NYISO’s CSPP complies with this requirement.123

4.The NYCA Is an Established Planning Region for Purposes of Order

No. 1000

Order No. 1000 declined to revisit the size and scope of planning regions established for
purposes of Order No. 890.124 The Commission defines a planning region as “one in which
public utility transmission providers, in consultation with stakeholders and affected states, have
agreed to participate in for purposes of regional transmission planning and development of a
single regional transmission plan.”125 The Commission further explained that existing regional
processes should provide guidance regarding the formulation of transmission planning regions
and that “the scope of a transmission planning region should be governed by the integrated
nature of the regional power grid and the particular reliability and resource issues affecting
individual regions.”126

The CSPP produces a regional transmission plan for the NYCA “planning region.” The
NYCA is a planning region where the NYISO, as the transmission provider, as well as affected
state entities and stakeholders, participate in the CSPP for purposes of regional transmission
planning and development of a regional transmission plan. The NYCA is an integrated region
with its own unique reliability and resource issues, and coordinates its planning with neighboring regions in New England, PJM and Canadian provinces, and thus meets the Order No. 1000
definition of a “planning region”. Further, as acknowledged by Order No. 1000,127 ISOs and
RTOs already engage in transmission planning for their planning regions. Thus the NYISO’s
Tariff complies with this requirement.

122 Again, cost allocation is provided only for transmission projects offered to address transmission congestion. Attachment Y, §31.5.4.1.

123 As further explained in Section V.A below, the proposed Public Policy Requirement process also fully complies with this requirement.

124 Order No. 1000 at P 160.

125 Id.

126 Id.

127 Id. at P 420.

Ms. Kimberly D. Bose, Secretary October 11, 2012

5. The NYISO’s CSPP complies with Order No. 1000’s Directives

Regarding Merchant Developer Participation in the Regional Transmission Planning Process

Order No. 1000 states that developers of merchant transmission projects (i.e., projects

“for which the costs of constructing the proposed transmission facilities will be recovered

through negotiated rates instead of cost-based rates”) should not be prohibited from participating
in the regional transmission planning process.128 However, where such a developer does not
seek to use the regional cost allocation process, it does not have to participate in the regional
transmission planning process.129 The Commission also directed that transmission providers
require merchant developers to “provide adequate information and data to allow public utility
transmission providers in the transmission planning region to assess the potential reliability and
operational impacts of the merchant transmission developer’s proposed transmission facilities on
other systems in the region.”130 The Commission left the actual requirements up to the discretion
of the individual transmission providers in consultation with their stakeholders.131

The NYISO’s CSPP requires merchant transmission developers to provide such data. Attachment Y Section 31.2.2.4.1 provides that

[a]t the NYISO’s request, Market Participants, Developers, and other parties shall provide … the data necessary for the development of the RNA. This input will include but not be limited to …proposals for merchant transmission facilities (to be provided by merchant Developers).

In addition, under Sections 31.2.4.5 and 31.2.4.7, any submission of a solution must include:

(1) evidence of a commercially viable technology, (2) a major milestone schedule,

(3) evidence of site control, or a plan for obtaining site control, (4) the status of any contracts … that are under negotiation or in place, (5) the status of any interconnection studies and an Interconnection Agreement, (6) the status of any required permits, (7) the status of equipment procurement, (8) evidence of
financing, and (9) any other information requested by the NYISO.

Further, any merchant transmission project that seeks to interconnect to the NYISO

region must comply with the interconnection and other procedures in Attachments S, X or Z of

128 Id. at P 119.

129 Id.

130 Id. at P 164.
131 Id.

Ms. Kimberly D. Bose, Secretary October 11, 2012

the OATT. Those procedures require the submittal of information and the completion of studies that assess potential reliability and operational impacts of interconnecting facilities.132

B. The NYISO’s Existing CSPP Already Complies with Many Order No. 1000

Directives on Non-Incumbent Transmission Developers

1.Rights of First Refusal

Order No. 1000 directs the removal of any provisions granting a federal “right of first
refusal” (“ROFR”) to construct facilities selected in regional transmission planning processes
from Commission-jurisdictional tariffs and agreements.133 Order No. 1000 found that unless
existing ROFR provisions are eliminated, a regional transmission planning process cannot be in
compliance with the principle of openness.134 The Commission requires that nonincumbent
developers of a facility selected in a regional transmission plan be provided the ability to allocate
the costs of such facilities through a regional cost allocation method.135 Order No. 1000 defines
a “nonincumbent transmission developer” as: “(1) [a] transmission developer that does not have
a retail distribution service territory or footprint; and (2) a public utility transmission provider
that proposes a transmission project outside of its existing retail distribution service territory or
footprint, where it is not the incumbent for purposes of that project.”136

Order No. 1000 emphasizes that it “does not … require removal from Commission-

jurisdictional tariffs and agreements a federal right of first refusal as applicable to a local

transmission facility.”137 The Commission defines a local transmission facility as “a

transmission facility located solely within a public utility transmission provider’s retail

distribution service territory or footprint that is not selected in the regional transmission plan for purposes of cost allocation.”138 The Commission further clarified that the elimination of ROFR provisions does not “remove or limit any right an incumbent may have to build, own and recover costs for upgrades to the facilities owned by an incumbent, nor does this Final Rule grant or deny transmission developers the ability to use rights-of-way held by other entities, even if
transmission facilities associated with such upgrades or uses of existing rights-of-way are
selected in the regional transmission plan for purposes of cost allocation.”139

132 See OATT Attachment S at Section 25.1.1 (stating that the intent of the interconnection rules is “that each Developer be held responsible for the net impact of the interconnection of its project on the reliability of the New York State Transmission System.”).

133 Order No. 1000 at PP 225, 313.

134 Id. at P 229.

135 Id.

136 Id. at P 225.
137 Id. at P 318.
138 Id. at P 63.
139 Id. at P 319.

Ms. Kimberly D. Bose, Secretary October 11, 2012

The NYISO’s Tariffs do not contain any ROFR provisions. They specifically allow for
any developer to submit proposals for transmission reliability solutions, as well as economic
transmission projects. Sections: (1) 31.2.4.4 - provides for the submission of market-based
responses for reliability needs submitted by all interested participants; (2) 31.2.4.6 and 31.2.5 -
provide for the submission of alternative regulated responses to identified Reliability Needs,
which are evaluated by the NYISO on the basis and in the same general time frame as NYTO
regulated backstop solutions; (3) 31.3.2.4 and 31.5.4 - any Developer may make an actual project
proposal for an economic transmission project to alleviate congestion; and (4) 31.3.1.3.3 -
provides that for identified economic considerations “[a]ll resource types shall be considered on
a comparable basis as potential solutions to the congestion identified: generation, transmission,
demand response”, although only transmission projects may recover their costs through the
NYISO Tariff; other project types may obtain recovery under state law.140 The NYISO Tariffs
are thus already in compliance with this Order No. 1000 directive.

C. The NYISO’s CSPP Already Satisfies Most of Order No. 1000’s Directives on

Cost Allocation for Regional Transmission Planning, including the Regional Cost Allocation Principles

Order No. 1000 also requires public utility transmission providers to include a method or
methods for cost allocation of new transmission facilities that were selected pursuant to the
regional transmission plan.141 To achieve those goals, Order No. 1000 states that the cost
allocation methods were designed to “work in tandem with the transmission planning
requirements … to identify more appropriately the benefits and the beneficiaries of new
transmission facilities so that transmission developers, planners and stakeholders can take into
account in planning who would bear the costs of transmission facilities, if constructed.”142 Cost
allocation principles are necessary, because “existing cost allocation methods may not
appropriately account for benefits associated with new transmission facilities and, thus, may
result in rates that are not just and reasonable or are unduly discriminatory or preferential.”143
Order No. 1000 allows transmission providers to develop different cost allocation methodologies
for different types of transmission facilities. Order No. 1000 does not address cost recovery.

The CSPP already includes provisions providing for cost allocation of regulated
reliability and economic solutions144 that comply with the Order No. 1000 cost allocation

140 Attachment Y, § 31.5.4.1. As explained in section V.A.3 below, the proposed Public Policy Requirements planning process also complies with this requirement.

141 Order No. 1000 at PP 482, 550, 558-559.

142 Id. at P 483.

143 Id. at P 487.

144 As further explained in section V.B below, the proposed Public Policy Requirements planning process also complies with these principles.

Ms. Kimberly D. Bose, Secretary October 11, 2012

principles. With respect to regulated reliability solutions, Section 31.5.3 of Attachment Y
provides a cost allocation methodology that contains a three-step approach that focuses on
whether there is a locational, statewide, or a bounded region need. Step one focuses on those
areas within the NYCA that have Locational Capacity Requirements for Installed Capacity (i.e.,
New York City and Long Island) (“LCR Zones”). The costs of upgrades in LCR Zones are
allocated to Load Serving Entities (“LSEs”) in those zones. In step two, the NYISO runs its
reliability simulation model with all internal transmission constraints relaxed to determine
whether an unconstrained NYCA would have a Loss of Load Expectation of less than 0.1 days
per year. If not, the reliability upgrades necessary to meet the threshold are allocated to all Load
Zones based on their coincident peak load contribution. LCR Zones receive credit for meeting
their location capacity requirements under this calculation. If the reliability simulation shows
that there are no Reliability Needs, step three requires the application of a binding interface test.
This test identifies binding transmission constraints that are preventing the deliverability of
capacity throughout the NYCA and allocates costs accordingly. Cost recovery occurs upon
completion of the project, with the filing by the NYISO, the relevant NYTO or Other Developer
providing final project cost information and the resulting revenue requirement using the formula
established in OATT Rate Schedule 10.

The cost allocation methodology for regulated economic transmission projects in Section

31.5.4.3.5 provides that projects will be eligible for cost recovery where they meet the following
thresholds: (1) the benefits must exceed the costs; (2) the total capital cost of the project must
exceed $25 million; (3) a supermajority of the project’s beneficiaries support the project; and (4)
the Commission approves the project’s costs as just and reasonable. Cost allocation among
beneficiaries is based on relative economic benefit apportioned according to zonal load savings.

Order No. 1000 requires the cost allocation method or methods to satisfy the following
six regional cost allocation principles.145 As explained in the following subsections, the
NYISO’s Tariff is already compliant with many of these principles for its existing reliability and
economic planning processes. Where enhancements to the NYISO’s process were necessary, the
Filing Parties propose additional tariff modifications to come into full compliance with the cost
allocation principles, in Section V.C.4 below. The cost allocation provisions for transmission
needs driven by Public Policy Requirements will be addressed below in Section V.A.3.

1.Regional Principle #1

Regional Principle #1 provides that

The cost of transmission facilities must be allocated to those within the transmission
planning region that benefit from those facilities in a manner that is at least roughly
commensurate with estimated benefits. In determining the beneficiaries of
transmission facilities, a regional transmission planning process may consider
benefits including, but not limited to, the extent to which transmission facilities,

145 Order No. 1000 at PP 550, 586.

Ms. Kimberly D. Bose, Secretary October 11, 2012

individually or in the aggregate, provide for maintaining reliability and sharing

reserves, production cost savings and congestion relief, and/or meeting public policy requirements established by state or federal laws or regulations that may drive
transmission needs.146

Attachment Y provides definite, clear, and fair cost allocation rules that utilize a

“beneficiaries pay” methodology. Specifically, Sections 31.5.3.2 and 31.5.4.4 provide for costs to be allocated only to entities that benefit from the implementation of a project. Beneficiaries are determined using the specific methodologies that are explained further in the section
addressing Principle #6 below.

The Commission’s October 2008 Order147 and October 2009 Order148 found that the

NYISO’s cost allocation processes properly allocated the costs of projects using a beneficiaries
pay methodology. Therefore, the NYISO’s existing OATT is compliant with Regional Principle
#1.

2.Regional Principle #2

Regional Principle # 2 requires that: “those that receive no benefit from transmission
facilities, either at present or in a likely future scenario, must not be involuntarily allocated the
costs of those facilities.” 149 The Commission accepted tariff provisions150 in Attachment Y
Section 31.5.4.4.3 providing that “Load zones not benefiting from a proposed RETP will not be
allocated any of the costs of the project under this Attachment Y. There will be no ‘make whole’
payments to non-beneficiaries.” Further, pursuant to the cost allocation process for economic
projects, only where a project provides a benefit to entities and where those entities by a super
majority vote to approve the project (see Section 31.5.4.6), are such project’s costs allocated.
Therefore, the NYISO’s existing OATT is compliant with Regional Principle #2.

3.Regional Principle #3

Regional Principle # 3 requires that:

If a benefit to cost threshold is used to determine which facilities have sufficient net
benefits to be included in a regional transmission plan for the purpose of cost
allocation, it must not be so high that facilities with significant positive net benefits
are excluded from cost allocation. A transmission planning region or public utility
transmission provider may want to choose such a threshold to account for uncertainty

146 Id. at PP 550, 586.

147 See October 2008 Order at PP 91, 110.
148 See October 2009 Order at P 67.
149 Order No. 1000 at PP 550, 586.

150 See October 2008 Order at P 105, October 2009 Order at P 49.

Ms. Kimberly D. Bose, Secretary October 11, 2012

in the calculation of benefits and costs. If adopted, such a threshold may not include
a ratio of benefits to costs that exceeds 1.25 unless the transmission planning region
or public utility transmission provider justifies and the Commission approves a
greater ratio. 151

The Filing Parties submit that they meet this principle because economic projects are

eligible for cost allocation through the NYISO Tariff simply if the benefits of a project exceed its
costs. There is no threshold requirement in the NYISO Tariff. The NYISO evaluates proposed
economic projects to determine if their benefits over a ten-year period exceed their costs over the
same ten-year period.152 The benefit metric is “expressed as the present value of the annual
NYCA-wide production cost savings that would result from the implementation of the proposed
project, measured for the first ten years from the proposed commercial operation date for the
project.”153 To be eligible for cost allocation and recovery under the Tariff, “the benefit of the
proposed project must exceed its cost measured over the first ten years from the proposed
commercial operation date for the project.”154 To the extent that the NYISO’s Tariff is
interpreted as providing for a ratio, it would be expressed as a ratio of benefits to costs of 1.0,
which is below the Commission’s maximum ratio of 1.25 and, therefore, complies with Regional
Principle #3.

4.Regional Principle #4

Regional principle #4 requires that:

The allocation method for the cost of a regional facility must allocate costs solely
within that transmission planning region unless another entity outside the region or
another transmission planning region voluntarily agrees to assume a portion of those costs. However, the transmission planning process in the original region must
identify consequences for other transmission planning regions, such as upgrades that may be required in another region and, if there is an agreement for the original region to bear costs associated with such upgrades, then the original region’s cost allocation method or methods must include provisions for allocating the costs of the upgrades
among the entities in the original region.155

Attachment Y allocates costs of reliability and economic transmission solutions solely to entities within the NYISO’s transmission planning region. The NYISO’s CSPP currently does not contain provisions allowing for the allocation of costs of projects to entities outside of the NYCA.

151 Order No. 1000 at PP 550, 586. 152 Attachment Y § 31.5.4.3.1. 153 Id. at § 31.5.4.3. 2.

154 Id. at § 31.5.4.3.5.

155 Order No. 1000 at PP 550, 586.

Ms. Kimberly D. Bose, Secretary October 11, 2012

With respect to the requirement to identify consequences in neighboring regions and the potential allocation of costs for upgrades in such region, the Filing Parties will coordinate these issues with the neighboring regions and will address these issues in the interregional transmission planning compliance filing due in April 2013.

5.Regional Principle #5

Regional principle # 5 requires that:

The cost allocation method and data requirements for determining benefits and

identifying beneficiaries for a transmission facility must be transparent with adequate documentation to allow a stakeholder to determine how they were applied to a
proposed transmission facility.156

Attachment Y, and the various studies conducted under it, provide transparent

information on the methodology and data requirements for determining benefits and identifying beneficiaries. The NYISO provides sufficient information for stakeholders to determine how
such methodologies and requirements were applied to any proposed projects. Specifically, the following Attachment Y Sections provide for the methodology used to determine benefits and
identify beneficiaries:

•31.5.3.1 - provides the cost allocation principles that will apply to the methodology and

criteria for regulated transmission projects proposed in response to identified Reliability

Needs;

•31.5.3.2 - provides the cost allocation methodology for regulated transmission reliability

projects, including the formula to be used;

• 31.5.4.2 - provides the cost allocation principles that will apply to the methodology and

criteria for regulated economic transmission projects proposed in response to identified congestion issues;

• 31.5.4.4 - provides the specific methodology to be used for cost allocation of regulated

economic projects, including the criteria for beneficiary selection and the formula to be used for cost allocation.

Further, Attachment Y provides that all of the studies produced pursuant to the CSPP are
published and available to all interested parties.157 The Commission has found the NYISO’s
Attachment Y provisions provide stakeholders with adequate information regarding data and

156 Id.

157 As explained in Section V.A, below, the proposed Public Policy Requirements planning process also complies with this principle.

Ms. Kimberly D. Bose, Secretary October 11, 2012

methodology.158 Therefore, the NYISO’s existing OATT is compliant with Regional Principle
#5.

6.Regional Principle #6

Regional principle # 6 requires that:

A transmission planning region may choose to use a different cost allocation method
for different types of transmission facilities in the regional plan, such as transmission
facilities needed for reliability, congestion relief, or to achieve public policy
requirements established by state or federal laws or regulations. Each cost allocation
method must be set out clearly and explained in detail in the compliance filing for this
Final Rule.159

Attachment Y currently establishes separate Commission-approved cost allocation

methods for reliability and economic project cost allocation. The Filing Parties submit that the relevant tariff Sections in Attachment Y Sections 31.5.3 (providing a detailed cost allocation methodology for regulated reliability solutions) and 31.5.4 (providing a detailed cost allocation methodology for regulated economic projects) comply with the requirement that the cost
allocation methods “be set out clearly and explained in detail.”

For regulated transmission projects, the NYISO’s Attachment Y allocates costs using a
“beneficiaries pay” approach. Sections 31.5.3.1 and 31.5.3.2 contain the cost allocation
principles and methodology for regulated transmission solutions to reliability needs. These
Sections use methodologies that are consistent with a compensatory MW approach and with cost
allocation mechanisms in the NYISO markets. The methodology is based on a three-step
approach that focuses on whether there is a locational need, a statewide need, or a bounded
region need. The needs are determined through a reliability standard requiring sufficient
resources to ensure that the NYCA has a Loss-of-Load-Expectation of less than 0.1 days per
year. The methodology has three steps. Step one focuses on areas that have Locational Capacity
Requirements for installed capacity. Any upgrades needed to satisfy Locational Capacity
Requirements are allocated solely to LSEs in those zones. Step two runs the NYISO’s reliability
model with all transmission constraints relaxed. If a need is identified, costs will be allocated to
all load zones based on their contribution to the need. If no needs are identified in step two, step
three applies a binding interface test. Compensatory MWs are allocated to any applicable
bounded regions based on NYCA coincident peak loads.

As described above, for regulated economic projects, cost allocation and recovery are

available where “the benefit of the proposed project must exceed its cost measured over the first
ten years from the proposed commercial operation date for the project.160 The total capital cost

158 See October 2008 Order at PP 48, 55 and October 2009 Order at P 1.

159 Order No. 1000 at PP 550, 586.

160 See Attachment Y at Section 31.5.4.3.

Ms. Kimberly D. Bose, Secretary October 11, 2012

of the project must exceed $25 million.161 Additionally, cost allocation is available when a super
majority of the project beneficiaries vote to support the project.162 Costs are allocated among
beneficiaries based on the relative economic benefit received by each beneficiary.163
Commission approval of a project’s cost is required in order for such project to recover its costs
under Attachment Y. Section 31.5.4.2 provides the process for identification of project
beneficiaries. Beneficiaries are identified using the present value and annual LBMP load savings
for all load zones which have such savings, net of reductions in transmission congestion credit
payments and bilateral contracts as a result of the implementation of the project.164 Beneficiaries
are those load zones that experience net benefits over the first ten years from the project’s
proposed commercial operation date.165 Each load zone that experiences a benefit is allocated
costs to its zone based on share of total savings.166 Within zones, costs are allocated based on
each load’s MWh of consumption.167

D.Participation by Non-Public Utilities Subject to FERC’s Reciprocity

Provisions

In Order No. 1000, the Commission held that non-public utility providers subject to a
reciprocity tariff “must ensure that the provisions of that tariff substantially conform, or are
superior, to the pro forma OATT as it has been revised by this Final Rule.”168 The Commission,
however, declined to invoke its authority under Section 211A of the FPA to require such
transmission providers to modify such tariffs, finding that it “remains up to each non-public
utility transmission provider whether it wants to maintain its safe harbor status by meeting the
transmission planning and cost allocation requirements” of Order No. 1000.169

While the relevant non-public utility providers within the NYISO’s planning region are
not subject to a reciprocity tariff, they fully participate in the NYISO’s planning processes.

V. PROPOSED COMPLIANCE TARIFF MODIFICATIONS

As explained above, the NYISO’s CSPP already complies with many of Order No.

1000’s regional transmission planning directives. However, the Filing Parties have identified

161 Id.

162 See id. at § 31.5.4.3.5. 163 See id.

164 See id. at § 31.5.4.4.2.1.
165 See id. at § 31.5.4.4.2.2.
166 See id. at § 31.5.4.4.4.
167 See id.

168 Order No. 1000 at P 815. 169 Id. at P 816.

Ms. Kimberly D. Bose, Secretary October 11, 2012

certain tariff modifications that are required to ensure full compliance, as further described below. The most significant revisions concern the NYISO’s proposed addition of a Public Policy Requirements planning process in Section 31.4 of OATT Attachment Y.170 The Filing Parties submit these compliance modifications and request that the Commission accept them without additional modification, as further explained below.

A.Public Policy Requirements

Order No. 1000 directed that local and regional transmission plans consider transmission needs driven by Public Policy Requirements.171 Specifically, Order No. 1000 directed “public utility transmission providers to amend their OATTs to describe procedures that provide for the consideration of transmission needs driven by Public Policy Requirements in the local and
regional transmission planning processes.”172 In compliance with Order No. 1000, the Filing Parties are proposing tariff revisions to introduce a new Public Policy Requirements planning process. The Public Policy Requirements planning process was developed in consultation with the NYISO’s stakeholders, including the New York Public Service Commission (“NYPSC”) and the New York State Department of Public Service (“NYDPS”).173

The new Public Policy Requirements planning process is set forth at Section 31.4174 and
the associated cost allocation methodology is set forth in Section 31.5.5. Section 31.4 provides
the processes that the NYISO will use to comply with the requirement that it “identif[y] …
transmission needs driven by Public Policy Requirements” and “evaluat[e] … potential solutions
to meet those needs.”175 The Public Policy Requirements planning process is a comprehensive
planning process that fully complies with the Order No. 1000 directives. Each Public Policy
Requirements planning cycle will begin following completion of the reliability planning process
in each two-year reliability and economic planning cycle. Should the process not identify any
Public Policy Requirements driving transmission needs, it will be considered complete until the
next two-year planning cycle, unless the NYPSC requests the NYISO conduct an analysis of
transmission needs driven by such requirements in the interim.176 The Filing Parties believe that
the changes described herein comply with the Order No. 1000 directives regarding the Public

170 Note that 31.4 previously contained the tariff provisions regarding cost allocation. The cost allocation, and subsequent, sections have been moved and renumbered as appropriate.

171 Order No. 1000 at P 68.

172 Id. at P 203.

173 The New York Public Service Commission is the decision-making body that resides in the New York State Department of Public Service, which is a state agency. The staff of the NYDPS also serves as the staff of the NYPSC. N.Y. Pub. Serv. L. §§ 3-4.

174 The Public Policy Requirements planning process replaces the current Section 31.4, which has been moved to Section 31.5. All subsequent sections have been renumbered accordingly.

175 Order No. 1000 at P 205.

176 Attachment Y, §§ 31.4.2.1, 31.4.1.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Policy Requirements planning process. As with the NYISO’s existing reliability and economic
planning processes, the Public Policy Requirements planning process comports with the core
principles identified by the Commission in Order No. 1000, including the Order No. 890
principles.

The NYISO’s Public Policy Requirements process will provide for the identification,

evaluation of, and the cost allocation methodology for, selection of transmission solutions to

address transmission needs driven by Public Policy Requirements. The Public Policy

Requirements planning process fully complements the existing Commission-approved reliability and economic planning processes and will encourage both incumbent and non-incumbent
transmission developers to advance transmission construction proposals in response to identified needs driven by Public Policy Requirements.

As explained in further detail below, the proposed Public Policy Requirements planning
process establishes that, consistent with New York State law, the NYPSC has the primary
responsibility for the identification of transmission needs driven by Public Policy Requirements.
The NYPSC is also the entity that determines which proposed transmission solutions should seek
the necessary local, state, and federal authorizations for construction and operation. The
NYISO’s role is to provide the NYPSC with the data and analyses necessary to fulfill those
tasks, as well as to solicit and receive the input of its stakeholders on proposed transmission
needs driven by Public Policy Requirements and potential solutions to those needs.

1.Definition of Public Policy Requirement

The Filing Parties propose a new term to be added to Attachment Y of the NYISO OATT: “Public Policy Requirements” which is defined as:

A federal or New York State statute or regulation, including a NYPSC order adopting a rule or regulation subject to and in accordance with the State Administrative Procedure Act, or any successor statute, that drives the need for expansion or upgrades to the New York State Bulk Power Transmission Facilities.

The Public Policy Requirement definition includes the term “NYPSC Orders adopting rules or
regulations” because they constitute state rules and regulations with the force of law in New
York State.177 Pursuant to this definition, only NYPSC Orders adopting a rule or regulation in
accordance with the New York State Administrative Procedure Act can define a Public Policy
Requirement. This definition does not allow a Public Policy Requirement to be defined in a
NYPSC order issued in an adjudicatory or licensing permitting proceeding. This limitation
provides that the Public Policy Requirements are identified pursuant to a rule of general

application intended to establish statewide policy. The State Administrative Procedure Act provides notice and an opportunity to be heard to interested parties and affected entities regarding consideration of potential Public Policy Requirements in New York.

177 N.Y.A.P.A. § 102(2)(a)(i) and (ii).

Ms. Kimberly D. Bose, Secretary October 11, 2012

a.Stakeholder Concerns with the Proposed Definition of the

Term “Public Policy Requirements”

In the stakeholder process, some stakeholders expressed concern with the proposed

definition of “Public Policy Requirement.” Specifically, Multiple Intervenors and IPPNY argued that the definition goes beyond the parameters established by the Commission in Order No.
1000. They assert that the inclusion of NYPSC orders is an expansion of the Order No. 1000 definition and is thus beyond the scope of the compliance filing. Other stakeholders supported the inclusion of NYPSC orders, noting that such orders are regulations and that the NYPSC has jurisdiction to define and administer energy policy in New York.

The Filing Parties submit that the proposed definition fully complies with Order No.
1000. Order No. 1000 held that a Public Policy Requirement would be “driven by state or
federal laws or regulations”178 and would “arise from state or federal laws or regulations that
drive transmission needs.”179 Further, Order No. 1000 recognizes the need to tailor such a
process to each region180 and encourages the involvement of states in the Public Policy
Requirements planning process.181 The proposed definition allows the NYISO to address and
evaluate transmission solutions for any Public Policy Requirement identified in New York State
by a law or regulation, and thus fully complies with Order No. 1000. The NYPSC is the agency
in New York State that develops energy policies182 and co-leads the New York State Energy
Planning Board with other state agencies.183 The NYPSC approves the siting of all transmission
lines over a certain size threshold in New York State. The decisions of the NYPSC include
determinations that such facilities are needed, are in the public interest, and will be compatible
with the environment.184 Accordingly, the NYPSC will be the primary source of Public Policy

178 Id. at P 214. Order No. 1000 further explained that “state or federal laws and regulations”
includes “enacted statutes (i.e., passed by the legislature and signed by the executive) and regulations
promulgated by a relevant jurisdiction, whether within a state or at the federal level.” Id. at P 2.

179 Id.

180 Id. at P 208 (stating that “[w]e allow for local and regional flexibility in designing the
procedures for identifying the transmission needs driven by Public Policy Requirements for which
potential solutions will be evaluated in the local or regional transmission planning processes”).

181 Id. at P 212 (stating that “nothing in this Final Rule is intended to alter the role of states” with respect to “transmission planning, especially as it relates to compliance with Public Policy Requirements” and that “[w]e strongly encourage states to participate actively in both the identification of transmission needs driven by Public Policy Requirements and the evaluation of potential solutions to the identified needs”); see also id. at P 337 (stating that state regulators “may be in the best position of determining how state-level public policy requirements are satisfied”).

182 See Section V.2.d for a discussion of stakeholder concerns regarding the role of the Long Island Power Authority.

183 See N.Y. Pub. Serv. L. §§ 5, 65, 66 and 72; N.Y. Energy Law Art. 6. 184 N.Y. Pub. Serv. L. Art. VII.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Requirements that drive the need for transmission in New York State. Further, as stated above, NYPSC orders established under the State Administrative Procedure Act185 are state regulations under New York law. Therefore, the Filing Parties request that the Commission accept the
proposed definition without modification.

2.Public Policy Requirements Planning Process

As provided in Section 31.4.1, the Public Policy Requirements planning process would

be conducted in a two year cycle, in parallel with the NYISO’s reliability and economic planning processes, beginning after the CRP Report is posted. The Public Policy Requirements planning process, as proposed, will have two steps:

(1) identification of transmission needs driven by Public Policy Requirements that
should be evaluated by the ISO; and (2) requests for specific proposed
transmission solutions to address those needs driven by Public Policy
Requirements identified for evaluation, and the evaluation of those specific
solutions.

This process complies with the Order No. 1000 requirement that the Public Policy Requirements planning process identify transmission needs driven by Public Policy Requirements and evaluate potential solutions to meet the identified needs.186

a.Step One - Identification of Needs

Order No. 1000 requires the process to identify needs to “allow stakeholders an

opportunity to provide input, and offer proposals regarding the transmission needs they believe are driven by Public Policy Requirements” and that all stakeholders “have an opportunity to provide input and offer proposals regarding the transmission needs they believe should be so identified.”187 Under the proposed Public Policy Requirements planning process, stakeholders will be given that opportunity.

Under Section 31.4.2, the NYISO will actively solicit stakeholder or other interested party input, and will provide a 60-day period to allow the submittal of proposed transmission needs that are being driven by a Public Policy Requirement. The NYISO may also identify a proposed transmission need on its own initiative. Those proposals must identify the Public
Policy Requirement driving the transmission need and describe how a transmission solution will fulfill the need. The NYISO will post all submittals on its website at the conclusion of the 60-
day period, and submit the proposals it receives to the NYDPS/NYPSC.

185 N.Y.S.A.P.A § 102(2)(a)(i) and (ii).

186 Order No. 1000 at P 205.

187 Id. at PP 207, 209. See also, Order No. 1000-A at P 321.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Pursuant to Section 31.4.2.1, the NYDPS will review the proposed needs, and with input
from the NYISO and interested parties, identify the transmission needs for which transmission
solutions should be requested and evaluated. Additionally, the Filing Parties propose to include
in the Public Policy Requirements planning process the ability to consider non-transmission
alternatives, on the request of the NYDPS. The Filing Parties believe that these are
enhancements to the process required by the Commission under Order No. 1000. Specifically,
Section 31.4.2.1 provides that “The NYDPS may also request that the ISO, pursuant to Section

3.8.1 of the ISO OATT, conduct an evaluation of alternative options to address the transmission needs.” Section 3.8.1 of the OATT has also been modified to ensure that the NYISO has the
ability to conduct an analysis of non-transmission alternatives necessary to comply with such a request by the NYDPS.

The Tariff setting forth the Public Policy Requirements planning process includes

specific language regarding the NYPSC procedures that fully comply with Order No. 1000. The NYPSC procedures will:

ensure that such process is open and transparent, provides the ISO and interested
parties a meaningful opportunity to participate in such process and provide input
regarding the NYDPS’ considerations, and results in the development of a written
determination as required by law, inclusive of the input provided by the ISO and
interested parties.188

Further, under Section 31.4.2.1, the NYDPS may identify a transmission need on its own, but
such need must be described in accordance with the stakeholder submittal requirements in
Section 31.4.2 and posted on the ISO’s website prior to the issuance of the NYDPS written
statement identifying needs. The posting must provide the NYISO and interested parties an
opportunity to provide input to the NYDPS regarding its proposed needs. The NYISO shall
assist the NYDPS through the provision of analyses or evaluation of alternative options, as

requested by the NYDPS. Section 31.4.2.1 further provides that the NYDPS must issue a written statement that:

explains why it has identified the transmission needs driven by Public Policy

Requirements for which transmission solutions will be evaluated by the ISO. The
statement shall also explain why transmission solutions to other suggested
transmission needs should not be evaluated. The NYDPS statement identifying
the transmission needs for which transmission solutions will be evaluated by the
ISO may also provide additional criteria for the evaluation of transmission
solutions and the type of analysis that it will request from the ISO. If the NYDPS
does not identify any transmission needs, it will provide confirmation of that
conclusion to the ISO. The ISO shall post the NYDPS statement on its website.

188 Attachment Y, § 31.4.2.1.

Ms. Kimberly D. Bose, Secretary October 11, 2012

This complies with the Order No. 1000 requirement that transmission providers “post on their
websites an explanation of which transmission needs driven by Public Policy Requirements will
be evaluated for potential solutions in the local or regional transmission planning process, as well as an explanation of why other suggested transmission needs will not be evaluated.”189 It also
complies with the Order No. 1000-A requirement that the posting explain the needs that have
been identified for evaluation and how other transmission needs that were identified were not
selected for further evaluation.190 In addition, where there is a dispute of an NYDPS
determination on the identification of transmission needs, Section 31.4.2.2 provides that a
dispute can be raised through a petition to the NYPSC.191 The NYPSC may also, on its own
motion, initiate a proceeding concerning any NYDPS determination regarding a transmission
need. Where a transmission need determination is under dispute, it will be held in abeyance
pending a final NYPSC determination. The information regarding disputes will also be posted
on the NYISO’s website, pursuant to Section 31.4.2.2.

The Filing Parties note that as of the date of this compliance filing the NYDPS has not
developed procedures establishing additional details of the process that will be used to fulfill its
responsibilities regarding transmission needs driven by Public Policy Requirements. However,
the Chairman of the New York Public Service Commission has provided a letter indicating that it
intends to initiate a proceeding to establish those procedures.192 Notwithstanding, the procedures
set forth in the Public Policy Requirements planning process in the Tariff regarding the role of
the NYDPS and the NYPSC comply with all of the requirements of Order No. 1000 for a process
to consider transmission needs and transmission solutions to needs driven by Public Policy

Requirements.

b. Step Two - Evaluation of Proposed Transmission Solutions

Order No. 1000 requires that the Public Policy Requirements planning process also

“include the evaluation of proposals by stakeholders for transmission facilities proposed to

satisfy an identified transmission need driven by Public Policy Requirements.”193 In compliance with this directive, the NYISO will request and evaluate transmission solutions to an NYDPS identified transmission need driven by a Public Policy Requirement. Pursuant to Section

31.4.3.1, the NYISO will provide 60 days after posting of the state agency determination to

allow for the submittal of specific transmission solutions (or where a need is under appeal,

following the resolution of that appeal). Solution proponents will pay study costs using the

process established in the economic planning process Section 31.3.1.2.3, as provided in Section

189 Order No. 1000 at P 209.

190 Order No. 1000-A at P 325.

191 The New York Public Service Commission is the decision-making body that resides in the
New York State Department of Public Service, which is a state agency. N.Y. Pub. Serv. L. §§ 3-4.

192 See Attachment II - Letter of Chairman Garry A. Brown to Steven G. Whitley (September 27,

2012).

193 Order No. 1000 at P 211.

Ms. Kimberly D. Bose, Secretary October 11, 2012

31.4.3.2. In order to ensure that at least one response will be available for a NYDPS identified need, Section 31.4.3.3 provides that NYDPS/NYPSC may request the appropriate Transmission Owner(s) to propose a solution. Costs incurred to prepare a proposed solution in response to
such a request will be recoverable. The NYISO will evaluate the solutions and prepare a report, with stakeholder input and utilizing its available resources and modeling capabilities. Where the NYDPS/NYPSC provides criteria for the analysis, the NYISO will use such criteria where
feasible. Section 31.4.4 requires that the NYISO’s evaluation and analysis of identified
transmission needs be performed using its:

existing reliability, economic and interconnection planning process tools,

databases and models, as applicable. Tools used in the planning process that may be used in the evaluation include power flow, stability and short circuit models for system planning analysis, probabilistic models of generator availability for
resource adequacy and production cost simulation models for economic and
environmental analysis.

The NYISO will identify both benefits and costs of proposed solutions, as well as
market-impacts. The NYISO will use metrics such as “change in production costs; LBMP;
losses; emissions; ICAP; TCC; congestion; impact on transfer limits; and deliverability.”
Metrics will be determined in consultation with stakeholders, and where the NYDPS/NYPSC
identifies an analytical methodology, the NYISO will use that methodology. The NYISO will
prepare a report that will identify its assumptions, inputs, methodologies and the results of its
analyses. Such report will be reviewed by the appropriate stakeholder working groups, and
forwarded to the BIC and MC for an advisory vote, before going to the NYISO Board for review
and action. The report will also be forwarded to the independent Market Monitoring Unit for
review and consideration of the potential impact of the proposed projects on the NYISO’s
competitive wholesale markets.194

c. Stakeholder Concerns with the Role of the NYPSC and NYISO

During the stakeholder process, some stakeholders questioned the role of the NYPSC, as
well as the NYISO in the proposed process. The Filing Parties submit that the proposed process
fully complies with Order No. 1000, as it carefully balances the expertise, ability, and authority
of both the NYISO and NYPSC. The NYISO’s planning region is New York State. The
NYPSC, as the agency responsible for the development of energy policies under New York State
law195 is appropriately given the role of identifying needs and selecting among proposed
solutions. The Commission indicated that it would not prescribe a role for state regulators, and
would “leave it to state regulators and public utility transmission providers, in consultation with
stakeholders, in each transmission planning region to determine the appropriate role of state

194 See Attachment Y, § 31.4.7 and Services Tariff Attachment O, § 30.4.6.8.5. 195 N.Y. Pub. Serv. L. §§ 5, 65, 66 and 72.

Ms. Kimberly D. Bose, Secretary October 11, 2012

regulators in the transmission planning process generally and in the consideration of transmission needs driven by Public Policy Requirements in particular.”196

The role of the NYPSC in the proposed Public Policy Requirements planning process is
also appropriate because the Order No. 1000 requirements are not intended to interfere with
states’ efforts.197 Further the proposal is consistent with the “important and unique role” that the
Commission found state regulators play in the transmission planning process “given their
oversight over transmission siting, permitting and construction, as well as integrated resource
planning and similar processes…[and] they may be in the best position of determining how state-
level public policy requirements are satisfied.”198 The NYISO’s role is also appropriately
defined, as it is in the best position to analyze needs and coordinate with stakeholders, in order to
fulfill the requirement that stakeholders be able to identify proposed needs and offer solutions to
those needs. The identification of transmission needs driven by Public Policy Requirements by
the NYPSC/NYDPS will result in the evaluation of proposed solutions that will have a
reasonable chance of being implemented. It will also save the NYISO the expenditure of both
time and resources on evaluations of proposed solutions to transmission needs that are
inconsistent with state objectives. Therefore, the Filing Parties submit that the Commission
should accept the proposed process, as further described below.

d.Stakeholder Concerns with the Role of Long Island Power

Authority

During the stakeholder process, LIPA raised an issue regarding the role of the Long

Island Power Authority in the identification, evaluation of needs driven, and selection of

solutions to needs driven, by Public Policy Requirements as it relates to the Long Island

Transmission District. LIPA has asserted that the Long Island Power Authority has

responsibility for the implementation of public policy and transmission planning for its

Transmission District (i.e., the Long Island Transmission District). Thus, LIPA presented to the stakeholders a proposal that would have provided the Long Island Power Authority’s Board of
Trustees the responsibilities under the Public Policy Requirements planning process, otherwise exercised by the NYDPS/NYPSC, relating to transmission needs of the Long Island
Transmission District.

The other NYTOs (exclusive of NYPA) disagreed with LIPA’s proposed changes to the
process. They argued against inclusion of the proposed revisions for various reasons, including
the following: (1) LIPA’s role for its Transmission District is preserved through its ability to
implement such plans through its own Local Transmission Plan; (2) the NYPSC is the
appropriate entity to determine statewide Public Policy Requirements and LIPA should not share
that responsibility; (3) LIPA’s proposal would allow it to essentially opt out of cost allocation for

196 Order No. 1000-A at P 338.

197 Order No. 1000-A at P 330. 198 Id. at P 337.

Ms. Kimberly D. Bose, Secretary October 11, 2012

projects that may benefit its Transmission District, either derailing the project or assigning costs
to others in the state; (4) affording LIPA the treatment it requests would be discriminatory; and

(5) LIPA agreed to be subject to the Commission’s jurisdiction when it joined the NYISO and participated in the existing planning process.

Given the parties’ positions, the Filing Parties are not including provisions in the Public
Policy Requirements planning process requested by LIPA. LIPA reserves its rights on this issue
to submit its own filing or pleading addressing this issue. The NYISO does not take a position on
this issue. Attempts were made during the stakeholder process to resolve the issue, but to date
they have not been successful. The NYISO has encouraged the NYTOs to continue to discuss
the issue and propose a resolution, after the submittal of this compliance filing, if one is reached.

3. Cost Allocation and Recovery for Transmission Solutions to Identified

Transmission Needs Driven by Public Policy Requirements

Consistent with the Commission’s directives in Order No. 1000, the Filing Parties also
propose tariff modifications to allow for cost allocation and cost recovery for transmission
solutions selected to address transmission needs driven by identified Public Policy Requirements.
Section 31.5.1.1 has been modified to provide that the cost allocation principles and
methodologies cover “regulated transmission solutions to needs driven by Public Policy
Requirements” and that the specific cost allocation principles and methodologies applicable to
transmission solutions in response to needs driven by Public Policy Requirements are identified
in Sections 31.5.5 and 31.5.6.

The cost allocation process is designed to comply with the Order No. 1000 requirement
that the costs of projects selected in the regional transmission plan as solutions to transmission
needs driven by Public Policy Requirements be allowed cost allocation and recovery through the
transmission provider’s tariff. As further explained below, the process provides necessary
flexibility to address cost allocation for transmission projects driven by Public Policy
Requirements.

a.Cost Allocation Provisions

The Filing Parties propose a new Section 31.5.5.1 to provide the cost allocation principles and methodology applicable to transmission solutions driven by Public Policy Requirements. Section 31.5.5.1 clarifies that only transmission solutions driven by Public Policy Requirements are eligible for cost recovery pursuant to these new provisions. Such cost allocation will be
consistent with the Order No. 1000 Regional Planning Cost Allocation Principles, as established in new Section 31.5.5.2. Section 31.5.5.2 also provides that:

The specific cost allocation methodology in Section 31.5.5.4 incorporates the following elements:

31.5.5.2.1 The focus of the cost allocation methodology shall be on proposed

regulated transmission solutions to transmission needs driven by Public Policy Requirements identified by the NYDPS/NYPSC.

Ms. Kimberly D. Bose, Secretary October 11, 2012

31.5.5.2.2Projects analyzed hereunder as proposed solutions to transmission

needs driven by Public Policy Requirements may proceed on a market basis with willing

buyers and sellers any time.

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

31.5.5.2.4Project benefits will be identified in accordance with Section

31.5.4.4.

31.5.5.2.5Identification of beneficiaries for cost allocation and cost

allocation among those beneficiaries shall be according to the methodology specified in

Section 31.5.5.4.

Under new Section 31.5.5.3, projects eligible for cost allocation under these provisions will be available for a transmission solution “when the NYPSC determines that the project should proceed to request the necessary local, state and federal authorizations for construction and operation of the project.” Section 31.5.5.3 also provides that the NYISO will post a list of projects that the NYPSC has so identified. Further, where the NYPSC requests that a
Transmission Owner or Other Developer provide more detailed studies or cost estimates, the costs of the study or estimates will be eligible for cost recovery.

The Filing Parties propose a cost allocation methodology for transmission solutions to

needs driven by identified Public Policy Requirements under new Section 31.5.5.4. The

proposed cost allocation methodology complies with the Order No. 1000 requirement that all

entities whose transmission project has been selected in the regional transmission plan be eligible to seek cost recovery.199 Specifically, Section 31.5.5.4.1 provides that where the identified
Public Policy Requirement provides for a particular cost allocation and cost recovery
methodology, that is the methodology that will be used by the NYISO. Under Section

31.5.5.4.2, where there has been no identified methodology, the project developer may propose a
methodology that uses a cost allocation based on load ratio share and adjusted to reflect the
characteristics and benefits of the specific project and the Public Policy Requirement that is
being implemented. Such proposed methodology will be subject to any guidance provided by
the NYPSC and approval by the Commission. Section 31.5.5.4.3 states that where neither the
Public Policy Requirement, nor the developer, proposes a methodology, or the developer’s
methodology is not endorsed by the NYPSC, the NYDPS/NYPSC may identify an alternative
cost allocation methodology. Such methodology must be consistent with the Order No. 1000
Regional Cost Allocation Principles. Pursuant to Section 31.5.5.4.4, if the cost allocation
methodology is other than the default methodology, the NYISO will make a filing on behalf of
the Transmission Owner or Other Developer, for approval by FERC. Section 31.4.5.5.4.4 also
provides that “The filing will demonstrate that the proposed cost allocation is compliant with the
Order No. 1000 Regional Transmission Planning Cost Allocation Principles.”

Where no cost allocation methodology is proposed under the above procedures, Section

31.5.5.4.5 provides that the NYISO will allocate costs “using a default cost allocation formula,

199 Order No. 1000 at P 332.

Ms. Kimberly D. Bose, Secretary October 11, 2012

based upon a load ratio share methodology.” The Filing Parties propose to allocate costs to all
loads across the NYCA as the default methodology because public policies established by
government are generally established to benefit everyone. In the event no other cost allocation
methodology is prescribed, the Transmission Owner or Other Developer will be eligible to use
this default load ratio share cost allocation methodology as set forth in Section 31.5.5.4.5.

Under these provisions, the NYPSC acts as a gatekeeper regarding the selection of the
cost allocation methodology to be used for solutions to needs driven by Public Policy
Requirements. The NYPSC, as the primary organization in the state of New York for the
development of energy policies, is charged with acting in the public interest with respect to such
matters.

b.Cost Recovery Provisions

The Filing Parties propose to modify Section 31.5.6 to provide for cost recovery for

transmission solutions driven by identified Public Policy Requirements. Specifically, the Filing Parties propose to add the following:

Transmission Owners and Other Developers will be entitled to recovery of costs associated with the implementation of regulated transmission projects undertaken to meet a transmission need driven by a Public Policy Requirement in accordance with the provisions of Section 31.5.5.4 of this Attachment Y.

The Filing Parties also propose a new Section 31.5.6.5 to provide that a transmission developer
will have the right, under FPA Section 205 to file for the approval of its costs associated with the
implementation of a project. The Commission will determine the period for cost recovery, and
the costs recovered will include the reasonable costs of providing more detailed studies or cost
estimates at the NYPSC’s request, as well as the costs of preparing the application to comply
with New York State law requirements and authorizations. Further, Section 31.5.6.5 allows
recovery of necessary and reasonably incurred costs for termination of projects that are not
approved by the appropriate governmental authorities, or that are approved but for which such
approval is later withdrawn. These provisions are consistent with the existing cost recovery
provisions for regulated reliability and regulated economic transmission projects.200

c.Stakeholder Concerns with Cost Allocation and Recovery

Methodology

In the stakeholder process, some stakeholders expressed concern with the Filing Parties’
proposal. Some stakeholders argued that the cost allocation methodology applicable to public
policy projects should be one of the existing cost allocation methodologies in the Tariff, for
projects to meet reliability needs or the CARIS cost allocation methodology for economic
projects, or some other alternative. Those stakeholders disagreed with the flexibility that the

200 See Attachment Y, §§ 31.5.6.1, 31.5.6.4.

Ms. Kimberly D. Bose, Secretary October 11, 2012

current proposal affords. The Filing Parties submit that the methodology should be accepted
because it complies with the Order No. 1000 requirement that projects selected as transmission solutions to transmission needs driven by Public Policy Requirements be eligible for cost
allocation. Cost allocation flexibility is essential because the nature of the need driven by the
specific Public Policy Requirement and the related benefits will not be known until that
requirement is identified and the proposed solutions are evaluated. The proposed methodology is compliant with the Order No. 1000 objective to encourage the development of transmission
projects to meet transmission needs driven by Public Policy Requirements and to apply a cost
allocation that reflects the benefits of these projects.

Adoption of the CARIS methodology, as suggested by some stakeholders would be

inappropriate, as that methodology was developed through extensive negotiation, and precisely defined for application to congestion projects. The CARIS methodology is also not an
appropriate default cost allocation methodology because a public policy transmission project
may have no economic benefits whatsoever. If some economic benefits do arise from the project those benefits may not relate in any way to the public policy objective and may be incidental or inconsequential. So imposing an economic cost allocation methodology on all public policy
projects would not be just and reasonable.

Moreover, the stakeholders who object to the proposed cost allocation methodology have
proposed no viable alternatives. For example, the reliability cost allocation methodology in the
Tariff could not be used for public policy transmission projects. Using that methodology suffers
from the same flaws as the CARIS methodology, of not knowing if a public policy transmission
project would address any identified reliability need or indeed necessarily improve reliability in
some quantifiable manner. The current reliability cost allocation methodology is based upon the
identification of violations of reliability criteria and the cost of necessary solutions to avoid those
violations are imposed on the entities that are responsible for creating the need. There is no

methodology for the quantification of reliability benefits not needed to meet applicable reliability criteria or any methodology for allocating such costs.

In sum, adopting the cost allocation methodology used for regulated economic or

reliability projects for public policy projects would be inappropriate, and may result in unjust and unreasonable rates, since they are not designed to measure the benefits related to a transmission solution to a need driven by a Public Policy Requirement.

Some stakeholders concerns are driven by a belief that the Public Policy Requirements
planning process could allow developers to circumvent the current reliability and economic
planning processes, creating an “end run around the markets.” The NYISO is also concerned
with potential market impacts, as the NYISO’s markets were established to send the appropriate
price signals for investment in new transmission and other resources, and because the reliability
planning process explicitly prefers market based solutions over regulatory rate recovery, and
because economic transmission projects must be voluntarily agreed to by beneficiary loads. In
order to address this concern, the proposed tariff language explicitly provides that projects
selected through the reliability or economic processes must proceed to cost allocation and
recovery through the process established for those types of projects. Additionally, the Public

Ms. Kimberly D. Bose, Secretary October 11, 2012

Policy Requirements planning process requires that the NYISO analyze the impacts of public policy projects on the NYISO’s markets and issue a report on its findings. That report will be provided to the MMU for review, which will identify any such impacts on the market to the stakeholders. That MMU report will be provided to the NYISO Board of Directors and the NYPSC which would, to the extent appropriate, address such issues.

It is important to bear in mind that the Public Policy Requirements planning process
being established will provide information and guidance to government agencies, the NYISO
and stakeholders so that the development of solutions to transmission needs driven by Public
Policy Requirements can be more efficient. It is not reasonable to assume that the NYPSC or
any other agency, after obtaining the input of all interested parties and the NYISO’s market
impact analysis, would not give serious consideration to that input and analysis. It should be
noted that the state already has jurisdiction over the construction of transmission in New York
State and there is no rational basis for the assumption that transmission projects will be built to
meet Public Policy Requirements without due consideration of the potential impacts on the

competitive markets. The NYISO will monitor the Public Policy Requirements planning process for market impacts and will report its findings.

In any event, to the extent stakeholders’ concerns are that adding a Public Policy

Requirements planning process provides another avenue for developers to propose transmission
projects for cost recovery that are outside of existing processes, that concern should have been
raised during the Order No. 1000 proceeding. The Filing Parties’ proposal complies with Order
No. 1000. As such, the proposed methodology should be accepted without modification.

4.Compliance with Order No. 890 Principles

The Filing Parties’ proposed Public Policy Requirements planning process also fully complies with each of the following Order No. 890 transmission planning principles:
“Coordination,” “Openness,” “Transparency,” “Information Exchange,” “Comparability,” and “Dispute Resolution.”201 The Filing Parties have modeled the proposed Public Policy
Requirements planning process on the existing reliability and economic planning processes, including similar provisions regarding stakeholder input and review, as well as the provision and posting of information by the NYISO. The Filing Parties submit that the Public Policy
Requirements planning process complies with the principles, as follows:

• Coordination - The transmission planning process is developed on a non-discriminatory
basis and provides all interested parties an opportunity to fully participate and provide
meaningful input. Specifically, Sections 31.4.2 (allowing for party identification of
proposed transmission needs), 31.4.2.1 (requiring the development of an open and
transparent process by the NYDPS regarding identification and review of needs), and

31.4.6 (allow for consideration and comment of the draft report in the NYISO’s

201 Order No. 1000 at P 151.

Ms. Kimberly D. Bose, Secretary October 11, 2012

stakeholder committees and forwarding of comments and advisory votes at the BIC and MC) ensure open communication regarding the Public Policy Requirements planning process among all interested parties, the NYISO, and the NYPSC/NYDPS.

• Openness - All interested parties may participate in the transmission planning meetings,

and the Public Policy Requirements planning process includes a balanced stakeholder

process that allows all interested entities the ability to fully participate in the process. As
explained above, existing Section 31.1.6 enables all interested parties to participate in the
process, providing that the ESPWG and the TPAS, for purposes of the Attachment Y
processes, is “open to any interested entity, irrespective of whether that entity has become
a Party to the ISO Agreement.” Additionally, new Section 31.4.2.1, requires that the
NYDPS develops an open and transparent process to review proposed transmission needs
and posting of identified needs on the NYISO’s website. All reports related to Public
Policy Requirements planning will be developed and reviewed in the stakeholder process.
The process also requires NYISO Board of Directors review and action, including
approval, or the proposal of modifications, as well as a final determination and posting of
the report upon final Board approval, in Section 31.4.7. It also requires the NYISO to
post approved solutions (Section 31.4.9).

• Comparability - Similarly situated customers are treated comparably in the Public

Policy Requirements planning process. Any entity is allowed to submit a proposed need
(Section 31.4.2) and the process provides transparent qualification criteria for entities
(Section 31.4.5) and information submittal requirements for project proposals (Section

31.4.8).

• Transparency - The basic methodology, criteria, assumptions and data used to develop

the plan is disclosed to customers and stakeholders. The Public Policy Requirements
process requires that the NYISO make available, upon request, pursuant to Section

31.4.6. Specifically, the proposed tariff language provides that “[t]he ISO shall make

available to any interested party sufficient information to replicate the results of the draft
report” consistent with the protection of Confidential Information and CEII under the
NYISO’s Code of Conduct and policies. For their parts, the NYDPS and NYPSC operate
under the State Administrative Procedure Act and the State Open Meetings Law, which
require public notice of proposed decisions, an opportunity to be heard in writing or at a
hearing, open meetings, a record of the proceeding, and a written decision.

• Information Exchange - The Public Policy Requirement planning process requires that

the transmission needs driven by such requirements be identified in consultation and with input from interested parties. Specifically, Section 31.4.4 proposed language requirement “[t]he ISO [to] evaluate specific proposed transmission solutions with input from
stakeholders….”

• Dispute Resolution - The proposed Public Policy Requirements planning process also

identifies a process to manage disputes arising from the process. Disputes regarding the
NYISO’s responsibilities under the Public Policy Requirements Planning Process will be
handled under the existing dispute resolution procedures for Attachment Y. That process

Ms. Kimberly D. Bose, Secretary October 11, 2012

provides for timely identification and resolution of substantive and procedural disputes
arising out of the CSPP, through the NYISO governance procedures as part of the plan
development process or by invoking formal dispute resolution procedures pursuant to
OATT Section 2.16 and Services Tariff Section 11. Section 31.4.2.2 requires disputes
regarding the NYDPS determination on proposed transmission needs to be raised through
a petition to the NYPSC and resolved by a NYPSC order. The NYPSC must be the
ultimate decision-maker with respect to any such disputes under its jurisdiction because it
is the entity ultimately responsible for identifying proposed transmission needs driven by
Public Policy Requirements. Disputes under FERC’s jurisdiction will ultimately be
decided by the Commission.202

5.Additional New Sections

The Filing Parties also include provisions, substantially similar to those included in the regional and economic planning process that:

• Provide for Market Monitoring Unit review (Section 31.4.7 - also related modifications to
Services Tariff Attachment O Section 30.4.6.8.5);

• Require the NYISO to post approved solutions (31.4.9); and

• Provide for entity qualification criteria and project information requirements, as well as
timing and submittal provisions; (Sections 31.4.5.2 and 31.4.8.1).

6.Modifications to Existing Provisions in Other Attachment Y Sections

to Reflect the Addition of a Public Policy Requirements Planning

Process

The Filing Parties also propose modifications in other sections of the Tariff to account for the Public Policy Requirements planning process provisions in other sections of Attachment Y. Most significantly, the Filing Parties propose a new Section 31.1.5, titled “Public Policy
Requirements Planning Process” which describes the process as follows:

Section 31.4 of this Attachment Y describes the planning process that the ISO,

and all interested parties, shall follow to consider Public Policy Requirements that
drive the need for expansions or upgrades to BPTFs. The objectives of the Public
Policy Requirements planning process are to: (1) allow Market Participants and
other interested parties to propose transmission needs that they believe are being
driven by Public Policy Requirements and for which transmission solutions
should be evaluated, (2) provide a process by which the NYDPS and NYPSC
will, with input from the ISO, Market Participants, and other interested parties,
identify the transmission needs, if any, for which transmission solutions should be
evaluated, (3) provide a process by which the ISO will request and, with input
from the NYDPS, Market Participants, and other interested parties, evaluate
proposed transmission solutions to the transmission needs that have been

202 Attachment Y, § 31.6.1.

Ms. Kimberly D. Bose, Secretary October 11, 2012

identified by the NYDPS and NYPSC, (4) provide a cost allocation methodology for regulated transmission projects driven by Public Policy Requirements and that have received an order from the NYPSC indicating that the project should
proceed to request the necessary federal, state, and local authorizations for
construction and operation, and (5) coordinate the ISO’s Public Policy
Requirements planning process with neighboring Control Areas.

Additionally, the Filing Parties propose to add a provision in Section 31.2.1.1.2 obligating
NYTOs with Transmission Districts to consider transmission needs driven by Public Policy
Requirements in the development of their LTPs. That new Section 31.2.1.1.2 states:

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. Market Participants and other interested parties may submit
comments for the Transmission Owner's consideration regarding a transmission
need that they believe is being driven by a Public Policy Requirement. The
Transmission Owner will post on its website an explanation of any transmission
need it has identified as being driven by a Public Policy Requirement either in the
initial LTP or as a result of Market Participant comments for which potential
transmission solutions will be evaluated, as well as an explanation of why
solutions to any suggested transmission need will not be evaluated.

Further, the Filing Parties propose these additional conforming revisions:

• Modification of the definitions of “CSPP” and “Other Developer” to reflect the addition

of the Public Policy Requirements planning process;

• The addition of the phrase “and the Public Policy Requirements planning process,

concurrently” in Section 31.1.7.2, regarding the schedule for data collection and submission which will be included in the ISO Procedures;

• The addition of the phrase “and the Public Policy Requirements considered” in Section

31.2.1.1.1 of the LTPP regarding the criteria, assumptions and data to be used by NYTOs with Transmission Districts; and

• The addition of language in OATT Sections 3.8.1 and 3.10 to allow the NYISO to

perform analyses requested by the NYPSC for the Public Policy Requirements planning process, including the evaluation of non-transmission alternatives to meet the needs driven by such requirements.

Ms. Kimberly D. Bose, Secretary October 11, 2012

B.Additional Modifications to Ensure Full Compliance with the Regional

Transmission Plan Directives

1. Modification to Ensure the Consideration of “Alternative

Transmission Solutions that May Meet the Needs of the Region More Efficiently or Cost-Effectively than Local Transmission Plans”

As explained in Section IV.A, above, the NYISO’s CSPP substantially complies with the Order No. 1000 Regional Transmission Plan requirements, including compliance with the Order No. 890 principles. However, Order No. 1000 identified and addressed certain deficiencies in
the Order No. 890 requirements, including the lack of a directive that transmission providers
“take affirmative steps to identify potential solutions at the regional level that could better meet the needs of the region” within the LTPP.203 The NYISO’s CSPP does produce a regional
transmission plan that includes input from the NYTO LTPs. However, Attachment Y at present does not include explicit tariff provisions in the LTPP that require the NYTOs and the NYISO to consider alternative transmission solutions which could meet regional needs more efficiently or cost-effectively than solutions proposed in NYTO LTPs.

Thus, the Filing Parties propose to add language to the LTPP section of Attachment Y to explicitly require the NYISO to consider such regional alternatives. Specifically, the Filing Parties propose to amend Attachment Y to add a new Section 31.2.1.1.3 which states:

The ISO will review the Transmission Owner LTPs as they relate to BPTFs and
will also evaluate whether other solutions proposed to meet Reliability Needs,
congestion identified in the CARIS, or Public Policy Requirements may meet
such BPTF needs of the NYCA region more efficiently or cost-effectively than
the Transmission Owners’ proposed LTP solutions. The ISO will report the
results of its evaluation in the relevant ISO planning report prepared under this
Attachment Y.

The NYISO has placed the language in the Scope section of the LTPP section in the CSPP.

Therefore, in compliance with Order No. 1000, this language provides the NYISO with the

ability and responsibility to review a NYTO LTP and identify any alternative solutions that may more efficiently or cost effectively meet the needs of the NYCA region.

a. Stakeholder Concerns with the Current and Proposed

Processes’ Compliance with the Non-Discrimination Directive

In the stakeholder process, LS Power expressed concerns that the NYISO’s Tariff and

proposed compliance tariff revisions do not result in a process in which the more efficient or

cost-effective solutions are selected. LS Power has indicated that it believes that Order No. 1000
requires that the Tariff be amended to require the selection of the more cost-effective or efficient

203 Id. at P 147.

Ms. Kimberly D. Bose, Secretary October 11, 2012

project, where such a project is identified. The Filing Parties believe that the Tariff, as modified
above, fully complies with the Order No. 1000 requirement. Order No. 1000 requires that the
planning process “evaluate, in consultation with stakeholders, alternative transmission solutions
that might meet the needs of the transmission planning region more efficiently or cost-effectively
than solutions identified … in [the] local transmission planning process.”204 Order No. 1000
provides that the analysis should be done so that the “more efficient or cost-effective
transmission solution can be selected in the regional transmission plan for purposes of cost
allocation.”205 Order No. 1000 does not require that the NYISO select the most efficient project,
rather it requires that the NYISO and NYTOs consider such solutions and allow for their
selection in the regional transmission plan. In any event, it is the NYPSC, not the NYISO, that
selects the reliability backstop solution or alternative regulated solution that will seek the
necessary local, state, and federal authorizations, as appropriate, where market-based solutions
will not timely fulfill identified Reliability Needs. Thus, LS Power’s concerns are unfounded.

LS Power is also concerned with the NYISO Tariff’s reliance on a NYPSC process,
which they contend may not be compliant with Order No. 1000, to determine the solution and
developer that will be selected to meet an identified Reliability Need. With respect to this
concern, the Filing Parties also submit that the NYISO’s reliability planning process, as modified
herein, fully complies with the Order No. 1000 requirements. As explained in Section IV.B, the
NYISO’s reliability planning process evaluates, in conjunction with Market Participants,
Reliability Needs and potential solutions to address those needs and ultimately, the appropriate
governmental authority, usually the NYPSC, is the ultimate decision-maker regarding what
solution gets implemented. Under the procedures adopted by the NYPSC, Responsible
Transmission Owners must, in a timely fashion, consider alternative regulated solutions that have
been found by the NYISO to be capable of meeting the identified Reliability Need.206 That
process also allows for a developer of a proposed alternative solution that is not selected by the
Responsible Transmission Owner to make a filing with the NYPSC requesting that its solution
be considered. Where the proposed regulated backstop solution is a non-transmission project,
the NYPSC’s process calls for the determination of whether implementation of the solution is in
the public interest. Where the regulated backstop solution is a transmission project, the NYPSC
must consider alternative regulated solutions in conjunction with its transmission siting authority
under Article VII of the New York Public Service Law. Where a solution is a state jurisdictional
regulated backstop solution to be implemented by LIPA or NYPA, the determination will be
made by their respective boards of directors.

LS Power also objects to the NYISO Tariff provision that permits a Responsible

Transmission Owner to recover its costs for the preparation of a regulated backstop solution,

204 Id. at P 148, see also id. at P 81.

205 Id. at P 148.

206 Policy Statement on Backstop Project Approval Process, Proceeding to Establish a Long-
Range Electric Resource Plan and Infrastructure Planning Process, Case No. 07-E-1507 (February 18,
2009).

Ms. Kimberly D. Bose, Secretary October 11, 2012

even if the project is subsequently halted or cancelled. However, the TOs have assumed the
obligation to prepare a regulated backstop solution to an identified Reliability Need, if
designated by the NYISO as the Responsible Transmission Owners(s) when no market-based
solution is available. This obligation was assumed by the TOs in a contract with the NYISO,
approved by the Commission.207 One of the conditions for assuming this obligation was the
recovery of costs reasonably incurred in the preparation of a regulated backstop solution at the
direction of the NYISO. No other party has assumed that obligation. No other party has an
obligation to prepare a solution to a Reliability Need, and any other party may discontinue a
project at any point. Consequently, the ability of a Responsible Transmission Owner to recover
the costs it has incurred in the development of a regulated backstop solution at the direction of
the NYISO is reasonable and not unduly discriminatory against Other Developers. It also should
be noted that the NYISO Tariff provides full cost recovery, including development costs, for an
Other Developer whose alternative regulated solution is selected by the NYPSC as the project
that should go forward to seek the necessary authorizations. When the Commission approved
this process, it found that “NYISO’s role in both soliciting market-based and regulated solutions
and in evaluating competing proposals for their ability to meet the designated Reliability Need in
a timely manner affords comparable treatment to all types of competing solutions and
resources.”208 Thus, there is no merit to LS Power’s concern that the process is discriminatory to
non-incumbent developers as they have the same opportunity to propose, seek approval, and
receive the same consideration, for a solution as incumbent developers.

2.Modification to Comply With ROFR Directives Regarding the Rights

of Incumbent Transmission Providers

As explained in Section IV.B.1, above, Order No. 1000 directs transmission providers to
remove ROFRs from the Tariffs that would give preference to incumbent TOs with respect to
regional transmission solutions. Also, as already discussed, the NYISO Tariffs provide no ROFR
to the NYTOs to build transmission projects to meet needs on the Bulk Power Transmission
Facilities. Order No. 1000, however, also clarifies that the requirement to eliminate ROFR
provisions is not intended to interfere with upgrades made by incumbent TOs to meet their local
needs. The Filing Parties, therefore, propose to modify Attachment Y to explicitly provide that
incumbent TOs have the right to make upgrades to their own facilities or use existing ROWs to
meet their local system needs. Specifically, new Section 31.6.4, titled “Rights of Incumbent
Transmission Owners” states:

Nothing in this Attachment Y affects the right of an incumbent Transmission

Owner to: (1) build, own, and recover costs for upgrades to the facilities it owns,

207 See, New York Independent System Operator, Inc., 109 FERC ¶ 61,372 at PP 38-39 (2004) and
New York Independent System Operator, Inc., 111 FERC ¶ 61,182 at P 19 (2005) (accepting unsigned
agreements between the NYISO and the NYTOs providing for the NYTO’s participation in the NYISO’s
comprehensive reliability planning process, filed by the NYISO on August 24, 2004, and revised on
February 25, 2005).

208 July 2010 Order at P 10.

Ms. Kimberly D. Bose, Secretary October 11, 2012

regardless of whether the upgrade has been selected in the regional transmission
plan for purposes of cost allocation; (2) retain, modify, or transfer rights-of-way
subject to relevant law or regulation granting such rights-of-way; or (3) develop a
local transmission solution that is not eligible for regional cost allocation to meet
its reliability needs or service obligations in its own service territory or footprint.

This provision complies with Order No. 1000 and the Commission should approve it without modification.

3. Modification to Comply With Directives Regarding Entity

Qualification and Project Information

Order No. 1000 requires that qualification criteria necessary for determining an entity’s eligibility to propose a transmission project that will be eligible to be selected in the regional transmission plan for purposes of cost allocation, be included in a transmission provider’s
tariff.209 The criteria must be transparent and not unduly discriminatory and allow stakeholder coordination, and the evaluation process must culminate in a decision that provides enough details for stakeholders to understand why a particular project was selected.210 Such criteria must allow for the evaluation of “the relative economics and effectiveness of performance for alternative solutions offered during the transmission planning process.”211

Potential transmission developers must be provided with an opportunity to show that they possess “the necessary financial resources and technical expertise to develop, construct, own, operate and maintain transmission facilities.”212 The qualification criteria must also take into account the fact that public utility transmission providers may already satisfy the criteria and must provide opportunities to remedy any deficiencies identified.213 The criteria must apply to both incumbent and non-incumbents214 and identify the information that must be submitted, as well as the deadline for submitting such information.215

In compliance with these directives, the Filing Parties propose to amend the Attachment
Y reliability planning and economic planning processes to add entity pre-qualification and
qualification criteria. The pre-qualification criteria allow entities wishing to qualify as
transmission developers to provide information prior to submitting a project proposal. The more
detailed entity qualification criteria would have to be met once a pre-qualified transmission

209 Order No. 1000 at PP 323-324. See also Order No. 1000-A at PP 439-442. 210 Id. at P 325.

211 Id. at P 328.
212 Id. at P 323.
213 Id. at P 324.
214 Id. at P 323.
215 Id. at P 325.

Ms. Kimberly D. Bose, Secretary October 11, 2012

developer submits a proposed transmission project for inclusion in either the CRP or CARIS or Public Policy Requirements planning process. Both the pre-qualification and qualification
criteria ensure that potential transmission developers are provided the opportunity to show that they possess qualifications necessary to propose a project. The Tariff applies the criteria to both non-incumbents and incumbents on an equal basis.

The criteria clearly provide what information must be submitted. The pre-qualification criteria provide a potential transmission developer with the option of updating previously
submitted information, and the entity qualification criteria provide that the listed criteria will be considered “as appropriate.” This language provides that different types of projects and
developers (including those that may already satisfy the criteria) can make a showing with only the detail necessary, as appropriate to that potential transmission developer’s circumstances.
Further, the criteria provide that information may be submitted at any time and that entities will be provided with an opportunity to cure any identified deficiencies within the period specified in the ISO Procedures. Finally, the criteria clearly establish that incumbents and non-incumbents both have the same ability to use regional cost allocation methods.216

Thus, in compliance with these requirements, the Filing Parties propose the following pre-qualification criteria, in Section 31.2.4.1.1 of the reliability planning process:

The ISO shall provide each entity with an opportunity to demonstrate that
it has or can draw upon the financial resources, technical expertise, and
experience needed to develop, construct, operate and maintain a project to meet
identified Reliability Needs. The ISO shall consider the qualifications of each
entity in an evenhanded and non-discriminatory manner, treating Transmission
Owners and Other Developers alike. Any entity that demonstrates that it has or
can draw upon the necessary financial resources and technical expertise shall be
eligible to propose a project as a solution to an identified Reliability Need.

Any entity seeking to become eligible to propose to develop a project as a
solution to an identified Reliability Need shall submit any information, or update
any previously submitted information, it considers relevant to its qualifications, to
the ISO. Such information may be submitted at any time. The ISO shall within

15 days of an entity’s submittal, notify the entity if the information is incomplete. The entity shall submit the additional information within the time period specified in the ISO Procedures.

The Filing Parties also propose the same language, modified as necessary, to indicate its

applicability to the economic planning process or Public Policy Requirements planning process,
in Sections 31.3.2.4.1.1 (for specific transmission solutions to address congestion identified in
the CARIS) and 31.4.5.1 (for transmission solutions to a transmission need driven by a Public

216 Id. at PP 332, 336.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Policy Requirement). With respect to entity qualification criteria, the Filing Parties propose the following, in Section 31.2.4.1.3 of the reliability planning process:

After the submittal of a project proposal, the ISO shall consider, as

appropriate, the following criteria when determining whether an entity is eligible
to develop a project as a solution to an identified Reliability Need: (1) the current
and expected capabilities of the entity to finance, license, and construct a
proposed solution and operate and maintain it for the life of the project; (2) the
entity’s existing rights of way and substations that would contribute to the project
in question; (3) the experience of the entity in acquiring rights of way, and the
ability of the entity to acquire rights of way, if necessary, that would facilitate
approval and construction; (4) the financial resources of the entity; (5) the
technical and engineering qualifications and experience of the entity; and (6)
whether the entity has the ability to meet the requirements for the submission of a
valid Interconnection Request as provided in ISO OATT Attachments X or Z, or a
valid transmission expansion Study Request under ISO OATT Section 3.7.217

Any entity determined by the ISO to qualify under this section shall be

eligible to use the cost allocation and cost recovery mechanism set forth in

Section 31.5 of this Attachment Y and Rate Schedule 10 for any approved project.

The Filing Parties also propose the same language, modified to indicate its applicability to the economic planning process or Public Policy Requirements planning process, in Sections

31.3.2.4.1.3 (for solutions to address specific congestion identified in the CARIS) and 31.4.5.3 (for transmission solutions to a transmission need driven by a Public Policy Requirement). Modifications to the provisions in the economic and Public Policy Requirements planning processes include replacement of the reference to Rate Schedule 10 with “the appropriate rate schedule.” These modifications are necessary because Rate Schedule 10 is applicable only to regulated reliability projects, so cost recovery for transmission solutions selected through
economic and Public Policy Requirements planning processes will recover the costs through alternative rate schedules to be developed by the NYISO as needed.

With respect to transmission projects, Order No. 1000 also requires that transmission
providers’ tariffs identify both “the information that must be submitted by a prospective
transmission developer in support of a transmission project it proposes in the regional
transmission planning process; and … the date by which such information must be submitted to
be considered in a given transmission planning cycle.”218 With respect to the reliability planning
process, the NYISO OATT already includes project information submission requirements in
Sections 31.2.4.3.1, 31.2.4.3.2 (for Regulated Backstop Solutions), 31.2.4.5 (for Market-Based

217 In accordance with P 441 of Order No. 1000-A, these entity qualification criteria do not

require entities to show that they are capable of obtaining rights of way through eminent domain or to show their ability to incorporate under specific state law requirements.

218 Id. at P 325.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Responses), and 31.2.4.7 (for Alternative Regulated Responses).219 Thus, the Filing Parties propose to add a similar list of project information requirements in the economic and Public Policy Requirements planning processes. Specifically, a new Section 31.3.2.4.2 is proposed to be added that provides:

Any entity seeking to offer a regulated economic transmission project as a

solution to address specific congestion identified in the CARIS must provide, at a
minimum, the following details: (1) contact information; (2) the lead time
necessary to complete the project; (3) a description of the project, including
planning and engineering specifications as appropriate; (4) evidence of a
commercially viable technology; (5) a major milestone schedule; (6) a schedule
for obtaining required siting permits and other certifications; (7) a demonstration
of Site Control or a schedule for obtaining such control; (8) status of ISO
interconnection studies and interconnection agreement; (9) status of equipment
procurement; (10) detailed capital cost estimates for each segment of the project;

(11) a risk profile addressing the stage of project development, required cost

overruns sharing, required project cost increase sharing, identification of

conditions for cancelling the project including terms and conditions for allocating sunk costs; and (12) any other information requested by the ISO.220

The Filing Parties also propose the same language, modified to indicate its applicability to the
Public Policy Requirements planning process. The modifications, which alter some of the
criteria for the purpose of increased flexibility, are necessary to ensure that the criteria are
applicable to any type of Public Policy Requirement. Specifically, Section 31.4.8.1 includes the
following criteria for transmission solutions to a transmission need driven by a Public Policy
Requirement:

Any entity seeking to offer a transmission solution for transmission needs driven
by Public Policy Requirements identified by the NYDPS/NYPSC, must provide,
at a minimum, the following details: (1) contact information; (2) the lead time
necessary to complete the project; (3) a description of the project, including type,
size, and location, as well as planning and engineering specifications as
appropriate; (4) evidence of a commercially viable technology; (5) a major
milestone schedule; (6) a schedule for obtaining required siting permits and other
certifications; (7) a demonstration of Site Control or a schedule for obtaining such
control; (8) status of ISO interconnection studies and interconnection agreement;

(9) status of equipment procurement; (10) capital cost estimates for the project;

(11) to the extent available a risk profile addressing the stage of project

219 The NYISO has added section 31.2.4.1.2 which indicates that the information requirements for projects are contained in the relevant sections.

220 Similar to the entity qualification criteria, these project qualification criteria do not require

entities to show that they are capable of obtaining rights of way through eminent domain or to show their ability to incorporate under specific state law requirements.

Ms. Kimberly D. Bose, Secretary October 11, 2012

development, required cost overruns sharing, required project cost increase

sharing, identification of conditions for cancelling the project including terms and
conditions for allocating sunk costs; and (12) any other information requested by
the ISO.221

The NYISO has also added Section 31.4.5.2 as a “road map” paragraph that points to the provisions on the project information requirements.222

Regarding the requirement that the Tariff be modified to include information on the

timing of the submittal of the information, the Filing Parties propose the following new Section

31.2.4.1.4, titled “Timing for Submittal of Project and Entity Qualification Information and Opportunity to Provide Additional Information” in the reliability planning process:

Any entity seeking to develop a project as a solution to an identified

Reliability Need shall submit any information, or update any previously submitted
information, it considers relevant to its project and qualifications to the ISO. The
required information for entity and project qualification must be submitted to the
ISO in accordance with the time frame and other requirements specified in the
ISO Procedures after a request for solutions is made by the ISO upon completion
of the RNA. The ISO shall within 15 days of an entity’s submittal, notify the
entity if the information is incomplete. The entity shall submit the additional
information within the time period specified in the ISO Procedures.

Rather than setting a strict deadline for information procedures, the Filing Parties added

flexibility to the time frame for entities to submit qualification information to the NYISO. The
Filing Parties also propose the same language, modified to indicate its applicability to the
economic planning process or Public Policy Requirements planning process, in Sections

31.3.2.4.1.4 (for solutions to address specific congestion identified in the CARIS) and 31.4.5.4
(for transmission solutions to a transmission need driven by a Public Policy Requirement).
Modifications to the provisions in the economic and Public Policy Requirements planning
process include language removing the reference to a “request for solutions” and adding, in the
economic planning process provision, language indicating that “required information … may be
submitted at any time, but the proposed regulated economic transmission project will be
evaluated against the most recently available CARIS Phase II database.” These modifications
were necessary to reflect differences between the economic and Public Policy Requirements
planning processes.

221 Similar to the entity qualification criteria, these project qualification criteria do not require

entities to show that they are capable of obtaining rights of way through eminent domain or to show their ability to incorporate under specific state law requirements.

222 A similar “road map” paragraph for the economic planning process section has been added in

31.3.2.4.1.2.

Ms. Kimberly D. Bose, Secretary October 11, 2012

In addition to the provisions in the qualification criteria regarding the directive that any entity, whether incumbent or non-incumbent, be able to use the cost recovery and cost allocation provisions in the Tariff, the Filing Parties add the following Section 31.5.1.7, titled “Eligibility for Cost Allocation and Cost Recovery”:

Any entity, whether Transmission Owner or Other Developer, shall be eligible for cost allocation and cost recovery, as set forth in Section 31.5 of this Attachment Y and associated rate schedules, as applicable, for any approved reliability,
economic, or Public Policy Requirement driven transmission project.

Further, with respect to the directive that all proposed solutions be evaluated comparably, the NYISO proposes the following revisions to clarify that evaluations will be comparably
evaluated in its reliability planning process. Specifically, the Filing Parties propose to modify
Section 31.2.5.1:

When evaluating proposed solutions to Reliability Needs from any Developer, all resource types shall be considered on a comparable basis as potential solutions to the Reliability Needs identified: generation, transmission, and demand response. All solutions will be evaluated in the same general time frame.

Also, the Filing Parties are adding new sections that provide for the identification of

qualifying entities and projects in the reliability planning process. The Filing Parties propose a new Section 31.2.6 in the reliability planning process that states: “The ISO will include in the CRP the list of entities and projects that qualify pursuant to Section 31.2.4.1.” Additionally, the Filing Parties propose language to require the posting of selected solutions.223 Thus, a new Section 31.2.6.4 in the reliability planning process is being added that states:

The ISO shall post on its website a list of all entities that have undertaken a commitment to build a project (which may be a regulated backstop solution, market-based response, alternative regulated response or gap solution) that is necessary to ensure system reliability, as identified in the CRP and approved by the appropriate governmental agency(ies) and/or authority(ies).

New Section 31.3.2.5, in the economic planning section, states:

The ISO shall post on its website a list of all entities who have undertaken a

commitment to build a project that has been approved by project beneficiaries, in accordance with Section 31.5.4.6 of this Attachment Y.

Finally, new Section 31.4.9, in the Public Policy Requirements planning section, states:

223 Order No. 1000 at P 159.

Ms. Kimberly D. Bose, Secretary October 11, 2012

The ISO shall post on its website a list of all entities who have accepted the terms and conditions of an Article VII certificate under the New York Public Service Law, or any successor statute, to build a project.

4.Process for Reevaluation of Transmission Plan Due to Delays in

Development

Order No. 1000 directs transmission providers to include the reevaluation criteria, for reliability projects, in their tariffs. As explained in Section IV.A.1.b.ii, the NYISO’s Tariff
already includes most of the criteria for reevaluation. However, in order to fully comply with Order No. 1000 the Filing Parties propose to add the further detail regarding reevaluation, which is currently included in the CRPP Manual, into the Tariff. Therefore, Section 31.2.7.1, regarding market-based solutions, has been amended as follows:

31.2.7.1 The ISO will monitor and report on the status of market-

based solutions to ensure their continued viability to meet Reliability Needs on a
timely basis in the CRP. The ISO shall’s criteria to assess the continued viability
of such projects using the following criteria:are included in the ISO Procedures.

31.2.7.1.1 Between three and five years before the Trigger Date for

the project, the ISO will use a screening analysis to verify the feasibility of the project.

31.2.7.1.2 Between one and two years before the Trigger Date for the

project, the ISO will review the status of the required

interconnection studies, contract negotiations, permit applications, financing, and Site Control.

31.2.7.1.3 Less than one year before the Trigger Date, the ISO will

perform a detailed review of the project’s status, including the
status of: (1) final permits; (2) required interconnection studies;
and (3) an effective interconnection agreement; (4) financing; (5)
equipment; and (6) the implementation of construction schedules.

The increasing levels of detail in NYISO monitoring are needed as the NYISO gets close to deciding whether to trigger a regulated solution and proceed to obtain regulatory approvals and start construction. The same revisions have also been made to Section 31.2.7.2, regarding regulated reliability solutions.

C.Additional Compliance Modifications

1.Applicability of Order No. 1000’s Reforms to New Facilities

Order No. 1000 provides that the directed reforms shall apply to new transmission

facilities. New transmission facilities are those subject to reevaluation after the effective date of

Ms. Kimberly D. Bose, Secretary October 11, 2012

this compliance filing.224 Because the Attachment Y process already complied with the

Commission’s directives with respect to the reliability and economic planning processes, projects selected pursuant to those processes have been, and continue to be eligible for cost allocation and cost recovery. However, in compliance with Order No. 1000, the NYISO has added a new
Public Policy Requirements planning process in Section 31.4. The Commission’s effective date directive, thus applies, making the new process effective upon the completion of the next
reliability planning cycle following the Commission’s acceptance of this compliance filing.
Thus, in compliance with this directive, the Filing Parties propose to add a new Section 31.5.1.8, titled “Effective Date of Cost Allocation and Cost Recovery for Regulated Transmission
Solutions Driven by Public Policy Requirements”:

The cost allocation methodology and cost recovery provided under this
Section 31.5 for regulated transmission solutions driven by Public Policy
Requirements shall only apply to solutions identified in the Tariff that are
submitted to the ISO upon the completion of the next reliability planning cycle
following the Commission’s issuance of a final order approving these tariff
changes.

2. Clarification that the NYISO Does Not Select Among Solutions in the

Regional Transmission Plan for Purposes of Cost Allocation

The Filing Parties also propose an additional modification to emphasize that the

appropriate governmental authorities, not the NYISO, select among proposed solutions, with respect to the reliability planning process. As explained in prior filings, and accepted by the Commission, the NYISO verifies that proposed projects will meet identified Reliability Needs. However, appropriate governmental authorities, not the NYISO, shall choose a solution, in the event that more than one project is identified to meet a Reliability Need. Section 31.2.5.7.1 provides that this is the process, but to clarify that the NYISO does not select solutions in that process, the Filing Parties propose the following modification:

If the ISO determines in the CRP, or at any time, that implementation of a
regulated backstop solution reviewed in a previous RNA/CRP cycle is necessary,
the ISO will request the Responsible Transmission Owner to submit its proposal
for a regulated backstop solution to the appropriate governmental agency(ies)
and/or authority(ies) to begin the necessary approval process. The Responsible
Transmission Owner in response to the ISO request shall make such a submission.
Other Developers and Transmission Owners proposing alternative regulated
solutions pursuant to Section 31.2.4.6.2 that have completed any changes required
by the ISO under Section 31.2.5.4, which the ISO has determined will resolve the
identified Reliability Need, may submit these proposals to the appropriate
governmental agency(ies) and/or authority(ies) for review. If more than one
regulated solution would meet the Reliability Need, the ISO does not determine

224 Id. at PP 65, 162, 503.

Ms. Kimberly D. Bose, Secretary October 11, 2012

which solution will be implemented. The appropriate governmental agency(ies)
and/or authority(ies) with jurisdiction over the implementation or siting will
determine whether the regulated backstop solution or an alternative regulated
solution will be implemented to address the identified Reliability Need.

3.Obligation of Non-Incumbent Transmission Developers to Comply

with Applicable Reliability Obligations

Order No. 1000 indicated that some commenters were concerned that existing

transmission providers could violate reliability standards if a non-incumbent transmission

developer abandons a facility needed to address a Reliability Need.225 The Commission held

that all entities that are users, owners, and operators of the electric bulk power system must

register with NERC, including such non-incumbent transmission providers. Therefore, the Filing Parties propose the following new Section 31.6.5, titled “Compliance with Reliability
Requirements” to reflect this obligation:

All entities developing an approved project pursuant to the provisions in this Attachment Y must register with NERC and NPCC for appropriate reliability functions and must comply with all applicable Reliability Criteria.

4. Revisions to Comply with Regional Cost Allocation Principles

Though the NYISO’s Tariff substantially complies with all of the Regional Cost

Allocation Principles, the Filing Parties propose additional modifications to ensure that

Attachment Y reflects all of the Order No. 1000 directives. Specifically, the Filing Parties

propose revisions to: (1) add the Order No. 1000 Regional Cost Allocation Principles to Section

31.5 of the Tariff and modifications in response to that addition; and (2) to modify the Tariff to fully comply with Regional Cost Allocation Principle #4.

First, the Filing Parties propose to include the language adopting the Order No. 1000 and Order No. 1000-A Cost Allocation Principles in Section 31.5.2. Second, the Filing Parties
propose to amend existing Sections 31.5.3.1 to state:

The ISO shall implement the specific cost allocation methodology
in Section 31.5.3.2 of this Attachment Y in accordance with the Order No.
1000 Regional Cost Allocation Principles as set forth in Section 31.5.2.
Cost allocation for regulated transmission solutions to Reliability Needs
shall be determined by the ISO be based upon the principle that
beneficiaries should bear the cost responsibility. The specific cost
allocation methodology in Section 31.5.3.2, to be developed by the ISO in
consultation with the ESPWG, will incorporates the following elements:

225 Id. at PP 342-344.

Ms. Kimberly D. Bose, Secretary October 11, 2012

Corresponding revisions have been made to Section 31.5.4.2 with respect to the cost allocation methodology for regulated economic projects.

Additionally, as explained above, Regional Cost Allocation Principle #4 requires that:

The allocation method for the cost of a regional facility must allocate costs solely within
that transmission planning region unless another entity outside the region or another
transmission planning region voluntarily agrees to assume a portion of those costs.
However, the transmission planning process in the original region must identify
consequences for other transmission planning regions, such as upgrades that may be
required in another region and, if there is an agreement for the original region to bear
costs associated with such upgrades, then the original region’s cost allocation method or
methods must include provisions for allocating the costs of the upgrades among the
entities in the original region.226

While the NYISO’s Tariff complies with the first requirement in this principle (i.e., cost must be allocated solely within the transmission planning region), modifications are necessary to fully comply with the second requirement. Therefore, the Filing Parties are proposing tariff
modifications to ensure that NYISO’s Tariff identifies and address the consequences for other regions. Specifically, with respect to its reliability planning process, a new Section 31.2.2.7, titled “Consequences for Other Regions” states:

The ISO will coordinate with neighboring regions to identify the

consequences of reliability transmission projects on neighboring regions. The ISO shall report the results in the CRP.

This language is also included in new Sections 31.3.1.6 (modified as necessary to reflect its

inclusion in the economic planning process) and 31.4.4.1 (modified as necessary to reflect its

inclusion in the Public Policy Requirements planning process). Presently, the NYISO is holding
meetings regularly with PJM and ISO-NE to discuss expansion of the existing Northeast
Coordinated System Planning Protocol (“NCSPP”) to meet the requirements of Order No. 1000.
Accordingly, the Filing Parties expect to submit the revised protocol to comply with the
interregional planning process requirements in their April 11, 2013 compliance filing. The
NYISO is developing the metrics and process to be used in identifying consequences of regional
plans on neighboring regions in conjunction with PJM and ISO-NE to provide for reciprocity and
a uniform approach across the three regions. Accordingly, the Filing Parties will make tariff
amendments to reflect these processes and metrics in their April 2013 compliance filing.

D. Additional Ministerial Modifications and Further Clarifications

The Filing Parties also propose several modifications to correct omissions, grammatical, and typographical errors. Additionally, the Filing Parties propose several clarifications to

226 Id. at PP 550, 586.

Ms. Kimberly D. Bose, Secretary October 11, 2012

provide additional detail and clarity necessary to ensure compliance with the Commission’s

Order No. 1000 directives. None of these clarifications or modifications alters the substance of the Attachment Y CSPP, as accepted by the Commission.227

Specifically, the Filing Parties propose the following ministerial and clarifying revisions:

• Replacing the word “Council” with “Corporation” in the definition of Reliability Criteria

to correct the name of the “North American Reliability Corporation”;

• Addition of the definition of “Site Control” which adopts, with necessary modifications,

the currently effective definition of Site Control found in OATT Attachment X. This

modification will provide clarification with respect to certain entity qualification criteria and project information requirements;

•Addition of the term CSPP and deletion of the term “Reliability Planning Process” in

Section 31.1.3;

•Correction of the cross-reference to Attachment O of the Services Tariff (currently

misidentified as Attachment O of the OATT) in Sections 31.2.3.2, 31.2.6.2, 31.3.2.2;

•Making the term “Transmission Owner” plural in Section 31.2.4.2.1;

•Capitalization of the newly defined term “Site Control” in Sections 31.2.4.3.1, 31.2.4.5.4,

31.2.4.7;

•Addition of the phrase “cost recovery” in Section 31.5.6.4, to conform it to the newly

added 31.5.6.5;

•Deletion of a duplicate “the” in Section 31.6.2;

•Addition of the word “shall” in Section 31.2.4.3.1;

•Numerous updates to reflect changed section numbering, including revised numbering in

OATT 6.10; and

•Several corrections to correct typographical errors such as additional spacing and periods.

VI.EFFECTIVE DATE

The Filing Parties request that the compliance tariff modifications proposed herein

become effective upon the completion of the next reliability planning cycle following the

Commission’s issuance of a final order approving these tariff changes. The Filing Parties

believe that the analysis of transmission needs driven by Public Policy Requirements should be

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

Ms. Kimberly D. Bose, Secretary October 11, 2012

based on a current Comprehensive Reliability Plan. This approach will provide the foundation of a reliable bulk power system upon which to build consideration of public policy needs.

VII. SERVICE

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

VIII. CONCLUSION

WHEREFORE, the New York Independent System Operator, Inc. and the New York
Transmission Owners respectfully request that the Commission accept this compliance filing,
without requiring any modifications, and make it effective upon the completion of the next
reliability planning cycle following the Commission’s issuance of a final order approving these
tariff changes.

Respectfully submitted,

NEW YORK INDEPENDENT SYSTEM OPERATOR, INC.NEW YORK TRANSMISSION OWNERS

By: /s/ Carl F. PatkaBy: /s/ Elias G. Farrah

Robert E. Fernandez, General CounselElias G. Farrah

Raymond Stalter, Director of Regulatory AffairsWinston & Strawn, LLP

Carl F. Patka, Assistant General Counsel1700 K Street, NW

New York Independent System Operator, Inc.Washington, DC 2006-3817

10 Krey BoulevardEmail: efarrah@winston.com

Rensselaer, NY 12144

Email: rfernandez@nyiso.com*Paul L. Gioia

Email: rstalter@nyiso.comWhiteman Osterman & Hanna LLP

Email: cpatka@nyiso.com111 Washington Avenue

Suite 401

Ted J. MurphyAlbany, NY 12210

Vanessa A. ColónEmail: pgioia@plg26.com

Hunton & Williams LLP

2200 Pennsylvania Ave, NW
Washington, DC 20037
Email: tmurphy@hunton.com
Email: vcolon@hunton.com

J. Kennerly Davis

Hunton & Williams LLP

/s/ John Borchert

John Borchert

Manager of Electric Engineering Services Central Hudson Gas & Electric Corporation 284 South Avenue

Poughkeepsie, NY 12601
Email: jborchert@cenhud.com

/s/ Jacqueline Hardy

Jacqueline Hardy

Assistant General Counsel
Long Island Power Authority

333 Earle Ovington Boulevard Suite 403

Uniondale, NY 11553
Email: jhardy@lipower.org

David Clarke

Director of Power Markets Policy Long Island Power Authority

Alfred E. Smith Building

80 South Swan Street, 6th Floor Albany, NY 12210

Email: dclarke@lipower.org

/s/ R. Scott Mahoney

R. Scott Mahoney, Esq.

/s/ Richard B. Miller

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

Richard B. Miller

Director of Energy Markets Policy Group
Consolidated Edison Co. of New York, Inc.

4 Irving Place

Room 1815-s

New York, NY 10003
Email: millerrich@coned.com

/s/Kristina Nifora

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

Kristina Nifora, Esq. Senior Attorney

Consolidated Edison Co. of New York, Inc.

4 Irving Place

Room 1850-s

New York, NY 10003
Email: niforak@coned.com

/s/ Andrew Neuman

New York Power Authority Andrew Neuman, Esq.

New York Power Authority 123 Main Street

White Plains, NY 10601-3170
Email: andrew.neuman@nypa.gov

William Palazzo, Director Market Issues New York Power Authority

123 Main Street

White Plains, NY 10601-3170
Email: william.palazzo@nypa.gov

/s/ Daniel Galaburda

Niagara Mohawk Power Corporation

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

Durham Hall, 52 Farm View Drive New Gloucester, ME 04260

Email: scott.mahoney@iberdrolausa.com

d/b/a/ National Grid

National Grid USA Service Company, Inc. Assistant General Counsel and Director

40 Sylvan Road

Waltham, MA 02451-1120

Email: daniel.galaburda@us.nrid.com

Bart Franey

Director of Federal Regulation

Niagara Mohawk Power Corporation d/b/a National Grid

300 Erie Boulevard West Syracuse, NY 13202

Email: bart.franey@us.ngrid.com