Competitive Transmission Developers file Section 206 Complaint against NYISO alleging that the New York Independent System Operator’s AC Transmission Public Policy Transmission Needs Project Solicitation (“Feb 29 Solicitation”) violates the grid operator’s Open Access Transmission Tariff (“OATT”) and is inconsistent with the Commission’s directives in Order No. 1000. On June 10, 2016, Boundless Energy NE, LLC; CityGreen Transmission, Inc.; and MillerBros Construction; cumulatively referred to as the Competitive Transmission Developers requested FERC to order NYISO to reissue the Feb 29 Solicitation in a manner that complies with the requirements of its OATT.
NYISO is the FERC jurisdictional utility responsible for administering wholesale energy and capacity markets, and managing the bulk power system throughout the State of New York. Boundless Energy NE and CityGreen Transmission are non-incumbent transmission developers. Miller Bros. is a subcontractor that engages in the construction and engineering design of transmission and other utility projects.
Background
In issuing Order No. 1000 FERC reformed transmission planning and cost allocation rules mandating, inter alia, that “transmission planning processes [] provide an opportunity to identify and evaluate transmission needs driven by public policy requirements established by state or federal laws or regulations.” Transmission Planning and Cost Allocation, Order 1000, orders on reh’g and clarification, Orders 1000-A & 1000-B, 141 FERC ❡ 61,044 (2012). [FERC further ordered that non-incumbent transmission developers be afforded a comparable opportunity to that of incumbent transmission developers to compete for new transmission projects eligible for cost allocation. Order 1000-B at P 25.] Accordingly NYISO has made FERC-approved changes to its OATT to comply with Order No. 1000 particularly the requirement that transmission planning processes consider transmission needs driven by public policy requirements. See NYISO, Order on Compliance Filing, 143 FERC ¶ 61,059 (2013); OATT Attachment Y, §31.4.
Attachment Y, § 31.4 of the NYISO OATT is the governing rubric for the Public Policy Transmission Planning Process (“Process”) in NYISO’s control area. Moreover, the Process consists of three steps: (1) the New York Public Service Commission (“NYPSC”) shall identify Public Policy Transmission Needs “warranting evaluation by the ISO; (2) “[t]he ISO shall request and evaluate specific proposed solutions to address such needs”; and (3) “[t]he ISO shall select the more efficient or cost-effective transmission solution to satisfy such needs.” Attachment Y, § 31.4.1 NYISO OATT.
Prior to the implementation of Attachment Y, § 31.4 of NYISO’s OATT, the NYPSC initiated several proceedings in 2012 to consider courses of action to increase transmission capacity necessary to eliminate transmission congestion between upstate electric generating facilities and downstate consumers on New York’s alternating current (“AC”) bulk power system. In 2014 and in accordance with Attachment Y of NYISO’s OATT, the NYPSC expanded the scope of the 2012 proceedings to fulfill its responsibility in identifying Public Policy Transmission Needs driven by public policy requirements. During these proceedings the NYPSC accepted proposals from incumbent and non-incumbent transmission developers to eliminate the aforementioned transmission congestion and directed the NYPSC trial staff to evaluate such proposals. On December 17, 2015, the NYPSC issued its Order for the consolidated 2012 and 2014 proceedings and identified four potential transmission projects driven by public policy requirements including: (1) Edic/Marcy to New Scotland; Princetown to Rotterdam; (2) Knickerbocker to Pleasant Valley; (3) upgrades to the Rock Tavern Substation; and (4) Shoemaker to Sugarloaf.
Pursuant to Attachment Y, NYISO issued its February 29 Solicitation for proposals from transmission developers to select Public Policy Transmission Projects that shall be eligible for cost recovery. AC Transmission Public Policy Transmission Needs Project Solicitation, NYISO, at 1 (Feb. 29, 2016). The February 29 Solicitation references the NYPSC’s December 17, 2015 Order (“NYPSC Order”), identifying the Public Policy Requirements driving transmission needs, and further indicating that the NYPSC Order provides the models and criteria that NYISO will apply to “determine the sufficiency of each proposed Public Policy Transmission Project.” Id. at 1-2 (citing Order Finding Transmission Needs Driven by Public Policy Requirements, Case No. 12-T-0502, NYPSC, at 66-68 (Dec. 17, 2015)). Ultimately, for a transmission developer’s project to meet the Solicitation’s qualification criteria for selection and to thus be eligible for cost allocation, proposals must include specific project information including that which satisfies the requirements set forth in the NYPSC Order. Id. at 2.
Summary of Issues and Underlying Arguments Made in the Complaint
- Whether NYISO violated its OATT when it delegated its transmission planning function to the NYPSC after issuance of the “February 29 AC Transmission Public Policy Transmission Needs Project Solicitation”.
Complainants assert that by adopting the NYPSC Order in its solicitation, NYISO “abdicates its responsibility under its [OATT] to review all viable technical solutions,” and limits its role to selecting “the lowest cost project bid to develop the NYPSC projects.” Comp. Transmission Dev. v. NYISO, No. EL16-84, FERC, at 3 (Jun. 10, 2016) (“FERC Complaint”). While NYISO has not yet filed its response, its argument may align with the NYPSC’s response to the same complainant’s appeal of its Order in state court, in that the solicitation accords with its OATT Public Policy Transmission Process as it calls for cooperation with the NYPSC, and NYISO is the only entity that ultimately selects, at the end of the process, project(s) eligible to seek cost recovery from FERC. See Memorandum, Boundless Energy v. NYPSC et al., No. 1200-16 New York Supreme Court, Albany County (filed May 13, 2016); OATT §31.4.8.2.
2. Whether NYISO violated its OATT by issuing a solicitation that purports to utilize a “bid-based” proposal evaluative methodology rather than a “sponsorship-based”.
According to Complainants, regional transmission organizations and independent system operators promulgated one of two competitive solicitation models in their OATTs to comply with the public policy requirement provisions of Order No. 1000: (1) sponsorship model or (2) bid-based model. A sponsorship model requires an ISO to identify transmission needs and issue competitive solicitations for project proposals, which are submitted as proposed solutions for such needs. Whereas, the bid-based model puts the onus on the ISO to identify the project based solutions and then requires it to issue competitive solicitations so that transmission developers may bid on the right to construct such identified solutions. The Public Policy Requirements promulgated in Attachment Y of NYISO’s OATT resemble a sponsorship model. In their Complaint, the Competitive Transmission Developers have articulated the argument that NYISO has violated its OATT through the issuance of the Feb 29 Solicitation because it has conducted the Solicitation as if it were operating under a bid-based model rather than the sponsorship model as depicted in the ISO’s OATT. In support of their argument, Complainants declare that NYISO’s OATT does not permit the ISO to identify specific solutions for Public Policy Transmission Needs, rather the ISO is supposed to issue a competitive solicitation that allows transmission developers to identify the specific solutions for such needs. FERC Complaint at 26. The Complaint fully purports to establish that the Feb 29 Solicitation “is not consistent with the explicit terms of § 31.4.3 of” NYISO’s OATT and substitutes the required sponsorship model for an unsupported bid-based model. Id.
3. Whether it is exclusively NYISO’s responsibility to identify specific project solutions to meet Public Policy Transmission Needs in applying the bid-based model.
The third issue identified for argument by the Complainants seeks to establish that if the Commission determines that it is appropriate for NYISO to utilize a bid-based model for its competitive solicitation that the ISO must have exclusive responsibility for the identification of specific project solutions for the Public Policy Transmission Needs. Competitive Transmission Developers are miffed that the NYPSC has identified the project solutions as identified in the NYPSC Order and believe that in effect, the NYPSC has usurped the NYISO’s role as detailed in Attachment Y of its OATT. The Complainants leap even further, arguing that the state commission has no right to perform the transmission planning function in lieu of NYSIO, because “[t]ransmission planning is under the exclusive jurisdiction of the FERC.” See FERC Complaint at 26 (citing Order No. 1000 at PP 99-107 and Order No. 890 at PP 2-8). As such, the Complainants iterate that there is “no recourse” for participants in the NYISO stakeholder process to address any problems associated with the transmission solutions to NYISO prior to the commencement of the competitive solicitation. Id. at 27. It is further argued that this black box approach does not allow stakeholders to verify the studies and assumptions utilized by the trial staff of the NYPSC and that if this procedural snafu is allowed to stand that FERC “would lose control of the planning process.” Id. Complainants support their argument by citing to New York Indep. Sys. Operator, 143 FERC ¶ 61,059 at PP 77-81 (2013) where FERC rejected “NYISO’s proposal to rely on the NYPSC to select transmission projects for inclusion in the regional transmission plan for purposes of cost allocation.” Id. at 28 n. 67.
4. Whether it is violative of NYISO’s OATT for it to rely on models and assumptions used by the NYPSC when evaluating proposed project solutions.
Additionally, Complainants express concern that NYISO intends to adopt the NYPSC’s modeling and assumptions in determining its preferred project solutions, and claim that this would violate the NYISO OATT citing to section 31.4.1 of Attachment Y. While the language of section 31.4.1 provides only the general overview of the Public Policy Requirements Process, section 31.4.4 addresses the evaluation component stating that “[t]he ISO will evaluate specific proposed transmission solutions with input from stakeholders and within its available resources and modeling capabilities. The ISO shall apply any criteria provided by the NYDPS/NYPSC and perform the analyses requested by the NYDPS/NYPSC, to the extent compliance with such criteria and analyses are feasible.” In the end, complainants ask that FERC “clarify” this issue and “at the very least, direct NYISO to follow its Tariff by independently evaluating the proposed project solutions,” FERC Complaint at 31.
Conclusion
In sum, the Competitive Transmission Developers request that FERC find: (1) that NYISO violated its OATT by deferring its transmission planning responsibilities entirely to the NYPSC to identify specific project solutions; (2) that NYISO violated its OATT by issuing the Feb 29 Solicitation and deviating from the sponsorship model approach; and (3) that NYISO’s OATT does not permit it to accept technical specifications based on the NYPSC’s studies. FERC Complaint at 14. Importantly, Complainants seek expedited relief, asking FERC to order NYISO to reissue a solicitation that is consistent with its OATT and allow any project solution permitted by Attachment Y to be submitted. In fact, Complainants request that FERC issue an order not later than July 31, 2016. Id. at 32.
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