FERC Order 1000: Planning for the Right of First Refusal and Planning for Public Policy Status & Implementation in New York

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1 1 FERC Order 1000: Planning for the Right of First Refusal and Planning for Public Policy Status & Implementation in New York Henry Chao Vice President - System and Resource Planning New York Independent System Operator 2014 IEEE Power and Energy Society General Meeting Washington DC July 29, 2014

2 2 FERC Order 1000 Imposes new requirements regarding regional and interregional planning procedures and cost allocation Adds a requirement to consider transmission needs driven by public policy requirements (PPRs) to the existing requirements regarding planning for reliability and economics Requires the removal of so-called right of first refusal (ROFR) provisions contained in existing tariffs of other ISOs/RTOs These additional requirements are intended to build upon the Planning Principles required under Order 890 with which the NYISO and New York Transmission Owners have already complied

3 3 NYISO Comprehensive System Planning Process (CSPP) Annual NYISO Gold Book Load & Capacity Data Annual Local Transmission Owner Plans (LTPs) Public Policy Transmission Planning Process Comprehensive Reliability Planning Process (CRPP) Economic Planning Process NYS PSC Determine Need & NYISO Requests Proposals Reliability Needs Assessment (RNA) Congestion Assessment and Resource Integration Study (CARIS) Phase I Assess Transmission & Non-Transmission Viability & Sufficiency Comprehensive Reliability Plan (CRP) Viability & Sufficiency Evaluation Phase Project Analysis & Determination of Beneficiaries Phase II Evaluate & Select Transmission Solution(s) CRP Transmission Evaluation & Selection Phase Voting (Beneficiaries)

4 4 Regional Planning Compliance Filings October 2012 NYISO and New York Transmission Owners -- in collaboration with New York State Department of Public Service Staff and other NYISO stakeholders -- filed tariff amendments to implement new Public Policy Requirements planning process and other provisions of Order 1000 April 18, 2013 FERC Order conditionally accepted regional planning compliance filing, but required significant changes to existing Reliability and proposed Public Policy Planning Processes October 15, 2013 Further compliance filing submitted

5 5 Significant Changes - April 18 Order NYISO not the PSC must evaluate and select transmission projects to meet needs driven by PPRs and for Reliability Needs Significant procedural changes needed to meet these requirements No changes to economic planning process Comparable evaluation of transmission and non-transmission solutions Clarify timing of PPR cost allocation Provide further justification for load ratio share as the default PPR cost allocation methodology Begin new procedures at start of next planning cycle NYISO requested January 2014 effective date On July 2, 2014 NYISO requested an amended effective date of January 2016 due to the lack of a FERC order accepting the October 2013 compliance filing Clarify enrollment process for new TOs in NYISO planning region

6 6 October 15, 2013 Filing Enhanced entity qualification and project information requirements Two-phase planning approach Comparable evaluation of viability and sufficiency of solutions to meet Reliability Need or PPR Need All resources included transmission, demand response, generation Further Evaluation and Selection from transmission proposals of the more efficient or cost effective solution 6

7 7 Evaluation and Selection Proposed For PPR NYDPS/PSC identifies transmission needs driven by Public Policy Requirements & determines those needs for which NYISO shall solicit solutions NYDPS/PSC may identify additional criteria for evaluating projects against the need NYISO solicits solutions, evaluates and reports All resources included transmission, demand response, generation Comparable evaluation of viability and sufficiency of all solutions to meet Reliability Need or PPR Need Selection from transmission of the more efficient or cost effective solution for inclusion in the regional plan for purposes of cost allocation under NYISO Tariff

8 8 Non-incumbent Developer Issues Existing NYISO Tariff does not contain a federal ROFR If NYISO selects and triggers a non-to transmission project, it will enter into a non-incumbent transmission developer agreement Based on ISO-NE and PJM, NYISO expects to file a pro forma developer agreement NYISO already has an agreement with TOs to develop regulated backstop solutions to reliability needs Cost recovery eligibility Development cost recovery at issue -- FERC decides rate recovery if project is selected 8

9 9 Enrollment of New TOs Any interested entity can participate in the NYISO planning processes without enrolling An entity may enroll in the NYISO planning region by becoming a Party to the NYISO Agreement An entity can become a Transmission Owner either by signing the NYISO/TO Agreement or a separate agreement under terms comparable to that agreement, and by turning over operational control of its facilities to NYISO 9

10 10 MMU Review & Board Selection of Projects Reliability Transmission projects built to keep the lights on Market Monitoring Unit (MMU) review to determine whether market failures led to need for regulated solutions PPR Projects may undermine competitive market signals MMU to report to MC before stakeholder vote and Board before action Board retains right not to select any transmission project if found to be harmful to NYISO competitive markets 10

11 11 Modified PPR Cost Allocation NYISO will file any cost allocation methodology contained in a PPR derived from federal, state, local law or regulation (including a PSC order issued after SAPA notice) for FERC approval TO/Developer wanting to use a different methodology has burden of proving it is just, reasonable and in compliance with Order 1000 principles Must consult PSC first and include PSC alternatives for FERC consideration General reservation of Section 205 tariff filing rights of TOs/Developers 11

12 12 PPR Cost Allocation (Cont.) NYISO will apply the cost allocation methodology approved by FERC If none approved, NYISO will allocate costs based upon a default allocation by load ratio share: FERC and courts have accepted load ratio share for high voltage projects benefiting entire region (e.g., MISO Multi-Value Projects and PJM Reliability Transmission Expansion Process) A recent decision from the 7th Circuit Court of appeals rejected PJM s RTEP cost allocation methodology that would have socialized the costs of 500 kv+ reliability transmission projects costs across PJM. NYISO is reviewing this decision. Improvements to Energy Highway to meet public PPR needs benefits all ratepayers by upgrading transmission service along the grid s backbone 12

13 13 The New York Independent System Operator (NYISO) is a not-for-profit corporation responsible for operating the state s bulk electricity grid, administering New York s competitive wholesale electricity markets, conducting comprehensive long-term planning for the state s electric power system, and advancing the technological infrastructure of the electric system serving the Empire State.