Short Term Improvements to Transmission Planning Processes

Transcription

1 Short Term Improvements to Transmission Planning Processes Yachi Lin Senior Manager, Transmission Planning ESPWG April 30, 2018

2 Agenda Background Objectives Issues to be Addressed in 2018 Tariff Amendments Next Steps 2

3 Background Currently, the NYISO s Comprehensive System Planning Process (CSPP) is comprised of the following individual, but interrelated, processes: Local Transmission Planning Process (LTPP) Reliability Planning Process (RPP) Congestion Assessment and Resource Integration Study (CARIS) Public Policy Transmission Planning Process (PPTPP) 3

4 Background NYISO Project B613, Comprehensive System Planning Process Review An effort to review the NYISO s separate planning processes and consider whether it may be beneficial to revise and/or further integrate the reliability, economic and public policy planning processes. The recommended approach will be developed and presented to stakeholders for discussion and consideration. 4

5 CSPP Improvements The NYISO s review seeks to improve the efficiency of the CSPP through tariff revisions that realign and/or streamline the various process Approach: Short term process improvement: Section 205 tariff filing to address immediate process improvements with targeted Board approval in July 2018 Long term process improvement: Q presentation of design concept to stakeholders Address process improvements in LTPP, RPP, CARIS and PPTPP 5

6 Objectives for Today Review and solicit input from interested parties on tariff amendments to improve the transmission planning processes in a Federal Power Act Section 205 filing midyear. Further changes to reliability and economic planning processes to be addressed in the design concept later this year. 6

7 Issues to be Addressed in 2018 Tariff Amendments. 7

8 Short Term Process Improvement 1: Two-Stage PPTPP Project Proposals Current Practice The PPTPP currently requires all Developers seeking to propose a Public Policy Transmission Project or Other Public Policy Project to submit all of the project information required by Section of the OATT within 60 days of the NYISO s request for solutions to an identified need. The required project information includes, but is not limited to, engineering and project design, scheduling estimates, cost estimates, site control, status of contracts, financing information, interconnection status, equipment, and permitting schedule. 8

9 Short Term Process Improvement 1: Two-Stage PPTPP Project Proposals Proposal: Require a Developer of a Public Policy Transmission Project or Other Public Policy Project to provide the project information in two stages, based upon what is required for the analyses conducted by the NYISO. Initial submission, within 60 days from the NYISO s solicitation: Developer qualification, certain electrical information, characteristics, and other targeted information necessary to conduct feasibility studies and determine a project s viability and sufficiency. Second submission, within 120 days from the NYISO s solicitation: Required project information for proposed transmission solutions for the purpose of conducting system impact studies, and project evaluation and selection. This includes cost estimates, permitting schedule, updates to site control, contracts, interconnection status, equipment, and updates to financing information. Rationale for Proposal This would allow the NYISO to conduct the viability and sufficiency assessment as Developers prepare and submit their project cost estimates and other project information, thereby expediting the PPTPP study process. Reduce an administrative burden on Developers to provide all of the project details for the viability and sufficiency assessment when the NYISO only uses certain information in that evaluation. 9

10 Short Term Process Improvement 2: Identical and Simultaneous Transmission Interconnection Application Current Practice Beginning with a Public Policy Transmission Need identified after the planning cycle, Developers must demonstrate to the NYISO, simultaneous with the submission of project information, that it has a valid Transmission Interconnection Application or Interconnection Request, if applicable. On March 19, 2018, the NYISO filed, pursuant to FERC s compliance order, revisions to require that a Developer demonstrate that it submitted a Transmission Interconnection Application or Interconnection Request, if applicable, as opposed to a valid application or request. 10

11 Short Term Process Improvement 2: Identical and Simultaneous Transmission Interconnection Application Proposal Based on the proposed two-stage project information submittal (see Issue No. 1), the NYISO proposes that a Developer must demonstrate that it submitted a Transmission Interconnection Application or Interconnection Request, as applicable, at the time of its initial submission of project information. Clarify in the tariff that the project description in the Transmission Interconnection Application or Interconnection Request, if applicable, must be identical to the project description in the Public Policy Transmission Project proposal. Rationale for Proposal Expedite the PPTPP study process and increase the efficiency of the studies performed by allowing the NYISO to fully evaluate the interconnection aspects of all projects. This proposed revision would avoid the possibility of differences in the project descriptions between the interconnection process and the PPTPP. 11

12 Short Term Process Improvement 3: Eliminate Pause Point Current Practice Following the completion of the viability and sufficiency assessment, Section of the OATT requires the PSC to issue an order explaining whether the NYISO should continue to evaluate transmission solutions for a Public Policy Transmission Need, whether non-transmission solutions should be pursued, or whether the identified need should be cancelled or modified. If the PSC finds that there is no need for transmission solutions or the need has been modified, the NYISO is required to halt its evaluation of proposed solutions. 12

13 Short Term Process Improvement 3: Eliminate Pause Point Proposal Eliminate the requirement for a PSC order for the NYISO to proceed with its evaluation of transmission solutions following the viability and sufficiency assessment. The NYISO would begin the evaluation and selection of the more efficient or cost-effective transmission solution following the completion of the viability and sufficiency assessment and receipt of additional project information from the Developers (see Issue No. 1). PSC would retain the ability to cancel or modify the identified Public Policy Transmission Need prior to the NYISO Board of Director s selection of the more efficient or cost-effective solution, which would halt the NYISO s evaluation. Rationale for Proposal Expedite the PPTPP study process and increase the NYISO s efficiency in performing studies. 13

14 Short Term Process Improvement 4: Interest on Study Deposits Current Practice The current tariff requires Developers to submit, together with its project information, a deposit of $100,000 for each proposed project submitted in response to a Public Policy Transmission Need. The NYISO then bills Developers the NYISO s actual costs in evaluating the proposals on a monthly basis. The NYISO is required to hold the full amount of the study deposit until settlement of the final monthly invoice, unless a Developer fails to timely pay an invoice. The tariff requires the NYISO to return any remaining portion of the study deposit with interest at the FERC rate specified under the Commission s Rules and Regulations (18 CFR 35.19a(a)(2)). Proposal The NYISO proposes to revise the tariff to pay the actual amount of interest earned on deposits held in escrow accounts for any portion of the deposit to be refunded to a Developer Rationale for Proposal The FERC interest rate (average prime rate compounded quarterly) exceeds the amount the NYISO actually earns on its accounts. 14

15 Short Term Process Improvement 5: 20-year CARIS evaluation period Current Practice Evaluate the cost-effectiveness of projects proposed in the economic planning process based on ten-years of project costs and ten-years of project benefits, starting from the proposed in-service date Proposal Change the ten-year evaluation period to twenty-years Rationale for Proposal Align evaluation period for the economic planning process with that of the public policy process Extend evaluation period to a time-period more reflective of a long-term asset; however, balancing this with the greater uncertainty of longer evaluation periods and the shrinking impact on the project s benefit-cost metric due to the discounting of costs and benefits 15

16 Short Term Process Improvement 6: Cost Containment The NYISO seeks to address stakeholder requests for cost containment for Public Policy Projects. The NYISO plans to address cost containment in the Reliability Planning Process and in the CARIS as part of the market design concept proposal for overall reformulation of the CSPP later this year. 16

17 Cost Containment: Guidelines The NYISO is proposing the following guidelines when developing the scope of cost containment: Uniformity The NYISO OATT would establish that all Developers may submit a capped cost amount for certain elements of their Public Policy Transmission Projects Specification of uniform cost containment parameters will aid NYISO in making an apples to apples comparison across all transmission projects. (continued on the next page) 17

18 Cost Containment: Guidelines Ease of administration Experience of other ISO/RTOs is that administering cost containment adds significant time to the process. The proposed scope should not be burdensome to the NYISO for administration. Consistency The NYISO would determine the capital cost elements and excusing conditions to be applied. (continued on the next page) 18

19 Cost Containment: Guidelines Filing and Enforcement Capital cost capped amounts and terms/exclusions memorialized in the Development Agreement with the Developer of selected transmission project Enforceable by NYISO as a matter of contract Pro forma Development Agreement and Rate Schedule 10 will require developers to include cost capped amounts and standard terms/exclusions in its rate filing at the FERC Enforceable by FERC in rate settlements and orders 19

20 Scope of Cost Containment The NYISO is further seeking stakeholder comments on the elements of cost containment: Inclusion Exclusion Incentive/Penalties Consideration in project evaluation and selection 20

21 Cost Containment: Inclusion What are the necessary elements to be included in the cost containment project proposals? Examples could include: Types of costs to be capped Capital cost elements of projects Development costs (project management, engineering, legal, insurance, permitting, bond costs) Equipment and construction costs (bulk and related non-bulk transmission system equipment, building and labor costs) Rights of way and land lease costs Escalation factor Contingency cost 21

22 Cost Containment: Exclusions What should be the standard exclusions adjusting Developer s capital cost cap? Elements due to events outside of its reasonable control? Examples could include: Unforeseeable costs; e.g., project changes due to siting under Public Service Law Article VII, actions or inactions of governmental or regulatory agencies on permitting; court orders System Upgrades determined by the NYISO in interconnection studies Project changes or delays due to acts or omissions of the NYISO or Connecting/Interconnecting/Affected Transmission Owners Changes in Taxes 22

23 Cost Containment: Incentives/Penalties Should the developer s cost cap be subject to incentives and penalties? E.g., 80%/20% (ratepayers/shareholders) for costs over and under cap? Return of, but not on, prudently-incurred costs over cap? Other? 23

24 Cost Containment: Consideration in Project Evaluation and Selection How should NYISO use cost capped amount in selecting the more efficient or cost effective transmission project? E.g., Calculating cost-benefit ratios in production cost, capacity cost, benefits Risk to project completion 24

25 Next Step Stakeholder comments requested on proposed transmission planning process improvements. Please submit written comments by May 9 to lbullock@nyiso.com, and the comments will be posted. NYISO will return to future stakeholder meetings for further discussion. 25

26 Questions? We are here to help. Let us know if we can add anything.. 26

27 The Mission of the New York Independent System Operator, in collaboration with its stakeholders, is to serve the public interest and provide benefits to consumers by: Maintaining and enhancing regional reliability Operating open, fair and competitive wholesale electricity markets Planning the power system for the future Providing factual information to policy makers, stakeholders and investors in the power system 27