New York regulators adopt additional procedures, rule changes for projects under Article VII

New York state regulators have adopted additional procedures and rule changes for review of multiple projects under Article VII of the Public Service Law.

According to the state Public Service Commission’s (PSC) Sept. 19 order, the commission began the proceeding in November 2012 to examine possible alternating current (AC) transmission solutions to the problem of persistent congestion on a corridor that includes facilities connected to Marcy, New Scotland, Leeds and Pleasant Valley substations, and two major electrical interfaces that are often referred to as “Central East,” and “UPNY/SENY.”

Upgrading this section of the state’s transmission system has the potential to bring numerous benefits to New York ratepayers including the near-term benefits of enhanced system reliability, flexibility and efficiency, reduced environmental and health impacts through reduced downstate emissions, and increased diversity in supply; as well as long-term benefits in terms of job growth, development of efficient new generating resources at lower cost in upstate areas, and mitigation of reliability problems that may arise with expected generator retirements, the PSC said.

In April, the PSC established procedures for a comparative evaluation of proposed AC project applications under Article VII. It also adopted modifications to certain regulations needed to assist in streamlining the certification process, and outlined additional steps to be taken over the next several months to pursue the objectives set forth in the November 2012 order.

The PSC also noted that it established a two-step review process involving the submission of initial application materials, scoping documents and proposed schedules by Oct. 1.

On May 29, staff proposed rules to be applied in the review of the applications submitted in response to the proceeding.

The primary goals of the proposed rules are to ensure that appropriate procedures are in place to allow the PSC to make a comparative evaluation of multiple projects on a common record, and to ensure that any such application contains pertinent information so that the PSC may decide whether to approve a particular project(s), the PSC added.

The proposed rule changes called for designation of a presiding officer, non-Article VII project filing requirements, a preliminary scoping process, the development of a common record for specified issues, additional application requirements and initial public outreach.

Comments regarding the proposal were received from five entities within the comment period, which expired on July 29, the PSC added.

NextEra Energy (NYSE:NEE) and other parties argued that should the PSC decline to adopt their recommendation to provide for an early comparative evaluation and selection, the PSC should at least level the playing field between incumbent and non-incumbent applicants by providing for recovery of their project development costs.

“NextEra asked us to ‘authorize cost recovery for planning, Article VII applications, and other development activities, subject to a prudence standard and a recovery cap of $5m per project, recovered via contract with an incumbent transmission provider, should the developer’s project ultimately not be selected,’” the PSC said.

The New York State Department of Environmental Conservation (NYSDEC) contended that a significant issue in the proceeding concerns site access to the transmission rights-of-way (ROW) owned or controlled by incumbent utilities.

The PSC added that NYSDEC is concerned that lack of site access by some project developers will compromise preparation of application materials and assessment of potentially significant environmental and natural resource issues. According to NYSDEC, the PSC said, equal access to ROW and other site information will ensure that the best data is available for the PSC’s decision making.

Accordingly, NYSDEC urged the PSC to exercise its authority to require or arrange access for non-incumbent utilities to utility ROW and other related property as necessary and appropriate.

The PSC said that on the issue of taking an early comparative evaluation approach – on the basis of “Part A” application materials – as advocated by some commentators, a number of benefits could attend this course of action.

The PSC also said it agrees that it possesses the necessary statutory authority to engage in some early screening.

“Indeed, we might well be able to go so far as to make preliminary findings on some of the issues we are required to evaluate under PSL Article VII, such as the need for specified facilities and their conformity to a long-range plan for expansion of the electric power grid,” the PSC said. “Yet, it is highly doubtful that, on the basis of only Part A application materials, we could appropriately make even preliminary determinations as to whether a given facility would serve the public interest, convenience and necessity, or which facility would best fit the Energy Highway initiatives.”

Also, given that the PSC does not know how well-developed the proposed projects are, and thus cannot determine what level of risk ratepayers would assume, it is not clear what would be gained by comparing the preliminary project cost estimates.

However, given the efficiencies that might well be gained by screening out proposed projects that do not meet, or only minimally meet, the objectives of this proceeding, the PSC said it will give the administrative law judge (ALJ) significant flexibility in presiding over the proceedings, to consider requests for late submission of information and to decide to sever issues for separate decision.

“We direct the ALJ to consider, promptly after the initial applications are filed, whether an early screening would help streamline the process and serve the goal of obtaining congestion relief at the least cost to ratepayers, and in the 2014-2018 timeframe set out in the Energy Highway Blueprint,” the PSC said.

An early screening on focused criteria would support the Energy Highway goals, the PSC said, adding that projects that do not provide the minimum 1,000 MW of increased transfer capability that the PSC has targeted, or that have not yet started the New York ISO study process, for instance, need not be considered as candidates for cost recovery in the comparative proceeding.

The PSC also said that it does not find it necessary to decide now how – if at all – to level the playing field between incumbent and non-incumbent electric corporations. An independent developer has no obligation to incur development costs but may see a future opportunity as worth the near-term risk, the PSC said.

NYSDEC is correct that, in order for the comparative project evaluation PSC is embarking on to be successful, non-incumbent electric corporations must have appropriate access to the transmission ROW of incumbent utilities. The electric corporations should give applicants access for purposes of conducting studies needed to complete their applications and for purposes of preparing cost estimates, subject only to such reasonable requirements as the utilities routinely specify when they provide such access to contractors and other persons who need to gain access to their ROW.

The PSC also said AC transmission developers intending to participate in the proceedings initiated by Oct. 1, 2013, are to comply with the procedural and substantive rules described in the order.

For instance, the Article VII application must include a description of the proposed facility, location of the proposed facility or ROW, and explanation of need for the proposed facility.

It should also include a description of the proposed transmission line including the design voltage and insulator design.

Part A initial applications for projects that are not subject to Article VII must include, for instance, a list of the permits and approvals that the project sponsor is required to obtain for the construction and operation of the project, and a schedule for the submission of any applications or other filings.

The PSC also ordered that electric corporations that participate in the proceedings are to provide access to their owned or controlled ROW as required.

About Corina Rivera-Linares 3107 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.