The New York ISO (NYISO), in Jan. 3 comments filed with the New York State Public Service Commission (PSC) said that it supports the PSC determining that the NYISO should continue to evaluate the proposed solutions identified in the NYISO’s October 2016 AC Transmission Public Policy Transmission Need Viability & Sufficiency Assessment (assessment).
The comments were prepared in response to a notice of proposed rulemaking published in the November 2016 edition of the New York State Register that sought comments on whether the NYISO should proceed with its evaluation of the viable and sufficient solutions to the PPTN identified in the AC Transmission proceedings for selection as the more efficient or cost-effective solution, if any, eligible to receive cost recovery under the NYISO’s open access transmission tariff (OATT).
The NYISO added that there continues to be a transmission need driven by the public policy requirements identified in the AC Transmission proceedings, and that the proposed transmission expansion in the Central East and Upstate/Southeast (UPNY/SENY) corridors of the state transmission system would provide a number of benefits to the state’s power grid and consumers, including improving reliability, replacing aging infrastructure and hardening the transmission system against storms.
As TransmissionHub reported, the NYISO last October filed with the PSC the assessment, along with the requested cost allocation methodology analysis. The NYISO noted that in August 2014, it initiated its Public Policy Transmission Planning Process under its OATT by soliciting proposed transmission needs that stakeholders or interested parties believe are driven by public policy requirements and, thereafter, filing the proposed transmission needs for consideration by the PSC. The PSC in December 2015 identified numerous public policies that together constituted public policy requirements driving transmission needs associated with the Central East (Segment A) and UPNY/SENY (Segment B) sections of the New York State transmission system.
As noted in the assessment, dated Oct. 27, Segment A is:
Edic/Marcy to New Scotland; Princetown to Rotterdam
Construction of a new 345-kV line from Edic or Marcy to New Scotland on existing right of way (ROW) (primarily using Edic to Rotterdam ROW west of Princetown); construction of two new 345-kV lines or two new 230-kV lines from Princetown to Rotterdam on existing Edic to Rotterdam ROW; decommissioning of two 230-kV lines from Edic to Rotterdam; related switching or substation work at Edic or Marcy, Princetown, Rotterdam and New Scotland
Segment B is:
Knickerbocker to Pleasant Valley
Construction of a new double circuit 345-kV/115-kV line from Knickerbocker to Churchtown on existing Greenbush to Pleasant Valley ROW; construction of a new double circuit 345-kV/115-kV line or triple circuit 345-kV/115-kV/115-kV line from Churchtown to Pleasant Valley on existing Greenbush to Pleasant Valley ROW; decommissioning of a double circuit 115-kV line from Knickerbocker to Churchtown; decommissioning of one or two double circuit 115-kV lines from Knickerbocker to Pleasant Valley; construction of a new tap of the New Scotland-Alps 345-kV line and new Knickerbocker switching station; related switching or substation work at Greenbush, Knickerbocker, Churchtown and Pleasant Valley substations
In its Jan. 3 comments, the NYISO said that its “Power Trends 2016: The changing energy landscape” report, consistent with prior years’ reports, noted that more than three-quarters of the state’s high-voltage transmission lines are more than 35 years old and that about 4,700 circuit miles of the state’s 11,000 circuit miles will require replacement over the next three decades in order to maintain a reliable and economically feasible transmission system.
The implementation of a solution to the AC transmission need is an essential step towards meeting the state’s needs because it will improve the reliability and resiliency of the state power grid; enhance competition in New York wholesale electricity markets; and achieve public policy objectives, the NYISO said.
The NYISO also noted that in 2016, wind power capacity increased 7% from 2013, reaching 1,754 MW of capacity, and wind generation grew by 16% since 2013, reaching 3,984 GWh of electricity. Most of that growth in capacity and output is taking place upstate and in the western portion of New York, the NYISO said.
The NYISO said that completion of Segments A and B would increase the NYISO’s ability to dispatch renewable resources more frequently and is a necessary step in New York’s achieving the clean energy standard (CES), which, as reported, requires New York to source 50% of its electricity from renewables by 2030.
In its Dec. 29, 2016, comments, Consolidated Edison Company of New York (Con Edison) noted that in order for a proposed transmission cost allocation method to be just and reasonable under the NYISO’s tariff, it must be consistent with the principles and precedent set forth by federal courts and FERC, which require that the costs of new transmission projects be allocated in a manner that is “at least roughly commensurate” with their benefits.
Con Edison claimed that the NYISO’s proposed approach to implementing the PSC’s cost allocation proposal of allocating 75% of project costs to the economic beneficiaries of the reduced congestion while allocating the other 25% of the costs statewide based on a load ratio share fails to meet that standard because it allocates project costs predominantly based on projected energy market savings and ignores other key benefits of the AC transmission projects, such as capacity savings and reductions in the costs of zero emissions credits (ZECs) and renewable energy credits (RECs).
“The failure to recognize these ‘unaddressed benefits’ resulted in the NYISO’s model assigning the vast majority of the costs to Con Edison’s customers when such costs should have been more widely allocated, especially to Long Island,” the company said.
The PSC should reject the NYISO’s proposed approach to cost allocation; adopt a cost allocation method for this proceeding that more accurately reflects the benefits of the AC projects and that more widely allocates costs throughout the state so that the cost allocation is roughly commensurate with the benefits of the AC projects; and reexamine its proposed methodology as outlined in the PSC’s December 2015 order.
Con Edison said that the PSC in its December 2015 order identified transmission upgrades in existing transmission corridors in the Mohawk Valley (Segment A) and the Hudson Valley (Segment B) as a PPTN driven by a public policy requirement, and directed the NYISO to address the transmission need by the solicitation and review of solutions under OATT Attachment Y and to develop a cost allocation method that, according to the PSC, “will result in approximately 90% of the project costs being allocated to downstate customers and about 10% to upstate customers.”
In its Dec. 29, 2016, comments, Niagara Mohawk Power d/b/a National Grid said that its position is that a PPTN still exists in the Central East and UPNY/SENY sections of the New York transmission system that can be addressed through transmission investments and upgrades, and the NYISO should continue with its evaluation of proposed solutions to address that PPTN.
The company said that relieving the persistent congestion across the Central East and UPNY/SENY interfaces will reduce energy costs for customers, improve market liquidity and operations, enhance system operations and resiliency, and enable the development and operation of more clean renewable resources. In addition, assuring the unconstrained transfer of energy produced by renewable and zero emissions resources in the western, central and northern parts of the state will be critical to achieving and sustaining the CES goals, and further reinforcements of the New York transmission system are necessary to make that happen, National Grid said.
The company said that in general, the “beneficiaries pay” methodology described by the NYISO presents a reasonable basis for allocating the costs of projects to address the Central East and UPNY/SENY PPTN. The methodology is essentially the same as one already approved by FERC for allocating costs of projects implemented under the NYISO’s economic planning process, National Grid said, adding that the NYISO’s proposed methodology would assign most of the costs to those load zones experiencing the greatest benefits – in the form of reduced energy costs – and will mitigate the costs to load zones that experience little or no cost reductions.
National Grid also said that while cost is a critical factor in the evaluation and ranking of projects, the NYISO should not be directed to evaluate and rank projects based solely on cost or cost containment proposals. Developers should have the opportunity and flexibility to structure cost containment proposals based on the specific characteristics of their projects, the company said.
NextEra Energy Transmission New York (NEETNY) said in its Jan. 3 comments that the need for new transmission as determined by the PSC in its December 2015 order continues to exist, and has increased with the CES.
“[T]his public policy need will concurrently meet the statewide objectives of grid modernization, increased storm resiliency, and replacing aging infrastructure – and the importance of each of these objectives has increased with the passage of time,” NEETNY said.
Cost containment measures offered by bidders should be given significant consideration by the NYISO as part of its evaluation of bid costs because such measures are relevant to the credibility of the estimate and the cost effectiveness of the proposal, and that will ensure that ratepayers realize the benefits of the competitive process to improve the state’s AC transmission system, the company said.
NYPA, North America Transmission
In their Jan. 3 comments, the New York Power Authority (NYPA) and North America Transmission said that the base drivers of the need persist and some drivers have become more pronounced, such as the need to integrate additional renewable resources, due to the approval of the CES.
The PSC’s December 2015 order recognizes capacity market related benefits that arise from the AC Transmission Upgrades, the companies said, adding that New York ratepayers are responsible for energy costs from generators as well as for payments to generators for generation capacity. The impact of increased transmission capacity on capacity markets helps to enhance planning and operational flexibility, including the ability to take other lines out of service for scheduled maintenance.
The companies also said that the PSC should encourage the NYISO to value proposals that provide the highest incremental transfer capability, and correspondingly lower cost per megawatt, to maximize the ability to assist in meeting the CES.
New York Transco
Among other commenters, New York Transco said in its Jan. 3 filing that it recommends that the PSC issue an order finding that the PPTN continues to exist and that the NYISO should proceed to select the most efficient and cost-effective transmission solutions.
There are several reasons for the need, including that the increased flows will allow additional clean energy to flow throughout the state, and congestion continues to exist, New York Transco said.
New York Transco also discussed cost allocation, suggesting that the PSC consider all cost allocation comments received in the proceeding to determine if, on the whole, the allocation that will ultimately be proposed to FERC will be appropriate, results in the greatest possible level of support by participants, and is in the best interest of customers throughout the state.