The New York Public Service Commission on Thursday designated the New York Power Authority’s (NYPA) $1 billion Northern New York (NNY) transmission line as a high priority for meeting the state’s renewable energy goals and adopted criteria for identifying other such “priority transmission projects” (PTPs) (20-E-0197).

The commission’s order bypassed NYISO’s public policy transmission planning process, referring the project straight to NYPA for development and construction in accordance with the Accelerated Renewable Energy Growth and Community Protection Act of 2020.

“Today, we are adopting well designed new rules to specifically expedite transmission investments that unbottle existing and new renewables … [and] the first investment under these new rules, NYPA’s Northern New York project, will complete a critical link in our upstate grid and unbottle at least 950 to 1,500 MW of renewable energy sources,” PSC Chair John B. Rhodes said.

The NNY project has an estimated cost of $1.05 billion, extrapolated from NYPA’s calculation that it would yield $99 million in production cost savings of per year. Based on production cost savings alone, the project has a positive 1.0 benefit/cost ratio, NYPA says.

The commission amended Department of Public Service staff’s proposed criteria, taking for example, the first three and bundling them into one criterion for designating a PTP: “the transmission investment’s potential for unbottling existing renewable generation, as well as projects that are in the NYISO interconnection process, for delivery to load centers in the state, thereby reducing the amount of new generation that must be constructed to meet the CLCPA targets.”

The state’s Climate Leadership and Community Protection Act (CLCPA) requires that 70% of electricity generation come from renewable resources by 2030, and that generation be 100% carbon-free by 2040.

One key factor in expediting the project’s approval and bypassing the NYISO planning cycle was that its presumed earlier in-service date would result in benefits that would otherwise be lost forever, the commission said.

NYPA said the project will upgrade approximately 200 miles of 230-kV lines to establish a continuous 345-kV path and expand the deliverability of renewable generation from northern and western New York to load centers, while compounding the benefits from the Segment A and B projects already underway. (See NYISO Board Selects 2 AC Public Policy Tx Projects.)

Watch the Guiderails

The State Legislature provided guiderails for the prioritization task by recognizing two project implementation mechanisms, the commission said. While all projects that are ultimately included in the plan will be necessary to meet the CLCPA objectives, the act distinguishes one category of projects as “needed expeditiously,” while other necessary projects may be referred to NYISO’s established public policy transmission planning process.

“The folks that participated and gave comments in this proceeding were generally supportive, right?” Commissioner Diane Burman asked. “Anbaric was supportive of the staff criteria; [the Natural Resources Defense Council] and Alliance for Clean Energy New York [ACE NY] submitted comments supporting it. … For me, we also need to be mindful that the ISO process is a good one, [to which] we should be complementary in this process dealing with transmission investments.”

Use of the PTP designation outside of the NYISO process should be “few and far between,” Burman said.

Multiple Intervenors (MI), a coalition of large industrial, commercial and institutional energy customers, submitted comments pointing out that a PTP designation amounts to a choice to bypass the existing NYISO planning process and its associated benefits to customers, including its competitive construct, a high level of transparency, cost caps and an equitable cost allocation methodology. MI asserted that, in contrast, the PTP designation process is not competitive, does not involve evaluation of alternative solutions, is not fully transparent and does not include consumer protections.

In its comments, NYISO asked the PSC to designate priority transmission projects “in tandem” with the ISO’s public policy planning process, which has been used successfully to develop transmission in response to needs identified by the commission, including the Western New York and AC Transmission projects. The ISO also said it has taken recent steps to streamline its process, which can now be completed in approximately 18 months.

“We take notice of the fact that the NYISO only recently initiated the 2020 public policy planning cycle, under which it would be several months before NYPA could even submit the NNY project for evaluation,” the commission said in the order. “We conclude that this factual circumstance supports the finding that the NNY project is likely to be placed in-service earlier than a comparable project selected by the NYISO would be, even though the petition does not provide a specific in-service date.”

“The Northern New York project, which may be new to certain folks on the commission, is not a new project,” Commissioner John Howard said. “It has been sitting on the drawing boards for some time in different iterations, and consensus projects like that with clear economic and environmental benefits are easy to do. I think this process becomes much more difficult going forward as we design transmission infrastructure for projects that have yet to become reality, and how we allocate those costs becomes much more difficult.”

NYPA estimates the project will allow the state to annually avoid more than 1.2 million tons of CO2 emissions and approximately 160 tons of NOx emissions from downstate emissions sources. It should also provide more than $447 million in annual congestion savings upstate.

Climate Change Financial Risk, Modifying CES

The PSC also initiated a proceeding to consider requiring New York’s major utilities to disclose what risks climate change poses to their companies, investors and customers going forward (20-M-0499).

“For utilities with significant assets and changing physical infrastructure needs, increased transparency of climate-related financial risks would allow better planning and investment consistent with New York’s climate goal of a carbon-neutral economy by 2050,” the commission said.

The state’s largest electric and gas utilities have more than $52 billion in capital and in the past year raised $6.2 billion through debt issuances, the commission said.

The PSC also modified the state’s Clean Energy Standard (CES) to align it with the CLCPA, as indicated in a June white paper (15-E-0302), specifically adopting the 70% by 2030 target and expanding the renewable energy procurement programs of the New York State Energy Research and Development Authority (NYSERDA).

The commission said that average annual Tier 1 procurement targets of approximately 4,500 GWh per year over 2021-2026 “provide sufficient certainty to investors that will allow effective planning and other market-based activities to develop.” It therefore declined “to adopt minimum or maximum gigawatt-hour requirements for each solicitation, instead allowing NYSERDA to adjust annual procurement targets based on its annual review of the latest market data.”

The order also authorized NYSERDA to solicit enough offshore wind energy to meet the CLCPA target of 9 GW by 2035 and created a new methodology for extending Tier 1 renewable energy eligibility to renewable energy facilities that undergo repowering. It additionally created a competitive five-year Tier 2 program under the CES to preserve existing renewable baseline generation, as well as a new Tier 4 large-scale renewable program to value environmental attributes associated with renewable energy delivered into New York City that will be in addition to annual Tier 1 procurement targets.

The commission said its action will ensure that the state’s renewable energy programs provide substantial benefits for disadvantaged communities, including low- to moderate-income customers.

Dissent and Caution

Commissioner Burman delivered the only vote against the measure and called it an overly prescriptive “tortured exercise … that seems to chill how technologies … may work together with other renewable sources in a way that may actually help.”

While developers want regulatory certainty and NYSERDA needs flexibility to conduct important solicitations, “my concern is that we have solicitations and [requests for proposals] throughout the state … and we need to look much more carefully at the guardrails that need to be in place to ensure that we are doing this in a responsible and fiscally accountable way,” Burman said.

She also doubted that NYSERDA had enough qualified staff to oversee such complicated programs.

“We may have to look at hiring some outside entity to help us ensure the proper implementation of these solicitations,” she said. “What makes me deeply pause is that due to the complexities of some of NYPA’s contracts, they were unable to satisfy the entirety of their allocated ZEC [zero-emission credit] obligation, and therefore a few of the [load-serving entities] have ceased offering service in New York, and NYSERDA has amassed a ZEC-collection deficit of approximately $34 million and now is seeking to recover those funds. I just find that unacceptable.”

Commissioner Howard said he was uncertain the state will be able to finance all its clean energy programs completely through customer bills. He was also uncertain about the role of FERC “and their ability to stymie some of our initiatives.”

The newest commissioner also found it “ironic that environmental advocates or any other advocates for clean energy also decry any increases in utility bills for customers. It is yet to be seen if we can continue to do it the way we’re doing it. I look forward to a new era when we have a more progressive nature of how we capitalize our new energy future.”

The commission also approved a build-ready program for NYSERDA, which will focus on developing properties that are fundamentally different from those that private developers would typically consider for investment.

The PSC accepted NYSERDA’s “rules of engagement” regarding the agency’s work with site owners and private developers, rules designed to mitigate any competition with private developers.

The commission said it “declines to adopt the ACE NY proposal to create a formal mechanism whereby developers can propose potential build-ready sites to NYSERDA as doing so would add additional complexity to the site selection process and does not appear to be necessary at this time.”