FERC on Thursday confirmed that New York Transmission Owners (NYTOs) have a federal right of first refusal (ROFR) under the ISO’s tariff and Order 1000 to build and recover the costs of upgrades to their transmission facilities, even if the upgrades are part of another developer’s project selected by the ISO for cost allocation (EL20-65).

NYISO requested the declaratory order last August, saying the issue of NYTOs’ upgrade rights required clarification because third-party developers’ Order 1000 transmission projects are likely to modify the TOs’ existing transmission facilities because such projects are likely to be located within existing rights-of-way. The state noted that its power needs are largely in New York City and Long Island, while generation resources serving demand are spread across the state. It also noted the state has limited rights-of-way to develop new transmission facilities because of environmental and agricultural impact concerns.

NYISO said it sought commission guidance because there was no realistic chance that it would be able to obtain the super-majority stakeholder support necessary to make a Federal Power Act Section 205 filing to revise its tariff to address the issues.

The commission said it exercised its discretion to issue the declaratory order because “NYISO has already expended considerable time and resources pursuing a stakeholder process to resolve these issues.”

The commission rejected protestors’ arguments that the TOs lacked a federal ROFR for upgrades or that their rights were limited to those needed to meet local transmission needs. Order 1000 required the elimination of federal ROFRs in commission-jurisdictional tariffs for transmission facilities selected in a regional transmission plan for purposes of cost allocation. But the order did not affect the right of an incumbent transmission provider to build upgrades to its own transmission facilities.

No on ‘Developer’ Definition

While the commission confirmed the TOs’ ROFR, it denied NYISO’s request for confirmation that, if a NYTO exercises its federal ROFR for upgrades to its existing transmission facilities, it should be treated as the developer.

The ISO said that because of ambiguity in the tariff, the NYTO should be treated as the developer of the upgrade portion of any such transmission project.

The New York Public Service Commission opposed the ISO’s request, saying it would undermine the ISO’s competitive transmission process by allowing a NYTO to step into the shoes of the developer after the ISO has already selected a transmission project. The commission said that would discourage proposed projects from non-incumbent developers.

FERC said NYISO’s open access transmission tariff (OATT) defines a developer as “[a] person or entity, including a transmission owner, sponsoring or proposing a project” under the rules defining how the ISO solicits and selects solutions to address reliability, economic and public policy driven transmission needs.

“Based on our determination on this issue, we find that there is no need to address the arguments on various aspects of the implementation of the federal ROFR for upgrades, such as cost containment and the timing of when the federal ROFR for upgrades should be exercised in NYISO’s transmission planning process,” FERC said. “We will evaluate tariff revisions to effectuate implementation details when they are presented to the commission.”

‘Upgrade’ Definition

FERC granted, in part, and denied, in part, NYISO’s two-part request for clarification on the scope of the definition of “upgrade” under its tariff, agreeing on what constitutes a “new” transmission line but refusing to clarify definitions regarding another developer’s Order No. 1000 transmission solution. It said the ISO failed to provide enough information.

FERC agreed that a scenario in which a solution required the retirement or decommissioning of a NYTO’s existing transmission facility — and would connect to the grid in a configuration different from the original facility — would constitute a new transmission facility, rather than an upgrade.

But the commission denied NYISO’s requested clarification on whether such a new transmission facility proposal in another developer’s Order 1000 transmission solution requires either the agreement of the NYTO that owns the existing transmission facility, a state regulatory proceeding or court order authorizing the decommissioning.

FERC said the ISO had not submitted sufficient information on relevant law, tariffs and facts for it to provide a clarification.

Clement: FERC Will Monitor Implementation

Commissioner Allison Clements concurred in a separate statement, saying the commission’s order raised questions about how the ISO will implement the ROFR.

“While this has not been the case in all regions, the success of NYISO’s competitive solicitations for public policy projects has been a bright spot in the Order No. 1000 landscape.

Whether that success continues depends on how NYISO implements the tariff interpretation we provide today, a concern voiced by numerous protestors in this proceeding, including the [PSC],” Clements said. “It is hard to imagine how NYISO can continue to leverage competitive forces in the planning process for consumers’ benefit if NYTOs are permitted to stifle competition through their exercise of rights of first refusal over upgrades within a new transmission facility project.”

NYISO’s tariff lacks clarity on any of these crucial implementation details, she said.

“Several parties, including the New York commission, ask that we provide time for them to be worked out in the NYISO stakeholder process,” Clements said. “Today’s order provides that time, and I will be eager to review the resulting tariff revisions.”