The NYISO Business Issues Committee last week voted to recommend that the Management Committee and Board of Directors approve a cost-containment mechanism for the ISO’s public policy transmission planning process that features voluntary cost caps in developer proposals.

NYISO Senior Manager for Transmission Planning Yachi Lin joined Assistant General Counsel Carl Patka in presenting the case to make a filing with FERC over the cost-containment provisions.

Under the proposed rules, transmission developers could propose either a hard or soft cap for capital costs. The hard cap would represent the amount over which the developer agrees not to recover capital costs from ratepayers, while the soft cap will be defined as an amount above which shareholders and ratepayers share excess costs, based on a defined percentage, with the developer’s share at least 20%.

“It’s up to developers to propose what risk percentage of the capital costs they want to bear,” Lin said.

Developers would be able to use the procedures in proposing projects as solutions to any public policy transmission need (PPTN) identified by the New York Public Service Commission.

“No doubt this is going to be a huge issue with the [Climate Leadership and Community Protection Act], for which transmission will need to be built,” said BIC Chair Aaron Breidenbaugh, who represents Consumer Power Advocates.

A stakeholder who wished not to be identified asked what the ISO would do in cases in which the developer is also the transmission owner, and a delay by the TO is in the list of excusable conditions for exceeding the cap.

Patka said he did not want to go into debate on the issue, and that “it would all come out in the wash at FERC … but we will make it clear that we’re talking about actions that are not controllable by the developer themselves.”

A developer that proposes a solution may voluntarily provide a capped amount for defined categories of capital costs and may only rely on the permitted excusing conditions to recover costs over those amounts.

Couch White attorney Michael Mager, who represents Multiple Intervenors, a coalition of large industrial, commercial and institutional energy customers, said the group has “long felt that the Tariff had a gaping hole when it comes to cost containment … while this measure may not be perfect, it does advance the ball.”

The New York State Energy Research and Development Authority and NextEra Energy echoed that support.

Couch White attorney Devlyn Tedesco, who represents New York City, commented that the city does not support the proposal because of a concern that it may not provide full cost containment and may not adequately protect consumers for the duration of the useful lives of the projects.

Patka said, “We added language to the Tariff expressly at the request of end users that the cost-containment mechanism must achieve ratepayer protection at least as effective as that proposed by the developer [OATT 6.10.6.3].”

Jane Quin, director of the energy markets policy group for Consolidated Edison, said her utility and Orange and Rockland Utilities appreciated the work and supported the concept, but that they would be abstaining because the changes also include changes to the ISO evaluation processes, with no provision in the case where the TO upgrades its own facilities.

Patka committed to address cost containment for upgrades as soon as the ISO begins to address the treatment of rights to build and own such upgrades in its PPTN planning.

The FERC filing is slated for December if the plan is approved by the MC on Oct. 30 and by the board next month.

“If approved by FERC, the measures would be effective in time for the public policy transmission solicitations that will start to be prepared early in the year,” Patka said. “We’re basically running out of time in our current public policy planning process.”

Enhancing Credit Requirements

The BIC also voted to recommend the MC and board approve changes to enhance credit reporting requirements and remedies.

Sheri Prevratil, manager of corporate credit, presented the proposed changes, including Tariff revisions that would require FERC approval.

The changes were prompted after certain market participants last year defaulted on their payment or credit obligations to NYISO. Some of those parties filed for Chapter 11 bankruptcy, while others were expelled from the ISO.

The proposed Tariff changes would increase minimum participation criteria, requiring a market participant to certify it has appropriate experience and resources to satisfy obligations as they become due. The changes would also clarify what investigations need to report, if legally permitted, and add an obligation to disclose information on nonpublic investigations when possible.

A new provision would allow NYISO to reject a new applicant determined to be an unreasonable credit risk based on a credit questionnaire and other review. The ISO would request additional information from new applicants upon registration and from existing market participants on an annual basis, with a new credit questionnaire to be included in the officer certification form due by April 30 each year.

LBMPs down 43%

NYISO locational-based marginal prices averaged $22.22/MWh in September, down about 20% from August and more than 43% from the same month a year ago, Principal Economist Nicole Bouchez said in delivering the monthly operations report. Year-to-date monthly energy prices averaged $33.88/MWh, a 26% decrease from a year ago.

Day-ahead and real-time load-weighted LBMPs came in lower compared to August. Average daily sendout was 419 GWh/day in September, down from 487 GWh/day in August and 458 GWh/day a year earlier. Transco Z6 hub natural gas prices averaged $1.78/MMBtu for the month, down slightly from August and 35.4% from a year ago.

Distillate prices were down 14.3% year over year and up slightly from the previous month, with Jet Kerosene Gulf Coast averaging $13.86/MMBtu, compared to $13.32 in August, while Ultra-low Sulfur No. 2 Diesel NY Harbor climbed to $13.79 from $13.02 in August.

September uplift increased to -13 cents/MWh from -20 cents in August, while total uplift costs, including the ISO’s cost of operations, came in lower than the previous month.

The ISO’s 17-cent/MWh local reliability share in September was down from 25 cents the previous month, while the statewide share climbed to -30 cents/MWh from -45 cents.

The Thunderstorm Alert cost was 43 cents/MWh.

— Michael Kuser