The New York Public Service Commission on Jan. 25 requested a rehearing of FERC’s December order granting a 50-basis-point RTO participation adder for the Propel NY Energy transmission project (ER24-232).
Propel — a $2.7 billion, 345-kV joint venture between New York Transco and the New York Power Authority — was selected from NYISO’s public policy transmission needs (PPTN) assessment to deliver at least 3,000 MW from offshore wind farms near the Long Island coast.
NY Transco petitioned FERC for transmission incentives, including a cost-containment mechanism, a base return on equity of 10.7% with a 150-basis-point risk adder, 100% coverage for abandoned plant and construction work in progress, and a 50-basis-point RTO participation adder. The commission approved these requests, but it reduced the risk incentive to 75 basis points and suspended the proposed base ROE pending hearing and settlement judge procedures. (See FERC Approves Incentives for NY OSW Transmission.)
However, the PSC said in its protest that the RTO adder is “neither necessary nor warranted” and “harms New York consumers” who will be “required to overpay to encourage a voluntary conduct on the part of the developer where the conduct sought to be incentivized is already required.”
FERC granted the adder with the condition that the developer continue its “membership in NYISO and transfer … operational control of the project to NYISO once it has been placed in service.”
But the PSC argued that the adder, typically used to incentivize voluntary participation, is redundant for Propel NY, as NY Transco’s involvement with NYISO is a regulatory requirement, not a discretionary choice. The adder “gives the developer an unjustified windfall while unnecessarily increasing costs to New Yorkers,” it said.
To support its position, the PSC cited FERC’s ruling last month that Pacific Gas and Electric was not eligible for an RTO adder in CAISO (ER24-96). (See Citing California Law, FERC Rejects PG&E Request for RTO Adder.) It said the two cases “are analogous.”
The PSC, along with New York City and Multiple Intervenors, had opposed NY Transco’s requested ROE and incentives. They complained that the 10.7% ROE was inflated and argued that NY Transco failed to demonstrate any special project risks.
The first settlement conference over the ROE is scheduled for Jan. 31.
