FERC Filings
COMPLAINT CONCERNING ALLOCATION OF SYSTEM UPGRADE FACILITY COSTS
INTRODUCTION
KeySpan Energy Development Corporation, KeySpan-Ravenswood, LLC, New York Power Authority, Electric Power Supply Association and Independent Power Producers of New York, Inc.,
Complainants,
v.
New York Independent System Operator, Inc.
Respondent.
Docket No. EL02-____-000
Pursuant to Section 206 of the Federal Power Act (“FPA”), 16 U.S.C. § 824e, and Rule 206 of the Rules of Practice and Procedure of the Federal Energy Regulatory Commission (“Commission”), 18 C.F.R. § 385.206, KeySpan Energy Development Corporation, KeySpan-Ravenswood, LLC (collectively referred to as “Ravenswood”), New York Power Authority (“NYPA”), Electric Power Supply Association (“EPSA”) and Independent Power Producers of New York, Inc. (“IPPNY”) (collectively referred to as “Complainants”) request the Commission to direct the New York Independent System Operator, Inc. (“NYISO”) to (a) prepare a revised cost allocation report for the Class of 2001 that complies with Attachment S of the NYISO’s Open Access Transmission Tariff (“Attachment S”) and (b) prepare cost allocation reports for succeeding years in compliance with the Commission’s decision in this proceeding.
The NYISO’s Annual Transmission Baseline Assessment (“Baseline Assessment”) seriously distorts the allocation of cost responsibility for system upgrades needed to comply with reliability rules and consequently shifts approximately $60 million of costs from the transmission owner to project developers in the Class of 2001. This significant shift results from the NYISO’s adoption of the Baseline Assessment prepared by the Consolidated Edison Company of New York, Inc. (“Con Edison”), which was expressly created to minimize the allocation of the costs of system upgrade facilities to Con Edison. The NYISO’s implementation of its cost allocation rules is thus transparently biased against project developers, it violates key tariff provisions and good utility practice, and it will affect not just the participants in the Class of 2001, but will similarly skew the results of cost allocations for succeeding years as well.
The Complaint identifies three ways in which the NYISO’s cost allocation for 2001 violates Attachment S.
- First, the NYISO, instead of identifying generating facilities for the Baseline Assessment in accordance with prudent utility siting factors as required by the NYISO Tariff, adopted the approach sponsored by Con Edison, namely selecting generic generating facilities based on a single siting factor – the minimization of system upgrade facility costs to Con Edison. Further, the NYISO assumed that the hypothetical units it identified to meet reliability requirements could be brought on-line in a timely fashion, without assessing whether it was feasible for such units to be constructed on the necessary emergency schedule as required by the NYISO Tariff and existing system conditions.
- Second, the NYISO ignored the existence and interconnection to the transmission system of a number of existing generating facilities – that the NYISO itself had called for to meet urgent reliability needs in summer 2001 – and thus excluded these units from the Baseline Assessment, despite the NYISO Tariff’s requirement to include all “existing” units in the Baseline Assessment.
- Third, and important both from a cost point of view and in order to maintain a reliable system, the NYISO failed to seek up-to-date information on construction of new generation in adjacent service territories. Such information, if it had been included in the NYISO’s model, would have shown that numerous circuit breakers throughout Con Edison’s system already exceed their rated capacity, regardless of the new projects proposed by project developers, and require system upgrades that ought not to be paid for by projects in the Class of 2001. This failure is inconsistent with the NYISO Tariff’s provisions concerning updated information.
The NYISO’s Board of Director’s (“Board”) Decision concerning cost allocation for the Class of 2001 does not adequately address these failings, but is internally contradictory and brushes aside key issues and facts in a mistaken effort to defend a fundamentally flawed cost allocation. These failings significantly affect the NYISO’s cost allocation and unreasonably shift costs from the transmission owner to project developers. The impact of correcting these failings is described in detail in a report attached to this complaint as Exhibit “15.” See discussion in Section IV(C) of this Complaint.
A number of parties have called for additional electric generation capacity to be constructed in New York City. In particular, the NYISO in a 2001 report and again in a report released in 2002 called for the construction of new generating facilities. In addition, the Chairman of the New York Public Service Commission recently called for construction of new power plants in New York. The NYISO’s call for new generation to be added by merchant developers, however, is not supported by the way it is allocating interconnection costs to developers. As the Commission recently recognized, an interconnection policy that works is crucial to building new generation and the continued development of the wholesale market in New York.
The fundamental flaws in the NYISO’s implementation of Attachment S, if allowed to stand, mean that New York will have an interconnection policy that does not work. Specifically, the New York market will have an interconnection policy that shifts costs of system upgrades to meet reliability, regardless of whether new generation is being constructed, away from transmission owners and on to project developers. This defect in New York’s interconnection policy will affect project developers’ ability to meet New York’s critical need for new generation.
This Commission should remedy this situation by acting promptly on the Complaint. Prompt Commission action will benefit the New York market, members of Class Year 2001 and members of the succeeding class years as well. There is no reason to reject this request based on an argument that it will cause undue delay, as the NYISO will not require extensive time to make the necessary and sufficient correction to its cost allocation. In any event, the NYISO should not be permitted to use its failure to address the Tariff in a timely manner as basis for performing a misapplication of the Tariff.