Commissioner Allison Clements Statement
April 15, 2021
Docket No. EL20-65-000
Order: E-9
I concur in today’s order because I believe our findings are consistent with the most reasonable reading of NYISO’s tariff. I write separately because today’s order leaves unanswered the critical question of how NYISO will implement our central finding, which is that New York transmission owners (NYTOs) possess a right of first refusal over upgrades that are part of a competitively chosen transmission project whose costs will be allocated regionally. That implementation may well determine the extent to which New York consumers continue to realize the benefits of competition to build certain new transmission projects in the state.
I agree that NYISO’s interpretation of the scope of NYTOs’ right of first refusal is consistent with the cited ISO-TO agreement and section 31.6.4 of Attachment Y of the tariff. That is, NYTOs retain a right of first refusal over upgrades, even when those upgrades are part of a project selected in the regional plan for purposes of cost allocation. Section 31.6.4 states that nothing in Attachment Y “affects the right of a transmission owner to . . .build, own, and recover the costs for upgrades to the facilities it owns,” and the definition of “upgrade” in that provision does not limit upgrades to local transmission facilities or to upgrades outside of projects selected for regional cost allocation.
That said, I am concerned about the potential implications for public policy-driven planning in NYISO’s transmission planning process. 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 New York Public Service Commission.
As the New York Commission and other parties explain, 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. Order No. 1000 found that “an incumbent transmission provider’s ability to use a right of first refusal to act in its own economic self-interest may discourage new entrants from proposing new transmission projects in the regional transmission planning process,”[1] an outcome that can “undermine the identification and evaluation of more efficient or cost-effective solutions to regional transmission needs.”[2] Protestors in this proceeding point to critical unresolved implementation details to argue NYISO’s competitive process could now suffer from this exact problem. They pose questions including whether NYTOs will be permitted to: exercise a right of first refusal in the middle of or after a competitive solicitation process is complete; assume responsibility for upgrades in a regionally selected project without abiding by the winning bidder’s cost containment commitment; or effectively veto proposed projects that would decommission an existing transmission facility unless the state or a court steps in to authorize the decommissioning. And the stakes are high given New York’s policy of preferring transmission development in existing rights of way in which the NYTOs maintain facilities.
NYISO’s tariff appears devoid of clarity on any of these crucial implementation details. Several parties, including the New York Commission, ask that we provide time for them to be worked out in the NYISO stakeholder process. Today’s order provides that time and I will be eager to review the resulting tariff revisions.