whiteman osterman & hanna comments to psc re:proposed deliverability study

8/8/2019 Whiteman Osterman & Hanna Comments to PSC RE:PROPOSED DELIVERABILITY STUDY

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WHITEMANOSTERMANE HANNA LLP

One Commerce PlazaAlbany, New York 1226o518.487.76oo phone518.487.7777 fax

Attorneys at Lawwu'tu.wo}a.com

August 24, 2009

VIA HAND DELIVERY AND ELECTRONIC FILINGHon. Jaclyn A. Brilling, SecretaryPublic Service Commission of the State of New YorkThree Empire State Plaza, 14t11 FloorAlbany, New York 12223-1350

Elizabeth A. GrisaruOf Counsel

518.487.7624 phoneegrisaru na woh. com

Re: Subject: Case 09--E--0497 - In the Matter of Generator-Specific EconomicDeliverability Study Methodology

Dear Ms. Brilling:Enclosed for filing in the above-captioned proceeding are an original and five copies of

the Comments of the New York Independent System Operator, Inc. ("NYISO") in response tothe Commission's June 23, 2009 Notice Seeking Comments. Should you have any questions,please contact me by phone at (518) 487-7624 or by e-mail at [email protected].

Resp ct 11 submitte

Elizabeth A. GrisaruWhiteman Osterman & HannaCounsel to the New York Independent SystemOperator, Inc.One Commerce PlazaAlbany, New York 12260mailto:[email protected]

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STATE OF NEW YORKPUBLICE SERVICE COMMISSION

Case No. 09-E-0497 - In the Matter of Generator-Specific Economic Deliverability StudyMethodology

COMMENTS OF THE NEW YORK INDEPENDENT SYSTEM OPERATOR, INCThe New York Independent System Operator, Inc. ("NYISO") submits these comments

in response to the Commission's June 23, 2009 Notice Seeking Comment in the above-captionedproceeding (the "Notice").'

In the Notice and the accompanying Appendices, the Commission considers thepossibility of requiring transmission owning utilities and renewable project Developers toconduct energy deliverability studies, and requests comment on the study methodologysubmitted by New York State Electric & Gas ("NYSEG") and Rochester Gas & Electric("RG&E") in Case 07-M-0906. The Commission states that it intends to evaluate (1) whethersuch a study would assist the Commission in a licensing proceeding under Public Service Law s68 for a renewable generation facility; (2) whether this type of study would provide informationon potential future congestion; and (3) whether the Commission should include the results ofsuch a study in the evaluation of projects for purposes of the Renewable Portfolio Standard("RPS") program. The Commission also expresses concern that project Developers may nothave adequate information on which to base their investment decisions and suggests thatrenewable Developers, in particular, may not be able to recover their costs without significanttransmission upgrades.

' The NYISO also attaches its Responses to the Commission's list of questions.


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As discussed more fully below, the NYISO submits that aspects of the Commission'sproposal appear duplicative of study efforts already underway, including various studies

conducted pursuant to the NYISO's FERC-approved interconnection and planning tariff

procedures, and thus would not appear to enhance the information that is being developed. Inaddition, Staffs comments relating to a possible transmission system upgrade requirement

appear to raise jurisdictional issues and may contribute to confusion among renewable

Developers and increased risks to the State's renewable policy objectives.

1 . THE PROPOSED DELIVERABILITY STUDY COULD OVERLAP WITH ORDUPLICATE EXISTING STUDY EFFORTS.

The Commission and Staff have suggested that the proposed energy deliverability studieswould provide data on transmission system constraints that might curtail energy production fromrenewable facilities. In its prior order on the Marble River application, and in Staffs commentsat the Technical Conference in this docket, the Commission has raised a concern about theaccuracy of wind Developers' predictions of environmental benefits.2 The Notice also questionswhether local system conditions might lead to over generation and price collapse in regions withsignificant renewable generation supply, thus potentially frustrating the State's efforts toincentivize construction of renewable generation.

2 In the matter of Petition of Marble River, LLC for an Order Granting Lightened Regulation and for an OriginalCertificate of Public Convenience and Necessity Under Public Service Law Section 68, Case No. 07-E-1343 (June19, 2008).

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The NYISO already conducts several types of studies that evaluate similar issues. TheCommission should note the possibility that a new energy deliverability requirement couldduplicate existing study efforts and requirements, with the potential for inconsistent results.Furthermore, the timing of an energy deliverability study could conflict with established studyprocedures. The existing study processes include generator interconnection studies, the WindIntegration Study, the CARIS economic planning program under Attachment Y of the OpenAccess Transmission Tariff ("OATT"), the STARS study conducted by the TransmissionOwners ("TOs"), and system studies under sections 19 and 32 of the NYISO's tariff. Details on

each of these are presented below.

II . THE NYISO STUDY PROCESSES PROVIDE IMPORTANT DATA TODEVELOPERS AND HAVE RESULTED IN THE SITING OF SUBSTANTIALNEW GENERATION CONSISTENT WITH MARKET SIGNALS.

1 . The NYISO interconnection studies evaluate both reliability and deliverability.

The NYISO's current interconnection process was developed in compliance with a seriesof FERC orders establishing generator interconnection cost allocation procedures and standardrules for interconnection studies.3 Under Attachments X, S, and Z of the Open AccessTransmission Tariff ("GATT"), the NYISO evaluates proposed interconnections to the NewYork Transmission System and FERC jurisdictional distribution for both reliability and3 Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, FERC Stats. &Regs. 31,146 (2003), order on reh'g, Order No. 2003-A, FERC Stats. & Regs. 31,160 (2004), order on reh'g,OrderNo. 2003-B, FERC Stats. & Regs. 31,171 (2004), order on reh'g, Order No. 2003-C, FERC Stats. & Regs. 31,190 (2005), affirmed sub nom. Nat'l Ass'n of Regulatory Util. Comm'rs v. FERC, 475 F.3d 1277 (D.C. Cir.2007).

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deliverability.4 The tariff requires NYISO to determine whether new projects meet the minimuminterconnection standard. That standard ensures the new generator can be reliablyinterconnected to the transmission system at the point of interconnection proposed by theDeveloper.5

Every Developer subject to the rules undergoes up to three interconnection studies: aFeasibility Study, a System Reliability Impact Study, and a Facilities Study, undertaken with agroup of similarly-advanced projects in a Class Year. The results of these studies determine thespecific system upgrade facilities that a Developer will be required to build in order to satisfyreliability requirements, as well as the costs of those facilities. The NYISO's tariff contains adetailed procedure indicating how costs of upgrades are allocated first between TransmissionOwners and Developers, and then among Developers in a given Class Year. Where more thanone new project contributes to a need for an upgrade, the costs are shared between theDevelopers of those projects according to a formula that holds a Developer responsible only for

those costs that are necessitated by the addition of the project to the system - a "but for" test thatfixes a new project's cost responsibility at the level of its individual impact. Once the project'scost responsibility has been determined, the Developer is obligated to post security in the full

4 Capitalized terms that are not otherwise defined herein shall have the meaning specified in Article 2 of the ServicesTariff and Article 1.0 of the NYISO Open Access Transmission Tariff OATT.5 See New York Independent System Operator, Inc., New York Transmission Owners, et al., 122 FERC 61,267(2008).

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amount of the estimated costs of the required system upgrade facilities if it chooses to proceedwith the project. This security may be non-refundable under certain circumstances.

Pursuant to several FERC orders, the NYISO has recently implemented a capacitydeliverability standard.6 The NYISO developed the standard after extensive discussion andnegotiation with its Market Participants, culminating in FERC's March 21, 2008 order approvingthe NYISO's methodology. Under the new rules, which were first applied to the Developerprojects in Class Year 2007, Developers who are seeking to supply installed capacity ("ICAP")to the New York Control Area must first demonstrate that they satisfy the DeliverabilityInterconnection Standard. The tariff defines deliverability for these purposes as the ability todeliver the aggregate of New York control area capacity resources to the aggregate control areaload under summer peak conditions. The NYISO determines whether the proposed project iscapable of delivering its capacity throughout the capacity region in which it is interconnected,but not outside of that region. The NYISO currently recognizes three distinct capacity regions:

New York City, Long Island, and Rest-of-State. A project locating in the very western portionof the state (Load Zone A), and intending to participate in the ICAP market, is required todemonstrate that its expected capacity would be deliverable throughout the Rest-of-StateCapacity Region, including down to the lower Hudson Valley (Load Zone G).

' New York Independent System Operator, Inc. and New York Transmission Owners, 126 FERC 61,046 (2009).

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If a project is found not to be deliverable or only partially deliverable, the NYISO willidentify the System Deliverability Upgrades ("SDU") necessary to meet the standard. The tariffincludes provisions allocating the costs of these upgrades. Both Developers and Load ServingEntities ("LSE") may potentially share in the costs of an SDU that is necessary to resolvecongestion on a "Highway" facility.7 Developers bear the full cost of upgrades to othertransmission facilities ("Byways"). The NYISO will also assess and allocate to a Developeropting to participate in the ICAP markets the costs of restoring the transfer capability of certainfacilities and interfaces that may be degraded as a result of the project. However, the Developerretains the option to forego participating in the ICAP markets and provide energy only; incontrast to the Commission's proposal, it is not required to accept the allocation of costs forSDUs.

The NYISO performs the capacity deliverability study in conjunction with the Class YearFacilities Study, so that Developers understand both their system upgrade responsibility under

the minimum interconnection standard and the extent of the SDUs they will be required to fundin order to qualify for ICAP revenues before they post security for their obligations and beginnegotiating an Interconnection Agreement. With this information in hand, Developers have thetools to quantify the total costs of the upgrades they will need in order to participate in the

NYISO's energy, ancillary services, and capacity markets.

Highways are transmission facilities at 115kV or higher that comprise the interfaces between certain load zones,although they do not include the interfaces between the capacity regions or between the NYISO and external controlareas.

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The NYISO notes that, because its Deliverability Interconnection Standard differs fromthe Commission's proposal, there is a significant possibility that the upgrades resulting fromstudies may be different in their wider system impact and cost, creating the potential for bothredundancies and conflicts. In some cases, a renewable project may meet the standard suggestedby the Commission but fail the NYISO's capacity deliverability test. The possibility ofinconsistent results and uncertain cost responsibility may hamper Developers' efforts to bringadditional renewable generation projects to New York.

2. Developers can Obtain Additional Information about Congestion

The NYISO OATT includes a "Transmission Expansion process" codified in sections 19and 32. These provisions allow a customer - such as a wind Developer - to obtain detailedinformation about the costs and benefits of particular system modifications. As a first step, thecustomer may request a System Impact Study ("SIS") through the NYISO. The customer maybe seeking information about congestion, the value of incremental transfer capability, or anyother reliability-related or operational issue. The goal of the SIS is to determine what newfacilities or transmission upgrades might be needed to meet the customer's objective. Thecustomer may then request a Facilities Study in order to develop a detailed design for the newfacilities under consideration and to estimate their costs and the time required for construction,among other details. Several parties have availed themselves of this option, and the NYISOsubmits that the process provides renewable Developers with another avenue to solidifying theirassumptions about the performance of the transmission system.

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3. The NYISO Interconnection Process Has Facilitated the Siting of New Generation

Since the early days of the NYISO, Developers, transmission owners, and the financial

community have worked through and grown familiar with the NYISO interconnection process,and over 7,600 MW of new generation has been built by public and private power suppliers. TheNYISO notes in particular that over 80% of the new supply has been sited in locations wheredemand is greatest (New York City, Long Island, and the Hudson Valley).

The NYISO's locational market design is intended to encourage the development of newsupply and merchant transmission in response to market signals. The interconnection processcarefully balances the need to maintain reliability with the recognition that new entrants mustcompete on an economic basis. The evidence to date suggests that the process is working,benefiting the competitiveness of the markets and system reliability, and that Developers are ableto make informed decisions about where to put their investments.

III. THE NYISO'S PLANNING STUDIES PROVIDE DATA ON FUTURECONGESTION AND TRANSMISSION INFRASTRUCTURE NEEDS

1. The CARIS Study Examines Congestion and Provides a Cost Allocation andRecovery Process for Transmission Solutions

FERC Order 890 required the NYISO to undertake local transmission planning,reliability planning, and economic planning for the bulk power transmission system. TheNYISO and its Market Participants developed, and FERC has conditionally approved, a three-stage Comprehensive System Planning Process ("CSPP") that includes a Local Transmission

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Owner Planning Process; a Comprehensive Reliability Planning Process; and an economicplanning process known as the Congestion Assessment and Resource Integration Study("CARIS"). 8

CARIS consists of two phases. In the first phase, the NYISO in collaboration with itsMarket Participants conducts three studies of 10 years of forecasted congestion on the mostcongested elements on the New York Bulk Power System, and analyzes the costs and benefits ofalternative transmission and resource solutions to alleviate that congestion.9 These studies will

not recommend specific transmission upgrades or resource additions, but will provide objectivefactual information on the nature of congestion in New York that Developers, TOs, and policy-makers can use to decide whether to proceed with congestion solutions. The CARIS report willalso analyze scenarios based on input from interested parties, including the Commission.Depending on available NYISO resources, they NYISO may undertake to analyze scenariosexamining load forecast uncertainty, new resources, retirements, emissions changes,environmental regulation, and energy efficiency programs.

The NYISO is currently developing its report on this first phase, and will present theresults to stakeholders and all interested parties, including the Commission and other policy-

8 The FERC conditionally approved the NYISO's December 7, 2007 and June 18, 2008 compliance filings onOctober 16, 2008. New York Independent System Operator, Inc., Order on Compliance Filing, 125 FERC 61,068(October 16, 2008). The NYISO made additional compliance filings on January 14, 2009 and May 19, 2009 toaddress the directives in the FERC's October 18, 2008 Order. Final approval from FERC remains pending.9 Stakeholders may also request additional studies of system congestion at their own expense.

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makers. The report will be presented to NYISO governance committees in October and to theBoard in November or December of this year.

In the second phase of CARIS, which will take place in 2010, Developers can choose toinvest and build projects on their own, based on the economics of those projects in the NYISO'smarkets. Developers can also propose transmission projects for cost recovery under theNYISO's tariff. If such a transmission project is approved for cost allocation, the costs will beallocated based on a "beneficiaries pay" approach under which those entities that economicallybenefit from a project will bear its costs, and the cost allocation among them will be based upontheir relative economic benefit from such upgrades.

The NYISO submits that the CARIS study will provide valuable data on solutions tocongestion issues and establish a basis for allocating the costs of transmission upgrades.

2. The Wind Integration Study Addresses Many of the Commission's Concerns

The NYISO's ongoing Wind Integration Study examines many of the issues raised in theNotice and discussed at the Technical Conference. In 2008, the NYISO and Market Participantsdetermined to analyze the impact of installed wind generation above 3,300 MW on the NYISO'soperating protocols, planning practices, and market structures. To accomplish this, the NYISO hasdeveloped a study consisting of six tasks, the objective of which is to provide projections of overallsystem performance, costs, and environmental benefits at different levels of wind penetrationevaluated at both peak and light loads. The results will identify transmission constraints along with

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the following information: (1) quantification of the level of congestion resulting from theseconstraints; (2) a recommended list of potential upgrades to relieve the constraints: and (3)measurements of the benefits these upgrades could provide in terms of the reduction in wind energy"bottling" and overall reduction in congestion. The results will also include evaluation of theimpacts on the system of the different wind penetration scenarios by fuel types, emissions, andgeneration displacement.

A report on the results of the Wind Integration Study is due in late 2009.

3. The STARS Study

In addition to the NYISO's wind study, the New York State Transmission Owners areconducting a joint study of the state's bulk power system to help meet future electric needs andsupport the growth of renewable energy sources. Called the New York State TransmissionAssessment and Reliability Study ("STARS"), its aim is to develop a thorough assessment of thetransmission system and suggest long-range plans for coordinated infrastructure investment.10The study will identify zones of potential "bottled" generation on the bulk power system, andidentify limitations of the current transmission system to meet future renewable generationdevelopment. The study will propose various strategies for upgrading, refurbishing, and buildingnew transmission in New York State. Specifically, if the Wind Integration Study identifies

1 0 Both NYSEG and RG&E are members of the STARS working group.

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constraints that limit the energy output of renewable resources, the STARS study will reviewthose results and identify transmission fixes that may alleviate the problems. i i

A draft of the STARS study is expected in late 2009.The scope of the studies already underway through the NYISO's processes suggests that

the study methodology followed by NYSEG and RG&E in response to the Commission's ordermay not materially enhance the future congestion data that these ongoing studies will provide.The modeling parameters and assumptions included in the NYISO and joint Transmission Ownerstudies are consistent and have been approved through rigorous stakeholder review. Under thesecircumstances, the NYISO submits that broadening the NYSEG/RG&E study to evaluate rest-of-state conditions would be redundant and possibly produce inconsistent results.

IV. STAFF'S PROPOSAL TO REQUIRE TRANSMISSION UPGRADES AS ASITING CONDITION CONFLICTS WITH FERC'S EXCLUSIVE JURISDICTION

It is well-established that FERC's jurisdiction over the terms of the interconnection of awholesale electricity supplier to the transmission system is exclusive.'2 The Commission'sproposal to require construction of transmission system upgrades as a condition to licensing a1 1 The NYISO suggests that the Commission consider utilizing the results of the Wind Integration Study and theSTARS study in making decisions about the RPS auction program, and further recommends that the issues raisedhere be referred to the proceeding underway in Case No. 03-E-0 188." 16 U.S.C. 824(b); See Tenn. Power Co., 90 F.E.R.C. 61,238, at 61,761-62 (2000) (interconnection is part oftransmission service and is subject to FERC pro forma tariff); Standardization of Small Generator InterconnectionAgreements and Procedures, Order No. 2006-A, 113 FERC 61195 at P. 105 (a state interconnection programcannot displace federal rules for interconnections).

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renewable project would likely intrude on that jurisdiction, even without an explicit requirementto allocate the costs to the Developer. The NYISO's tariff establishes the standards andrequirements that a Developer must meet in order to interconnect and participate in the wholesalemarket. The tariff also allocates the costs of the interconnection and system upgrades. While theFederal Power Act does not alter the State's core siting jurisdiction, the Commission may notregulate the terms of transmission service or the functions of the wholesale markets through acondition to a siting certificate.13

V. LINKING AN ADDITIONAL DELIVERABILTY STUDY TO THE LICENSINGPROCESS COULD DETER DEVELOPMENT OF RENEWABLE ENERGYFACILITIES

The NYISO is concerned that the addition of a deliverability study and upgraderequirement to the state licensing process could create uncertainty for Developers. Developers inthe NYISO interconnection process are required to commit to paying for reliability-relatedsystem upgrades by posting security for the costs of those facilities within a short period of timeafter the conclusion of the Facilities Study.14 Under some circumstances, a Developer may forfeitthat security if he or she does not proceed on schedule with the project. From a Developer'spoint of view, the addition of a deliverability study to the Public Service Law process, even if itdoes not result in additional upgrade costs, could put its NYISO security posting at risk if the

'3 PSEG Power Cross Hudson Corporation, 100 FERC 61,162 at 16 (2002)(New York Public ServiceCommission may not impose conditions on a siting certificate that infringe on FERC's exclusivejurisdiction).1 4 OATT Attachment S, at VIII.B.1.

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Commission's action on the section 68 application is not coordinated with the publication of theFacilities Study results.15

Conditioning a state siting certificate on a deliverability study could create economicuncertainty for the Developer; a siting condition requiring transmission upgrades could conflictwith the Developer's tariff obligations. Under the NIYSO tariff, the system upgrades aDeveloper must pay for in order to interconnect are those identified through the NYISOinterconnection process. The Commission's proposal raises the possibility that the Developermight have to pay more to access the transmission system than the NYISO requires, or have toconstruct upgrades that might not be electrically compatible with those identified in the NYISOprocess. The prospect of a potential conflict between the State's and the NYISO's thresholds forinterconnection is likely to dampen Developers' interest in building in New York.

The Commission could mitigate these uncertainties by conducting an open stakeholderprocess to consider how the energy deliverability requirement will be coordinated with theNYISO interconnection studies. The Commission could also use such a proceeding clarify theassumptions and technical parameters it will expect Developers to use and to consider how tomanage possible inconsistencies between the results of the studies. Even if the Commission canidentify a jurisdictional basis for requiring an energy deliverability study, the potential for1 5 Under the Commission's present interpretation of its section 68 authority, Developers can submit applications forcertificates of Public Convenience and Necessity once their projects have received NYISO Operating Committeeapproval. This approach makes it possible for Developers to receive a certificate prior to reaching the securityposting milestone. Uncertainty about the potential for additional deliverability upgrade requirements would leadDevelopers to delay their applications to the Commission and would tend to add more time to an already extendedprocess.

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conflict between the studies and harm to the prospects for further development of renewables inNew York require the Commission to proceed with the utmost caution, if at all.

VI. THE GOAL OF STAFF'S PROPOSAL TO ENSURE COST RECOVERY OFRENEWABLE GENERATION IS UNCLEAR AND MAY CONFLICT WITH THENYISO MARKET DESIGN

The NYISO wholesale markets are designed to provide a level playing field for suppliers'competition. A new entrant takes the system as it is, and thus takes the risk that systemconditions may not always permit him to run. The new supplier is not required to do more to

access that system on the same basis as other generators than pay for project-specific upgradesnecessary to meet the minimum interconnection standard. In contrast, Staffs statements in theAppendices to the Notice and comments made at the Technical Conference seem to arise from aconcern that renewable suppliers may not be able to recover "all" their costs in the NYISOmarkets if transmission constraints lead to curtailments under some conditions. However,nothing in FERC policy or the NYISO's market design is intended to guarantee any supplier costrecovery, and to prefer one class of generation by ensuring recovery of costs would be contraryto the fundamental principles at the basis of the wholesale markets.

Staff also expresses concern for avoiding a possible decline in market prices underconditions of over-generation. Those market prices are a matter of FERC jurisdiction, and stateaction to prop up - or lower - the prices resulting from the bid-based markets could infringe on

an area in which federal policy governs.

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CONCLUSIONThe Commission's proposal to undertake studies of the type submitted by NYSEG and

RG&E appears to overlap with the studies already underway through the NYISO's processes andcould create conflicts with the NYISO's interconnection rules. In particular, the NYISO'sCARIS and Wind Integration studies, and the TOs' STARS study, will provide data that shouldallow the Commission to project future congestion and estimate the level of transmissioninvestment that may be necessary to integrate renewable resources with the markets. TheNYISO notes that the proposal may raise conflicts with FERC's jurisdiction and with existing

FERC transmission cost allocation principles. Finally, the NYISO submits that theCommission's proposal could have the unintended consequence of discouraging the investmentneeded to help the State reach its renewable energy goals.

Respectfully submitted,

li^'abetfi i(,.6r1isaWhiteman Osterman & HannaCounsel to the New York Independent System Operator,Inc.One Commerce PlazaAlbany, New York 12260mailto:[email protected]

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RESPONSES TO APPENDIX A QUESTIONS

The NYISO submits the following responses to the questions included onAppendix A to the Commission's Notice. Both the numbered questions and the NYISO'sanswers are given below.

1 . Does the NYSEG/RG&E filing appropriately cover the requirements outlined inthe Commission Orders? If no, please discuss.NYISO RESPONSE: The NYSEG/RG&E study methodology appears to comportgenerally with the terms of the Commission Orders. The NYISO notes, however, that itis not clear how this approach satisfies the concern expressed in the Iberdrola order foravoiding the potential exercise of vertical market power. Nor does the methodologyprovide a reasonable calculation of the amount of environmental benefits achieved withthe addition of renewable generation, a concern raised in the Marble River order.

At the same time, the NYISO believes the study provides a possible screeningapproach to identify local transmission constraints on the Transmission Owner's systemwhich can then be used as input to more detailed economic transmission studies such asCARIS. The NYISO would caution the Commission against relying on this method foridentifying potential remedies for congestion, since an approach focused solely on oneTransmission Owner's system may not find the most cost effective system-widetransmission upgrades.2. Is the NYSEG/RG&E filing appropriate for use by other investor-owned utilities inNew York? If no, please discuss.NYISO RESPONSE: As described above, this methodology can be effectively used toscreen for potential local constraints on individual Transmission Owner systems, but acomprehensive, statewide evaluation is necessary to identify the most cost effectivesolutions to relieve congested renewable generation. The NYISO submits that theongoing STARS and CARTS studies will enable development of such solutions.3. Should the performance of the studies be required of the investor-owned utilities onlyor is it reasonable to allow other entities, such as contractors or the NYISO, to providethis study service? Please explain.


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NYISO RESPONSE: The NYISO believes that the utilities should be encouraged toperform such studies afforded to them by Sections 19 and 32 of the OATT, and toparticipate in system-wide NYISO studies such as CARTS.4. Rather than intending to assure 100% of available renewable energy output can bedelivered, it may be useful to review applicable load duration curves along withanticipated generator output availability. From this, it may be reasonable to perform anEnergy Deliverability Test in which (for example) 90% of maximum simultaneousavailable generator energy can be delivered rather than 100%, and/or the test is conductedfor a load of 110% of minimum load rather than the actual expected minimum. Shouldthis modification be included in the study methodology? If yes, please explain.NYISO RESPONSE: In order to provide both the developers and Transmission Ownerswith the best information, the expected simultaneous level of load and wind generationshould be modeled. Representing wind at 100% output for all hours of the year is overlyconservative and may result in over-investment in transmission. A combined power flowand production costing simulation may be a more appropriate approach to handle themodeling issue and to provide a range of bottling information at different time frames(hourly, daily, monthly, seasonally, etc.). The NYISO Wind Integration Study doesexactly that, implementing over thirty wind profiles measured throughout the state toevaluate a full year of production costing simulations.5. If renewable output can be expected to be higher when load is higher, less transmissionwill be needed to insure energy deliverability. In the extreme (albeit unlikely) case, if theavailable energy from a renewable generator having a 20% capacity factor coincides withthe highest loads, then much less transmission will be needed. To the extent correlationscan be made between load and renewable output (e.g., on-peak hours versus off-peakhours for winter, spring, summer, fall, etc.), it would facilitate dividing a year intodifferent segments and conducting a set of separate energy deliverability tests under avariety of expected generation versus load correlations. Should this modification beincluded in the study methodology? If yes, please explain.NYISO RESPONSE: See response to (4). The NYISO also notes that wind generationoutput changes throughout the day and throughout the year, and in fact often does soinversely to load (e.g. peak wind output during off-peak load hours). Therefore, theNYISO supports in part the approach taken by NYSEG/RG&E, where the year is dividedinto segments for a variety of load levels. However those segments should also considerthe simultaneous levels of renewable generation, as is being done in the NYISO WindIntegration Study.6. In some instances, a new generator may be locating upstream of a transmissionconstraint that is also impacted by a renewable resource external to New York. It shouldbe noted that - unless an external resource is providing firm ICAP - the NYISO will notlikely include the impact of external renewable resources when it performs a capacityx:\egrisaru\nyiso does\nyiso answers final.doc

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deliverability test on a new generator. In the case of an energy deliverability test, ifexternal renewable resources lie upstream of a transmission constraint along with a newrenewable resource (that is internal to New York), those external resources would impactenergy deliverability as well. Should consideration of external renewable resources beincluded in the study methodology? If yes, please explain.NYISO RESPONSE: Yes, the NYISO believes external renewables that are beingcounted on to meet RPS requirements should be modeled in a study such as the one theCommission has proposed. Also, as noted, the NYISO's capacity deliverability test onlyincludes external capacity with firm long term contracts. The NYISO would recommendtaking the same approach in any energy deliverability test that is adopted. However, itshould be noted that there will be resources which are neither ICAP providers nor RPScontractors that will be competing for the use of the transmission system on an economicbasis.

An energy deliverability test conducted using a production cost model thatsimulates security constrained unit commitment and real-time dispatch can model bothinternal and external resources and quantify how resources compete for the use of thetransmission system. The ability of external resources to compete with internal resourceswill be a function of the external resources' marginal cost and the "hurdle rate" theexternal resources faces. The hurdle rate incorporates the costs the external generatorencounters in delivering its energy to the appropriate New York interface, such as anytransmission service charges, scheduling costs, and other potential costs that impact thedelivery of the energy to the New York system. These costs are the result of "seams"between markets and control areas. Such a tool could also be used to quantify thepotential impact on transmission system utilization of all resources that may becompeting to use the New York transmission system for energy deliveries. The NYISO'sWind Integration Study and CARIS are designed to accomplish this.7. In comparison to a more sophisticated model such as security constrainedcommitment and dispatch production costing software (e.g., the NYISO SCUC orGEMAPS), the Energy Deliverability Study performed using a power-flow model canprovide a more intuitive, more insightful indication of important drivers. This may alsoprovide a less iterative, more straightforward analysis, particularly if detailed generatoroutput versus load data is sparse. Having said that, if detailed estimates of generatoroutput, load and energy bid prices are available (particularly if they can be correlated toone another on a hourly basis) and/or the transmission topography is exceedinglycomplex, then use of the more sophisticated models to perform an energy deliverabilitytest may be useful. If so, rather than producing a single point outcome, the analysis wouldlikely be more useful if a range of outcomes were produced using optimistic andpessimistic assumptions. Should this approach be included in the study methodology? Ifyes, please explain.

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NYISO RESPONSE: See comments for (4) and (5). In terms of an energy deliverabilitystudy at the Transmission Owner level, a power flow model could provide resultsadequate to screen for transmission constraints. Wind profiles for various regionsthroughout the state should be considered, as well as historical merit order of dispatch forother generation, in order to provide a realistic power flow case.

Output from such a power flow analysis done by Transmission Owners could thenbe fed into production costing simulations such as CARIS to provide the most costeffective solutions to relieve transmission constraints for wind energy delivery.

8 . The relative performance of a generator in an Energy Deliverability Test isdependent upon the transmission study criteria used, and needs to be stated in thatcontext. For example, if a generator passes an energy deliverability test under an "alllines-in" criteria, its energy will not necessarily be deliverable if a single contingencyoccurs. Based upon the probabilities that a single or multiple contingency might occur,the generator could be evaluated under more stringent criteria to increase its assurancethat its energy will be deliverable even under more restrictive conditions. In any event, itwould need to accept a certain probability that its energy may not always be deliverable.Should the results of the study be qualified in the context of the evaluation criteria used?If yes, please explain.NYISO RESPONSE: Yes. Any generating unit is subject to security constraineddispatch which includes consideration of contingencies. Any evaluation associated withsecurity constrained dispatch such as energy deliverability should include designcontingency analysis.9. While the Energy Deliverability Study proposed could be performed on aspecifically proposed new generator, it could also be performed for a certain location inthe following alternative ways: (a) test the proposed new generator plus potentialadditional new generators at the same location (which might lead to the need or desire fora more global comprehensive transmission upgrade); (b) test the maximum sizedgenerator whose energy can be generally delivered with the existing transmission systemconfiguration; or (c) test the maximum sized generator whose energy can be generallydelivered with one or more specific transmission upgrades. Should this expansion ofscope be included in the study methodology? If yes, please explain.NYISO RESPONSE: The NYISO's Class Year and capacity deliverability studies takean approach similar to that suggested in (a). The Wind Integration Study addresses to anextent both (b) and (c), by modeling the system with and without potential systemupgrades. Further, the CARIS is capable of providing the information targeted by allthree alternative tests.10. Co-generators providing steam service improve the overall efficiency ofx:\egrisaru\nyiso docs\nyiso answers final.doc

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generators burning fossil fuel. Therefore in performing an Energy Deliverability Test,should generators serving as steam hosts be treated as "must run" at the minimum outputrequired for maintaining steam production, and/or should their anticipated levels ofcurtailment be noted? Please explain.NYISO RESPONSE: Co-generators should not be the only must-run consideration.Because of physical and contractual limitations, the transmission system mustaccommodate a certain amount of minimum generation at all load levels. PURPA unitsare not necessarily economically committed, but run based on a contract commitment,and a number of other plants have minimum down times and long start-up times, such asnuclear plants, making it uneconomic to shut them down. A production costingsimulation model, such as that being used in NYISO's CARIS and Wind Studies, canproperly model reliability must-run and which units are to be committed/dispatchedeconomically. A separate reliability study should be performed to designate if a unitshould be a reliability must-run.1 1 . Although low or negative Real-Time energy prices can be caused by transmissionconstraints as identified in the proposed Energy Deliverability Test, some low or negativeReal-Time prices may also be caused by temporary over-generation problems caused bymomentary upward excursions of out-of-merit generation and/or rapid drops in load towhich generation can not adequately respond in the short term. Thus, for a more"complete picture", it may be useful to provide a renewable energy developer with both(a) an estimate of energy curtailment and/or low or negative prices due to transmissionconstraints (which presumably can be determined with the Energy Deliverability Test andcan be mitigated with transmission upgrades); and (b) an estimate (based upon historicaldata) of low or negative LBMPs caused by temporary out-of-merit over-generation(which presumably can't be mitigated with transmission upgrades). Therefore should theproposed Energy Deliverability Test be supplemented with an estimate of expectednegative energy price conditions caused by temporary over-generation conditions? If so,please explain.NYISO RESPONSE: The NYISO submits that the complexity of the study Staff issuggesting may not materially enhance the information available to developers. A robustplanning study, such as CARIS, should be capable of providing information on expectedenergy curtailment and the price impacts of transmission constraints. A historicalstatistical analysis of negative LBMPs does not illuminate the impacts of transmissioncongestion relief. A change in the transmission systems, coincident load in the system,fuel prices, or any other factors will change the statistics which in turn would make suchstatistical analysis irrelevant.

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whiteman osterman & hanna comments to psc re:proposed deliverability study

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