CERTO Table by carolynelefant


									   Summary of ISO/RTO Public Policy Definitions, Planning, Cost Allocation and Consideration of Non-Transmission Alternatives

  ISO             Public Policy Definition                  Public Policy Planning                  Public Policy Cost Allocation             Non-Transmission Alternative (NTA)
CAISO    Policy-driven” transmission facilities,   With respect to public policy-driven       The tariff allocates the cost all high        Specific avenues available for
         are defined as those necessary to         projects, the ISO applies a “least-        voltage facilities under the ISO’s            continued consideration of demand
         achieve state and federal policy          regrets” analysis (i.e., evaluating a      operational control regionally, so by         response, generation and other types
         requirements and directives, such as      range of plausible scenarios made up       definition they are facilities “included in   of non-transmission alternative for
         the reduction of greenhouse gas and       of different generation portfolios, and    the transmission plan for the purpose         meeting identified needs
         increased renewable energy targets        identifying the transmission               of regional cost allocation” as
                                                   reinforcements found to be necessary       described by Order No. 1000. Costs of
                                                   in a reasonable number of those            low voltage facilities are allocated to
                                                   scenarios) to determine the                the applicable participating
                                                   transmission upgrades or additions         transmission owner, who recovers the
                                                   that “efficiently and effectively meet     costs of such low voltage facilities from
                                                   applicable policies under alternative      is customers that the use the low
                                                   location and integration assumptions       voltage facilities.. Although the ISO’s
                                                   and scenarios, while mitigating the risk   transmission plan includes both high
                                                   of stranded investment.”                   and low voltage transmission facilities,
                                                                                              only the high voltage facilities are
                                                                                              eligible for regional cost allocation.

NE-ISO   Public policy references federal and      Consideration of federal public policy     The costs of Public Policy Transmission       Market Responses” is the terminology
         state requirements. No further            requirements (Section 4A) public policy    Upgrade(s) shall be allocated to the          used in New England for non-
         discussion or examples.                   consideration added by voluntary           Regional Network Load for                     transmission
                                                   agreement of tmission owners, who          all opting-in states based on each            alternatives. Existing Sections 3.5 and
                                                   claim Mobile-Sierra protection from        state’s respective load-ratio share of        4.2(a) of Attachment K address the
                                                   tariff modification.                       the Qualified Transmission Project            manner in
                                                   States will identify Public Policy         Sponsors’ proposal/solution costs for         which non-transmission alternatives
                                                   Requirements that drive the need for       that project as set forth in Attachment       can displace regulated transmission
                                                   public policy projects (many times,        K of the OATT. If an                          solutions. Section 4.2 also specifies the
                                                   though, only federal public policies are   alternative cost allocation is specified      manner in which market responses,
                                                   referenced, not state/federal.ISO-NE       in the NESCOE Public Policy                   including
                                                   will fund and conduct a Public Policy      Transmittal, costs will be allocated          demand-response resources, are
                                                   Study to identify high level solutions.    in accordance with mechanisms to              accounted for in needs assessments to
                                                   Competitive proposals to construct and     implement such alternative cost               determine whether the reliability or
                                                   own a public policy project may be put     allocation included in the Tariff and/or      market efficiency need persists in light
                                                   forth through a two-stage process          other documents filed with and                of a market solution. In addition,
                                                   where NEISO addresses whether the          accepted by the Commission by the             to ensure equal consideration of
                                                   project will satisfy public policy needs   applicable PTOs in accordance with the        demand response and generation
                                                   and considers engineering plans for        TOA or by a Qualified Transmission            resources, Section 4.2(a) requires ISO-
                                                   project development.                       Project Sponsor that is not a PTO. If         NE to incorporate in the needs
                                                   The new public policy transmission         not already a party to the TOA, each          assessments resources of any type

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     ISO             Public Policy Definition                    Public Policy Planning                    Public Policy Cost Allocation         Non-Transmission Alternative (NTA)
                                                        planning process builds off the current      Qualified Transmission Project Sponsor    that “have cleared in a Forward
                                                        economic studies process, and involves       for a Public Policy Transmission          Capacity Auction pursuant to Market
                                                        the states through the New England           Upgrade shall                             Rule 1 of the ISO-NE Tariff” or
                                                        State Committee on Electricity               execute the TOA upon placing the          “have been selected in, and are
                                                        (“NESCOE”), which identifies state and       upgrade into service.                     contractually bound by, a state-
                                                        federal public policies for initial study.                                             sponsored Request For
                                                                                                                                               Proposals” or other “financially binding
                                                                                                                                               obligation pursuant to a contract.”

MISO         Described in supporting testimony as       MISO establishes MVP (multi-value            Cost allocation -Because MVP benefits     Evaluation of transmission projects
             "documented energy policy mandates         projects) that are “for the purpose of       are spread broadly across the             also includes the consideration of
             or laws enacted by state/fed legis. or     enabling the Transmission System to          footprint,98 100 percent of their costs   alternative non-transmission solutions
             regulation that govern amount of           reliably and economically deliver            are allocated regionally (i.e., system-   and transmission solutions, consistent
             energy that can be generated by            energy in support of state and federal       wide).99                                  with Order No.1000. Also,
             specific types of generation."             public policy. MISO takes a holistic         (multi value project)1                    uncommitted NTAs (e.g., generation
                                                        approach, where the determination of                                                   resources/demand response) not
                                                        specific Transmission                                                                  included in regional recommendations
                                                        Issues driven by public policy                                                         because they are state jury. Only
                                                        requirements is not done in a vacuum,                                                  “committed” non-transmission
                                                        but instead is integrated                                                              alternatives can be considered for
                                                        into the overall regional transmission                                                 reliability.
                                                        planning process.

NYISO        Public policy is defined as A federal or   The Public Policy Requirements               Establishes three separate cost           The NYDPS may
             New York State statute or regulation,      planning process shall consist of two        allocation mechanism for reliability,     also request that the ISO conduct an
             including a NYPSC order adopting a         steps: (1)                                   economic and tmission projects. If        evaluation of alternative options to
             rule or regulation subject to and in       identification of transmission needs         policy prescribes cost                    address the transmission needs.
             accordance with the State                  driven by Public Policy Requirements         allocation/recovery, ISO will use that.
             Administrative Procedure Act, or any       that should be evaluated by the ISO;         If no prescribed allocation, use a cost
             successor statute, that drives the need    and (2) requests for specific proposed       allocation based on load ratio share,
             for expansion or upgrades to the New       transmission solutions to address those      adjusted to reflect the transmission
             York State Bulk Power Transmission         needs driven by Public Policy                needs
             Facilities                                 Requirements identified for evaluation,      driven by the Public Policy
                                                        and the evaluation of                        Requirement, the party(ies)
                                                        those specific solutions. The                responsible for complying
                                                        NYDPS/NYPSC shall identify                   with the Public Policy Requirement,
                                                        transmission needs driven by Public          and the parties who benefit from the
                                                        Policy Requirements and warranting           transmission facility (“Adjusted Load
                                                        evaluation by the ISO and ISO shall          Ratio Share”). ISO will file to seek

    MVP cost allocation formula currently subject to appeal at DC Circuit ICC v. FERC
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  ISO               Public Policy Definition                    Public Policy Planning                  Public Policy Cost Allocation            Non-Transmission Alternative (NTA)
                                                       evaluate solutions.                        FERC approval if any other than the
                                                                                                  default cost allocation formula based
                                                                                                  on a load ratio share

PJM         “Public Policy Requirements” shall refer   PJM’s evaluation of Public                 PJM Transmission Owners propose a             Transmission solutions only considered
            to policies pursued by state or federal    Policy Requirements will occur in the      cost allocation method that                   after evaluation of all non-transmission
            entities, where                            context of sensitivity studies, model      distinguishes                                 solutions, which have been committed
            such policies are reflected in enacted     assumption variations and scenario         between Regional Facilities, Necessary        as capacity resources.
            statutes or regulations, including but     analysis which results will be             Lower Voltage Facilities, and Lower
            not limited to, state                      considered as alternative transmission     Voltage
            renewable portfolio standards and          solutions that may accelerate,             Facilities. PJM Transmission Owners
            requirements under Environmental           decelerate or modify a potential           also propose to apply the same cost
            Protection Agency                          reliability,                               allocation
            regulations. Also, has category of pub     market efficiency or operational           method used for Alternating Current
            policy objectives (initiatives that have   performance expansion or                   (AC) projects to high voltage Direct
            not yet been codify in law but may         enhancement regional tmission              Current (DC) projects included in the
            impact long term tmission planning).       expansion plan will assess needs based     regional plan. The costs of Regional
                                                       on reliability, efficiency and             Facilities and Necessary Lower Voltage
                                                       federal/state pub policy. ISAC             Facilities will be allocated using a
                                                       (independent state agency committee)       hybrid method. One-half of each
                                                       and stakeholders will provide input on     project’s cost will be allocated on a
                                                       public policy needs for regional           postage-stamp basis to zones based on
                                                       planning.                                  load ratio share and to merchant
                                                       State Agreement Mechanism: As an           transmission facilities based on
                                                       additional option to further meet          awarded Firm Transmission Withdrawal
                                                       potential state’s needs, a supplemental    Rights. The other half will be allocated
                                                       mechanism, not directly tied to            to specifically identified beneficiaries
                                                       meeting the Commission’s Order No.         using different methods depending on
                                                       1000 “consideration” of Public Policy      the project’s classification for a
                                                       Requirement, was added to Schedule 6       Reliability project or decreased load
                                                       as the “state agreement approach.”         payments for an Economic project. The
                                                       which allows for inclusion of pub policy   entire cost of any Lower Voltage
                                                       projects either paid for by retail         Facility that is not a Regional Facility or
                                                       customers or allocated between             Necessary Lower Voltage
                                                       sponsoring states and recovered            Facility will be allocated to specifically
                                                       pursuant to a FERC-accepted cost           identified beneficiaries using the same,
                                                       allocation. This is a way to reflect       non-postage stamp method that would
                                                       differences in RPS/non RPS states.         be applied to a Regional Facility.2

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  ISO               Public Policy Definition                   Public Policy Planning                  Public Policy Cost Allocation          Non-Transmission Alternative (NTA)

SPP         Public Policy defined as                   Planning process will take account of     SPP’s Highway/Byway cost allocation         Non transmission evaluated as means
            “[r]equirements established by local,      among other things, renewable energy      methodology and ITP process do not          to relieve reliability and as part of
            state, or federal laws or regulations,     standards,128 energy efficiency           generally distinguish among                 planning process to assess
            including duly                             requirements,129 other relevant           transmission facility “types” (i.e.,        transmission needs
            enacted statutes or regulations            environmental or government               reliability, economic, or public policy)
            promulgated by a relevant jurisdiction,    mandates,130 and “[o]ther input           for cost allocation, but instead evaluate
            whether within a state or at the federal   requirements identified during the        projects holistically and allocate costs
            level.” (same as Order No. 1000            stakeholder process.”131 SPP also is      based on voltage level, with special
            definition)                                required to develop and finalize the      cost allocation provisions for
                                                       study scope for each ITP assessment       transmission facilities associated with
                                                       in consultation with                      wind generation. Under the
                                                       stakeholders,132 and to post the          Highway/Byway method, the costs of
                                                       assessment study scope on the SPP         each transmission facility approved
                                                       website and include it in the annual      through the SPP transmission planning
                                                       STEP report Given the integrated          process are allocated according to their
                                                       nature of the ITP process, SPP does       voltage, with EHV transmission
                                                       not separately plan transmission          facilities (300 kV and above) – the
                                                       facilities to address needs driven by     “Highway” – allocated 100% on a
                                                       Public Policy Requirements, but instead   regional basis.157 Lower voltage
                                                       includes such requirements as inputs      facilities (greater than 100 kV and less
                                                       to planning studies and analyzes          than 300 kV) – the “Byway” – are
                                                       potential solutions in accordance with    allocated one-third on a regional basis
                                                       the assessment study scope.               and two thirds to the host transmission
                                                                                                 pricing zone.158 Finally, low voltage
                                                                                                 facilities (less than or equal to 100 kV)
                                                                                                 are allocated 100% to the host
                                                                                                 transmission zone. For facilities that
                                                                                                 are associated with Designated
                                                                                                 Resources that are wind generation
                                                                                                 resources that are located in a
                                                                                                 different pricing zone than the delivery
                                                                                                 point, the Highway/Byway cost
                                                                                                 allocation is different, with “Highway”
                                                                                                 facilities (300 kV and above) allocated
                                                                                                 100% on a regional basis161 and all
                                                                                                 other facilities (including both “Byway”
                                                                                                 and low voltage) allocated two-thirds
                                                                                                 on a regional basis and one-third to
                                                                                                 the Transmission Customer.

      Prepared by Law Offices of Carolyn Elefant, Washington DC carolynelefant.com | nextgenerationenergylaw.com | follow us @nxtgenenergy
Prepared by Law Offices of Carolyn Elefant, Washington DC carolynelefant.com | nextgenerationenergylaw.com | follow us @nxtgenenergy

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