On April 30, 2020, FERC accepted the New York Independent System Operator, Inc.’s (“NYISO”) proposed revisions to its Open Access Transmission Tariff (“OATT”) and its Market Administration and Control Area Services Tariff intended to enhance the integration of its Generator Deactivation Process with its Reliability Planning Process. NYISO proposed to establish a Short-Term Reliability Process using quarterly Short-Term Assessment of Reliability (“STAR”) studies that simultaneously evaluate the reliability impact of both generator deactivations and other changes that may impact transmission facilities (“Proposal”). FERC found that the Proposal will enhance NYISO’s current Generator Deactivation Process into a more efficient and comprehensive Short-Term Reliability Process.

In support of its Proposal, NYISO explained that its current process of performing resource-specific assessments of generator deactivations is inefficient because the ad hoc nature of the assessment process makes it hard for NYISO and transmission owners to plan for, schedule, and staff the reliability studies. In contrast, NYISO’s Proposal would establish a Short-Term Reliability Process that will expand its Generator Deactivation Process into a single comprehensive procedure that will integrate with NYISO’s longer-term Reliability Planning Process. According to NYISO, the STAR studies will focus on system needs expected to arise in the first three years of the study period, and if they identify a near-term reliability need arising out of a generator deactivation and there is inadequate time to conduct a solicitation for competitive transmission solutions, then NYISO will designate the responsible transmission owner as the sole entity to provide a transmission solution for that need. NYISO contended that its Proposal appropriately balances the need to avoid delays in addressing time-sensitive reliability needs with the Commission’s interest in removing barriers to permit non-incumbent transmission developers to propose and be selected to construct alternative transmission solutions.

In relevant part, however, LS Power, the sole protestor, argued that NYISO failed to demonstrate that its Proposal, which permits a time-based reliability exemption from its competitive transmission solicitation process, satisfies FERC’s policy on such exemptions. LS Power also argued that NYISO’s Proposal essentially allows a four-year right of first refusal instead of three years, in violation of Commission policy, and that any exemption from competition must be shown to outweigh the benefits of competition. FERC disagreed, finding that NYISO’s proposal satisfies the Commission’s policy because, despite an initial 365-day generator deactivation notice period, a near-term reliability need would arise only after the generator at issue is eligible to deactivate at the conclusion of the 365-day notice period. FERC further concluded that NYISO’s Proposal strikes the appropriate balance by avoiding delays in addressing time-sensitive reliability needs (those needed within three years), while removing barriers to nonincumbent transmission development where there is adequate time to conduct a solicitation for competitive transmission solutions.

Click here to read a copy of FERC’s order.