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April 15, 2025

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CAISO Wins FERC Approval for Subscriber-funded Tx Plan

FERC has approved a CAISO proposal allowing transmission lines outside California to join the ISO under a new subscriber-funded model that avoids allocating project costs to the ISO’s load-serving entities (ER23-2917). 

Under CAISO’s “subscriber participating transmission owner” (PTO) program, the developer of a transmission project not chosen in CAISO’s transmission planning process can solicit generation-owning customers to subscribe to service on a line designed to deliver energy into California. The project owner then can turn operational authority of the line over to the ISO, joining the balancing authority areas as a “subscriber PTO,” a category of owner ineligible to recover costs through the ISO’s transmission access charge (TAC) — the mechanism CAISO uses to bill load-serving entities for their transmission use.  

The plan, which CAISO’s Board of Governors approved in July 2023, is designed to help California draw on clean energy resources outside the state to meet its ambitious greenhouse gas reduction goals while alleviating financial risks associated with building new merchant transmission. (See CAISO Board OKs Plan to Admit Subscriber-funded Transmission Lines.) 

“The commission has long required a merchant transmission facility’s owner and its willing customers to assume the full market risk for the cost of constructing the facility and ensure that no captive customers are required to pay for the cost of the facility,” FERC wrote in the March 12 order. “Here, subscribers of the capacity on the subscriber PTO’s transmission facilities will be responsible for paying the entire cost of constructing those transmission facilities, and no transmission revenue requirement for the subscriber PTO transmission facilities will be included in the TAC.  

“Therefore, we find CAISO’s proposal to be consistent with the commission’s policy regarding cost recovery for merchant transmission facilities.”

The subscriber PTO program will require applicants to obtain approval from CAISO’s board to join the balancing area, execute a transmission control agreement, place transmissions assets and associated entitlements under the ISO’s operational control, and satisfy the requirements applicable to other PTOs.  

In exchange for funding the project, subscribers will receive scheduling priority on the associated transmission paths. Initial subscriber-owned generation interconnecting with CAISO through the subscriber PTO’s transmission will be studied through the PTO’s transmission interconnection process, rather than the ISO’s generator interconnection process. 

The program is open to existing transmission lines and those being planned or developed. 

Nonsubscriber Charges Prompt Protest

Protests filed with FERC against the subscriber PTO model focused on how those PTOs will be compensated when nonsubscribers use their lines.  

The proposal calls for CAISO to assess the TAC rate for nonsubscriber imports using the scheduling points associated with a subscriber PTO’s transmission facilities, while assessing the ISO’s wheeling access charge (WAC) rate for nonsubscriber exports and “wheeling-through” transactions at those points.  

At the same time, each subscriber PTO can develop a nonsubscriber $/MWh usage charge that cannot exceed the application TAC rate at the time the PTO files its charge for FERC approval.  

“Thus, while nonsubscribers will pay CAISO the current TAC or WAC, the subscriber PTO would receive an amount no greater than the TAC rate via the nonsubscriber usage rate accepted by the commission,” FERC noted in the order. “CAISO explains that, if the total TAC and WAC revenue contributed by transactions on the subscriber PTO’s facilities exceeds the total calculated nonsubscriber usage payment then the excess amount will be added back to the regional access charge for allocation to the other participating TOs besides the subscriber PTO.” 

When WAC revenue is insufficient to cover nonsubscriber charges, CAISO will draw on nonsubscriber TAC revenues to cover the balance before distributing those revenues to other CAISO PTOs. 

In a jointly filed protest, Pacific Gas and Electric and Southern California Edison complained that subscriber PTOs should not be compensated for nonsubscriber use of their transmission lines because those lines will be fully paid for by the subscribers. 

“As an initial matter, and contrary to protestors’ arguments, the commission has not held that a facility’s costs can be allocated to customers only following a determination that the facility is necessary for reliability, economic, policy or other reasons through the CAISO transmission planning process,” the commission wrote. “In any case, we disagree with protestors that compensation for nonsubscriber use of a subscriber PTO’s transmission facilities conflicts with the commission’s longstanding policy that a merchant transmission facility’s owner and its willing customers must assume the full market risk for the cost of constructing the merchant transmission facility, and that no captive customers are required to pay for the cost of the facility.”  

The commission declined to address the protestors’ concerns about how the nonsubscriber usage rate will be formulated, saying the issue was outside the scope of the current proceeding and best addressed in future proceedings dealing with rates proposed by subscriber PTOs. FERC also dismissed a request to sever the nonsubscriber rate provisions from the proposal and reject them. 

“Regarding protestors’ concerns that the TAC could increase as a result of the nonsubscriber usage rate, we find, based on the record before us, that the subscriber PTO model is unlikely to result in an increase in the TAC, and, should an increase occur, any such increase would not be due to the subscriber PTO recovering any of the costs for constructing the subscriber PTO’s initial transmission facilities through the TAC,” the commission found. It also noted that CAISO’s response to a FERC deficiency letter in January clarified that the nonsubscriber usage rate would be required to decline in line with any future reduction of the TAC. 

TransWest Request Denied

FERC rejected a request by TransWest Express for guidance on “a potential framework to determine the nonsubscriber usage rate,” saying the subject was outside the scope of the proceeding and reiterating that the issue would be addressed in future rate filings. 

The proposed TransWest Express project, a 700-mile line designed to carry 3,000 MW of wind energy from Wyoming to a CAISO interconnection point in Nevada, likely will become the first transmission facility to join the ISO under the subscriber PTO program. 

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NEPOOL Markets Committee Briefs: March 13, 2024

ISO-NE on March 13 presented the NEPOOL Markets Committee with additional results of the impact analysis for the RTO’s resource capacity accreditation (RCA) project, which looked at how changes to the resource mix would affect the seasonal distribution of shortfall risks. 

The RCA project is being developing in conjunction with structural changes to the timescale of the Forward Capacity Auction (FCA). The RTO has proposed a three-year delay of FCA 19 to develop and implement the changes. (See related story, NEPOOL MC Backs Further Forward Capacity Auction Delay.) 

In the initial impact analysis “base case,” ISO-NE estimated that loss-of-load risk is distributed 80% in the winter and 20% in the summer. (See NEPOOL Markets Committee Briefs: Feb. 6, 2024.) 

The sensitivity analyses presented to the MC included three scenarios: 

      • the addition of wind, solar and battery resources without corresponding resource retirements; 
      • the addition of the renewable resources accompanied by the retirement of oil-only capacity; and 
      • the addition of renewables accompanied by the retirement of coal capacity. 

The addition of renewables without retirements would be more likely to reduce the number of days with loss-of-load events in the winter than in the summer but would provide greater reductions in the duration of the events in the summer than in the winter, ISO-NE found. 

When coal capacity was retired, ISO-NE found increased risk of multiday loss-of-load events in the winter, shifting the region’s risk profile towards the winter, said Dane Schiro, the RTO’s principal analyst. 

Compared to the retirement of coal, retiring oil capacity “can be thought of as retiring proportionally more summer capacity than winter capacity” because of the model’s winter fuel constraints for oil resources, Schiro said. Therefore, the retirement of oil capacity shifted the overall risk profile toward the summer relative to the coal-retirement scenario. 

“The seasonal output characteristics of retiring and new resources are important to the seasonal risk split,” Schiro said, adding that the findings were in line with expectations. 

ISO-NE will present additional sensitivity results to the MC in April. 

Regional Differences in Gas Accreditation

Ben Griffiths, vice president of wholesale market policy at LS Power, made the case for the RCA updates to incorporate regional differences in pipeline gas availability in the winter. 

ISO-NE is planning to treat access to nonfirm gas as the same across the region, despite LS Power data showing that gas access varies significantly based on where generators are located on the pipeline system, Griffiths said. 

“Observational data, economic modeling and physical analysis all indicate that gas availability is location and fact specific,” Griffiths said. “A failure to reflect locational attributes will lead to inaccurate pricing for gas generators, worse reliability [and] potential premature retirement.” 

Gas units in Connecticut run “at a higher level than we would expect across a range of temperatures, and there is no appreciable temperature-dependent output deviation,” Griffiths said. “This suggests that the gas system is not constrained in Connecticut at any observed temperature.” 

In contrast, generation for some units in Maine and Massachusetts historically has been highly temperature dependent, although this temperature correlation can vary significantly unit to unit, Griffiths added.  

The accreditation of gas resources has been a major topic of the RCA project. ISO-NE has advocated for a “market constraint approach,” in which the RTO would limit the amount of nonfirm gas capacity it procures based on the region’s gas constraints while having gas-fired resources compete for capacity obligations. 

ISO-NE initially indicated it would not be able to design and implement this approach for FCA 19, but it said March 13 that if the proposal for an additional two-year delay of the auction is approved by FERC, it will prioritize implementing a market constraint approach in time for it. (See NEPOOL Markets Committee Briefs: Jan. 11, 2024.) 

Regardless of the approach ISO-NE takes, it must account for local differences, Griffiths said. 

Under the market-constraint approach, ISO-NE could create “a nested zone for Connecticut which has higher levels of fuel availability and is, in effect, unconstrained,” Griffiths said. LS Power’s proposal would not affect the total amount of accredited gas capacity and simply would change how the overall capacity of the fleet is distributed, he added.  

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NY State Reliability Council Executive Committee Briefs: March 8, 2024

Proposed Transmission Criteria for Gas Contingencies

ALBANY, N.Y. — The New York State Reliability Council Executive Committee on March 8 approved for industry review two new proposed reliability rules, 153a and 154a, aimed at revising NYISO’s transmission planning requirements to account for a loss of the gas delivery system and fuel shortages at power plants, respectively. 

Roger Clayton, chair of the council’s Reliability Rules Subcommittee, said the group’s goal is to “basically convert what are currently considered extreme contingencies and extreme system conditions into design conditions.” 

While the failure of the gas delivery system to multiple plants is already included as an extreme contingency in the council’s design criteria, PRR-153a would add the loss of fuel to a single plant as another contingency. Both would be clarified to apply specifically to fossil-based plants. 

“This recognizes the increasing importance of gas going forward amid the increasing development of renewable resources, and the need to have reliable backup base reserves by incorporating a design contingency for the sudden loss of gas fuel,” Clayton said. 

PRR-154a aims to better align the council’s requirements with expected gas plant availability under winter peak conditions. It would add the unavailability of nonfirm gas service during the winter peak to the “credible combinations” of conditions under which the grid would be strained, and it would clarify that extreme conditions include the loss of all gas generation, regardless of supply firmness. 

“As New York becomes a winter-peaking system, the gas supply to electric generation plants is expected to be strained,” the proposal says. “To maintain reliability in the future, New York’s grid should be designed to withstand gas shortages during forecasted winter peak conditions.” 

Zach Smith, vice president of system and resource planning at NYISO, commended the committee for developing proposed rules that respond to evolving market conditions. 

Smith said the ISO’s only concern with the proposals was related to timing, as it would like to incorporate them into its annual Reliability Needs Assessment because it might “identify reliability needs in the wintertime” that it might have previously overlooked. Smith added that, if the timing aligns as intended, the rules would also be integrated into NYISO’s first newly revamped interconnection cluster study, but not its transitional cluster study. 

The proposed rules will be posted online for a 45-day review period. 

NYISO Updates

Aaron Markham, NYISO vice president of operations, briefed the committee on how the ISO is preparing for the April 8 solar eclipse, predicting it could reduce the afternoon’s solar production by “upwards of 3,400 MW if it is a clear sky day.”  

Markham added that if the eclipse occurs on a cloudy day, NYISO would not conduct a post-event review of its impact on solar production, as the previous cloudy day eclipse event had only minor impacts on solar production. (See “October Operations,” NYISO Braces for the Coming Winter.) 

NYISO staff also addressed Advanced Energy United’s recently released scorecard on ISO/RTO generator interconnection processes. The ISO received a C-, better than only PJM and ISO-NE, though no grid operator scored higher than a B. (See AEU Grades ISO/RTO Queues as Order 2023 is Implemented.) 

COO Emilie Nelson said the study relied on a small sample of interconnection queue datapoints for each ISO/RTO. “Nevertheless, we’re working really hard with our stakeholders to improve the interconnection process, and we take that objective very seriously, so I think that the results of that effort will come to bear in the next few years.” 

Smith followed up, saying, “We’ve reached out to the authors to try to understand what went into their [methodology]. … But what they were intending was to create a reference point, because all of [the ISO/RTOs] are entirely changing their interconnection processes, and we are completely overhauling our current processes. 

“So, in talking to them, and trying to understand their objective, their objective is to put out another report in the future to demonstrate that ‘this is where we were, and where are we in the future?’” 

Gioia, Burman Honored

The committee opened its meeting by dedicating a plaque in honor of former New York Public Service Commission Chair Paul L. Gioia, who helped establish NYISO.  

Gioia, 81, died last month. He was appointed chair by Gov. Hugh Carey in 1981 and served for five years until he was fired by Gov. Mario Cuomo. He then joined law firm Dewey & LeBoeuf, where he became lead counsel for the New York Power Pool and helped oversee its transition into the ISO in the late ’90s. 

The council “recognizes Paul’s outstanding public service and contributions to the health and safety of New Yorkers today, and in the future, by assuring the reliability of the electric power system in New York state,” Clayton said. 

NYSRC commemorative plaque for Paul L. Gioia | © RTO Insider LLC

PSC Commissioner Diane Burman also paid tribute, highlighting Gioia’s impact as a mentor and how much his “personal and professional friendship” meant to her. She shared a personal tribute on LinkedIn. 

The committee recognized Burman for her service at the meeting’s conclusion. She announced last month that she would not seek reappointment after a decade on the commission. Her term ended Feb. 1. 

“I’ve been a public servant over for 20 years; five of that was as a staffer for the commission, and over 10 years has been as a commissioner,” she said. “Leaving is really bittersweet to me, but it is time for me to pass the baton. 

“I really wanted to come here today to thank the Reliability Council as a whole, but more importantly, each of you individually for your continued service. Thank you for making me a better, more well-rounded regulator, and I am truly going to greatly miss being a part of all this with all of you.” 

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House Oversight Examines Grid Reliability and Resource Adequacy

Former FERC Commissioner James Danly told a House Oversight subcommittee March 12 that resource adequacy was being threatened by rapid generation retirements and demand growth. 

The message, given to the House Oversight and Accountability Subcommittee on Economic Growth, Energy Policy and Regulatory Affairs, was not much different from what Danly, now a partner at law firm Skadden, told Congress last year when he was on the commission. (See FERC’s Danly, Christie Again Warn Congress of Looming Reliability Crisis.) 

“Every market is different, the tariffs are different region to region, but there have been problems in properly incentivizing the arrival of new generation to meet load growth,” Danly said. “This problem becomes all the more difficult when the markets have to operate and create those price signals upon which we rely to ensure resource adequacy, when they’re operating in the context of widespread and lucrative subsidies, which have the inevitable effect of warping price signals.”