Elective Transmission Upgrade ProjectForward Capacity Market Changes

O C T O B E R 7 - 8 , 2 0 1 4 | M A R K E T S C O M M I T T E E M E E T I N G

Janine DombrowskiJ D O M B R O W S K I @ I S O - N E . C O M | 4 1 3 . 5 4 0 . 4 4 4 8

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Motivation for FCM Changes

• The ISO has proposed changes to the Open Access Transmission Tariff (OATT) to create new interconnection procedures for Elective Transmission Upgrades (ETUs)– Proposes energy and capacity interconnection services– Design presented to Tariff Committee on September 23, 2014 link

• Need to change the market rule to incorporate ETUs into the Forward Capacity Market (FCM) and provide a mechanism for the ETU to complete the capacity interconnection requirements

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New OATT ETU Interconnection Procedures

• The OATT creates two categories of Elective Transmission Upgrades:

Internal ETU

External ETU

A transmission facility with interconnection points located solely within the New England Control Area

A transmission facility that will interconnect the New England Control

Area with another control area

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New OATT ETU Interconnection Service

• For certain ETU types, the ETU schedule will define ETU-specific interconnection services similar to the services available to generators:– Network Import Interconnection Service (NIIS): Comparable to a

generator’s Network Resource Interconnection Service (NRIS) for energy– Capacity Network Import Interconnection Service (CNIIS):

Comparable to a generator’s Capacity Network Resource Interconnection Service (CNRIS) for capacity & energy

• External ETU CNIIS and NIIS structure is comparable to generator CNRIS and NRIS, except that:– CNIIS and NIIS are assigned to the ETU, not a generator

• ETU must complete OATT interconnection process milestones & achieve commercial operation to receive NIIS

• ETU must complete OATT interconnection process, FCM-specific milestones & achieve commercial operation to receive CNIIS

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FCM Process Changes to accommodate ETUs

• How will an internal ETU participate in the FCM?– The internal ETU supports the qualification of a generator and cannot

independently participate in the FCM– The internal ETU is considered in the FCM in the same manner as

transmission upgrades associated with a new generator qualifying for FCM today

• How will an external ETU participate in the FCM and how will the CNIIS be assigned to the ETU?– The external ETU supports the qualification of an Import Capacity

Resource and cannot independently participate in the FCM– The FCM rules need to be updated

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Use Existing Framework to Incorporate ETUs

The FCM currently models external interfaces and allows Import Capacity Resources to qualify import capacity over those interfaces

1. External ETUs seeking CNIIS are external interfaces so a mechanism to model ETUs in the FCM is needed– Today the external interfaces are hard coded in the tariff

2. Propose to use the Import Capacity Resource qualification process (III.13) in combination with ETU transmission certification process (III.12) in the FCM– Need to establish a relationship between the proposed ETU and the Import

Capacity Resource

3. Anticipate a multiyear import contract supporting the ETU– The Import Capacity Resource will be new until it clears and existing for

the balance of the contract

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Use Existing Framework to Incorporate ETUs (continued)

4. Propose to treat the Import Capacity Resource associated with the transmission investment similar to new internal resources– Apply Section III.13.1.1.2.2.4 Capacity Commitment Period Election to

permit revenue and quantity certainty– Subject the Import Capacity Resource to the III.13.2.6. Capacity Rationing

Rule unless it elects rationing

5. Require the Import Capacity Resource to provide non-commercial financial assurance until the non-commercial transmission is built and deemed commercial, paralleling the treatment of an Import Capacity Resource backed by a new non-commercial generator or a new internal generator

6. Require the Import Capacity Resource to provide quarterly Critical Path Scheduling (CPS) monitoring, similar to the transmission upgrades required for an internal generator interconnection

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Use Existing Framework to Incorporate ETUs (continued)7. Allocate CNIIS to the ETU once the Import Capacity

Resource acquires a Capacity Supply Obligation (CSO), similar to how CNRIS is allocated to a generator

8. ETUs may request long lead treatment at the time of the OATT interconnection request– This allows the ETU to be modeled in the FCM and “lock in” its

upgrades similar to the long lead treatment for a generator

9. ETUs will be incorporated into the existing FCM conditional qualification provisions

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Summary

• The ETU Project FCM-related conforming changes will:

– For internal ETUs• Recognize internal ETUs and their association with an internal

generator

– For external ETUs• Incorporate the ETUs into the FCM construct and allow for the

bundling of an Import Capacity Resource and an ETU to participate in the capacity market while assigning non-commercial financial assurance

• Allocate CNIIS to the external ETU when the Import Capacity Resource acquires a CSO