Comments on revised draft final proposal

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

ACP-California greatly appreciates the work that the CAISO has put into the development of a new approach to PTO participation through the Subscriber PTO initiative. The existence of new options, such as the Subscriber PTO model, to bring diverse clean energy resources online and deliver them to CAISO load is critical to meet the state’s decarbonization goals. Therefore, ACP-California generally supports development of the Subscriber PTO model to help transmission projects like TransWest Express, and other similarly situated proposed transmission lines, reach commercial operation.

The Revised Draft Final Proposal adds critical new elements to the proposal, particularly around the generator interconnection process for TransWest Express. ACP-California appreciates the potential need for unique considerations for Subscriber PTOs but requests that, prior to finalizing this proposal, CAISO provide significantly more detail on how the process will work and the interaction it will have with other ongoing interconnection processes. Additional detail from CAISO is critical to ensure that the process being proposed is not implemented in a manner that provides preferential treatment or harms other projects that are in the process of interconnecting and seeking deliverability allocations.

We look forward to CAISO providing additional detail on the interaction of the proposed transmission/generator interconnection process for TransWest with the traditional and ongoing Generator Interconnection Deliverability and Allocation Procedures (GIDAP).

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

In the Draft Final Proposal, CAISO has included new provisions related to the generator interconnection process for the Subscriber PTO. Specifically, for a variety of reasons, CAISO has proposed that the subscriber generation interconnecting to TransWest be studied through the transmission interconnection process, rather than separately going through the generator interconnection process. During the stakeholder call, CAISO highlighted some technical and study related reasons for proceeding in this manner, including that the relevant transmission interconnection studies require studying the combination of additional transmission and generation in order to be accurate. ACP-California requests that CAISO articulate the technical and study-related reasons for its proposed approach to the subscriber generation interconnecting to TransWest. This will help provide necessary clarity to stakeholders. Additionally, this background will be required for future tariff filings, so it will have to be developed at some point, but it would be beneficial for stakeholders to understand prior to this proposal being finalized.

As part of this new proposal for treatment of the subscriber generation interconnecting to TransWest, CAISO is also proposing to provide the subscribers with the “right of first refusal” to the deliverability capacity on upgrades that are deemed necessary inside the CAISO BAA.

First, with respect to this element of the proposal, ACP-California recommends that CAISO use a different term than “right of first refusal.” This would help avoid confusion about what is being proposed. Our understanding is that the “right of first refusal” (as CAISO is using the term in the Subscriber PTO proposal) is in reference to the deliverability and not for the right to construct/own the network upgrades themselves. The term “right of first refusal” term has become highly associated with the right of first refusal to construct and own assets (and with Order 1000). But, in this context, CAISO does not appear to be proposing a “right of first refusal” to construct and own any transmission facilities, but rather first access to the deliverability on transmission facilities that might be constructed inside the CAISO BAA to accommodate the Subscriber PTO and its generation. Thus, we suggest CAISO use an alternative term for this element of the proposal such as “first option,” “pre-emptive right”, or “priority access.” 

Second, we commend CAISO for thinking creatively about solutions to bring more generation and transmission capacity online in as timely a manner as possible, especially as delays mount with network upgrades and the interconnection queue. However, CAISO must provide additional detail on the sequencing of the transmission interconnection studies for the Subscriber PTO with the GIDAP process, and the interactions with Cluster 14 and 15 (and earlier clusters). This information is necessary in order for stakeholders to adequately assess whether this creative solution might create concerns around potential harm to other in flight projects. We request that CAISO provide specific information on the sequencing of various interconnection studies and allocation of deliverability for this process and the standard, ongoing GIDAP processes. Only with that information in hand can stakeholders provide meaningful comments on the proposed approach to addressing the generation interconnection of the subscribers to TransWest Express.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

The California Community Choice Association (CalCCA) appreciates the opportunity to comment on the California Independent System Operator’s (ISO) Subscriber Participating Transmission Owner (PTO) Model Revised Draft Final Proposal. CalCCA supports the Subscriber PTO model as an alternative way to develop new transmission with commercial interest without increasing the ISO’s transmission access charge (TAC). The ability to develop new transmission through multiple avenues will enable the development of more transmission that is critically needed to support the state’s clean energy policy goals. Because projects using the Subscriber PTO forego the Transmission Planning Process (TPP), the subscriber PTO model should be designed in a manner such that the costs of subscriber PTO projects do not go into the TAC. The subscriber PTO model should not result in increases to the ISO TAC.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

CalCCA generally supports the ISO’s proposal to charge non-subscribers the TAC or wheeling access charge (WAC) to use the Subscriber PTO line and use the TAC or WAC charges to first pay for the subscriber WAC developed by the subscriber and approved by the Federal Energy Regulatory Commission. The ISO should adopt the revision in the Revised Draft Final Proposal that caps the subscriber WAC at the Regional TAC or WAC rate to ensure the subscriber WAC does not increase costs to California customers.

The Revised Draft Final Proposal clarifies that a non-subscriber load-serving entity would be charged the TAC when the non-subscriber load-serving entity (LSE) is an LSE in the ISO balancing authority areas (BAA) and will be charged the WAC if the non-subscriber is exporting from the ISO BAA. This clarification will allow the non-subscriber to schedule their load in a manner that makes them indifferent from using the subscriber PTO line versus another path.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

CalCCA reiterates its previous comments regarding generator interconnection - the Subscriber PTO should develop a transmission revenue requirement for network upgrades associated with only subsequent generator interconnection requests that are not a part of the original build of the project. The ISO should only include generator network upgrades for projects identified after the original build and identified through the generator interconnection and deliverability allocation procedures in the TAC.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

The CPUC’s Energy Division appreciates the potential benefits of a subscriber-funded participating transmission owner approach (“Subscriber PTO Model”) for procuring out-of-state resources that increase the diversity of options for resource technologies and geographic locations.  The Subscriber PTO Model could significantly help California meet its procurement goals for out-of-state resources, as set forth in the Preferred System Plan adopted by the CPUC in Decision 22-02-004.  We reiterate our general support for this Model, as we expressed in comments submitted to the CAISO on December 5, 2022, and March 1, 2023.

Energy Division does, however, continue to have concerns with a few elements of the Subscriber PTO Model, including, as explained below, a new proposal to exempt certain generator interconnection upgrades from competitive procurement requirements.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

The CAISO’s May 15, 2023, Revised Draft Proposal for the Subscriber Participating Transmission Owner Model (“Revised Final Draft”) proposes a new exemption from Order 1000 competitive procurement requirements for transmission projects.  Specifically, the CAISO proposes that if delivery network upgrades (“DNUs”) included in an approved transmission plan are necessary to meet the portfolios established by the CPUC, “then the Subscriber Participating TO “will have the first right of refusal to those upgrades . . . up to the capacity include[d] in the portfolio.”[1]  Federal Energy Regulatory Commission (“FERC”) Order 1000, however, generally prohibits the establishment of Right of First Refusal (“ROFR”) provisions associated with transmission projects “if any costs of a new transmission facility” are regionally allocated or allocated “outside of a public utility transmission provider’s retail distribution service territory or footprint.”[2]  In fact, the CAISO’s April 11, 2023, Subscriber Participating TO Model Draft Final Proposal (“Draft Final Proposal”) recognized that the same upgrades, i.e., DNUs related to the Subscriber Participating TO’s project approved in a transmission plan to access generation resources necessary to meet CPUC portfolios, would be subject to Order 1000 competitive procurement requirements.[3] 

The Revised Final Draft does not, however, offer an explanation as to why the CAISO proposed the change, nor explain why FERC should grant the new exemption from competitive procurement requirements.[4]  Although during the May 22, 2023, Stakeholder call, CAISO staff suggested that it would be impossible to competitively bid the DNUs separate from the entire transmission project that will bring as much as 3,000 MW of wind to California from Wyoming, the CPUC does not understand why that would be the case.  Further, as noted, the CAISO itself previously contemplated in the Draft Final Proposal that the same DNUs would be procured through Order 1000 compliant competitive processes.[5]

During the Stakeholder call, CAISO staff emphasized that the primary benefit of the proposed ROFR is that the cost of the referenced DNUs would not be recovered through the Transmission Access Charge (“TAC”).  But CAISO then acknowledged that the DNUs would be paid for by the existing PTO and incorporated into its Transmission Revenue Requirement (“TRR”), and thus, ultimately recovered from ratepayers.[6]  CAISO staff did not explain how recovery from ratepayers via an existing PTO’s TRR avoids recovering these costs through the TAC. 

Keeping in mind that Energy Division supports the proposed subscriber model generally, we urge CAISO to reconsider its ROFR proposal because it contravenes the competition mandate in Order 1000, is unnecessary, and would require California ratepayers to pay for DNUs approved in the TPP that are not competitively procured, and thus, deprive ratepayers of the cost containment benefits provided by competitive processes.[7]

[1] Revised Final Draft at 5 (emphasis in original) (“As part of the transmission interconnection request process for the Subscriber Participating TO applicant, the affected Participating TO and the ISO will study the project for interconnection facilities, and reliability and deliverability network upgrades.  If upgrades have been developed in the Transmission Planning Process (“TPP”) related to the generation to be served by the Subscriber Participating TO project for purposes of meeting the portfolios established by the CPUC, then the Subscriber Participating TO will have the first right of refusal to those upgrades included in an approved ISO transmission plan up to the capacity include in the portfolio.”).  See id. at 21 (clarifying that the proposed right of first refusal (“ROFR”) provision specifically applies to delivery network upgrades). 

[2] Order 1000-A at P 430 (emphasis added).  Notably, Order 1000 allows utilities to maintain ROFRs for local transmission facilities, Order 1000 at P 318, and for upgrades to a utility’s existing facilities, even if such upgrades have been selected in the regional transmission plan for purposes of cost allocation, id. at P 319.

[3] Draft Final Proposal at 14 (emphasis added) (“If in the future, the ISO is provided portfolios from the CPUC that require generation in a certain area, the TPP determines transmission must be built to meet the needs of the portfolio, and if the Subscriber Participating TO’s bid wins the competitive solicitation process consistent with Section 24 of the ISO tariff or if the Subscriber Participating TO is otherwise designated to build a new project (such as an upgrade to its existing facilities) under Section 24, then the Subscriber Participating TO could have its costs solely for the new TPP project paid for under the TAC.”). 

[4] The CPUC opposes unnecessary exemptions from Order 1000 competitive procurement requirements.  See, e.g., Initial Comments of the California Public Utilities Commission, RM21-17-000 (Oct. 12, 2021), eLibrary No. 20211012-5697 at 44 (recommending FERC eliminate “non-essential, anticompetitive ‘carve outs’ from competitive processes and thereby facilitate, and ensure faithful implementation of, Order 1000’s competitive mandate.”).

[5] Draft Final Proposal at 14.

[6] See, e.g., California Independent System Operator Corporation, FERC Docket No. ER23-___-000, CAISO Tariff Amendment to Implement Interconnection Process (Jan. 26, 2023) at 7 (emphasis added) (explaining that “[a]lthough interconnection customers provide the initial financing for local delivery network upgrades and approved project sponsors for area delivery network upgrades, both parties eventually receive reimbursement, and the ultimate costs go to ratepayers through transmission rates.”).

[7] See, e.g., Initial Comments of the California Public Utilities Commission, FERC Docket No. RM21-17-000 (Aug. 17, 2022), eLibrary No. 20220817-5255 at 61-72 (explaining that Order 1000 competitive processes provide multiple benefits to ratepayers); id. at 64-68 (describing actual cost savings realized by competitively procured projects in the CAISO).

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

The Public Advocates Office’s Comments on the Subscriber Participating Transmission Owner Model Revised Draft Final Proposal.

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) is the state-appointed independent consumer advocate at the California Public Utilities Commission (CPUC).  Our goal is to ensure that all Californians have affordable, safe, and reliable utility services while advancing the state’s environmental goals. Our advocacy efforts to protect California customers span the areas of energy, water, and communications regulation.[1]

The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) supports the Subscriber Participating Transmission Owner Model as a way to expand transmission capacity while minimizing Transmission Access Charge (TAC) impacts.   

Cal Advocates also supports maximizing the number of transmission projects eligible for competitive solicitation. As discussed in response to question 3 below, the Revised Draft Final Proposal could expand the number of projects that are ineligible for competitive solicitation in a manner that is inconsistent with Federal Energy Regulatory Commission (FERC) Order 1000 and the CAISO Tariff.

[1] Public Utilities Code Section 309.5.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

Cal Advocates does not have comments on this section at this time.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

Section 3.4 of the Revised Draft Final Proposal states:

If upgrades have been developed in the TPP related to the generation served by the Subscriber Participating TO project for purposes of meeting the portfolios established by the CPUC, then the Subscriber Participating TO will have the first right of refusal to those upgrades up to the capacity include in the portfolio.[1]

This language should be removed, and the Final Participating Transmission Owner Model should state that FERC Order 1000 and the CAISO Tariff determine which projects are covered by a right of first refusal.

As background, FERC Order No. 1000 requires transmission providers to remove the exclusive right to construct projects within their service territory, provided that those projects are “selected in the regional transmission plan.”[2]  FERC Order 1000 also states that transmission providers retain the right to construct certain types of projects. Specifically, Order 1000 states that transmission owners have the right to construct: 1) “local” transmission facilities, which the FERC Order defines as those that are “within a public utility transmission provider’s retail distribution service territory or footprint,”[3] 2) upgrades to the transmission owner’s own facilities, and 3) projects that are within a transmission owner’s existing right of way.[4]  

The CAISO’s Tariff, which was revised to comply with FERC Order 1000, states that facilities that are under 200 kilovolts (kV) and that are within the footprint of a transmission owner are deemed “local,” and are not subject to competitive procurement.[5] It also confirms that projects that are additions, upgrades, or improvements to existing facilities are also not subject to competitive procurement.[6]

The language from the Revised Draft Proposal, included above, would appear to expand the scope of facilities that are not eligible for competitive solicitation to include projects that are “developed in the TPP related to the generation served by the Subscriber Participating TO project for purposes of meeting the portfolios established by the CPUC.” It is possible that a project could be proposed that would meet the criteria for competitive solicitation under FERC Order 1000 and the CAISO Tariff (if over 200 kV and not an upgrade, improvement, or addition, and is not within an existing right of way) but would be deemed ineligible because it is “related to generation served by the Subscriber Participating TO project.” Making such a project ineligible for competitive solicitation would contravene FERC Order 1000 and the CAISO Tariff.  It could also result in a more costly outcome for ratepayers. A 2019 Report found that competitive procurement led to cost savings of 29% between 2013 and 2019 in CAISO territory and that, across the nation, competitive procurement led to prices that were an average of 40% below initial cost estimates.[7] Additionally, research has shown that a competitive bidding process for transmission can provide stakeholders with critical price transparency.[8]

In short, the CAISO’s Final Participating Transmission Owner Model should comply with FERC Order 1000 and not reduce the number of projects eligible for competitive solicitation.  Instead, the CAISO should make it clear that the regulations that determine which projects are eligible for competitive solicitation are set by the existing CAISO Tariff and FERC Order 1000.  

[1] Section 3.4. Revised Draft Final Proposal, Subscriber Participating Transmission Owner Model. CAISO May 22, 2023. Available at http://www.caiso.com/InitiativeDocuments/Revised-Draft-Final-Proposal-Subscriber-Participating-Transmission-Owner-Model-May222023.pdf.

[2] Federal Energy Regulatory Commission (FERC) Order No. 1000. Issued July 21, 2011. Section 318. Available at https://www.ferc.gov/sites/default/files/2020-04/OrderNo.1000.pdf. 

[3] FERC Order No. 1000. Section 63.

[4] FERC Order No. 1000. Section 318 and 226.

[5] Section 24.4.10 of the CAISO Tariff. states that “A Participating Transmission Owner will have the responsibility to construct, own, finance and maintain any Local Transmission Facility.” Appendix A of the CAISO Tariff defines local transmission projects as those that operate at a voltage below 200 kilovolts (kV) and are located entirely within the footprint of a Participating Transmission Owner’s footprint or service territory. (See http://www.caiso.com/rules/Pages/Regulatory/Default.aspx.)

[6] Section 24.5.1 of the CAISO Tariff states that “if the transmission solution adopted in Phase 2 [of the CAISO Transmission Planning Process] involves an upgrade or improvement to, addition on, or a replacement of a part of an existing Participating TO facility, the Participating TO will construct and own such upgrade, improvement, addition or replacement facilities unless a Project Sponsor and the Participating TO agree to a different arrangement.”

[7] Cost Savings Offered by Competition in Electric Transmission. The Brattle Group. April 2019. Figure 18 and p. 29. Available at https://www.brattle.com/wp-content/uploads/2021/05/16726_cost_savings_offered_by_competition_in_electric_transmission.pdf.

[8] Joskow, Paul. Competition for Electric Transmission Projects in the U.S.: FERC Order 1000. March 2019. Available at https://ceepr.mit.edu/wp-content/uploads/2021/09/2019-004.pdf. P. 49.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

Golden State Clean Energy continues to support this initiative and CAISO’s proposal, including the new update that subscribed generation will be studied through the transmission interconnection process. However, we seek clarification on one issue.

In the Revised Draft Final Proposal, CAISO referenced our previous comment in stating the following:[1]

Golden State Clean Energy urges the ISO to refrain from including any unnecessary limitations on the Subscriber PTO Model and instead preserve optionality and not create hurdles for future innovation. The primary benefit of the Subscriber PTO Model is transmission development that avoids increasing the TRR of the TAC. That benefit can be captured irrespective of the physical location of transmission and generation resources, so ISO should ensure it does not limit this potential.  

However, the Revised Draft Final Proposal did not explicitly address whether CAISO intends to include limitations on whether future transmission projects can avail themselves of the Subscriber PTO model. Specifically, it is unclear whether the Subscriber PTO model will be available to projects within (or offshore from) California. The initiative has at times focused on the benefit of TransWest Express bringing out-of-state wind to CAISO. We seek clarification that CAISO does not intend to prevent the Subscriber PTO model from applying to any project that seeks similar treatment regardless of project location.

[1] Revised Draft Final Proposal, Subscriber Participating Transmission Owner Model initiative, at 22, May 15, 2023.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

While the Joint Commenters[1] have been supportive of the overall concept of developing the Subscriber Participating Transmission Owner (“SPTO”) model throughout this initiative, the model has evolved significantly since it was initially proposed in two key respects, both of which are detrimental to the interests of CAISO transmission customers:

• First, the processes that the CAISO will use to perform studies to identify (i) the network upgrades that are needed to interconnect the SPTO transmission facilities; and (ii) the network upgrades that are needed to enable the interconnection and deliverability of generation resources via the SPTO transmission facilities, have both become very unclear.

• Second, the cost allocation for network upgrades associated with items (i) and (ii) above is inconsistent with the principle that existing CAISO ratepayers not utilizing the SPTO facilities would be held harmless from increases in the CAISO’s Access Charge rates as a consequence of the SPTO facility. 

Until these issues are addressed with rules that define in detail how SPTO facilities and any associated generation resources will be evaluated by the CAISO and that reasonably allocate the costs of any upgrades, the Joint Commenters are unable to support the proposal.  The CAISO should develop specific provisions for its tariff that discuss the application process for the SPTO model and the applicable study process(es) for SPTO facilities and any interconnecting resources, both resources that intend to interconnect to the SPTO facility as part of the initial SPTO project and resources that will subsequently interconnect to the facility once it enters service.  Allowing transmission projects that are not approved as part of the CAISO Transmission Planning Process (“TPP”) and do not go through a competitive solicitation process to be incorporated into the CAISO Controlled Grid via the SPTO model requires development of guardrails to protect CAISO transmission customers, notwithstanding the potential benefits of the SPTO model.

[1] The Joint Commenters include: the Bay Area Municipal Transmission group, which consists of City of Palo Alto Utilities and City of Santa Clara, Silicon Valley Power (“BAMx”); the Northern California Power Agency, and the Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California (the Six Cities”).

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

The Joint Commenters remain concerned that the proposal has shifted from the original principle on which the SPTO model was initially premised, which the Joint Commenters had understood as providing that existing CAISO ratepayers that do not utilize the SPTO facilities would be held harmless from increases in the CAISO’s Access Charge rates as a consequence of the SPTO facility.  Regrettably, the Revised Draft Final Proposal continues to reflect a move off of this principle by allocating the cost of network upgrades associated with SPTO facilities to CAISO transmission customers.  This fails to achieve the “hold harmless” principle.  The Joint Commenters, therefore, urge the CAISO to revise its proposal to require network upgrades on the existing CAISO transmission system that are needed to accomplish interconnection of the SPTO transmission facility to be allocated to the SPTO, with no eligibility for reimbursement of the costs of these facilities from existing CAISO transmission customers via the CAISO’s Access Charge rates. 

With respect to the costs of reliability and deliverability network upgrades to interconnect generation, the Joint Commenters continue to have concerns regarding the CAISO’s proposal regarding treatment of network upgrades on the CAISO’s system associated with generation resources that are interconnecting directly to the SPTO’s transmission facilities.  As the Six Cities articulated in previous comments, it is not reasonable to fully insulate potential subscribers from costs associated with upgrades on the CAISO system that are necessary to accommodate the interconnection of generation and transmission services that the subscribers are purchasing.  The Joint Commenters do not support this element of the Revised Draft Final Proposal. 

For subsequent interconnections to the SPTO facilities, the Joint Commenters are open to funding necessary reliability and deliverability upgrades through the CAISO’s Access Charge rates, if the offtakers of these subsequently-interconnecting resources are CAISO entities.  If they are not CAISO entities, then it is not appropriate to require CAISO transmission customers to fund upgrades on facilities that are for the benefit of resources procured by external parties.  Such funding is inconsistent with the CAISO’s recently-adopted policy in the Transmission Service and Market Scheduling Priorities initiative, which provides for external parties seeking wheeling priorities to prepay the CAISO Wheeling Access Charge (“WAC”) for the duration of their request or, in the event of a long term request for which incremental deliverability capacity is necessary, to fund studies and pay for upgrade costs associated with providing incremental deliverability to the extent the upgrades are not deemed needed as a reliability, economic, or policy project by the CAISO.  See generally Final Proposal – Transmission Service and Market Scheduling Priorities Initiative: Phase 2 (Jan. 18, 2023) at 45-49. 

On the other hand, if the CAISO’s proposal is that non-CAISO, non-subscriber offtakers of subsequently-interconnected resources would fund the cost of any network upgrades needed for their projects through assessment of the CAISO WAC, then the CAISO’s approach may be reasonable.  However, under the Revised Draft Final Proposal (at p. 21), the CAISO WAC would be assessed only if the offtakers’ resources exit at a non-SPTO scheduling point.

While the Joint Commenters note the CAISO’s claimed analogy to its new tariff provisions regarding reimbursement for affected system mitigation as somehow dictating the policy that should result here, the CAISO’s reliance on this policy is misplaced.  First, the CAISO stakeholdered its proposal regarding affected system mitigation in the Interconnection Process Enhancements initiative last year, and, in that initiative, it emphasized the narrow context of interconnections by new resources to neighboring systems that caused reliability or other issues on the CAISO system, explaining that historically affected system issues on the CAISO grid have been rare.  See Final Proposal – Interconnection Process Enhancements 2021 – Phase 2: Longer Term Enhancements (Sept. 31, 2022) at 30 (explaining that “[i]n the last decade, there have been virtually no instances where a generator’s interconnection to a neighboring balancing authority area would affect the reliability of the ISO grid,” that the CAISO is “almost never an ‘affected system,” and that recently it had received a “few notices” of potential impacts).  Because of this, the CAISO determined that it would be willing to include the costs of network upgrades required as a result of such interconnections to third-party systems in its Access Charge rates, even though this practice is not common among adjacent balancing authority areas (“BAAs”).  See id. at 31 (observing that neighboring systems “not only fail to provide cash reimbursement when they are the affected system; they do not provide cash reimbursement to their own Interconnection Customers”).  The CAISO did not explain, and stakeholders did not discuss, consider, or decide the application of the reimbursement policy for affected system mitigation in any other situations, including the unique circumstances presented by the SPTO model.  It is simply inappropriate for the CAISO to assert that its tariff rules regarding reimbursement for network upgrades due to affected system mitigation now represents a generally-applicable cost allocation policy that applies in this initiative or in any other context.  That was not the decision made by stakeholders in the Interconnection Process Enhancements initiative. 

Second, the CAISO has suggested that FERC’s order accepting the tariff revisions from the Interconnection Process Enhancements initiative likewise establishes a generally-applicable policy that requires reimbursement of network upgrades in this initiative.  To be clear, the CAISO’s filing did not discuss or propose that FERC approve application of this policy to other situations, nor did any party challenge this element of the tariff amendments, possibly due to the understanding that such mitigation would be applicable to interconnections to neighboring systems (i.e., as provided for in the proposed tariff amendments) and likely would be infrequent.  See Tariff Amendments to Implement Interconnection Process Enhancements – Transmittal Letter, Cal. Indep. Sys. Operator Corp., Docket No. ER23-941-000 (filed Jan. 26, 2023) at 9-11.  Moreover, FERC’s letter order accepting the tariff revisions for filing did not address any substantive issues associated with the affected system mitigation proposal, much less establish or endorse any sort of general policy.  See Cal. Indep. Sys. Operator Corp., 182 FERC ¶61,196 at P 16 (2023) (observing only that “the revisions concerning affected system studies provide clarity in circumstances where CAISO is identified as an affected system by a neighboring transmission provider”). 

Third, the SPTO model presents circumstances that are different from the affected system interconnections addressed in the Interconnection Process Enhancements tariff revisions.  The circumstances of SPTO interconnections directly to the CAISO Controlled Grid are different from the indirect impacts stemming from interconnections to third-party systems.  Significantly, the SPTO facilities are not required to be approved as part of the CAISO TPP, a process over which the CAISO Board of Governors has control.  Unlike the affected system interconnections, which are not under the CAISO’s control, in the case of the SPTO facilities, the CAISO is free to determine whether to allow the interconnection of such facilities and whether the costs associated with interconnecting those facilities should be allocated to the subscribers or to existing CAISO customers.

Finally, the Joint Commenters address several other elements of the Revised Draft Final Proposal:

• The Joint Commenters do not oppose the CAISO’s proposed rate methodology for addressing the use of the SPTO facilities by non-subscribers, subject to the comments provided above regarding network upgrade cost allocation.  The examples and additional information in the Revised Draft Final Proposal regarding the mechanics of charging and crediting non-subscriber payments for use of the SPTO facilities are helpful.  The Joint Commenters also support the CAISO’s proposal for a cap on the Subscriber Wheeling Charge.
• The Joint Commenters appreciate the CAISO’s use of the term “Subscriber Wheeling Charge” (see Revised Draft Final Proposal at 5) to avoid confusion with the current CAISO WAC. 
• The Joint Commenters note the clarification that generation associated with the SPTO transmission facilities is in the CAISO BAA for renewable portfolio standards and resource adequacy purposes.  See Revised Draft Final Proposal at 29.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

In addition to the points raised above, the Joint Commenters have some related questions regarding the generator interconnection and deliverability assessment processes:

1. For SPTO projects such as the TransWest Express project that rely on very long lines to interconnect to the current CAISO grid, will CAISO be proposing to modify its deliverability assessment methodology? For example, does the CAISO plan to not apply the single (N-1) and common mode (N-2) contingencies for the SPTO facilities in determining the deliverability to CAISO load of the initial (or future) interconnecting generators?
2. If CAISO does apply the N-1 and N-2 criteria for interconnecting generators requesting Full Capacity Deliverability Status, will that trigger the need for a parallel facility (or facilities) to deliver the power from Power Company of Wyoming resources to Eldorado while meeting the N-1 or N-2 contingency criteria, resulting in significant additional costs being allocated to CAISO loads as a result of the SPTO facility? Or will CAISO allow the use of a Remedial Action Scheme or redispatch to mitigate associated overloads?
3. If CAISO does not apply the N-1 and N-2 criteria, or allows the use of a RAS or redispatch to mitigate associated overloads, would CAISO need to modify its deliverability assessment criteria to ensure it does not become overly dependent on resources interconnecting to such facilities (e.g., put bounds on the number of MWs associated with the single largest contingency)?
4. If CAISO is willing to modify the deliverability criteria for resources interconnecting to the SPTO facilities, why wouldn’t CAISO similarly modify the criteria for resources that interconnect to the existing CAISO grid?

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

 LS Power is supportive of CAISO’s effort to develop a new option for PTO participation through the Subscriber PTO (SPTO) initiative.  Our comments focus on new aspects of the generator interconnection proposal brought forward in the revised draft final proposal.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

 LS Power has no comment at this time.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

Generator Interconnection Process

  LS Power requests additional clarification on CAISO’s proposal to perform the generator interconnection study as part of the transmission interconnection process.  CAISO notes that interconnection studies are underway with PacifiCorp, Los Angeles Department of Water and

Power, NV Energy, LS Power and Southern California Edison and indicates that requiring the generators to go through the CAISO generator interconnection process would be duplicative.  Our understanding is that the interconnection studies currently underway are only applicable to the transmission interconnection.  Would these transmission interconnection studies be expanded to include all aspects of the Phase I and Phase II interconnection studies consistent with the Generator Interconnection and Deliverability Allocation Procedure (GIDAP), Appendix DD and Section 25 of the CAISO tariff that governs generator interconnection?  If not, would there be additional documentation describing the study requirements for generators being studied under the transmission interconnection process? 

In addition to our process questions, LS Power has concern that incorporating this into the SPTO model could provide future opportunities for “queue jumping” by attaching generation to small transmission projects and using the SPTO model. 

Finally, it was briefly discussed on the call how this new paradigm would be applicable to generators interconnecting to a non-contiguous SPTO.  It would be helpful for CAISO to describe how this study process would work and how deliverability will be handled given that these projects would be required to utilize Maximum Import Capability (MIC).  It would also be helpful to understand why these projects would not follow the dynamic transfer process and instead be studied by Affected PTOs and CAISO.

Right of First Refusal (ROFR)

  In the revised draft final proposal CAISO indicates, “if upgrades have been developed in the TPP related to the generation served by the Subscriber Participating TO project for purposes of meeting the portfolios established by the CPUC, then the Subscriber Participating TO will have the first right of refusal to those upgrades up to the capacity include in the portfolio.”  This could be interpreted to mean that the SPTO will have a ROFR to build the TPP identified upgrades.  This interpretation, however, is inconsistent with FERC Order No. 1000-A, paragraph 430 which states, “Finally, in response to petitioner’s concerns over which facilities are selected in a regional transmission plan for purposes of cost allocation, and for which a federal right of first refusal must therefore be eliminated, we clarify that if ANY of the costs of a new transmission facility are allocated regionally or outside of a public utility’s transmission provider’s retail distribution territory or footprint, then there can be no right of first refusal associated with such transmission facility, except as provided in this order.”

LS Power’s understanding is that this should be interpreted as providing the SPTO generation with the first option for the deliverability made available by upgrade identified in the 2023-24 TPP for meeting the CPUC portfolio.  It would be good for CAISO to clarify that the deliverability priority does not arise from the business model of the SPTO but from CAISO’s planning for the CPUC portfolio. Additionally, it would be helpful for CAISO to verify in the final proposal that existing MIC and incremental MIC resulting from the upgrades planned to meet the 2023-24 CPUC base portfolio will have priority over the SPTO generation.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

NextEra Energy Resources, LLC (“NextEra Resources”) appreciates the opportunity to provide comments on the CAISO’s revised draft final proposal and continues to support the initiative’s goal of streamlining the development and enhancing the ongoing operation of transmission to expand access to renewable energy resources.  To that end, NextEra Resources requests that the CAISO provide additional clarification on the revised proposal as detailed below. 

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

NextEra Resources appreciates the additional clarification that the CAISO has provided as it relates to transmission costs under the SPTO revised draft final proposal.  However, transmission cost allocation associated with congestion rents warrants further consideration.  Specifically, NextEra Resources seeks additional feedback from the CAISO on the allocation of congestion revenue that the CAISO would collect on market transactions utilizing either released subscriber capacity or available non-subscriber capacity under the SPTO model. 

During the May 22^nd stakeholder call, the CAISO indicated that the capacity associated with the Subscriber Right is removed from the Congestion Revenue Right (CRR) model because subscribers obtain physical rights that are a perfect congestion hedge.  However, this circumstance does not appear to encompass circumstances where subscribers or owners release their rights in the Day-Ahead and Real-Time for market use. Nor does it appear to encompass a circumstance where a SPTO has unsubscribed capacity available to CAISO markets, whether in one-direction or both. NextEra Resources understands that the rationale for the proposed revenue allocation approach stems from the premise that the market use of the released capacity benefits LSE load, which pay for the embedded costs of the transmission system by paying wheeling access charges.[1]

However, this allocation approach overlooks an important fact in the context of the SPTO model: unlike what is the case for regulated transmission, load will not pay for the embedded cost of the SPTO facilities through CAISO transmission access charges.  Rather, under the SPTO model capacity will be subscribed and paid for by subscribers and turned over to the CAISO’s control as a network facility.  Accordingly, consistent with FERC cost allocation principles, the parties paying for the embedded cost of the SPTO transmission facilities (the subscribers and owners) should benefit from the associated congestion rents.[1]       

The fact that SPTO subscribers and owners benefit from receiving revenues under the Subscriber Wheeling Charge for the market use of the transmission line is not different from regulated PTOs that benefit from the CAISO wheeling access charge imposed on exports. Any congestion revenues are received by those who pay for the embedded cost of the constrained facilities (i.e., CAISO load), not those who pay the wheeling charges (i.e., the exporters).  Allocating congestion revenues on the market-use of released SPTO capacity would also be inconsistent with how such congestion (and transfer) revenues are allocated in the Energy Imbalance Market (EIM) and the Extended Day Ahead Market (EDAM) i.e., to the owner of the transmission facilities (or rights) that are made available for EIM and EDAM use.

For this reason and given that subscribers and associated wind customers shoulder the capital cost of the SPTO facilities, NextEra Resources believes that it is appropriate and consistent with cost allocation principles for the SPTO owners and subscribers, as the parties funding the construction of CAISO system expansion, to receive congestion revenue resulting from an SPTO facility. Such rents should then rightly reduce subscriber costs or offset the embedded cost of the SPTO facility for the benefit of subscribers.  Offsetting subscriber transmission costs through congestion rents ultimately reduces the price to wind off-takers.  Such a construct appears to be consistent with the premise that those that pay for the transmission receive revenue for making that investment and to offset the end use cost.  The current SPTO proposal seems to be inconsistent with how congestion revenues are allocated for regulated transmission by CAISO or EIM/EDAM participants.      

[1] FERC Order No. 861 requires that “long-term firm transmission rights made feasible by transmission upgrades or expansions must be available upon request to any party that pays for such upgrades or expansions in accordance with the transmission organization's prevailing cost allocation methods for upgrades or expansions.”  Long-Term Firm Transmission Rights, 2006 FERC LEXIS 1713, *153-154 (F.E.R.C. July 20, 2006).  Similarly, the CAISO tariff provides that merchant transmission facilities that do not recover the cost of the facilities through TAC or WAC can elect CRR Options that reflect the contribution of the facility to grid transfer capacity.  See CAISO Tariff Section 36.11.

[1] CAISO Load Serving Entity Definition Refinement Draft Final Proposal (September 21, 2016) (Pages 9-10), https://www.caiso.com/Documents/DraftFinalProposal-LoadServingEntityDefinititionRefinement.pdf

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

NextEra Resources appreciates the recognition (and subsequent clarification) that CAISO staff provided at the May 22^nd stakeholder meeting regarding the potential for duplicative interconnection study requirements under the previous iteration of the proposal.  As noted on the stakeholder call, the CAISO’s previous proposal required the SPTO subscribers to go through the CAISO’s generator interconnection queue. However, it subsequently recognized that the equivalent reliability and deliverability is conducted in both the generator interconnection studies and the interconnection studies of the transmission owners impacted by the project. In other words, the studies to interconnect wind generation are duplicative of studies conducted in the transmission-to-transmission owners’ agreements and the annual Transmission Planning Process.  As such, NextEra Resources supports the CAISO’s conclusion that it would be both inefficient and unnecessary to require the SPTO subscribers project to go through the generator interconnection study process twice. 

NextEra Resources also appreciates the clarification that the CAISO provided regarding the intent of the SPTO’s “first right of refusal” to apply to deliverability.  Based on the CAISO’s explanation, it is NextEra Resource’s understanding that the use of the term “first right of refusal” in the SPTO context is intended to allocate deliverability on upgrades adopted in a CAISO Transmission Plan to generation that is identified in a CPUC approved portfolio and relies on the SPTO’s facility for delivery.   While this proposal may be reasonable, NextEra Resources, the CAISO should include a more detailed explanation in the final proposal of how the first right of refusal would work in the context of the annual deliverability application and allocation process associated with the Transmission Planning Process. For example, when a project completes its transmission-to-Transmission studies (and associated agreements), when is the soonest opportunity to apply for deliverability under the right of refusal proposal and would there be a new or separate process for subscribers of SPTO facilities to apply?  The timing for receiving deliverability is an important question and thus further details are appreciated.  

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

SCE continues to be supportive of the Subscriber PTO concept (S-PTO).  The S-PTO model has the potential to provide another route for ISO transmission to be built, specifically allowing California load-serving entities to access out-of-state renewable power to help California meet its renewable power and greenhouse gas goals, and also to potentially be a quicker route to ultimate construction of transmission projects than the other existing transmission need determination options in the ISO’s Transmission Planning Process (“TPP”).

The Revised Draft Final Proposal sets forth three revisions from the previous Draft Final Proposal, all of which SCE believes represent improvements: 1) Requiring study of network upgrades needed for an SPTO project in the transmission interconnection process portion of the Transmission Planning Process (“TPP”); 2) Revisions to the S-PTO Wheeling Access Charge that would preclude the possibility of unintended recovery of the S-PTO original build costs through the ISO’s Transmission Access Charge (“TAC”); and 3) Clarifying when a non-subscriber project can submit a generator interconnection request to the S-PTO.

SCE’s primary concern with the S-PTO model is ensuring that none of the “original build” costs of an SPTO facility work their way into the ISO’s Transmission Access Charge.  The Revised Draft Final Proposal allows one pathway in particular for costs related to the original build to affect the Transmission Access Charge (“TAC”) that SCE believes should be reversed in the Final Proposal: Allowing for refunding over five years costs associated with Network Upgrades that are only identified in the GIDAP (not the TPP).  As SCE has stated previously, such costs, when refunded, are included in the Transmission Revenue Requirement (“TRR”) of the PTO that constructed the Network Upgrades (not the S-PTO), and thus enter the ISO’s TAC.  SCE does not take issue with costs associated with network upgrades that are studied in the ISO’s TPP, even though such network upgrades would also be included in the TAC, because SCE believes a holistic consideration of network upgrades needed to meet approved CPUC resource portfolios through the ISO’s TPP is the appropriate means of determining upgrades to the ISO grid for this purpose.  The ISO justifies the inclusion of network upgrade costs associated only with the GIDAP in the TAC by saying that reimbursements for network upgrades associated with out-of-BAA generators are already allowed pursuant to FERC policy (See Page 3 of the Revised DFP).  However, SCE does not believe the policy cited is on point, since it is not specific to transmission line interconnections for a line that ultimately would be a part of the ISO BAA.

The Revised Draft Final Proposal implements the rights of subscriber entities to the S-PTO facilities and associated capacity through formal contractual Encumbrances.  An alternative means of accomplishing this goal in SCE’s view is for ISO use a combination of Congestion Revenue Rights (“CRRs”) to insulate the subscribers from any congestion costs over the S-PTO line, and a high level of scheduling priority to ensure their ability to use the line.  However, SCE believes the ISO Encumbrance proposal will also achieve the needs of subscribers to be assured the ability to use their paid for capacity.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

SCE agrees with the principle that “The Subscriber PTO will not include in the ISO TAC the cost of its project” as clearly stated in Section 3.2 “Transmission Costs” (page 11).  In addition to the TAC, recovered through charges to end-use customers of load serving PTOs, the ISO also discusses the notion of a Subscriber Wheeling Access Charge (“S-WAC”).  SCE has concerns regarding the S-WAC development as explained below relating to ensuring that no S-PTO costs are included in the ISO’s TAC.  More generally, SCE questions the need for any S-WAC, at least associated with the original build costs of the project

SCE’s view is that an S-PTO facility should not be approved by the ISO without the S-PTO agreeing to deem the project “fully subscribed” for the capacity of the project.  That is, no cost of the original project will ever be: 1) included in the CAISO TAC; or 2) be eligible for a wheeling charge/revenue. A full subscription will deem that the subscriber contracts yield the full transmission revenue requirements (“TRR”) of the S-PTO through the charges (without considering any revenue credits).  ISO approval for the S-PTO to construct the facility only after having been deemed to be a full subscription requirement would ensure that there would be no left over unrecovered costs for the S-PTO associated with the original build.  It would also mean that there would be no original build costs for the S-PTO to recover through any S-WAC charge.  To use ratemaking terms, the net TRR of such an entity would be $0, since there would be a revenue credit (i.e., revenue received from the subscriber entities) equal to the costs of owning and operating the facility.  Since the TRR of the S-PTO for the original build would be $0, the S-WAC relating to original build costs should also be $0 (if it is even determined at all).  As a companion to “deeming” the line fully subscribed, the S-PTO should receive CRRs associated with the full amount of the S-PTO project turned over the to the CAISO.  Thus, although the original project will never receive wheeling revenue, it will receive congestion rents.  This serves as a payment the S-PTO is allowed to keep, and should be a net benefit to the S-PTO when 1) the line is congested, and 2) third parties are using the line (and thus paying for congestion.)

SCE recognizes that it is possible that the S-PTO could be required to construct additions or network upgrades to its facility in the future (as for example, in the event of a network upgrade to the facility built and owned by the S-PTO after the initial construction of the original build facilities).  In that event, the S-PTO may have non-original build costs that will need to be recovered.  Such upgrade costs would be separable from the original build costs (the ISO has proposed to fully document the original build costs of the S-PTO), and should be considered separately for cost recovery.  In some instances, it would be appropriate for upgrades to be paid for by new subscribers, as in the case where upgrades are built to increase the capability of the facility to serve non-ISO BAA load (then, new subscribers would pay any incremental upgrade costs).  If incremental costs are not recovered from new subscribers, and if the upgrades are for serving ISO BAA load, recovery of these upgrade costs should be through the ISO’s TAC.  In both instances described above, the S-PTO is fully compensated for its network upgrade costs, either through the ISO’s TAC or through new subscriber revenue.  No S-WAC would be needed for these non-original build costs, and the ISO Wheeling Charge assessed for exiting the S-PTO facility would equal the charge assessed to exit at any other High Voltage ISO exit point (assuming the S-PTO facility is also HV). 

Although SCE strongly opposes the CAISO proposal for an S-WAC per kWh charge for the S-PTO, in the event that there is ever an unanticipated instance where original build costs are used to develop an S-WAC to be assessed to S-PTO exit points, allowing any charge greater than the WAC would violate the first principle that costs of the S-PTO must not be included in the WAC.  Thus such charges in excess of the WAC can never be allowed.  Moreover, the wheeling-out from the S-PTO is not possible but-for the use of existing CAISO transmission.  If the WAC is now paid to the S-PTO, it effectively deprives the other PTOs from recovering the WAC that, but-for the S-PTO, they would have received.  This is neither just nor reasonable.   This is just another reason that the S-PTO should only be entitled to congestion rents, and should never receive WAC on the original costs of the S-PTO line. 

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

SCE is supportive of the ISO’s proposed changes to consider upgrades needed to meet CPUC approved portfolios in the TPP.

1. Please provide a summary of your organization’s comments on the revised draft final proposal.

TransWest Express LLC (“TransWest”) recognizes the California Independent System Operator’s (“CAISO”) tremendous effort in formulating the Subscriber Participating Transmission Owner (“SPTO”) model and preparing the related Subscriber Participating TO Model Revised Draft Final Proposal (“Final Proposal”). TransWest appreciates the opportunity to participate in the CAISO’s stakeholder process and to provide comments on the Final Proposal.

The Final Proposal provides a high-level roadmap for the study process with respect to the TransWest Express Transmission Project (“TWE Project”) and the associated Wyoming wind generation, the Chokecherry and Sierra Madre Wind Energy Project (“CCSM Project”) being built by Power Company of Wyoming LLC (“PCW”) and interconnected to the TWE Project.  It explains that both the transmission and generation interconnection will be studied as part of the CAISO’s transmission planning process (“TPP”), and this study work will include an analysis of the transmission interconnection as well as associated reliability and deliverability network upgrades.  (Final Proposal, at 4-5, 19).  The Final Proposal further explains that the Subscriber PTO (i.e., TransWest) including its subscriber generation (i.e., PCW’s CCSM Project) will have the right to be allocated all of the associated capacity upgrades (in the form of Full Capacity Deliverability Status (“FCDS”) included in the portfolio of an approved CAISO transmission plan. (Id.)  This streamlined approach is necessary to avoid requiring the TWE Project and its subscriber generator, the CCSM Project, to go through the generator interconnection study process twice. (Id. at 4).   

TransWest supports the CAISO’s proposal to use the TPP to study all reliability and deliverability network upgrades that could be associated with interconnection of the TWE Project and PCW’s associated wind generation.  On April 18, 2023, the CAISO approved PCW’s generator interconnection request for Cluster 15, following execution of the Applicant Participating Transmission Owner Agreement. The Interconnection Request for PCW’s Chokecherry Sierra Madre Wind Energy Project outlined a request for interconnection to the TWE Project in Wyoming, with a commercial operation date of December 2027, and it requested 1,500 MW of FCDS at the TWE Project Point of Interconnection to the HAE line. Cluster 15 review is scheduled to resume in 2024 with Interconnection Agreements not anticipated until 2025 or 2026.

Likewise, several recent TPPs have studied out-of-state (“OOS”) wind from Wyoming being injected into the CAISO system in southern Nevada.  TransWest understands that the most recent TPPs have modeled Wyoming wind in the following manner:

• The 2022-2023 TPP included 1,062 MW of Wyoming wind with FCDS in the base case, and 2,986 MW of Wyoming and Idaho wind with FCDS.  The TPP identified, and the CAISO board approved, two required Network Upgrades on the SCE system downstream of Eldorado with Wyoming and Idaho wind coming into the CAISO in Nevada.
• The 2023-2024 TPP did not identify a need for Network Upgrades from Harry Allen to Eldorado (“HAE”). The detailed ‘busbar’ mapping direction provided by California Public Utilities Commission staff identified 1,500 MW of OOS wind at the Eldorado substation and 1,486 MW of OOS wind at the Harry Allen substation for the sensitivity study.  The 1,486 MW of Transmission Plan Deliverability studied from Harry Allen is likely sufficient for PCW’s 1,500 MW FCDS request at HAE.

While TransWest agrees with the CAISO’s approach to FCDS allocation associated with the TWE Project, the Final Proposal does not explain how the Subscriber PTO’s rights to such capacity upgrades will be memorialized or whether CAISO will be required to amend the Tariff to allow for this right.  To avoid any confusion among interested parties, TransWest seeks further clarity from the CAISO as to the process and timing for the subscribing generator, in this instance PCW, to memorialize its rights with respect to deliverability in a timely manner.

2. Provide your organization’s comments on the revised transmission costs, as described in the revised draft final proposal.

The Final Proposal discusses the use of congestion revenue rights (“CRRs”) associated with the TWE Project.  It explains that CRRs will not be used with respect to the north-to-south capacity on the line, because the costs associated with the construction of the TWE Project are intended to be recovered through TransWest’s transmission service agreements with PCW.  (Final Proposal, at 10). TransWest, as the Subscriber Participating TO, will receive revenue from its subscriber PCW as well as the Subscriber Wheeling Access Charge from non-subscriber use of its transmission facilities. (Id. at 18-19).

The Final Proposal leaves open the question of whether CRRs may be used with respect to the south-to-north capacity on the TWE Project.  It is important to clarify that to the extent a CRR construct is used with respect to the TWE Project, TransWest expects that the revenue associated with such CRRs would be allocated to TransWest or its subscriber PCW in some manner because it is the Subscriber PTO that is funding the entire cost of the construction and operation of the TWE Project.  While TransWest only requires an Encumbrance on the TWE Project in the north-to-south direction to deliver wind generation to California customers, all revenues associated with use of the TWE Project transmission facilities – whether by subscribers or non-subscribers, and in both directions – should flow back to TransWest or its subscriber PCW as the Subscriber PTO.  TransWest looks forward to working with the CAISO and interested parties to further analyze these important issues.

3. Provide your organization’s comments on the revisions to the generator interconnection process and SPTO project interconnection, as described in the revised draft final proposal.

Please see response to Item 1.