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.
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.” 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.” 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.
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. 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.
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. 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.
 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).
 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.
 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.”).
 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.”).
 Draft Final Proposal at 14.
 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.”).
 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).
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.