Solicitation FAQ » Linden VFT Solicitation -

Linden VFT Transmission Solicitation Frequently Asked Questions

This document will be updated as the Independent Solicitation Manager (“ISM”) receives new questions. To submit a question to the ISM, please use the Ask the Manager link on the website or email the ISM at linden-vft-ism@brattle.com.

Last Update: 5/20/2022

FAQ001 – When is the Bid Form due?

The latest calendar is located on the Solicitation Web Site at http://lindenvftauction.com/calendar/.

By May 26^th at 5 pm Eastern Time, Bid Forms must be submitted in electronic form, either by using the Document Submittal page of the Solicitation Web Site or by sending it via email to linden-vft-ism@brattle.com.

These dates are potentially subject to change.

FAQ002 – Is the Linden VFT in the PSEG or PSEG-North LDA in PJM?

The Linden VFT is in the PS North Locational Delivery Area (“LDA”) of PJM. Please refer to section 1 of the Information Memorandum for more information.

FAQ003 – Is there anything that precludes the winner of transmission rights to use a 3rd party energy manager to schedule the physical power flows?

No.

FAQ004 – If awarded, what are the payment terms from the winning bidder to Linden? Up front or monthly in arrears?

The specific payment terms are to be negotiated between the bidder and Linden VFT, based on the structure of the winning bid. The frequency of payment is expected to be monthly.

FAQ005 – How long are bids required to be held open for?

The information provided by an interested party on the Bid Form is used by Linden VFT (and the Independent Solicitation Manager) to identify a “short list”. Linden VFT will then enter into negotiations with bidders on the short list, using the information provided on the Bid Form as a starting point. If the negotiations are successful, the final terms and conditions will be reflected in a purchase and sale agreement for the transmission rights executed by the Bidder and Linden VFT.

FAQ006 – On page 5 of the Information Memorandum, you state that Linden VFT currently has the rights to 325 MW of Long Term Firm Point-to-Point Transmission Service from PJM to the Linden VFT facility, which Linden VFT currently assigns to its customers that hold TSRs through May 31, 2023. Further, holders of UDR rights, in order to sell capacity into the NYISO market through the Linden VFT facility are subject to the tariff rate for Long Term Firm Point-to-Point Transmission Service. However, on page 8, you note that effective December 31, 2017, Linden VFT converted its 330 MW of Transmission Withdrawal Rights (TWRs) from Firm to Non-Firm. Does the conversion of the transmission rights from Firm to Non-Firm affect the ability of Linden VFT TSR holders to sell capacity into the NYISO market?

No. FERC’s order in Docket No. EL18-189 at P 40 (169 FERC ¶ 61,209) directly addressed this question when it stated :

“NYISO’s Services Tariff does not require that MTFs, as external capacity suppliers, have Firm Transmission Withdrawal Rights in the external control area to qualify to supply capacity to NYISO. Rather, the Services Tariff requires only that the external capacity supplier show to NYISO’s “satisfaction” that its capacity is deliverable to NYISO and “will not be recalled or curtailed.” IPPNY has failed to satisfy its burden of showing that NYISO acted unjustly and unreasonably in determining that Linden’s transmission service will not be curtailed. Based on its review of the NERC TLR procedures and the nature of the external capacity transmission service, NYISO determined that firm transmission service to the Linden or Hudson MTF is sufficient to satisfy the requirement that external capacity be deliverable and will not be recalled or curtailed by an external control area (in this case, PJM). We find that this analysis is reasonable and therefore that NYISO has complied with the requirements of the Services Tariff that governs installed capacity in NYISO. ”

Accordingly, the conversion from Firm TWRs to Non-Firm TWRs does not affect a TSR holder’s ability to sell capacity into NYISO.

FAQ007 – What is the expected outage time on the Linden VFT line in a calendar year?

Linden VFT has been able to achieve on average 99.2% availability in the last two calendar years, excluding planned maintenance. Linden VFT is allowed 240 hours of outage on a rolling 12 month basis. The facility had planned outages of 181 and 240 hours in 2020 and 2021, respectively.

FAQ008 – The “Termination” section of the Confidentiality Agreement (i.e., section 6) states as follows: “This Agreement covers only Confidential Information that is disclosed on or after the date hereof.” Is this regardless of the source?

The Confidentiality Agreement covers information provided by either Linden VFT or the Bidder. If the information is obtained from a public source, then it is not confidential.

FAQ009 – Can an interested entity submit multiple bids?

Bidders can submit multiple bids, covering different term lengths and pricing arrangements. Section III of the Bid Form allows alternative proposals. If the Bid Form does not allow sufficient space, bidders also can provide an additional attachment with any alternative proposals.

FAQ010 – What is the anticipated Proposed Border Rate Settlement (PBRS) price or modified VFT Tariff rate for 2028 under the PBRS method\approach?

Neither Linden VFT nor The Brattle Group has projected anticipated rates for Border Rate Service in 2028 or beyond. As detailed in Section 2.4.2 of the Proposed Border Rate Settlement (“PBRS”) filing, if the Settlement is approved, the rate for Border Rate Service to any Merchant Transmission Facility (“MTF”) Path will be determined as set forth in PJM Tariff, Schedule 7, Section (11), and subjected to a percentage discount as explained in Sections 2.5 and 2.6 of the PBRS filing.

PJM sets its Border Yearly Charge (“BYC”) using a formula. Under the Proposed Border Rate Settlement (“PBRS”), there would be a change to that formula (see redline beginning on PDF p. 70 of the PBRS). During negotiation of the agreement, it was calculated that if the new formula had been applied in 2020, the rate would have been approximately 3.5% lower than under the formula that is currently in effect. Those calculations indicated that the 2020 rate of 55,615 $/MW-Year would have been reduced to 53,768 $/MW-Year. If the PBRS is approved, the rate would be updated annually as revenue requirements change, using the updated formula. Linden VFT has not projected what those costs would be.

Under the PBRS, there is a discount percentage schedule that would be applied to the BYC beginning in 2028 (see Sections 2.5-2.6 of the PBRS). That discount percentage can vary, and would be based on the total amounts owed for transmission TECs assigned to a merchant transmission facility or its transmission customers in the prior year. The charge for Border Rate Service is equal to BYC multiplied by (1 – discount). For VFT, the discount is 10% up to a cap of 4% of its Transmission Enhancement Charges (“TECs”). The discount in 2028 is expected to total only $230k on 325MW of firm transmission service due to the amount of TECs currently assigned to Linden VFT.

FAQ011 – Can you provide an example of a Transmission Service Right Purchase Agreement?

A Sample TSR Purchase Agreement can be found in the Confidential portion of the website, in both PDF and Microsoft Word formats.

FAQ012 – In the Linden VFT Bid form, the document asks for confirmation that, in the event they are selected as a winning bidder, the Interested Entity agrees to pay the applicable rate for Long-Term Firm Point-to-Point Transmission Service, or to specify a proposed cost-sharing arrangement. Please provide a copy of Schedule 7 of the applicable PJM Tariff.

Schedule 7 of the PJM Tariff is posted here. Please also refer to p. 6 of the Information Memorandum, which presents proposed rates for Long-Term Firm Point-to-Point Transmission Service that would apply to Linden in the event that the Proposed Border Rate Settlement is approved.

FAQ013 – Were the proposed rates for Long-Term Firm Point-to-Point Transmission Service already approved? If not, when is approval expected?

The Presiding Judge certified the Proposed Border Rate Settlement, including the proposed rates for long-term firm point-to-point transmission service included on p. 6 of the Information Memorandum, as uncontested, on December 21, 2021. However, the Settlement is still pending before FERC as of May 18, 2022.

FAQ014 – Are NYISO members that classify as Pivotal Suppliers permitted to bid?

Linden VFT and the Independent Solicitation Manager welcome bids from any NYISO members. For guidance on the permissibility of NYISO members that classify as Pivotal Suppliers to bid energy capacity into PJM, the Independent Solicitation Manager suggests that interested bidders seek their own legal or regulatory guidance.

FAQ015 – If the FERC doesn’t approve the Settlement, do the Transmission rates go back to/remain $5.635/kW-month?

This is a pending administrative proceeding before the Federal Energy Regulatory Commission. While we believe the settlement has a good chance of being accepted and approved, there is no guarantee about that, and the Commission could alternatively order an evidentiary hearing or resolve the issues in the rate filing on its own without an evidentiary hearing.