25-E-0041

The main stakeholders in this docket are:

- New York State Electric & Gas Corporation (NYSEG)
- Rochester Gas and Electric Corporation (RG&E)
- Avangrid, Inc. (parent company of NYSEG and RG&E)
- New York Public Utilities Commission (the Commission)
- United Illuminating Company (another Avangrid subsidiary mentioned in the context of transformer commitments)
- Other participants in the Edison Electric Institute Spare Transformer Equipment Program (STEP), which is governed by a committee of utility representatives
- The Department of Public Service staff (involved in environmental review and regulatory compliance)

Positions on Proposals:
- NYSEG, RG&E, and Avangrid are in favor of participation in the STEP and the associated approvals and waivers. Their joint petition requests approval to participate in STEP, transfer transformers as needed, and receive authorization under Public Service Law § 70 for these transfers. They also request certain filing requirement waivers for transformer sales under STEP 1, 1.
- The Commission is in favor of granting these approvals, as evidenced by its order granting the petition, approving participation in STEP, and authorizing required transfers 1, 1.
- The Department of Public Service staff completed environmental reviews and found no significant adverse impacts, thus supporting the proposal 1, 1.
- No comments opposing the proposal were received during the public comment period following the notice of proposed rulemaking 1, 1.
- United Illuminating Company is noted as having committed sufficient spare transformer capacity to cover Avangrid’s obligations, which supports the proposal 1.
- Other STEP participants are not individually identified as for or against in the excerpts, but participation is generally voluntary and governed by the EEI sharing agreement.

No stakeholders are identified in the excerpts as being opposed to the proposals in this docket.

The financial and timeline risks and concerns discussed in this docket are as follows:

Financial Risks and Concerns:
- The annual dues for participation in the Spare Transformer Equipment Program (STEP) are $8,500 for 2025, up from $7,500 in 2024. Although these costs are described as minor relative to the program's benefits, there is an explicit recognition that program costs, though low, are not negligible. In future years, these dues will be split evenly among Avangrid’s four electric operating companies, but for 2025, the full amount has already been paid by United Illuminating Company, and NYSEG or RG&E will not be allocated a share for this year 1, 1.
- The companies are directed to file annual reports of all costs associated with the program, including detailed workpapers on cost allocation among Avangrid utilities. This ongoing reporting requirement reflects a concern for transparency and oversight of costs 1, 1.
- There is also a requirement to file accounting and ratemaking treatment details within six months after any transformer transaction, indicating a need to address potential impacts on ratepayers and utility financials 1.
- If spare transformers are purchased for the program, purchases must follow established practices and be capitalized, not booked to non-utility plant, which impacts rate recovery and depreciation schedules 1.

Timeline Risks and Concerns:
- Regulatory approval processes for transfers under PSL § 70 generally require 90 to 120 days, which could delay emergency response. The order addresses this by granting pre-authorization for future transfers in national emergencies, thus eliminating administrative delays and enabling rapid response 1.
- There are strict deadlines for reporting and notifications: companies must notify relevant offices within 48 hours of a transformer purchase request and within 30 days of a completed transfer. Failure to meet these deadlines could lead to compliance issues 1.
- The secretary has discretion to extend deadlines, but extension requests must be made in writing at least three days in advance, suggesting that late or inadequate requests could result in procedural non-compliance 1, 1.

In summary, the docket highlights minor but real financial obligations, the need for careful cost allocation and reporting, and potential risks of delay or non-compliance with tight regulatory timelines, though the pre-authorization mechanism is intended to mitigate emergency response delays.

The docket for Case 25-e-0041 primarily identifies growth in the following areas:

1. Expansion of Utility Participation in the STEP Program:
- The docket authorizes New York State Electric & Gas Corporation (NYSEG) and Rochester Gas and Electric Corporation (RG&E) to participate in the Edison Electric Institute (EEI) Spare Transformer Equipment Program (STEP) through their parent company, Avangrid. This participation increases their access to a national pool of spare transformers, which is essential for recovery from deliberate attacks or national emergencies. The STEP program currently includes approximately 50 participating utilities nationwide, and expansion in participation is an area of growth 1, 1.

Key considerations:
- Financial: Annual dues for participation were $8,500 in 2025 (up from $7,500 in 2024), to be split evenly among Avangrid’s four electric operating companies in future years 1, 1.
- Regulatory: Utilities need to secure state regulatory approval prior to joining or expanding participation in STEP 1.
- Operational: Participation does not require committing new transformers immediately; sufficient capacity has already been committed by another Avangrid subsidiary, United Illuminating Company 1.
- Strategic: The program reduces the need for each utility to maintain a full set of spares, minimizing redundant purchases while improving preparedness 2.

2. Growth in Emergency Preparedness and Infrastructure Resilience:
- By participating in STEP, utilities enhance their capability to recover from disasters that disable transformers and to restore electric service more rapidly, which is increasingly critical as attacks on the electric system have become more common 1, 1.

Key considerations:
- Legal and Procedural: Transfers of transformers require commission pre-authorization and detailed filings after each transaction, including justification of purchase price and proposed accounting treatment 1.
- Environmental: The commission determined that participation and associated transfers will not have significant adverse environmental impacts, as no construction or disturbance is involved 1, 3.
- Governance: The EEI agreement mandates annual reviews of commitment requirements by equipment sub-committees, ensuring adequate spares for all voltage classes and updating obligations as needed 1, 1.

In summary, the key areas of growth are the expansion of utility participation in STEP and the strengthening of emergency preparedness. Each area involves financial, regulatory, operational, environmental, and governance considerations as outlined above.

This docket (Case 25-E-0041) concerns the joint petition of New York State Electric & Gas Corporation (NYSEG) and Rochester Gas and Electric Corporation (RG&E), through their parent company Avangrid, for approval to participate in the Edison Electric Institute (EEI) Spare Transformer Equipment Program (STEP). The program allows participating utilities to access and share a pool of large, hard-to-replace spare transformers for use in the event of deliberate destruction (such as terrorism) or a declared national emergency. Participation is limited to specified voltage classes, and each utility must commit a set number of qualified spare transformers, determined by a formula based on system needs.

The Public Service Commission (PSC) reviewed the petition and approved the companies’ participation in STEP, authorizing future transfers (sales or purchases) of spare transformers per the EEI agreement. The PSC found no significant adverse environmental impact from this action and issued a negative declaration under SEQRA. The order also requires NYSEG and RG&E to file details of accounting and ratemaking treatment within six months of any transaction under the program.

Key financial details include:
- No initial enrollment fee; 2025 dues are $8,500, to be shared among Avangrid's subsidiaries.
- Transformers will be priced at either net book value or replacement cost, with preference for replacement cost to ensure the selling utility is fully compensated.
- No immediate commitment of NYSEG or RG&E transformers; existing capacity covers obligations.
- Participation provides access to critical recovery assets, reducing the need for utilities to individually maintain large inventories of expensive transformers (costing $500,000 to $11,000,000 each) 1, 1, 1, 1, 2.

Key events and scheduled submissions in this proceeding include:

- January 13, 2025: NYSEG and RG&E filed a joint petition requesting approval to participate in the Edison Electric Institute (EEI) Spare Transformer Equipment Program (STEP) and to transfer large spare transformers under Public Service Law Section 70 1.

- February 26, 2025: Notice of proposed rulemaking published in the State Register (SAPA No. 25-e-0041sp1) 1, 1.

- April 28, 2025: Deadline for submission of comments on the proposed rulemaking; no comments were received 1, 1.

- May 15, 2025: Public Service Commission session held in Albany regarding the petition 1.

- May 19, 2025: Commission order issued approving future transfers of spare transformers under the EEI agreement and granting pre-authorization under PSL § 70 for such transfers. The order also directed annual and event-based filings and established related reporting requirements 1.

- Ongoing/Annual: By December 31st of each year, NYSEG and RG&E must file:
- An annual report of all costs associated with the STEP program, including allocation workpapers 1, 1.
- A letter stating whether certain triggering events (such as modifications to the EEI agreement, changes in required transformers, company withdrawals, or affiliate agreements) have occurred. If any such event occurs, a letter must be filed within 30 days of the event 1, 1.

- Upon Request/Transaction:
- Within 48 hours of receiving a transformer purchase request under the EEI agreement, companies must notify relevant Commission offices.
- Within 30 days after a transformer transfer, companies must notify the same officials.
- Within six months after closing a transaction, companies must file details on the transaction, including terms, accounting, and ratemaking treatment 1, 1, 1.

- Extensions: The Commission Secretary may grant deadline extensions upon written request with justification, filed at least three days before the affected deadline 1, 1.