# Reform of Generator Interconnection Procedures and Agreements > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2018-08659 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** May 9, 2018 - **Citation:** 83 FR 21342 ## Text DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 37 [Docket No. RM17-8-000; Order No. 845] Reform of Generator Interconnection Procedures and Agreements AGENCY: Federal Energy Regulatory Commission, DOE. ACTION: Final action. SUMMARY: In this final action, the Federal Energy Regulatory Commission (Commission) is amending the pro forma Large Generator Interconnection Procedures and the pro forma Large Generator Interconnection Agreement to improve certainty, promote more informed interconnection, and enhance interconnection processes. The reforms are intended to ensure that the generator interconnection process is just and reasonable and not unduly discriminatory or preferential. DATES: This action is effective July 23, 2018. FOR FURTHER INFORMATION CONTACT: Tony Dobbins (Technical Information), Office of Energy Policy and Innovation, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502-6630, Tony.Dobbins@ferc.gov . Kathleen Ratcliff (Technical Information), Office of Energy Market Regulation, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502-8018, Kathleen.Ratcliff@ferc.gov . Adam Pan (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, (202) 502-6023, Adam.Pan@ferc.gov . SUPPLEMENTARY INFORMATION: Before Commissioners: Kevin J. McIntyre, Chairman; Cheryl A. LaFleur, Neil Chatterjee, Robert F. Powelson, and Richard Glick. Table of Contents Paragraph Nos. I. Introduction 1 II. Background 9 A. Order No. 2003 9 B. 2008 Order on Interconnection Queuing Practices 12 C. 2015 American Wind Energy Association Petition and 2016 Technical Conference 15 D. Notice of Proposed Rulemaking 18 III. Overview and Need for Reform 23 A. Comments on Overall Approach 26 B. Commission Determination 36 IV. Proposed Reforms 45 A. Improving Certainty for Interconnection Customers 45 1. Scheduled Periodic Restudies 46 2. The Interconnection Customer's Option To Build 73 3. Self-Funding by the Transmission Owner 114 4. Dispute Resolution 123 5. Capping Costs for Network Upgrades 172 B. Promoting More Informed Interconnection 191 1. Identification and Definition of Contingent Facilities 192 2. Transparency Regarding Study Models and Assumptions 221 3. Congestion and Curtailment Information 247 4. Definition of Generating Facility in the Pro Forma LGIP and Pro Forma LGIA 273 5. Interconnection Study Deadlines 290 6. Improving Coordination With Affected Systems 335 C. Enhancing Interconnection Processes 342 1. Requesting Interconnection Service Below Generating Facility Capacity 343 2. Provisional Interconnection Service 424 3. Utilization of Surplus Interconnection Service 453 4. Material Modification and Incorporation of Advanced Technologies 510 5. Modeling of Electric Storage Resources for Interconnection Studies 537 D. Other Issues 545 1. Whether Proposed Reforms Should Be Applied to Small Generation 545 2. Issues Not Raised in the NOPR 550 3. Process Considerations 552 4. Compliance and Implementation 554 V. Information Collection Statement 557 VI. Environmental Analysis 563 VII. Regulatory Flexibility Act 564 VIII. Document Availability 566 IX. Effective Date and Congressional Notification 569 I. Introduction 1. In this final action, the Commission revises its pro forma Large Generator Interconnection Procedures (LGIP) and the pro forma Large Generator Interconnection Agreement (LGIA) to implement ten specific reforms. 2. This final action adopts reforms that are designed to improve certainty for interconnection customers, promote more informed interconnection decisions, and enhance the interconnection process. We believe the reforms adopted in this final action will benefit both interconnection customers and transmission providers. 1 Specifically, we expect these reforms to provide interconnection customers with better information and more options for obtaining interconnection service such that there are fewer interconnection requests overall and fewer interconnection requests that are unlikely to reach commercial operation. As a result, we expect transmission providers will be able to focus on those requests that are most likely to reach commercial operation. 1 Transmission provider: Shall mean the public utility (or its designated agent) that owns, controls, or operates transmission or distribution facilities used for the transmission of electricity in interstate commerce and provides transmission service under the Tariff. The term Transmission Provider should be read to include the Transmission Owner when the Transmission Owner is separate from the Transmission Provider. Pro forma LGIP Section 1 (Definitions); pro forma LGIA Art. 1 (Definitions). 3. First, in order to improve certainty for interconnection customers, this final action: (1) Removes the limitation that interconnection customers may only exercise the option to build a transmission provider's interconnection facilities and stand alone network upgrades in instances when the transmission provider cannot meet the dates proposed by the interconnection customer; and (2) requires that transmission providers establish interconnection dispute resolution procedures that allow a disputing party to unilaterally seek non-binding dispute resolution. 4. Second, to promote more informed interconnection decisions, this final action: (1) Requires transmission providers to outline and make public a method for determining contingent facilities; (2) requires transmission providers to list the specific study processes and assumptions for forming the network models used for interconnection studies; (3) revises the definition of “Generating Facility” to explicitly include electric storage resources; and (4) establishes reporting requirements for aggregate interconnection study performance. 5. The third area of reforms aims to enhance the interconnection process. To effectuate this goal, this final action: (1) Allows interconnection customers to request a level of interconnection service that is lower than their generating facility capacity; (2) requires transmission providers to allow for provisional interconnection agreements that provide for limited operation of a generating facility prior to completion of the full interconnection process; (3) requires transmission providers to create a process for interconnection customers to use surplus interconnection service at existing points of interconnection; and (4) requires transmission providers to set forth a procedure to allow transmission providers to assess and, if necessary, study an interconnection customer's technology changes without affecting the interconnection customer's queued position. 6. The pro forma LGIP and pro forma LGIA establish the terms and conditions under which public utilities that own, control, or operate facilities for transmitting electric energy in interstate commerce 2 must provide interconnection service to large generating facilities. 3 Based on the record in this proceeding, we find it necessary under section 206 of the Federal Power Act (FPA) 4 to revise the pro forma LGIP and the pro forma LGIA to ensure that the rates, terms, and conditions pursuant to which public utilities provide interconnection service to large generating facilities are just and reasonable and not unduly discriminatory or preferential. 2 A public utility is a utility that owns, controls, or operates facilities used for transmitting electric energy in interstate commerce, as defined by the Federal Power Act (FPA). See 16 U.S.C. 824(e) (2012). A non-public utility that seeks voluntary compliance with the reciprocity condition of an Open Access Transmission Tariff (OATT) may satisfy that condition by filing an OATT, which includes the pro forma LGIP and the pro forma LGIA. See Standardization of Generator Interconnection Agreements and Procedures, Order No. 2003, FERC Stats. & Regs. ¶ 31,146 (2003) (Order No. 2003), order on reh'g, Order No. 2003-A, FERC Stats. & Regs. ¶ 31,160, at P 774 (Order No. 2003-A), order on reh'g, Order No. 2003-B, FERC Stats. & Regs. ¶ 31,171 (2004) (Order No. 2003-B), order on reh'g, Order No. 2003-C, FERC Stats. & Regs. ¶ 31,190 (2005) (Order No. 2003-C), aff'd sub nom. Nat'l Ass'n of Regulatory Util. Comm'rs v. FERC, 475 F.3d 1277 (DC Cir. 2007), cert. denied, 552 U.S. 1230 (2008). 3 A large generating facility is “a Generating Facility having a Generating Facility Capacity of more than 20 [megawatts].” Pro forma LGIA Art. 1. 4 16 U.S.C. 824e (2012). 7. Although the implementation of Order No. 2003 reduced undue discrimination in the generator interconnection process, some interconnection customers argue that they have continued to observe systemic inefficiencies and discriminatory practices. 5 In addition, there have been a number of developments that affect generator interconnection, including a changing resource mix driven by market forces and state and federal policies, and by the emergence of new technologies. At the same time, transmission providers have expressed concern that the interconnection study process can be difficult to manage because some interconnection customers submit requests for interconnection service associated with new generating facilities that the transmission providers maintain have little chance of reaching commercial operation. Consequently, we conclude that it is appropriate to adopt the revisions to the pro forma LGIP and the pro forma LGIA described in this final action to mitigate existing concerns and to ensure that the pro forma LGIP and pro forma LGIA are just and reasonable and not unduly discriminatory or preferential. 5 See, e.g., AWEA June 19, 2015 Petition at 2 (Petition). 8. The reforms we adopt track many of the proposals set forth in the Notice of Proposed Rulemaking (NOPR) issued in this proceeding on December 15, 2016, 6 with certain modifications. Among other things, we have revised aspects of the reforms pertaining to dispute resolution, contingent facilities, model and assumption transparency, study deadline metrics, provisional interconnection service, utilization of surplus interconnection service, and material modification. 7 Additionally, in this final action, as discussed more fully below, we withdraw or decline to move forward with the NOPR proposals pertaining to scheduled periodic restudies, self-funding by the transmission owner, congestion and curtailment information, and modeling electric storage resources. The Commission also held a technical conference on April 3 and 4, 2018 to gather additional information regarding transmission providers' and interconnection customers' coordination with affected systems. 8 We conclude that the reforms adopted in this final action will help improve the efficiency of processing interconnection requests for both transmission providers and interconnection customers, maintain reliability, balance the needs of interconnection customers and transmission owners, and remove barriers to resource development. 6 Reform of Generator Interconnection Procedures and Agreements, 82 FR 4464 (Jan. 13, 2017), FERC Stats. & Regs. ¶ 32,719 (2017) (NOPR). 7 The pro forma LGIP defines Material Modification as “those modifications that have a material impact on the cost or timing of any Interconnection Request with a later queue priority date.” See pro forma LGIP Section 1. 8 Reform of Affected System Coordination in the Generator Interconnection Process, Docket No. AD18-8-000 and EDF Renewable Energy, Inc. v. Midcontinent Independent System Operator, Inc., Southwest Power Pool, Inc., and PJM Interconnection, L.L.C., Docket No. EL18-26-000, Notice of Technical Conference (Feb. 2, 2018). II. Background A. Order No. 2003 9. In Order No. 2003, the Commission recognized a “pressing need for a single set of procedures for jurisdictional Transmission Providers and a single, uniformly applicable interconnection agreement for Large Generators.” 9 Prior to the issuance of Order No. 2003, the Commission addressed interconnection issues on a case-by-case basis through, for example, filings under section 205 of the FPA. 10 9 Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at P 11. 10 See Id. P 10. 10. In Order No. 2003, the Commission noted that it had previously found that interconnection is a “critical component of open access transmission service and thus is subject to the requirement that utilities offer comparable service under the OATT.” 11 The Commission found that a standard set of procedures “will minimize opportunities for undue discrimination and expedite the development of new generation, while protecting reliability and ensuring that rates are just and reasonable.” 12 11 Id. P 9 (citing Tennessee Power Co., 90 FERC ¶ 61,238 (2000)). 12 Id. P 11. 11. Consequently, in Order No. 2003, the Commission required public utilities that own, control, or operate transmission facilities to file standard generator interconnection procedures and a standard agreement to provide interconnection service to generating facilities with a capacity greater than 20 megawatts (MW). To this end, the Commission adopted the pro forma LGIP and pro forma LGIA and required all public utilities subject to Order No. 2003 to modify their OATTs to incorporate the pro forma LGIP and pro forma LGIA. B. 2008 Order on Interconnection Queuing Practices 12. Although the issuance of Order No. 2003 was a significant step in minimizing undue discrimination in the generator interconnection process, some concerns with the process persisted, while some new concerns came to light. In response to concerns voiced to the Commission about interconnection queue management by regional transmission organizations and independent system operators (RTOs/ISOs) as well as other entities, the Commission held a technical conference on December 17, 2007, and issued a notice inviting further comments in response to such concerns. 13 13 Interconnection Queuing Practices, Docket No. AD08-2-000, Notice of Technical Conference (Nov. 2, 2007). 13. The Commission issued an order on March 20, 2008 addressing interconnection queue issues based on the December 2007 technical conference and subsequent comments. 14 The Commission acknowledged that delays in processing interconnection queues were more pronounced in RTOs/ISOs that were attracting significant new entry. 14 Interconnection Queuing Practices, 122 FERC ¶ 61,252, at PP 16-18 (2008) (2008 Order). 14. The Commission declined to impose generally applicable solutions, given the regional nature of some interconnection queue issues. However, the Commission provided guidance to assist RTOs/ISOs and their stakeholders in their efforts to improve the processing of interconnection queues. 15 The Commission further stated that, although it “may need to [impose solutions] if the RTOs and ISOs do not act themselves,” each region would have an opportunity to work with stakeholders to develop its own solutions through “consensus proposals.” 16 Following the 2008 Order, RTOs/ISOs submitted multiple queue reform proposals to the Commission, some of which were intended to move away from a “first-come, first-served” approach to a “first-ready, first-served” approach. 15 2008 Order, 122 FERC ¶ 61,252 at PP 16-18. 16 Id. P 8. C. 2015 American Wind Energy Association Petition and 2016 Technical Conference 15. On June 19, 2015, AWEA filed a petition in Docket No. RM15-21-000 requesting that the Commission revise the pro forma LGIP and pro forma LGIA. On July 7, 2015, the Commission issued a Notice of Petition for Rulemaking in that docket to seek public comment on the petition. The Commission received thirty-five comments and three answers and reply comments. 16. On May 13, 2016, Commission staff convened a technical conference (2016 Technical Conference). The 2016 Technical Conference featured five panels on “The Current State of Generator Interconnection Queues,” “Transparency and Timing in the Interconnection Study Process,” “Certainty in Cost Estimates and Construction Time,” “Other Queue Coordination and Management Issues,” and “Interconnection of Electric Storage Resources.” The panels featured representatives from RTOs/ISOs, transmission owners from both RTO/ISO and non-RTO/ISO regions, renewable generation developers, electric storage resource developers, and other stakeholders. 17. On June 3, 2016, the Commission issued a Notice Inviting Post-Technical Conference Comments. The Commission received twenty-four post-technical conference comments. D. Notice of Proposed Rulemaking 18. On December 15, 2016, the Commission issued the NOPR, proposing fourteen reforms focused on improving aspects of the pro forma LGIP and pro forma LGIA, the pro forma OATT, and the Commission's regulations. The Commission also sought comment on, but did not propose, tariff or regulatory revisions on other issues. 19. First, the Commission proposed four reforms to improve certainty by affording interconnection customers more predictability in the interconnection process. To accomplish this goal, the Commission proposed to: (1) Revise the pro forma LGIP to require transmission providers that conduct cluster studies to move toward a scheduled, periodic restudy process; (2) remove from the pro forma LGIA the limitation that interconnection customers may only exercise the option to build transmission provider's interconnection facilities and stand alone network upgrades if the transmission provider cannot meet the dates proposed by the interconnection customer; (3) modify the pro forma LGIA to require mutual agreement between the transmission owner and interconnection customer for the transmission owner to opt to initially self-fund the costs of the construction of network upgrades; and (4) require that RTOs/ISOs establish dispute resolution procedures for interconnection disputes. The Commission also sought comment on the extent to which a cap on the network upgrade costs for which interconnection customers are responsible can mitigate the potential for serial restudies without inappropriately shifting cost responsibility. 20. Second, the Commission proposed five reforms to improve transparency by providing more detailed information for the benefit of all participants in the interconnection process. The Commission proposed to: (1) Require transmission providers to outline and make public a method for determining contingent facilities in their LGIPs and LGIAs based upon guiding principles in the NOPR; (2) require transmission providers to list in their LGIPs and on their Open Access Same-Time Information System (OASIS) sites the specific study processes and assumptions for forming the networking models used for interconnection studies; (3) require congestion and curtailment information to be posted in one location on each transmission provider's OASIS site; (4) revise the definition of “Generating Facility” in the pro forma LGIP and pro forma LGIA to explicitly include electric storage resources; and (5) create a system of reporting requirements for aggregate interconnection study performance. The Commission also sought comment on proposals or additional steps that the Commission could take to improve the resolution of issues that arise when a proposed interconnection impacts affected systems. 17 17 Affected system “shall mean an electric system other than the Transmission Provider's Transmission System that may be affected by the proposed interconnect.” Pro forma LGIP Section 1 (Definitions); pro forma LGIA Art. 1 (Definitions). 21. Third, the Commission proposed five reforms to enhance interconnection processes by making use of underutilized existing interconnections, providing interconnection service earlier, or accommodating changes in the development process. In this area, the Commission proposed to: (1) Allow interconnection customers to limit their requested level of interconnection service below their generating facility capacity; (2) require transmission providers to allow for provisional agreements so that interconnection customers can operate on a limited basis prior to completion of the full interconnection process; (3) require transmission providers to create a process for interconnection customers to utilize surplus interconnection service at existing interconnection points; (4) require transmission providers to set forth a separate procedure to allow transmission providers to assess and, if necessary, study an interconnection customer's technology changes ( e.g., incorporation of a newer turbine model) without a change to the interconnection customer's queue position; and (5) require transmission providers to evaluate their methods for modeling electric storage resources for interconnection studies and report to the Commission why and how their existing practices are or are not sufficient. 22. In response to the NOPR, sixty-three comments were filed. 18 These comments have informed our determinations in this final action. 18 Appendix A to Order No. 845 lists the entities that submitted comments on the NOPR and the shortened names used through this final action to describe those entities. Order No. 845 is available on the Commission's eLibrary and website. III. Overview and Need for Reform 23. In the NOPR, the Commission noted that the electric power industry has undergone numerous changes since Order No. 2003's issuance. These changes are due to a variety of factors, such as the economics of new power generation being driven by sustained low natural gas prices, technological advances, and federal and state policies. In the NOPR, the Commission found that such changes have implications for the interconnection process, for both interconnection customers and transmission providers. 19 19 NOPR, FERC Stats. & Regs. ¶ 32,719 at PP 24-25. 24. As a result of such changes and despite Commission efforts to improve the interconnection process, aspects of the generator interconnection process still provide cause for concern. 20 For example, the Commission noted that many interconnection customers experience delays, and some interconnection queues have significant backlogs and long timelines. 21 The Commission also recognized the recurring problem of late-stage interconnection request withdrawals that lead to interconnection restudies and consequent delays for lower-queued interconnection customers. 22 The Commission further recognized that interconnection request withdrawals can lead to increased network upgrade cost responsibility for lower-queued interconnection customers, which, in turn, could result in cascading withdrawals. Moreover, the Commission stated that the lack of cost and timing certainty can hinder interconnection customers from obtaining financing, and that cost uncertainty is a significant obstacle, as some interconnection customers are less able to absorb unexpected and potentially higher costs. 20 Id. P 26. 21 Id. (citing, e.g., 2016 Technical Conference Tr. 210: 1-10 (discussion of delays up to a year)). 22 Id. (citing, e.g., 2016 Technical Conference Tr. 20:15-23 (discussion regarding MISO experiencing 50 percent withdrawal rates in many parts of the queue)). 25. In light of the changing industry and the aforementioned concerns, the Commission preliminarily found that the current interconnection process may hinder the timely development of new generation and, thereby, stifle competition in the wholesale markets, resulting in rates, terms, and conditions that are not just and reasonable or are unduly discriminatory or preferential. Additionally, the Commission preliminarily found that the interconnection study process may result in uncertainty and inaccurate information. Finally, the Commission preliminarily found that the potential for discriminatory interconnection processes exists as new technologies enter the power generation sphere. A. Comments on Overall Approach 26. A number of parties express support for the proposals in the NOPR. 23 For example, TAPS “generally support[s] the proposed reforms” and states that the NOPR proposals “reasonably balance the needs of interconnection customers with the needs of load and transmission providers.” 24 Generation Developers agree with the Commission's preliminary findings and argue that the NOPR “addresses critical items that directly impact: (i) The development of new generation; (ii) the rates; terms and conditions of interconnection service; and (iii) the rates to customers for wholesale electric products.” 25 Joint Renewable Parties and ESA ask the Commission to quickly proceed with a final rulemaking. 26 ESA states that Order No. 2003's issuances predate the deployment of electric storage resources on the transmission system and that existing interconnection agreements and processes do not consider electric storage resources' attributes. 27 ESA also states that the resulting undue uncertainty limits grid access for electric storage resources and prevents them from providing low cost reliability services. 28 ESA asserts, however, that the Commission's NOPR proposals strike an effective balance between transmission provider flexibility and interconnection customer certainty. 29 23 See e.g., Community Renewable Energy Association 2017 Comments at 1-2; Joint Renewable Commenters 2017 Comments at 1; Generation Developers 2017 Comments at 2; Renewable Energy Coalition 2017 Comments at 2; Renewable and Storage Associations 2017 Comments at 1-2; TAPS 2017 Comments at 1; TDU Systems 2017 Comments at 3-13, 16-30. 24 TAPS 2017 Comments at 1. 25 Generation Developers 2017 Comments at 2. 26 Joint Renewable Commenters 2017 Comments at 1; ESA 2017 Comments at 19. 27 Id. at 5-6. 28 Id. at 6. 29 Id. at 19. 27. IECA supports the majority of the Commission's proposed reforms. 30 Invenergy supports many of the Commission's proposed reforms but states that the NOPR “leaves fundamental causes of these [interconnection] delays unaddressed.” 31 NEPOOL states that the proposed reforms could: (1) Address the time ISO-NE takes to evaluate, study, and approve new interconnections; and (2) facilitate market entry through more transparent and useful information regarding capacity and energy deliverability of potential new ISO-NE resources. 32 Joint Renewable Parties contend that, despite existing rules, abusive interconnection practices impede the development of competitively supplied generation from renewable resources—particularly where the transmission provider is a vertically integrated utility. 33 CAISO recognizes the need to nationalize many of the practices proposed in the NOPR. 34 30 IECA 2017 Comments at 2. 31 Invenergy 2017 Comments at 1. 32 NEPOOL 2017 Comments at 5. 33 Joint Renewable Parties 2017 Comments at 1-2. 34 CAISO 2017 Comments at 37. 28. Other parties express some support for the NOPR proposals but object to specific reforms. For example, the Non-Public Utility Trade Associations “believe that certain of the NOPR's proposed changes . . . hold the potential for improving transparency and process in a manner that may enhance cost certainty and predictability.” 35 They object, however, to any changes that would impose cost caps for network upgrades and certain of the NOPR's proposed reforms. 36 Additionally, California Energy Storage Alliance commends CAISO for the reforms already implemented in that region and suggests that other RTOs/ISOs should adopt these reforms. 37 However, California Energy Storage Alliance also suggests that each RTO/ISO should decide upon the proposed solutions for themselves rather than through the establishment of new national policy. 38 35 Non-Profit Utility Trade Associations 2017 Comments at 4. 36 Non-Profit Utility Trade Associations 2017 Comments at 4. These include the proposal for transparency regarding study models and assumptions, the proposal to allow interconnection customers to request interconnection service below generating facility capacity, and the proposal regarding the utilization of surplus interconnection service. 37 California Energy Storage Alliance 2017 Comments at 1-2. 38 Id. at 13. 29. Other parties oppose some or all aspects of the NOPR. EEI argues that improving certainty is a responsibility shared by interconnection customers and transmission providers. 39 It states that the volume of interconnection requests and the inherently speculative nature of generation development lead to queue delays, suspensions, and withdrawals. 40 Imperial states that the NOPR could alter transmission owners' rights and raises concerns regarding the feasibility of processing interconnection requests. 41 ISO-NE states that several of the proposed reforms may be overly prescriptive and may have unintended negative consequences. 42 Southern argues that the NOPR fails to address problems or delays caused or exacerbated by interconnection customers. 43 39 EEI 2017 Comments at 9. AEP and Duke support the comments being filed by EEI in this proceeding. AEP 2017 Comments at 1; Duke 2017 Comments at 2. 40 EEI 2017 Comments at 9. 41 Imperial 2017 Comments at 1. 42 ISO-NE 2017 Comments at 2. 43 Southern 2017 Comments at 4-5. 30. A number of parties object to proposals that they contend could compromise system reliability or shift risk and costs to transmission providers for factors beyond the transmission providers' control. 44 EEI requests that the Commission not deviate from its longstanding policy “that risks and costs associated with an interconnection request be borne by the interconnection customer.” 45 Similarly, Salt River states that the NOPR could undermine the Commission's non-discrimination policy as well as the cost causation principle. 46 Southern asks the Commission to reconsider those proposals that “lack balance and would shift risks and add bureaucratic responsibilities to” transmission providers. 47 44 Non-Profit Utility Trade Associations 2017 Comments at 3; EEI 2017 Comments at 9-10; Salt River 2017 Comments at 1-2; Southern 2017 Comments at 4; Xcel 2017 Comments at 3-4; APS 2017 Comments at 5. 45 EEI 2017 Comments at 9. 46 Salt River 2017 Comments at 1-2. 47 Southern 2017 Comments at 4. 31. APS states that it reviewed the NOPR against its current LGIP and LGIA and identified various revisions, in addition to those proposed in the NOPR, that would need to be made to comply with the proposals in the NOPR. 48 APS suggests that the Commission re-evaluate its revisions and additions to ensure that there are not potentially conflicting or otherwise limiting provisions elsewhere in the pro forma LGIP and pro forma LGIA. 49 48 APS 2017 Comments at 5-6. 49 Id. at 7. 32. Duke, ISO-NE, and Southern support the NOPR to the extent that it allows procedures to vary according to differing regional needs. 50 Similarly, MISO TOs state that each RTO/ISO's LGIP or LGIA is not simply a set of procedures tied to a pro forma agreement that is amenable to generic modifications but is instead a complex series of arrangements, accepted by the Commission, developed in consultation with stakeholders, and designed to meet the RTO/ISO's particular needs and circumstances. 51 50 Duke 2017 Comments at 29; ISO-NE 2017 Comments at 3; Southern 2017 Comments at 3. 51 MISO TOs 2017 Comments at 4. 33. NEPOOL states that a final action should allow for significant regional flexibility, especially for regions such as ISO-NE that have continued to improve their interconnection processes and incorporated region-specific features into interconnection rules, such as ISO-NE's Forward Capacity Market (FCM) and Elective Transmission Upgrade provisions. NEPOOL notes that, especially where interconnection provisions intersect with the FCM qualification process, the Commission should allow maximum flexibility to deviate from pro forma rules to avoid unintended disruptions to market participants. NEPOOL states that, to the extent that the proposals would disrupt the integrated interconnection and FCM process in New England, they would not support the adoption of the NOPR in New England. 52 Similarly, because of the unique interconnection issues in each region and significant regional variations, NYISO asks the Commission to allow parties to tailor appropriate tariff revisions and demonstrate how they are addressing, or plan to address, the Commission's concerns in a manner consistent with or superior to the NOPR's proposed revisions. 53 52 NEPOOL 2017 Comments at 6. 53 NYISO 2017 Comments at 1. 34. Southern recommends that the Commission issue a revised notice of proposed rulemaking to allow for another round of notice and comment. 54 EEI asks the Commission to convene technical conferences to seek feedback on the portions of the LGIA and LGIP that require review and revision to ensure consistency, completeness, and applicability. 55 54 Southern 2017 Comments a 6. 55 EEI 2017 Comments at 76. 35. Duke states that, to fulfill their obligations to ensure reliability service, “transmission providers must be afforded the time needed to: (i) Carefully evaluate the potential reliability impact on [their] system[s] of proposed interconnections; and (ii) provide generators with reasonable estimates within the time needed to effectuate interconnection and necessary supporting upgrades.” 56 56 Duke 2017 Comments at 3. B. Commission Determination 36. After consideration of the NOPR comments, we conclude that certain revisions to interconnection processes are necessary and that the record supports the need for reform. Therefore, with the exception of the withdrawal of some reforms proposed in the NOPR and the modification of others, which are discussed in further detail below, we adopt the majority of the proposed revisions to the pro forma LGIP and the pro forma LGIA. 57 57 The final action revises the pro forma LGIP and pro forma LGIA in accordance with § 35.28(f)(1) of the Commission's regulations, which provides that every public utility that is required to have on file a non-discriminatory open access transmission tariff under the section must amend such tariff by adding the standard interconnection procedures and agreement and the standard small generator interconnection procedures and agreement required by Commission rulemaking proceedings promulgating and amending such interconnection procedures and agreements, or such other interconnection procedures and agreements as may be required by Commission rulemaking proceedings promulgating and amending the standard interconnection procedures and agreement and the standard small generator interconnection procedures and agreement. 18 CFR 35.28(f)(1) (2017). See Reactive Power Requirements for Non-Synchronous Generation, Order No. 827, FERC Stats. & Regs. ¶ 31,385 (cross-referenced at 155 FERC ¶ 61,277), order on clarification and reh'g, 157 FERC ¶ 61,003 (2016) (Order No. 827). 37. Based on our analysis of the record, we adopt the NOPR's preliminary findings. 58 We find that the record in this proceeding provides support for our findings that, without the reforms adopted here, the current interconnection process may hinder timely development of new generation, 59 stifle competition, 60 result in uncertainty 61 and inaccurate information, 62 or potentially unduly discriminate against new technologies. 63 Further, we find that, absent the reforms adopted in this final action, the existing defects and inefficiencies in generator interconnection processes that we have described could become exacerbated, resulting in longer delays in generation development, higher costs to customers, more uncertainty in the process, and less competition in the market. For these reasons, we conclude that these reforms are necessary to ensure that rates, terms, and conditions of service are just and reasonable and are not unduly discriminatory or preferential. 58 See supra P 26. 59 See, e.g., Invenergy 2017 Comments at 1 (stating that “many of the Commission's proposed reforms. . . . are small steps in the right direction toward reducing the current chronic queue delays); FTC 2017 Comments at 2 (stating that it supports the Commission's proposals “to facilitate generation interconnections to the grid). 60 See, e.g., FTC 2017 Comments at 2, 5 (stating that the NOPR “is a logical next step in [a] procompetitive process” and citing existing concerns about “anticompetitive behavior” in the interconnection process); 61 See, e.g., AFPA 2017 Comments at 6 (stating that the option to build proposal “should increase cost certainty”). 62 See, e.g., id. at 4 (stating that the provisional interconnection service, utilization of surplus interconnection service, and material modification reforms “have the potential to . . . improve the accuracy and reliability of interconnection studies”). 63 See, e.g. AWEA 2017 Comments at 4 (stating that “the current process . . . creates the potential for discriminatory interconnection processes as new technologies enter the generation sphere”); Public Interest Organizations 2017 Comments at 17 (stating that they agree that “[i]nterconnection customers involving `new technologies may be affected more by process and information uncertainty than incumbents' ”). 38. We disagree with commenters that take issue with the proposals to impose new requirements and responsibilities on transmission providers. For example, although EEI is correct that interconnection customers and transmission providers share responsibility to improve certainty and that generator interconnection, by its nature, involves some uncertainty, we find that current interconnection processes and agreements can create unnecessary levels of uncertainty as discussed in more detail below. 39. Additionally, in response to Imperial's concerns that the NOPR could alter transmission owners' rights, we note that, although the final action creates new obligations and responsibilities for transmission providers and transmission owners, these changes are likely to improve the generator interconnection process for all involved parties. Also, we emphasize that the final action does not relieve interconnection customers of their existing responsibilities. Nor does it alter the ownership structure established in Order No. 2003 for interconnection facilities or network upgrades. Although some commenters argue that the NOPR's proposed reforms do not increase the responsibilities of, or directly address delays created by, interconnection customers, we believe that the reforms adopted in this final action should help improve the efficiency of processing interconnection requests for both transmission providers and interconnection customers. 40. We also disagree with arguments that the NOPR will compromise system reliability. We find that, for those reforms for which commenters have expressed reliability concerns, the Commission has either maintained existing safeguards or provided transmission providers with sufficient discretion to ensure that the reforms will not interfere with system reliability. For example, as discussed more fully below, the option to build, as modified by this final action, does not relax any of the safeguards that the Commission first established in Order No. 2003. Additionally with regard to the reforms that allow interconnection customers to request interconnection service below generating facility capacity and to utilize surplus interconnection service, transmission providers have the ability to require control technologies or to establish conditions necessary for interconnection customers to exercise these options without compromising reliability. 41. In response to comments by EEI and Salt River, among others, that the NOPR will shift costs traditionally borne by the interconnection customer, we note that this final action makes no changes with regard to interconnection customers' cost responsibilities for network upgrades and that the Commission is taking no further action on the issue of cost caps. Additionally, in response to Southern's concerns that the NOPR proposals lack balance, it is our belief that improved generator interconnection processes will benefit both transmission providers and interconnection customers. 42. Although APS argues that the NOPR necessitates additional pro forma LGIP and pro forma LGIA revisions, it neglects to further describe or explain the particulars of such revisions. The revisions to the pro forma LGIP and the pro forma LGIA adopted here are intended to effectuate the reforms discussed in this final action and to integrate the adopted reforms so that they do not unintentionally conflict with other portions of the pro forma LGIP and the pro forma LGIA. Nonetheless, to the extent that a particular transmission provider believes that additional revisions to its LGIP or LGIA are necessary, it may propose such revisions in a filing pursuant to section 205 of the FPA. 43. Finally, we note that a number of commenters seek regional flexibility in complying with the rule to accommodate regional needs. In Order No. 2003, the Commission stated that if, on compliance, a non-RTO/ISO transmission provider “offers a variation from the Final Rule LGIP and Final Rule LGIA and the variation is in response to established . . . reliability requirements, then it may seek to justify its variation using the regional difference rationale.” 64 However, if a non-RTO/ISO seeks a variation “for any other reason,” it must present its justification for the variation as “consistent with or superior to” the pro forma LGIA or pro forma LGIP. 65 The Commission went on to say that, for RTOs/ISOs, it would allow independent entity variations for pricing and non-pricing provisions, and that RTOs/ISOs “shall have greater flexibility to customize [their] interconnection procedures and agreements to fit regional needs.” 66 In this final action, we make no changes to the variations allowed by Order No. 2003. Therefore, on compliance, transmission providers may argue that they qualify for the above-mentioned variations from the requirements of this final action. 64 Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at P 826. 65 Id. 66 Id. 44. We decline to adopt Southern's recommendation that we issue a revised notice of proposed rulemaking, as well as EEI's proposal to convene general generator interconnection technical conferences, apart from the technical conference concerning affected systems discussed further below. We note that the process used in this proceeding has included a number of opportunities to narrow the issues for discussion and to provide comments. As stated, the Commission noticed AWEA's original 2015 petition for comment, held a technical conference in May 2016, and issued subsequent questions for which it requested comment, and sought comments on the NOPR. Therefore, we do not think additional steps are necessary in this proceeding at this time. In response to Duke's requests that transmission providers need to have adequate time to evaluate reliability impacts and to provide generators “with reasonable estimates within the time needed to effectuate interconnection and necessary supporting upgrades,” we point out that this final action neither changes the deadlines for interconnection studies nor eliminates the reasonable efforts standard or the deadlines for construction of facilities necessary to interconnect a particular large generating facility. 67 67 Duke 2017 Comments at 3. IV. Proposed Reforms A. Improving Certainty for Interconnection Customers 45. The Commission proposed reforms intended to improve certainty by providing interconnection customers more predictability in the interconnection process, including more predictability regarding the costs and the timing of interconnecting to the transmission system. In addition to the proposed reforms, the Commission sought comment on the extent to which capping interconnection customer cost responsibility for actual network upgrade costs to some margin above estimated network upgrade costs could mitigate the potential for serial restudies without inappropriately shifting cost responsibility. 1. Scheduled Periodic Restudies a. NOPR Proposal 46. The Commission proposed to revise the pro forma LGIP to require transmission providers that conduct cluster studies 68 to conduct restudies on a scheduled, periodic basis ( e.g., annually, semi-annually, quarterly, or a set number of days after the completion of the cluster study). 69 Specifically, the Commission proposed to require each transmission provider that conducts cluster studies to revise Sections 6.4, 7.6, and 8.5 of the pro forma LGIP with time frames for periodic restudies. 70 The Commission also sought comment on: (1) If the Commission's proposal were adopted, whether transmission providers that conduct cluster studies should be allowed to retain some discretion to conduct a restudy outside of the established schedule at the request of interconnection customers or under specific circumstances that make such schedule deviations necessary; and (2) when this discretion should be restricted and the circumstances under which such schedule deviations should be allowed. 71 The Commission also sought comment on whether there are improvements to the pro forma LGIP necessary to clarify events that would trigger a restudy (restudy triggers). 72 68 Clustering allows transmission providers to simultaneously study all interconnection requests received during a specified period. See Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at PP 149-156. 69 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 46. 70 Id. PP 48-49. 71 Id. P 50. 72 Id. P 51. b. Comments 47. Several commenters argue that, although restudies are often necessary, repeated restudies conducted at irregular intervals create cost and timing uncertainty for interconnection customers, impose delays on the process, and put development of new generation at risk, despite reductions in some RTOs/ISOs' interconnection requests and the use of cluster studies. 73 Some of these commenters assert that, because the withdrawal of higher-queued interconnection requests can create cascading restudies of lower-queued interconnection requests, regularly scheduled restudies would help alleviate the need for multiple ad hoc restudies, thereby helping to reduce uncertainty and delays. 74 73 AFPA 2017 Comments at 5; AVANGRID 2017 Comments at 5-6; AWEA 2017 Comments at 8-9; Generation Developers 2017 Comments at 6; NextEra 2017 Comments at 6; IECA 2017 Comments at 2. 74 AFPA 2017 Comments at 5; AVANGRID 2017 Comments at 5-6; AWEA 2017 Comments at 8-9; Generation Developers 2017 Comments at 6; NextEra 2017 Comments at 6. 48. Some commenters note that the unpredictable start and stop of the generation interconnection study process has caused project cancellations because delays in obtaining an LGIA or small generator interconnection agreement (SGIA) can affect project financing. 75 NextEra explains that, in some cases, restudies have taken years to complete due to projects withdrawing from the queue, transmission project changes, inadequate transmission provider resources, and other factors. 76 NextEra further notes that transmission providers then have to restart the study with the remaining members of the interconnection customer study group. NextEra contends that this occurrence can delay the interconnection customer's receipt of its study results and finalized GIA, which could prevent it from accurately evaluating the timing and costs of necessary network upgrades. 77 NextEra suggests that a regularly scheduled restudy process will allow transmission providers to consider relevant changes on a set timetable and reduce the need for ad hoc restudies. NextEra also argues that, by ensuring that studies are completed, an interconnection customer will receive some network upgrade information that it would not receive if studies are restarted or delayed. 78 75 Generation Developers 2017 Comments at 6; NextEra 2017 Comments at 6. 76 NextEra 2017 Comments at 6. 77 Id. 78 Id. at 6-7. 49. AWEA states that requiring transmission providers to identify the frequency of restudies of a cluster study and post the dates of these scheduled restudies on OASIS will increase certainty and give transmission providers flexibility. 79 NextEra suggests that periodic restudies should be conducted every six months, noting that, with that frequency, there should be little need for intervening studies, and yearly studies would be frequent enough. 80 79 AWEA 2017 Comments at 9-10. 80 NextEra 2017 Comments at 7. 50. Xcel supports the Commission's proposal but requests that the Commission clarify that restudies will commence within a specified time period ( e.g., ninety days) of a triggering event, instead of after the completion of the cluster study. Xcel suggests that explicitly defining triggering events is not necessary and notes that determination of triggering events tends to vary between regions. 81 81 Xcel 2017 Comments at 7. 51. AVANGRID recommends that transmission providers provide cost estimates for the proposed scheduled periodic restudies for interconnection customers with interconnection requests included in a group or cluster, instead of providing interconnection customers estimates for the initial study only. 82 AFPA supports regular cluster studies but believes that RTOs/ISOs should have the ability to avoid restudies and the associated costs where they can demonstrate no material change in relevant assumptions or inputs. 83 82 AVANGRID 2017 comments at 5-6. 83 AFPA 2017 Comments at 3. 52. APPA/LPPC states that a schedule detailing periodic restudies may provide added predictability that could be valuable to project developers. 84 However, it argues that, where interconnection queues are short, there may be no need to await specified dates to perform restudies, and in those circumstances, a fixed schedule may hamper the interconnection process. 85 84 APPA/LPPC 2017 Comments at 5. 85 Id. 53. Duke states that it does not regularly conduct cluster studies, but it supports the proposal and the flexibility provided for transmission providers that do conduct cluster studies. 86 Southern agrees with the Commission that transmission providers that do not conduct interconnection studies in clusters should not have to perform periodic restudies. 87 86 Duke 2017 Comments at 4. 87 Southern 2017 Comments at 9. 54. CAISO cautions that periodic restudies are effective in CAISO because it uses a cluster study approach with firm cost caps, and transmission owners finance network upgrade costs beyond these cost caps. 88 CAISO asserts that only with both of these mechanisms is it reasonable for interconnection customers to wait for an annual restudy to find out how their projects may have been affected by project withdrawals over the course of the prior year. 89 CAISO states that, with the transmission owners picking up any costs above the cost cap, withdrawals can decrease or increase interconnection customers' network upgrade costs depending upon whether the upgrade is still necessary for other interconnection customers. 90 CAISO states that costs decrease when sufficient interconnection customers withdraw and obviate the need for a network upgrade. However, CAISO states that costs may increase if the network upgrade is still necessary but fewer interconnection customers remain to finance it. 91 88 CAISO 2017 Comments at 7. 89 Id. 90 Id. at 7-8. 91 Id. at 8. 55. CAISO asserts that imposing scheduled periodic restudies in other RTOs/ISOs that do not share CAISO's market features may be problematic. 92 CAISO states that, as ISO-NE and others pointed out in response to the AWEA petition, an interconnection customer must wait for a periodic restudy to find out that its project costs have increased dramatically. 93 92 Id. 93 Id. 56. CAISO cautions that the Commission should consider the various proposed reforms in concert with each other, including changes to schedules in periodic studies, because cost caps and the definition of contingent facilities also have a significant impact on the efficacy of periodic restudies. 94 94 Id. 57. SoCal Edison and PG&E state that scheduled periodic annual restudies are the standard practice for CAISO and that they appreciate the predictability of CAISO's restudy process. 95 95 PG&E 2017 Comments at 3 (citing CAISO, eTariff, FERC Electric Tariff, OATT, app. DD Section 7.4 (6.0.0)). 58. Generation Developers support the Commission's proposal, but they assert that semi-annual or quarterly restudies could be problematic and unpredictable, especially if the RTO/ISO has missed the study completion deadline listed in its tariff. 96 Similarly, EDP indicates that, although each transmission provider should be able to establish its own unique schedule, a pro forma restudy schedule should be developed that serves as the default schedule unless a transmission provider demonstrates the need for an alternative schedule. 97 96 Generation Developers 2017 Comments at 6-7. 97 EDP 2017 Comments at 3. 59. Invenergy states that restudies can be useful but should not add unnecessary time and expense, citing the substantial time differences for restudies within several RTOs/ISOs. 98 According to Invenergy, an important missing element in the restudy process is transparency for the interconnection customer. Invenergy suggests a requirement that RTOs/ISOs inform the customer of the restudy prior to its initiation. Invenergy suggests that the transmission provider should provide information in sufficient detail so that the customer can understand the need for restudy, including whether there is an addition or change to the necessary network upgrades. 99 98 Invenergy 2017 Comments at 5. 99 Id. 60. Several commenters oppose the Commission's proposed revisions to require transmission providers that conduct cluster studies to conduct restudies on a scheduled, periodic basis. As discussed further below, commenters state that the Commission's proposal may cause unnecessary delays, may not be appropriate in each region, and may unduly burden smaller transmission providers. 61. PJM contends that the NOPR may have the opposite effect from what is intended by causing unnecessary delays. 100 PJM argues that, in a situation where a project withdraws during the system impact study, or prior to the completion of the facilities study, and restudy is necessary, the NOPR proposal would harm all subsequently queued projects. PJM explains that these projects would remain in a “holding pattern” until the scheduled, periodic restudy is complete. 101 PJM states that improvements in transparency can achieve the intended goals of the NOPR proposal without the drawbacks. 102 100 PJM 2017 Comments at 5. 101 Id. at 4-5. 102 Id. at 5. 62. PJM explains that although it performs cluster studies at the feasibility and system impact study stages, it does not conduct restudies at the feasibility study stage because of the broad scope of the feasibility study and because the system impact study can account for withdrawals. 103 However, PJM states that it does not oppose conducting periodic restudies within a cluster after the issuance of a system impact study report and receipt of an executed facilities study agreement from the projects that need to be restudied. 104 PJM states that it could commit to post such restudy dates on its website. 105 103 Id. at 3-4. 104 Id. at 4. 105 Id. 63. PJM asserts that the pro forma LGIP appropriately requires restudied interconnection customers to bear the cost of restudy. 106 PJM also states that, at the facilities study stage, interconnection customers should bear all costs, including any impacts caused to lower-queued projects by changes made to a higher-queued project. 107 106 Id. at 6 (citing pro forma LGIP Sections 6.4, 7.6, and 8.5). 107 Id. 64. PJM opposes the NOPR's 45/60 day restudy timeframe because restudies “come in all sizes and complexities.” 108 PJM states that committing to a strict timeframe would then necessitate granting the transmission provider the flexibility to extend the timeframe beyond the study period found in the tariff, regardless of whether a transmission provider is serially processing a restudy or restudying a cluster. 109 PJM maintains that reporting and sharing of status information with the affected parties is more effective than inflexible restudy deadlines. 110 108 Id. at 5. 109 Id. 110 Id. at 5-6. 65. NYISO and Indicated NYTOs state that NYISO does not perform restudies in its Standard Large Facility Interconnection Procedures to modify the upgrades required for projects or their cost estimates based on changes to higher-queued projects or system conditions. 111 111 NYISO 2017 Comments at 13; Indicated NYTOs 2017 Comments at 4-5. 66. ISO-NE and NEPOOL state that the Commission should not adopt the NOPR proposal because it may not be appropriate in each region. 112 As an example, ISO-NE states that the recent revisions to its interconnection procedures incorporate a clustering approach that does not include scheduled restudies. 113 ISO-NE argues that a scheduled restudy would result in less certainty for interconnection customers because it would delay the study outcome. On the other hand, ISO-NE states that its clustering approach would still meet the objectives of the NOPR by establishing milestones that can serve as decision points for interconnection customers. 114 112 ISO-NE 2017 Comments at 15-16. 113 Id. at 16. 114 Id. at 16-17. 67. Specifically, ISO-NE states that its proposed two-phased cluster study structure is designed to provide interconnection customers with information regarding the likely outcome of the cluster study in the first phase. ISO-NE states that interconnection customers could then determine whether they would like to proceed to the second-phase, move to the end of the interconnection queue, or withdraw from the interconnection queue. 115 ISO-NE states that its cluster study approach minimizes the need for restudy through provisions that allow for the participation of lower-queued requests in the event of withdrawals. 116 115 Id. 116 Id. at 17. 68. MISO, MISO TOs, ITC, and MidAmerican state that MISO's 2016 queue reform proposal addressed unstructured and repeated restudies. MISO asserts that, consistent with the independent entity variation standard, its revised procedures are now in effect and should be implemented. 117 MISO states that the Commission should not deviate from its current requirement that allows transmission providers to use reasonable efforts. It also contends that the Commission should not impose inflexible timeframes on restudies, and asserts that a one-size-fits-all approach would not be appropriate here. MISO notes that in RTOs/ISOs, the interconnection process involves many parties, and imposing inflexible restudy deadlines would be counter-productive, particularly where delays are caused by third parties or by factors outside of the RTO/ISO's control. 118 ITC urges the Commission to accept MISO's Definitive Planning Phase 119 process, which addresses restudies, as consistent with or superior to the revisions made to the pro forma LGIP in this proceeding. 120 117 MISO 2017 Comments at 12-13. 118 Id. at 13-14. 119 Under MISO's Definitive Planning Phase process, MISO performs three sequential system impact studies after successive milestone payments to account for queue withdrawals. 120 ITC 2017 Comments at 6. 69. Imperial states that the Commission's proposal to require scheduled, periodic restudies for cluster studies would unduly burden smaller transmission providers. 121 Imperial states that transmission providers may not be willing to memorialize an aggressive restudy commitment if they expect to experience variations in the number of interconnection requests that would be appropriate for cluster studies or restudies over a period of time. 122 Additionally, for smaller transmission providers that conduct few restudies, such a proposal may be less efficient than studying each project individually as the need to restudy arises. 123 Therefore, Imperial requests that the Commission allow transmission providers, particularly smaller transmission providers, the discretion to conduct periodic cluster restudies within their selected timeframes. 124 121 Imperial 2017 Comments at 15. 122 Id. at 16. 123 Id. 124 Id. c. Commission Determination 70. We decline to adopt the proposal in the NOPR to require transmission providers that conduct cluster studies to conduct scheduled periodic restudies. We find that the record does not support a finding that cascading restudies are an issue that the final action should address by adopting the proposal on scheduled periodic restudies. We recognize that scheduled periodic restudies may provide timing certainty for interconnection queues that experience cascading restudies, but the record does not suggest that this is a significant problem in all or many regions' interconnection queues where cluster studies are used. We agree with the commenters' concern that requiring scheduled periodic restudies would unnecessarily constrain the restudy process for transmission providers that are not experiencing cascading restudies. As explained in the RTO/ISO comments on this issue, existing variations in interconnection processes suggest that a one-size-fits-all approach is not appropriate at this time. For example, CAISO's firm cost caps allow customers to know in advance that network upgrade costs will not exceed the cost cap, even if a restudy occurs. In other RTOs/ISOs, however, adopting CAISO's annual restudy approach would require interconnection customers to wait for a scheduled periodic restudy to learn of cost changes. 71. We note that restudies are sometimes necessary due to a number of factors, including project withdrawals, modifications of higher-queued projects subject to section 4.4 of the LGIP, and/or a change to a project's point of interconnection. 125 We agree with the comments that, regardless of the restudy schedule, restudies that result from such actions by a higher-queued interconnection customer may not be foreseeable or preventable. Implementing a scheduled periodic restudy process may reduce timing uncertainty by creating decision points, but it would not eliminate the cost uncertainty created by the withdrawal or modification of a higher-queued project. In that case, restudy would be necessary to recalculate network upgrade cost distribution among the remaining customers, and restricting the timing of these restudies may cause, rather than prevent, unnecessary delays. 125 Pro forma LGIP Sections 6.4, 7.6, and 8.5. 72. Accordingly, we decline to adopt revisions to the pro forma LGIP that would require transmission providers that conduct cluster studies to establish a schedule for conducting periodic restudies. We also decline to adopt revisions to the pro forma LGIP to address the transmission provider's discretion to conduct restudies outside of an established schedule, and decline to propose revisions to the restudy triggers in the pro forma LGIP. 2. The Interconnection Customer's Option To Build a. NOPR Proposal 73. In the NOPR, the Commission proposed modifications to the pro forma LGIA to allow interconnection customers to exercise the option to build regardless of whether the transmission provider can meet the interconnection customer's proposed dates. 126 126 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 52. 74. Generally, in the interconnection process, the transmission provider is responsible for the construction of all network upgrades and the transmission provider's interconnection facilities. Under article 5.1.3 of the current pro forma LGIA, however, the interconnection customer has the option to build the transmission provider's interconnection facilities 127 and stand alone network upgrades, 128 but only if the transmission provider notifies the interconnection customer that the transmission provider cannot complete construction of such facilities by the interconnection customer's proposed in-service date, initial synchronization date, or commercial operation date; this is termed the “option to build.” To expand the opportunity for interconnection customers to exercise the option to build to reduce costs or complete construction more quickly, the Commission proposed in the NOPR to allow the interconnection customer to exercise the option to build regardless of whether the transmission provider finds the interconnection customer's selected in-service date, initial synchronization date, and commercial operation date acceptable. 127 According to the pro forma LGIA: Transmission Provider's Interconnection Facilities shall mean all facilities and equipment owned, controlled or operated by the Transmission Provider from the Point of Change of Ownership to the Point of Interconnection as identified in Appendix A to the Standard Large Generator Interconnection Agreement, including any modifications, additions or upgrades to such facilities and equipment. Transmission Provider's Interconnection Facilities are sole use facilities and shall not include Distribution Upgrades, Stand Alone Network Upgrades or Network Upgrades. Pro forma LGIA Art. 1. 128 Stand alone network upgrades: Shall mean Network Upgrades that an Interconnection Customer may construct without affecting day-to-day operations of the Transmission System during their construction. Both the Transmission Provider and the Interconnection Customer must agree as to what constitutes Stand Alone Network Upgrades and identify them in Appendix A to the Standard Large Generator Interconnection Agreement. Id. 75. Under the current pro forma LGIA, unless otherwise mutually agreed to by the parties, the interconnection customer selects the “In-Service Date, Initial Synchronization Date, and Commercial Date” 129 and “either the Standard Option or Alternative Option.” 130 Under both of these options, the transmission provider is responsible for construction of the transmission provider's interconnection facilities and all network upgrades. 129 The In-Service Date is “the date upon which the Interconnection Customer reasonably expects it will be ready to begin use of the Transmission Provider's Interconnection Facilities to obtain back feed power.” Id. The Initial Synchronization Date is “the date upon which the Generating Facility is initially synchronized and upon which Trial Operation begins.” Id. The Commercial Operation Date is “the date on which the Generating Facility commences Commercial Operation as agreed to by the Parties pursuant to Appendix E to the Standard Large Generator Interconnection Agreement.” Id. 130 Pro forma LGIA Art. 5.1. 76. Under the “standard option,” the transmission provider “shall construct the Transmission Provider's Interconnection Facilities and Network Upgrades using Reasonable Efforts to complete the construction by the dates designated by the Interconnection Customer.” 131 Under the “alternate option,” the transmission provider may be liable for liquidated damages if it does not construct the transmission provider's interconnection facilities and “Network Upgrades according to the construction completion dates established by the Interconnection Customer.” 132 131 Pro forma LGIA Art. 5.1.1. 132 The transmission provider has the ability to decline this option within 30 days of the LGIA's execution. 77. Under the current pro forma LGIA, there are two additional options for assuming responsibility for constructing certain facilities, which are available if the transmission provider informs the interconnection customer that it cannot meet proposed construction completion dates: The option to build, described above, and the “negotiated option.” 133 The negotiated option, described in article 5.1.4 of the pro forma LGIA, applies if the transmission provider cannot meet the interconnection customer's proposed dates but the interconnection customer does not want to assume responsibility for construction of the transmission provider's interconnection facilities and stand alone network upgrades. In this case, the transmission provider would construct the transmission provider's interconnection facilities and all network upgrades. 133 Pro forma LGIA Art. 5.1.4. 78. In the NOPR, the Commission proposed modifications to articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow interconnection customers to exercise the option to build with respect to the transmission provider's interconnection facilities and stand alone network upgrades regardless of whether the transmission provider can meet the interconnection customer's proposed dates. Specifically, the Commission proposed to modify the language in article 5.1 of the pro forma LGIA as follows (with proposed deletions in brackets and proposed additions in italics): Options. Unless otherwise mutually agreed to between the Parties, Interconnection Customer shall select the In-Service Date, Initial Synchronization Date, and Commercial Operation Date; and either the Standard Option or Alternate Option set forth below [for completion of Transmission Provider's Interconnection Facilities and Network Upgrades, as set forth in Appendix A, Interconnection Facilities and Network Upgrades,] and such dates and selected option shall be set forth in Appendix B, Milestones. At the same time, Interconnection Customer shall indicate whether it elects to exercise the Option to Build set forth in article 5.1.3 below. If the dates designated by Interconnection Customer are not acceptable to Transmission Provider, Transmission Provider shall so notify Interconnection Customer within thirty (30) Calendar Days. Upon receipt of the notification that Interconnection Customer's designated dates are not acceptable to Transmission Provider, the Interconnection Customer shall notify the Transmission Provider within thirty (30) Calendar Days whether it elects to exercise the Option to Build if it has not already elected to exercise the Option to Build. 134 134 In this final action, the adopted language differs slightly from the NOPR language because we remove the word “the” before “Transmission Provider” in the final sentence of this article. 79. The Commission also proposed to modify the language in article 5.1.3 of the pro forma LGIA as follows (with proposed deletions in brackets): Option to Build. [If the dates designated by Interconnection Customer are not acceptable to Transmission Provider, Transmission Provider shall so notify Interconnection Customer within thirty (30) Calendar Days and unless the Parties agree otherwise,] Interconnection Customer shall have the option to assume responsibility for the design, procurement and construction of Transmission Provider's Interconnection Facilities and Stand Alone Network Upgrades on the dates specified in article 5.1.2. Transmission Provider and Interconnection Customer must agree as to what constitutes Stand Alone Network Upgrades and identify such Stand Alone Network Upgrades in Appendix A. Except for Stand Alone Network Upgrades, Interconnection Customer shall have no right to construct Network Upgrades under this option. 80. The Commission stated that, given the changes proposed above, revisions to the negotiated option were necessary because the negotiated option references the current limitations on the option to build. 135 For this reason, it proposed to revise the negotiated option to remove references to limitations on the option to build, to address scenarios in which an interconnection customer exercises the option to build and still wishes to negotiate completion times for network upgrades that are not stand alone network upgrades, and to address circumstances in which the interconnection customer does not wish to exercise the option to build. The Commission asserted that such revisions are necessary because the ability to exercise the option to build would no longer be contingent upon a transmission provider's inability to meet the interconnection customer's proposed dates. However, the Commission noted that the negotiated option must also contemplate the possibility that the transmission provider does not agree to the interconnection customer's proposed dates as to network upgrades that are not stand alone. That is, even if the interconnection customer elects to exercise the option to build, the transmission provider would still be responsible for the design, procurement, and construction of network upgrades that are not stand alone network upgrades. 135 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 62. 81. Therefore, the Commission also proposed to modify the language in article 5.1.4 of the pro forma LGIA as follows (with proposed deletions in brackets and proposed additions in italics): Negotiated Option. [If Interconnection Customer elects not to exercise its option under Article 5.1.3, Option to Build, Interconnection Customer shall so notify Transmission Provider within thirty (30) Calendar Days, and] If the dates designated by Interconnection Customer are not acceptable to Transmission Provider, the Parties shall in good faith attempt to negotiate terms and conditions (including revision of the specified dates and liquidated damages, the provision of incentives, or the procurement and construction of [a portion of Transmission Provider's Interconnection Facilities and Stand Alone Network Upgrades by Interconnection Customer] all facilities other than Transmission Provider's Interconnection Facilities and Stand Alone Network Upgrades if the Interconnection Customer elects to exercise the Option to Build under article 5.1.3) [pursuant to which Transmission Provider is responsible for the design, procurement and construction of Transmission Provider's Interconnection Facilities and Network Upgrades]. If the Parties are unable to reach agreement on such terms and conditions, then, pursuant to article 5.1.1 (Standard Option), Transmission Provider shall assume responsibility for the design, procurement and construction of [Transmission Provider's Interconnection Facilities and Network Upgrades] all facilities other than Transmission Provider's Interconnection Facilities and Stand Alone Network Upgrades if the Interconnection Customer elects to exercise the Option to Build [pursuant to article 5.1.1, Standard Option]. 82. Consistent with article 5.2 of the current pro forma LGIA, the interconnection customer and transmission provider (and transmission owner, if applicable) would continue to reach agreement on the design and construction of the transmission provider's interconnection facilities and stand alone network upgrades; the Commission proposed no changes to article 5.2 in the NOPR. b. General i. Comments 83. Many commenters support this proposal. 136 AWEA states that the current restriction on when the option to build can be exercised is unnecessary, unjust, and unreasonable because it restricts an interconnection customer's ability to build interconnection facilities and stand alone network upgrades cost-effectively. 137 Several commenters contend that the proposal will reduce costs and improve construction timelines. 138 NextEra states that, in late 2016, one of its subsidiaries in SPP exercised the option to build and completed construction of facilities for a cost of approximately $12 million, even though the relevant transmission owner asserted that it could not complete such facilities until late 2017 for an estimated cost of $18 million. NextEra argues that if the Commission expanded interconnection customers' ability to exercise the option to build, there would be more instances where an interconnection customer constructs more efficiently than the transmission owner. 139 AFPA asserts that the proposal will provide competitive and commercial discipline to utility cost estimates, construction timelines, and negotiating strategies. 140 Competitive Suppliers and NEPOOL state that the proposal provides more flexibility to market participants and has the potential to increase efficiency. 141 AFPA argues that the market for engineering and construction contractors is sufficiently robust that interconnection customers can often find cheaper and more efficient alternatives to utility construction. 142 CAISO and PJM comment that they each currently allow this option to some degree. 143 MISO and NYISO take no position on the proposal. 144 136 AFPA; AVANGRID; AWEA; Bonneville; CAISO; Joint Renewable Parties; Duke; Generation Developers; EDP; ELCON; Competitive Suppliers; FTC; IECA; NEPOOL; NextEra; PJM; Public Interest Organizations; SEIA; TDU Systems; TVA. 137 AWEA 2017 Comments at 12-13. 138 Id. at 13; EDP 2017 Comments at 3-4; ELCON 2017 Comments at 3; Public Interest Organizations 2017 Comments at 5-8; Competitive Suppliers 2017 Comments at 4. 139 NextEra 2017 Comments at 9. 140 AFPA 2017 Comments at 4. 141 Competitive Suppliers 2017 Comments at 4; NEPOOL 2017 Comments at 7. 142 AFPA 2017 Comments at 6. 143 CAISO 2017 Comments at 9; PJM 2017 Comments at 7 (citing PJM, Intra-PJM Tariffs, OATT, Attachment P, app. 2, Section 3.2.3 (3.0.0)). 144 MISO 2017 Comments at 15; NYISO 2017 Comments at 14. 84. A number of commenters also oppose the proposal. 145 EEI, and MISO TOs argue that there has been no demonstration that the options under the existing pro forma LGIA result in unjust and unreasonable rates, undue discrimination, or preferential treatment. 146 Both Imperial and MISO TOs question whether exercising the option to build would result in significant decreases in cost or construction time. 147 AEP, Xcel, and National Grid argue that only transmission owners have the required knowledge, processes, and access to suppliers and contractors to properly construct network upgrades. 148 Several commenters state that the additional coordination needed between transmission owners and interconnection customers may undercut the interconnection customer's ability to achieve lower costs or quicker construction. 149 AEP contends that the Commission has “appropriately recognized [that] the expansion of an existing station should be treated differently than a green field construction project, and this is precisely why the Commission should not broaden the Option-to-Build.” 150 145 AEP; AES; APPA/LPPC; EEI; Eversource; Imperial; Indicated NYTOs; ITC; MidAmerican; MISO TOs; National Grid; PG&E; NorthWestern; SoCal Edison; Southern; Xcel; Sunflower. 146 EEI 2017 Comments at 17; MISO TOs 2017 Comments at 13. 147 Imperial 2017 Comments at 17; MISO TOs 2017 Comments at 13. 148 AEP 2017 Comments at 6; Xcel 2017 Comments at 8-10; National Grid 2017 Comments at 6-7. 149 Duke 2017 Comments at 6; TVA 2017 Comments at 4; ITC 2017 Comments at 7; MidAmerican 2017 Comments at 9-10; NorthWestern 2017 Comments at 3; Southern 2017 Comments at 10-11; Xcel 2017 Comments at 8-9. 150 AEP 2017 Comments at 6. ii. Commission Determination 85. In this final action, we adopt the NOPR proposal to modify articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow interconnection customers to exercise the option to build with respect to the transmission provider's interconnection facilities and stand alone network upgrades regardless of whether the transmission provider can meet the interconnection customer's proposed dates. We conclude that this reform will benefit the interconnection process by providing interconnection customers more control and certainty during the design and construction phases of the interconnection process. 151 Further, we find that limiting exercise of the option to build to circumstances where the transmission provider cannot meet the interconnection customer's requested dates is not just and reasonable. The limitation restricts an interconnection customer's ability to efficiently build the transmission provider's interconnection facilities and stand alone network upgrades in a cost-effective manner, which could result in higher costs for interconnection customers. 151 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 58. 86. In response to EEI's and MISO TOs' contention that there has been no demonstration that the options under the existing pro forma LGIA result in unjust and unreasonable rates, undue discrimination, or preferential treatment, we find that in circumstances where an interconnection customer cannot exercise the option to build, it may pay more and/or wait longer for the construction of the transmission provider's interconnection facilities and stand alone network upgrades. With regard to Imperial and MISO TOs' skepticism regarding the potential cost and construction efficiencies gained by exercising the option to build, the record suggests that such savings can occur and have already occurred. For example, NextEra states that its subsidiary exercised the option to build in SPP in 2016 and was able to complete the project one year sooner and for $6 million less than estimated by the transmission provider. NextEra also notes that its subsidiary used approved subcontractors, built to the transmission owner's specifications, and purchased components from vendors approved by the transmission owner. 152 152 See, e.g., NextEra 2017 Comments at 9. 87. Although AEP, Xcel, and National Grid question interconnection customers' abilities to properly construct stand alone network upgrades, we note that the NOPR proposal makes no changes to the transmission provider's right to approve the engineering design, the equipment tests, and the construction of its interconnection facilities and stand alone network upgrades. In response to AEP, we note that the final action does not change the type of facilities for which the option to build is available, and neither the final action nor the NOPR discuss the applicability of the option to build to an “existing station” versus a “green field construction project.” c. Reliability Concerns i. Comments 88. APPA/LPPC, MidAmerican, EEI, ITC, National Grid, and Southern contend that this proposal could compromise grid reliability. 153 EEI, ITC, MidAmerican, National Grid, and Southern argue that the proposal favors granting interconnection customers the potential for quicker or less costly construction over potential degradation of safety and reliability. 154 APPA/LPPC state that the existing option to build provision sufficiently balances the needs of interconnection customers with best utility practice and reliability concerns. 155 They argue that the NOPR proposal, however, will “alter dramatically” the risk to long-term reliability of transmission providers' systems and that the safeguards in article 5.2 of the pro forma LGIA lack a grasp of the “short- and long-term reliability implications associated with construction, interconnection and operation of interconnection facilities and network upgrades.” 156 153 APPA/LPPC 2017 Comments at 4; MidAmerican 2017 Comments at 9-10; EEI 2017 Comments at 17; ITC 2017 Comments at 7; National Grid 2017 Comments at 6-7; Southern 2017 Comments at 10. 154 EEI 2017 Comments at 17; ITC 2017 Comments at 7; MidAmerican 2017 Comments at 9-10; National Grid 2017 Comments at 6-7; Southern 2017 Comments at 10. 155 APPA/LPPC 2017 Comments at 2. 156 Id. at 3. 89. Three commenters state that article 5.2 of the pro forma LGIA does not fully cover the ongoing system operations, planning, and reliability requirements that are inherent in interconnection and network upgrades. 157 CAISO asserts that interconnection customers must follow the transmission owners' existing standards as well as meet grid engineering and reliability standards. 158 EEI requests that the Commission ensure that any facilities constructed by the interconnection customer that are transferred to the transmission provider comply with any applicable North American Electric Reliability Corporation (NERC) reliability standards. 159 157 Id. at 4; MISO TOs 2017 Comments at 15; National Grid 2017 Comments at 6-7. 158 CAISO 2017 Comments at 10. 159 EEI 2017 Comments at 20. 90. Other commenters disagree and argue that the expanded option to build would not affect system reliability. 160 NextEra, for example, states that there is little evidence that the NOPR proposal would compromise grid reliability, and any contrary arguments ignore the fact that this proposal only loosens the conditions for exercising this right with regard to the option to build. 161 AWEA asserts that expanding the option to build should not increase reliability concerns because it does not change existing approval requirements. 162 160 AWEA 2017 Comments at 14; Generation Developers 2017 Comments at 12; NextEra 2017 Comments at 10. 161 Id. 162 AWEA 2017 Comments at 14. ii. Commission Determination 91. Concerns that the option to build, as revised by the final action, will compromise system reliability are misplaced because they ignore the safeguards for reliability already in place for the existing option to build. We note that a number of commenters expressed similar concerns in the Order No. 2003 proceeding. 163 There, in response to such concerns, the Commission established several safeguards. 164 These safeguards, embodied in article 5.2 of the pro forma LGIA, require, among other things, that the interconnection customer exercise good utility practice and adhere to the standards and specifications provided in advance by the transmission providers. Further, these safeguards give the transmission provider the right to approve the engineering design, equipment acceptance tests, and the construction itself. In Order No. 2003-A, the Commission stated that vague reliability concerns about the option to build are misplaced, and that articles 5.2.1, 5.2.3, 5.2.5, and 5.2.6 of the pro forma LGIA are sufficient to guarantee the reliability of the facilities in question. 165 In this final action, we make no changes to the requirements in article 5.2. Furthermore, we note that because article 5.2 already gives the transmission provider a significant role with regard to the option to build and provides sufficient safeguards to ensure reliable operations, we see no reason why the expanded option to build should cause a new reliability concern. 163 Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at P 341. 164 Id. PP 356-357. 165 Order No. 2003-A, FERC Stats. & Regs. ¶ 31,160 at P 232. 92. In response to EEI's and CAISO's concerns about whether any facilities constructed pursuant to the option to build comply with applicable NERC reliability standards, we note that article 5.2 already addresses this concern. For example, article 5.2(2) states that the interconnection customer “shall comply with all requirements of law to which Transmission Provider would be subject.” d. Liability and Cost Responsibility Concerns i. Comments 93. EEI, Xcel, and National Grid ask the Commission to ensure that interconnection customers indemnify the transmission owner or provider from any damages that result from facilities built pursuant to the option to build, including damages to adjacent facilities. 166 Six commenters maintain that interconnection customers should assume all additional costs that may result from this proposal without cash, transmission credit, or congestion revenue right reimbursement. 167 CAISO, NextEra, PG&E, and SoCal Edison also argue that the Commission should require that interconnection customers not receive such reimbursements to the extent that stand alone network upgrade costs exceed a specified cap. 168 166 EEI 2017 Comments at 23; Xcel 2017 Comments at 10; National Grid 2017 Comments at 8-11. 167 CAISO 2017 Comments at 10; Bonneville 2017 Comments at 2-3; EEI 2017 Comments at 23-24; MISO TOs 2017 Comments at 16; Southern 2017 Comments at 12; SoCal Edison 2017 Comments at 5. 168 CAISO 2017 Comments at 10; NextEra 2017 Comments at 11; PG&E 2017 Comments at 4; SoCal Edison 2017 Comments at 5. ii. Commission Determination 94. In response to EEI's, Xcel's, and National Grid's comments, we note that article 5.2(7) of the pro forma LGIA requires the interconnection customer to “indemnify the Transmission Provider for claims arising from Interconnection Customer's construction of Transmission Provider's Interconnection Facilities and Stand Alone Upgrades.” We consider this provision sufficiently broad to address EEI's, Xcel's, and National Grid's concerns. 169 169 We note that the pro forma LGIA states that the term transmission provider “should be read to include the Transmission Owner when the Transmission Owner is separate from the Transmission Provider.” Pro forma LGIA Art.1 (Definitions). 95. In response to arguments that interconnection customers should assume all additional costs that result from exercise of the option to build, we note that the final action makes no changes with regard to cost assignment for transmission provider's interconnection facilities and stand alone network upgrades. Additionally, apart from the modifications to articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow interconnection customers to exercise the option to build regardless of whether the transmission provider can meet the interconnection customer's proposed dates, this final action makes no changes to the option to build process. In response to CAISO, NextEra, PG&E, and SoCal Edison, we note that the issue of cost caps is currently unique to CAISO; therefore, issues regarding the interaction of the option to build and the CAISO network upgrade cost cap would be better addressed when CAISO submits its compliance filing to this final action. e. Other i. Comments 96. AES claims that the proposal increases the transmission provider's risk regarding security compliance and project management. 170 APPA/LPPC, MISO TOs, and National Grid express concern that transmission owners will have to expend significant resources to perform the oversight functions in article 5.2 of the pro forma LGIA. 171 170 AES 2017 Comments at 7. 171 ITC 2017 Comments at 7; MISO TOs 2017 Comments at 14; AES 2017 Comments at 7. 97. Multiple commenters also identify barriers that will continue to exist under the current proposal. AWEA worries that requirements to adhere to jurisdictional transmission owner guidelines may remain a barrier to exercising the option to build under existing tariffs. 172 APPA/LPPC note that interconnection customers may be constrained by state laws affecting the ability of non-utilities to exercise eminent domain to construct facilities and upgrades. 173 CAISO states that later-queued projects may rely on network upgrades being built by interconnection customers and could be adversely affected if the customer withdraws from the queue or delays construction. 174 172 AWEA 2017 Comments at 15. 173 APPA/LPPC 2017 Comments at 4. 174 CAISO 2017 Comments at 9. 98. Some commenters recommend that additional, specific options and regulatory language be added to the proposal. AVANGRID and AWEA recommend that the Commission ensure the expanded option to build would apply to identified transmission provider interconnection facilities and stand alone network upgrades identified through cluster studies. 175 To ensure that transmission providers cannot refuse to build facilities and force interconnection customers to do so, EDP recommends that the Commission clarify that a transmission provider retains the obligation to build unless and until an interconnection customer exercises its option to build. 176 175 AVANGRID 2017 Comments at 14-15; AWEA 2017 Comments at 14. 176 EDP 2017 Comments at 4. 99. AVANGRID also recommends that the Commission provide two additional options for interconnection customers. Under the first, the transmission provider would construct, and the interconnection customer would pay the costs of, the transmission provider's interconnection facilities and stand alone network upgrades upfront, including an opportunity cost capped at 10 percent. Second, for all other network upgrades, the transmission provider, with the agreement of the interconnection customer, would construct and fund network upgrades, with charges to the interconnection customer made over time or the interconnection customer paying the costs up front, which would not include any margin. 177 Bonneville recommends the option to build only be available if the customer can demonstrate it can build the facilities more cost-effectively than the transmission provider or improve the timeline for construction. 178 177 AVANGRID 2017 Comments at 14-15. 178 Bonneville 2017 Comments at 2-3. 100. Duke and EEI recommend that the Commission revise article 9.7.1 of the LGIA to require that parties coordinate actions regarding stand alone network upgrades that may impact other parties' facilities during outages needed for maintenance, testing, or installation. 179 Duke recommends revising article 11.5 of the pro forma LGIA (Provision of Security) to include stand alone network upgrades, as well as article 26.1 of the pro forma LGIA to clarify that the transmission provider is not prevented from using subcontractors to perform its obligations under the LGIA. Duke also recommends adding language to require the transmission provider's approval of subcontractors. 180 EEI requests that articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA be revised to note that, if during the study process it is determined that upgrades and facilities need to be expedited, the option to build will be superseded. 179 Duke 2017 Comments at 5; EEI 2017 Comments at 22. 180 Duke 2017 Comments at 6. 101. National Grid recommends that the Commission revise article 5.2 of the pro forma LGIA to require: (1) Transmission owner's prior written approval of all contractors and any information requested to evaluate the creditworthiness and technical capabilities of proposed contractors; (2) prior written transmission owner approval of agreements between interconnection customers and contractors and provisions that allow transmission owners to directly enforce the agreement against the contractor; and (3) that the interconnection customer and transmission owner enter into a written transfer agreement regarding the transfer of ownership of facilities built by the interconnection customer. 181 Similarly, Eversource suggests that the Commission grant blanket authorization for the transfer of these facilities. 182 181 National Grid 2017 Comments at 8-11. 182 Eversource 2017 Comments at 17. 102. TVA and EEI suggest that interconnection customers should meet standards similar to those required under Order No. 1000 for transmission construction qualification. 183 Generation Developers, NextEra, and EEI support transmission owners maintaining a list of pre-approved contractors. 184 Some commenters suggest that the Commission require the transmission provider to post the standards and specifications used for the transmission provider's interconnection facilities and stand alone network upgrades on the transmission provider's website. 185 Generation Developers state that there is a need for the transmission provider or interconnecting transmission owner to agree as to what constitutes a stand alone network upgrade. 186 Generation Developers also request that transmission providers be required to provide written documentation and post on their website the reasons why they disagree that a facility is considered a stand alone network upgrade, in order to prevent undue discrimination. 187 Eversource asks the Commission to require the interconnection customer to obtain transmission owner approval before ordering electrical material and equipment. 188 Eversource and MISO recommend requiring that interconnection customers provide sufficient land rights for the transmission owners to access, operate, and maintain the transmission facilities and that the Commission terminate the interconnection customer's authority to construct during emergency situations. 189 183 TVA 2017 Comments at 4; EEI 2017 Comments at 18. 184 Generation Developers 2017 Comments at 11; NextEra 2017 Comments at 11; EEI 2017 Comments at 21. 185 Generation Developers 2017 Comments at 11; EDP 2017 Comments at 4; SEIA 2017 Comments at 14. 186 Generation Developers 2017 Comments at 9-10. 187 Id. at 10. 188 Eversource 2017 Comments at 9-11. 189 Id. at 1; MISO TOs 2017 Comments at 15-16. ii. Commission Determination 103. In response to AES's concern that the proposal increases transmission providers' risk regarding security compliance and project management, we again note that the final action does not relax the established safeguards in article 5.2 of the pro forma LGIA. In response to concerns raised by APPA/LPPC, MISO TOs, and National Grid that transmission owners will have to expend significant resources to perform oversight functions, we note that the final action does not alter the role that the transmission provider would play in overseeing the option to build process. However, it may result in more interconnection customers exercising the expanded option to build. 104. In response to AWEA's and APPA/LPPC's assertions about jurisdictional barriers, states laws, and eminent domain, we note that the specific purpose of this proposal is only to eliminate the pro forma LGIP's existing limitation on the option to build. It is not to ensure that there are no jurisdictional or other legal barriers to construction by interconnection customers. Although more interconnection customers are likely to exercise the option to build as a result of the final action, there are still situations where an interconnection customer may not be able to do so due to jurisdictional or legal constraints. In those situations, we would not expect the interconnection customer to exercise its option to build if it could not do so effectively due to jurisdictional or legal constraints, such as limitations imposed by state law. Additionally, an interconnection customer might find that that there may be interconnection requests for which the option to build is unlikely to result in cost or time savings. Consequently, we believe that interconnection customers are in the best position to determine whether they will realize any cost or time savings from exercising the option to build for a particular interconnection request. Finally, the fact that this reform will not necessarily be useful to all interconnection requests does not mean that this reform will not afford an opportunity to some interconnection customers. 105. In response to CAISO's comment that later-queued projects may be adversely affected if a higher-queued customer withdraws from the queue or delays construction, we see no reason to believe that an interconnection customer that exercises the option to build is more likely to adversely affect a later-queued project than would a delay caused by a transmission provider. In fact, it is our expectation that customers that exercise the option to build are likely only to do so if they believe they can construct the facilities faster than the transmission provider. Additionally, we agree with AVANGRID and AWEA that the expanded option to build would apply to identified transmission provider interconnection facilities and stand alone network upgrades regardless of whether those facilities were identified through clustering, serial, or another study method. This is consistent with the current option to build, which does not restrict the study method. 106. In response to EDP, we note that the pro forma LGIA, as modified by the final action, makes clear that the interconnection customer may exercise the option to build at its discretion with regard to transmission provider's interconnection facilities and stand alone network upgrades. If the interconnection customer does not exercise this discretion, pursuant to articles 5.1.1, 5.1.2, and 5.1.4, the transmission provider would be responsible for the construction of transmission provider's interconnection facilities and stand alone network upgrades. 107. We choose not to adopt AVANGRID's two additional proposals and find that the revisions adopted by the final action strike the appropriate balance. Additionally, we disagree with Bonneville's recommendation that we allow the interconnection customer to exercise the option to build only if it can demonstrate its ability to construct the subject facilities cost-effectively. It is unnecessary to impose such a requirement for interconnection customers because they will ultimately bear the costs of the transmission provider's interconnection facilities and the stand alone network upgrades; thus, they have more incentive than transmission providers to select the most cost effective option. 108. We disagree with Duke and EEI regarding the need to revise article 9.7.1 of the pro forma LGIA to require parties to coordinate maintenance, testing, or installation actions for stand alone upgrades. Article 5.2 provides sufficient safeguards to ensure coordination of maintenance, testing, and installation by providing for transmission provider access and requiring the ultimate transfer of ownership. We also disagree with National Grid's and Eversource's proposals regarding the transfer of ownership because articles 5.2(8) and (9) already require the transfer of control and ownership to the transmission provider. 109. Furthermore, we disagree with Duke's proposal to revise article 11.5 of the pro forma LGIA to include stand alone upgrades. Duke provides no reason why such revision is necessary. Additionally, we read the phrase “applicable portion” in article 11.5 to exclude facilities that an interconnection customer would construct pursuant to the option to build. Since the purpose of article 11.5 is for the interconnection customer to provide funds to the transmission provider for construction costs, there would be no need for the interconnection customer to provide security to the transmission provider for facilities the transmission provider will not construct (because the interconnection customer is exercising the option to build). 110. We also see no need to revise article 26.1 of the pro forma LGIA, as Duke proposed, to limit the interconnection customer's ability to use subcontractors. Similarly, while we agree with Generation Developers, NextEra, and EEI that it could be helpful for transmission owners to maintain a list of contractors available to interconnection customers for the option to build, given the adequacy of the safeguards in article 5.2, we find that it is not necessary to require transmission owners to do so. We find the safeguards in article 5.2 to be sufficient because they give the transmission provider significant oversight authority to review and approve the design, equipment testing, and construction, “unrestricted access” to inspect the construction, and the ability to require the interconnection customer to remedy deficiencies that may arise at “any time during construction.” 190 Similarly, we do not agree with Duke's and National Grid's suggestion that the transmission provider should have the right to approve subcontractors because of the multiple preexisting protections in article 5.2. Further, we are not persuaded by EEI's contention that revisions are necessary to supersede the option to build if facilities need to be expedited. First, article 5.2 already obligates the interconnection customer to “remedy deficiencies” should “any phase of the engineering, equipment procurement, or construction . . . not meet the standards and specifications provided by Transmission Provider.” 191 Second, the option to build is limited to the construction of transmission provider's interconnection facilities and stand alone network upgrades, the latter of which the pro forma LGIA defines as those network upgrades that the interconnection customer “may construct without affecting day-to-day operations of the Transmission System during their construction.” 192 Together, these provisions minimize the likelihood that any delays in construction will adversely affect reliability. 190 Pro forma LGIA Articles 5.2 (3), (5), & (6). 191 Pro forma LGIA Art. 5.2(6). 192 Pro forma LGIA Art. 1 (Definitions). 111. In response to TVA and EEI, we find that article 5.2 already provides sufficient safeguards regarding transmission construction qualifications because it requires, for example, that interconnection customers use good utility practice and follow the standards and specifications outlined by the transmission provider. Additionally, while Generation Developers, EDP, and SEIA advocate that transmission providers post the standards and specifications for interconnection facilities and stand alone network upgrades on their websites, we will not require them to do so. Although posting such standards and specifications on a website could be useful, we do not think it appropriate to impose this requirement on transmission providers in this final action given the questionable usefulness of this information. 112. In response to Generation Developers' request that transmission providers be required to provide an explanation when they disagree that a facility is a stand alone network upgrade, we find that it would be difficult for a transmission provider to determine whether or not a facility would be considered a stand alone network upgrade until it is presented with the results of a system impact study. While we recognize that questions regarding what constitutes a stand alone network upgrade could lead to disputes, interconnection customers are free to seek dispute resolution on such questions and/or pursue a complaint under section 206 of the FPA. 113. We disagree with Eversource's request to require that interconnection customers receive transmission owner approval before ordering electrical materials and equipment. Article 5.2 already provides sufficient responsibilities to interconnection customers to mitigate the concerns Eversource raised through, for example, the requirements that the interconnection customer use good utility practice and abide by the transmission provider's standards and specifications, and the requirement that the transmission provider approve the design, equipment acceptance tests, and construction. We also disagree with Eversource's and MISO's recommendations to require that interconnection customers provide sufficient land rights to allow transmission provider access to transmission facilities and to terminate interconnection customers' authority to construct during emergency situations. We do not see the need to impose a further requirement on the interconnection customer, especially because the revisions adopted in this final action do not relax the existing requirements. 3. Self-Funding by the Transmission Owner a. NOPR Proposal 114. In the NOPR, the Commission proposed to require agreement between a transmission owner or provider and interconnection customer before the transmission owner or provider may elect to initially fund network upgrades. 193 193 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 64. 115. Prior to the revisions proposed in the NOPR, article 11.3 in the pro forma LGIA stated that “[u]nless Transmission Provider or Transmission Owner elects to fund the capital for the Network Upgrades, they shall be solely funded by Interconnection Customer.” This provision allowed the transmission provider or owner to unilaterally elect to “self-fund” network upgrades. 116. In 2013, MISO proposed allowing a transmission owner to elect to directly assign costs associated with self-funded network upgrades to the interconnection customer. 194 In that proceeding, the Commission accepted MISO's proposal for a transmission owner that elects to initially fund network upgrades under MISO's pro forma GIA to recover the capital costs for network upgrades through a network upgrade charge assessed to the interconnection customer. 195 194 Midcontinent Indep. Sys. Operator, Inc., 145 FERC ¶ 61,111 (2013) ( Hoopeston ). 195 Hoopeston, 145 FERC ¶ 61,111 at P 41. 117. The Commission revisited that approach in the Otter Tail proceedings. 196 In those proceedings, the Commission found that article 11.3 in MISO's pro forma GIA, which allows a transmission owner to self-fund network upgrades, to be unjust, unreasonable, and unduly discriminatory or preferential. Consequently, the Commission directed MISO to revise article 11.3 to require mutual agreement with the interconnection customer for the transmission owner to elect to initially fund network upgrades. Ameren Services Company, a transmission owner in MISO, challenged this order in the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit). 196 Midcontinent Indep. Sys. Operator, Inc., 151 FERC ¶ 61,220 (2015); Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator, Inc., 153 FERC ¶ 61,352, at P 14 (2015); Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator, Inc., 156 FERC ¶ 61,099 (2016) (collectively, the Otter Tail proceedings). 118. In the NOPR in this proceeding, the Commission proposed to revise article 11.3 of the pro forma LGIA to require mutual agreement between the interconnection customer and the transmission owner for the transmission owner to initially fund the cost of network upgrades. Specifically, the Commission proposed in the NOPR to modify the language in article 11.3 of the pro forma LGIA as follows (with proposed additions in italics): Transmission Provider or Transmission Owner shall design, procure, construct, install, and own the Network Upgrades and Distribution Upgrades described in Appendix A, Interconnection Facilities, Network Upgrades and Distribution Upgrades. The Interconnection Customer shall be responsible for all costs related to Distribution Upgrades. Unless Transmission Provider or Transmission Owner elects to fund the capital for the Network Upgrades, which election shall only be available upon mutual agreement of Interconnection Customer and Transmission Owner or Transmission Provider, they shall be solely funded by Interconnection Customer. 119. The Commission also sought comment on whether to limit the proposal to RTOs/ISOs or to apply it to all transmission providers. b. Comments 120. A number of commenters support the proposal. 197 A group of five commenters, predominantly from MISO, oppose the proposal and state that any action would be premature, given that, at the time that they filed their comments, the D.C. Circuit had not issued a decision in the Otter Tail proceedings. They ask the Commission to refrain from implementing this reform until the appellate decision is issued. 198 197 Non-Profit Utility Trade Associations; AFPA; AWEA; CAISO; Joint Renewable parties; Generation Developers; EDP; ELCON; FTC; IECA; NEPOOL; NextEra; PG&E; SEIA; TDU Systems. 198 Duke 2017 Comments at 6-7; EEI 2017 Comments at n.20; ITC 2017 Comments at 8; MidAmerican 2017 Comments at 11; MISO TOs 2017 Comments at 17. 121. Regarding whether the Commission should extend the requirement for mutual agreement beyond RTOs/ISOs, AWEA, Joint Renewable Parties, TDU Systems, and AFPA all argue that the proposal should apply generically. 199 On the other hand, Southern, TVA, Generation Developers, and Xcel state that self-funding by the transmission owner is not applicable to the pro forma OATT. 200 199 AWEA 2017 Comments at 19; Joint Renewable Parties 2017 Comments at 9-10; TDU Systems 2017 Comments at 7; AFPA Comments at 7. 200 Southern 2017 Comments at 13-14; TVA 2017 Comments at 5; Generation Developers 2017 Comments at 15; Xcel 2017 Comments at 10-11. c. Commission Determination 122. We withdraw the NOPR's proposal to extend the approach to self-funding that the Commission approved in MISO to all regions. On January 26, 2018, the D.C. Circuit issued a decision vacating the Commission's orders in the Otter Tail proceedings. 201 In this decision, the court noted, among other things, that the Commission did not adequately respond to the argument that “involuntary generator funding compels [transmission owners] to . . . accept additional risk without corresponding return.” 202 The court further stated that the Commission's approved changes to the MISO tariff “open[ ] the floodgates to involuntary generator-funded interconnection projects.” 203 The court also referenced this proceeding, stating that the fact that the Commission “plans a rulemaking to consider interconnection problems and costs . . . suggests that it should approach those issues on a clean slate.” 204 In light of the D.C. Circuit's decision, we will not move forward with the proposal pertaining to self-funding at this time. We will, however, continue to evaluate the issue. 201 Ameren Servs. Co. v. FERC, 880 F.3d 571 (D.C. Cir. 2018). 202 Id. at 573-74. 203 Id. at 584. 204 Id. at 585. 4. Dispute Resolution a. NOPR Proposal 123. In the NOPR, the Commission proposed that RTOs/ISOs establish interconnection dispute resolution procedures that allow a disputing party to unilaterally seek dispute resolution in RTO/ISO regions. 205 205 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 78. 124. Order No. 2003 created an arbitration process through the adoption of section 13.5 of the pro forma LGIP, which allows disputing parties to agree to arbitration “upon mutual agreement of the Parties” to the dispute. 206 Pursuant to this process, arbitrators may interpret and apply the provisions of the LGIA and LGIP but have no power to modify those provisions. 207 At the completion of this process, the arbitrator's decision is “final and binding upon the Parties, and judgment on the award may be entered in any court having jurisdiction.” Additionally, the decision may only “be appealed . . . on the grounds that the conduct of the arbitrator(s), or the decision itself, violated the standards set forth in the Federal Arbitration Act or the Administrative Dispute Resolution Act.” 208 While the arbitrator's decision is binding, “the final decision must still be filed with [the Commission] if it affects jurisdictional rates, terms and conditions of service, Interconnection Facilities, or Network Upgrades,” 209 and the Commission “retains the authority to review the arbitrator's decision.” 210 Participation in the section 13.5 arbitration process does not limit the ability of either party to bring a complaint about the same issues. 211 206 Pro forma LGIP Section 13.5.1. 207 Pro forma LGIP Section 13.5. 208 Pro forma LGIP Section 13.5.3. 209 Id. 210 Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at P 290. 211 Specifically, it states that section 13.5 arbitration does not “circumscribe[ ] the Parties' right to avail themselves of the Commission's complaint process because under section 13.5.1, a party that does not agree to arbitration may exercise its rights, including its right to bring a complaint to the Commission.” Order No. 2003, FERC Stats. & Regs. ¶ 31,146 at P 290. 125. In the NOPR, the Commission proposed to revise the Code of Federal Regulations to require RTOs/ISOs to establish interconnection dispute resolution procedures that would allow a disputing party to unilaterally seek dispute resolution. In particular, the Commission proposed to revise § 35.28 of the Commission's regulations to add a new paragraph (g)(9), providing that every Commission-approved independent system operator or regional transmission organization tariff must contain provisions governing generator interconnection dispute resolution procedures to allow a disputing party to unilaterally initiate dispute resolution procedures under the respective tariff. Such provisions must provide for independent system operator or regional transmission organization staff member(s) or utilize subcontractor(s) to serve as the neutral decision-maker(s) or presiding staff member(s) or subcontractor(s) to the dispute resolution procedures. Such staff participating in dispute resolution procedures shall not have any current or past substantial business or financial relationships with any party. Additionally, such dispute resolution procedures must account for the time sensitivity of the generator interconnection process. 126. The Commission limited the proposed requirements in this draft text to RTOs/ISOs because the Commission had only received comments regarding the need for dispute resolution reform in RTOs/ISOs. However, given the lack of a record on this issue, the Commission also sought comment on the need for reform outside the RTOs/ISOs. 212 The Commission also sought comment on the appropriateness of adopting procedures similar to section 4.2 of the pro forma SGIP, which allows parties to contact the Commission's Dispute Resolution Service (DRS) for assistance in resolving an interconnection dispute. 213 212 NOPR, FERC Stats. & Regs. ¶ 32,719 at P 86. 213 Section 4.2.4 of the pro forma SGIP states that DRS will assist in resolving a dispute or in selecting an appropriate dispute resolution venue. Additionally, section 4.2.6 states that if neither party elects to contact DRS or if the attempted dispute resolution fails, “either Party may exercise whatever rights and remedies it may have in equity or law consistent with the terms of these procedures.” 127. The NOPR proposal represented a potential alternative to, and not a replacement of, section 13.5 of the pro forma LGIP. 214 The Commission crafted its proposal in response to its observation that the arbitration process embodied in section 13.5 is effectively unavailable to an interconnection customer if a transmission owner opposes this arbitration process. 215 214 Id. 215 Id. P 85. b. General i. Comments 128. Multiple commenters support the proposal. 216 The Non-Profit Utility Trade Associations state that they do not object to this proposal. 217 Salt River states that the proposal is reasonable with regard to disputes between interconnection customers and RTOs/ISOs, RTO/ISO transmission owners, or affected system operators that are also RTO/ISO transmission owners. 218 However, Salt River argues that if the dispute is with an autonomous neighboring affected system operator that is a non-RTO/ISO member, then the dispute resolution procedures in the affected system operator's OATT should apply. 219 216 AWEA 2017 Comments at 21; Joint Renewable Parties 2017 Comments at 2-3; IECA 2017 Comments at 3; Invenergy 2017 Comments at 15-16; AFPA 2017 Comments at 8; CAISO 2017 Comments at 11-12; SEIA 2017 Comments at 14-15; TDU Systems 2017 Comments at 11; AVANGRID 2017 Comments at 18. 217 Non-Profit Utility Trade Associations 2017 Comments at 6. 218 Salt River 2017 Comments at 8. 219 Id. 129. AES asserts that RTOs/ISOs, not the Commission, should reexamine their existing dispute resolution procedures. 220 Indicated NYTOs oppose the dispute resolution proposal, arguing that NYISO's existing dispute resolution provisions are adequate. 221 NYISO also opposes the proposed revisions, stating that they would duplicate existing dispute resolution opportunities. 222 ISO-NE and CAISO similarly argue that their current dispute resolution procedures are adequate. 223 CAISO also notes that its tariff includes a dedicated dispute committee for generator interconnection issues. 224 MidAmerican argues that the existing MISO tariff addresses the Commission's concerns about the ability of a party to unilaterally request dispute resolution. 225 220 AES 2017 Comments at 7-8. 221 Indicated NYTOs 2017 [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2018-08659. Public record. Not legal advice.