Improvements to Generator Interconnection Procedures and Agreements

Federal RegisterJul 5, 2022

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM22-14-000]

Improvements to Generator Interconnection Procedures and Agreements

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Energy Regulatory Commission (Commission) is issuing a Notice of Proposed Rulemaking (NOPR) proposing reforms to its

pro forma

Large Generator Interconnection Procedures,

pro forma

Small Generator Interconnection Procedures,

pro forma

Large Generator Interconnection Agreement, and

pro forma

Small Generator Interconnection Agreement to address interconnection queue backlogs, improve certainty, and prevent undue discrimination for new technologies. The reforms are intended to ensure that the generator interconnection process is just and reasonable and not unduly discriminatory or preferential. The Commission invites all interested persons to submit comments on the proposed reforms, including proposed revisions to the

pro forma

interconnection procedures and agreements, and in response to specific questions.

DATES:

Comments are due October 13, 2022 and Reply Comments are due November 14, 2022.

ADDRESSES:

Comments, identified by docket number, may be filed in the following ways. Electronic filing through

https://www.ferc.gov

is preferred.

•

Electronic Filing:

Documents must be filed in acceptable native applications and print-to-PDF, but not in scanned or picture format.

• For those unable to file electronically, comments may be filed by U.S. Postal Service mail or by hand (including courier) delivery.

○

Mail via U.S. Postal Service only:

Addressed to: Federal Energy Regulatory Commission, Office of the Secretary, 888 First Street NE, Washington, DC 20426.

○

For delivery via any other carrier (including courier):

Deliver to: Federal Energy Regulatory Commission, Office of the Secretary, 12225 Wilkins Avenue, Rockville, MD 20852.

The Comment Procedures Section of this document contains more detailed filing procedures.

FOR FURTHER INFORMATION CONTACT:

Tristan Kessler (Technical Information), Office of Energy Policy and Innovation, 888 First Street NE, Washington, DC 20426, (202) 502-6608,

tristan.kessler@ferc.gov

Franklin Jackson (Technical Information), Office of Energy Market Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-6464,

franklin.jackson@ferc.gov

Sarah Greenberg (Legal Information), Office of the General Counsel, 888 First Street NE, Washington, DC 20426, (202) 502-6230,

sarah.greenberg@ferc.gov

SUPPLEMENTARY INFORMATION:

Table of Contents

Paragraph Nos.

I. Introduction

A. Background

1. The Commission's

Pro Forma

Generator Interconnection Procedures

2. 2008 Order on RTO/ISO Interconnection Queuing Practices

3. Order No. 845

4. Transmission Planning and Cost Allocation ANOPR

5. Joint Federal-State Task Force on Electric Transmission

B. Need for Reform

II. Proposed Reforms

A. Reforms To Implement a First-Ready, First-Served Cluster Study Process

1. Interconnection Information Access

2. Cluster Study

3. Allocation of Cluster Study Costs

4. Allocation of Cluster Network Upgrade Costs

5. Shared Network Upgrades

6. Increased Financial Commitments and Readiness Requirements

102

7. Transition Process

149

B. Reforms To Increase the Speed of Interconnection Queue Processing

161

1. Elimination of the Reasonable Efforts Standard

161

2. Affected Systems

174

3. Optional Resource Solicitation Study

216

C. Reforms To Incorporate Technological Advancements Into the Interconnection Process

238

1. Increasing Flexibility in the Generator Interconnection Process

238

2. Incorporating Alternative Transmission Technologies Into the Generator Interconnection Process

289

3. Modeling and Performance Requirements for Non-Synchronous Generating Facilities

303

III. Proposed Compliance Procedures

342

IV. Information Collection Statement

345

V. Environmental Analysis

359

VI. Regulatory Flexibility Act

360

VII. Comment Procedures

364

VIII. Document Availability

368

Appendix A: Interconnection Study Metrics.

Appendix B: Compilation of proposed changes to the pro forma LGIP.

Appendix C: Compilation of proposed changes to the pro forma SGIP.

Appendix D: Compilation of proposed changes to the pro forma LGIA.

Appendix E: Compilation of proposed changes to the pro forma SGIA.

I. Introduction

1. Pursuant to our authority under section 206 of the Federal Power Act (FPA),

we are proposing reforms in this Notice of Proposed Rulemaking (NOPR) to the Commission's

pro forma

Large Generator Interconnection Procedures (LGIP),

pro forma

Small Generator Interconnection Procedures (SGIP),

pro forma

Large Generator Interconnection Agreement (LGIA), and

pro forma

Small Generator Interconnection Agreement (SGIA) to address interconnection queue backlogs, improve certainty, and prevent undue discrimination for new technologies.

16 U.S.C. 824e. Section 206 of the FPA requires that whenever the Commission finds any rate, term, or condition for the transmission of electric energy in interstate commerce or the sale of such energy at wholesale in interstate commerce to be unjust, unreasonable, unduly discriminatory, or preferential, the Commission must establish a just and reasonable and not unduly discriminatory or preferential replacement rate, term, or condition.

2. Nineteen years ago the Commission issued Order No. 2003,

in which the Commission required all public utilities that own, control, or operate facilities used for transmitting electric energy in interstate commerce to have on file standard procedures and a standard agreement for interconnecting generating facilities larger than 20 MW (called the

pro forma

LGIP, and the

pro forma

LGIA).

The Commission stated its expectation that the changes would prevent undue discrimination, preserve reliability, increase energy supply, and lower wholesale prices for customers by increasing the amount and variety of new generation that would compete in the wholesale electricity market.

The Commission further stated that the standard procedures would facilitate market entry for generation competitors by reducing interconnection costs and time.

In Order No. 2006,

the Commission adopted standard procedures and a standard agreement for interconnecting generating facilities no larger than 20 MW (called the

pro forma

SGIP, and the

pro forma

SGIA), citing the same purposes outlined in Order No. 2003.

Standardization of Generator Interconnection Agreements & Proc.,

Order No. 2003, 68 FR 49845 (Aug. 19, 2003), 104 FERC ¶ 61,103 (2003),

order on reh'g,

Order No. 2003-A, 69 FR 15932 (Mar. 5, 2004), 106 FERC ¶ 61,220,

order on reh'g,

Order No. 2003-B, 70 FR 265 (Jan. 19, 2005), 109 FERC ¶ 61,287 (2004),

order on reh'g,

Order No. 2003-C, 70 FR 37661 (July 18, 2005), 111 FERC ¶ 61,401 (2005),

aff'd sub nom. Nat'l Ass'n of Regul. Util. Comm'rs

FERC,

475 F.3d 1277 (D.C. Cir. 2007) (

NARUC

FERC

Order No. 2003, 104 FERC ¶ 61,103 at P 2.

Id.

P 1.

Id.

P 12.

Standardization of Small Generator Interconnection Agreements & Proc.,

Order No. 2006, 70 FR 34189 (June 13, 2005), 111 FERC ¶ 61,220,

order on reh'g,

Order No. 2006-A, 70 FR 71760 (Nov. 30, 2005), 113 FERC ¶ 61,195 (2005),

order granting clarification,

Order No. 2006-B, 71 FR 42587 (July 27, 2006), 116 FERC ¶ 61,046 (2006).

Order No. 2006, 111 FERC ¶ 61,220 at PP 15, 36.

3. The electricity sector has transformed significantly since the issuance of Order Nos. 2003 and 2006. The growth of new resources seeking to interconnect to the transmission system and the differing characteristics of those resources have created new challenges for the generator interconnection process. These new challenges are creating large interconnection queue backlogs and uncertainty regarding the cost and timing of interconnecting to the transmission system, potentially increasing costs for consumers. Backlogs in the generator interconnection process, in turn, can create reliability issues as needed new generating facilities are unable to come online in an efficient and timely manner. Therefore, we believe that it may be appropriate to reform the Commission's standard interconnection procedures and agreements to ensure that interconnection customers are able to interconnect to the transmission system in a reliable, efficient, transparent, and timely manner, thereby ensuring that rates, terms, and conditions for Commission-jurisdictional services remain just and reasonable and not unduly discriminatory or preferential.

4. Accordingly, we propose in this NOPR reforms to the Commission's

pro forma

LGIP and

pro forma

LGIA. Specifically, as explained in detail in this NOPR, we propose reforms to: (1) implement a first-ready, first-served cluster study process;

(2) increase the speed of interconnection queue processing; and (3) incorporate technological advancements into the interconnection process.

A first-ready, first-served cluster study process includes the following elements: increased access to information prior to entering the queue; a mechanism to study interconnection requests in groups; and increased financial commitments and readiness requirements to enter and proceed through the queue. To contrast, the existing first-come, first-served serial study process assigns interconnection requests an individual queue position based solely on the date of entry into the queue and does not include access to information prior to entering the queue.

5. We also propose reforms to the

pro forma

SGIP and

pro forma

SGIA. Specifically, as explained in detail in this NOPR, for small generators we propose reforms to incorporate alternative transmission technologies into the interconnection process and to provide modeling and performance requirements for non-synchronous generators. In addition, we seek comment on whether the other reforms proposed in this NOPR should be applied to the

pro forma

SGIP and

pro forma

SGIA.

6. We recognize that transmission providers have undertaken efforts to address interconnection queue management issues. This NOPR is not intended to divert or slow the potential progress represented by those efforts. We will review any filings that result from those efforts based on the record before us in those proceedings and not based on whether they comply with the proposed reforms in this NOPR. We note that any compliance obligations arising out of any final rule in this docket on the issues addressed herein will be evaluated in light of the independent entity variation for RTO/ISO regions and the consistent with or superior to standard for non-RTO regions.

A. Background

1. The Commission's Pro Forma Generator Interconnection Procedures

7. In Order No. 2003, the Commission recognized a need for a standard set of interconnection procedures for transmission providers

and a single, uniformly applicable interconnection agreement for large generating facilities.

The Commission noted that generator interconnection is a “critical component of open access transmission service and thus is subject to the requirement that utilities offer comparable service under the [

pro forma

] OATT.”

The Commission found that it was appropriate to establish a standard set of generator interconnection procedures to

“minimize opportunities for undue discrimination and expedite the development of new generation, while protecting reliability and ensuring that rates are just and reasonable.”

To this end, the Commission adopted the

pro forma

LGIP and

pro forma

LGIA and amended its regulations to require all transmission providers to incorporate these standard procedures and agreement into their OATTs.

In this order, 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 electric energy in interstate commerce and provides transmission service under the [Transmission Provider's Tariff]. The term . . . should be read to include the Transmission Owner when the Transmission Owner is separate from the Transmission Provider.”

Pro forma

LGIP section 1;

pro forma

LGIA art. 1;

pro forma

SGIP attach. 1;

pro forma

SGIA attach. 1. Therefore, unless otherwise noted, “transmission provider” refers only to public utility transmission providers. FPA section 201(e) defines “public utility” to mean “any person who owns or operates facilities subject to the jurisdiction of the Commission under this subchapter.” 16 U.S.C. 824(e). 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, the

pro forma

SGIP, the

pro forma

LGIA, and the

pro forma

SGIA.

See

Order No. 2003, 104 FERC ¶ 61,103 at PP 1, 616; Order No. 2006, 111 FERC ¶ 61,220 at P 1.

Order No. 2003, 104 FERC ¶ 61,103 at P 11. Large generating facilities are defined to mean “a Generating Facility having a Generating Facility Capacity of more than 20 MW.”

Pro forma

LGIP section 1.

Order No. 2003, 104 FERC ¶ 61,103 at P 9 (citing

Tenn. Power Co.,

90 FERC ¶ 61,238 (2000)).

Id.

P 11.

18 CFR 35.28(f)(1).

8. To initiate the generator interconnection process set forth in the Commission's

pro forma

LGIP,

the interconnection customer submits an interconnection request for its proposed generating facility that includes preliminary documentation of the site of the proposed generating facility, certain technical information about the proposed generating facility, and the expected commercial operation date of the proposed generating facility, along with a refundable deposit of $10,000.

After the transmission provider determines that the interconnection request is complete, the interconnection request enters the transmission provider's interconnection queue with other pending interconnection requests and is assigned a queue position based on the time and date of its receipt.

The queue position determines the order in which the transmission provider studies the interconnection requests in its queue.

While we provide a broad description of the process in the Commission's

pro forma

LGIP as background here, we recognize that many transmission providers have adopted (and the Commission has accepted) variations to many of the terms in the Commission's

pro forma

LGIP and

pro forma

LGIA. Consequently, some or many of the details of a particular transmission provider's generator interconnection procedures may vary considerably from the broad description provided here.

Order No. 2003, 104 FERC ¶ 61,103 at P 35;

pro forma

LGIP sections 3.1, 3.4.

Pro forma

LGIP section 4.1.

Id.

9. Transmission providers must schedule a scoping meeting with the interconnection customer to discuss possible points of interconnection for the proposed generating facility and exchange technical information, which is followed by a series of interconnection studies to evaluate the proposed interconnection in detail.

Transmission providers study interconnection requests in three phases: (1) the Interconnection Feasibility Study (feasibility study);

(2) the Interconnection System Impact Study (system impact study);

and (3) the Interconnection Facilities Study (facilities study).

These studies contain the power flow, short circuit, and stability analyses necessary to: (1) identify any adverse impacts on the transmission providers' transmission system or any affected systems;

(2) determine the interconnection facilities and network upgrades

needed to reliably interconnect the generating facility; and (3) estimate the interconnection customer's cost responsibility for these facilities.

The

pro forma

LGIP requires that transmission providers use reasonable efforts to complete: (1) feasibility studies within 45 days; (2) system impact studies within 90 days; and (3) facilities studies within 90 or 180 days, depending on the interconnection customer's requested accuracy margin.

Order No. 2003, 104 FERC ¶ 61,103 at P 36;

pro forma

LGIP sections 3.4.4; 6-8.

The

pro forma

LGIP defines a feasibility study as “a preliminary evaluation of the system impact and cost of interconnecting the Generating Facility to the Transmission Provider's Transmission System.” The scope of a feasibility study is described in section 6 of the

pro forma

LGIP.

Pro forma

LGIP sections 1, 6.

The

pro forma

LGIP defines a system impact study as “an engineering study that evaluates the impact of the proposed interconnection on the safety and reliability of Transmission Provider's Transmission System and, if applicable, an Affected System.” In particular, a system impact study identifies and details “the system impacts that would result if the Generating Facility were interconnected without project modifications or system modifications, focusing on the Adverse System Impacts identified in the [feasibility study], or to study potential impacts, including but not limited to those identified in the Scoping Meeting.”

Id.

section 1.

The

pro forma

LGIP defines a facilities study as “a study conducted by the Transmission Provider or a third-party consultant for the Interconnection Customer to determine a list of facilities (including Transmission Provider's Interconnection Facilities and Network Upgrades as identified in the [system impact study]), the cost of those facilities, and the time required to interconnect the Generating Facility with the Transmission Provider's Transmission System.” The scope of a facilities study is described in section 8 of the

pro forma

LGIP.

Id.

sections 1, 8.

An affected system is an electric system other than the transmission provider's transmission system that may be affected by the proposed interconnection.

Id.

section 1;

pro forma

LGIA art. 1.

For purposes of this NOPR, unless otherwise noted, “network upgrades” refers to interconnection-related network upgrades. More specifically, the

pro forma

LGIP and

pro forma

LGIA state that “Network Upgrades shall mean the additions, modifications, and upgrades to the Transmission Provider's Transmission System required at or beyond the point at which the Interconnection Facilities connect to the Transmission Provider's Transmission System to accommodate the interconnection of the Large Generating Facility to the Transmission Provider's Transmission System.”

Pro forma

LGIP section 1 (Definitions);

pro forma

LGIA art. 1 (Definitions).

Order No. 2003, 104 FERC ¶ 61,103 at PP 35-37;

pro forma

LGIP sections 6-8. The interconnection customer is responsible for the actual costs of interconnection studies and any necessary re-studies.

Pro forma

LGIP section 13.3.

Id.

sections 6.3, 7.4, 8.3.

10. At the completion of the facilities study, the

pro forma

LGIP requires the transmission provider to issue a report on the best estimate of the costs to effectuate the requested interconnection and provide a draft generator interconnection agreement to the interconnection customer.

If the interconnection customer wishes to proceed, after negotiations, the interconnection customer enters into a generator interconnection agreement with the transmission provider or, in specific circumstances, requests that the transmission provider file the agreement with the Commission unexecuted.

The transmission provider is responsible for the construction of all network upgrades, but, as further discussed below, the interconnection customer has the option to build these facilities in certain circumstances.

Order No. 2003, 104 FERC ¶ 61,103 at P 38. Section 11.1 of the

pro forma

LGIP requires the transmission provider to tender a draft LGIA to the interconnection customer “in the form of Transmission Provider's FERC-approved standard form LGIA.”

If the transmission provider and interconnection customer execute an LGIA that conforms to the transmission provider's FERC-approved standard form LGIA, the agreement does not need to be filed with the Commission (if the transmission provider has such a standard form LGIA on file and submits an Electronic Quarterly Report). Alternatively, the transmission provider must file an LGIA with the Commission for review and approval if: (1) the interconnection customer determines that negotiations with the transmission provider over the terms of an LGIA are at an impasse and requests submission of the unexecuted LGIA with the Commission; or (2) the LGIA does not conform to the transmission provider's FERC-approved standard form LGIA.

See

Order No. 2003-A, 106 FERC ¶ 61,220 at P 201;

pro forma

LGIP sections 11.2-11.3.

Order No. 2003, 104 FERC ¶ 61,103 at PP 351-354;

pro forma

LGIA art. 5.1.3.

11. Similar to Order No. 2003, in Order No. 2006, the Commission recognized the need for standardized interconnection procedures and agreements for small generating facilities with a capacity of 20 MW or less.

In addition to establishing a

pro forma

interconnection study process for small generating facilities similar to the process for large generation established in Order No. 2003, the Commission included: (1) a “Fast Track Process”

that uses technical screens to evaluate a certified small generating facility no larger than 2 MW; and (2) a “10 kW Inverter Process”

that uses the same technical screens to evaluate a certified inverter-based small generating facility no larger than 10 kW.

The Commission later issued Order No.

792,

in which the Commission revised the

pro forma

SGIP and

pro forma

SGIA to provide for interconnection customers to receive point of interconnection information in advance of submitting an interconnection request, increase the threshold for participation in the Fast Track Process to 5 MW, and to specifically include electric storage devices.

Order No. 2006, 111 FERC ¶ 61,220 at P 36.

Pro forma

SGIP section 2.1.

Id.

attach. 5.

Order No. 2006, 111 FERC ¶ 61,220 at PP 36, 38-39.

Small Generator Interconnection Agreements & Procs.,

Order No. 792, 78 FR 73240 (Dec. 5, 2013), 145 FERC ¶ 61,159 (2013),

clarifying,

Order No. 792-A, 146 FERC ¶ 61,214 (2014).

See

Order No. 792, 145 FERC ¶ 61,159 at P 1.

2. 2008 Order on RTO/ISO Interconnection Queuing Practices

12. In response to concerns voiced to the Commission about interconnection queue management, in 2007, the Commission held a technical conference,

and later issued an order

addressing interconnection queue issues in RTOs/ISOs. In the order, the Commission noted that some transmission providers were not processing their interconnection queues within the timelines established in the

pro forma

LGIP, and in certain cases, were greatly exceeding them.

The Commission stated that, although it “may need to [impose solutions] if the RTOs and ISOs do not act themselves,” each RTO/ISO would have an opportunity to work with its stakeholders to develop its own solutions.

As further discussed below, following the order, multiple RTOs/ISOs submitted queue reform proposals to the Commission, some of which moved away from a so-called “first-come, first-served” approach (whereby interconnection requests are processed in the order they are received) to a so-called “first-ready, first-served” approach (whereby interconnection requests are processed based on when interconnection customers meet certain project development milestones).

Interconnection Queuing Practices,

Docket No. AD08-2-000, Notice of Technical Conference (issued Nov. 2, 2007).

Interconnection Queuing Practices,

122 FERC ¶ 61,252 (2008) (2008 Technical Conference Order).

Id.

P 3.

Id.

P 8.

See, e.g., Sw. Power Pool, Inc.,

128 FERC ¶ 61,114 (2009) (

SPP

);

Midwest Ind. Sys. Operator, Inc.,

124 FERC ¶ 61,183 (2008);

Cal. Ind. Sys. Operator Corp.,

124 FERC ¶ 61,292 (2008).

3. Order No. 845

13. In 2018, the Commission issued Order No. 845,

in which the Commission made the most comprehensive revisions to the

pro forma

LGIP and

pro forma

LGIA since their adoption in Order No. 2003. In Order No. 845, the Commission concluded that reforms to the

pro forma

LGIP and

pro forma

LGIA were needed to mitigate concerns regarding systemic inefficiencies, remedy discriminatory practices, and address recent developments, including changes in the resource mix and emergence of new technologies.

The Commission therefore adopted reforms designed to improve certainty for interconnection customers, promote more informed interconnection decisions, and enhance the generator interconnection process.

Among other things, the Commission: (1) expanded the interconnection customer's option to build certain network upgrades; (2) revised the definition of generating facility to include electric storage resources;

(3) established reporting requirements for aggregate interconnection study performance; (4) allowed interconnection customers to request a level of interconnection service that is lower than their generating facility capacity; (5) required transmission providers to allow provisional interconnection service that provides for limited operation of a generating facility prior to completion of the full generator interconnection process; (6) required transmission providers to create a process for interconnection customers to use surplus interconnection service

at existing points of interconnection; and (7) required transmission providers to assess and, if necessary, study, an interconnection customer's technology changes without affecting the interconnection customer's queue position.

Reform of Generator Interconnection Procs & Agreements,

Order No. 845, 83 FR 21342 (May 09, 2018), 163 FERC ¶ 61,043 (2018),

order on reh'g,

Order No. 845-A, 166 FERC ¶ 61,137, 84 FR 8156 (Mar. 06, 2019),

order on reh'g,

Order No. 845-B, 168 FERC ¶ 61,092 (2019).

Order No. 845, 163 FERC ¶ 61,043 at P 7.

Id.

P 2.

Generating Facilities “shall mean Interconnection Customer's device for the production and/or storage for later injection of electricity identified in the Interconnection Request, but shall not include the Interconnection Customer's Interconnection Facilities.”

Pro forma

LGIP section 1.

The

pro forma

LGIP defines surplus interconnection service as “any unneeded portion of Interconnection Service established in a Large Generator Interconnection Agreement, such that if Surplus Interconnection Service is utilized the total amount of Interconnection Service at the Point of Interconnection would remain the same.”

Pro forma

LGIP section 1.

Order No. 845, 163 FERC ¶ 61,043 at PP 3-5.

4. Transmission Planning and Cost Allocation ANOPR

14. On July 15, 2021, the Commission issued an Advance Notice of Proposed Rulemaking (ANOPR) in Docket No. RM21-17-000, presenting potential reforms to the Commission's requirements governing the regional transmission planning and cost allocation and generator interconnection processes.

Specific to the generator interconnection process, the Commission sought comment on whether and which reforms may be necessary to ensure a more purposeful integration of the generator interconnection process with the regional transmission planning and cost allocation processes, establish a faster and more efficient interconnection queueing process, and promote a more efficient and cost-effective allocation of interconnection-related network upgrade costs.

For instance, the Commission noted that the cost of interconnection-related network upgrades can depend largely on both the timing of when the interconnection customer enters the interconnection queue and where the interconnection customer proposes to interconnect its generating facility. Therefore, the Commission noted, interconnection customers may submit multiple interconnection requests in an effort to determine the most favorable point of interconnection

that minimizes their interconnection-related network upgrade costs.

The Commission stated that this practice, in turn, may lead to late-stage withdrawals of the excess interconnection requests, which can then impede the transmission provider's ability to process its interconnection queue in an efficient manner. As a result, the Commission stated that it may be time to consider reforms to generator interconnection process that would make them more efficient and ensure that generation facilities that are more “ready” than others are not unduly delayed in the interconnection queue.

Bldg. for the Future Through Elec. Reg'l Transmission Plan. & Cost Allocation & Generator Interconnection,

86 FR 40266 (July 15, 2021), 176 FERC ¶ 61,024 (2021) (ANOPR).

Id.

P 5.

Point of Interconnection refers to “the point, as set forth in Appendix A to the Standard Large Generator Interconnection Agreement, where the Interconnection Facilities connect to the Transmission Provider's Transmission System.”

Pro forma

LGIP section 1.

ANOPR, 176 FERC ¶ 61,024 at P 41.

15. On April 21, 2022, the Commission issued a Notice of Proposed Rulemaking (Transmission Planning and Cost Allocation NOPR) proposing reforms to its existing regional transmission planning and cost allocation requirements in the same proceeding as it issued the ANOPR. While the Transmission Planning and Cost Allocation NOPR did not address many of the concerns raised by the Commission in the ANOPR with respect

to the generator interconnection queue process, the Commission noted in the Transmission NOPR that it would continue to review the record and that it expected to address possible inadequacies through subsequent proceedings that propose reforms, as warranted, related to that topic.

We are now taking that next step with the reforms we propose in this NOPR.

Bldg. for the Future Through Elec. Reg'l Transmission Plan. & Cost Allocation & Generator Interconnection,

87 FR 26504 (May 04, 2022), 179 FERC ¶ 61,028, at P 10 (2022) (Transmission Planning and Cost Allocation NOPR).

5. Joint Federal-State Task Force on Electric Transmission

16. On June 17, 2021, the Commission established a Joint Federal-State Task Force on Electric Transmission (Task Force) to formally explore broad categories of transmission-related topics.

The Commission explained that the development of new transmission infrastructure implicates a host of different issues, including generator interconnection. The Task Force is comprised of all FERC Commissioners as well as representatives from 10 state commissions nominated by the National Association of Regulatory Utility Commissioners (NARUC), with two originating from each NARUC region.

The Task Force will convene for multiple formal meetings and has thus far met three times—on November 10, 2021, on February 16, 2022, and on May 6, 2022.

Joint Fed.-State Task Force on Elec. Transmission,

175 FERC ¶ 61,224, at PP 1, 6 (2021).

An up-to-date list of Task Force members, as well as additional information on the Task Force, is available on the Commission's website at:

https://www.ferc.gov/TFSOET.

Public materials related to the Task Force, including transcripts from public meetings, are available in the Commission's eLibrary in Docket No. AD21-15-000.

17. The discussion at the May meeting focused on interconnection issues, including generator interconnection queue processes and backlogs. The Task Force Members discussed: the primary challenges preventing more efficient processing of interconnection queues; specific improvements to interconnection processes (such as tighter applicant requirements to enter and remain in the queue, clustering, fast tracking, tighter deadlines on transmission providers completing studies, and minimizing reiterative studies); and how to balance near term improvements to the interconnection procedures with longer-term regional transmission planning and development.

Joint Fed.-State Task Force on Elec. Transmission,

Notice of Meeting, Docket No. AD21-15-000 (issued Apr. 22, 2022) (attaching agenda).

B. Need for Reform

18. Under the Commission's

pro forma

LGIP, the interconnection study process for large generating facilities is a serial first-come, first-served study process by which transmission providers study interconnection requests individually in the order the transmission provider received them.

The Commission adopted these procedures at a time when most interconnection requests were for large traditional generating facilities that would use readily available transmission capacity. In the 2008 Technical Conference Order, the Commission acknowledged that, while the generator interconnection process set forth in the

pro forma

LGIP made sense at the time that the Commission adopted it, it has since led to some unexpected consequences, particularly for transmission systems with numerous interconnection customers and limited excess transmission capacity.

The Commission also explained that surges in the volume of new types of generating facilities, principally renewable generation, were placing stress on interconnection queue management because such generating facilities can be constructed and placed into operation more quickly than traditional types of generating facilities. The increase in the number of interconnection requests and limited transmission capacity have not subsided since the issuance of the 2008 Technical Conference Order. Although in Order No. 845, the Commission attempted to address interconnection queue backlogs,

the interconnection queue backlog has persisted and worsened. Indeed, as of the end of 2021, there were over 8,100 active interconnection requests in interconnection queues throughout the United States, representing over 1,000 GW of generation and an estimated 420 GW of electric storage.

This is more than triple the total volume, in gigawatts, of generation and electric storage in interconnection queues nationwide just five years earlier.

Pro forma

LGIP section 4.1.

2008 Technical Conference Order, 122 FERC ¶ 61,252 at P 15.

Order No. 845, 163 FERC ¶ 61,043 at P 24.

Joseph Rand et al., Lawrence Berkeley Nat'l Lab'y,

Queued Up: Characteristics of Power Plants Seeking Transmission Interconnection as of the End of 2021,

at 26 (Apr. 2022),

https://emp.lbl.gov/sites/default/files/queued_up_2021_04-13-2022.pdf

(

Queued Up

See

Ryan Wiser et al., Lawrence Berkeley Nat'l Lab'y, Wind Energy Techs. Office,

Land-Based Wind Market Report: 2021 Edition,

at 10 (Aug. 2021),

https://www.energy.gov/eere/wind/articles/land-based-wind-market-report-2021-edition-released

19. The continued use of the Commission's

pro forma

LGIP in the face of dramatic increases in interconnection requests is leading to a growing backlog of interconnection requests for many transmission providers. Based on Commission staff's compilation of information posted by transmission providers for 2021, nationwide, almost 1,900 interconnection requests were awaiting interconnection studies that had not been performed as of the tariff-defined deadline.

These interconnection queue backlogs and study delays create uncertainty and inhibit project developers' ability to interconnect generating facilities to the transmission system.

In addition, as interconnection studies fall behind, the amount of time subsequent interconnection requests spend in the interconnection queue rises.

See

app. A (compiling data publicly posted by transmission providers in compliance with Order No. 845);

See also

May Joint Task Force Tr. 23:18-25 (Jason Stanek) (expressing frustration with the status quo and agreement that it is “no longer tenable” considering the inability of generators to interconnect in a timely manner, e.g., there are “2,500 projects under study [in the MACRUC region] and about a half of them have been in the queue since at least 2001”).

20. Numerous factors appear to contribute to these interconnection queue backlogs. Increasing volumes of interconnection requests are entering the interconnection queue due to a confluence of the rapidly changing

resource mix,

market forces,

and emerging technologies.

At the same time, available transmission capacity appears to have been exhausted in many regions. As the Commission observed in the Transmission Planning and Cost Allocation NOPR, “[t]he evidence suggests that long-term regional transmission planning and cost allocation to identify and plan for transmission needs . . . is not occurring in most transmission planning regions on a regular or consistent basis.”

Instead, the Commission added, significant transmission expansion appears to be happening in an incremental fashion, in response to individual interconnection requests.

This reactive approach to transmission expansion adds to the challenge many proposed projects face to successfully complete the interconnection queue process and reach commercial operation. Therefore, the number of projects waiting in the interconnection queue is increasing. Further, transmission providers report that there is a nationwide shortage of qualified engineers to keep pace with the increasing number of interconnection requests in the queue and associated interconnection studies.

Many, if not all, of these drivers are either ongoing or increasing. Thus, we are concerned that, without reforms to the generator interconnection process, existing interconnection queue backlogs are likely to intensify.

Corporations purchased over 30 GW of clean energy through power purchase agreements in 2021, up nearly 24% from 2020. U.S.-based purchases represented 17 GW of the power purchase agreements executed in 2021. Bloomberg New Energy Finance,

Corporate Clean Energy Buying Tops 30GW Mark in Record Year

(Jan. 31, 2022),

https://about.bnef.com/blog/corporate-clean-energy-buying-tops-30gw-mark-in-record-year/#:~:text=Corporate%20Clean%20Energy%20Buying%20Tops%2030GW%20Mark%20in%20Record%20Year,-January%2031%2C%202022&text=New%20York%20and%20London%2C%20January,research%20firm%20BloombergNEF%20

(BNEF).

From 2009 to 2021, the levelized cost of energy from unsubsidized utility scale wind and solar photovoltaic facilities dropped 72% and 90%, respectively. Lazard,

Lazard's Levelized Cost of Energy Analysis—Version 15.0,

at 9 (Oct. 2021),

https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/

(

Lazard's LCOE

For instance, 42% (285 GW) of solar and 8% (17 GW) of wind projects currently in the queue include are proposed as hybrid resources including electric storage.

Queued Up

at 18.

Transmission Planning and Cost Allocation NOPR, 179 FERC ¶ 61,028 at P 36.

Id.

For example, CAISO stated in its recent proposal to extend its interconnection study deadlines to accommodate its interconnection queue cluster 14 that neither CAISO nor the participating transmission owners could increase staffing as few experts are available to hire.

Cal. Indep. Sys. Operator Corp.,

176 FERC ¶ 61,207, at PP 7, 21 (2021). The Midcontinent Independent System Operator (MISO) has indicated that it similarly has experienced delays in performance of interconnection studies by outside consultants.

See

MISO, Informational Report, Transmittal, Docket No. ER19-1960, at 12 (filed Nov. 16, 2020).

21. In recent years, numerous transmission providers have responded to the types of trends and challenges outlined above by seeking to reform their interconnection queue processes.

Since 2018, the Commission has approved proposals from five non-independent transmission providers to transition from the serial first-come, first-served study process set forth in the

pro forma

LGIP to a first-ready, first-served cluster study process that imposes increasing readiness requirements to advance through the study phases.

Meanwhile, several RTOs/ISOs, including MISO and Southwest Power Pool (SPP), have proposed refinements to the cluster study processes in their regions that the Commission had previously approved.

See

May Joint Task Force Tr. 88:10-12 (Ted Thomas) (“[T]he RTOs have been working on these interconnection issues and we don't have a solution yet.”).

Dominion Energy S.C., Inc.,

Docket No. ER22-301-000 (Dec. 28, 2021) (delegated order) (

Dominion

);

Duke Energy Carolinas, LLC,

176 FERC ¶ 61,075 (2021) (

Duke

);

PacifiCorp,

171 FERC ¶ 61,112 (2020);

Pub. Serv. Comm'n of Colo.,

169 FERC ¶ 61,182 (2019) (

PSCo

);

Tri-State Generation & Transmission Ass'n, Inc.,

173 FERC ¶ 61,015 (2020) (2020 Tri-State Order).

See, e.g.,

Midcontinent Indep. Sys. Operator, Inc.,

178 FERC ¶ 61,141 (2022);

Sw. Power Pool, Inc.,

178 FERC ¶ 61,015 (2022).

22. As the factors contributing to interconnection queue backlogs and study delays continue and even increase, it has become more apparent that the Commission's existing generator interconnection procedures and agreements may be insufficient to ensure that interconnection customers are able to interconnect to the transmission system in a reliable, efficient, transparent, and timely manner, thereby ensuring that rates, terms, and conditions for Commission-jurisdictional services remain just and reasonable and not unduly discriminatory or preferential.

We preliminarily find that the Commission's

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA result in rates, terms, and conditions pursuant to which transmission providers provide generator interconnection service are unjust and unreasonable and unduly discriminatory or preferential. Further, because the interconnection queue backlogs and study delays afflicting generator interconnection service nationwide hinder the timely development of new generation and thereby stifle competition in the wholesale electric markets, we preliminarily find that the Commission's

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA result in rates, terms, and conditions in the wholesale electric markets that are unjust and unreasonable and unduly discriminatory or preferential.

See

May Joint Task Force Tr. 23:6-11 (Riley Allen) (“Ultimately, this system is not working efficiently now and those inefficiencies translate into costs. It's not just cost on the developers, but I find from my decades of experience that, if there are inefficiencies in the system, they ultimately have to be borne by the loads and ratepayer interests.”).

23. Our preliminary findings are based on several features of the Commission's existing generator interconnection procedures and agreements that are of concern, specifically: (1) the information (or lack thereof) available to prospective interconnection customers and the commitments required of them to enter and progress through the interconnection queue; (2) the reliance on a serial first-come, first-served study process and the standard to which transmission providers are held for meeting interconnection study deadlines; (3) the protocols for affected systems studies; (4) the provisions for studying new or hybrid (co-located) generation technologies and considering alternative transmission technologies; and (5) the performance requirements for inverter-based technologies, including wind, solar, and electric storage facilities. We describe these features of the Commission's existing generator interconnection procedures and agreements—as set forth in the Commission's

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA—in this section and then turn to our proposed reforms to address the concerns identified with those features.

See id.

184:6-19 (Clifford Rechtschaffen) (“I think it's beyond dispute that we need queue reform. I don't know if it's a crisis, but there's logjams, dysfunctions, inefficiencies . . . . I think there's a real need to keep the foot on the gas and for FERC to provide guidance templates, best practices, . . . minimum baselines, while again, providing for flexibility.”).

24. First, the

pro forma

LGIP does not contain a process by which an interconnection customer can obtain information at a specific location or point of interconnection about potential interconnection costs prior to submitting an interconnection request. As a result, at the outset of the generator interconnection process,

interconnection customers typically have little insight into the interconnection capacity available at various points on the transmission system. Furthermore, interconnection customers face limited financial commitments to enter and stay in the interconnection queue and few requirements to prove the commercial viability of proposed generating facilities.

Therefore, developers often submit multiple interconnection requests for proposed generating facilities at various points of interconnection, not all of which are expected to reach commercial operation, as an exploratory mechanism to obtain information to allow them to choose the most favorable site.

As in the background of this NOPR, we describe the generator interconnection process set forth in the Commission's

pro forma

LGIP, which

we recognize differs from many transmission providers' generator interconnection processes due to Commission-approved variations.

For example, the total cost of interconnection studies under the

pro forma

LGIP is often under $500,000.

See pro Forma

LGIP sections 3.1 ($10,000 deposit with interconnection request), 6.1 ($10,000 deposit with Feasibility Study Agreement), 7.2 ($50,000 deposit with System Impact Study Agreement), 8.1 (minimum $100,000 deposit with Facilities Study Agreement).

See, e.g., Review of Generator Interconnection Agreements and Procedures,

Technical Conference Transcript, Docket No. RM16-12-000, at 211:10-21 (May 13, 2016) (Steve Naumann, Exelon Corp.) (filed Aug. 23, 2016) (“We would look at putting let's say new gas fired generation in PJM, it may have four queue positions. And we only intend to go through with one, that's not speculation, that's trying to get information on which is the most viable.”).

25. Second, securing a higher interconnection queue position is valuable when interconnecting to a transmission provider that uses the serial first-come, first-served study process as laid out in the

pro forma

LGIP because the transmission provider will process interconnection requests (

i.e.,

perform required interconnection studies) in the order in which the interconnection requests are received. By obtaining an early queue position, a generating facility may be able to use available transmission capacity and not need to incur costs for network upgrades that later-queued interconnection customers potentially incur. Under this framework, interconnection customers have an incentive to submit interconnection requests to secure a queue position as early as possible, even if they are not prepared to move forward with the proposed generating facility at the time the interconnection request is made, to identify locations with available headroom on the transmission system and establish priority over later-queued interconnection requests.

26. Often, these more speculative interconnection requests do not prove to be commercially viable. For example, in many interconnection queues, the MW volumes of interconnection requests far exceed the transmission provider's peak network load.

A lack of commercial viability often means that many proposed generating facilities in the interconnection queue will eventually withdraw after not finding a purchaser for their output. In the case where the interconnection customer submits multiple requests, the developer may select only the one or two most viable project candidates and withdraw the interconnection requests for the remaining projects. These withdrawals then impact the remaining interconnection customers in the interconnection queue. A withdrawal may necessitate re-studies and cause the shifting of network upgrade costs to lower-queued interconnection customers. New cost estimates, in turn, can alter a proposed generating facility's commercial viability and create further re-studies and withdrawals, often referred to as cascading re-studies and withdrawals.

These re-studies exacerbate the cost uncertainty faced by interconnection customers

and prevent the transmission provider from maintaining a model base case for how its transmission system is expected to reliably operate and serve load in the future.

For example, Dominion, PSCo, and Tri-State each provided statistics to this effect as part of their argument for interconnection queue reforms.

See

Dominion, Transmittal Letter, Docket No. ER22-301-000, at 8 (filed Nov. 1, 2021); PSCo, Transmittal Letter, Docket No. ER19-2774-000, at 27 (filed Sep. 9, 2019); Tri-State, Transmittal Letter, Docket No. ER21-410-000, at 20 (filed Nov. 13, 2020).

See pro forma

LGIP section 7.6; s

ee also

May Joint Task Force Tr. 70:20-71:6 (Matthew Nelson) (analogizing reiterative studies to going to the supermarket to buy ingredients for a recipe without knowing how much the ingredients cost, finding out at the register that they cost too much for your budget, and having to “go home, get a new recipe, and start it all over again”).

74:9-21 (Andrew French) (stating that generator developers complain principally about cost certainty and cost sharing and that “cost certainty is the much bigger issue” given that “an essential element of being able to sell a product is to know what your inputs are so you can market it”).

27. These delays faced by individual interconnection customers may hinder the timely development of new generation, and, thereby, stifle competition in wholesale energy markets or delay access to potential low cost generation, which ultimately drive up costs for consumers.

28. Compounding these issues, the

pro forma

LGIP does not require transmission providers to meet deadlines for conducting interconnection studies. Rather, transmission providers are only required to use “reasonable efforts”

to complete interconnection studies on time.

Despite complaints from interconnection customers, the Commission has not yet found that a transmission provider failed to use reasonable efforts to meet interconnection study deadlines, even though such studies are routinely completed months or years late. While interconnection customers can be removed from the queue for failure to comply with deadlines throughout the generator interconnection process,

transmission providers face no consequences for failure to comply with study deadlines.

Reasonable efforts are defined as “actions that are timely and consistent with Good Utility Practice and are substantially equivalent to those a Party would use to protect its own interests.” Order No. 2003, 104 FERC ¶ 61,103 at P 67;

pro forma

LGIP section 1.

See pro forma

LGIP sections 2.2, 6.3, 7.4, 8.3.

Id.

section 3.7 (“[I]f Interconnection Customer fails to adhere to all requirements of this LGIP . . . Transmission Provider shall deem the Interconnection Request to be withdrawn and shall provide written notice to Interconnection Customer . . . [.] Interconnection Customer shall have fifteen (15) Business Days in which to either respond with information or actions that cures the deficiency or to notify Transmission provider of its intent to pursue Dispute Resolution.”).

29. Third, similar to the lack of requirements for timely completion of interconnection studies, the

pro forma

LGIP provides almost no requirements regarding how or when transmission providers or affected systems should complete affected system studies; in particular, even the reasonable efforts standard does not apply to these studies.

In practice, these studies often lag behind those completed by the host transmission provider and are sometimes completed very late in the process, causing an additional round of delays and cost uncertainty for interconnection customers.

Affected systems studies are used to study the impact of proposed interconnection requests on neighboring transmission systems. Transmission providers are obligated to coordinate the conduct of affected system studies, but the Commission has not required transmission providers to follow any specific affected system coordination process.

See pro forma

LGIP section 3.6.

EDF Renewable Energy, Inc.

Midcontinent Indep. Sys. Operator, Inc.,

168 FERC ¶ 61,173 (2019) (

EDF

MISO

30. In short, under the Commission's existing

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA, it is difficult for transmission providers to disincentivize interconnection customers from entering multiple speculative interconnection requests into the interconnection queue or minimize the risk of late-stage withdrawals of interconnection requests. Conversely, transmission providers have little

incentive to perform interconnection studies in a timely fashion. The resulting timing and cost uncertainty creates a barrier to entry that hinders competitive wholesale electric markets. As the Commission has previously observed, delayed interconnection study results or unexpected cost increases can disrupt numerous aspects of generating facility development, including project financing and the ability to obtain a power purchase agreement.

Developers in the interconnection queues have recently filed complaints with the Commission alleging that interconnection study delays have caused direct and indirect financial harm to them by threatening the viability of their projects.

Cost uncertainty poses an especially significant obstacle because proposed generating facilities may simply not be able to absorb substantial unexpected interconnection costs allocated as the result of a re-study. As indicated earlier, our fundamental concern is the follow-on impacts of these issues on rates paid by consumers. Unnecessary interconnection costs, either on the part of project developers or transmission providers, are ultimately passed through to consumers through higher energy or transmission rates, respectively. Conversely, efficient interconnection queues and well-functioning wholesale markets deliver enormous benefits to consumers by driving down wholesale electricity costs.

Reform of Generator Interconnection Procedures and Agreements,

157 FERC ¶ 61,212, at P 30 (2016).

See, e.g.,

SOO Green HVDC Link Project Co, LLC, Complaint, Docket No. EL21-85-000, at 24, 38-39 (filed June 21, 2021).

31. Fourth, in addition to our preliminary findings related to the interconnection queue backlogs described above, we preliminarily find that the Commission's

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA are unjust and unreasonable, unduly discriminatory, and preferential as applied to several interconnection procedural and modeling issues. This set of inquiries was prompted by newer technologies entering interconnection queues in greater numbers. Interconnection queues consist now predominantly of non-synchronous resources such as wind, solar, and electric storage projects, all of which have operating characteristics that were not anticipated when the Commission issued Order No. 2003.

In particular, interest in hybrid resources, which combine more than one generating facility type, often with electric storage, has increased dramatically.

This change in the types of resources has brought to light several issues. For example, the

pro forma

LGIP does not specify whether interconnection customers of all resource types can submit a single interconnection request for co-located components of a generating facility, although research shows that this option is frequently used in regions where it has been made available through variations from the Commission's

pro forma

generator interconnection procedures.

As of the end of 2019, 90% of the generating capacity that was waiting in interconnection queues nationwide was wind, solar, or energy storage projects.

See

Jay Caspary et al., Ams. for a Clean Energy Grid,

Disconnected: The Need for a New Generator Interconnection Policy,

at 4 (Jan. 2021),

https://cleanenergygrid.org/disconnected-the-need-for-new-interconnection-policy/

(ACEG Report).

42% (285 GW) of solar and 8% (17 GW) of wind projects currently in the queue are proposed as hybrid resources including electric storage.

Queued Up

at 18.

In researching hybrid interconnection requests, Lawrence Berkeley National Laboratory encountered many projects for which “the `Generator Type' field includes multiple types for a single queue entry.”

See

Mark Bolinger, et al., Lawrence Berkeley Nat'l Lab'y,

Hybrid Power Plants: Status of Installed and Proposed Projects,

at 16 (Aug. 2021),

https://emp.lbl.gov/sites/default/files/hybrid_plant_development_2021.pdf

32. Further, the addition of generating facilities that do not affect the requested interconnection service level are often deemed a material modification without review, which can cause unnecessary network upgrades. Also, the use of the surplus interconnection process, as adopted in Order No. 845, has proven helpful for interconnection customers seeking to access interconnection capacity that has already been approved through an LGIA, but it is currently only available when a resource is fully operational. Lastly, with respect to interconnection requests involving electric storage resources, a transmission provider may use operating assumptions for interconnection studies that employ worst-case assumptions or other inaccuracies (e.g., that electric storage will charge during peak load periods)

that do not accurately reflect the planned operation of these resources, thus requiring network upgrades that may not be necessary.

Hybrid Resource Coalition, Comments, Docket No. AD20-9-000, at 11-12 (filed Sept. 20, 2021); City of New York, Comments, Docket No. AD20-9-000, at 3 (filed Sept. 20, 2021); Clean Grid Alliance, Comments, Docket No. AD20-9-000, at 3 (filed Sept. 20, 2021); Savion, Post-Technical Conference Comments, Docket No. AD20-9-000, at 7 (filed Sept. 24, 2020); Enel, Post-Technical Conference Comments, Docket No. AD20-9-000, at 2-3 (filed Sept. 24, 2020).

33. We also preliminarily find that failing to consider alternative transmission technologies that can be deployed both more quickly and at lower costs than network upgrades may render Commission-jurisdictional rates unjust and unreasonable. Therefore, we propose to modify the Commission's

pro forma

LGIP and SGIP to require their consideration to achieve their benefits in generator interconnection processes.

Alternative transmission technologies might allow for the interconnection of a proposed generating facility at a lower cost and require less time to implement than traditional network upgrades.

Despite these potential benefits, alternative transmission technologies often do not receive the same consideration during generator interconnection processes and have only been deployed in a small number of instances.

The result is that interconnection customers—and ultimately consumers—may be paying more than is reasonable to reliably interconnect new generating facilities, rendering Commission-jurisdictional rates unjust and unreasonable and unduly discriminatory and preferential.

A variety of technologies offer potential alternatives to standard infrastructure network upgrades (e.g., reconductoring transmission lines or building new ones). These technologies include advanced power flow control devices, transmission switching, dynamic line ratings, static synchronous compensators, static volt-ampere reactive (VAR) compensators, and electric storage in specific use cases.

See, e.g.,

EDF Renewables, Comments, Docket No. RM21-17-000, at 16 (filed Nov. 30, 2021); State Agencies, Comments, Docket No. RM21-27-000, at 30-33 (filed Nov. 30, 2021); Alliant Energy Corporate Services, Inc. et al., Comments, Docket No. RM20-16-000, at 6 (filed Mar. 22, 2021) (stating that “utilization of [dynamic line ratings] can improve contingency planning and defer or eliminate the need for line upgrades or reconductoring”).

See, e.g.,

EDF Renewables, Comments, Docket No. RM21-17-000, at 16 (filed Nov. 30, 2021); Potomac Economics, Comments, Docket No. RM21-17-000, at 8-9 (filed Nov. 30, 2021); State Agencies, Comments, Docket No. RM21-27-000, at 31-32 (filed Nov. 30, 2021).

34. Fifth, we preliminarily find that the

pro forma

LGIP and SGIP's data submission and performance requirements for non-synchronous generating facilities

(including wind, solar, and electric storage facilities) require reform to avoid undue discrimination and ensure just and reasonable Commission-jurisdictional rates. When an interconnection customer submits an interconnection

request for a proposed synchronous generating facility, it must provide a variety of system information, which allows the transmission provider to assess and model the facility's ability to respond appropriately to transmission system disturbances.

By contrast, non-synchronous generating facilities are not required to provide a comparable level of information that would allow the transmission provider to model and assess the facility's ability to respond appropriately to transmission system disturbances.

As the penetration of wind, solar, and electric storage resources increases, the behavior of these types of non-synchronous generating facilities during transmission system disturbances becomes more consequential, as does the need to assess their potential contribution to cascading outages or other major electric system issues. Furthermore, we are concerned that, without reform to require interconnection customers developing non-synchronous resources to provide sufficiently accurate and validated models, interconnection studies may not identify the appropriate interconnection facilities and network upgrades needed for that interconnection request. If the interconnection studies are not able to identify the appropriate interconnection facilities and network upgrades, then the interconnection costs assigned to that interconnection customer may be skewed, resulting in unjust and unreasonable rates for interconnection service.

Non-synchronous generating facilities are “connected to the bulk power system through power electronics, but do not produce power at system frequency (60 Hz).” They “do not operate in the same way as traditional generators and respond differently to network disturbances.”

Reactive Power Requirements for Non-Synchronous Generation,

Order No. 827, 81 FR 40793 (June 23, 2016), 155 FERC ¶ 61,277, at P 10 n.24 (2016) (citing

Interconnection for Wind Energy,

Order No. 661, 70 FR 34993 (June 16, 2005), 111 FERC ¶ 61,353, at P 3 n.4 (2005)).

This information includes model block diagrams for excitation systems, power system stabilizers, and governor systems, to inform and verify the dynamic models used by the transmission provider to assess the proposed synchronous generating facility's response to transmission system disturbances.

See pro forma

LGIP app. 1, attach. A.

See infra

PP 310-312.

35. In addition, we are concerned that the

pro forma

LGIA and SGIA may impose disparate performance requirements during system disturbances on synchronous and non-synchronous resources. Specifically, the physical characteristics of synchronous generating facilities result in such facilities continuing to inject electric current during transmission system disturbances, consistent with the need to remain “connected to and synchronized with the Transmission System” as required by the

pro forma

LGIA and SGIA.

As a result, services that support transmission system reliability are not disrupted during such events. However, the

pro forma

LGIA and SGIA do not currently require non-synchronous generating facilities to continue injecting current in a comparable manner during system disturbances. Specifically, non-synchronous resources many cease injecting current through “momentary cessation.”

As a result, transmission providers cannot determine whether non-synchronous generating facilities, in the aggregate, will continue to inject electric current during transmission system disturbances.

Pro forma

LGIA art. 9.73;

pro forma

SGIA art. 1.57.

See infra

note 463

36. In light of the concerns outlined above, we preliminarily find that it is necessary to reform the Commission's

pro forma

LGIP,

pro forma

LGIA,

pro forma

SGIP, and

pro forma

SGIA to ensure that interconnection customers are able to interconnect to the transmission system in a reliable, efficient, transparent, and timely manner, thereby ensuring that rates, terms, and conditions for Commission-jurisdictional services remain just and reasonable and not unduly discriminatory or preferential.

II. Proposed Reforms

A. Reforms To Implement a First-Ready, First-Served Cluster Study Process

37. In recent years, late-stage withdrawals of interconnection requests have caused significant delays in interconnection study processes. In its January 2020 interconnection queue reform filing, PacifiCorp noted that about 75% of all interconnection requests ultimately withdraw from its interconnection queue and that withdrawals are a significant cause of delays in the generator interconnection process because withdrawals trigger re-studies. PacifiCorp argued that the current generator interconnection process encourages speculative projects to enter the interconnection queue because it does not require any progress toward commercial viability and does not penalize withdrawals from the interconnection queue.

PacifiCorp,

171 FERC ¶ 61,112 at P 3.

38. In support of its 2019 interconnection queue reform proposal, PSCo stated that it has experienced a surge in interconnection requests that cannot be processed under its current generator interconnection process. PSCo explained that, because the amount of generation requesting interconnection is significantly greater than the region's needs, only a small fraction of the generating facilities in the interconnection queue are likely to reach commercial operation. In addition, PSCo stated that, due to the configuration of PSCo's transmission system and the fact that most requests are for network resource integration service (NRIS),

almost all lower-queued interconnection requests, regardless of study phase, are affected by changes to higher-queued interconnection requests.

100

NRIS allows the interconnection customer to integrate its generating facility with the transmission provider's transmission system in a manner comparable to that in which the transmission provider integrates its generating facilities to serve native load customers, or in an RTO/ISO with market-based congestion management, in the same manner as Network Resources. NRIS in and of itself does not convey transmission service.

Pro forma

LGIP section 1.

100

PSCo,

169 FERC ¶ 61,182 at P 21.

39. For the reasons explained above, we preliminarily find that the Commission's

pro forma

LGIP and LGIA are unjust, unreasonable, unduly discriminatory, and preferential and that reforms are needed to allow interconnection customers to interconnect in a reliable, efficient, timely manner, thereby ensuring that rates, terms, and conditions for Commission-jurisdictional services remain just and reasonable and not unduly discriminatory or preferential. In particular, with regard to interconnecting in an efficient and timely manner, we propose reforms to the

pro forma

LGIP that: (1) require transmission providers to offer an optional informational interconnection study to serve as additional information for prospective interconnection customers in deciding whether to submit an interconnection request and set minimum requirements for transmission providers to publicly post available information pertaining to generator interconnection; (2) require transmission providers to implement a first-ready, first-served cluster study process that allocates costs associated with cluster studies and identified network upgrades consistent with the discussion below; and (3) impose more stringent financial commitments and readiness requirements on interconnection customers, including increased study deposits, more stringent site control requirements, a commercial readiness framework, and higher withdrawal penalties. To implement these reforms, we also propose to require transmission providers to establish a transition process, consistent with the proposed requirements below.

1. Interconnection Information Access

a. Need for Reform

40. We are concerned that the lack of transparency for prospective interconnection customers to obtain information about potential

interconnection costs prior to submitting an interconnection request is problematic. Without this information, it is difficult for interconnection customers to assess the viability of a specific proposed generating facility. Subsequently, interconnection customers submit multiple speculative interconnection requests in an attempt to obtain information through the system impact study process about the costs associated with various project configurations.

41. Some transmission providers have attempted to solve these problems by making more information available to interconnection customers before they enter the interconnection queue through an optional informational interconnection study that provides estimates of costs and scheduling for various sites.

101

These optional informational interconnection studies evaluate the feasibility of a proposed interconnection request and provide interconnection customers with non-binding information upon which to base preliminary siting decisions. Transmission providers that offer these types of studies require a $10,000 deposit for the studies, subject to a true-up based on actual costs of performing the studies.

102

While some transmission providers offer such an option, it is not currently required by the

pro forma

LGIP.

101

Dominion,

Docket No. ER22-301-000 (Dec. 28, 2021) (delegated order);

Duke,

176 FERC ¶ 61,075 at P 19;

PacifiCorp,

171 FERC ¶ 61,112 at P 54;

PSCo,

169 FERC ¶ 61,182 at PP 9-10, 30;

Tri-State Generation & Transmission Ass'n, Inc.,

174 FERC ¶ 61,021, at P 6 (2021) (

Tri-State

102

See, e.g.,

Dominion, OATT and Service Agreements, attach. M (4.5.0), section 3.1; PSCo, Transmission and Service Agreements Tariff, OATT, attach. N. (0.8.0), section 6.1 (requiring a $10,000 deposit for an informational study request).

b. Proposed Reforms

i. Informational Interconnection Study

42. To address the lack of information available to interconnection customers prior to entering the interconnection queue, and the associated impacts on development of new generating facilities, interconnection queue backlogs, and interconnection study delays, we propose to revise the Commission's

pro forma

LGIP to require transmission providers to offer an informational interconnection study to serve as additional information for prospective interconnection customers in deciding whether to submit an interconnection request. The study would provide cost estimates for the transmission provider's interconnection facilities

103

and network upgrade costs specific to the interconnection scenario detailed in the study agreement. Specifically, we propose to revise sections 6.1-6.3 and Appendix 2 to the

pro forma

LGIP to implement this reform: section 6.1 (Informational Interconnection Study Agreement), section 6.2 (Scope of Informational Interconnection Study), section 6.3 (Informational Interconnection Study Procedures), Appendix 2 (Informational Interconnection Study Request form), and Attachment A to Appendix 2 (Informational Interconnection Study Agreement form). We also propose to include new definitions for an informational interconnection study and informational interconnection study agreement.

103

The

pro forma

LGIA defines “Transmission Provider's Interconnection Facilities” as “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.” These are distinct from “Interconnection Customer's Interconnection Facilities,” which are those facilities “identified in Appendix A of the Standard Large Generator Interconnection Agreement, that are located between the Generating Facility and the Point of Change of Ownership, including any modification, addition, or upgrades to such facilities and equipment necessary to physically and electrically interconnect the Generating Facility to the Transmission Provider's Transmission System. Interconnection Customer's Interconnection Facilities are sole use facilities.”

Pro forma

LGIA section 1.

43. Proposed section 6.1 of the

pro forma

LGIP provides that a prospective interconnection customer may request an informational interconnection study. The proposed provision would limit prospective interconnection customers to no more than five separate informational interconnection study requests pending at a time to ensure that transmission providers are not overburdened with these studies and that one prospective interconnection customer cannot prevent others from taking advantage of this information-gathering process.

104

Each configuration of an interconnection request would require a separate informational interconnection study. For example, prospective interconnection customers seeking to evaluate different sites or different voltage levels at the same site would need to submit a separate request for each configuration. The informational interconnection study would be at the interconnection customer's expense, and each study would require a $10,000 deposit, subject to a true-up based on actual study costs.

104

See, e.g.,

Dominion, OATT and Service Agreements, attach. M (4.5.0), section 3.1 (“Any one Interconnection Customer (including affiliates) shall have no more than five (5) requests for Informational Interconnection Study reports pending at one time.”).

44. Under the proposal, within seven business days of the receipt of a prospective interconnection customer's request for an informational interconnection study, the transmission provider would have to provide the prospective interconnection customer with an informational interconnection study agreement in the form of Attachment A to Appendix 2 of the

pro forma

LGIP. The informational interconnection study agreement would specify the technical data that the prospective interconnection customer must provide and an estimate of the expected costs of the study, including, to the extent known by the transmission provider, an estimate of the study costs expected to be incurred by any relevant affected systems. The prospective interconnection customer would have 10 business days to execute the agreement and deliver it to the transmission provider, along with the relevant technical data and study deposit, after which the transmission provider would have 45 days to complete the study.

45. Proposed section 6.2 of the

pro forma

LGIP explains that the informational interconnection study consists of a sensitivity analysis based on the assumptions specified in the informational interconnection study agreement. The informational interconnection study would identify potential interconnection facilities and network upgrades that may be required to interconnect the prospective interconnection customer's proposed generating facility, including an approximation of the costs of such interconnection facilities and network upgrades. The transmission provider would also coordinate with affected systems that may be impacted by the prospective interconnection customer's request to provide information on affected systems-related issues.

46. Proposed Attachment A to Appendix 2 of the

pro forma

LGIP contains the informational interconnection study agreement form. The form agreement explains that the informational interconnection study is performed solely for informational purposes and is not binding on either party. It also requires the study report to provide specific information, including, at a minimum: (1) preliminary identification of any circuit breaker short circuit capability limits exceeded; (2) preliminary identification of any thermal overload or voltage limit violations; and (3) estimated network

upgrade costs related to the identified overloads and violations.

47. We recognize that the benefit of the informational interconnection study results would depend on the information provided, the assumptions made, and the timing of the proposed interconnection, with studies looking at interconnection requests with proposed commercial operation dates further into the future carrying greater uncertainty. Nevertheless, we seek comment on whether the informational interconnection study, as proposed, would provide prospective interconnection customers with sufficient and timely information to inform decision-making prior to submitting an interconnection request.

48. We seek comment on whether transmission providers should be required to establish a request window of a limited number of days each year in which potential interconnection customers can request an optional informational interconnection study. Lastly, we seek comment on the burdens on transmission providers of conducting informational studies and whether other options, such as the proposal below for public interconnection information, might strike a better balance of providing interconnection customers with useful information while making efficient use of transmission provider resources.

ii. Public Interconnection Information

49. In addition to the optional informational interconnection study described above, to address the lack of information available to interconnection customers prior to entering the interconnection queue, and the associated impacts on development of new generating facilities, interconnection queue backlogs, and interconnection study delays, we also propose to set minimum requirements for transmission providers to publicly post available information pertaining to generator interconnection. We believe that providing an interactive visual representation

105

of available interconnection capacity, as explained below, across a transmission provider's transmission system could provide valuable information to prospective interconnection customers that are considering efficient points of interconnection and could ameliorate the incentive to submit multiple speculative interconnection requests to gather information useful to assessing the viability of proposed generating facilities.

105

See, e.g.,

Midcontinent Indep. Sys. Operator,

Points of Interconnection, https://giqueue.misoenergy.org/PoiAnalysis/index.html

(accessed March 17, 2022).

50. Some transmission providers already post such generator interconnection information as an extra tool for prospective interconnection customers. For example, MISO provides an interactive heatmap of expected congestion to serve as a guide on potential points of interconnection with available interconnection capacity.

106

The heatmap allows prospective interconnection customers to see estimated changes in variables such as the distribution factor (an approximation of congestion) and the percentage impact on power flow for monitored facilities based on a user-entered MW amount and voltage level at a user-selected point of interconnection. Transmission congestion is a key consideration for potential interconnection customers because elevated congestion in a particular area of the transmission system may signal that it is a location where network upgrades are more likely to be required or curtailments are more likely to occur relative to an area with less congestion. This heatmap is based on the assumptions in a given interconnection study cycle and MISO includes the caveat that the tool does not provide consideration for all system conditions, including voltage and stability constraints.

106

Id.

51. In order to make similar information available to prospective interconnection customers across the country—ensuring comparable access to information regardless of the interconnecting transmission provider—we propose to require transmission providers to maintain and make publicly available an interactive visual representation of available interconnection capacity as well as a table of relevant interconnection metrics that allow prospective interconnection customers to see certain estimates of a potential generating facility's effect on the transmission provider's transmission system. Specifically, we propose to revise section 6.4 of the

pro forma

LGIP to implement this reform. Section 6.4 (Publicly Posted Interconnection Information) would set forth minimum requirements that include a heatmap of estimated incremental injection capacity (in MW) available at each bus in the transmission provider's footprint under N-1 conditions, as well as providing a table of results showing the estimated impact of the addition of a proposed project (based on the user-specified MW amount, voltage level, and point of interconnection) for each monitored facility impacted by the proposed project on: (1) the distribution factor; (2) the MW impact (based on the proposed project size and the distribution factor); (3) the percentage impact on the monitored facility (based on the MW values of the proposed project and the monitored facility rating); (4) the percentage of power flow on the monitored facility before the proposed project; and (5) the percentage power flow on the monitored facility after the injection of the proposed project. These metrics would be calculated based on the power flow model of the cluster study or re-study with the transfer simulated from each bus to the whole transmission providers footprint (to approximate NRIS), and with the incremental capacity at each bus decremented by the existing and queued generation in the Cluster (based on the existing or requested interconnection service limit of the generation). These metrics would be intended to facilitate a high-level comparison between various points of interconnection, without submitting an interconnection request. We propose to require transmission providers to make this information available on their public websites to facilitate transparency and the usefulness of this information for prospective interconnection customers. We propose to require transmission providers to update this information within 30 days after the completion of each cluster study and re-study. Should prospective interconnection customers require more detailed analysis, they could submit a request for an informational interconnection study, as we proposed to establish above in Section A.1.b.

52. We seek comment on whether there are any security concerns with this proposed requirement. We also seek comment on whether the assumptions specified for the analysis are the right set of assumptions.

2. Cluster Study

a. Need for Reform

53. As discussed above, the inefficiency of the

pro forma

serial first-come, first-served interconnection study process in the

pro forma

LGIP is a major cause of the backlogs delaying transmission providers' interconnection queues. Using the

pro forma

serial interconnection study process in the face of a large interconnection queue backlog leads to uncertainty with regard to how long it will take to complete the interconnection study process, and the interconnection customer's cost responsibility for network upgrades.

54. Even for transmission providers that have not yet experienced large backlogs, the serial interconnection study process may cause unnecessary delay and inefficiently allocate network upgrade costs. Under the

pro forma

LGIP study process, interconnection requests are typically studied individually where a single proposed generating facility may create a need for network upgrades. This current serial process may result in a piecemeal identification of network upgrades which does not account for possible efficiencies of studying multiple interconnection customer requests and identifying fewer network upgrades that are able to accommodate multiple interconnection requests, particularly requests that may be located in a similar area.

107

See

May Joint Task Force Tr. 43:25-44:4 (Riley Allen) (“Clustering helps the regions identify what I'll call the backbone or trunk facilities that provide efficiencies in the system to the benefit ultimately of ratepayers. New England has been relying on clustering and I'm told that that's going very well.”).

55. Moreover, advancing interconnection customers' facilities through the queue based solely on date of entry may result in inefficiencies where earlier queued customers have the potential to delay later-queued facilities. Specifically, the serial process combined with existing allocation of costs may cause unreasonable delays in the study process. Under existing tariffs within the RTOs/ISOs and non-RTO/ISO regions, the transmission provider allocates the full cost of those network upgrades to the individual interconnection customer. Although the crediting policy in the

pro forma

LGIP requires that the interconnection customer is ultimately reimbursed for the cost of the network upgrades, the large upfront network upgrade cost allocation may render a proposed generating facility economically non-viable, such that the interconnection customer is forced to withdraw from the interconnection queue.

108

Unless the withdrawing interconnection customer's proposed generating facility is electrically isolated, this withdrawal will also trigger individual re-study of lower-queued interconnection requests. As the transmission provider attempts to allocate this large network upgrade cost to the next interconnection customer in the interconnection queue, it can cause several projects to withdraw and trigger further re-studies—commonly referred to as cascading re-studies. If the interconnection customer does not withdraw and pays for the network upgrade to be constructed, lower-queued interconnection customers that will benefit from the network upgrade are not required to share cost responsibility simply because they submitted an interconnection request at a later date.

109

Therefore, the existing serial study process may now be unjust and unreasonable because interconnection customers are no longer able to consistently progress through the interconnection process in a timeframe consistent with Order No. 2003 and the

pro forma

LGIP. Further, the existing serial study process may now be unjust and unreasonable because the process frequently allocates to individual interconnection customers the cost network upgrades that may create additional interconnection capacity needed for several interconnection customers.

108

See, e.g., Duke,

176 FERC ¶ 61,075 at P 3 (explaining that, in many cases, assignment of such significant network upgrade costs can make new generation projects infeasible, incentivizing those projects to delay in committing to fund the network upgrades or to withdraw from the interconnection queue, causing delays and the need for re-studies). Interconnection customers may be even more likely to withdraw in RTO/ISO areas where the Commission has allowed for participant funding of network upgrades, whereby the interconnection customer will not be fully reimbursed for the cost of the network upgrades.

109

See

Order No. 845-A, 166 FERC ¶ 61,137 at P 78 (“The principle of cost causation generally requires that costs `are to be allocated to those [that] cause the costs to be incurred and reap the resulting benefits.'”) (citing

S.C. Pub. Serv. Auth.

FERC,

762 F.3d 41, 87 (D.C. Cir. 2014)) (quoting

NARUC

FERC,

475 F.3d at 1285).

b. Proposed Reforms

i. Background

56. The serial first-come, first-served study process in the

pro forma

LGIP includes three distinct studies, conducted on an individual basis, to identify the interconnection facilities and network upgrades that are needed to accommodate the interconnection request and provide an estimate of the cost responsibility and timing for those facilities. Each study incorporates the base case study model, which includes all generating facilities and the associated interconnection facilities and network upgrades needed for higher-queued interconnection requests that are pending, as well as an up-to-date model of the transmission provider's transmission system.

110

First, the transmission provider conducts the feasibility study, which is a preliminary evaluation of the system impact and cost of interconnecting the generating facility to the transmission provider's transmission system, and consists of a power flow and short circuit analysis.

111

The transmission provider must use reasonable efforts to complete the feasibility study no later than 45 days after it receives the executed interconnection feasibility study agreement.

112

110

Pro forma

LGIP section 2.3.

111

Id.

section 6.2. Some transmission providers—including CAISO, Arizona Public Service Company, El Paso Electric Company (El Paso Electric), Sierra Pacific Power Company and Nevada Power Company (jointly, NV Energy), and Public Service Company of New Mexico (PNM)—have eliminated the feasibility study to reduce interconnection request processing time.

112

Id.

section 6.3.

57. Second, the transmission provider conducts the system impact study. The system impact study identifies and details the impacts to the transmission provider's transmission system or an affected system of the interconnection of the proposed generating facility.

113

The system impact study consists of a short circuit analysis, a stability analysis, and a power flow analysis. The transmission provider must use reasonable efforts to complete the system impact study within 90 days after it receives the executed interconnection system impact study agreement.

114

The

pro forma

LGIP provides transmission providers with the option to study interconnection requests on a clustered basis for the system impact study.

115

113

Id.

section 7.3.

114

Id.

section 7.4.

115

Order No. 2003, 104 FERC ¶ 61,103 at PP 153-156;

pro forma

LGIP section 4.2. If the transmission provider elects to study interconnection requests using clustering, all interconnection requests received within 180 days (queue cluster window) must be studied together without regard to the nature of the underlying interconnection service, whether NRIS or ERIS. However, the

pro forma

LGIP allows the transmission provider to study an interconnection request separately based on the electrical remoteness of the proposed generating facility.

Pro forma

LGIP section 4.2.

58. Third, the transmission provider conducts the facilities study, which specifies and estimates the cost of the equipment, engineering, procurement, and construction work needed to implement the conclusions of the system impact study.

116

Where the system impact study focuses mainly on impacts to the transmission system, the facilities study aims to provide a more accurate estimate of the electrical switching configuration of the connection equipment, such as transformers, switchgear, meters, and other station equipment and a more accurate estimate of the specific costs associated with required network upgrades rather than a per-mile estimate. The facilities study will also identify any potential control equipment needed to accommodate requests for interconnection service that are lower than the generating facility capacity. Interconnection customers

have two options for the timeframe in which the facilities study must be completed: 90 days, if the interconnection customer requests a +/−20% cost estimate contained in the report; or 180 days, if the interconnection customer requests a +/−10% cost estimate.

117

116

Id.

section 8.2.

117

If the interconnection customer wants its cost estimate to be accurate within a range of +/−20%, the study must be completed within 90 days since there is greater room for error on the part of the transmission provider's estimate, whereas if the interconnection customer wants its cost estimate to be accurate within a range of +/−10%, the transmission provider has up to 180 days to develop a more accurate cost estimate.

Id.

section 8.3.

59. Re-study is required when (1) a higher-queued interconnection request withdraws from the interconnection queue, (2) a higher-queued interconnection request modifies its proposed generating facility pursuant to section 4.4 of the

pro forma

LGIP, or (3) the interconnection customer redesignates its point of interconnection.

118

Transmission providers are required to conduct re-study of the feasibility study within 45 days of the triggering event and re-study of the system impact and facilities studies within 60 days of the triggering event.

118

Id.

sections 6.4, 7.6, 8.5.

60. Under the

pro forma

LGIP, the interconnection customer can request to begin negotiations to the LGIA with the transmission provider at any time after the interconnection customer executes the interconnection facilities study agreement, for not more than 60 days after tender of the final interconnection facilities study report.

119

If the interconnection customer determines that negotiations are at an impasse, it may request termination of the negotiations at any time after tender of the draft LGIA and request submission of the unexecuted LGIA to the Commission, or initiate dispute resolution procedures. The transmission provider must provide a final LGIA to the interconnection customer within 15 days after the completion of the negotiation process. Within 15 days after receipt of the final LGIA, the interconnection customer must provide the transmission provider either (1) reasonable evidence of continued site control or (2) post additional non-refundable security of $250,000, which will be applied toward future construction costs.

120

The interconnection customer also must provide reasonable evidence that it has achieved one or more milestones in the development of the generating facility as listed in section 11.3 of the

pro forma

LGIP. As soon as practicable, but not later than 10 days after receiving the tendered LGIA or the request to file an unexecuted LGIA, the transmission provider must file the LGIA with the Commission.

121

119

Id.

section 11.2.

120

Id.

section 11.3.

121

Id.

61. The Commission has stated that clustering is the preferred method for conducting interconnection studies, and has strongly encouraged clustering in interconnection queue management and interconnection study processes for all transmission providers.

122

In the 2008 Technical Conference Order, the Commission noted that clustering that takes into account factors other than the interconnection request filing date may allow for more efficient prioritization of interconnection requests while still providing protection from undue discrimination by transmission providers.

123

Subsequently, the Commission approved many variations of cluster study processes where the transmission provider groups interconnection requests received during an open window period and processes those requests as a cluster, with some form of shared cost responsibility for identified network upgrades triggered by the cluster. The Commission noted that performing studies in clusters helps alleviate interconnection queue backlogs and offers considerable benefits as the network upgrades required for an interconnection customer to interconnect to the transmission system may be large enough to accommodate more than one interconnection request.

124

Generally, cluster study processes include the following elements: (1) an interconnection request window; (2) a customer engagement window; (3) cluster studies including (a) a power-flow and voltage study, which is similar to a feasibility study under the

pro forma

LGIP, and (b) a stability and short circuit study, which completes the traditional system impact study; (4) a facilities study; (5) re-study, if needed; and (6) LGIA execution or filing of an unexecuted LGIA.

122

Order No. 2003, 104 FERC ¶ 61,103 at P 155, Order No. 2006, 111 FERC ¶ 61,220 at P 181.

123

2008 Technical Conference Order, 122 FERC ¶ 61,252 at P 18.

124

Midwest Ind. Sys. Operator, Inc.,

124 FERC ¶ 61,183 at PP 114, 143 (accepting usage of group studies as a means to help alleviate interconnection queue backlog and finding that clustering studies offers considerable benefits);

SPP,

128 FERC ¶ 61,114 at P 32 (finding that performing cluster studies should enable processing the interconnection queue backlog more effectively);

So. Cal. Edison Co.,

135 FERC ¶ 61,093, at P 50 (2011) (finding that coordinating the cluster study processes for interconnection requests to a utility's transmission and distribution systems would “achieve greater efficiency and effectively manage network impacts”);

see also Tri-State,

174 FERC ¶ 61,021 at P 31 (noting PSCo's Comments that PSCo's preliminary experience of operating under the cluster study process has demonstrated that “studying requests in clusters is shown to be more efficient than studying each request individually,” and that “this approach to generator interconnection is superior to the

pro forma

LGIP and LGIA”).

134

PNM,

136 FERC ¶ 61,231 at P 79 (noting that “PNM's proposal adopting the cluster approach to study related projects together will likely improve efficiency by limiting the need for re-studies”) (citing Order No. 2006, 111 FERC ¶ 61,220, at P 181).

65. In particular, we propose several revisions to the

pro forma

LGIP and

pro forma

LGIA to implement a first-ready, first-served cluster study process. We describe these revisions briefly in this section and include the full proposed language in appendices to this NOPR. We propose to add several new defined terms and revise several defined terms in section 1 of the

pro forma

LGIP and article 1 of the

pro forma

LGIA. For example, we propose to modify the definition of stand alone network upgrade to clarify that, for a network upgrade to be eligible for treatment as a stand alone network upgrade,

135

the network upgrade must only be required for one interconnection customer. This clarification should prevent lengthy conflict and negotiations in instances where multiple interconnection requests trigger the need for a network upgrade that could be considered a stand alone network upgrade under the current definition mainly because it can be constructed without affecting day-to-day operations of the transmission system, and several interconnection customers have an interest in exercising the option to build. We also propose modifying the definition of material modification to account for the equal queue position of generating facilities in the same cluster.

136

The new definition would clarify that material modifications are those with a material impact on the cost or timing of interconnection requests with a later or equal queue position.

135

Under the current

pro forma,

Stand Alone Network Upgrades are defined as “Network Upgrades that are not part of an Affected System 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. If the Transmission Provider and Interconnection Customer disagree about whether a particular Network Upgrade is a Stand Alone Network Upgrade, the Transmission Provider must provide the Interconnection Customer a written technical explanation outlining why the Transmission Provider does not consider the Network Upgrade to be a Stand Alone Network Upgrade within 15 days of its determination.”

Pro forma

LGIP section 1.

136

Under the current

pro forma,

Material Modification is defined as “those modifications that have a material impact on the cost or timing of any Interconnection Request with a later queue priority date.”

Pro forma

LGIP section 1.

66. We propose revisions to add new subsection 3.1.1.1 (Initial Study Deposit) to the

pro forma

LGIP, which provides that an interconnection customer must submit its interconnection request and applicable study deposit during a cluster request window (described below). We also propose to add new subsection 3.1.2 (Submission) to the

pro forma

LGIP, which provides that interconnection customers evaluating different options (such as different sizes, sites, or voltages) are encouraged but not required to use the new informational interconnection study proposed in this NOPR before entering the cluster study. New subsection 3.1.2 of the

pro forma

LGIP also provides that the interconnection customers must select a definitive point of interconnection to be studied when executing the cluster study agreement. Upon mutual agreement, the transmission provider may make reasonable changes to the requested point of interconnection to facilitate efficient interconnection of clustered interconnection requests at common points of interconnection.

67. We also propose to add new subsection 3.4.1 (Cluster Request Window) to the

pro forma

LGIP, which provides that interconnection customers must submit an interconnection request during a specified period, the cluster request window, which is a 45-day period with the start date to be determined by each transmission provider (with the annual start date for the transmission provider's cluster

request window included in its LGIP). The transmission provider would consider all interconnection requests accepted within this period to have equal queue priority for purposes of the cluster study. Following the close of the cluster request window, the transmission provider would begin a 30-day customer engagement window as provided in new subsection 3.4.5 (Customer Engagement Window) of the

pro forma

LGIP.

68. We propose to renumber and revise subsection 3.4.4 (Scoping Meeting) as subsection 3.4.6 of the

pro forma

LGIP to provide that, during the customer engagement window, transmission providers must hold a scoping meeting with all interconnection customers whose interconnection requests were received in that cluster request window. Revised subsection 3.4.6 of the

pro forma

LGIP would also require transmission providers to hold individual customer-specific scoping meetings, at the interconnection customer's request, which must be requested by no later than 15 business days after the close of the cluster request window. By the end of the customer engagement window, the transmission provider would post on OASIS the final cluster study plan, which lists all valid interconnection requests with an executed cluster study agreement that will be part of the cluster study.

69. We propose to replace the sections of the

pro forma

LGIP, including subsection 3.5.2 (Requirement to Post Interconnection Study Metrics) of the

pro forma

LGIP, that require the posting of metrics for interconnection feasibility studies processing time and system impact study processing time with sections that require the posting of metrics for cluster study processing time and cluster re-study processing time. We also propose to add a new subsection to require the posting of the time from when the transmission provider received a valid interconnection request to the completion of the cluster study, cluster re-study, and facilities study.

70. We also propose several revisions to section 4 (Queue Position) of the

pro forma

LGIP to make clear that cluster studies are the required interconnection study method under the

pro forma

LGIP and that transmission providers may not have a first-come, first-served interconnection study method under their respective LGIPs. We propose to rename and revise section 4.1 of the

pro forma

LGIP as “Queue Position” and add two new subsections: (1) subsection 4.1.1 (Assignment of Queue Position), which makes clear that queue position will be based on the time and date that the transmission provider receives all items required under section 3.4 (Valid Interconnection Request) and that there is no queue priority for interconnection customers that opted for informational interconnection studies;

137

and (2) subsection 4.1.2 (Higher Queue Position), which provides that all interconnection requests studied in a single cluster shall be considered to have equal queue priority, but clusters initiated earlier in time shall be considered to have a higher queue position than clusters initiated later. To be clear, the date of submission of an individual interconnection request within the same cluster would have no bearing on the allocation of the cost of the network upgrades identified in the applicable cluster study, because such costs would be allocated among interconnection requests using a proportional impact method (discussed below in section II.A.4.).

137

See supra

PP 42-45 (explaining that the informational interconnection study is intended to provide prospective interconnection customers with information prior to entering the queue).

71. New subsection 4.1.2 of the

pro forma

LGIP also provides that moving a point of interconnection shall result in a loss of queue position if the transmission provider deems the change a material modification. To align with this, we propose corresponding changes to the material modification provisions in section 4.4 (Modification) of the

pro forma

LGIP to provide that moving a point of interconnection shall result in a loss of interconnection queue position if it is deemed a material modification by the transmission provider. We note that the interconnection customer may decide to forego the requested change that constitutes a material modification and retain its existing queue position.

138

We also propose to revise

pro forma

LGIP section 4.4.5, which currently states that an extension of less than three cumulative years of the generating facility's commercial operation date are not material and should be handled through construction sequencing. We propose to provide that the commercial operation date reflected in the initial interconnection request shall be used in calculating the permissible three-year extension.

138

Pro forma

LGIP section 4.4.3.

72. We propose to remove from section 4.2 (Clustering) of the

pro forma

LGIP the provisions allowing interconnection requests to be studied serially. We also propose to remove the requirement for the transmission provider to provide 180 days' advance notice before opening a cluster window. In addition to removing these provisions, we propose to rename section 4.2 of the

pro forma

LGIP “General Study Process” and revise it to provide that interconnection studies shall be performed within the cluster study process.

73. We propose to revise subsection 4.4.1 of the

pro forma

LGIP to make clear that: (1) the modifications previously permitted prior to return of the executed system impact study agreement are now permitted to be made prior to return of the executed cluster study agreement; and (2) for plant increases, the incremental increase will be studied with the next cluster study for purposes of cost allocation and study analysis.

74. We propose to delete section 6 (Interconnection Feasibility Study) of the

pro forma

LGIP (and all subsections). As explained above, we propose to adopt the new section 6 (Interconnection Information Access) of the

pro forma

LGIP to establish a mechanism for the interconnection customer to evaluate the feasibility of a prospective generating facility. We propose to revise section 7 (Interconnection System Impact Study) of the

pro forma

LGIP to make clear that the system impact study will now be conducted on a clustered basis, and that the transmission provider must complete the cluster study within 150 days of the closing of the customer engagement window. We further propose revisions to sections 3.4.2 and 8.1 of the

pro forma

LGIP to include the financial commitments and readiness requirements that must be met for the interconnection customer to remain in the interconnection queue following the completion of the cluster study. Those requirements are discussed in greater detail below. We propose additional revisions to delete section 7.5 (Meeting with Transmission Provider) of the

pro forma

LGIP and adopt the new section 7.5 (Cluster Study Re-Studies) of the

pro forma

LGIP to include provisions governing clustered re-studies where an interconnection customer in the cluster or a higher-queued cluster withdraws its interconnection request. Specifically, we propose to require transmission providers to conduct a re-study of the cluster within 150 days of informing the cluster of the need for re-study.

75. We propose revisions to the facilities study provisions in section 8 (Interconnection Facilities Study) of the

pro forma

LGIP to make clear that re-studies can be triggered by a higher or equally queued interconnection project withdrawing from the interconnection queue or modification of a higher or equally queued interconnection project

pursuant to section 4.4 (Modifications) of the

pro forma

LGIP.

76. We also propose revisions to section 11.1 (Tender) of the

pro forma

LGIP to clarify the procedures for executing the LGIA. We propose revisions to section 11.3 (Execution and Filing) of the

pro forma

LGIP to provide that the interconnection customer must submit to the transmission provider at the same time it submits the executed LGIA demonstration of continued site control, the requisite deposit, and reasonable evidence of achieving milestones in the development of the generating facility. An interconnection customer that requests that the transmission provider file an unexecuted LGIA with the Commission must submit the aforementioned information within 15 days of the Commission issuing an order on the unexecuted LGIA filing, or its interconnection request will be deemed withdrawn. We propose revisions to the system impact study agreement and facilities study agreement to be consistent with the new cluster study process. We propose to add several new definitions to section 1 of the

pro forma

LGIP and article 1 of the

pro forma

LGIA that relate to the new first-ready, first-served cluster study process and to modify a number of other definitions.

77. We seek comment on whether the Commission should require transmission providers to conduct cluster studies on subgroups of interconnection customers based on areas of geographic and electric relevance, and, if so, whether the Commission should adopt provisions governing how cluster areas should be formed to ensure that cluster areas are formed in a transparent and not unduly discriminatory manner.

139

Commenters that believe that the Commission should adopt provisions governing how cluster areas should be formed should also explain how to define such a cluster area (e.g., based on geographic proximity, geographic constraints such as bodies of water or mountain ranges, system topology, and/or major transmission system constraints).

78. We seek comment on whether the

pro forma

LGIP should specify how cluster studies must be rerun after re-study is triggered or whether there are provisions the Commission could adopt to improve the efficacy of the re-study process, such as preventing excessive re-study by limiting the transmission provider to two re-studies per month within the 150-day cluster re-study period.

79. We seek comment on whether the Commission should maintain an option in the

pro forma

LGIP for some interconnection requests to be processed outside of the annual cluster study process, and if so, in what circumstances and on what timeframe (for completion of the study), and on what priority compared to any active clusters.

3. Allocation of Cluster Study Costs

a. Background

80. Under the

pro forma

LGIP, interconnection studies are conducted for each individual interconnection request and study costs are paid by the interconnection customer. Transitioning to a first-ready, first-served cluster study process would require transmission providers to establish a method to allocate the shared cost of clustered interconnection studies among the interconnection customers in the cluster.

81. The Commission has accepted a variety of approaches to allocating the costs of cluster studies, most of which allocate costs using two factors: (1) the total MW size requested in a cluster; and (2) the number of interconnection requests in the cluster. Approaches among transmission providers vary with regard to the weight assigned to each of these factors. For example, Duke and Dominion allocate 90% of the applicable study costs to interconnection customers on a pro rata basis based on requested MWs included in the applicable cluster, and 10% on a per capita basis based on the number of interconnection requests included in the applicable cluster.

140

SPP, PNM, PSCo, PacifiCorp, and Tri-State allocate 50% of the study costs based on requested MWs, and 50% based on the number of interconnection requests.

141

CAISO, NYISO, and MISO only use one of the two factors in their allocation method. CAISO and NYISO allocate all study costs equally based on the number of interconnection requests within the cluster,

142

while MISO allocates all study costs pro rata based on the number of MWs requested.

143

140

See Duke,

176 FERC ¶ 61,075 at P 18;

Dominion,

Docket No. ER22-301-000 (Dec. 28, 2021) (delegated order).

141

See

SPP, OATT, attach. V (4.0.0), section 4.2.5;

PNM,

136 FERC ¶ 61,231 at P 24;

PSCo,

169 FERC ¶ 61,182 at P 32;

PacifiCorp,

171 FERC ¶ 61,112 at P 13;

Tri-State,

174 FERC ¶ 61,021 at P 33.

142

CAISO, CAISO eTariff, OATT, app. DD, section 3 (14.0.0), section 3.5.1.2; NYISO, NYISO Tariffs, attach. X, section 30.13 (5.0.0), section 30.13.3.

143

MISO, FERC Electric Tariff, OATT, attach. X, (155.0.0) section 3.3.1.

b. Proposal

82. We propose to revise section 13.3 (Obligation for Study Costs) of the

pro forma

LGIP to allocate the shared costs of cluster studies as follows: 90% of the applicable study costs to interconnection customers on a pro rata basis based on requested MWs included in the applicable cluster, and 10% of the applicable study costs to interconnection customers on a per capita basis based on the number of interconnection requests included in the applicable cluster.

144

We preliminarily find that this allocation of the costs of cluster studies would result in just and reasonable Commission-jurisdictional rates because it appropriately recognizes that the MW size of a cluster has a dramatic impact on the cost of studying the cluster, while also recognizing that the number of interconnection requests included in the cluster also impacts the cost of studying the cluster, but to a lesser degree.

144

If an interconnection customer withdraws its interconnection request prior to the start of the cluster study, that customer would be required to pay the actual costs of processing its interconnection request but would not be assessed a withdrawal penalty.

83. We seek comment on whether a different cost allocation approach may be appropriate or whether each transmission provider should be provided additional flexibility to propose a cost allocation approach on compliance with any final rule.

4. Allocation of Cluster Network Upgrade Costs

a. Background

84. As discussed above, under the serial first-come, first-served study process in the

pro forma

LGIP, transmission providers study interconnection requests individually and in the order in which they are received. If a study identifies a need for network upgrades in response to an individual interconnection customer request, the transmission provider allocates the initial cost of those network upgrades to the individual interconnection customer. The

pro forma

LGIP allows transmission providers to perform clustered system impact studies but does not explain how transmission providers should allocate network upgrade costs among interconnection customers within a cluster.

85. Several of the transmission providers that have adopted a cluster first-ready, first-served study process have also adopted methods for allocating network upgrade costs that differ from their previously existing cost allocation mechanisms in one of two ways: (1) proportional capacity (based on the proposed generating facility's MW capacity in proportion to the cluster's total MW capacity); or (2) proportional impact (determined based

on a distribution factor analysis). Several transmission providers also separate network upgrades into two categories prior to allocating costs based on the proportional capacity or proportional impact method: (1) station equipment, including all equipment located in the substation immediately beyond the point of interconnection to which the generating facility is connected (called station equipment network upgrades); and (2) all other network upgrades, including equipment located beyond the substation, such as transmission lines, transformers, voltage support, and distantly located breakers (called system network upgrades).

145

These methods allocate station equipment network upgrade costs based on the number of generating facilities interconnecting at an individual station (i.e., allocated equally to each interconnection customer interconnecting to the substation).

145

E.g., PNM,

136 FERC ¶ 61,231 at P 25.

86. For network upgrades beyond the transmission provider's substation, PNM and PacifiCorp use the proportional capacity method.

146

PacifiCorp explained in its interconnection queue reform proposal that the proportional capacity method is better for PacifiCorp given the size of its service territory, and that PacifiCorp uses a cluster area approach in which it clusters projects by electrical relevance, which prevents interconnection customers from bearing the costs of network upgrades in distant areas of PacifiCorp's transmission system.

147

146

Id.; PacifiCorp,

171 FERC ¶ 61,112 at P 18.

147

PacifiCorp, Transmittal, Docket No. ER20-924-000, at n.107 (filed Jan. 31, 2020).

87. CAISO, MISO, SPP, NYISO, PSCo, Tri-State, Duke, and Dominion use the proportional impact method by performing a distribution factor analysis.

148

Relative to other transmission providers, Tri-State includes a more comprehensive explanation of its distribution factor analysis method in its tariff. Specifically, Tri-State's tariff provides that: (1) thermal network upgrade costs are allocated based on the impact (in MWs) from each generating facility within the cluster or cluster area; (2) voltage network upgrade costs are allocated based on the voltage impact from each generating facility within the cluster or cluster area on the most constrained bus under the most constraining contingency in the definitive interconnection study case(s); (3) transient stability network upgrade costs within a cluster or cluster area are allocated based on the pro rata share of the total MW requests of all generating facilities causing instability; (4) short circuit network upgrade costs are allocated based on the impact (in kiloamperes) from each generating facility within the cluster or cluster area, on the constrained facilities under the most constraining fault in the definitive interconnection study case(s); and (5) in instances when a network upgrade resolves multiple types of constraints (such as thermal and voltage or thermal and voltage and transient stability), the costs are allocated within a cluster or cluster area based on a ratio share of the total cost of the independent mitigation types to equitably allocate the cost to all generating facilities contributing to constraints.

149

148

PSCo,

169 FERC ¶ 61,182 at P 34;

Tri-State,

174 FERC ¶ 61,021 at P 38;

Duke,

176 FERC ¶ 61,075 at P 11;

Dominion,

Docket No. ER22-301-000 (Dec. 28, 2021) (delegated order).

149

Tri-State LGIP section 4.2.4.b.

Proposal

88. We propose to revise the

pro forma

LGIP to include new subsection 4.2.3 to require transmission providers to allocate network upgrade costs to interconnection customers within a cluster using a proportional impact method. Therefore, we propose to establish the definition “Proportional Impact Method” in the

pro forma

LGIP,

150

and require transmission providers to revise their LGIPs to include the specific technical parameters and thresholds of the method for cost allocation. We preliminarily find that this approach will ensure just and reasonable Commission-jurisdictional rates because it will allow the transmission provider to allocate network upgrade costs among several interconnection customers that may benefit from (and cause the need for) certain network upgrades.

151

By allocating shared network upgrade costs among a cluster of interconnection customers, we expect that this reform will reduce the frequency of an individual customer being allocated a large network upgrade that benefits subsequent interconnection customers, reduce the incentive to submit multiple speculative requests, and reduce the amount of cascading withdrawals and re-studies. We believe that a proportional impact method will accurately reflect the level of contribution of an interconnection request to the need for the network upgrade.

150

We propose to revise section 1 of the

pro forma

LGIP to provide that Proportional Impact Method shall mean a technical analysis conducted by the transmission provider to determine the degree to which each generating facility in the cluster contributes to the need for a specific network upgrade.

151

Tri-State,

174 FERC ¶ 61,021 at P 38.

89. We seek comment on whether there are specific types of analyses that the Commission should require transmission providers to use to determine the proportional impact attributed to an interconnection request, including the benefits and drawbacks of any proposed approach. Conversely, we seek comment on whether there are specific types of analyses that the Commission should prohibit because they are known to be inaccurate, provide undue discretion to the transmission provider, or could otherwise be problematic. Additionally, we seek comment on alternative methods to allocate the cost of network upgrades within a cluster such as the proportional capacity method as discussed above. While such a method does not assign cost based on level of contribution of an interconnection request to the need for a network upgrade, we seek comment on whether this method can be sufficiently accurate, in certain instances, in a manner consistent with or superior to the proposed method. For instance, we seek comment on whether the proportional capacity method may be appropriate when a transmission provider with a relatively small service territory clusters projects by electrical relevance. Conversely, we seek comment on whether there are some circumstances where the proportional capacity method would not be appropriate, such as circumstances where there may be potential for discriminatory treatment.

5. Shared Network Upgrades

a. Background

90. There are no existing provisions in the

pro forma

LGIP that require transmission providers to share network upgrade costs between earlier-in-time and later-in-time interconnection customers (e.g., customers studied in separate clusters). However, in MISO and NYISO, the Commission has approved tariff provisions that require interconnection customers in later cluster studies that benefit from network upgrades completed prior to that later-in-time interconnection customer commencing commercial operation to partially reimburse the interconnection customers in an earlier cluster study that were initially responsible for the facilities' construction.

152

See

NYISO, NYISO Tariffs, attach. S, section 25 (16.0.0), section 25.7.2; MISO, FERC Electric Tariff, MISO OATT, attach. FF section III (81.0.0), section III.A.2.d.2.

91. MISO tests all network upgrades in service for less than five years to

determine whether they qualify for cost sharing. MISO requires interconnection customers in a later cluster study to share costs if they (1) connect to that network upgrade or (2) pass a two-part power flow screening.

153

If the test reveals that more than five MW of the later-in-time interconnection customer's generating facility uses the network upgrade with a network upgrade rating exceeding one percent, MISO performs an additional analysis. If the results of the second analysis conclude that the interconnection customer generating facility's impact exceeds more than five percent of the network upgrade's facility rating, or that the transmission distribution factor (TDF)

154

is greater than 20%, the interconnection customer in the later cluster study will reimburse interconnection customers from the earlier cluster study based on the share of the cost of the network upgrade allocated to each interconnection customer. MISO allocates the costs of the shared network upgrades using the pro rata share of the MW contribution on all constraints from each project.

153

MISO Business Practice Manual No. 15, section 6.1.1.1.11, version 23 (May 2021),

https://cdn.misoenergy.org/BPM%20015%20-%20Generation%20Interconnection49574.zip

154

TDF measures the energy the interconnection customer has requested to inject onto the transmission system, expressed as the percent of the flows across a given transmission facility.

92. NYISO accounts for excess capacity created by network upgrades and requires that interconnection customers in a later cluster study reimburse the interconnection customers from an earlier cluster study for the use of these facilities. NYISO tracks any excess capacity, or headroom,

155

created by network upgrades and determines eligibility for cost sharing using two methods. When technically feasible, a later-in-time interconnection customer's use of headroom is measured in terms of the interconnection customer's electrical impact. Otherwise, headroom usage is based on the total number of interconnection customers using a given network upgrade. The headroom is available for 10 years or until it is depleted.

156

155

NYISO defines headroom as “the functional or electrical capacity of the System Upgrade Facility or the electrical capacity of the System Deliverability Upgrade that is in excess of the functional or electrical capacity actually used by the Developer's Project.” NYISO, NYISO Tariffs, attach. S, section 25.1 (12.0.0).

156

See id.

section 25.8.7.

b. Relevant ANOPR Comments

93. Multiple commenters support the concept of cost sharing approaches. The National Association of Regulatory Utility Commissioners (NARUC), for example, contends that the Commission should encourage improvements to the participant funding model through sharing the costs of clusters of similarly situated interconnection customers.

157

NARUC, Comments, Docket No. RM21-17-000, at 23 (filed Oct. 12, 2021).

94. MISO and NYISO each highlight the advantages of their existing network upgrade cost sharing approaches. MISO claims that its cost sharing method appropriately balances the interconnection customers' interests.

158

NYISO asserts that its group-based facilities study minimizes later-in-time interconnection customers benefiting without paying for the use of a network upgrade at the outset.

159

NYISO also states that its headroom accounting process partly addresses the issue caused by later-in-time interconnection customers benefiting from preexisting network upgrades.

158

MISO, Comments, Docket No. RM21-17-000, at 87-88 (filed Oct. 12, 2021).

159

NYISO, Comments, Docket No. RM21-17-000, at 45 (filed Oct. 12, 2021).

95. The Michigan Commission asserts that MISO has not made frequent use of its shared network upgrade process and suggests that the Commission explore whether analyzing network upgrades up to 20 years post-construction would encourage the development of higher-cost network upgrades in transmission constrained areas.

160

Michigan Comm'n, Comments, Docket No. RM21-17-000, at 21-22 (filed Oct. 12, 2021).

96. Some commenters argue that a network upgrade sharing arrangement would be too complicated to execute and lead to stakeholder disagreements. EDF asserts that, while a study-based cost allocation might offer a more precise representation of benefits, such approaches are time-consuming and can be prone to stakeholder disagreement over the study's assumptions and results; EDF believes that any cost sharing percentage for generators should be commensurate with the value of the reimbursement generators receive.

161

TAPS states that, while cost sharing arrangements make sense conceptually, developing a cost sharing process can be resource-intensive and highly contentious.

162

161

EDF Renewables, Inc., Comments, Docket No. RM21-17-000, at 13 (filed Oct. 12, 2021).

162

Transmission Access Policy Study Group (TAPS), Comments, Docket No. RM21-17-000, at 47-48 (filed Oct. 12, 2021).

c. Need for Reform

97. We preliminarily find that the absence of network upgrade cost sharing provisions in the

pro forma

LGIP poses a barrier to entry to generation development. Absent cost sharing provisions among clusters, interconnection customers may significantly benefit from earlier-in-time network upgrades but not share in the cost of those network upgrades in a manner that is roughly commensurate with benefits.

163

As a result, individual interconnection customers may be responsible for the entire cost of network upgrades and may be reluctant to move forward with the development of an interconnection request if there is no opportunity to recover some of the costs associated with the construction of significant network upgrades that are likely to benefit interconnection customers in subsequent cluster studies.

163

See

May Joint Task Force Tr. 135:6-7 (Andrew French) (“I do think costs should be shared between clusters.”)

d. Proposal

98. We propose to revise the

pro forma

LGIP and

pro forma

LGIA to require transmission providers to allocate the costs for network upgrade costs between interconnection customers in an earlier cluster study and interconnection customers in a subsequent cluster study that benefit from the same network upgrade in a manner that is roughly commensurate with the benefits received. First, we propose to require that, as part of the first-ready, first-served cluster study process that we also propose in this NOPR, the transmission provider analyze all network upgrades identified through the transmission provider's study process, and, if a generating facility of an interconnection customer in a later cluster study directly connects either to (1) a network upgrade in-service for less than five years or (2) a substation where the network upgrade in-service for less than five years terminates, then the transmission provider would be required to designate the network upgrade a shared network upgrade, and the interconnection customer in the later cluster study would be required to contribute a pro rata portion of the shared network upgrade's remaining undepreciated capital cost based on the impact the interconnection customer in the later cluster study has on the network upgrade as measured using the same method the transmission provider used to determine the impact of the interconnection customer(s) in the earlier cluster study. Second, if the new generating facility does not directly connect to the network upgrade, then the transmission provider would perform a power flow analysis with a two-step test to measure the later-in-time interconnection customer's use of and benefit from the network upgrade

funded by interconnection customers from an earlier cluster study. Under the first step, the transmission provider would determine if the impact of the interconnection customer in the later cluster study exceeds 5 MW and exceeds one percent of the network upgrade's rating, which we believe would reasonably identify interconnection customers that benefit from the network upgrade. Then, if those criteria are met, the transmission provider would determine if the later-in-time interconnection customer's impact either exceeds more than five percent of the network upgrade's facility rating or if the TDF is greater than 20%.

164

Finally, if either of these criteria were met, the transmission provider would be required to designate that network upgrade a shared network upgrade, and the interconnection customer in the later cluster study would be responsible for a pro rata share of the network upgrade's remaining undepreciated capital cost based on the impact the interconnection customer in the later cluster study has on the network upgrade as measured using the same method the transmission provider used to determine the impact of the interconnection customer(s) from the earlier cluster study.

164

Midwest Indep. Transmission Sys. Operator, Inc.,

133 FERC ¶ 61,221, at P 336 (2010) (finding that the 20% TDF screen is an appropriate measure of benefits for shared network upgrades that strikes an appropriate balance between cost sharing and guarding against overcharging late-coming generating facilities).

99. We propose to require the interconnection customer in the later cluster study to pay the transmission provider for the interconnection customer's share of the shared network upgrade costs through a one-time lump sum, which the transmission provider would disburse to the appropriate interconnection customer(s) from the earlier cluster study. Where applicable, the interconnection customer from the earlier cluster study or the relevant transmission provider would be required to assign transmission credits for the portion of the shared network upgrade that the interconnection customer in the later cluster study funded to the interconnection customer in the later cluster study. Additionally, we propose to require that the interconnection customer in the later study cluster not be required to pay for its share of the cost of the shared network upgrade until that shared network upgrade is in service. We propose to require transmission providers to provide the list of shared network upgrades to interconnection customers in subsequent cluster studies at the conclusion of the cluster study and to list those network upgrades in the LGIA.

100. As noted above, an interconnection customer in a later cluster study that otherwise meets the criteria described above would only bear some of the network upgrade costs for a network upgrade that was in service before the commercial operation date of the generating facility of the interconnection customer in the later cluster study. Thus, there could be scenarios where the network upgrade may be identified as both a shared network upgrade and a contingent facility pursuant to section 3.8 of the

pro forma

LGIP; and, therefore a designation of a network upgrade as a contingent facility does not preclude it from also being a shared network upgrade if the network upgrade meets the aforementioned criteria and passes the screens.

165

Contingent facilities include “those unbuilt . . . Network Upgrades upon which the Interconnection Request's costs, timing, and study findings are dependent, and if delayed or not built, could cause a need for Re-Studies of the Interconnection Request or a reassessment of the Interconnection Facilities and/or Network Upgrades and/or costs and timing.”

Pro forma

LGIP section 1. Pursuant to section 3.8 of the

pro forma

LGIP, transmission providers must have a method for identifying contingent facilities to be provided to the interconnection customer at the conclusion of the system impact study and including in the LGIA.

Id.

section 3.8.

101. We preliminarily find that requiring transmission providers to develop a method to share network upgrade costs among interconnection customers in earlier and later cluster studies will result in just and reasonable Commission-jurisdictional rates by allowing for allocation of costs of network upgrades in a manner more closely aligned to the distribution of benefits than the status quo.

166

Specifically, to the extent that interconnection customers in later cluster studies benefit from pre-existing network upgrades, we preliminarily find that it is just and reasonable for those interconnection customers to share a portion of those network upgrade costs.

167

166

See, e.g., Midwest Indep. Transmission Sys. Operator, Inc.,

133 FERC ¶ 61,221 at PP 55, 336 (accepting shared network upgrades as just and reasonable and agreeing that the proper test for cost sharing with regard to an already-constructed upgrade is not what effect a late-coming generating facility would have had on the system as it existed prior to the network upgrade, but rather whether that late-coming generating facility will actually benefit from the network upgrade).

167

Id.

P 336.

6. Increased Financial Commitments and Readiness Requirements

a. Need for Reform

102. The

pro forma

LGIP allows an interconnection customer to proceed through the generator interconnection process without having shown evidence to the transmission provider of meaningful progress toward achieving commercial viability (e.g., a power purchase agreement or site control). We are concerned that without requiring this type of evidence, interconnection customers will continue to submit multiple speculative interconnection requests and later withdraw those requests, triggering rounds of re-studies. While we believe that our proposal to require transmission providers to implement a first-ready, first-served cluster study process will substantially improve transmission providers' ability to manage their interconnection queues, we recognize that the sheer volume of interconnection requests in interconnection queues nationwide are overwhelming many transmission providers' resources.

168

Although the optional informational interconnection study that we also propose in this NOPR would provide a mechanism for prospective interconnection customers to obtain key information on potential points of interconnection for proposed generating facilities, prospective interconnection customers may still prefer to submit an interconnection request to establish a queue position rather than investing in and waiting for the results of an optional informational interconnection study.

168

See, e.g.,

Tri-State Generation and Transmission Association, Inc., Transmittal Letter, Docket No. ER20-2593-000, at 3, 14, and 17 (filed Jul. 31, 2020); Transmittal Letter, Docket No. ER11-3522-000, at 3 (filed May 5, 2011); PacifiCorp, Transmittal Letter, Docket No. ER20-924-000, at 5 (filed Jan. 31, 2020).

103. Therefore, in addition to the reforms that we propose to implement a first-ready, first-served cluster study process, we also propose a set of reforms to adopt more stringent financial commitments and readiness requirements for interconnection customers to remain in the interconnection queue to discourage speculative interconnection requests and allow transmission providers to focus on processing viable interconnection requests and to better approximate the cost of the interconnection study process.

169

These

proposed reforms pertain to (1) increased study deposits, (2) demonstration of site control, (3) commercial readiness, and (4) withdrawal penalties.

169

See

May Joint Task Force Tr. 38:7-8 (Matthew Nelson) (“[W]hat we hope to do is try to make sure that being in the queue means something[.]”);

47:1-4 (Clifford Rechtschaffen) (cautioning that clustering is important but must be accompanied by other reforms to interconnection queue processing to address existing problems).

b. Proposed Reforms

i. Increased Study Deposits and LGIA Deposit

(a) Background

104. Under the serial first-come, first-served interconnection study process in the

pro forma

LGIP, an interconnection customer must submit the following study deposits:

170

Pro forma

LGIP sections 6.1, 7.2, 8.1.

• $10,000 deposit with its interconnection request, which is used for the feasibility study,

• $50,000 deposit when executing the system impact study agreement, and

• $100,000 deposit when executing the facilities study agreement.

105. Several transmission providers have increased the study deposit requirements in a tiered fashion to recognize that interconnection requests with higher generating facility capacities cost more to study. In accepting PNM's tiered approach, the Commission stated that increasing the study deposit in a tiered fashion is reasonable because it recognizes that larger proposed generating facilities within a cluster likely carry a greater risk (such as risk triggering the need for substantial network upgrades and triggering re-studies when withdrawing from the queue).

171

The Commission has accepted maximum study deposits as high as $250,000 for interconnection requests of 200 MW and greater and accepted proposals requiring study deposits at multiple points throughout the interconnection study process. For example, PSCo, Tri-State, Dominion, and Duke require four study deposits throughout their cluster study processes, and an additional deposit upon LGIA execution. In accepting PSCo's study deposit framework, the Commission reasoned that the study deposits represented the total approximate cost of PSCo's reformed cluster study process and that this framework was consistent with Order No. 2003's requirement that interconnection customers pay the actual costs of their studies.

172

171

PNM,

136 FERC ¶ 61,231 at P 80.

172

PSCo,

169 FERC ¶ 61,182 at P 36 (citing Order No. 2003, 104 FERC ¶ 61,103 at P 37).

(b) Proposal

106. We propose to adopt the following study deposit framework in the

pro forma

LGIP:

Size of proposed

generating facility

associated with interconnection request

Amount of deposit

>20 MW <80 MW

$35,000 + $1,000/MW.

>80 MW <200 MW

$150,000.

>200 MW

$250,000.

107. We propose to require transmission providers to collect this study deposit before each phase of the new first-ready, first-served cluster study process (i.e., cluster study, cluster re-study, and facilities study).

173

We propose to require the interconnection customer to provide an initial study deposit along with its interconnection request which will be used to pay for the cluster study.

174

We propose to require the interconnection customer to provide the second study deposit of the same amount within 20 days of receiving the cluster study report from the transmission provider.

175

This second study deposit will cover the cost of any clustered re-studies. We propose to require the interconnection customer to provide the third study deposit of the same amount along with its executed facilities study agreement.

176

Study deposits would be refundable, and the transmission provider would refund any portion of the study deposits above the applicable study costs and withdrawal penalties once the interconnection customer executes the LGIA, requests the filing of an unexecuted LGIA and submits the corresponding payment discussed below, or withdraws from the queue.

177

173

Proposed

pro forma

LGIP section 3.1.1.

174

Id.

section 3.1.1.1.

175

Id.

section 3.1.1.2.

176

Id.

section 3.1.1.2.

177

Consistent with Order No. 2003, interconnection customers would be responsible for actual study costs, and the study deposits would be subject to true-up. Order No. 2003, 104 FERC ¶ 61,103 at P 37;

pro forma

LGIP section 8.1.

108. We also propose to require interconnection customers to submit a deposit equal to nine times the amount of its study deposit when executing the LGIA or requesting the filing of an unexecuted LGIA.

178

This deposit would be fully refunded once the generating facility achieves commercial operation, but if the interconnection customer withdraws after executing the LGIA or after requesting the filing of an unexecuted LGIA, this deposit would be refunded subject to the withdrawal penalty discussed below.

178

Proposed

pro forma

LGIP section 3.1.1.3.

109. We believe that increasing the total study deposit amounts submitted in the interconnection study process would better approximate the cost of the interconnection study process and disincentivize interconnection customers from submitting interconnection requests for speculative, non-commercially viable generating facilities. As the Commission recognized in the 2008 Technical Conference Order, “relatively small deposit amounts, coupled with the incentives produced by a first-come, first-served approach to allocating capacity, provides an incentive for developers to secure a place in the queue even for projects that may not be commercially viable.”

179

Conversely, the Commission has specifically found that increased study deposits “better identif[y] viable projects that are more ready to proceed with construction and commercial operation while discouraging speculative projects that could delay the cluster study process.”

180

The Commission has similarly explained “that increasing the deposit in a tiered fashion . . . is reasonable because it recognizes that larger projects likely carry a greater risk.”

181

Accordingly, we propose to revise section 3 of the

pro forma

LGIP to implement these proposed increased study deposit reforms.

179

2008 Technical Conference Order, 122 FERC ¶ 61,252 at P 15.

180

PNM,

136 FERC ¶ 61,231 at P 80;