FERC Substantively Revises Generator Interconnection Rules, Eases Rules For New Developers of Generation and Storage Facilities

On Thursday, April 19, 2018, the Federal Energy Regulatory Commission (FERC or “Commission”) issued a Final Rule revising its Large Generator Interconnection Procedures (LGIP) and Large Generator Interconnection Agreement (LGIA), which apply to generators over 20 MW.[1] The order, labeled Order No. 845, is the first comprehensive review of FERC’s generator interconnection policy in about 15 years, since Order No. 2003 and its progeny in 2003.

Order No. 845 is prospective only, applying to generators which are not yet in a queue. Transmission providers, including independent system operators and regional transmission organizations (ISO/RT) must file changes to their tariffs by August 7, 2018. Note that on May 17, 2018, the ISO/RTO Council filed a motion for extension, asking that the compliance date be extended by 70 days to October 16, 2018.

The changes that FERC proposes will be beneficial and significant to developers and future projects. The goal of Order No. 845 is to add a greater degree of transparency to the interconnection customer, and certainty for both the interconnection customer and the transmission provider.

The most significant changes for developers are:

  • Interconnection below full capacity of facility. The Commission adopted a proposal to allow a facility to interconnect at an amount lower than its full facility generating (or storage) capacity. This is particularly relevant to wind and solar developments where nameplate capacity may not match expected output.
  • Storage. The Commission modified the definition of “facility” to include storage facilities over 20 MW. This, combined with the ability to interconnect below the full capacity of the facility and the ability to use excess capacity, will open doors for more storage on the grid.
  • Provisional interconnection service. The Commission adopted a proposal to allow a facility to begin operating with limited interconnection service on a provisional basis, which would terminate once all network upgrades and other needed construction is complete.
  • Dispute resolution. The Commission modified dispute resolution provisions to give a unilateral right to seek non-binding dispute resolution, so that one party could not stymie the other, and extending these provisions to all regions, not just ISO/RTO. Provisions also add timing considerations given time sensitivity of interconnection. Provisions were not extended to the SGIP and SGIA (for facilities under 20 MW).

Other important findings include:

  • Interconnection customer option to build. The Commission adopts its proposal to allow interconnection customers to build both stand-alone network upgrades and transmission provider interconnection facilities. The intent is to give the interconnection customer greater certainty and control over the process, and it will not be limited to just cases where the transmission provider cannot build these facilities in a timely manner. Concerns were raised regarding reliability and indemnification, which the Commission rejected.
  • Identification of contingent facilities. Transmission providers must publish their methods of identifying contingent facilities. Upon customer’s request, transmission providers must also provide estimated network upgrade costs and estimated in-service dates for these facilities if the information is “readily available.” The term is defined:

Contingent Facilities shall mean those unbuilt interconnection facilities and 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 restudies of the interconnection request or a reassessment of the interconnection facilities and/or network upgrades and/or costs and timing.

  • Provision of base-case data. The Commission adopted its proposal to require transmission providers to list all network models and underlying assumptions used for interconnection studies on either its OASIS site or other password-protected location. The goal here is to increase transparency while allowing interconnection customers to make better-informed decisions, and holding transmission providers accountable as to the network models and assumptions they use to assess interconnection requests.
  • Study deadlines. The Commission continues to require “reasonable efforts” to complete interconnection studies in a timely manner, and did not impose specific timelines. However, the Commission does require transmission providers to post metrics on their interconnection study completion timeframes.

The following proposals from the Notice of Proposed Rulemaking were not adopted:

  • Rejected proposed requirement that transmission providers which perform cluster studies must perform restudies on a set, periodic time frame.
  • Declined to adopt the requirement that a transmission provider post certain congestion and curtailment information, as potentially technically infeasible.
  • Withdrew proposal to allow self-funding by transmission provider in light of DC Circuit rejection of a similar proposal in MISO.
  • Declined to adopt cost capping. This was a significant issue with a proposal to “provide for a cost cap that would limit an interconnection customer’s network upgrade costs at the higher bound of a transmission provider’s cost estimate plus a stated accuracy margin following a certain stage in the interconnection study process.” Commission declined to adopt this but noted that a transmission provider may present voluntary cost caps, in response to Duke’s request.

These changes will substantially ease the path to interconnection for new generation and/or storage facilities, by allowing smoother, faster interconnection through the use of existing capacity, provisional interconnection allowing a facility to partially enter into service while the remainder of its interconnection facilities are built and interconnection at a customized, lower capacity allowing for tailoring of needs and costs.