Interconnection Only Transmission Owners Directly Affected

On May 15, the Federal Energy Regulatory Commission proposed to modify its policy concerning open access and priority rights to capacity for interconnection only transmission facilities. This proposal, if implemented, will reduce regulatory burdens and clarify capacity rights on interconnection facilities for generators and those who wish to interconnect to generator lead lines. Renewable power developers will be most impacted by these new rules.

FERC’s proposal contains three major components:

  1. Blanket Waiver: FERC’s proposal grants blanket waivers to all existing and future entities that are subject to Open Access Transmission Tariff requirements, Open Access Same-Time Information System requirements, and Standard of Conduct requirements solely because they own, control, or operate generator interconnection facilities. This will impact almost all generators whose only transmission asset is a generator lead line.
  2. Open Access and Priority Rights: FERC’s proposal will allow third parties to seek interconnection and transmission service on interconnection facilities subject to the blanket waiver by making a request at FERC. Once a request is made, FERC will then make priority determinations on a case by case basis, using the public interest standard as the basis of establishing third party rights to capacity over those of the incumbent waiver holder.
  3. Safe Harbor: FERC’s proposal provides a five year safe harbor period for rights to capacity on an interconnection facility where the blanket waiver holder can establish a rebuttable presumption that it has definitive plans to use its excess capacity and that it should not be required to expand its facilities. This safe harbor is intended to protect generation developers who plan to construct their facilities in stages and build their generator lead lines with the initial stage of development. Wind power developers will be one group most interested in the safe harbor provisions.

The blanket waiver of the OATT requirements would be revoked if the transmission line owner ceases to qualify for the waiver or upon a determination by the Commission that it is in the public interest to do so. FERC will consider on a case by case basis requests by entities with OATTs already on file to be subject to the waiver. The blanket waiver would supersede an existing waiver of the OATT. If adopted, this provision will greatly reduce the regulatory burden and cost on generator lead line owners currently subject to the OATT requirements.

In the Notice of Proposed Rulemaking, the Commission recognized that its current policy places a disproportionately heavy burden and high risk on limited asset, interconnection facility owners that may temporarily have excess capacity in the early stages of a project and may never intend to be in the business of providing transmission service. The Commission also noted that interconnection facility owners have been highly successful in establishing priority rights over third parties. It also noted the infrequency of third party requests for transmission services on most such facilities.

Comments will be due in mid-July, subject to the date of publication of the NOPR in the Federal Register.