FERC Schedules Technical Conference to Explore Generator Interconnection Issues

Apr 01 2016

On March 29, 2016, the Federal Energy Regulatory Commission (“FERC” or “Commission”) issued a Notice of Technical Conference announcing that it will hold a technical conference on May 13, 2016, to explore generator interconnection issues faced by interconnection customers, transmission owners and transmission operators across the United States. The issues discussed during the technical conference could have significant implications for the generator interconnection process.

According to the Notice, the primary focus of the conference will be the Petition for Rulemaking filed by American Wind Energy Association (“AWEA”) in FERC Docket No. RM15-21-000 on June 19, 2015 (“Petition”). In the Petition, AWEA argues that the FERC’s pro forma Generator Interconnection Procedures (“GIPs”) and Generator Interconnection Agreements (“GIAs”) have become out-of-date relative to current market conditions, and result in a complex and time consuming interconnection process that poses significant barriers to entry and undermines the ability of new generations to compete. Specifically, AWEA raises concerns about the lack of transparency and certainty in the generator interconnection process, particularly with respect to the interconnection study and re-study process and the costs associated with facilities and network upgrades.

The Petition proposes four general categories of changes, which the Petition describes as aimed to improve: (1) certainty in the study and restudy process; (2) transparency in the overall interconnection process; (3) certainty of network upgrade costs, and (4) accountability of the transmission provider in the interconnection process. A summary of the key changes proposed in each category can be found here.

Along with the AWEA Petition, discussions at the conference may also address certain specific interconnection issues raised in proceedings pending before the Commission, including the specific generation interconnection procedures employed by certain Regional Transmission Organizations (“RTOs”) and Independent System Operators (“ISOs”). Topics that may be addressed include, but are not limited to, the issues raised in the following dockets:

California Independent System Operator, Inc. (“CAISO”), Docket No. ER16-693-000: Addressing proposed revisions to the CAISO GIPs that are the result of CAISO’s 2015 Interconnection Process Enhancement Initiative, which was the latest in a series of stakeholder initiatives to review and improve the generator interconnection process and associated interconnection agreements in CAISO. The revisions include changes to how affected systems are studied during the interconnection process, along with various other changes designed to improve and streamline the interconnection study and queue processes. For example, these changes include the adoption of new “commercial viability criteria” that an interconnection customer is required to meet before being granted significant extensions of their commercial operation date, and a new, flat, $150,000 deposit in lieu of the current $50,000 plus $1,000 per MW deposit requirement for all projects. The revisions were accepted by FERC, subject to a compliance filing, in an Order issued on March 7, 2016.
ISO New England (“ISO-NE”), Docket No. ER16-946-000: Addressing proposed revisions to the ISO-NE GIPs regarding interconnection challenges experienced primarily by wind and inverter-based generators seeking to interconnect to the Maine portion of ISO-NE’s system, which currently has a queue backlog of approximately 4,000 MW. The revisions seek to reduce the time needed to complete the necessary interconnection studies for wind and inverter-based generators through the implementation of new reactive power[1] and technical data requirements for these generators, along with a series of other changes to improve the overall interconnection process. These changes include (1) providing an alternate feasibility study process intended to focus on specific areas of concern for wind and inverter-based generators, (2) redefining “material modification” to provide added flexibility for generators to modify their projects without triggering a material modification analysis, and (3) providing interconnection customers with direct access to ISO-NE’s Base Case database to so that they can make informed decisions about issues such as project location, point of interconnection, and whether to modify a proposed project. ISO-NE has indicated that the proposed revisions are the first in a series of changes under consideration by ISO-NE and its stakeholders as part of a long-term effort to improve ISO-NE’s interconnection process.
E.On Climate & Renewables North America LLC (“E.On”), et al., v. Northern Indiana Public Service Company (“NIPSCO”), Docket No. EL14-66-002: Addressing an E.On complaint against NIPSCO regarding the terms of two Transmission Upgrade Agreements (“TUAs”) between E.On and NIPSCO. The TUAs govern NIPSCO’s construction of network upgrades necessary to alleviate significant curtailments of wind generation owned by E.On and nine other parties (collectively, “Wind Generators”) that are interconnected to NIPSCO’s system. The network upgrades were identified in a Midcontinent Independent System Operator, Inc. (“MISO”) study commissioned by the Wind Generators, but had not been identified during the interconnection process. E.On was required to enter into the TUAs directly with NIPSCO because the MISO Tariff does not include a pro forma agreement for customer-funded network upgrades required post-commercial operation. At issue are the total costs that NIPSCO can recover under the TUAs, above and beyond the costs of construction, for the ownership and operation of network upgrades that the Wind Generators have funded. FERC issued an Order granting the complaint in part and setting the matter for hearing and settlement to determine NIPSCO’s actual incremental costs of ownership and operation.

Internal MISO Generation v. Midcontinent Independent System Operator, Inc., Docket No. EL15-99-000: Addressing a complaint against MISO regarding MISO’s protocol to provide the network resource interconnection service delivery product to generators external to MISO (“E-NRIS Protocol”). The complainants sought removal of the E-NRIS customers from MISO’s generation interconnection definitive planning phase (“DPP”) studies while allowing remaining pending DPP studies to move forward. FERC issued an Order on March 29, 2016 granting the complaint, in part, and directing MISO to file Tariff revisions addressing the E-NRIS Protocol within 60 days (as discussed below, such revisions are pending before FERC in Docket No. ER16-1120-000). The Order also institutes a paper hearing in Docket No. EL16-12-000 to examine MISO’s Tariff. Specifically, the paper hearing will focus on ensuring that MISO’s tariff provisions treat all interconnection customers, both internal and external, and new and existing, comparably, and the provisions are appropriately structured to weed out unviable projects from the interconnection queue.
Midcontinent Independent System Operator, Inc., Docket No. ER16-675-000: Addressing proposed revisions to MISO’s GIPs and its pro forma GIA intended to address backlogs in the interconnection queue, primarily by minimizing unscheduled restudies and adding two new cash-at-risk milestone payments at two designated off-ramps that allow an interconnection customer to withdraw its project from the queue if the project is not ready to proceed. FERC issued an Order on March 29, 2016 rejecting MISO’s proposed revisions, citing concerns about the filing’s completeness and a general lack of justification for the proposed revisions, several of which were vigorously opposed by stakeholders.

Midcontinent Independent System Operator, Inc.; Docket No. ER16-1120-000: Addressing MISO’s proposed new pro forma service agreement to Attachment X of its Tariff revising the E-NRIS Protocols described above to clarify and expedite the processing of requests for E-NRIS service by generators outside of MISO. The format for the new pro forma agreement is based on the Network Integration Transmission Service Agreement in Attachment F of the Tariff and incorporates ideas from MISO’s stakeholder Interconnection Process Task Force.

Midcontinent Independent System Operator, Inc., Docket No. ER16-1211-000: Addressing an unexecuted GIA by and between MISO and Indianapolis Power & Light Company (“IPL”) governing interconnection of IPL’s Harding Street Station Battery Energy Storage System (“Storage System”). MISO claims that the pro forma GIA is the correct mechanism to allow IPL to interconnect the Storage System to the transmission system. By contrast, IPL contends that numerous terms and conditions of the GIA are inapplicable or inappropriate for the Storage System, as the Storage System does not generate electricity and was designed to provide frequency control services. The Interconnection Agreement remains pending before FERC.

Given the broad range of potential issues presented by the Notice of Technical Conference, the conference may have a significant impact on FERC’s pro forma GIPs and pro forma GIA and the on-going reforms to the GIPs and GIA in several of the ISOs and RTOs. Accordingly, Participation in the conference should be considered by parties with a significant interest in the interconnection process.

Footnotes:

[1] The reactive power requirements proposed by ISO-NE are similar to those proposed by the FERC in its Reactive Power Notice of Proposed Rulemaking. A summary of the FERC’s Reactive Power NOPR can be found here.