FERC Proposes Reforms to Large Generator Interconnection Procedures and Agreements

By William M. Keyser and Elizabeth P. Trinkle

On December 15, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Proposed Rulemaking (“NOPR”) to revise Parts 35 and 37 of its regulations, as well as the pro forma Large Generator Interconnection Procedures (“LGIP”) and pro forma Large Generator Interconnection Agreement (“LGIA”).  The proposed reforms are designed to improve certainty, promote more informed interconnection, and enhance interconnection processes.

The pro forma LGIP and LGIA establish the terms and conditions by which public utilities subject to the Federal Power Act must provide interconnection service to Large Generating Facilities.  FERC defines “Large Generating Facilities” as facilities with generating capacity greater than 20 MW.  While FERC has previously undertaken steps to reduce undue discrimination in the generator interconnection process, interconnection customers have continued to express concerns regarding inefficiencies and discriminatory practices.  Moreover, FERC proposes that recent changes to the resource mix, the emergence of new technologies, changes to state and federal policies, and challenges with the interconnection study process warrant reforms.  Based, in part, on input received from stakeholders following a 2015 technical conference on these issues, the NOPR identifies reforms to benefit both interconnection customers through timely and cost-effective interconnection and transmission providers by mitigating the potential for re-studies associated with late-stage interconnection request withdrawals.

Specifically, FERC proposes reforms that focus on improving aspects of the pro forma LGIP and LGIA, the pro forma Open Access Transmission Tariff, and the Commission’s regulations.  These reforms fall into three broad categories:  (1) reforms intended to improve certainty in the interconnection process; (2) reforms intended to improve transparency by providing more information to interconnection customers; and (3) reforms intended to enhance interconnection processes.  FERC requests comment from interested stakeholders on specific issues related to development and implementation of each of the proposals within these three broad areas of reform.  An overview of FERC’s proposals and request for comment on each area of reform are summarized below.

Comments on the NOPR will be due 60 days from publication in the Federal Register.  A copy of the NOPR is available here.

FERC’s high-level proposals in the NOPR include the following:

• Improving Certainty for Interconnection Customers – FERC proposes the following reforms to improve certainty by providing interconnection customers with more predictability in the interconnection process.

1. Revise the pro forma LGIP to require transmission providers that conduct cluster studies to move toward a scheduled, periodic restudy process. FERC also proposes to require transmission providers to update their LGIPs to specify the frequency of restudies and post the dates on the transmission provider’s Open Access Same-Time Information System (“OASIS”).  (NOPR, Section IV.A.1).
2. Modify the pro forma LGIA to allow an interconnection customer to exercise the option to build regardless of whether the transmission provider can meet the requested construction dates. More specifically, FERC proposes to allow an interconnection customer to design, procure, and construct the transmission provider’s interconnection facilities and stand-alone network upgrades – even if the transmission provider can meet the requested construction dates – where both parties agree as to the design and construction details of the transmission provider’s interconnection facilities and stand-alone network upgrades to be built.  (Section IV.A.2).
3. Modify the pro forma LGIA to require mutual agreement between the transmission owner and interconnection customer for the transmission owner to opt to initially self-fund the costs of construction network upgrades. FERC requests comment on the benefits or harm an interconnection customer may realize by forgoing its opportunity to fund network upgrades.  FERC also seeks comment on whether to apply the proposed changes to all regions or just to those that do not provide interconnection credits.  (Section IV.A.3).
4. Require that the Regional Transmission Owners (“RTOs”) and Independent System Operators (“ISOs”) establish dispute resolution procedures for interconnection disputes. FERC proposes that ISOs/RTOs provide staff members or use subcontractors to preside over such disputes and serve as neutral decision-makers.  FERC also seeks comment on whether such procedures should apply outside RTOs/ISOs.  (Section IV.A.4).
5. Cap costs for network upgrades. FERC requests comment on whether it should revise the pro forma LGIP and LGIA to provide for a cost cap limiting an interconnection customer’s network upgrade costs at the higher bound of a transmission provider’s cost estimate plus a stated accuracy margin.  FERC also seeks comment on how to minimize potential cost shifts to other parties if such a cost cap is imposed, as well as alternative proposals.  (Section IV.A.5).

• Promoting More Informed Interconnection – FERC proposes the following reforms to improve transparency by providing improved information for the benefit of all participants in the interconnection process. FERC also seeks comment on proposals or additional steps that could be taken to improve the resolution of issues that arise when affected systems are impacted by a proposed interconnection.

1. Require transmission providers to outline and make public a method for determining contingent facilities in their LGIPs. These principles include transparency sufficient to determine why a specific contingent facility was identified and how it relates to the interconnection request; the estimated interconnection facility and/or network upgrade costs; and estimated in-service completion time of each contingent facility.  FERC also seeks comment on whether to harmonize the process for determining contingent facilities across regions.  (Section IV.B.1).
2. Require transmission providers to list in their LGIPs and on their OASIS sites the network models and underlying assumptions used in interconnection studies. (Section IV.B.2). 
3. Require congestion and curtailment information to be posted in one location on each transmission provider’s OASIS site. FERC also seeks comment on whether there is information specific to interconnection requests and whether transmission providers should be required to provide this information to interconnection customers through the interconnection study process.  FERC further proposes to require the provision of more granular information and seeks comment on the level and frequency of information that should be provided.  (Section IV.B.3).
4. Revise the definition of “Generating Facility” in the pro forma LGIP and LGIA to explicitly include electric storage resources. (Section IV.B.4).
5. Create a system of reporting requirements for aggregate interconnection study performance. This system would include posting of summary statistics related to the processing of interconnection studies on transmission providers’ OASIS sites on a quarterly basis.  The Commission also seeks to impose reporting requirements if the transmission provider does not meet certain study goals.  (Section IV.B.5).
6. Improving coordination with affected systems. FERC requests comment on whether it should prescribe guidelines for affected systems analyses and coordination or if it should impose study requirements and associated timelines on affected systems that are also public utility transmission providers.  FERC also seeks comment on whether to standardize the process for coordinating an affected system analysis and whether to develop a standard affected study agreement.  (Section IV.B.6).

• Enhancing Interconnection Processes – FERC proposes the following reforms to enhance interconnection processes by making use of existing interconnections, providing interconnection service earlier, or accommodating changes in the development process.

1. Allow interconnection customers to limit their requested level of interconnection service below their full generating facility capacity. FERC asserts that this proposal will help reduce overbuilding of interconnection facilities and network upgrades by tailoring to generating facilities that do not intend to operate at full generating facility capacity.  FERC seeks comment on the types of technology and safeguards that could be put in place to allow implementation of this process.  (Section IV.C.1).
2. Require transmission providers to allow for provisional agreements so that interconnection customers can operate on a limited basis prior to completion of the full interconnection process. FERC requests comment on the means by which interconnection customers and transmission providers could mitigate any risks and liabilities for provisional interconnection service.  (Section IV.C.2).
3. Require transmission providers to create a process for interconnection customers to utilize surplus interconnection service at existing interconnection points. FERC proposes to add a new definition for Surplus Interconnection Service to section 1 of the pro forma LGIP and article 1 of the pro forma LGIA that provides an expedited process for interconnection customers to do so.  FERC also seeks to establish a process to allow the transfer of the surplus interconnection service.  (Section IV.C.3).
4. Require transmission providers to create a separate procedure to allow transmission providers to assess and, if necessary, study an interconnection customer’s technology changes without the change being considered a material modification. (Section IV.C.4).
5. Require transmission providers to evaluate their methods for modeling electric storage resources for interconnection studies and report to FERC why and how their existing practices are not sufficient. (Section IV.C.5).

The reforms proposed in the NOPR could have significant impacts on the generator interconnection process for Large Generating Facilities.  Accordingly, both transmission providers and interconnection customers with significant interest in the interconnection process should consider submitting comments.