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FERC Proposes Major Interconnection Reforms to Facilitate Renewable Energy Growth

June 28, 2022

On June 16,  the Federal Energy Regulatory Commission (FERC) issued a proposed rulemaking designed to update key aspects of its pro forma interconnection procedures. FERC designed these reforms “to address interconnection queue backlogs, improve certainty, and prevent undue discrimination for new technologies.” Because comments are due 100 days after publication in the Federal Register, the deadline will likely fall in October.

The proposed changes fall into three major categories, each of which is briefly summarized below.  

Imposing a First-Ready, First-Served Cluster Study Process 

FERC proposes to replace the first-come, first-served study process in its interconnection procedures with a first-ready, first-served cluster study process in which all interconnection requests studied in a single cluster are considered to have equal queue priority. This is designed to reduce delays caused by individual projects. 

FERC also proposes that Transmission Providers: 

  • Offer to perform pre-interconnection request interconnection studies to evaluate potential Points of Interconnection and to provide specific information, such as available capacity at each bus;  
  • Assign upgrade costs based on the proportional impact of each customer, and allocate Network Upgrades borne by an early cluster to customers in subsequent clusters found to benefit;
  • Increase the study deposit requirements;
  • Require customers to demonstrate 100% site control when submitting interconnection requests; 
  • Require customers to demonstrate commercial readiness or provide escalating deposit amounts; and  
  • Impose a queue withdrawal penalty that could exceed any study deposits. 

Increasing Queue Processing Speed 

FERC proposes numerous reforms to its pro forma interconnection procedures designed to accelerate the study process. Such proposals include: 

  • Making interconnection study deadlines firm and subject to penalty; 
  • Increasing standardization of the Affected System study process that utilizes pro forma study and construction agreements with penalty-enforceable deadlines; and 
  • Requiring Transmission Providers to utilize the less-demanding Energy Resource Interconnection Service (ERIS) as the default study methodology, even when the interconnection customer requests the more demanding Network Resource Interconnection Service (NRIS) in the neighboring system.  

Incorporating Technological Advancements into the Interconnection Process 

Given the dramatic increase of electric storage devices and of co-locating multiple generating technologies, FERC proposes to mandate increased flexibility for customers to propose such projects, including the ability to modify existing interconnection requests. For example, FERC proposes that Transmission Providers: 

  • Allow different technologies to co-locate behind a single point of interconnection in certain cases;   
  • Accept requests to add an additional generating facility to an existing interconnection request under certain circumstances;
  • Accept surplus interconnection service requests in cases where the underlying generation facility has not yet been constructed, so long as it already has an interconnection agreement; and 
  • Reflect the unique operating characteristics of electric storage resources and co-located resources containing electric storage resources when conducting interconnection studies.  

Implication for RTOs/ISOs 

Importantly, FERC designed these interconnection reforms with its pro forma interconnection procedures in mind. RTOs/ISOs have interconnection procedures that deviate – sometimes substantially – from FERC’s pro forma rules. Several RTOs/ISOs have interconnection rules that already incorporate several aspects of the proposed rulemaking, and FERC may allow RTOs/ISOs to deviate from the final rulemaking. Therefore, it remains to be seen how significant an impact any final rulemaking has on RTO/ISO interconnection queues.  

The views and opinions expressed in the article represent the view of the authors and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is it intended to be a substitute for professional legal advice.

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