Electricity Markets

APPA Responds to FERC’s Generator Interconnection Reform Proposal

The Federal Energy Regulatory Commission (FERC) should consider a number of modifications and/or clarifications to a generator interconnection Notice of Proposed Rulemaking (NOPR) to help ensure that any final rule improves interconnection queue processing while not inadvertently creating problems that could impose unnecessary costs and inefficiencies on transmission providers, interconnecting generators, and existing transmission customers, the American Public Power Association (APPA) and the Large Public Power Council (LPPC) said.

The Oct. 13 comments filed by APPA and LPPC came in response to a NOPR issued by FERC in June 2022. In the NOPR, FERC proposed to reform its generator interconnection procedures and pro forma interconnection agreements to address interconnection queue backlogs.

Although the proposals in the NOPR are not directly applicable to public power transmission owners, public power utilities in regional transmission organization (RTO)/independent system operator (ISO) regions may be subject to the proposed requirements under RTO/ISO tariffs or other governing agreements. 

Also, as FERC specifically states in the NOPR, transmission providers that are not utilities subject to FERC’s general transmission jurisdiction (such as public power utilities) would be required to adopt the requirements of the NOPR as a condition of maintaining the status of any safe harbor tariff to satisfy the reciprocity requirements of FERC Order No. 888. 

In their comments, APPA and LPPC note that they generally support the initiatives in the proposed rule, “and we are gratified in particular by the NOPR’s focus on improving the incentives generation developers have to stand behind bona fide interconnection applications, which should have a substantial stabilizing effect.”

A common refrain in their comments is the need for flexibility in implementing certain of the NOPR’s proposals, particularly to accommodate existing generator interconnection processes that have made progress in addressing the types of challenges cited in the NOPR.

APPA and LPPC said that FERC should not adopt the NOPR’s proposal to require transmission providers to undertake informational interconnection studies. 

“Substantial information is already made available to prospective interconnecting customers, and the informational study requirement would transfer the current burdens associated with processing speculative interconnection requests to an extra-LGIP process.”

APPA and LPPC endorsed the proposed requirement to post certain interactive information for use by prospective generator interconnection customers, though they argued that the Commission should clarify that transmission providers would not be required to conduct any individualized analyses in response to use of these interactive tools.

While APPA and LPPC support the NOPR’s proposed requirement to use a cluster study approach in studying generator interconnection requests, they said the Commission should allow for an exception where there are too few interconnection applications to justify a cluster study approach. 

In addition, the groups said that FERC should allow for flexibility in the cost allocation methods used to allocate cluster study costs and to allocate costs of required transmission system network upgrades identified in the cluster study.

APPA and LPPC said they strongly support the Commission’s proposal to adopt financial commitment and readiness reforms for prospective generator interconnection customers. They said the Commission should not dilute these reforms by allowing an interconnection customer to provide a deposit in lieu of making a showing of commercial readiness. “It may be appropriate to permit deposits in lieu of demonstrating full site control in circumstances where an interconnection customer is genuinely prohibited by regulatory limitations from obtaining site control, or where particular regions have specific reasons to adopt a deposit-in-lieu-of-site-control framework,” they said.

The NOPR’s proposal to impose stricter study processing requirements on transmission providers, backed by penalties, is generally a reasonable complement to the application of stricter financial commitment and readiness requirements on interconnection customers, APPA and LPPC said. 

“The Commission, however, should allow for flexibility in transmission provider deadlines, particularly in Regional Transmission Organization and Independent System Operator regions, particularly where the transmission provider has been permitted to utilize a cluster study approach that differs from the pro forma LGIP requirements.”

FERC should not adopt a penalty framework under which RTOs and ISOs might be obligated to pass penalties through to RTO/ISO members that bear no responsibility for interconnection study delays, they said. “The Commission should adopt a reporting requirement for RTOs and ISOs as a substitute for imposing interconnection study delay penalties on these not-for-profit entities.”

The groups also said that:

  • The Commission should include in the pro forma Large Generator Interconnection Agreement a provision obligating the interconnecting customer contractually to reimburse an Affected System for upgrade costs. 
  • The Commission should clarify how the proposed optional resource solicitation study mechanism is intended to operate in conjunction with the proposed “first-ready, first-served” cluster study framework.  
  • APPA and LPPC do not support the Commission’s proposal to require transmission providers, upon request of the interconnection customer, to evaluate requested alternative transmission solution(s).
  • APPA and LPPC support the modeling and performance requirements for nonsynchronous generation resources.

APPA and LPPC also specifically responded to the NOPR’s statement that public power utilities would be obligated “to adopt the requirements of this Proposed Rule as a condition of maintaining the status of their safe harbor tariff or otherwise satisfying the reciprocity requirement of Order No. 888.”

While acknowledging that safe harbor tariff requirements will be modified pursuant to any final rule in this case, APPA and LPPC expressed concern that the Commission’s statement failed to acknowledge that the reciprocity requirements of Order No. 888 can also be satisfied through bilateral arrangements or by waiver.  APPA and LPPC asked FERC to make clear in any final rule that public power utilities would still be able to satisfy the reciprocity requirements under Order No. 888 through bilateral arrangements and/or waiver.