United States: FERC Proposes New Regulations On Priority Rights And Access To Generator Interconnection Facilities

On May 15, 2014, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) on open access and priority rights with regard to Interconnection Customer's Interconnection Facilities (ICIF).1 The proposed changes in FERC's regulations will affect generation developers, owners and operators of generator interconnection facilities, and transmission providers. This alert describes the NOPR and identifies some important implications for market participants.


FERC has examined on several occasion issues related to whether developers that build new transmission facilities should have priority rights to use the new capacity and, if so, could such priority rights be granted consistent with the mandate that transmission providers and owners provide nondiscriminatory open access to their facilities. FERC's long-standing policy has been to subject interconnection facilities to its open access requirements on the same basis as transmission facilities.

FERC has granted many petitions filed by developers, owners and operators of ICIF for waiver of the open access requirements. Under current practice, these waivers are revoked if a third party requests service on ICIF and the ICIF owner and/or operator must file an open access transmission tariff (OATT) with FERC for service on ICIF within 60 days of the request for service. With regard to priority rights, while FERC has developed a case-by-case process for granting developers priority rights to use the capacity of the ICIF, "the priority rights do not diminish the risk that the ICIF owner may have to file an OATT within 60 days of a request for service," and thereby lose some of the capacity of these facilities that they had planned to use in the future.2

In April 2012, FERC opened a Notice of Inquiry (NOI) seeking comments on whether its regulations, policies, and precedents appropriately address open access to interconnection facilities, and whether and how developers of those facilities should receive priority rights to the use of those facilities.


FERC has made a preliminary finding that its "current OATT requirements as applied to ICIF may impose risks and burdens on generators and create regulatory inefficiencies that are not necessary to achieve the Commission's open access goals."3 The NOPR has also determined that ICIF should not be subject to exactly the same open access requirements as transmission facilities (or interconnection facilities owned by the transmission owner).

Accordingly, the NOPR proposes to change Section 35.28 of FERC's regulations. New section 18 C.F.R. 35.28(d)(2) would grant a blanket waiver of all OATT requirements, including the requirements in 18 C.F.R. Part 37 (to establish and maintain an Open Access Same Time Information System (OASIS)) and Part 358 (to abide by the Standards of Conduct for Transmission Providers) to any public utility that is subject to such requirements solely because it owns, controls, or operates ICIF and sells electric energy from its generating facility.

The proposed regulations will also specify under what circumstances this blanket waiver could be revoked. New section 18 C.F.R. 35.28(d)(2)(i) would state that this blanket waiver is deemed revoked as of the date the public utility ceases to satisfy the qualifications for the waiver. In addition, FERC may revoke the blanket waiver if it determines that is in the public interest to do so.

Finally, FERC would codify in its regulations the process that must be followed by a third party that wants to use the capacity of any ICIF that are under the blanket waiver. Unlike current FERC policy, the ICIF owner would not have to make the facilities available under an OATT. Instead, the party seeking access would have to apply to FERC for an order under Sections 210 and 211 of the Federal Power Act (FPA) directing the ICIF owner to connect the applicant's facilities with the ICIF (Section 210) and provide the applicant with transmission services (Section 211).

In any such proceeding, the NOPR proposes FERC will: (1) consider it in the public interest to grant priority rights to the ICIF owner and/or operator to use the capacity when the owner and/or operator can demonstrate that it has "specific plans with milestones to use such capacity to interconnect its or its affiliate's future generation projects" and (2) grant the owner/operator a five-year "safe harbor" to use the ICIF. The "safe harbor" would cover the first five years after the ICIF are energized. During that time period, if there is a request by another party to access the facilities, there will be rebuttable presumptions that the ICIF owner and/or operator should have priority rights to the capacity and not be required to expand it.


As proposed by FERC, the blanket waiver of its open access requirements would not be available to entities that do not own both the ICIF and the generating facility. The reason FERC proposes to limit the blanket waiver is to ensure that the ICIF owner is subject to FERC's authority under both FPA Sections 210 and 211. Section 210 grants FERC authority to order "electric utilities" to interconnect and Section 211 grants FERC authority to order "transmitting utilities" to transmit. The FPA defines an "electric utility" as selling electric energy, and defines a "transmitting utility" as owning, controlling or operating facilities "used for transmission for the sale of electric energy at wholesale."

FERC notes that an interconnection-only entity would continue to have the option to seek waiver of the OATT requirements on a case-by-case basis. FERC states that it "seeks comment on what would be the appropriate criteria and procedures for granting such entities a waiver, and whether and under what procedures the safe harbor" could be extended to such entities.4 It also seeks comment on whether there are alternatives to the case-by-case process for applying the blanket waiver to entities with a broader set of ownership structures."5 It will be important for project developers to present FERC with a strong case that there will be no diminution of the benefits that the case-by-case waiver procedure affords. Developers may also wish to explain some of the reasons that different portions of a project might be developed under separate ownership structures, that these projects confront the same risks and burdens as a project where one company holds all of the project assets, and present options for FERC to consider applying the blanket waiver to interconnection-only entities (for example, to the extent they are affiliated or under common control with the generating facility.) FERC's proposal to use FPA Sections 210 and 211 as the vehicles to ensure that third parties are provided nondiscriminatory access to ICIF presents important legal and policy issues. FERC adopted the open access requirements partly in response to the view, in an increasingly competitive power generation industry, that the Sections 210/211 process for obtaining transmission access was unduly burdensome, cumbersome, and weighted in favor of the incumbent transmission owner. It is also potentially time consuming because applications under Sections 210 and 211 must also meet the requirements of FPA Section 212 which requires that FERC, before issuing a final order under either Section 210 or 211, issue a proposed order setting a reasonable time for the parties to agree to terms and conditions for carrying out the order including cost allocation.

FERC would deem the blanket waiver to be revoked as of the date the public utility ceases to satisfy the qualifications for the waiver. FERC gives as an example a change in the corporate structure such that the ICIF owner is no longer the entity that sells electric energy from the generating facility. Project developers and their lenders and investors need to assess this risk carefully when designing and structuring transactions.

Comments on the NOPR are due 60 days after the NOPR is published in the Federal Register.


1 Notice of Proposed Rulemaking, Open Access and Priority Rights on Interconnection Customer's Interconnection Facilities, 147 FERC ¶ 61,123 (May 15, 2014).

2 NOPR ¶¶ 31-32.

3 NOPR ¶¶ 23-25.

4 NOPR ¶ 52.

5 Id.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.