United States: FERC Proposes Broad Changes To Its Pro Forma Interconnection Procedures And Interconnection Agreement

Last Updated: January 4 2017
Article by Adam Wenner and A. Cory Lankford

In its final meeting of 2016, FERC issued a notice of proposed rulemaking in which it proposes changes to its standard interconnection rules and agreement for generators with a capacity of more than 20 megawatts. The proposed reforms are intended to benefit interconnection customers by providing more timely and accurate information to inform and streamline the interconnection process. Among FERC's proposals are enhancements that would benefit the energy storage industry.

FERC adopted the current pro forma interconnection procedures and agreement in 2003. Since then, FERC has made revisions from time to time, but none have been as sweeping as the current proposals, which include significant changes to the pro forma Large Generator Interconnection Procedures and pro forma Large Generator Interconnection Agreement. FERC states that these changes are necessary to address the significant technological and market advances that have occurred since 2003. The proposals fall into three categories: (1) certainty and predictability in the interconnection process, (2) transparency, and (3) other enhancements to the interconnection process.

Transmission network upgrade costs often are the biggest expense for generators seeking to interconnect with utilities. At present, pursuant to their FERC-approved interconnection procedures, utilities and regional transmission organizations conduct interconnection studies, often in an aggregate cluster of interconnection requests, through which they identify transmission network upgrades necessary to accommodate the respective requests. Restudies can be triggered unexpectedly and by events that are not within the control of the interconnection customer, such as the withdrawal of other interconnection customers from the interconnection queue. To provide greater predictability in the interconnection process, FERC proposes to change its pro forma interconnection procedures to require utilities and RTOs that conduct cluster interconnection studies to implement a binding schedule for the restudy process. In addition, FERC proposes to expand opportunities for interconnection customers to construct transmission network upgrades and seeks comment on the use of a cap on an interconnection customer's allocated upgrade costs to mitigate the potential for multiple restudies.

The NOPR cites an assertion by the American Wind Energy Association that some utilities and RTOs have unilateral discretion under their FERC-approved tariffs to self-fund high-cost transmission upgrades, the costs of which they then pass on to interconnection customers, even when the utility or RTO does not allow interconnection customers to recover the full costs of the upgrades. To mitigate these concerns, FERC proposes to require utilities and RTOs to enter into an agreement with their interconnection customers before electing to self-fund the costs of transmission upgrades. The proposal is intended to mitigate opportunities for utilities to "gold plate" transmission upgrades by giving generator owners an opportunity to negotiate necessary transmission upgrades and their costs with their interconnecting utility or RTO. Under the proposal, if an interconnection customer determines that it can construct upgrades more inexpensively than the utility, the customer could refuse to enter into an agreement to allow the utility to self-fund the upgrades and could construct them itself.

FERC's current pro forma interconnection procedures and agreement provide standard dispute resolution procedures, but some RTOs direct parties involved in an interconnection dispute to use other, more general dispute resolution procedures that are not designed to resolve interconnection disputes. Interconnection customers have complained to FERC that current RTO interconnection dispute resolution procedures are inadequate. For example, RTOs can refuse to be a party to a dispute resolution, requiring the interconnection customer to resolve its dispute directly with the utility. An interconnection customer always has the option to file a complaint with FERC to resolve a dispute, but the formal complaint process can be costly and often does not provide resolution within time frames necessary for developers to finance and construct their projects. To provide more uniformity in the resolution of disputes between RTOs and their interconnection customers, FERC proposes to require RTOs to adopt interconnection dispute resolution procedures under which an RTO will be required to serve as a neutral decision-maker in any dispute between a utility and interconnection customers. FERC believes that the proposal will streamline the interconnection dispute resolution process.

Often the interconnection of one generation project will be contingent upon the completion of interconnection facilities or network upgrades to be constructed or funded by a higher-queued interconnection customer. If these "contingent" interconnection facilities or network upgrades are not built, the utility or RTO will often restudy lower-queued interconnection requests and, to the extent the contingent facilities and upgrades are still required, the utility or RTO will reassess costs and construction timing for the remaining requests. To provide more transparency in the interconnection process, FERC proposes to require utilities and RTOs to describe and post online their methods for identifying contingent interconnection facilities and network upgrades. FERC's proposals to impose a scheduled restudy process, to negotiate funding of upgrades, and to require a uniform dispute resolution process across all RTOs may mitigate many disputes related to contingent interconnection facilities and network upgrades.

FERC also proposes to require utilities and RTOs to post online the processes and assumptions that they use to develop network models for interconnection studies as well as data that they use to forecast transmission congestion and generator curtailment. Utilities and RTOs also would be required to post quarterly reports online as to the status of their pending interconnection studies. If a utility or RTO exceeds interconnection study deadlines for more than 25 percent of any study type for two consecutive calendar quarters, it would be required to file informational reports with FERC for the next four calendar quarters.

Other FERC proposals would enable generators to use underutilized interconnection facilities, obtain interconnection service earlier, and accommodate technology changes in the development process. Under FERC's proposal, a generator with excess capacity on its interconnection facilities could, under an expedited process, interconnect additional generating or storage facilities. In addition, FERC proposes to require utilities and RTOs to offer provisional interconnection agreements, which would allow interconnection customers to operate earlier at a reduced capacity or, subject to periodic curtailment, until all transmission upgrades needed to accommodate the full capacity of the generator are complete. (Some utilities and RTOs already offer provisional interconnection agreements.) In response to frequent complaints by interconnection customers, FERC also proposes to require utilities and RTOs to develop a process to respond to interconnection customer proposals to change their generation technology without causing significant delays to the interconnection process.

In response to comments from generation and energy storage developers, FERC proposes to allow interconnection customers to limit their requested level of interconnection service to an amount that is less than the capacity of their generating facility. Under this approach, an interconnection customer would be able to avoid expensive transmission upgrades that would be triggered if the customer intended to deliver the full output of its facility to the transmission grid. Some RTOs and utilities already permit this, but FERC has not proposed to make this a universal requirement until now.

Finally, FERC's NOPR includes proposals intended to improve the ability of electric storage devices to interconnect with their local utilities and sell into wholesale electricity markets. FERC proposes to revise the definition of "Generating Facility" in the pro forma large generator interconnection procedures and agreement to include electric storage resources. (FERC has already directed a similar change to the pro forma interconnection procedures and agreement that apply to small generators that do not exceed 20 megawatts). In addition, generator owners with excess capacity on their interconnection facilities would be able to use the excess capacity to install energy storage devices on the same site. Energy storage developers also could benefit from FERC's proposal to allow interconnection customers to install more generating capacity than the megawatt limit of their interconnection service. For example, the owner of a battery storage device with a rating of 30 megawatts, which could discharge for a short period, might elect to limit itself to releasing a maximum of 22 megawatts, which it could discharge over a longer time period, and thereby satisfy minimum run-time requirements to sell energy and capacity into wholesale markets. Finally, FERC proposes to require utilities and RTOs to evaluate their methods for modeling electric storage resources for interconnection studies and to report to FERC as to why and how their existing practices are or are not sufficient.

Comments on FERC's interconnection proposals are due by the end of the February or early March, depending on the date of publication of the NOPR in the Federal Register. A copy of the NOPR can be found by clicking here

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

Registration

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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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.