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Today, the Federal Energy Regulatory Commission (“FERC”) took a significant step to expedite the process to bring large loads (data centers) online.
The FERC issued separate show cause orders to six regional transmission organizations (“RTOs”) and independent system operators (“ISOs”) in the United States – ISO-NE, NYISO, PJM, MISO, SPP and CAISO – preliminarily finding that their Tariff treatment of large loads is unjust and unreasonable. The intent of the orders is to provide a pathway to get power to data centers, while protecting other ratepayers.
Key features include:
- Clear transmission service options and flexibility to deliver power to load.
- Clear co-location and behind the meter protocols and costs.
- Revised study processes to address generation that is electrically proximate to load and thereby can alleviate the delay and cost from unnecessary, new transmission build. The paired study process would be completed within 60-90 days.
- Use of grid-enhancement technologies, such as dynamic line rating, that will increase the available capacity identified on existing transmission to power load.
- A Cost Recovery Agreement that would ensure large load bears the risk and is ultimately responsible for costs incurred to provide transmission service, including the cost of Network Upgrades, particularly if the large load does not reach commercial operation, thereby leaving other customers harmless from the impact.
- Large loads must provide financial security to validate viability and thereby discourage speculative projects.
- Increased disclosure of utility investments and transmission costs.
- Enhanced transparency regarding network upgrade costs, which, coupled with the Cost Recovery Agreement and utility investment disclosures, will provide the States with information to consider costs and impacts to its retail customers.
- Improved load forecasting.
- New large load impact studies to understand, in advance, the impact to the transmission grid based on North American Electric Reliability Corporation standards.
There are six FERC dockets, one for each RTO/ISO. FERC emphasized that, because each RTO/ISO region is different, the issues and solutions may be different per region.
FERC has put this on a fast track.
- Within 30 days: Each RTO/ISO must submit information about the status of resource adequacy.
- Within 60 days: Each RTO/ISO must respond to the FERC’s findings and briefing questions listed in the show cause order.
- The industry will have an opportunity to submit comments thereafter.
Finally, although FERC’s current focus is on the six RTOs, it noted there may be need for reforms that apply to Transmission Providers that are outside of RTOs and ISOs and encouraged these Transmission Providers to file proposed Tariff measures at FERC.
Please do not hesitate to contact the Sheppard Energy and Infrastructure team with any questions. The Sheppard team will be preparing a summary of the key details in the six orders.
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.
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