On December 15, 2016, FERC issued a Notice of Proposed Rulemaking ("NOPR") in which it proposed to revise its regulations and the pro forma Large Generator Interconnection Procedures ("LGIP") and pro forma Large Generator Interconnection Agreement ("LGIA"). According to FERC, the proposed reforms could help "improve the efficiency of processing interconnection requests for both transmission providers and interconnection customers, maintain reliability, increase energy supply, balance the needs of interconnection customers and transmission owners, and remove barriers to needed resource development." Comments on the proposed reforms in FERC's NOPR are due 60 days after publication of the NOPR in the Federal Register.
In the NOPR, FERC organized its proposed reforms into the following three general categories, each named for a specific policy objective: (i) improve certainty for interconnection customers; (ii) promote more informed interconnection customers; and (iii) enhance current interconnection processes. FERC explained that the proposed reforms were developed to address current interconnection issues that may impede the timely development of new generation, including significant delays and lengthy queue timelines, withdrawals of interconnection requests late in the interconnection process, and uncertainty surrounding both timing and costs for interconnection customers. Among its reforms, FERC proposed to:
- modify the pro forma LGIA to allow interconnection customers to design, procure, and construct the transmission provider's interconnection facilities and stand-alone network upgrades – even if the transmission provider can meet the requested construction dates – where the interconnection customer and transmission provider (and transmission owner, if applicable) agree to the facilities and upgrades that would be built, including the design and construction details;
- revise the pro forma LGIA to require mutual agreement between the interconnection customer and the transmission owner or provider for the transmission owner or provider to choose to fund the capital for network upgrades;
- require regional transmission organizations and independent system operators ("RTOs/ISOs") to establish interconnection dispute resolution procedures that allow a disputing party to unilaterally seek dispute resolution in RTO/ISO regions;
- potentially revise the pro forma LGIP and LGIA to provide for a cost cap that would limit an interconnection customer's network upgrade costs at the higher bound of a transmission provider's cost estimate plus a stated accuracy margin following a certain stage in the interconnection study process;
- add electric storage resources to the definition of a "Generating Facility" under the pro forma LGIP and LGIA;
- revise the pro forma LGIP and LGIA to allow interconnection customers to request interconnection service for generating facilities that intend to operate at a level that is lower than that facility's total capacity;
- extend to all RTOs/ISOs a provisional interconnection service process to allow generators to interconnect and operate according to existing and regularly updated studies while the regular interconnection process and study requirements are being completed; and
- require transmission providers to establish an expedited process whereby interconnection customers can utilize or transfer surplus interconnection service at existing generating facilities.
In terms of compliance, FERC proposed that all public utility transmission providers submit compliance filings to FERC, revising their LGIPs and LGIAs, within 90 days of the effective date of any final rule. Transmission providers may also demonstrate in their compliance filings that their respective LGIPs and LGIAs continue to be consistent with or superior to the pro forma ultimately adopted by FERC.
Comments on the proposed reforms in FERC's NOPR are due 60 days after publication in the Federal Register. Although the NOPR only applies to large generating facilities, FERC is also seeking comments on whether any of the proposed reforms should be applied to small generating facilities (20 MW or less) as well.
A copy of the December 15, 2016 NOPR may be found here.
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