NY Public Service Commission Adopts Interconnection Queue Management Framework In Light Of New ITC Deadlines

With new deadlines imposed by the federal government on renewable energy projects' eligibility for certain federal investment tax credits (ITC), the State of New York Public Service Commission (PSC) has adopted new rules requiring utilities to prioritize the interconnection of tax credit-eligible distributed energy resource projects in the State through management of interconnection queues and completion of utility-side work. The PSC's Order on Interconnection Queue Management, issued and effective January 23, 2026, aims to support the timely interconnection of as many tax credit-eligible projects as possible, which would "ultimately benefit New York ratepayers."

To be eligible for prioritization under the Order, renewable energy projects (which may now include storage technology) must qualify for tax credits under Internal Revenue Service (IRS) guidance. Projects will be separated into groupings, based on whether they require Qualifying Upgrades (certain equipment subject to the PSC's cost sharing rules and which can require significant construction lead time).

Group A projects will be those projects that do not necessitate Qualifying Upgrades, and will be prioritized as follows:

• Initial participants will be those projects that (1) have commenced construction, and (2) must be in-service by December 31, 2027 to qualify for tax credits.
  • Within 15 calendar days of the Order, an eligible project developer must provide to the applicable utility information regarding the commencement of construction and anticipated placed in service dates. Consultation between the developer and utility is to follow.
  • Within 75 calendar days of the Order, the utility should provide a schedule and target in-service date, along with the date by which deposits under the Standardized Interconnection Requirements (SIRs) must be released (the Release Date).
• For all other Group A participants, any time after May 1, 2026, an eligible project developer is to provide the applicable utility information regarding the commencement of construction and anticipated placed in service dates. Consultation between the developer and utility should follow. The utility should provide a schedule, target in-service date, and Release Date within 15 business days of receipt of the notification.
• If a project developer anticipates that it will miss its Release Date, it should notify the applicable utility no later than 15 business days before the scheduled Release Date with its updated target in-service date and request a new Release Date. A Group A project that misses its Release Date risks being removed from the priority grouping, though it will remain in the interconnection queue.

Group B projects will be those projects that do require Qualifying Upgrades, and will be prioritized as follows:

• Group B.1 projects are those projects for which the developer notifies the applicable utility within 30 days of the Order that (1) it has been assigned a Qualifying Upgrade share, and (2) it has commenced construction.
  • In the notification, the eligible project developer must provide information regarding the commencement of construction and the date by which the IRS rules require the project to be placed in service.
  • By May 1, 2026, the utility is to provide preliminary work plans for completing the Qualifying Upgrades for interconnecting the project by the IRS deadline.
  • By June 1, 2026, the developer is to pay the Qualifying Upgrade Charges, or confirm such payment has been made.
  • By July 15, 2026, if mobilization thresholds are met, work plans are to be published on utility websites, and the utility is to provide target in-service dates upon publication.
  • By July 15, 2026, if mobilization thresholds are not met for a particular Qualifying Upgrade, the utility is to determine whether it can complete the upgrade in time to meet IRS deadlines and then publish the date by which the threshold must be met.
• Group B.2 projects are all other projects that commence construction and are allocated Qualifying Upgrade share at any time. The developer is to provide a notification to the utility to be scheduled.
  • In the notification, the eligible project developer must provide information regarding the commencement of construction and the date by which the IRS rules require the project to be placed in service.
  • If the project requires a Qualifying Upgrade with a published work plan, the developer is to pay the Qualifying Upgrade Charge, and the utility is to add the project to its work plan.
  • If the project requires a Qualifying Upgrade that is open to participation with a mobilization threshold deadline set by the utility, the project is to pay the Qualifying Upgrade Charge on or before the deadline, and the utility is to publish the work plan when the threshold is met. The utility is to provide target in-service dates upon publication.
  • For all other projects, the utility is to determine whether it can complete the upgrade in time to meet IRS deadlines and then publish and inform all affected developers of the date by which the mobilization threshold must be met. The utility is to publish the work plan if the mobilization threshold is met by the deadline. The utility is to provide target in-service dates upon publication.
• If circumstances beyond the utility's control prevent the utility's timely completion of work, or upgrade costs have increased 50% or more, the utility is to confer with participating projects to determine how to proceed. Some participants may withdraw and be responsible for their share of work completed to date; those participants that remain will not be required to pay the costs of withdrawing participants. Alternative approaches may also be considered. Such approaches must not affect system reliability, and must be paid for by the project participants.

The Order allows for adjustments to target in-service dates, Release Dates, and work plans to maximize the number of projects that achieve timely interconnection for tax credit purposes.

Among other things, the utilities are also directed to prepare a proposal on alternative "bridge-to-wires" approaches to meeting the IRS deadlines for discussion among stakeholder interconnection working groups by July 1, 2026, with a proposal filed with the PSC by December 1, 2026.

While the Order does not guarantee that any project will meet the placed-in-service deadlines imposed by the IRS, the Order creates opportunities for project developers facing accelerated project schedules in the wake of changes to and early sunsetting of federal tax credits.

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