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Proposed Rule2022-13470

Improvements to Generator Interconnection Procedures and Agreements

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Published

July 5, 2022

Issuing agencies

Energy DepartmentFederal Energy Regulatory Commission

Abstract

The Federal Energy Regulatory Commission (Commission) is issuing a Notice of Proposed Rulemaking (NOPR) proposing reforms to its pro forma Large Generator Interconnection Procedures, pro forma Small Generator Interconnection Procedures, pro forma Large Generator Interconnection Agreement, and pro forma Small Generator Interconnection Agreement to address interconnection queue backlogs, improve certainty, and prevent undue discrimination for new technologies. The reforms are intended to ensure that the generator interconnection process is just and reasonable and not unduly discriminatory or preferential. The Commission invites all interested persons to submit comments on the proposed reforms, including proposed revisions to the pro forma interconnection procedures and agreements, and in response to specific questions.

Full Text

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<title>Federal Register, Volume 87 Issue 127 (Tuesday, July 5, 2022)</title>
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[Federal Register Volume 87, Number 127 (Tuesday, July 5, 2022)]
[Proposed Rules]
[Pages 39934-40032]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-13470]

[[Page 39933]]

Vol. 87

Tuesday,

No. 127

July 5, 2022

Part II

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 35

Improvements to Generator Interconnection Procedures and Agreements;
Proposed Rule

Federal Register / Vol. 87, No. 127 / Tuesday, July 5, 2022 /
Proposed Rules

[[Page 39934]]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM22-14-000]

Improvements to Generator Interconnection Procedures and
Agreements

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
issuing a Notice of Proposed Rulemaking (NOPR) proposing reforms to its
pro forma Large Generator Interconnection Procedures, pro forma Small
Generator Interconnection Procedures, pro forma Large Generator
Interconnection Agreement, and pro forma Small Generator
Interconnection Agreement to address interconnection queue backlogs,
improve certainty, and prevent undue discrimination for new
technologies. The reforms are intended to ensure that the generator
interconnection process is just and reasonable and not unduly
discriminatory or preferential. The Commission invites all interested
persons to submit comments on the proposed reforms, including proposed
revisions to the pro forma interconnection procedures and agreements,
and in response to specific questions.

DATES: Comments are due October 13, 2022 and Reply Comments are due
November 14, 2022.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways. Electronic filing through <a href="https://www.ferc.gov">https://www.ferc.gov</a> is
preferred.
<bullet> Electronic Filing: Documents must be filed in acceptable
native applications and print-to-PDF, but not in scanned or picture
format.
<bullet> For those unable to file electronically, comments may be
filed by U.S. Postal Service mail or by hand (including courier)
delivery.
[cir] Mail via U.S. Postal Service only: Addressed to: Federal
Energy Regulatory Commission, Office of the Secretary, 888 First Street
NE, Washington, DC 20426.
[cir] For delivery via any other carrier (including courier):
Deliver to: Federal Energy Regulatory Commission, Office of the
Secretary, 12225 Wilkins Avenue, Rockville, MD 20852.
The Comment Procedures Section of this document contains more
detailed filing procedures.

FOR FURTHER INFORMATION CONTACT:

Tristan Kessler (Technical Information), Office of Energy Policy and
Innovation, 888 First Street NE, Washington, DC 20426, (202) 502-6608,
<a href="/cdn-cgi/l/email-protection#88fcfae1fbfce9e6a6e3edfbfbe4edfac8eeedfaeba6efe7fe">[email&#160;protected]</a>
Franklin Jackson (Technical Information), Office of Energy Market
Regulation, 888 First Street NE, Washington, DC 20426, (202) 502-6464,
<a href="/cdn-cgi/l/email-protection#87e1f5e6e9ecebeee9a9ede6e4ecf4e8e9c7e1e2f5e4a9e0e8f1">[email&#160;protected]</a>
Sarah Greenberg (Legal Information), Office of the General Counsel, 888
First Street NE, Washington, DC 20426, (202) 502-6230,
<a href="/cdn-cgi/l/email-protection#3f4c5e4d5e5711584d5a5a515d5a4d587f595a4d5c11585049">[email&#160;protected]</a>

SUPPLEMENTARY INFORMATION:

Table of Contents

Paragraph
Nos.

I. Introduction............................................. 1
A. Background........................................... 7
1. The Commission's Pro Forma Generator 7
Interconnection Procedures.........................
2. 2008 Order on RTO/ISO Interconnection Queuing 12
Practices..........................................
3. Order No. 845.................................... 13
4. Transmission Planning and Cost Allocation ANOPR.. 14
5. Joint Federal-State Task Force on Electric 16
Transmission.......................................
B. Need for Reform...................................... 18
II. Proposed Reforms........................................ 37
A. Reforms To Implement a First-Ready, First-Served 37
Cluster Study Process..................................
1. Interconnection Information Access............... 40
2. Cluster Study.................................... 53
3. Allocation of Cluster Study Costs................ 80
4. Allocation of Cluster Network Upgrade Costs...... 84
5. Shared Network Upgrades.......................... 90
6. Increased Financial Commitments and Readiness 102
Requirements.......................................
7. Transition Process............................... 149
B. Reforms To Increase the Speed of Interconnection 161
Queue Processing.......................................
1. Elimination of the Reasonable Efforts Standard... 161
2. Affected Systems................................. 174
3. Optional Resource Solicitation Study............. 216
C. Reforms To Incorporate Technological Advancements 238
Into the Interconnection Process.......................
1. Increasing Flexibility in the Generator 238
Interconnection Process............................
2. Incorporating Alternative Transmission 289
Technologies Into the Generator Interconnection
Process............................................
3. Modeling and Performance Requirements for Non- 303
Synchronous Generating Facilities..................
III. Proposed Compliance Procedures......................... 342
IV. Information Collection Statement........................ 345
V. Environmental Analysis................................... 359
VI. Regulatory Flexibility Act.............................. 360
VII. Comment Procedures..................................... 364
VIII. Document Availability................................. 368
Appendix A: Interconnection Study Metrics...................
Appendix B: Compilation of proposed changes to the pro forma
LGIP.
Appendix C: Compilation of proposed changes to the pro forma
SGIP.
Appendix D: Compilation of proposed changes to the pro forma
LGIA.
Appendix E: Compilation of proposed changes to the pro forma
SGIA.

[[Page 39935]]

I. Introduction

1. Pursuant to our authority under section 206 of the Federal Power
Act (FPA),\1\ we are proposing reforms in this Notice of Proposed
Rulemaking (NOPR) to the Commission's pro forma Large Generator
Interconnection Procedures (LGIP), pro forma Small Generator
Interconnection Procedures (SGIP), pro forma Large Generator
Interconnection Agreement (LGIA), and pro forma Small Generator
Interconnection Agreement (SGIA) to address interconnection queue
backlogs, improve certainty, and prevent undue discrimination for new
technologies.
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\1\ 16 U.S.C. 824e. Section 206 of the FPA requires that
whenever the Commission finds any rate, term, or condition for the
transmission of electric energy in interstate commerce or the sale
of such energy at wholesale in interstate commerce to be unjust,
unreasonable, unduly discriminatory, or preferential, the Commission
must establish a just and reasonable and not unduly discriminatory
or preferential replacement rate, term, or condition.
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2. Nineteen years ago the Commission issued Order No. 2003,\2\ in
which the Commission required all public utilities that own, control,
or operate facilities used for transmitting electric energy in
interstate commerce to have on file standard procedures and a standard
agreement for interconnecting generating facilities larger than 20 MW
(called the pro forma LGIP, and the pro forma LGIA).\3\ The Commission
stated its expectation that the changes would prevent undue
discrimination, preserve reliability, increase energy supply, and lower
wholesale prices for customers by increasing the amount and variety of
new generation that would compete in the wholesale electricity
market.\4\ The Commission further stated that the standard procedures
would facilitate market entry for generation competitors by reducing
interconnection costs and time.\5\ In Order No. 2006,\6\ the Commission
adopted standard procedures and a standard agreement for
interconnecting generating facilities no larger than 20 MW (called the
pro forma SGIP, and the pro forma SGIA), citing the same purposes
outlined in Order No. 2003.\7\
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\2\ Standardization of Generator Interconnection Agreements &
Proc., Order No. 2003, 68 FR 49845 (Aug. 19, 2003), 104 FERC ]
61,103 (2003), order on reh'g, Order No. 2003-A, 69 FR 15932 (Mar.
5, 2004), 106 FERC ] 61,220, order on reh'g, Order No. 2003-B, 70 FR
265 (Jan. 19, 2005), 109 FERC ] 61,287 (2004), order on reh'g, Order
No. 2003-C, 70 FR 37661 (July 18, 2005), 111 FERC ] 61,401 (2005),
aff'd sub nom. Nat'l Ass'n of Regul. Util. Comm'rs v. FERC, 475 F.3d
1277 (D.C. Cir. 2007) (NARUC v. FERC).
\3\ Order No. 2003, 104 FERC ] 61,103 at P 2.
\4\ Id. P 1.
\5\ Id. P 12.
\6\ Standardization of Small Generator Interconnection
Agreements & Proc., Order No. 2006, 70 FR 34189 (June 13, 2005), 111
FERC ] 61,220, order on reh'g, Order No. 2006-A, 70 FR 71760 (Nov.
30, 2005), 113 FERC ] 61,195 (2005), order granting clarification,
Order No. 2006-B, 71 FR 42587 (July 27, 2006), 116 FERC ] 61,046
(2006).
\7\ Order No. 2006, 111 FERC ] 61,220 at PP 15, 36.
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3. The electricity sector has transformed significantly since the
issuance of Order Nos. 2003 and 2006. The growth of new resources
seeking to interconnect to the transmission system and the differing
characteristics of those resources have created new challenges for the
generator interconnection process. These new challenges are creating
large interconnection queue backlogs and uncertainty regarding the cost
and timing of interconnecting to the transmission system, potentially
increasing costs for consumers. Backlogs in the generator
interconnection process, in turn, can create reliability issues as
needed new generating facilities are unable to come online in an
efficient and timely manner. Therefore, we believe that it may be
appropriate to reform the Commission's standard interconnection
procedures and agreements to ensure that interconnection customers are
able to interconnect to the transmission system in a reliable,
efficient, transparent, and timely manner, thereby ensuring that rates,
terms, and conditions for Commission-jurisdictional services remain
just and reasonable and not unduly discriminatory or preferential.
4. Accordingly, we propose in this NOPR reforms to the Commission's
pro forma LGIP and pro forma LGIA. Specifically, as explained in detail
in this NOPR, we propose reforms to: (1) implement a first-ready,
first-served cluster study process; \8\ (2) increase the speed of
interconnection queue processing; and (3) incorporate technological
advancements into the interconnection process.
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\8\ A first-ready, first-served cluster study process includes
the following elements: increased access to information prior to
entering the queue; a mechanism to study interconnection requests in
groups; and increased financial commitments and readiness
requirements to enter and proceed through the queue. To contrast,
the existing first-come, first-served serial study process assigns
interconnection requests an individual queue position based solely
on the date of entry into the queue and does not include access to
information prior to entering the queue.
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5. We also propose reforms to the pro forma SGIP and pro forma
SGIA. Specifically, as explained in detail in this NOPR, for small
generators we propose reforms to incorporate alternative transmission
technologies into the interconnection process and to provide modeling
and performance requirements for non-synchronous generators. In
addition, we seek comment on whether the other reforms proposed in this
NOPR should be applied to the pro forma SGIP and pro forma SGIA.
6. We recognize that transmission providers have undertaken efforts
to address interconnection queue management issues. This NOPR is not
intended to divert or slow the potential progress represented by those
efforts. We will review any filings that result from those efforts
based on the record before us in those proceedings and not based on
whether they comply with the proposed reforms in this NOPR. We note
that any compliance obligations arising out of any final rule in this
docket on the issues addressed herein will be evaluated in light of the
independent entity variation for RTO/ISO regions and the consistent
with or superior to standard for non-RTO regions.

A. Background

1. The Commission's Pro Forma Generator Interconnection Procedures
7. In Order No. 2003, the Commission recognized a need for a
standard set of interconnection procedures for transmission providers
\9\ and a single, uniformly applicable interconnection agreement for
large generating facilities.\10\ The Commission noted that generator
interconnection is a ``critical component of open access transmission
service and thus is subject to the requirement that utilities offer
comparable service under the [pro forma] OATT.'' \11\ The Commission
found that it was appropriate to establish a standard set of generator
interconnection procedures to

[[Page 39936]]

``minimize opportunities for undue discrimination and expedite the
development of new generation, while protecting reliability and
ensuring that rates are just and reasonable.'' \12\ To this end, the
Commission adopted the pro forma LGIP and pro forma LGIA and amended
its regulations to require all transmission providers to incorporate
these standard procedures and agreement into their OATTs.\13\
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\9\ In this order, transmission provider ``shall mean the public
utility (or its designated agent) that owns, controls, or operates
transmission or distribution facilities used for the transmission of
electric energy in interstate commerce and provides transmission
service under the [Transmission Provider's Tariff]. The term . . .
should be read to include the Transmission Owner when the
Transmission Owner is separate from the Transmission Provider.'' Pro
forma LGIP section 1; pro forma LGIA art. 1; pro forma SGIP attach.
1; pro forma SGIA attach. 1. Therefore, unless otherwise noted,
``transmission provider'' refers only to public utility transmission
providers. FPA section 201(e) defines ``public utility'' to mean
``any person who owns or operates facilities subject to the
jurisdiction of the Commission under this subchapter.'' 16 U.S.C.
824(e). A non-public utility that seeks voluntary compliance with
the reciprocity condition of an Open Access Transmission Tariff
(OATT) may satisfy that condition by filing an OATT, which includes
the pro forma LGIP, the pro forma SGIP, the pro forma LGIA, and the
pro forma SGIA. See Order No. 2003, 104 FERC ] 61,103 at PP 1, 616;
Order No. 2006, 111 FERC ] 61,220 at P 1.
\10\ Order No. 2003, 104 FERC ] 61,103 at P 11. Large generating
facilities are defined to mean ``a Generating Facility having a
Generating Facility Capacity of more than 20 MW.'' Pro forma LGIP
section 1.
\11\ Order No. 2003, 104 FERC ] 61,103 at P 9 (citing Tenn.
Power Co., 90 FERC ] 61,238 (2000)).
\12\ Id. P 11.
\13\ 18 CFR 35.28(f)(1).
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8. To initiate the generator interconnection process set forth in
the Commission's pro forma LGIP,\14\ the interconnection customer
submits an interconnection request for its proposed generating facility
that includes preliminary documentation of the site of the proposed
generating facility, certain technical information about the proposed
generating facility, and the expected commercial operation date of the
proposed generating facility, along with a refundable deposit of
$10,000.\15\ After the transmission provider determines that the
interconnection request is complete, the interconnection request enters
the transmission provider's interconnection queue with other pending
interconnection requests and is assigned a queue position based on the
time and date of its receipt.\16\ The queue position determines the
order in which the transmission provider studies the interconnection
requests in its queue.\17\
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\14\ While we provide a broad description of the process in the
Commission's pro forma LGIP as background here, we recognize that
many transmission providers have adopted (and the Commission has
accepted) variations to many of the terms in the Commission's pro
forma LGIP and pro forma LGIA. Consequently, some or many of the
details of a particular transmission provider's generator
interconnection procedures may vary considerably from the broad
description provided here.
\15\ Order No. 2003, 104 FERC ] 61,103 at P 35; pro forma LGIP
sections 3.1, 3.4.
\16\ Pro forma LGIP section 4.1.
\17\ Id.
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9. Transmission providers must schedule a scoping meeting with the
interconnection customer to discuss possible points of interconnection
for the proposed generating facility and exchange technical
information, which is followed by a series of interconnection studies
to evaluate the proposed interconnection in detail.\18\ Transmission
providers study interconnection requests in three phases: (1) the
Interconnection Feasibility Study (feasibility study); \19\ (2) the
Interconnection System Impact Study (system impact study); \20\ and (3)
the Interconnection Facilities Study (facilities study).\21\ These
studies contain the power flow, short circuit, and stability analyses
necessary to: (1) identify any adverse impacts on the transmission
providers' transmission system or any affected systems; \22\ (2)
determine the interconnection facilities and network upgrades \23\
needed to reliably interconnect the generating facility; and (3)
estimate the interconnection customer's cost responsibility for these
facilities.\24\ The pro forma LGIP requires that transmission providers
use reasonable efforts to complete: (1) feasibility studies within 45
days; (2) system impact studies within 90 days; and (3) facilities
studies within 90 or 180 days, depending on the interconnection
customer's requested accuracy margin.\25\
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\18\ Order No. 2003, 104 FERC ] 61,103 at P 36; pro forma LGIP
sections 3.4.4; 6-8.
\19\ The pro forma LGIP defines a feasibility study as ``a
preliminary evaluation of the system impact and cost of
interconnecting the Generating Facility to the Transmission
Provider's Transmission System.'' The scope of a feasibility study
is described in section 6 of the pro forma LGIP. Pro forma LGIP
sections 1, 6.
\20\ The pro forma LGIP defines a system impact study as ``an
engineering study that evaluates the impact of the proposed
interconnection on the safety and reliability of Transmission
Provider's Transmission System and, if applicable, an Affected
System.'' In particular, a system impact study identifies and
details ``the system impacts that would result if the Generating
Facility were interconnected without project modifications or system
modifications, focusing on the Adverse System Impacts identified in
the [feasibility study], or to study potential impacts, including
but not limited to those identified in the Scoping Meeting.'' Id.
section 1.
\21\ The pro forma LGIP defines a facilities study as ``a study
conducted by the Transmission Provider or a third-party consultant
for the Interconnection Customer to determine a list of facilities
(including Transmission Provider's Interconnection Facilities and
Network Upgrades as identified in the [system impact study]), the
cost of those facilities, and the time required to interconnect the
Generating Facility with the Transmission Provider's Transmission
System.'' The scope of a facilities study is described in section 8
of the pro forma LGIP. Id. sections 1, 8.
\22\ An affected system is an electric system other than the
transmission provider's transmission system that may be affected by
the proposed interconnection. Id. section 1; pro forma LGIA art. 1.
\23\ For purposes of this NOPR, unless otherwise noted,
``network upgrades'' refers to interconnection-related network
upgrades. More specifically, the pro forma LGIP and pro forma LGIA
state that ``Network Upgrades shall mean the additions,
modifications, and upgrades to the Transmission Provider's
Transmission System required at or beyond the point at which the
Interconnection Facilities connect to the Transmission Provider's
Transmission System to accommodate the interconnection of the Large
Generating Facility to the Transmission Provider's Transmission
System.'' Pro forma LGIP section 1 (Definitions); pro forma LGIA
art. 1 (Definitions).
\24\ Order No. 2003, 104 FERC ] 61,103 at PP 35-37; pro forma
LGIP sections 6-8. The interconnection customer is responsible for
the actual costs of interconnection studies and any necessary re-
studies. Pro forma LGIP section 13.3.
\25\ Id. sections 6.3, 7.4, 8.3.
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10. At the completion of the facilities study, the pro forma LGIP
requires the transmission provider to issue a report on the best
estimate of the costs to effectuate the requested interconnection and
provide a draft generator interconnection agreement to the
interconnection customer.\26\ If the interconnection customer wishes to
proceed, after negotiations, the interconnection customer enters into a
generator interconnection agreement with the transmission provider or,
in specific circumstances, requests that the transmission provider file
the agreement with the Commission unexecuted.\27\ The transmission
provider is responsible for the construction of all network upgrades,
but, as further discussed below, the interconnection customer has the
option to build these facilities in certain circumstances.\28\
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\26\ Order No. 2003, 104 FERC ] 61,103 at P 38. Section 11.1 of
the pro forma LGIP requires the transmission provider to tender a
draft LGIA to the interconnection customer ``in the form of
Transmission Provider's FERC-approved standard form LGIA.''
\27\ If the transmission provider and interconnection customer
execute an LGIA that conforms to the transmission provider's FERC-
approved standard form LGIA, the agreement does not need to be filed
with the Commission (if the transmission provider has such a
standard form LGIA on file and submits an Electronic Quarterly
Report). Alternatively, the transmission provider must file an LGIA
with the Commission for review and approval if: (1) the
interconnection customer determines that negotiations with the
transmission provider over the terms of an LGIA are at an impasse
and requests submission of the unexecuted LGIA with the Commission;
or (2) the LGIA does not conform to the transmission provider's
FERC-approved standard form LGIA. See Order No. 2003-A, 106 FERC ]
61,220 at P 201; pro forma LGIP sections 11.2-11.3.
\28\ Order No. 2003, 104 FERC ] 61,103 at PP 351-354; pro forma
LGIA art. 5.1.3.
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11. Similar to Order No. 2003, in Order No. 2006, the Commission
recognized the need for standardized interconnection procedures and
agreements for small generating facilities with a capacity of 20 MW or
less.\29\ In addition to establishing a pro forma interconnection study
process for small generating facilities similar to the process for
large generation established in Order No. 2003, the Commission
included: (1) a ``Fast Track Process'' \30\ that uses technical screens
to evaluate a certified small generating facility no larger than 2 MW;
and (2) a ``10 kW Inverter Process'' \31\ that uses the same technical
screens to evaluate a certified inverter-based small generating
facility no larger than 10 kW.\32\ The Commission later issued Order
No.

[[Page 39937]]

792,\33\ in which the Commission revised the pro forma SGIP and pro
forma SGIA to provide for interconnection customers to receive point of
interconnection information in advance of submitting an interconnection
request, increase the threshold for participation in the Fast Track
Process to 5 MW, and to specifically include electric storage
devices.\34\
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\29\ Order No. 2006, 111 FERC ] 61,220 at P 36.
\30\ Pro forma SGIP section 2.1.
\31\ Id. attach. 5.
\32\ Order No. 2006, 111 FERC ] 61,220 at PP 36, 38-39.
\33\ Small Generator Interconnection Agreements & Procs., Order
No. 792, 78 FR 73240 (Dec. 5, 2013), 145 FERC ] 61,159 (2013),
clarifying, Order No. 792-A, 146 FERC ] 61,214 (2014).
\34\ See Order No. 792, 145 FERC ] 61,159 at P 1.
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2. 2008 Order on RTO/ISO Interconnection Queuing Practices
12. In response to concerns voiced to the Commission about
interconnection queue management, in 2007, the Commission held a
technical conference,\35\ and later issued an order \36\ addressing
interconnection queue issues in RTOs/ISOs. In the order, the Commission
noted that some transmission providers were not processing their
interconnection queues within the timelines established in the pro
forma LGIP, and in certain cases, were greatly exceeding them.\37\ The
Commission stated that, although it ``may need to [impose solutions] if
the RTOs and ISOs do not act themselves,'' each RTO/ISO would have an
opportunity to work with its stakeholders to develop its own
solutions.\38\ As further discussed below, following the order,
multiple RTOs/ISOs submitted queue reform proposals to the Commission,
some of which moved away from a so-called ``first-come, first-served''
approach (whereby interconnection requests are processed in the order
they are received) to a so-called ``first-ready, first-served''
approach (whereby interconnection requests are processed based on when
interconnection customers meet certain project development
milestones).\39\
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\35\ Interconnection Queuing Practices, Docket No. AD08-2-000,
Notice of Technical Conference (issued Nov. 2, 2007).
\36\ Interconnection Queuing Practices, 122 FERC ] 61,252 (2008)
(2008 Technical Conference Order).
\37\ Id. P 3.
\38\ Id. P 8.
\39\ See, e.g., Sw. Power Pool, Inc., 128 FERC ] 61,114 (2009)
(SPP); Midwest Ind. Sys. Operator, Inc., 124 FERC ] 61,183 (2008);
Cal. Ind. Sys. Operator Corp., 124 FERC ] 61,292 (2008).
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3. Order No. 845
13. In 2018, the Commission issued Order No. 845,\40\ in which the
Commission made the most comprehensive revisions to the pro forma LGIP
and pro forma LGIA since their adoption in Order No. 2003. In Order No.
845, the Commission concluded that reforms to the pro forma LGIP and
pro forma LGIA were needed to mitigate concerns regarding systemic
inefficiencies, remedy discriminatory practices, and address recent
developments, including changes in the resource mix and emergence of
new technologies.\41\ The Commission therefore adopted reforms designed
to improve certainty for interconnection customers, promote more
informed interconnection decisions, and enhance the generator
interconnection process.\42\ Among other things, the Commission: (1)
expanded the interconnection customer's option to build certain network
upgrades; (2) revised the definition of generating facility to include
electric storage resources; \43\ (3) established reporting requirements
for aggregate interconnection study performance; (4) allowed
interconnection customers to request a level of interconnection service
that is lower than their generating facility capacity; (5) required
transmission providers to allow provisional interconnection service
that provides for limited operation of a generating facility prior to
completion of the full generator interconnection process; (6) required
transmission providers to create a process for interconnection
customers to use surplus interconnection service \44\ at existing
points of interconnection; and (7) required transmission providers to
assess and, if necessary, study, an interconnection customer's
technology changes without affecting the interconnection customer's
queue position.\45\
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\40\ Reform of Generator Interconnection Procs & Agreements,
Order No. 845, 83 FR 21342 (May 09, 2018), 163 FERC ] 61,043 (2018),
order on reh'g, Order No. 845-A, 166 FERC ] 61,137, 84 FR 8156 (Mar.
06, 2019), order on reh'g, Order No. 845-B, 168 FERC ] 61,092
(2019).
\41\ Order No. 845, 163 FERC ] 61,043 at P 7.
\42\ Id. P 2.
\43\ Generating Facilities ``shall mean Interconnection
Customer's device for the production and/or storage for later
injection of electricity identified in the Interconnection Request,
but shall not include the Interconnection Customer's Interconnection
Facilities.'' Pro forma LGIP section 1.
\44\ The pro forma LGIP defines surplus interconnection service
as ``any unneeded portion of Interconnection Service established in
a Large Generator Interconnection Agreement, such that if Surplus
Interconnection Service is utilized the total amount of
Interconnection Service at the Point of Interconnection would remain
the same.'' Pro forma LGIP section 1.
\45\ Order No. 845, 163 FERC ] 61,043 at PP 3-5.
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4. Transmission Planning and Cost Allocation ANOPR
14. On July 15, 2021, the Commission issued an Advance Notice of
Proposed Rulemaking (ANOPR) in Docket No. RM21-17-000, presenting
potential reforms to the Commission's requirements governing the
regional transmission planning and cost allocation and generator
interconnection processes.\46\ Specific to the generator
interconnection process, the Commission sought comment on whether and
which reforms may be necessary to ensure a more purposeful integration
of the generator interconnection process with the regional transmission
planning and cost allocation processes, establish a faster and more
efficient interconnection queueing process, and promote a more
efficient and cost-effective allocation of interconnection-related
network upgrade costs.\47\ For instance, the Commission noted that the
cost of interconnection-related network upgrades can depend largely on
both the timing of when the interconnection customer enters the
interconnection queue and where the interconnection customer proposes
to interconnect its generating facility. Therefore, the Commission
noted, interconnection customers may submit multiple interconnection
requests in an effort to determine the most favorable point of
interconnection \48\ that minimizes their interconnection-related
network upgrade costs.\49\ The Commission stated that this practice, in
turn, may lead to late-stage withdrawals of the excess interconnection
requests, which can then impede the transmission provider's ability to
process its interconnection queue in an efficient manner. As a result,
the Commission stated that it may be time to consider reforms to
generator interconnection process that would make them more efficient
and ensure that generation facilities that are more ``ready'' than
others are not unduly delayed in the interconnection queue.
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\46\ Bldg. for the Future Through Elec. Reg'l Transmission Plan.
& Cost Allocation & Generator Interconnection, 86 FR 40266 (July 15,
2021), 176 FERC ] 61,024 (2021) (ANOPR).
\47\ Id. P 5.
\48\ Point of Interconnection refers to ``the point, as set
forth in Appendix A to the Standard Large Generator Interconnection
Agreement, where the Interconnection Facilities connect to the
Transmission Provider's Transmission System.'' Pro forma LGIP
section 1.
\49\ ANOPR, 176 FERC ] 61,024 at P 41.
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15. On April 21, 2022, the Commission issued a Notice of Proposed
Rulemaking (Transmission Planning and Cost Allocation NOPR) proposing
reforms to its existing regional transmission planning and cost
allocation requirements in the same proceeding as it issued the ANOPR.
While the Transmission Planning and Cost Allocation NOPR did not
address many of the concerns raised by the Commission in the ANOPR with
respect

[[Page 39938]]

to the generator interconnection queue process, the Commission noted in
the Transmission NOPR that it would continue to review the record and
that it expected to address possible inadequacies through subsequent
proceedings that propose reforms, as warranted, related to that
topic.\50\ We are now taking that next step with the reforms we propose
in this NOPR.
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\50\ Bldg. for the Future Through Elec. Reg'l Transmission Plan.
& Cost Allocation & Generator Interconnection, 87 FR 26504 (May 04,
2022), 179 FERC ] 61,028, at P 10 (2022) (Transmission Planning and
Cost Allocation NOPR).
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5. Joint Federal-State Task Force on Electric Transmission
16. On June 17, 2021, the Commission established a Joint Federal-
State Task Force on Electric Transmission (Task Force) to formally
explore broad categories of transmission-related topics.\51\ The
Commission explained that the development of new transmission
infrastructure implicates a host of different issues, including
generator interconnection. The Task Force is comprised of all FERC
Commissioners as well as representatives from 10 state commissions
nominated by the National Association of Regulatory Utility
Commissioners (NARUC), with two originating from each NARUC region.\52\
The Task Force will convene for multiple formal meetings and has thus
far met three times--on November 10, 2021, on February 16, 2022, and on
May 6, 2022.
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\51\ Joint Fed.-State Task Force on Elec. Transmission, 175 FERC
] 61,224, at PP 1, 6 (2021).
\52\ An up-to-date list of Task Force members, as well as
additional information on the Task Force, is available on the
Commission's website at: <a href="https://www.ferc.gov/TFSOET">https://www.ferc.gov/TFSOET</a>. Public
materials related to the Task Force, including transcripts from
public meetings, are available in the Commission's eLibrary in
Docket No. AD21-15-000.
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17. The discussion at the May meeting focused on interconnection
issues, including generator interconnection queue processes and
backlogs. The Task Force Members discussed: the primary challenges
preventing more efficient processing of interconnection queues;
specific improvements to interconnection processes (such as tighter
applicant requirements to enter and remain in the queue, clustering,
fast tracking, tighter deadlines on transmission providers completing
studies, and minimizing reiterative studies); and how to balance near
term improvements to the interconnection procedures with longer-term
regional transmission planning and development.\53\
---------------------------------------------------------------------------

\53\ Joint Fed.-State Task Force on Elec. Transmission, Notice
of Meeting, Docket No. AD21-15-000 (issued Apr. 22, 2022) (attaching
agenda).
---------------------------------------------------------------------------

B. Need for Reform

18. Under the Commission's pro forma LGIP, the interconnection
study process for large generating facilities is a serial first-come,
first-served study process by which transmission providers study
interconnection requests individually in the order the transmission
provider received them.\54\ The Commission adopted these procedures at
a time when most interconnection requests were for large traditional
generating facilities that would use readily available transmission
capacity. In the 2008 Technical Conference Order, the Commission
acknowledged that, while the generator interconnection process set
forth in the pro forma LGIP made sense at the time that the Commission
adopted it, it has since led to some unexpected consequences,
particularly for transmission systems with numerous interconnection
customers and limited excess transmission capacity.\55\ The Commission
also explained that surges in the volume of new types of generating
facilities, principally renewable generation, were placing stress on
interconnection queue management because such generating facilities can
be constructed and placed into operation more quickly than traditional
types of generating facilities. The increase in the number of
interconnection requests and limited transmission capacity have not
subsided since the issuance of the 2008 Technical Conference Order.
Although in Order No. 845, the Commission attempted to address
interconnection queue backlogs,\56\ the interconnection queue backlog
has persisted and worsened. Indeed, as of the end of 2021, there were
over 8,100 active interconnection requests in interconnection queues
throughout the United States, representing over 1,000 GW of generation
and an estimated 420 GW of electric storage.\57\ This is more than
triple the total volume, in gigawatts, of generation and electric
storage in interconnection queues nationwide just five years
earlier.\58\
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\54\ Pro forma LGIP section 4.1.
\55\ 2008 Technical Conference Order, 122 FERC ] 61,252 at P 15.
\56\ Order No. 845, 163 FERC ] 61,043 at P 24.
\57\ Joseph Rand et al., Lawrence Berkeley Nat'l Lab'y, Queued
Up: Characteristics of Power Plants Seeking Transmission
Interconnection as of the End of 2021, at 26 (Apr. 2022), <a href="https://emp.lbl.gov/sites/default/files/queued_up_2021_04-13-2022.pdf">https://emp.lbl.gov/sites/default/files/queued_up_2021_04-13-2022.pdf</a>
(Queued Up).
\58\ See Ryan Wiser et al., Lawrence Berkeley Nat'l Lab'y, Wind
Energy Techs. Office, Land-Based Wind Market Report: 2021 Edition,
at 10 (Aug. 2021), <a href="https://www.energy.gov/eere/wind/articles/land-based-wind-market-report-2021-edition-released">https://www.energy.gov/eere/wind/articles/land-based-wind-market-report-2021-edition-released</a>.
---------------------------------------------------------------------------

19. The continued use of the Commission's pro forma LGIP in the
face of dramatic increases in interconnection requests is leading to a
growing backlog of interconnection requests for many transmission
providers. Based on Commission staff's compilation of information
posted by transmission providers for 2021, nationwide, almost 1,900
interconnection requests were awaiting interconnection studies that had
not been performed as of the tariff-defined deadline.\59\ These
interconnection queue backlogs and study delays create uncertainty and
inhibit project developers' ability to interconnect generating
facilities to the transmission system.\60\ In addition, as
interconnection studies fall behind, the amount of time subsequent
interconnection requests spend in the interconnection queue rises.\61\
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\59\ See app. A (compiling data publicly posted by transmission
providers in compliance with Order No. 845); see also Order No. 845,
163 FERC ] 61,043 at P 305. This is based on informational reports
submitted by transmission providers in compliance with Order No.
845.
\60\ See Joint Fed.-State Task Force on Elec. Transmission,
Technical Conference, Docket No. AD21-15-000, Tr. 15:21-16:1 (Ted
Thomas) (May 6, 2022) (May Joint Task Force Tr.) (``Houston, we have
a problem. As stated in the NARUC ANOPR comments, existing methods
for interconnecting new resources to the transmission grid are
inadequate and inefficient because of the time necessary to
interconnect new resources and the corresponding network upgrade
costs.'').
\61\ For the four RTOs/ISOs (California Independent System
Operator Corporation (CAISO), Electric Reliability Council of Texas
(ERCOT), New York Independent System Operator, Inc. (NYISO), and PJM
Interconnection, L.L.C (PJM) and one utility (Arizona Public Service
Company)) for which data was available, the average time projects
spent in interconnection queues before being constructed increased
from ~2.1 years for projects built between 2000 and 2010 to ~3.7
years for those built between 2011 and 2021. Queued Up at 3. As of
the end of 2021, only 13% of total capacity in interconnection
queues had an executed generator interconnection agreement. Id. at
17. See also May Joint Task Force Tr. 23:18-25 (Jason Stanek)
(expressing frustration with the status quo and agreement that it is
``no longer tenable'' considering the inability of generators to
interconnect in a timely manner, e.g., there are ``2,500 projects
under study [in the MACRUC region] and about a half of them have
been in the queue since at least 2001'').
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20. Numerous factors appear to contribute to these interconnection
queue backlogs. Increasing volumes of interconnection requests are
entering the interconnection queue due to a confluence of the rapidly
changing

[[Page 39939]]

resource mix,\62\ market forces,\63\ and emerging technologies.\64\ At
the same time, available transmission capacity appears to have been
exhausted in many regions. As the Commission observed in the
Transmission Planning and Cost Allocation NOPR, ``[t]he evidence
suggests that long-term regional transmission planning and cost
allocation to identify and plan for transmission needs . . . is not
occurring in most transmission planning regions on a regular or
consistent basis.'' \65\ Instead, the Commission added, significant
transmission expansion appears to be happening in an incremental
fashion, in response to individual interconnection requests.\66\ This
reactive approach to transmission expansion adds to the challenge many
proposed projects face to successfully complete the interconnection
queue process and reach commercial operation. Therefore, the number of
projects waiting in the interconnection queue is increasing. Further,
transmission providers report that there is a nationwide shortage of
qualified engineers to keep pace with the increasing number of
interconnection requests in the queue and associated interconnection
studies.\67\ Many, if not all, of these drivers are either ongoing or
increasing. Thus, we are concerned that, without reforms to the
generator interconnection process, existing interconnection queue
backlogs are likely to intensify.
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\62\ Corporations purchased over 30 GW of clean energy through
power purchase agreements in 2021, up nearly 24% from 2020. U.S.-
based purchases represented 17 GW of the power purchase agreements
executed in 2021. Bloomberg New Energy Finance, Corporate Clean
Energy Buying Tops 30GW Mark in Record Year (Jan. 31, 2022), https:/
/about.bnef.com/blog/corporate-clean-energy-buying-tops-30gw-mark-
in-record-year/
#:~:text=Corporate%20Clean%20Energy%20Buying%20Tops%2030GW%20Mark%20i
n%20Record%20Year,-
January%2031%2C%202022&text=New%20York%20and%20London%2C%20January,re
search%20firm%20BloombergNEF%20 (BNEF).
\63\ From 2009 to 2021, the levelized cost of energy from
unsubsidized utility scale wind and solar photovoltaic facilities
dropped 72% and 90%, respectively. Lazard, Lazard's Levelized Cost
of Energy Analysis--Version 15.0, at 9 (Oct. 2021), <a href="https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/">https://www.lazard.com/perspective/levelized-cost-of-energy-levelized-cost-of-storage-and-levelized-cost-of-hydrogen/</a> (Lazard's LCOE).
\64\ For instance, 42% (285 GW) of solar and 8% (17 GW) of wind
projects currently in the queue include are proposed as hybrid
resources including electric storage. Queued Up at 18.
\65\ Transmission Planning and Cost Allocation NOPR, 179 FERC ]
61,028 at P 36.
\66\ Id.
\67\ For example, CAISO stated in its recent proposal to extend
its interconnection study deadlines to accommodate its
interconnection queue cluster 14 that neither CAISO nor the
participating transmission owners could increase staffing as few
experts are available to hire. Cal. Indep. Sys. Operator Corp., 176
FERC ] 61,207, at PP 7, 21 (2021). The Midcontinent Independent
System Operator (MISO) has indicated that it similarly has
experienced delays in performance of interconnection studies by
outside consultants. See MISO, Informational Report, Transmittal,
Docket No. ER19-1960, at 12 (filed Nov. 16, 2020).
---------------------------------------------------------------------------

21. In recent years, numerous transmission providers have responded
to the types of trends and challenges outlined above by seeking to
reform their interconnection queue processes.\68\ Since 2018, the
Commission has approved proposals from five non-independent
transmission providers to transition from the serial first-come, first-
served study process set forth in the pro forma LGIP to a first-ready,
first-served cluster study process that imposes increasing readiness
requirements to advance through the study phases.\69\ Meanwhile,
several RTOs/ISOs, including MISO and Southwest Power Pool (SPP), have
proposed refinements to the cluster study processes in their regions
that the Commission had previously approved.\70\
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\68\ See May Joint Task Force Tr. 88:10-12 (Ted Thomas) (``[T]he
RTOs have been working on these interconnection issues and we don't
have a solution yet.'').
\69\ Dominion Energy S.C., Inc., Docket No. ER22-301-000 (Dec.
28, 2021) (delegated order) (Dominion); Duke Energy Carolinas, LLC,
176 FERC ] 61,075 (2021) (Duke); PacifiCorp, 171 FERC ] 61,112
(2020); Pub. Serv. Comm'n of Colo., 169 FERC ] 61,182 (2019) (PSCo);
Tri-State Generation & Transmission Ass'n, Inc., 173 FERC ] 61,015
(2020) (2020 Tri-State Order).
\70\ See, e.g., Midcontinent Indep. Sys. Operator, Inc., 178
FERC ] 61,141 (2022); Sw. Power Pool, Inc., 178 FERC ] 61,015
(2022).
---------------------------------------------------------------------------

22. As the factors contributing to interconnection queue backlogs
and study delays continue and even increase, it has become more
apparent that the Commission's existing generator interconnection
procedures and agreements may be insufficient to ensure that
interconnection customers are able to interconnect to the transmission
system in a reliable, efficient, transparent, and timely manner,
thereby ensuring that rates, terms, and conditions for Commission-
jurisdictional services remain just and reasonable and not unduly
discriminatory or preferential.\71\ We preliminarily find that the
Commission's pro forma LGIP, pro forma LGIA, pro forma SGIP, and pro
forma SGIA result in rates, terms, and conditions pursuant to which
transmission providers provide generator interconnection service are
unjust and unreasonable and unduly discriminatory or preferential.
Further, because the interconnection queue backlogs and study delays
afflicting generator interconnection service nationwide hinder the
timely development of new generation and thereby stifle competition in
the wholesale electric markets, we preliminarily find that the
Commission's pro forma LGIP, pro forma LGIA, pro forma SGIP, and pro
forma SGIA result in rates, terms, and conditions in the wholesale
electric markets that are unjust and unreasonable and unduly
discriminatory or preferential.
---------------------------------------------------------------------------

\71\ See May Joint Task Force Tr. 23:6-11 (Riley Allen)
(``Ultimately, this system is not working efficiently now and those
inefficiencies translate into costs. It's not just cost on the
developers, but I find from my decades of experience that, if there
are inefficiencies in the system, they ultimately have to be borne
by the loads and ratepayer interests.'').
---------------------------------------------------------------------------

23. Our preliminary findings are based on several features of the
Commission's existing generator interconnection procedures and
agreements that are of concern, specifically: (1) the information (or
lack thereof) available to prospective interconnection customers and
the commitments required of them to enter and progress through the
interconnection queue; (2) the reliance on a serial first-come, first-
served study process and the standard to which transmission providers
are held for meeting interconnection study deadlines; (3) the protocols
for affected systems studies; (4) the provisions for studying new or
hybrid (co-located) generation technologies and considering alternative
transmission technologies; and (5) the performance requirements for
inverter-based technologies, including wind, solar, and electric
storage facilities. We describe these features of the Commission's
existing generator interconnection procedures and agreements--as set
forth in the Commission's pro forma LGIP, pro forma LGIA, pro forma
SGIP, and pro forma SGIA--in this section and then turn to our proposed
reforms to address the concerns identified with those features.\72\
---------------------------------------------------------------------------

\72\ See id. 184:6-19 (Clifford Rechtschaffen) (``I think it's
beyond dispute that we need queue reform. I don't know if it's a
crisis, but there's logjams, dysfunctions, inefficiencies . . . . I
think there's a real need to keep the foot on the gas and for FERC
to provide guidance templates, best practices, . . . minimum
baselines, while again, providing for flexibility.'').
---------------------------------------------------------------------------

24. First, the pro forma LGIP does not contain a process by which
an interconnection customer can obtain information at a specific
location or point of interconnection about potential interconnection
costs prior to submitting an interconnection request. As a result, at
the outset of the generator interconnection process,\73\

[[Page 39940]]

interconnection customers typically have little insight into the
interconnection capacity available at various points on the
transmission system. Furthermore, interconnection customers face
limited financial commitments to enter and stay in the interconnection
queue and few requirements to prove the commercial viability of
proposed generating facilities.\74\ Therefore, developers often submit
multiple interconnection requests for proposed generating facilities at
various points of interconnection, not all of which are expected to
reach commercial operation, as an exploratory mechanism to obtain
information to allow them to choose the most favorable site.\75\
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\73\ As in the background of this NOPR, we describe the
generator interconnection process set forth in the Commission's pro
forma LGIP, which we recognize differs from many transmission
providers' generator interconnection processes due to Commission-
approved variations.
\74\ For example, the total cost of interconnection studies
under the pro forma LGIP is often under $500,000. See pro Forma LGIP
sections 3.1 ($10,000 deposit with interconnection request), 6.1
($10,000 deposit with Feasibility Study Agreement), 7.2 ($50,000
deposit with System Impact Study Agreement), 8.1 (minimum $100,000
deposit with Facilities Study Agreement).
\75\ See, e.g., Review of Generator Interconnection Agreements
and Procedures, Technical Conference Transcript, Docket No. RM16-12-
000, at 211:10-21 (May 13, 2016) (Steve Naumann, Exelon Corp.)
(filed Aug. 23, 2016) (``We would look at putting let's say new gas
fired generation in PJM, it may have four queue positions. And we
only intend to go through with one, that's not speculation, that's
trying to get information on which is the most viable.'').
---------------------------------------------------------------------------

25. Second, securing a higher interconnection queue position is
valuable when interconnecting to a transmission provider that uses the
serial first-come, first-served study process as laid out in the pro
forma LGIP because the transmission provider will process
interconnection requests (i.e., perform required interconnection
studies) in the order in which the interconnection requests are
received. By obtaining an early queue position, a generating facility
may be able to use available transmission capacity and not need to
incur costs for network upgrades that later-queued interconnection
customers potentially incur. Under this framework, interconnection
customers have an incentive to submit interconnection requests to
secure a queue position as early as possible, even if they are not
prepared to move forward with the proposed generating facility at the
time the interconnection request is made, to identify locations with
available headroom on the transmission system and establish priority
over later-queued interconnection requests.
26. Often, these more speculative interconnection requests do not
prove to be commercially viable. For example, in many interconnection
queues, the MW volumes of interconnection requests far exceed the
transmission provider's peak network load.\76\ A lack of commercial
viability often means that many proposed generating facilities in the
interconnection queue will eventually withdraw after not finding a
purchaser for their output. In the case where the interconnection
customer submits multiple requests, the developer may select only the
one or two most viable project candidates and withdraw the
interconnection requests for the remaining projects. These withdrawals
then impact the remaining interconnection customers in the
interconnection queue. A withdrawal may necessitate re-studies and
cause the shifting of network upgrade costs to lower-queued
interconnection customers. New cost estimates, in turn, can alter a
proposed generating facility's commercial viability and create further
re-studies and withdrawals, often referred to as cascading re-studies
and withdrawals.\77\ These re-studies exacerbate the cost uncertainty
faced by interconnection customers \78\ and prevent the transmission
provider from maintaining a model base case for how its transmission
system is expected to reliably operate and serve load in the future.
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\76\ For example, Dominion, PSCo, and Tri-State each provided
statistics to this effect as part of their argument for
interconnection queue reforms. See Dominion, Transmittal Letter,
Docket No. ER22-301-000, at 8 (filed Nov. 1, 2021); PSCo,
Transmittal Letter, Docket No. ER19-2774-000, at 27 (filed Sep. 9,
2019); Tri-State, Transmittal Letter, Docket No. ER21-410-000, at 20
(filed Nov. 13, 2020).
\77\ See pro forma LGIP section 7.6; see also May Joint Task
Force Tr. 70:20-71:6 (Matthew Nelson) (analogizing reiterative
studies to going to the supermarket to buy ingredients for a recipe
without knowing how much the ingredients cost, finding out at the
register that they cost too much for your budget, and having to ``go
home, get a new recipe, and start it all over again'').
\78\ Id 74:9-21 (Andrew French) (stating that generator
developers complain principally about cost certainty and cost
sharing and that ``cost certainty is the much bigger issue'' given
that ``an essential element of being able to sell a product is to
know what your inputs are so you can market it'').
---------------------------------------------------------------------------

27. These delays faced by individual interconnection customers may
hinder the timely development of new generation, and, thereby, stifle
competition in wholesale energy markets or delay access to potential
low cost generation, which ultimately drive up costs for consumers.
28. Compounding these issues, the pro forma LGIP does not require
transmission providers to meet deadlines for conducting interconnection
studies. Rather, transmission providers are only required to use
``reasonable efforts'' \79\ to complete interconnection studies on
time.\80\ Despite complaints from interconnection customers, the
Commission has not yet found that a transmission provider failed to use
reasonable efforts to meet interconnection study deadlines, even though
such studies are routinely completed months or years late. While
interconnection customers can be removed from the queue for failure to
comply with deadlines throughout the generator interconnection
process,\81\ transmission providers face no consequences for failure to
comply with study deadlines.
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\79\ Reasonable efforts are defined as ``actions that are timely
and consistent with Good Utility Practice and are substantially
equivalent to those a Party would use to protect its own
interests.'' Order No. 2003, 104 FERC ] 61,103 at P 67; pro forma
LGIP section 1.
\80\ See pro forma LGIP sections 2.2, 6.3, 7.4, 8.3.
\81\ Id. section 3.7 (``[I]f Interconnection Customer fails to
adhere to all requirements of this LGIP . . . Transmission Provider
shall deem the Interconnection Request to be withdrawn and shall
provide written notice to Interconnection Customer . . . [.]
Interconnection Customer shall have fifteen (15) Business Days in
which to either respond with information or actions that cures the
deficiency or to notify Transmission provider of its intent to
pursue Dispute Resolution.'').
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29. Third, similar to the lack of requirements for timely
completion of interconnection studies, the pro forma LGIP provides
almost no requirements regarding how or when transmission providers or
affected systems should complete affected system studies; in
particular, even the reasonable efforts standard does not apply to
these studies.\82\ In practice, these studies often lag behind those
completed by the host transmission provider and are sometimes completed
very late in the process, causing an additional round of delays and
cost uncertainty for interconnection customers.\83\
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\82\ Affected systems studies are used to study the impact of
proposed interconnection requests on neighboring transmission
systems. Transmission providers are obligated to coordinate the
conduct of affected system studies, but the Commission has not
required transmission providers to follow any specific affected
system coordination process. See pro forma LGIP section 3.6.
\83\ EDF Renewable Energy, Inc. v. Midcontinent Indep. Sys.
Operator, Inc., 168 FERC ] 61,173 (2019) (EDF v. MISO).
---------------------------------------------------------------------------

30. In short, under the Commission's existing pro forma LGIP, pro
forma LGIA, pro forma SGIP, and pro forma SGIA, it is difficult for
transmission providers to disincentivize interconnection customers from
entering multiple speculative interconnection requests into the
interconnection queue or minimize the risk of late-stage withdrawals of
interconnection requests. Conversely, transmission providers have
little

[[Page 39941]]

incentive to perform interconnection studies in a timely fashion. The
resulting timing and cost uncertainty creates a barrier to entry that
hinders competitive wholesale electric markets. As the Commission has
previously observed, delayed interconnection study results or
unexpected cost increases can disrupt numerous aspects of generating
facility development, including project financing and the ability to
obtain a power purchase agreement.\84\ Developers in the
interconnection queues have recently filed complaints with the
Commission alleging that interconnection study delays have caused
direct and indirect financial harm to them by threatening the viability
of their projects.\85\ Cost uncertainty poses an especially significant
obstacle because proposed generating facilities may simply not be able
to absorb substantial unexpected interconnection costs allocated as the
result of a re-study. As indicated earlier, our fundamental concern is
the follow-on impacts of these issues on rates paid by consumers.
Unnecessary interconnection costs, either on the part of project
developers or transmission providers, are ultimately passed through to
consumers through higher energy or transmission rates, respectively.
Conversely, efficient interconnection queues and well-functioning
wholesale markets deliver enormous benefits to consumers by driving
down wholesale electricity costs.
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\84\ Reform of Generator Interconnection Procedures and
Agreements, 157 FERC ] 61,212, at P 30 (2016).
\85\ See, e.g., SOO Green HVDC Link Project Co, LLC, Complaint,
Docket No. EL21-85-000, at 24, 38-39 (filed June 21, 2021).
---------------------------------------------------------------------------

31. Fourth, in addition to our preliminary findings related to the
interconnection queue backlogs described above, we preliminarily find
that the Commission's pro forma LGIP, pro forma LGIA, pro forma SGIP,
and pro forma SGIA are unjust and unreasonable, unduly discriminatory,
and preferential as applied to several interconnection procedural and
modeling issues. This set of inquiries was prompted by newer
technologies entering interconnection queues in greater numbers.
Interconnection queues consist now predominantly of non-synchronous
resources such as wind, solar, and electric storage projects, all of
which have operating characteristics that were not anticipated when the
Commission issued Order No. 2003.\86\ In particular, interest in hybrid
resources, which combine more than one generating facility type, often
with electric storage, has increased dramatically.\87\ This change in
the types of resources has brought to light several issues. For
example, the pro forma LGIP does not specify whether interconnection
customers of all resource types can submit a single interconnection
request for co-located components of a generating facility, although
research shows that this option is frequently used in regions where it
has been made available through variations from the Commission's pro
forma generator interconnection procedures.\88\
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\86\ As of the end of 2019, 90% of the generating capacity that
was waiting in interconnection queues nationwide was wind, solar, or
energy storage projects. See Jay Caspary et al., Ams. for a Clean
Energy Grid, Disconnected: The Need for a New Generator
Interconnection Policy, at 4 (Jan. 2021), <a href="https://cleanenergygrid.org/disconnected-the-need-for-new-interconnection-policy/">https://cleanenergygrid.org/disconnected-the-need-for-new-interconnection-policy/</a> (ACEG Report).
\87\ 42% (285 GW) of solar and 8% (17 GW) of wind projects
currently in the queue are proposed as hybrid resources including
electric storage. Queued Up at 18.
\88\ In researching hybrid interconnection requests, Lawrence
Berkeley National Laboratory encountered many projects for which
``the `Generator Type' field includes multiple types for a single
queue entry.'' See Mark Bolinger, et al., Lawrence Berkeley Nat'l
Lab'y, Hybrid Power Plants: Status of Installed and Proposed
Projects, at 16 (Aug. 2021), <a href="https://emp.lbl.gov/sites/default/files/hybrid_plant_development_2021.pdf">https://emp.lbl.gov/sites/default/files/hybrid_plant_development_2021.pdf</a>.
---------------------------------------------------------------------------

32. Further, the addition of generating facilities that do not
affect the requested interconnection service level are often deemed a
material modification without review, which can cause unnecessary
network upgrades. Also, the use of the surplus interconnection process,
as adopted in Order No. 845, has proven helpful for interconnection
customers seeking to access interconnection capacity that has already
been approved through an LGIA, but it is currently only available when
a resource is fully operational. Lastly, with respect to
interconnection requests involving electric storage resources, a
transmission provider may use operating assumptions for interconnection
studies that employ worst-case assumptions or other inaccuracies (e.g.,
that electric storage will charge during peak load periods) \89\ that
do not accurately reflect the planned operation of these resources,
thus requiring network upgrades that may not be necessary.
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\89\ Hybrid Resource Coalition, Comments, Docket No. AD20-9-000,
at 11-12 (filed Sept. 20, 2021); City of New York, Comments, Docket
No. AD20-9-000, at 3 (filed Sept. 20, 2021); Clean Grid Alliance,
Comments, Docket No. AD20-9-000, at 3 (filed Sept. 20, 2021);
Savion, Post-Technical Conference Comments, Docket No. AD20-9-000,
at 7 (filed Sept. 24, 2020); Enel, Post-Technical Conference
Comments, Docket No. AD20-9-000, at 2-3 (filed Sept. 24, 2020).
---------------------------------------------------------------------------

33. We also preliminarily find that failing to consider alternative
transmission technologies that can be deployed both more quickly and at
lower costs than network upgrades may render Commission-jurisdictional
rates unjust and unreasonable. Therefore, we propose to modify the
Commission's pro forma LGIP and SGIP to require their consideration to
achieve their benefits in generator interconnection processes.\90\
Alternative transmission technologies might allow for the
interconnection of a proposed generating facility at a lower cost and
require less time to implement than traditional network upgrades.\91\
Despite these potential benefits, alternative transmission technologies
often do not receive the same consideration during generator
interconnection processes and have only been deployed in a small number
of instances.\92\ The result is that interconnection customers--and
ultimately consumers--may be paying more than is reasonable to reliably
interconnect new generating facilities, rendering Commission-
jurisdictional rates unjust and unreasonable and unduly discriminatory
and preferential.
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\90\ A variety of technologies offer potential alternatives to
standard infrastructure network upgrades (e.g., reconductoring
transmission lines or building new ones). These technologies include
advanced power flow control devices, transmission switching, dynamic
line ratings, static synchronous compensators, static volt-ampere
reactive (VAR) compensators, and electric storage in specific use
cases.
\91\ See, e.g., EDF Renewables, Comments, Docket No. RM21-17-
000, at 16 (filed Nov. 30, 2021); State Agencies, Comments, Docket
No. RM21-27-000, at 30-33 (filed Nov. 30, 2021); Alliant Energy
Corporate Services, Inc. et al., Comments, Docket No. RM20-16-000,
at 6 (filed Mar. 22, 2021) (stating that ``utilization of [dynamic
line ratings] can improve contingency planning and defer or
eliminate the need for line upgrades or reconductoring'').
\92\ See, e.g., EDF Renewables, Comments, Docket No. RM21-17-
000, at 16 (filed Nov. 30, 2021); Potomac Economics, Comments,
Docket No. RM21-17-000, at 8-9 (filed Nov. 30, 2021); State
Agencies, Comments, Docket No. RM21-27-000, at 31-32 (filed Nov. 30,
2021).
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34. Fifth, we preliminarily find that the pro forma LGIP and SGIP's
data submission and performance requirements for non-synchronous
generating facilities \93\ (including wind, solar, and electric storage
facilities) require reform to avoid undue discrimination and ensure
just and reasonable Commission-jurisdictional rates. When an
interconnection customer submits an interconnection

[[Page 39942]]

request for a proposed synchronous generating facility, it must provide
a variety of system information, which allows the transmission provider
to assess and model the facility's ability to respond appropriately to
transmission system disturbances.\94\ By contrast, non-synchronous
generating facilities are not required to provide a comparable level of
information that would allow the transmission provider to model and
assess the facility's ability to respond appropriately to transmission
system disturbances.\95\ As the penetration of wind, solar, and
electric storage resources increases, the behavior of these types of
non-synchronous generating facilities during transmission system
disturbances becomes more consequential, as does the need to assess
their potential contribution to cascading outages or other major
electric system issues. Furthermore, we are concerned that, without
reform to require interconnection customers developing non-synchronous
resources to provide sufficiently accurate and validated models,
interconnection studies may not identify the appropriate
interconnection facilities and network upgrades needed for that
interconnection request. If the interconnection studies are not able to
identify the appropriate interconnection facilities and network
upgrades, then the interconnection costs assigned to that
interconnection customer may be skewed, resulting in unjust and
unreasonable rates for interconnection service.
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\93\ Non-synchronous generating facilities are ``connected to
the bulk power system through power electronics, but do not produce
power at system frequency (60 Hz).'' They ``do not operate in the
same way as traditional generators and respond differently to
network disturbances.'' Reactive Power Requirements for Non-
Synchronous Generation, Order No. 827, 81 FR 40793 (June 23, 2016),
155 FERC ] 61,277, at P 10 n.24 (2016) (citing Interconnection for
Wind Energy, Order No. 661, 70 FR 34993 (June 16, 2005), 111 FERC ]
61,353, at P 3 n.4 (2005)).
\94\ This information includes model block diagrams for
excitation systems, power system stabilizers, and governor systems,
to inform and verify the dynamic models used by the transmission
provider to assess the proposed synchronous generating facility's
response to transmission system disturbances. See pro forma LGIP
app. 1, attach. A.
\95\ See infra PP 310-312.
---------------------------------------------------------------------------

35. In addition, we are concerned that the pro forma LGIA and SGIA
may impose disparate performance requirements during system
disturbances on synchronous and non-synchronous resources.
Specifically, the physical characteristics of synchronous generating
facilities result in such facilities continuing to inject electric
current during transmission system disturbances, consistent with the
need to remain ``connected to and synchronized with the Transmission
System'' as required by the pro forma LGIA and SGIA.\96\ As a result,
services that support transmission system reliability are not disrupted
during such events. However, the pro forma LGIA and SGIA do not
currently require non-synchronous generating facilities to continue
injecting current in a comparable manner during system disturbances.
Specifically, non-synchronous resources many cease injecting current
through ``momentary cessation.'' \97\ As a result, transmission
providers cannot determine whether non-synchronous generating
facilities, in the aggregate, will continue to inject electric current
during transmission system disturbances.
---------------------------------------------------------------------------

\96\ Pro forma LGIA art. 9.73; pro forma SGIA art. 1.57.
\97\ See infra note 463.
---------------------------------------------------------------------------

36. In light of the concerns outlined above, we preliminarily find
that it is necessary to reform the Commission's pro forma LGIP, pro
forma LGIA, pro forma SGIP, and pro forma SGIA to ensure that
interconnection customers are able to interconnect to the transmission
system in a reliable, efficient, transparent, and timely manner,
thereby ensuring that rates, terms, and conditions for Commission-
jurisdictional services remain just and reasonable and not unduly
discriminatory or preferential.

II. Proposed Reforms

A. Reforms To Implement a First-Ready, First-Served Cluster Study
Process

37. In recent years, late-stage withdrawals of interconnection
requests have caused significant delays in interconnection study
processes. In its January 2020 interconnection queue reform filing,
PacifiCorp noted that about 75% of all interconnection requests
ultimately withdraw from its interconnection queue and that withdrawals
are a significant cause of delays in the generator interconnection
process because withdrawals trigger re-studies. PacifiCorp argued that
the current generator interconnection process encourages speculative
projects to enter the interconnection queue because it does not require
any progress toward commercial viability and does not penalize
withdrawals from the interconnection queue.\98\
---------------------------------------------------------------------------

\98\ PacifiCorp, 171 FERC ] 61,112 at P 3.
---------------------------------------------------------------------------

38. In support of its 2019 interconnection queue reform proposal,
PSCo stated that it has experienced a surge in interconnection requests
that cannot be processed under its current generator interconnection
process. PSCo explained that, because the amount of generation
requesting interconnection is significantly greater than the region's
needs, only a small fraction of the generating facilities in the
interconnection queue are likely to reach commercial operation. In
addition, PSCo stated that, due to the configuration of PSCo's
transmission system and the fact that most requests are for network
resource integration service (NRIS),\99\ almost all lower-queued
interconnection requests, regardless of study phase, are affected by
changes to higher-queued interconnection requests.\100\
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\99\ NRIS allows the interconnection customer to integrate its
generating facility with the transmission provider's transmission
system in a manner comparable to that in which the transmission
provider integrates its generating facilities to serve native load
customers, or in an RTO/ISO with market-based congestion management,
in the same manner as Network Resources. NRIS in and of itself does
not convey transmission service. Pro forma LGIP section 1.
\100\ PSCo, 169 FERC ] 61,182 at P 21.
---------------------------------------------------------------------------

39. For the reasons explained above, we preliminarily find that the
Commission's pro forma LGIP and LGIA are unjust, unreasonable, unduly
discriminatory, and preferential and that reforms are needed to allow
interconnection customers to interconnect in a reliable, efficient,
timely manner, thereby ensuring that rates, terms, and conditions for
Commission-jurisdictional services remain just and reasonable and not
unduly discriminatory or preferential. In particular, with regard to
interconnecting in an efficient and timely manner, we propose reforms
to the pro forma LGIP that: (1) require transmission providers to offer
an optional informational interconnection study to serve as additional
information for prospective interconnection customers in deciding
whether to submit an interconnection request and set minimum
requirements for transmission providers to publicly post available
information pertaining to generator interconnection; (2) require
transmission providers to implement a first-ready, first-served cluster
study process that allocates costs associated with cluster studies and
identified network upgrades consistent with the discussion below; and
(3) impose more stringent financial commitments and readiness
requirements on interconnection customers, including increased study
deposits, more stringent site control requirements, a commercial
readiness framework, and higher withdrawal penalties. To implement
these reforms, we also propose to require transmission providers to
establish a transition process, consistent with the proposed
requirements below.
1. Interconnection Information Access
a. Need for Reform
40. We are concerned that the lack of transparency for prospective
interconnection customers to obtain information about potential

[[Page 39943]]

interconnection costs prior to submitting an interconnection request is
problematic. Without this information, it is difficult for
interconnection customers to assess the viability of a specific
proposed generating facility. Subsequently, interconnection customers
submit multiple speculative interconnection requests in an attempt to
obtain information through the system impact study process about the
costs associated with various project configurations.
41. Some transmission providers have attempted to solve these
problems by making more information available to interconnection
customers before they enter the interconnection queue through an
optional informational interconnection study that provides estimates of
costs and scheduling for various sites.\101\ These optional
informational interconnection studies evaluate the feasibility of a
proposed interconnection request and provide interconnection customers
with non-binding information upon which to base preliminary siting
decisions. Transmission providers that offer these types of studies
require a $10,000 deposit for the studies, subject to a true-up based
on actual costs of performing the studies.\102\ While some transmission
providers offer such an option, it is not currently required by the pro
forma LGIP.
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\101\ Dominion, Docket No. ER22-301-000 (Dec. 28, 2021)
(delegated order); Duke, 176 FERC ] 61,075 at P 19; PacifiCorp, 171
FERC ] 61,112 at P 54; PSCo, 169 FERC ] 61,182 at PP 9-10, 30; Tri-
State Generation & Transmission Ass'n, Inc., 174 FERC ] 61,021, at P
6 (2021) (Tri-State).
\102\ See, e.g., Dominion, OATT and Service Agreements, attach.
M (4.5.0), section 3.1; PSCo, Transmission and Service Agreements
Tariff, OATT, attach. N. (0.8.0), section 6.1 (requiring a $10,000
deposit for an informational study request).
---------------------------------------------------------------------------

b. Proposed Reforms
i. Informational Interconnection Study
42. To address the lack of information available to interconnection
customers prior to entering the interconnection queue, and the
associated impacts on development of new generating facilities,
interconnection queue backlogs, and interconnection study delays, we
propose to revise the Commission's pro forma LGIP to require
transmission providers to offer an informational interconnection study
to serve as additional information for prospective interconnection
customers in deciding whether to submit an interconnection request. The
study would provide cost estimates for the transmission provider's
interconnection facilities \103\ and network upgrade costs specific to
the interconnection scenario detailed in the study agreement.
Specifically, we propose to revise sections 6.1-6.3 and Appendix 2 to
the pro forma LGIP to implement this reform: section 6.1 (Informational
Interconnection Study Agreement), section 6.2 (Scope of Informational
Interconnection Study), section 6.3 (Informational Interconnection
Study Procedures), Appendix 2 (Informational Interconnection Study
Request form), and Attachment A to Appendix 2 (Informational
Interconnection Study Agreement form). We also propose to include new
definitions for an informational interconnection study and
informational interconnection study agreement.
---------------------------------------------------------------------------

\103\ The pro forma LGIA defines ``Transmission Provider's
Interconnection Facilities'' as ``all facilities and equipment
owned, controlled or operated by the Transmission Provider from the
Point of Change of Ownership to the Point of Interconnection as
identified in Appendix A to the Standard Large Generator
Interconnection Agreement, including any modifications, additions or
upgrades to such facilities and equipment. Transmission Provider's
Interconnection Facilities are sole use facilities and shall not
include Distribution Upgrades, Stand Alone Network Upgrades or
Network Upgrades.'' These are distinct from ``Interconnection
Customer's Interconnection Facilities,'' which are those facilities
``identified in Appendix A of the Standard Large Generator
Interconnection Agreement, that are located between the Generating
Facility and the Point of Change of Ownership, including any
modification, addition, or upgrades to such facilities and equipment
necessary to physically and electrically interconnect the Generating
Facility to the Transmission Provider's Transmission System.
Interconnection Customer's Interconnection Facilities are sole use
facilities.'' Pro forma LGIA section 1.
---------------------------------------------------------------------------

43. Proposed section 6.1 of the pro forma LGIP provides that a
prospective interconnection customer may request an informational
interconnection study. The proposed provision would limit prospective
interconnection customers to no more than five separate informational
interconnection study requests pending at a time to ensure that
transmission providers are not overburdened with these studies and that
one prospective interconnection customer cannot prevent others from
taking advantage of this information-gathering process.\104\ Each
configuration of an interconnection request would require a separate
informational interconnection study. For example, prospective
interconnection customers seeking to evaluate different sites or
different voltage levels at the same site would need to submit a
separate request for each configuration. The informational
interconnection study would be at the interconnection customer's
expense, and each study would require a $10,000 deposit, subject to a
true-up based on actual study costs.
---------------------------------------------------------------------------

\104\ See, e.g., Dominion, OATT and Service Agreements, attach.
M (4.5.0), section 3.1 (``Any one Interconnection Customer
(including affiliates) shall have no more than five (5) requests for
Informational Interconnection Study reports pending at one time.'').
---------------------------------------------------------------------------

44. Under the proposal, within seven business days of the receipt
of a prospective interconnection customer's request for an
informational interconnection study, the transmission provider would
have to provide the prospective interconnection customer with an
informational interconnection study agreement in the form of Attachment
A to Appendix 2 of the pro forma LGIP. The informational
interconnection study agreement would specify the technical data that
the prospective interconnection customer must provide and an estimate
of the expected costs of the study, including, to the extent known by
the transmission provider, an estimate of the study costs expected to
be incurred by any relevant affected systems. The prospective
interconnection customer would have 10 business days to execute the
agreement and deliver it to the transmission provider, along with the
relevant technical data and study deposit, after which the transmission
provider would have 45 days to complete the study.
45. Proposed section 6.2 of the pro forma LGIP explains that the
informational interconnection study consists of a sensitivity analysis
based on the assumptions specified in the informational interconnection
study agreement. The informational interconnection study would identify
potential interconnection facilities and network upgrades that may be
required to interconnect the prospective interconnection customer's
proposed generating facility, including an approximation of the costs
of such interconnection facilities and network upgrades. The
transmission provider would also coordinate with affected systems that
may be impacted by the prospective interconnection customer's request
to provide information on affected systems-related issues.
46. Proposed Attachment A to Appendix 2 of the pro forma LGIP
contains the informational interconnection study agreement form. The
form agreement explains that the informational interconnection study is
performed solely for informational purposes and is not binding on
either party. It also requires the study report to provide specific
information, including, at a minimum: (1) preliminary identification of
any circuit breaker short circuit capability limits exceeded; (2)
preliminary identification of any thermal overload or voltage limit
violations; and (3) estimated network

[[Page 39944]]

upgrade costs related to the identified overloads and violations.
47. We recognize that the benefit of the informational
interconnection study results would depend on the information provided,
the assumptions made, and the timing of the proposed interconnection,
with studies looking at interconnection requests with proposed
commercial operation dates further into the future carrying greater
uncertainty. Nevertheless, we seek comment on whether the informational
interconnection study, as proposed, would provide prospective
interconnection customers with sufficient and timely information to
inform decision-making prior to submitting an interconnection request.
48. We seek comment on whether transmission providers should be
required to establish a request window of a limited number of days each
year in which potential interconnection customers can request an
optional informational interconnection study. Lastly, we seek comment
on the burdens on transmission providers of conducting informational
studies and whether other options, such as the proposal below for
public interconnection information, might strike a better balance of
providing interconnection customers with useful information while
making efficient use of transmission provider resources.
ii. Public Interconnection Information
49. In addition to the optional informational interconnection study
described above, to address the lack of information available to
interconnection customers prior to entering the interconnection queue,
and the associated impacts on development of new generating facilities,
interconnection queue backlogs, and interconnection study delays, we
also propose to set minimum requirements for transmission providers to
publicly post available information pertaining to generator
interconnection. We believe that providing an interactive visual
representation \105\ of available interconnection capacity, as
explained below, across a transmission provider's transmission system
could provide valuable information to prospective interconnection
customers that are considering efficient points of interconnection and
could ameliorate the incentive to submit multiple speculative
interconnection requests to gather information useful to assessing the
viability of proposed generating facilities.
---------------------------------------------------------------------------

\105\ See, e.g., Midcontinent Indep. Sys. Operator, Points of
Interconnection, <a href="https://giqueue.misoenergy.org/PoiAnalysis/index.html">https://giqueue.misoenergy.org/PoiAnalysis/index.html</a> (accessed March 17, 2022).
---------------------------------------------------------------------------

50. Some transmission providers already post such generator
interconnection information as an extra tool for prospective
interconnection customers. For example, MISO provides an interactive
heatmap of expected congestion to serve as a guide on potential points
of interconnection with available interconnection capacity.\106\ The
heatmap allows prospective interconnection customers to see estimated
changes in variables such as the distribution factor (an approximation
of congestion) and the percentage impact on power flow for monitored
facilities based on a user-entered MW amount and voltage level at a
user-selected point of interconnection. Transmission congestion is a
key consideration for potential interconnection customers because
elevated congestion in a particular area of the transmission system may
signal that it is a location where network upgrades are more likely to
be required or curtailments are more likely to occur relative to an
area with less congestion. This heatmap is based on the assumptions in
a given interconnection study cycle and MISO includes the caveat that
the tool does not provide consideration for all system conditions,
including voltage and stability constraints.
---------------------------------------------------------------------------

\106\ Id.
---------------------------------------------------------------------------

51. In order to make similar information available to prospective
interconnection customers across the country--ensuring comparable
access to information regardless of the interconnecting transmission
provider--we propose to require transmission providers to maintain and
make publicly available an interactive visual representation of
available interconnection capacity as well as a table of relevant
interconnection metrics that allow prospective interconnection
customers to see certain estimates of a potential generating facility's
effect on the transmission provider's transmission system.
Specifically, we propose to revise section 6.4 of the pro forma LGIP to
implement this reform. Section 6.4 (Publicly Posted Interconnection
Information) would set forth minimum requirements that include a
heatmap of estimated incremental injection capacity (in MW) available
at each bus in the transmission provider's footprint under N-1
conditions, as well as providing a table of results showing the
estimated impact of the addition of a proposed project (based on the
user-specified MW amount, voltage level, and point of interconnection)
for each monitored facility impacted by the proposed project on: (1)
the distribution factor; (2) the MW impact (based on the proposed
project size and the distribution factor); (3) the percentage impact on
the monitored facility (based on the MW values of the proposed project
and the monitored facility rating); (4) the percentage of power flow on
the monitored facility before the proposed project; and (5) the
percentage power flow on the monitored facility after the injection of
the proposed project. These metrics would be calculated based on the
power flow model of the cluster study or re-study with the transfer
simulated from each bus to the whole transmission providers footprint
(to approximate NRIS), and with the incremental capacity at each bus
decremented by the existing and queued generation in the Cluster (based
on the existing or requested interconnection service limit of the
generation). These metrics would be intended to facilitate a high-level
comparison between various points of interconnection, without
submitting an interconnection request. We propose to require
transmission providers to make this information available on their
public websites to facilitate transparency and the usefulness of this
information for prospective interconnection customers. We propose to
require transmission providers to update this information within 30
days after the completion of each cluster study and re-study. Should
prospective interconnection customers require more detailed analysis,
they could submit a request for an informational interconnection study,
as we proposed to establish above in Section A.1.b.
52. We seek comment on whether there are any security concerns with
this proposed requirement. We also seek comment on whether the
assumptions specified for the analysis are the right set of
assumptions.
2. Cluster Study
a. Need for Reform
53. As discussed above, the inefficiency of the pro forma serial
first-come, first-served interconnection study process in the pro forma
LGIP is a major cause of the backlogs delaying transmission providers'
interconnection queues. Using the pro forma serial interconnection
study process in the face of a large interconnection queue backlog
leads to uncertainty with regard to how long it will take to complete
the interconnection study process, and the interconnection customer's
cost responsibility for network upgrades.

[[Page 39945]]

54. Even for transmission providers that have not yet experienced
large backlogs, the serial interconnection study process may cause
unnecessary delay and inefficiently allocate network upgrade costs.
Under the pro forma LGIP study process, interconnection requests are
typically studied individually where a single proposed generating
facility may create a need for network upgrades. This current serial
process may result in a piecemeal identification of network upgrades
which does not account for possible efficiencies of studying multiple
interconnection customer requests and identifying fewer network
upgrades that are able to accommodate multiple interconnection
requests, particularly requests that may be located in a similar
area.\107\
---------------------------------------------------------------------------

\107\ See May Joint Task Force Tr. 43:25-44:4 (Riley Allen)
(``Clustering helps the regions identify what I'll call the backbone
or trunk facilities that provide efficiencies in the system to the
benefit ultimately of ratepayers. New England has been relying on
clustering and I'm told that that's going very well.'').
---------------------------------------------------------------------------

55. Moreover, advancing interconnection customers' facilities
through the queue based solely on date of entry may result in
inefficiencies where earlier queued customers have the potential to
delay later-queued facilities. Specifically, the serial process
combined with existing allocation of costs may cause unreasonable
delays in the study process. Under existing tariffs within the RTOs/
ISOs and non-RTO/ISO regions, the transmission provider allocates the
full cost of those network upgrades to the individual interconnection
customer. Although the crediting policy in the pro forma LGIP requires
that the interconnection customer is ultimately reimbursed for the cost
of the network upgrades, the large upfront network upgrade cost
allocation may render a proposed generating facility economically non-
viable, such that the interconnection customer is forced to withdraw
from the interconnection queue.\108\ Unless the withdrawing
interconnection customer's proposed generating facility is electrically
isolated, this withdrawal will also trigger individual re-study of
lower-queued interconnection requests. As the transmission provider
attempts to allocate this large network upgrade cost to the next
interconnection customer in the interconnection queue, it can cause
several projects to withdraw and trigger further re-studies--commonly
referred to as cascading re-studies. If the interconnection customer
does not withdraw and pays for the network upgrade to be constructed,
lower-queued interconnection customers that will benefit from the
network upgrade are not required to share cost responsibility simply
because they submitted an interconnection request at a later date.\109\
Therefore, the existing serial study process may now be unjust and
unreasonable because interconnection customers are no longer able to
consistently progress through the interconnection process in a
timeframe consistent with Order No. 2003 and the pro forma LGIP.
Further, the existing serial study process may now be unjust and
unreasonable because the process frequently allocates to individual
interconnection customers the cost network upgrades that may create
additional interconnection capacity needed for several interconnection
customers.
---------------------------------------------------------------------------

\108\ See, e.g., Duke, 176 FERC ] 61,075 at P 3 (explaining
that, in many cases, assignment of such significant network upgrade
costs can make new generation projects infeasible, incentivizing
those projects to delay in committing to fund the network upgrades
or to withdraw from the interconnection queue, causing delays and
the need for re-studies). Interconnection customers may be even more
likely to withdraw in RTO/ISO areas where the Commission has allowed
for participant funding of network upgrades, whereby the
interconnection customer will not be fully reimbursed for the cost
of the network upgrades.
\109\ See Order No. 845-A, 166 FERC ] 61,137 at P 78 (``The
principle of cost causation generally requires that costs `are to be
allocated to those [that] cause the costs to be incurred and reap
the resulting benefits.''') (citing S.C. Pub. Serv. Auth. v. FERC,
762 F.3d 41, 87 (D.C. Cir. 2014)) (quoting NARUC v. FERC, 475 F.3d
at 1285).
---------------------------------------------------------------------------

b. Proposed Reforms
i. Background
56. The serial first-come, first-served study process in the pro
forma LGIP includes three distinct studies, conducted on an individual
basis, to identify the interconnection facilities and network upgrades
that are needed to accommodate the interconnection request and provide
an estimate of the cost responsibility and timing for those facilities.
Each study incorporates the base case study model, which includes all
generating facilities and the associated interconnection facilities and
network upgrades needed for higher-queued interconnection requests that
are pending, as well as an up-to-date model of the transmission
provider's transmission system.\110\ First, the transmission provider
conducts the feasibility study, which is a preliminary evaluation of
the system impact and cost of interconnecting the generating facility
to the transmission provider's transmission system, and consists of a
power flow and short circuit analysis.\111\ The transmission provider
must use reasonable efforts to complete the feasibility study no later
than 45 days after it receives the executed interconnection feasibility
study agreement.\112\
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\110\ Pro forma LGIP section 2.3.
\111\ Id. section 6.2. Some transmission providers--including
CAISO, Arizona Public Service Company, El Paso Electric Company (El
Paso Electric), Sierra Pacific Power Company and Nevada Power
Company (jointly, NV Energy), and Public Service Company of New
Mexico (PNM)--have eliminated the feasibility study to reduce
interconnection request processing time.
\112\ Id. section 6.3.
---------------------------------------------------------------------------

57. Second, the transmission provider conducts the system impact
study. The system impact study identifies and details the impacts to
the transmission provider's transmission system or an affected system
of the interconnection of the proposed generating facility.\113\ The
system impact study consists of a short circuit analysis, a stability
analysis, and a power flow analysis. The transmission provider must use
reasonable efforts to complete the system impact study within 90 days
after it receives the executed interconnection system impact study
agreement.\114\ The pro forma LGIP provides transmission providers with
the option to study interconnection requests on a clustered basis for
the system impact study.\115\
---------------------------------------------------------------------------

\113\ Id. section 7.3.
\114\ Id. section 7.4.
\115\ Order No. 2003, 104 FERC ] 61,103 at PP 153-156; pro forma
LGIP section 4.2. If the transmission provider elects to study
interconnection requests using clustering, all interconnection
requests received within 180 days (queue cluster window) must be
studied together without regard to the nature of the underlying
interconnection service, whether NRIS or ERIS. However, the pro
forma LGIP allows the transmission provider to study an
interconnection request separately based on the electrical
remoteness of the proposed generating facility. Pro forma LGIP
section 4.2.
---------------------------------------------------------------------------

58. Third, the transmission provider conducts the facilities study,
which specifies and estimates the cost of the equipment, engineering,
procurement, and construction work needed to implement the conclusions
of the system impact study.\116\ Where the system impact study focuses
mainly on impacts to the transmission system, the facilities study aims
to provide a more accurate estimate of the electrical switching
configuration of the connection equipment, such as transformers,
switchgear, meters, and other station equipment and a more accurate
estimate of the specific costs associated with required network
upgrades rather than a per-mile estimate. The facilities study will
also identify any potential control equipment needed to accommodate
requests for interconnection service that are lower than the generating
facility capacity. Interconnection customers

[[Page 39946]]

have two options for the timeframe in which the facilities study must
be completed: 90 days, if the interconnection customer requests a +/-
20% cost estimate contained in the report; or 180 days, if the
interconnection customer requests a +/-10% cost estimate.\117\
---------------------------------------------------------------------------

\116\ Id. section 8.2.
\117\ If the interconnection customer wants its cost estimate to
be accurate within a range of +/-20%, the study must be completed
within 90 days since there is greater room for error on the part of
the transmission provider's estimate, whereas if the interconnection
customer wants its cost estimate to be accurate within a range of +/
-10%, the transmission provider has up to 180 days to develop a more
accurate cost estimate. Id. section 8.3.
---------------------------------------------------------------------------

59. Re-study is required when (1) a higher-queued interconnection
request withdraws from the interconnection queue, (2) a higher-queued
interconnection request modifies its proposed generating facility
pursuant to section 4.4 of the pro forma LGIP, or (3) the
interconnection customer redesignates its point of
interconnection.\118\ Transmission providers are required to conduct
re-study of the feasibility study within 45 days of the triggering
event and re-study of the system impact and facilities studies within
60 days of the triggering event.
---------------------------------------------------------------------------

\118\ Id. sections 6.4, 7.6, 8.5.
---------------------------------------------------------------------------

60. Under the pro forma LGIP, the interconnection customer can
request to begin negotiations to the LGIA with the transmission
provider at any time after the interconnection customer executes the
interconnection facilities study agreement, for not more than 60 days
after tender of the final interconnection facilities study report.\119\
If the interconnection customer determines that negotiations are at an
impasse, it may request termination of the negotiations at any time
after tender of the draft LGIA and request submission of the unexecuted
LGIA to the Commission, or initiate dispute resolution procedures. The
transmission provider must provide a final LGIA to the interconnection
customer within 15 days after the completion of the negotiation
process. Within 15 days after receipt of the final LGIA, the
interconnection customer must provide the transmission provider either
(1) reasonable evidence of continued site control or (2) post
additional non-refundable security of $250,000, which will be applied
toward future construction costs.\120\ The interconnection customer
also must provide reasonable evidence that it has achieved one or more
milestones in the development of the generating facility as listed in
section 11.3 of the pro forma LGIP. As soon as practicable, but not
later than 10 days after receiving the tendered LGIA or the request to
file an unexecuted LGIA, the transmission provider must file the LGIA
with the Commission.\121\
---------------------------------------------------------------------------

\119\ Id. section 11.2.
\120\ Id. section 11.3.
\121\ Id.
---------------------------------------------------------------------------

61. The Commission has stated that clustering is the preferred
method for conducting interconnection studies, and has strongly
encouraged clustering in interconnection queue management and
interconnection study processes for all transmission providers.\122\ In
the 2008 Technical Conference Order, the Commission noted that
clustering that takes into account factors other than the
interconnection request filing date may allow for more efficient
prioritization of interconnection requests while still providing
protection from undue discrimination by transmission providers.\123\
Subsequently, the Commission approved many variations of cluster study
processes where the transmission provider groups interconnection
requests received during an open window period and processes those
requests as a cluster, with some form of shared cost responsibility for
identified network upgrades triggered by the cluster. The Commission
noted that performing studies in clusters helps alleviate
interconnection queue backlogs and offers considerable benefits as the
network upgrades required for an interconnection customer to
interconnect to the transmission system may be large enough to
accommodate more than one interconnection request.\124\ Generally,
cluster study processes include the following elements: (1) an
interconnection request window; (2) a customer engagement window; (3)
cluster studies including (a) a power-flow and voltage study, which is
similar to a feasibility study under the pro forma LGIP, and (b) a
stability and short circuit study, which completes the traditional
system impact study; (4) a facilities study; (5) re-study, if needed;
and (6) LGIA execution or filing of an unexecuted LGIA.
---------------------------------------------------------------------------

\122\ Order No. 2003, 104 FERC ] 61,103 at P 155, Order No.
2006, 111 FERC ] 61,220 at P 181.
\123\ 2008 Technical Conference Order, 122 FERC ] 61,252 at P
18.
\124\ Midwest Ind. Sys. Operator, Inc., 124 FERC ] 61,183 at PP
114, 143 (accepting usage of group studies as a means to help
alleviate interconnection queue backlog and finding that clustering
studies offers considerable benefits); SPP, 128 FERC ] 61,114 at P
32 (finding that performing cluster studies should enable processing
the interconnection queue backlog more effectively); So. Cal. Edison
Co., 135 FERC ] 61,093, at P 50 (2011) (finding that coordinating
the cluster study processes for interconnection requests to a
utility's transmission and distribution systems would ``achieve
greater efficiency and effectively manage network impacts''); see
also May Joint Task Force Tr. 42:3-9 (Gladys Brown Dutrieuille)
(explaining that clustering has two goals: minimizing the study time
and minimizing the first mover disadvantage by sharing costs among
those resources that need the same upgrades).
---------------------------------------------------------------------------

62. To join a cluster, an interconnection customer must generally
submit a valid interconnection request before the close of the request
window for that cluster. Some transmission providers accept
interconnection requests during an annual \125\ window, whereas others
have a semi-annual \126\ window. After the interconnection requests are
received and deemed valid, and before the start of the interconnection
study process for the cluster, a customer engagement window
begins.\127\ During the customer engagement window, transmission
providers work with interconnection customers to build study models,
verify data, hold stakeholder meetings, and generally prepare for the
interconnection study process. At the end of the customer engagement
window, all interconnection customers with complete interconnection
requests and a signed study agreement will be included in that cluster.
---------------------------------------------------------------------------

\125\ PacifiCorp, Tri-State, Duke, ISO New England Inc. (ISO-
NE), MISONYISO, and SPP have annual windows.
\126\ PNM, Arizona Public Service Company, El Paso Electric, NV
Energy, PSCo, and CAISO have semi-annual windows.
\127\ PSCo and Tri-State have 75-day customer engagement
windows, while Duke has a 60-day customer engagement window.
---------------------------------------------------------------------------

63. Many transmission providers with large transmission systems
typically group interconnection requests on the basis of geographic
location and electrical relevance before conducting a cluster
study.\128\ Most transmission providers that use a cluster study
process still conduct facilities studies on an individual basis.\129\
In addition, some non-RTO/ISO transmission providers offer a separate
generator interconnection process for interconnection customers
participating in a resource solicitation process.\130\
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\128\ MISO, CAISO, SPP, ISO-NE, NV Energy, Arizona Public
Service Company, and PNM group projects in such a way, and
PacifiCorp and Tri-State have added the term Cluster Area to their
LGIPs. See PacifiCorp, Transmission OATT and Service Agreements,
part. IV.36 (Definitions) (5.0.0); Tri-State Generation and
Transmission Association, Inc., Open Access Transmission Tariff,
attach. N, Standard LGIP (7.0.0), section 1.
\129\ NV Energy, however, uses clusters for the facilities
study. MISO performs both the system impact study and facilities
study in a group study format.
\130\ The resource solicitation process provision is discussed
later in the NOPR.

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[[Page 39947]]

ii. Proposal
64. We propose to revise the pro forma LGIP and pro forma LGIA to
make cluster studies the required interconnection study method under
the pro forma LGIP.\131\ We therefore propose to require transmission
providers to eliminate the serial first-come, first-served study
process and instead use a first-ready, first-served cluster study
process. We preliminarily find that a first-ready, first-served cluster
study process, coupled with increased financial commitments and
readiness requirements that we also propose in this NOPR, will address
the interconnection queue issues described above, thereby remedying
potentially unjust and unreasonable Commission-jurisdictional
rates.\132\ Even in areas that have not yet experienced large backlogs,
we believe the first-ready, first-served cluster study process
increases efficiency of the interconnection process and would help
prevent delays in the future. A first-ready, first-served cluster study
process is a more efficient way of studying a large interconnection
queue because transmission providers can perform larger interconnection
studies encompassing numerous proposed generating facilities, rather
than separate studies for each individual interconnection
customer.\133\ Additionally, conducting a single cluster study and
cluster re-study each year would minimize delays that can arise from
proposed generating facility interdependencies and also minimize the
risk of cascading re-studies when a higher-queued interconnection
customer withdraws.\134\ This limited re-study process would consume
far less time than under a serial first-come, first-served re-study
process, which requires re-studying all proposed generating facilities
in isolation with a new base case. In addition, the proposed reforms
may assist interconnection queue management because, even if clusters
have cascading re-study issues, there will be fewer re-studies needed
and fewer cost consequences for lower-queued generators as compared to
serial re-studies. Thus, we believe that requiring a first-ready,
first-served cluster study process, coupled with increased financial
commitments and readiness requirements that we also propose in this
NOPR, should improve the efficiency in processing generator
interconnection requests, and result in just and reasonable Commission-
jurisdictional rates.
---------------------------------------------------------------------------

\131\ See May Joint Task Force Tr. 46:15-19 (Clifford
Rechtschaffen) (stating that CAISO's cluster process has been
helpful and important for improving interconnection queue processing
and that clustering ``is a best practice and should be promoted'').
\132\ See 2020 Tri-State Order, 173 FERC ] 61,015 at PP 29, 45
(finding that a first-ready, first-served cluster study process
would address interconnection queue backlog and rejecting the filing
on other grounds); PacifiCorp, 171 FERC ] 61,112 at P 47 (finding
that proposed interconnection queue reform was a just and reasonable
solution to an interconnection queue backlog); PSCo, 169 FERC ]
61,182 at P 30 (same); Pub. Serv. Co. of N.M., 136 FERC ] 61,231, at
P 77 (2011) (PNM) (finding that first-ready, first-served cluster
study process would address interconnection queue backlog and allow
projects that are further along in development to proceed on a more
accelerated basis while allowing less developed projects to receive
early information); Duke, 176 FERC ] 61,075 at P 51 (finding that
proposed revisions to Duke LGIP and LGIA were consistent with or
superior to the pro forma LGIP and LGIA); see also Tri-State, 174
FERC ] 61,021 at P 27 (noting previous findings from the 2020 Tri-
State Order).
\133\ See Duke, 176 FERC ] 61,075 at P 52 (finding that Duke's
transition to a first-ready, first-served cluster study process
could relieve ``(1) delays in completing generator interconnection
studies; (2) inability of interconnection customers to share costs
of network upgrades; and (3) existence of non-viable projects in the
queues''); see also Tri-State, 174 FERC ] 61,021 at P 31 (noting
PSCo's Comments that PSCo's preliminary experience of operating
under the cluster study process has demonstrated that ``studying
requests in clusters is shown to be more efficient than studying
each request individually,'' and that ``this approach to generator
interconnection is superior to the pro forma LGIP and LGIA'').
\134\ PNM, 136 FERC ] 61,231 at P 79 (noting that ``PNM's
proposal adopting the cluster approach to study related projects
together will likely improve efficiency by limiting the need for re-
studies'') (citing Order No. 2006, 111 FERC ] 61,220, at P 181).
---------------------------------------------------------------------------

65. In particular, we propose several revisions to the pro forma
LGIP and pro forma LGIA to implement a first-ready, first-served
cluster study process. We describe these revisions briefly in this
section and include the full proposed language in appendices to this
NOPR. We propose to add several new defined terms and revise several
defined terms in section 1 of the pro forma LGIP and article 1 of the
pro forma LGIA. For example, we propose to modify the definition of
stand alone network upgrade to clarify that, for a network upgrade to
be eligible for treatment as a stand alone network upgrade,\135\ the
network upgrade must only be required for one interconnection customer.
This clarification should prevent lengthy conflict and negotiations in
instances where multiple interconnection requests trigger the need for
a network upgrade that could be considered a stand alone network
upgrade under the current definition mainly because it can be
constructed without affecting day-to-day operations of the transmission
system, and several interconnection customers have an interest in
exercising the option to build. We also propose modifying the
definition of material modification to account for the equal queue
position of generating facilities in the same cluster.\136\ The new
definition would clarify that material modifications are those with a
material impact on the cost or timing of interconnection requests with
a later or equal queue position.
---------------------------------------------------------------------------

\135\ Under the current pro forma, Stand Alone Network Upgrades
are defined as ``Network Upgrades that are not part of an Affected
System that an Interconnection Customer may construct without
affecting day-to-day operations of the Transmission System during
their construction. Both the Transmission Provider and the
Interconnection Customer must agree as to what constitutes Stand
Alone Network Upgrades and identify them in Appendix A to the
Standard Large Generator Interconnection Agreement. If the
Transmission Provider and Interconnection Customer disagree about
whether a particular Network Upgrade is a Stand Alone Network
Upgrade, the Transmission Provider must provide the Interconnection
Customer a written technical explanation outlining why the
Transmission Provider does not consider the Network Upgrade to be a
Stand Alone Network Upgrade within 15 days of its determination.''
Pro forma LGIP section 1.
\136\ Under the current pro forma, Material Modification is
defined as ``those modifications that have a material impact on the
cost or timing of any Interconnection Request with a later queue
priority date.'' Pro forma LGIP section 1.
---------------------------------------------------------------------------

66. We propose revisions to add new subsection 3.1.1.1 (Initial
Study Deposit) to the pro forma LGIP, which provides that an
interconnection customer must submit its interconnection request and
applicable study deposit during a cluster request window (described
below). We also propose to add new subsection 3.1.2 (Submission) to the
pro forma LGIP, which provides that interconnection customers
evaluating different options (such as different sizes, sites, or
voltages) are encouraged but not required to use the new informational
interconnection study proposed in this NOPR before entering the cluster
study. New subsection 3.1.2 of the pro forma LGIP also provides that
the interconnection customers must select a definitive point of
interconnection to be studied when executing the cluster study
agreement. Upon mutual agreement, the transmission provider may make
reasonable changes to the requested point of interconnection to
facilitate efficient interconnection of clustered interconnection
requests at common points of interconnection.
67. We also propose to add new subsection 3.4.1 (Cluster Request
Window) to the pro forma LGIP, which provides that interconnection
customers must submit an interconnection request during a specified
period, the cluster request window, which is a 45-day period with the
start date to be determined by each transmission provider (with the
annual start date for the transmission provider's cluster

[[Page 39948]]

request window included in its LGIP). The transmission provider would
consider all interconnection requests accepted within this period to
have equal queue priority for purposes of the cluster study. Following
the close of the cluster request window, the transmission provider
would begin a 30-day customer engagement window as provided in new
subsection 3.4.5 (Customer Engagement Window) of the pro forma LGIP.
68. We propose to renumber and revise subsection 3.4.4 (Scoping
Meeting) as subsection 3.4.6 of the pro forma LGIP to provide that,
during the customer engagement window, transmission providers must hold
a scoping meeting with all interconnection customers whose
interconnection requests were received in that cluster request window.
Revised subsection 3.4.6 of the pro forma LGIP would also require
transmission providers to hold individual customer-specific scoping
meetings, at the interconnection customer's request, which must be
requested by no later than 15 business days after the close of the
cluster request window. By the end of the customer engagement window,
the transmission provider would post on OASIS the final cluster study
plan, which lists all valid interconnection requests with an executed
cluster study agreement that will be part of the cluster study.
69. We propose to replace the sections of the pro forma LGIP,
including subsection 3.5.2 (Requirement to Post Interconnection Study
Metrics) of the pro forma LGIP, that require the posting of metrics for
interconnection feasibility studies processing time and system impact
study processing time with sections that require the posting of metrics
for cluster study processing time and cluster re-study processing time.
We also propose to add a new subsection to require the posting of the
time from when the transmission provider received a valid
interconnection request to the completion of the cluster study, cluster
re-study, and facilities study.
70. We also propose several revisions to section 4 (Queue Position)
of the pro forma LGIP to make clear that cluster studies are the
required interconnection study method under the pro forma LGIP and that
transmission providers may not have a first-come, first-served
interconnection study method under their respective LGIPs. We propose
to rename and revise section 4.1 of the pro forma LGIP as ``Queue
Position'' and add two new subsections: (1) subsection 4.1.1
(Assignment of Queue Position), which makes clear that queue position
will be based on the time and date that the transmission provider
receives all items required under section 3.4 (Valid Interconnection
Request) and that there is no queue priority for interconnection
customers that opted for informational interconnection studies; \137\
and (2) subsection 4.1.2 (Higher Queue Position), which provides that
all interconnection requests studied in a single cluster shall be
considered to have equal queue priority, but clusters initiated earlier
in time shall be considered to have a higher queue position than
clusters initiated later. To be clear, the date of submission of an
individual interconnection request within the same cluster would have
no bearing on the allocation of the cost of the network upgrades
identified in the applicable cluster study, because such costs would be
allocated among interconnection requests using a proportional impact
method (discussed below in section II.A.4.).
---------------------------------------------------------------------------

\137\ See supra PP 42-45 (explaining that the informational
interconnection study is intended to provide prospective
interconnection customers with information prior to entering the
queue).
---------------------------------------------------------------------------

71. New subsection 4.1.2 of the pro forma LGIP also provides that
moving a point of interconnection shall result in a loss of queue
position if the transmission provider deems the change a material
modification. To align with this, we propose corresponding changes to
the material modification provisions in section 4.4 (Modification) of
the pro forma LGIP to provide that moving a point of interconnection
shall result in a loss of interconnection queue position if it is
deemed a material modification by the transmission provider. We note
that the interconnection customer may decide to forego the requested
change that constitutes a material modification and retain its existing
queue position.\138\ We also propose to revise pro forma LGIP section
4.4.5, which currently states that an extension of less than three
cumulative years of the generating facility's commercial operation date
are not material and should be handled through construction sequencing.
We propose to provide that the commercial operation date reflected in
the initial interconnection request shall be used in calculating the
permissible three-year extension.
---------------------------------------------------------------------------

\138\ Pro forma LGIP section 4.4.3.
---------------------------------------------------------------------------

72. We propose to remove from section 4.2 (Clustering) of the pro
forma LGIP the provisions allowing interconnection requests to be
studied serially. We also propose to remove the requirement for the
transmission provider to provide 180 days' advance notice before
opening a cluster window. In addition to removing these provisions, we
propose to rename section 4.2 of the pro forma LGIP ``General Study
Process'' and revise it to provide that interconnection studies shall
be performed within the cluster study process.
73. We propose to revise subsection 4.4.1 of the pro forma LGIP to
make clear that: (1) the modifications previously permitted prior to
return of the executed system impact study agreement are now permitted
to be made prior to return of the executed cluster study agreement; and
(2) for plant increases, the incremental increase will be studied with
the next cluster study for purposes of cost allocation and study
analysis.
74. We propose to delete section 6 (Interconnection Feasibility
Study) of the pro forma LGIP (and all subsections). As explained above,
we propose to adopt the new section 6 (Interconnection Information
Access) of the pro forma LGIP to establish a mechanism for the
interconnection customer to evaluate the feasibility of a prospective
generating facility. We propose to revise section 7 (Interconnection
System Impact Study) of the pro forma LGIP to make clear that the
system impact study will now be conducted on a clustered basis, and
that the transmission provider must complete the cluster study within
150 days of the closing of the customer engagement window. We further
propose revisions to sections 3.4.2 and 8.1 of the pro forma LGIP to
include the financial commitments and readiness requirements that must
be met for the interconnection customer to remain in the
interconnection queue following the completion of the cluster study.
Those requirements are discussed in greater detail below. We propose
additional revisions to delete section 7.5 (Meeting with Transmission
Provider) of the pro forma LGIP and adopt the new section 7.5 (Cluster
Study Re-Studies) of the pro forma LGIP to include provisions governing
clustered re-studies where an interconnection customer in the cluster
or a higher-queued cluster withdraws its interconnection request.
Specifically, we propose to require transmission providers to conduct a
re-study of the cluster within 150 days of informing the cluster of the
need for re-study.
75. We propose revisions to the facilities study provisions in
section 8 (Interconnection Facilities Study) of the pro forma LGIP to
make clear that re-studies can be triggered by a higher or equally
queued interconnection project withdrawing from the interconnection
queue or modification of a higher or equally queued interconnection
project

[[Page 39949]]

pursuant to section 4.4 (Modifications) of the pro forma LGIP.
76. We also propose revisions to section 11.1 (Tender) of the pro
forma LGIP to clarify the procedures for executing the LGIA. We propose
revisions to section 11.3 (Execution and Filing) of the pro forma LGIP
to provide that the interconnection customer must submit to the
transmission provider at the same time it submits the executed LGIA
demonstration of continued site control, the requisite deposit, and
reasonable evidence of achieving milestones in the development of the
generating facility. An interconnection customer that requests that the
transmission provider file an unexecuted LGIA with the Commission must
submit the aforementioned information within 15 days of the Commission
issuing an order on the unexecuted LGIA filing, or its interconnection
request will be deemed withdrawn. We propose revisions to the system
impact study agreement and facilities study agreement to be consistent
with the new cluster study process. We propose to add several new
definitions to section 1 of the pro forma LGIP and article 1 of the pro
forma LGIA that relate to the new first-ready, first-served cluster
study process and to modify a number of other definitions.
77. We seek comment on whether the Commission should require
transmission providers to conduct cluster studies on subgroups of
interconnection customers based on areas of geographic and electric
relevance, and, if so, whether the Commission should adopt provisions
governing how cluster areas should be formed to ensure that cluster
areas are formed in a transparent and not unduly discriminatory
manner.\139\
---------------------------------------------------------------------------

\139\ Commenters that believe that the Commission should adopt
provisions governing how cluster areas should be formed should also
explain how to define such a cluster area (e.g., based on geographic
proximity, geographic constraints such as bodies of water or
mountain ranges, system topology, and/or major transmission system
constraints).
---------------------------------------------------------------------------

78. We seek comment on whether the pro forma LGIP should specify
how cluster studies must be rerun after re-study is triggered or
whether there are provisions the Commission could adopt to improve the
efficacy of the re-study process, such as preventing excessive re-study
by limiting the transmission provider to two re-studies per month
within the 150-day cluster re-study period.
79. We seek comment on whether the Commission should maintain an
option in the pro forma LGIP for some interconnection requests to be
processed outside of the annual cluster study process, and if so, in
what circumstances and on what timeframe (for completion of the study),
and on what priority compared to any active clusters.
3. Allocation of Cluster Study Costs
a. Background
80. Under the pro forma LGIP, interconnection studies are conducted
for each individual interconnection request and study costs are paid by
the interconnection customer. Transitioning to a first-ready, first-
served cluster study process would require transmission providers to
establish a method to allocate the shared cost of clustered
interconnection studies among the interconnection customers in the
cluster.
81. The Commission has accepted a variety of approaches to
allocating the costs of cluster studies, most of which allocate costs
using two factors: (1) the total MW size requested in a cluster; and
(2) the number of interconnection requests in the cluster. Approaches
among transmission providers vary with regard to the weight assigned to
each of these factors. For example, Duke and Dominion allocate 90% of
the applicable study costs to interconnection customers on a pro rata
basis based on requested MWs included in the applicable cluster, and
10% on a per capita basis based on the number of interconnection
requests included in the applicable cluster.\140\ SPP, PNM, PSCo,
PacifiCorp, and Tri-State allocate 50% of the study costs based on
requested MWs, and 50% based on the number of interconnection
requests.\141\ CAISO, NYISO, and MISO only use one of the two factors
in their allocation method. CAISO and NYISO allocate all study costs
equally based on the number of interconnection requests within the
cluster,\142\ while MISO allocates all study costs pro rata based on
the number of MWs requested.\143\
---------------------------------------------------------------------------

\140\ See Duke, 176 FERC ] 61,075 at P 18; Dominion, Docket No.
ER22-301-000 (Dec. 28, 2021) (delegated order).
\141\ See SPP, OATT, attach. V (4.0.0), section 4.2.5; PNM, 136
FERC ] 61,231 at P 24; PSCo, 169 FERC ] 61,182 at P 32; PacifiCorp,
171 FERC ] 61,112 at P 13; Tri-State, 174 FERC ] 61,021 at P 33.
\142\ CAISO, CAISO eTariff, OATT, app. DD, section 3 (14.0.0),
section 3.5.1.2; NYISO, NYISO Tariffs, attach. X, section 30.13
(5.0.0), section 30.13.3.
\143\ MISO, FERC Electric Tariff, OATT, attach. X, (155.0.0)
section 3.3.1.
---------------------------------------------------------------------------

b. Proposal
82. We propose to revise section 13.3 (Obligation for Study Costs)
of the pro forma LGIP to allocate the shared costs of cluster studies
as follows: 90% of the applicable study costs to interconnection
customers on a pro rata basis based on requested MWs included in the
applicable cluster, and 10% of the applicable study costs to
interconnection customers on a per capita basis based on the number of
interconnection requests included in the applicable cluster.\144\ We
preliminarily find that this allocation of the costs of cluster studies
would result in just and reasonable Commission-jurisdictional rates
because it appropriately recognizes that the MW size of a cluster has a
dramatic impact on the cost of studying the cluster, while also
recognizing that the number of interconnection requests included in the
cluster also impacts the cost of studying the cluster, but to a lesser
degree.
---------------------------------------------------------------------------

\144\ If an interconnection customer withdraws its
interconnection request prior to the start of the cluster study,
that customer would be required to pay the actual costs of
processing its interconnection request but would not be assessed a
withdrawal penalty.
---------------------------------------------------------------------------

83. We seek comment on whether a different cost allocation approach
may be appropriate or whether each transmission provider should be
provided additional flexibility to propose a cost allocation approach
on compliance with any final rule.
4. Allocation of Cluster Network Upgrade Costs
a. Background
84. As discussed above, under the serial first-come, first-served
study process in the pro forma LGIP, transmission providers study
interconnection requests individually and in the order in which they
are received. If a study identifies a need for network upgrades in
response to an individual interconnection customer request, the
transmission provider allocates the initial cost of those network
upgrades to the individual interconnection customer. The pro forma LGIP
allows transmission providers to perform clustered system impact
studies but does not explain how transmission providers should allocate
network upgrade costs among interconnection customers within a cluster.
85. Several of the transmission providers that have adopted a
cluster first-ready, first-served study process have also adopted
methods for allocating network upgrade costs that differ from their
previously existing cost allocation mechanisms in one of two ways: (1)
proportional capacity (based on the proposed generating facility's MW
capacity in proportion to the cluster's total MW capacity); or (2)
proportional impact (determined based

[[Page 39950]]

on a distribution factor analysis). Several transmission providers also
separate network upgrades into two categories prior to allocating costs
based on the proportional capacity or proportional impact method: (1)
station equipment, including all equipment located in the substation
immediately beyond the point of interconnection to which the generating
facility is connected (called station equipment network upgrades); and
(2) all other network upgrades, including equipment located beyond the
substation, such as transmission lines, transformers, voltage support,
and distantly located breakers (called system network upgrades).\145\
These methods allocate station equipment network upgrade costs based on
the number of generating facilities interconnecting at an individual
station (i.e., allocated equally to each interconnection customer
interconnecting to the substation).
---------------------------------------------------------------------------

\145\ E.g., PNM, 136 FERC ] 61,231 at P 25.
---------------------------------------------------------------------------

86. For network upgrades beyond the transmission provider's
substation, PNM and PacifiCorp use the proportional capacity
method.\146\ PacifiCorp explained in its interconnection queue reform
proposal that the proportional capacity method is better for PacifiCorp
given the size of its service territory, and that PacifiCorp uses a
cluster area approach in which it clusters projects by electrical
relevance, which prevents interconnection customers from bearing the
costs of network upgrades in distant areas of PacifiCorp's transmission
system.\147\
---------------------------------------------------------------------------

\146\ Id.; PacifiCorp, 171 FERC ] 61,112 at P 18.
\147\ PacifiCorp, Transmittal, Docket No. ER20-924-000, at n.107
(filed Jan. 31, 2020).
---------------------------------------------------------------------------

87. CAISO, MISO, SPP, NYISO, PSCo, Tri-State, Duke, and Dominion
use the proportional impact method by performing a distribution factor
analysis.\148\ Relative to other transmission providers, Tri-State
includes a more comprehensive explanation of its distribution factor
analysis method in its tariff. Specifically, Tri-State's tariff
provides that: (1) thermal network upgrade costs are allocated based on
the impact (in MWs) from each generating facility within the cluster or
cluster area; (2) voltage network upgrade costs are allocated based on
the voltage impact from each generating facility within the cluster or
cluster area on the most constrained bus under the most constraining
contingency in the definitive interconnection study case(s); (3)
transient stability network upgrade costs within a cluster or cluster
area are allocated based on the pro rata share of the total MW requests
of all generating facilities causing instability; (4) short circuit
network upgrade costs are allocated based on the impact (in
kiloamperes) from each generating facility within the cluster or
cluster area, on the constrained facilities under the most constraining
fault in the definitive interconnection study case(s); and (5) in
instances when a network upgrade resolves multiple types of constraints
(such as thermal and voltage or thermal and voltage and transient
stability), the costs are allocated within a cluster or cluster area
based on a ratio share of the total cost of the independent mitigation
types to equitably allocate the cost to all generating facilities
contributing to constraints.\149\
---------------------------------------------------------------------------

\148\ PSCo, 169 FERC ] 61,182 at P 34; Tri-State, 174 FERC ]
61,021 at P 38; Duke, 176 FERC ] 61,075 at P 11; Dominion, Docket
No. ER22-301-000 (Dec. 28, 2021) (delegated order).
\149\ Tri-State LGIP section 4.2.4.b.
---------------------------------------------------------------------------

b. Proposal
88. We propose to revise the pro forma LGIP to include new
subsection 4.2.3 to require transmission providers to allocate network
upgrade costs to interconnection customers within a cluster using a
proportional impact method. Therefore, we propose to establish the
definition ``Proportional Impact Method'' in the pro forma LGIP,\150\
and require transmission providers to revise their LGIPs to include the
specific technical parameters and thresholds of the method for cost
allocation. We preliminarily find that this approach will ensure just
and reasonable Commission-jurisdictional rates because it will allow
the transmission provider to allocate network upgrade costs among
several interconnection customers that may benefit from (and cause the
need for) certain network upgrades.\151\ By allocating shared network
upgrade costs among a cluster of interconnection customers, we expect
that this reform will reduce the frequency of an individual customer
being allocated a large network upgrade that benefits subsequent
interconnection customers, reduce the incentive to submit multiple
speculative requests, and reduce the amount of cascading withdrawals
and re-studies. We believe that a proportional impact method will
accurately reflect the level of contribution of an interconnection
request to the need for the network upgrade.
---------------------------------------------------------------------------

\150\ We propose to revise section 1 of the pro forma LGIP to
provide that Proportional Impact Method shall mean a technical
analysis conducted by the transmission provider to determine the
degree to which each generating facility in the cluster contributes
to the need for a specific network upgrade.
\151\ Tri-State, 174 FERC ] 61,021 at P 38.
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89. We seek comment on whether there are specific types of analyses
that the Commission should require transmission providers to use to
determine the proportional impact attributed to an interconnection
request, including the benefits and drawbacks of any proposed approach.
Conversely, we seek comment on whether there are specific types of
analyses that the Commission should prohibit because they are known to
be inaccurate, provide undue discretion to the transmission provider,
or could otherwise be problematic. Additionally, we seek comment on
alternative methods to allocate the cost of network upgrades within a
cluster such as the proportional capacity method as discussed above.
While such a method does not assign cost based on level of contribution
of an interconnection request to the need for a network upgrade, we
seek comment on whether this method can be sufficiently accurate, in
certain instances, in a manner consistent with or superior to the
proposed method. For instance, we seek comment on whether the
proportional capacity method may be appropriate when a transmission
provider with a relatively small service territory clusters projects by
electrical relevance. Conversely, we seek comment on whether there are
some circumstances where the proportional capacity method would not be
appropriate, such as circumstances where there may be potential for
discriminatory treatment.
5. Shared Network Upgrades
a. Background
90. There are no existing provisions in the pro forma LGIP that
require transmission providers to share network upgrade costs between
earlier-in-time and later-in-time interconnection customers (e.g.,
customers studied in separate clusters). However, in MISO and NYISO,
the Commission has approved tariff provisions that require
interconnection customers in later cluster studies that benefit from
network upgrades completed prior to that later-in-time interconnection
customer commencing commercial operation to partially reimburse the
interconnection customers in an earlier cluster study that were
initially responsible for the facilities' construction.\152\
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\152\ See NYISO, NYISO Tariffs, attach. S, section 25 (16.0.0),
section 25.7.2; MISO, FERC Electric Tariff, MISO OATT, attach. FF
section III (81.0.0), section III.A.2.d.2.
---------------------------------------------------------------------------

91. MISO tests all network upgrades in service for less than five
years to

[[Page 39951]]

determine whether they qualify for cost sharing. MISO requires
interconnection customers in a later cluster study to share costs if
they (1) connect to that network upgrade or (2) pass a two-part power
flow screening.\153\ If the test reveals that more than five MW of the
later-in-time interconnection customer's generating facility uses the
network upgrade with a network upgrade rating exceeding one percent,
MISO performs an additional analysis. If the results of the second
analysis conclude that the interconnection customer generating
facility's impact exceeds more than five percent of the network
upgrade's facility rating, or that the transmission distribution factor
(TDF) \154\ is greater than 20%, the interconnection customer in the
later cluster study will reimburse interconnection customers from the
earlier cluster study based on the share of the cost of the network
upgrade allocated to each interconnection customer. MISO allocates the
costs of the shared network upgrades using the pro rata share of the MW
contribution on all constraints from each project.
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\153\ MISO Business Practice Manual No. 15, section 6.1.1.1.11,
version 23 (May 2021), <a href="https://cdn.misoenergy.org/BPM%20015%20-%20Generation%20Interconnection49574.zip">https://cdn.misoenergy.org/BPM%20015%20-%20Generation%20Interconnection49574.zip</a>
\154\ TDF measures the energy the interconnection customer has
requested to inject onto the transmission system, expressed as the
percent of the flows across a given transmission facility.
---------------------------------------------------------------------------

92. NYISO accounts for excess capacity created by network upgrades
and requires that interconnection customers in a later cluster study
reimburse the interconnection customers from an earlier cluster study
for the use of these facilities. NYISO tracks any excess capacity, or
headroom,\155\ created by network upgrades and determines eligibility
for cost sharing using two methods. When technically feasible, a later-
in-time interconnection customer's use of headroom is measured in terms
of the interconnection customer's electrical impact. Otherwise,
headroom usage is based on the total number of interconnection
customers using a given network upgrade. The headroom is available for
10 years or until it is depleted.\156\
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\155\ NYISO defines headroom as ``the functional or electrical
capacity of the System Upgrade Facility or the electrical capacity
of the System Deliverability Upgrade that is in excess of the
functional or electrical capacity actually used by the Developer's
Project.'' NYISO, NYISO Tariffs, attach. S, section 25.1 (12.0.0).
\156\ See id. section 25.8.7.
---------------------------------------------------------------------------

b. Relevant ANOPR Comments
93. Multiple commenters support the concept of cost sharing
approaches. The National Association of Regulatory Utility
Commissioners (NARUC), for example, contends that the Commission should
encourage improvements to the participant funding model through sharing
the costs of clusters of similarly situated interconnection
customers.\157\
---------------------------------------------------------------------------

\157\ NARUC, Comments, Docket No. RM21-17-000, at 23 (filed Oct.
12, 2021).
---------------------------------------------------------------------------

94. MISO and NYISO each highlight the advantages of their existing
network upgrade cost sharing approaches. MISO claims that its cost
sharing method appropriately balances the interconnection customers'
interests.\158\ NYISO asserts that its group-based facilities study
minimizes later-in-time interconnection customers benefiting without
paying for the use of a network upgrade at the outset.\159\ NYISO also
states that its headroom accounting process partly addresses the issue
caused by later-in-time interconnection customers benefiting from
preexisting network upgrades.
---------------------------------------------------------------------------

\158\ MISO, Comments, Docket No. RM21-17-000, at 87-88 (filed
Oct. 12, 2021).
\159\ NYISO, Comments, Docket No. RM21-17-000, at 45 (filed Oct.
12, 2021).
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95. The Michigan Commission asserts that MISO has not made frequent
use of its shared network upgrade process and suggests that the
Commission explore whether analyzing network upgrades up to 20 years
post-construction would encourage the development of higher-cost
network upgrades in transmission constrained areas.\160\
---------------------------------------------------------------------------

\160\ Michigan Comm'n, Comments, Docket No. RM21-17-000, at 21-
22 (filed Oct. 12, 2021).
---------------------------------------------------------------------------

96. Some commenters argue that a network upgrade sharing
arrangement would be too complicated to execute and lead to stakeholder
disagreements. EDF asserts that, while a study-based cost allocation
might offer a more precise representation of benefits, such approaches
are time-consuming and can be prone to stakeholder disagreement over
the study's assumptions and results; EDF believes that any cost sharing
percentage for generators should be commensurate with the value of the
reimbursement generators receive.\161\ TAPS states that, while cost
sharing arrangements make sense conceptually, developing a cost sharing
process can be resource-intensive and highly contentious.\162\
---------------------------------------------------------------------------

\161\ EDF Renewables, Inc., Comments, Docket No. RM21-17-000, at
13 (filed Oct. 12, 2021).
\162\ Transmission Access Policy Study Group (TAPS), Comments,
Docket No. RM21-17-000, at 47-48 (filed Oct. 12, 2021).
---------------------------------------------------------------------------

c. Need for Reform
97. We preliminarily find that the absence of network upgrade cost
sharing provisions in the pro forma LGIP poses a barrier to entry to
generation development. Absent cost sharing provisions among clusters,
interconnection customers may significantly benefit from earlier-in-
time network upgrades but not share in the cost of those network
upgrades in a manner that is roughly commensurate with benefits.\163\
As a result, individual interconnection customers may be responsible
for the entire cost of network upgrades and may be reluctant to move
forward with the development of an interconnection request if there is
no opportunity to recover some of the costs associated with the
construction of significant network upgrades that are likely to benefit
interconnection customers in subsequent cluster studies.
---------------------------------------------------------------------------

\163\ See May Joint Task Force Tr. 135:6-7 (Andrew French) (``I
do think costs should be shared between clusters.'')
---------------------------------------------------------------------------

d. Proposal
98. We propose to revise the pro forma LGIP and pro forma LGIA to
require transmission providers to allocate the costs for network
upgrade costs between interconnection customers in an earlier cluster
study and interconnection customers in a subsequent cluster study that
benefit from the same network upgrade in a manner that is roughly
commensurate with the benefits received. First, we propose to require
that, as part of the first-ready, first-served cluster study process
that we also propose in this NOPR, the transmission provider analyze
all network upgrades identified through the transmission provider's
study process, and, if a generating facility of an interconnection
customer in a later cluster study directly connects either to (1) a
network upgrade in-service for less than five years or (2) a substation
where the network upgrade in-service for less than five years
terminates, then the transmission provider would be required to
designate the network upgrade a shared network upgrade, and the
interconnection customer in the later cluster study would be required
to contribute a pro rata portion of the shared network upgrade's
remaining undepreciated capital cost based on the impact the
interconnection customer in the later cluster study has on the network
upgrade as measured using the same method the transmission provider
used to determine the impact of the interconnection customer(s) in the
earlier cluster study. Second, if the new generating facility does not
directly connect to the network upgrade, then the transmission provider
would perform a power flow analysis with a two-step test to measure the
later-in-time interconnection customer's use of and benefit from the
network upgrade

[[Page 39952]]

funded by interconnection customers from an earlier cluster study.
Under the first step, the transmission provider would determine if the
impact of the interconnection customer in the later cluster study
exceeds 5 MW and exceeds one percent of the network upgrade's rating,
which we believe would reasonably identify interconnection customers
that benefit from the network upgrade. Then, if those criteria are met,
the transmission provider would determine if the later-in-time
interconnection customer's impact either exceeds more than five percent
of the network upgrade's facility rating or if the TDF is greater than
20%.\164\ Finally, if either of these criteria were met, the
transmission provider would be required to designate that network
upgrade a shared network upgrade, and the interconnection customer in
the later cluster study would be responsible for a pro rata share of
the network upgrade's remaining undepreciated capital cost based on the
impact the interconnection customer in the later cluster study has on
the network upgrade as measured using the same method the transmission
provider used to determine the impact of the interconnection
customer(s) from the earlier cluster study.
---------------------------------------------------------------------------

\164\ Midwest Indep. Transmission Sys. Operator, Inc., 133 FERC
] 61,221, at P 336 (2010) (finding that the 20% TDF screen is an
appropriate measure of benefits for shared network upgrades that
strikes an appropriate balance between cost sharing and guarding
against overcharging late-coming generating facilities).
---------------------------------------------------------------------------

99. We propose to require the interconnection customer in the later
cluster study to pay the transmission provider for the interconnection
customer's share of the shared network upgrade costs through a one-time
lump sum, which the transmission provider would disburse to the
appropriate interconnection customer(s) from the earlier cluster study.
Where applicable, the interconnection customer from the earlier cluster
study or the relevant transmission provider would be required to assign
transmission credits for the portion of the shared network upgrade that
the interconnection customer in the later cluster study funded to the
interconnection customer in the later cluster study. Additionally, we
propose to require that the interconnection customer in the later study
cluster not be required to pay for its share of the cost of the shared
network upgrade until that shared network upgrade is in service. We
propose to require transmission providers to provide the list of shared
network upgrades to interconnection customers in subsequent cluster
studies at the conclusion of the cluster study and to list those
network upgrades in the LGIA.
100. As noted above, an interconnection customer in a later cluster
study that otherwise meets the criteria described above would only bear
some of the network upgrade costs for a network upgrade that was in
service before the commercial operation date of the generating facility
of the interconnection customer in the later cluster study. Thus, there
could be scenarios where the network upgrade may be identified as both
a shared network upgrade and a contingent facility pursuant to section
3.8 of the pro forma LGIP; and, therefore a designation of a network
upgrade as a contingent facility does not preclude it from also being a
shared network upgrade if the network upgrade meets the aforementioned
criteria and passes the screens.\165\
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\165\ Contingent facilities include ``those unbuilt . . .
Network Upgrades upon which the Interconnection Request's costs,
timing, and study findings are dependent, and if delayed or not
built, could cause a need for Re-Studies of the Interconnection
Request or a reassessment of the Interconnection Facilities and/or
Network Upgrades and/or costs and timing.'' Pro forma LGIP section
1. Pursuant to section 3.8 of the pro forma LGIP, transmission
providers must have a method for identifying contingent facilities
to be provided to the interconnection customer at the conclusion of
the system impact study and including in the LGIA. Id. section 3.8.
---------------------------------------------------------------------------

101. We preliminarily find that requiring transmission providers to
develop a method to share network upgrade costs among interconnection
customers in earlier and later cluster studies will result in just and
reasonable Commission-jurisdictional rates by allowing for allocation
of costs of network upgrades in a manner more closely aligned to the
distribution of benefits than the status quo.\166\ Specifically, to the
extent that interconnection customers in later cluster studies benefit
from pre-existing network upgrades, we preliminarily find that it is
just and reasonable for those interconnection customers to share a
portion of those network upgrade costs.\167\
---------------------------------------------------------------------------

\166\ See, e.g., Midwest Indep. Transmission Sys. Operator,
Inc., 133 FERC ] 61,221 at PP 55, 336 (accepting shared network
upgrades as just and reasonable and agreeing that the proper test
for cost sharing with regard to an already-constructed upgrade is
not what effect a late-coming generating facility would have had on
the system as it existed prior to the network upgrade, but rather
whether that late-coming generating facility will actually benefit
from the network upgrade).
\167\ Id. P 336.
---------------------------------------------------------------------------

6. Increased Financial Commitments and Readiness Requirements
a. Need for Reform
102. The pro forma LGIP allows an interconnection customer to
proceed through the generator interconnection process without having
shown evidence to the transmission provider of meaningful progress
toward achieving commercial viability (e.g., a power purchase agreement
or site control). We are concerned that without requiring this type of
evidence, interconnection customers will continue to submit multiple
speculative interconnection requests and later withdraw those requests,
triggering rounds of re-studies. While we believe that our proposal to
require transmission providers to implement a first-ready, first-served
cluster study process will substantially improve transmission
providers' ability to manage their interconnection queues, we recognize
that the sheer volume of interconnection requests in interconnection
queues nationwide are overwhelming many transmission providers'
resources.\168\ Although the optional informational interconnection
study that we also propose in this NOPR would provide a mechanism for
prospective interconnection customers to obtain key information on
potential points of interconnection for proposed generating facilities,
prospective interconnection customers may still prefer to submit an
interconnection request to establish a queue position rather than
investing in and waiting for the results of an optional informational
interconnection study.
---------------------------------------------------------------------------

\168\ See, e.g., Tri-State Generation and Transmission
Association, Inc., Transmittal Letter, Docket No. ER20-2593-000, at
3, 14, and 17 (filed Jul. 31, 2020); Transmittal Letter, Docket No.
ER11-3522-000, at 3 (filed May 5, 2011); PacifiCorp, Transmittal
Letter, Docket No. ER20-924-000, at 5 (filed Jan. 31, 2020).
---------------------------------------------------------------------------

103. Therefore, in addition to the reforms that we propose to
implement a first-ready, first-served cluster study process, we also
propose a set of reforms to adopt more stringent financial commitments
and readiness requirements for interconnection customers to remain in
the interconnection queue to discourage speculative interconnection
requests and allow transmission providers to focus on processing viable
interconnection requests and to better approximate the cost of the
interconnection study process.\169\ These

[[Page 39953]]

proposed reforms pertain to (1) increased study deposits, (2)
demonstration of site control, (3) commercial readiness, and (4)
withdrawal penalties.
---------------------------------------------------------------------------

\169\ See May Joint Task Force Tr. 38:7-8 (Matthew Nelson)
(``[W]hat we hope to do is try to make sure that being in the queue
means something[.]''); id 47:1-4 (Clifford Rechtschaffen)
(cautioning that clustering is important but must be accompanied by
other reforms to interconnection queue processing to address
existing problems).
---------------------------------------------------------------------------

b. Proposed Reforms
i. Increased Study Deposits and LGIA Deposit
(a) Background
104. Under the serial first-come, first-served interconnection
study process in the pro forma LGIP, an interconnection customer must
submit the following study deposits: \170\
---------------------------------------------------------------------------

\170\ Pro forma LGIP sections 6.1, 7.2, 8.1.
---------------------------------------------------------------------------

<bullet> $10,000 deposit with its interconnection request, which is
used for the feasibility study,
<bullet> $50,000 deposit when executing the system impact study
agreement, and
<bullet> $100,000 deposit when executing the facilities study
agreement.
105. Several transmission providers have increased the study
deposit requirements in a tiered fashion to recognize that
interconnection requests with higher generating facility capacities
cost more to study. In accepting PNM's tiered approach, the Commission
stated that increasing the study deposit in a tiered fashion is
reasonable because it recognizes that larger proposed generating
facilities within a cluster likely carry a greater risk (such as risk
triggering the need for substantial network upgrades and triggering re-
studies when withdrawing from the queue).\171\ The Commission has
accepted maximum study deposits as high as $250,000 for interconnection
requests of 200 MW and greater and accepted proposals requiring study
deposits at multiple points throughout the interconnection study
process. For example, PSCo, Tri-State, Dominion, and Duke require four
study deposits throughout their cluster study processes, and an
additional deposit upon LGIA execution. In accepting PSCo's study
deposit framework, the Commission reasoned that the study deposits
represented the total approximate cost of PSCo's reformed cluster study
process and that this framework was consistent with Order No. 2003's
requirement that interconnection customers pay the actual costs of
their studies.\172\
---------------------------------------------------------------------------

\171\ PNM, 136 FERC ] 61,231 at P 80.
\172\ PSCo, 169 FERC ] 61,182 at P 36 (citing Order No. 2003,
104 FERC ] 61,103 at P 37).
---------------------------------------------------------------------------

(b) Proposal
106. We propose to adopt the following study deposit framework in
the pro forma LGIP:

----------------------------------------------------------------------------------------------------------------
Size of proposed generating facility associated with
interconnection request Amount of deposit
----------------------------------------------------------------------------------------------------------------
>20 MW <80 MW......................................... $35,000 + $1,000/MW.
>80 MW <200 MW........................................ $150,000.
>200 MW............................................... $250,000.
----------------------------------------------------------------------------------------------------------------

107. We propose to require transmission providers to collect this
study deposit before each phase of the new first-ready, first-served
cluster study process (i.e., cluster study, cluster re-study, and
facilities study).\173\ We propose to require the interconnection
customer to provide an initial study deposit along with its
interconnection request which will be used to pay for the cluster
study.\174\ We propose to require the interconnection customer to
provide the second study deposit of the same amount within 20 days of
receiving the cluster study report from the transmission provider.\175\
This second study deposit will cover the cost of any clustered re-
studies. We propose to require the interconnection customer to provide
the third study deposit of the same amount along with its executed
facilities study agreement.\176\ Study deposits would be refundable,
and the transmission provider would refund any portion of the study
deposits above the applicable study costs and withdrawal penalties once
the interconnection customer executes the LGIA, requests the filing of
an unexecuted LGIA and submits the corresponding payment discussed
below, or withdraws from the queue.\177\
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\173\ Proposed pro forma LGIP section 3.1.1.
\174\ Id. section 3.1.1.1.
\175\ Id. section 3.1.1.2.
\176\ Id. section 3.1.1.2.
\177\ Consistent with Order No. 2003, interconnection customers
would be responsible for actual study costs, and the study deposits
would be subject to true-up. Order No. 2003, 104 FERC ] 61,103 at P
37; pro forma LGIP section 8.1.
---------------------------------------------------------------------------

108. We also propose to require interconnection customers to submit
a deposit equal to nine times the amount of its study deposit when
executing the LGIA or requesting the filing of an unexecuted LGIA.\178\
This deposit would be fully refunded once the generating facility
achieves commercial operation, but if the interconnection customer
withdraws after executing the LGIA or after requesting the filing of an
unexecuted LGIA, this deposit would be refunded subject to the
withdrawal penalty discussed below.
---------------------------------------------------------------------------

\178\ Proposed pro forma LGIP section 3.1.1.3.
---------------------------------------------------------------------------

109. We believe that increasing the total study deposit amounts
submitted in the interconnection study process would better approximate
the cost of the interconnection study process and disincentivize
interconnection customers from submitting interconnection requests for
speculative, non-commercially viable generating facilities. As the
Commission recognized in the 2008 Technical Conference Order,
``relatively small deposit amounts, coupled with the incentives
produced by a first-come, first-served approach to allocating capacity,
provides an incentive for developers to secure a place in the queue
even for projects that may not be commercially viable.'' \179\
Conversely, the Commission has specifically found that increased study
deposits ``better identif[y] viable projects that are more ready to
proceed with construction and commercial operation while discouraging
speculative projects that could delay the cluster study process.''
\180\ The Commission has similarly explained ``that increasing the
deposit in a tiered fashion . . . is reasonable because it recognizes
that larger projects likely carry a greater risk.'' \181\ Accordingly,
we propose to revise section 3 of the pro forma LGIP to implement these
proposed increased study deposit reforms.
---------------------------------------------------------------------------

\179\ 2008 Technical Conference Order, 122 FERC ] 61,252 at P
15.
\180\ PNM, 136 FERC ] 61,231 at P 80; see also PSCo, 169 FERC ]
61,182 at PP 36, 49.
\181\ PNM, 136 FERC ] 61,231 at P 80.
---------------------------------------------------------------------------

110. We seek comment on whether the proposed study deposit amounts
accurately estimate the cost of conducting cluster studies, such that
interconnection customers are not required to submit deposits that are
likely to far exceed actual study costs. We also seek comment on
whether the Commission should adopt additional provisions or a
different framework that would require larger proposed

[[Page 39954]]

generating facilities to provide a higher deposit amount--such as a per
MW framework.
ii. Demonstration of Site Control
(a) Background
111. The pro forma LGIP defines site control as documentation
demonstrating: (1) ownership of, a leasehold interest in, or a right to
develop a site for the purpose of constructing the generating facility;
(2) an option to purchase or acquire a leasehold site for such purpose;
or (3) an exclusivity or other business relationship between the
interconnection customer and the entity having the right to sell,
lease, or grant the interconnection customer the right to possess or
occupy a site for such purpose.\182\ Interconnection customers are
required to submit a demonstration of site control along with the
interconnection request or submit a $10,000 deposit in lieu of such a
demonstration.\183\ The in-lieu-of deposit allows the interconnection
customer to proceed through the generator interconnection process
without providing evidence of site control. At the end of the study
process, within 15 days after receipt of the draft LGIA, the
interconnection customer must provide evidence of continued site
control or post $250,000 of non-refundable security that will be
applied toward future construction costs. The pro forma LGIA allows the
interconnection customer to suspend its LGIA for up to three years
before providing the additional security or demonstration of site
control.\184\
---------------------------------------------------------------------------

\182\ Pro forma LGIP section 1.
\183\ Id. section 3.4.1.
\184\ Pro forma LGIA art. 5.16.
---------------------------------------------------------------------------

112. The Commission has accepted several interconnection queue
reform proposals that have increased the initial $10,000 deposit in
lieu of site control. For example, Nevada Power increased the initial
deposit amount to $50,000 \185\ and Arizona Public Service Company and
El Paso Electric increased the amount of the initial deposit in lieu of
site control to match their increased study deposits--$160,000 for
interconnection requests less than 75 MW, and $250,000 for
interconnection requests for 75 MW and greater.\186\ All of these
transmission providers maintain the pro forma LGIP provision allowing
the interconnection customer to post $250,000 of non-refundable
security in lieu of site control at LGIA execution.
---------------------------------------------------------------------------

\185\ NV Energy, Inc., 142 FERC ] 61,165, at P 25 (2013).
\186\ Ariz. Pub. Serv. Co., 137 FERC ] 61,099, at P 11 (2011);
El Paso Elec. Serv. Co., 137 FERC ] 61,101, at P 11 (2011).
---------------------------------------------------------------------------

113. PacifiCorp allows interconnection customers to submit a
$10,000 deposit in lieu of site control to begin the cluster study
process but requires that the interconnection customer demonstrate
exclusive site control before proceeding to the facilities study.\187\
Duke and Dominion adopted a similar approach of requiring that the
interconnection customer demonstrate exclusive site control before
proceeding to the facilities study but increased the deposit amount to
$20,000 plus $500 per MW.\188\ These transmission providers have
removed the option to post $250,000 of non-refundable security in lieu
of site control at LGIA execution and instead require proof of site
control without exception.
---------------------------------------------------------------------------

\187\ PacifiCorp, Transmission OATT and Service Agreements,
attach. W, section 5 (3.0.0), section 5.2.
\188\ Duke, Tariffs, Rate Schedules and Service Agreements,
OATT, attach. J (18.0.0), section 4.4.2; Dominion, OATT and Service
Agreements, attach. M (4.5.0), section 4.4.2.
---------------------------------------------------------------------------

114. PNM,\189\ PSCo,\190\ and MISO have eliminated the deposit in
lieu of site control. However, MISO allows a deposit in lieu of site
control of $10,000 per MW where regulatory limitations prohibit the
procurement of site control.\191\ This deposit is subject to a floor of
$500,000 and a ceiling of $2,000,000. The cash in lieu deposit is only
available to customers at the start of the study process:
interconnection customers must demonstrate 100% site control prior to
MISO conducting the facilities study.\192\ To cut down on multiple
speculative projects leasing the same site in order to remain in the
queue, MISO also requires that interconnection customers demonstrate an
``exclusive right to develop the site'' of a generating facility or,
where facilities are to be co-located, a right that is ``sufficient to
accommodate the final design of the facility and account for any other
projects that will utilize all or part of the same site.'' \193\
---------------------------------------------------------------------------

\189\ PNM, 136 FERC ] 61,231 at P 81.
\190\ PSCo, 169 FERC ] 61,182 at P 58. Site control requirements
for PSCo are as follows: (1) before entering Phase 1, demonstration
of 50% site control and 0% site control of interconnection
customer's interconnection facilities is required; (2) before
entering Phase 2, demonstration of 50% site control and 0% site
control of interconnection customer's interconnection facilities is
required; (3) before entering Phase 1, demonstration of 60% site
control and 0% site control of interconnection customer's
interconnection facilities is required; (4) before entering Phase 4,
demonstration of 75% site control and 0% site control of
interconnection customer's interconnection facilities is required;
(5) before executing an LGIA, demonstration of 90% site control and
50% site control of interconnection customer's interconnection
facilities is required. PSCo, Transmission and Service Agreements
Tariff, Xcel Energy Operating Cos. Joint OATT, attach. N (0.8.0),
section 7.7.6.
\191\ In order to demonstrate regulatory limitations to securing
site control, MISO requires the interconnection customer to submit:
(1) a signed affidavit from an officer of the company indicating
that site control is unobtainable due to regulatory requirements;
and (2) documentation sufficiently describing and explaining the
source and effects of such regulatory restrictions, including a
description of any conditions that must be met in order to satisfy
the regulatory restrictions and the anticipated time by which the
interconnection customer expects to satisfy the regulatory
restrictions. MISO, FERC Electric Tariff, MISO OATT, attach. X
(155.0.0), section 7.2.1.2.
\192\ Midcontinent Indep. Sys. Operator, Inc., 169 FERC ]
61,173, at P 27 (2019).
\193\ Id. P 48; see also Midcontinent Indep. Sys. Operator,
Inc., 166 FERC ] 61,187 (2019).
---------------------------------------------------------------------------

(b) Proposal
115. We believe that more stringent site control requirements will
help prevent interconnection customers from submitting interconnection
requests for speculative, non-commercially viable proposed generating
facilities.\194\ We preliminarily find that an interconnection customer
securing the exclusive land right necessary to construct its proposed
generating facility (or for co-located resources, demonstration of
shared land use) is sufficient evidence of the interconnection
customer's commitment to construct the generating facility.
---------------------------------------------------------------------------

\194\ See, e.g., PNM, 136 FERC ] 61,231 at P 81 (accepting PNM's
increased deposit requirement and revised site control); PSCo, 169
FERC ] 61,182 at P 58 (stating that removing the $10,000 deposit
option ``provides interconnection customers with the flexibility to
demonstrate their viability while also balancing the goal of
ensuring viable projects continue through the queue'').
---------------------------------------------------------------------------

116. We propose to revise the pro forma LGIP to require
interconnection customers to demonstrate 100% site control for their
proposed generating facilities when they submit their interconnection
request. We propose to have transmission providers include in their
tariff specific acreage requirements for each generating facility
technology type.
117. To cut down on multiple interconnection customers leasing the
same site in order to remain in the queue, we propose to revise the pro
forma LGIP to require interconnection customers to demonstrate the
exclusive land right (where the land rights are exclusive to the
interconnection customer, not necessarily the individual project) to
develop, construct, operate, and maintain its generating facility or,
where facilities are co-located, to demonstrate a shared land use right
to develop, construct, operate, and maintain co-located facilities.
118. We propose to include a limited option for interconnection
customers to submit a deposit in lieu of site control

[[Page 39955]]

when they submit their interconnection request only when regulatory
limitations prohibit the interconnection customer from obtaining site
control.\195\ In such instances, the interconnection customer would
submit an initial deposit in lieu of site control of $10,000 per MW,
subject to a floor of $500,000 and a ceiling of $2,000,000, which would
be applied toward any interconnection studies or withdrawal penalty, if
applicable. Such an interconnection customer must demonstrate 100% site
control prior to the facilities study.
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\195\ For example, in MISO, the Commission found that 100% site
control for the interconnection customer's interconnection
facilities, the transmission owner's interconnection facilities, and
network upgrades at the point of interconnection is impractical
because those facilities often are subject to additional state
siting and permitting requirements that do not apply to generating
facilities. Midcontinent Indep. Sys. Operator, Inc., 169 FERC ]
61,173 at P 40.
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119. In compliance with any final rule in this proceeding, we also
propose that, after notifying the transmission provider of a change to
the interconnection customer's site control demonstration, the
transmission provider give the interconnection customer 10 business
days to demonstrate satisfaction with the applicable requirement after
notification. We propose to implement these requirements through
revisions to sections 3.4.1 and 11.3 of the pro forma LGIP, as set
forth in Appendix B to this NOPR.
120. We believe that strengthening the site control requirements of
the pro forma LGIP to include a demonstration of 100% site control
would help prevent speculative interconnection requests. We recognize
that requiring site control effectively bars entry into the queue until
land is acquired, and that this may prevent early-stage projects from
entering the queue. We nevertheless believe this proposed reform to be
just and reasonable because it will address the concerns with
interconnection queue backlogs and study delays explained in the Need
for Reform by reducing the number of interconnection requests being
submitted and ensure that interconnection customers in the queue are
ready to proceed.
121. We seek comment on whether there are other specific situations
in which the Commission should accept a deposit in lieu of site
control.
122. We seek comment on whether the definition of ``site control,''
including the requirement to obtain an exclusive land right (or, for
co-located resources, a shared land right), should be broadened or
refined to account for circumstances that may arise in, for example,
the siting and permitting of offshore resources in bodies of water and/
or submerged land. Further, for circumstances where interconnection
customers are proposing to develop generating facilities on sites owned
or physically controlled by a state governmental entity and/or federal
governmental entity, there may be a need to craft a different site
control requirement that acknowledges that the interconnection
customer, that has to comply with regulatory requirements, may not be
able to demonstrate site control as proposed in this NOPR until later.
For this reason, we seek comment on whether and how the definition of
``site control'' should be adjusted for interconnection customers
(including both onshore and offshore) to account for any regulatory
requirements they may have associated with proposed generating
facilities developed on sites owned or physically controlled by a state
governmental entity and/or a federal governmental entity. We also seek
comment on the appropriate stage in developing such sites when the
Commission should view completion of such stage as indicative of an
interconnection customer's request being non-speculative and whether
there are substantive differences among interconnection customers
(including both onshore and offshore) developing sites owned or
physically controlled by a state governmental entity and/or a federal
governmental entity.
123. We also seek comment on whether the Commission should allow
transmission providers to accept demonstrations of less than 100% site
control in the initial phases of the interconnection study process,
outside of when regulatory limitations prohibit the interconnection
customer from obtaining site control. Additionally, we seek comment on
whether the Commission should instead adopt site control provisions
that allow a deposit in lieu of site control to enter the generator
interconnection process and be evaluated under the first-ready, first-
served cluster study process described above but require
interconnection customers to demonstrate site control to enter the
facilities study.
iii. Commercial Readiness
(a) Background
124. Generally, at least in bilateral markets, an interconnection
customer does not proceed to construct a generating facility unless it
has executed some form of off-take agreement, such as a contract for
the sale of electric energy or capacity from the generating facility.
Transmission providers often use the terms ``ready'' or ``commercially
viable'' to describe projects that have demonstrated commercial
progress by executing such an agreement.\196\ Aside from a
demonstration of site control or the $10,000 deposit in lieu of site
control, the pro forma LGIP does not require interconnection customers
to demonstrate progress towards achieving commercial readiness
throughout the interconnection study process. Rather, section 11.3 of
the pro forma LGIP only requires demonstrations of commercial progress
within 15 days after receipt of the final LGIA, after the transmission
provider has completed its studies of the interconnection request. If
interconnection customers cannot meet this deadline, the pro forma LGIA
allows them to suspend their LGIAs for up to three years: that
suspension may include a decision by the interconnection customer to
pause work on their proposed generating facilities and network
upgrades.\197\ Under this approach, interconnection customers are able
to submit interconnection requests and progress through the
interconnection queue for only $160,000 in study deposits, subject to
true-up based on actual study costs and then suspend their LGIAs for an
additional three year time period for no cost.\198\ In Order 2003, the
Commission allowed suspension for a three year time period to allow
generation projects the flexibility necessary to accommodate permitting
and other delays that are particularly likely to affect large
projects.\199\
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\196\ See, e.g., PSCo, Transmission and Service Agreements
Tariff, Xcel Energy Operating Cos. Joint OATT, attach. N, (0.8.0)
Sec. 7.7.6; PacifiCorp, Transmission OATT and Service Agreements,
OATT, pt. IV.38 (6.0.0), section 38.4.1.
\197\ Pro forma LGIA art. 5.16.
\198\ See pro forma LGIP sections 3.4.1, 6.1, 7.2, 8.1
(providing for: $10,000 for the Interconnection Feasibility Study,
$50,000 for the Interconnection System Impact Study, and $100,000
for the Interconnection Facilities Study).
\199\ Order No. 2003, 104 FERC ] 61,103 at P 410.
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125. PSCo, PacifiCorp, Tri-State, Dominion, and Duke have
implemented frameworks that require interconnection customers to
demonstrate commercial readiness early in the generator interconnection
process to incentivize developers to submit ready or near-ready
proposed generating facilities into the interconnection queue and to
discourage the inclusion of speculative interconnection requests in the
interconnection queue. These transmission providers offer several
options to demonstrate commercial readiness. Notably, the commercial
readiness requirements become more stringent as the interconnection
customer proceeds to the later phases of the interconnection study
process:

[[Page 39956]]

<bullet> Executed term sheet in early phases, or executed contract
or power purchase agreement in later phases;
<bullet> Reasonable evidence of being selected in a resource plan
or offered into a resource solicitation plan in early phases, or proof
of applying for certificate of public convenience and necessity, if
required, in later phases; or
<bullet> Provisional LGIA filed executed or unexecuted at the
Commission in early phases or accepted at the Commission in later
phases.\200\
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\200\ PSCo, Transmission and Service Agreements Tariff, Xcel
Energy Operating Cos. Joint OATT, attach. N (0.8.0), section 7.7;
PacifiCorp, Transmission OATT and Service Agreementts, OATT, pt.
IV.38 (6.0.0), section 38.4.1; Tri-State, Tri-State OATT, attach. N
(7.0.0), section 7.7; Dominion, OATT and Service Agreements, attach.
M (4.5.0), section 10.1; Duke, Tariffs, Rate Schedules and Service
Agreements, OATT, attach. J (18.0.0), section 10.11 .
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126. As an alternative, PSCo, PacifiCorp, Tri-State, Dominion, and
Duke allow interconnection customers that cannot provide these non-
financial forms of readiness to instead provide additional deposit
funds to proceed through the interconnection study process. Because
PacifiCorp's cluster study process has fewer phases than PSCo, Tri-
State, Dominion, and Duke, PacifiCorp offers the option to submit a
deposit in lieu of readiness of $3,000/MW at the interconnection
request phase, and for the later phase, a deposit equal to the network
upgrade costs allocated to the interconnection customer in the most
recent cluster study.\201\ To contrast, in PSCo, Tri-State, Dominion,
and Duke, an interconnection customer that cannot provide a readiness
demonstration must provide additional deposits equal to:
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\201\ PacifiCorp, Transmission OATT and Service Agreements,
OATT, pt. IV.38 (6.0.0), section 38.4.1(v).
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<bullet> Two times the study deposit amount to enter the phase 1
cluster study;
<bullet> Three times the study deposit amount after the phase 1
report meeting to enter the phase 2 cluster study;
<bullet> Five times the study deposit amount after the phase 2
report meeting; and
<bullet> Seven times the study deposit amount after receipt of the
facilities study agreement.\202\
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\202\ PSCo, Transmission and Service Agreements Tariff, Xcel
Energy Operating Cos. Joint OATT, attach. N (0.8.0), section 7.7.5;
Tri-State, Tri-State OATT, attach. N (7.0.0), section 7.7.5;
Dominion, OATT and Service Agreements, attach. M (4.5.0), section
10.1.6; Duke, Tariffs, Rate Schedules and Service Agreements, OATT,
attach. J (18.0.0), section 10.11.6.
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127. As explained earlier, we are concerned with the significant
interconnection queue backlogs and study delays, which we believe are
caused in part by the minimal requirements for submitting
interconnection requests and the tendency for non-viable projects to
linger in interconnection queues. We have learned through
interconnection queue reform filings that interconnection customers
typically do not actually construct generating facilities unless they
have entered into an off-take agreement for the output of such
facilities, at least in bilateral market areas.\203\ On the other hand,
interconnection customers that do not enter into such agreements
frequently withdraw from the interconnection queue, sometimes late in
the study process or even after the conclusion of the study process,
triggering the types of delays and re-studies for commercially viable
projects that raise concerns for us. Thus, we believe that the existing
pro forma LGIP requirements may be insufficient because they do not
require customers to demonstrate commercial readiness early enough in
the study process to deter interconnection customers from submitting
interconnection requests for, and continuing in the interconnection
queue, speculative proposed generating facilities.
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\203\ PNM, Transmittal Letter, Docket No. ER11-3522-000, at 10-
12 (filed May 5, 2011); PacifiCorp, Transmittal Letter, Docket No.
ER20-924-000, at 51 (filed Jan. 31, 2020).
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(b) Proposal
128. We propose to revise the pro forma LGIP to include a
commercial readiness framework. One major benefit of the frameworks
adopted by PSCo, PacifiCorp, Tri-State, Dominion, and Duke is that the
financial requirement in lieu of readiness increases throughout the
study process, which encourages interconnection customers that are not
ready to proceed to withdraw from the interconnection queue earlier in
the study process while also providing them the flexibility to enter
and remain in the interconnection queue without an off-take agreement.
We believe that such a mechanism would reduce the number of times an
interconnection customer executes and suspends an LGIA for a
speculative interconnection request, only to later withdraw the
request, which impacts the remaining interconnection customers in the
interconnection queue by causing re-studies and shifting network
upgrade costs to lower-queued interconnection customers. This proposed
reform should also reduce the strain on transmission providers and
enable viable interconnection requests to progress more quickly through
a less congested interconnection queue, thereby remedying the unjust
and unreasonable Commission-jurisdictional rates discussed in our need
for reform.
129. Therefore, we propose to establish the defined terms
``Commercial Readiness Demonstration'' \204\ and ``Commercial Readiness
Deposit'' \205\ in the pro forma LGIP. We also propose to add to
sections 3.4.2, 7.5 and 8.1 of the pro forma LGIP the following options
as acceptable commercial readiness demonstration options to enter into
the cluster study and cluster re-study:
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\204\ We propose to revise section 1 of the pro forma LGIP to
provide that Commercial Readiness Demonstration shall have the
meaning set forth in Sections 3.4.2, 7.5, and 8.1 of this LGIP.
\205\ We propose to revise section 1 of the pro forma LGIP to
provide that Commercial Readiness Deposit shall mean a deposit paid
in lieu of submitting a Commercial Readiness Demonstration, as set
forth in Sections 3.4.2, 7.5, and 8.1 of this LGIP.
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<bullet> Executed term sheet (or comparable evidence) related to a
contract, binding upon the parties to the contract, for sale of (1) the
constructed generating facility, (2) the generating facility's energy
or capacity, or (3) the generating facility's ancillary services; where
the term of sale is not less than five years.
<bullet> Reasonable evidence that the project has been selected in
a resource plan or resource solicitation process by or for a load
serving entity, is being developed by a load-serving entity (LSE), or
is being developed for purposes of a sale to a commercial, industrial,
or other large end-use customer.
<bullet> Provisional LGIA which has been filed at the Commission
(executed or unexecuted), which is not suspended and includes a
commitment to construct the generating facility.
130. We propose to add to section 8.1 of the pro forma LGIP that
the following may serve as commercial readiness demonstration options
to enter the facilities study, and must be provided with the executed
facilit

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