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FERC Issues Notice of Proposed Rulemaking Targeting Interconnection Queue Backlogs

On June 16, 2022, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR) proposing reforms to address interconnection queue backlogs and promote new technologies in its forms of generator interconnection procedures and agreements. The proposed reforms would implement a first-ready, first-served cluster study process, tighten the timelines for transmission providers to process interconnection studies with financial penalties for failing to meet deadlines, incorporate new technologies into the interconnection process and modify affected systems coordination and modeling standards.

Reforms to Implement a First-Ready, First-Served Cluster Study Process

To address the perceived deficiencies in the current rules governing the interconnection process that result in backlogs, the NOPR presents three primary proposals:

  1. Transmission providers would be required to maintain and make publicly available interconnection capacity and relevant interconnection metrics and offer an informational interconnection study to prospective interconnection customers;
  2. Transmission providers would be required to perform cluster studies in a forty-five-day period, replacing the first-come, first-served approach with the first-ready, first-served study method; and
  3. Transmission providers would impose increased study deposits, higher withdrawal penalties, and more readiness requirements on interconnection customers. 

The NOPR proposes a transition period that would allow eligible interconnection customers to choose either to enter a transitional serial interconnection facilities study or a transitional cluster study with commercial readiness requirements, or to withdraw from the interconnection queue without penalty. 

Reforms to Increase the Speed of Interconnection Queue Processing

To improve the speed of interconnection queue processing by transmission providers, the NOPR proposes to eliminate the reasonable efforts standard for completing interconnection studies and replace it with firm study deadlines, enforced with a $500 per day penalty (capped at 100% of the total study deposit) for each day the transmission provider fails to meet study deadlines after more than ten business days (except where force majeure caused such failure). FERC proposes to permit transmission providers to extend the deadline of a particular study by thirty days by mutual agreement with all interconnection customers in the relevant study.

In addition, the NOPR proposes to include an affected systems study process in the pro forma Large Generator Interconnection Procedures (LGIP) that would give relevant parties the opportunity to discuss required network upgrades and mitigation measures in a timely manner. FERC emphasizes that transmission providers conducting cluster studies would not be required to delay those studies while awaiting the results of affected systems studies.  The NOPR proposes that the interconnection customer whose project has an impact on a neighboring system will fund the cost of assigned network upgrades on that system and be reimbursed by the affected system operator or transmission provider. 

The NOPR also proposes that affected system operators would study interconnection requests using Energy Resource Interconnection Service modeling standards, regardless of the requested level of service on the host transmission provider’s transmission system. In the alternative, the transmission provider could make a filing with FERC requesting approval to use Network Resource Integration Service modeling standards. 

Reforms to Incorporate Technological Advancements into the Interconnection Process

To increase flexibility in the generator interconnection process, the NOPR proposes revisions to the pro forma LGIP and Large Generator Interconnection Agreement (LGIA) to require transmission providers to:

(i) allow more than one resource to co-locate on a shared site behind a single point of interconnection and share a single interconnection request (e.g., hybrid resources);

(ii) evaluate the proposed addition of a generating facility to an interconnection request if there is no change to the originally requested interconnection service level;

(iii) allow other interconnection customers to access the surplus interconnection service process once the original interconnection customer has an executed LGIA or files an unexecuted LGIA; and

(iv) use operating assumptions for interconnection studies that hold interconnection customers to the intended operation of their electric storage resource or co-located resource containing an electric storage resource (including hybrid resources).

The NOPR further proposes revisions to the pro forma LGIP and Small Generator Interconnection Procedures that will require transmission providers to consider, upon the interconnection customer’s request, newer technologies such as dynamic line ratings or advanced power flow control devices as they study and identify needed system reinforcements and network upgrades. 

FERC requires each transmission provider to submit a compliance filing within 180 days of the effective date of the final rule and will permit appropriate entities to seek “regional reliability variations” or “independent entity variations” from the proposed revisions to the pro forma LGIP and LGIA.

Comments on the NOPR are due on October 13, 2022, and reply comments are due on November 14, 2022.