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FERC Approves PJM's Interconnection Reform Proposal

On November 29, 2022, the Federal Energy Regulatory Commission (FERC) issued an order accepting the PJM Interconnection, L.L.C. (PJM) filing to comprehensively reform its interconnection process. The proposed package of tariff revisions is designed to more efficiently and timely process requests to interconnect facilities with the PJM system, by transitioning from a serial “first-come, first-served” queue approach to a “first-ready, first-served” cycle approach.  

FERC’s order approved the following reforms:

  • Moving to a clustered cycle process for both interconnection studies and allocation of the costs of network upgrades;
  • Implementation of multiple decision points within the interconnection process at which project developers will need to provide deposits and meet other threshold requirements to move forward, thus permitting projects that are ready to progress to do so while incentivizing projects that are not ready to proceed to exit the interconnection process;
  • A transition mechanism to ensure a timely transition to the new “first-ready, first-served” cycle approach; and
  • Consolidation of PJM’s interconnection-related service agreements and forms that will be used for the transition process and the new rules.

In accepting PJM’s filing, FERC found that the proposed reforms “should provide PJM with the ability to reduce the current backlog more quickly than possible under its current rules and ultimately result in the more efficient and timely processing of New Service Requests.” FERC also found that to the extent PJM’s reforms reflect deviations from FERC’s pro forma Large Generator Interconnection Agreement and Large Generator Interconnection Procedures, the reforms satisfy the independent entity variation standard of Order No. 2003.

FERC also determined that PJM’s proposed transition rules are a reasonable way to implement interconnection reform, noting that they balance the interests of mature projects in completing the interconnection study process under PJM’s current cost allocation rules with the need to move expeditiously to a first-ready, first-served, clustered-cycle approach to clear the significant backlog and begin full implementation of the new rules. 

Acceleration to Final Agreement Stage

FERC accepted PJM’s proposed use of an accelerated process whereby projects that enter a cycle and do not contribute to the need for any network upgrades or require subsequent studies can accelerate to a final interconnection-related agreement.

Site Control Requirements

FERC accepted PJM’s proposed Site Control requirements, agreeing with PJM that more stringent site control requirements will discourage or prevent project developers from submitting speculative projects and, while the proposed site control requirements will add to the burden on prospective interconnection customers, those burdens will be outweighed by the benefits associated with decreasing the number of speculative interconnection requests entering PJM’s interconnection process. 

Elimination of Suspension

FERC accepted PJM’s proposal to eliminate suspension and allow project developers a one-time option to extend their milestones (other than any milestone related to site control) for a total period of one year regardless of cause as consistent with the independent entity variation, finding that it reasonably balances the need for flexibility with encouraging project developers to complete generation projects in a timely manner.

Proposal to Remove Penalties in Tariff Parts II and III

FERC accepted PJM’s proposal to remove the operational penalties in Tariff sections 19.8 and 32.5 as consistent with or superior to the requirements of Order No. 890 and appropriate given PJM’s combined study process for transmission service requests and interconnection requests. 

Study Completion Timeliness and Requirement that PJM Provide Transition Period Progress Reports

FERC rejected protests about the timeliness of PJM’s studies and requests that PJM be required to use outside consultants to complete studies, stating it was not ordering any changes to the Reasonable Efforts standards at this time.  FERC directed PJM to submit, at the same time it submits its Order No. 845 informational reports, informational reports detailing its progress under the Transition Period Rules, including information on the completion time for studies, and updated reports on when PJM expects to complete the expedited process and Transition Cycles #1 and #2.