Editor’s note: This is the second installment of a three-part series on the FERC interconnection NOPR. Check out the first article in the series, “Breaking down the FERC interconnection NOPR.” Part 3 will examine proposed reforms to interconnection queue processing.
By Rao Konidena
There are three parts to the FERC interconnection NOPR. In the first piece, FERC proposed reforms to implement the first-ready, first-served cluster study process. Next, recognizing the delays associated with affected systems studies, FERC proposed reforms to increase the speed of interconnection queue processing. This article will break down that component of the NOPR.
Speeding up the queue
FERC focused on withdrawal penalties for interconnection customers to reduce the restudies that cause backlogs in the first component of the interconnection NOPR, the second piece focuses on holding transmission providers accountable by levying fines if they delay interconnection studies.
It remains to be seen if the transmission providers will be supportive of this proposal since there haven’t been any financial penalties on transmission providers, even if studies are delayed beyond their stated deadlines.
For example, if all MISO DPP studies in the 2021 cycle are delayed by 150 days, then MISO ends up paying $31 million!
1. Eliminating the Reasonable Efforts Standard
FERC realized that it was unable to find transmission providers at fault even though interconnection studies are routinely delayed due to the phrase “reasonable efforts,” which are defined in FERC Order 2003 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.” FERC is proposing to remove the phrase “reasonable efforts” from the Large Generator Interconnection Procedures (LGIP).
FERC proposes requiring transmission providers that do not complete a cluster, cluster restudy, facilities, or affected system study by the deadline specified in the LGIP to pay a penalty of $500 per day when the study is late after a 10-day grace period.
But $500 per day is not enough to incentivize transmission providers because delays to studies cause financial hardship to interconnection customers.
FERC is seeking comment on the $500 per day fine and asking for additional comments on whether agency staff should issue periodic reports summarizing the status of transmission providers’ queues and timeliness of interconnection studies based on information collected through existing reporting requirements.
2. Affected systems studies
Both MISO and SPP use the first-ready, first-served cluster study process and have large queue volumes and delayed studies, partly due to affected systems studies.
FERC said: “Affected systems studies are used to study the impact of proposed interconnection requests on neighboring transmission systems.” Even though the transmission providers are currently obligated to conduct affected systems studies, FERC recognized that it has not provided guidance so far on this topic.
3. A study process
Currently, affected systems studies are not included in the LGIP, so FERC proposes to fix that in this NOPR. Second, FERC proposed that the transmission provider notify the affected system operator within 10 business days of the event causing the system impact.
FERC defines this “event” as anyone of the following: (1) the cluster request window, (2) the customer engagement window, (3) the cluster study, or (4) the cluster restudy as part of the first-ready, first-served cluster study process.
FERC proposes new definitions for affected system study components in the LGIP. For instance, an “Affected System Interconnection Customer” is an interconnection customer whose proposed interconnection with the host transmission system impacts the transmission provider.
The transmission provider has the responsibility to schedule an affected system scoping meeting within seven business days after providing written notification that it intends to conduct an affected system study, provide monthly informational data reports, and tender an affected system study agreement to the affected system interconnection customer within five business days of sharing the schedule for the affected system study.
The affected system interconnection customer must return the executed affected system study agreement within 10 business days of receipt. FERC thought about instances when both affected system Interconnection Customer and interconnection customers have an impact on affected network upgrades. So, FERC proposed that the transmission provider acting as the affected system assign the affected system interconnection customer a queue position based on when the affected customer executes an affected system study, rather than when the affected system interconnection customer entered its host transmission provider’s queue.
The transmission provider acting as the affected system must provide the affected system interconnection customer with affected system study results within 90 calendar days after receiving the executed affected system study agreement. Otherwise, the transmission provider is penalized $500 per day.
4. Pro forma affected system study agreement
FERC recognized that the current affected systems studies are muddy to the interconnection customer. Hence FERC is proposing to increase the efficiency and transparency of the interactions between the interconnection customer and the affected system operator.
FERC proposes many technical study details as part of the affected system study agreement scope and it is seeking comment on whether this technical information is adequate for the affected system interconnection customer.
5. Pro forma affected systems facilities construction agreement
In addition to the Study Agreement, FERC proposes a Facilities Construction Agreement for affected systems. The transmission provider acting as the affected system and the affected system interconnection customer will enter into this facilities construction agreement. The transmission provider must design, procure, construct, and install all network upgrades as part of this agreement. And the interconnection customer’s responsibility is initially to fund the cost of any assigned network upgrades and be reimbursed by the transmission provider acting as the affected system.
FERC is seeking comments on the interconnection customer payment and repayment provisions because the transmission provider is required to repay the affected system customer the full cost of network upgrades, plus interest, in a term to be mutually agreed upon but not to exceed 20 years. That repayment is needed because affected system interconnection customers do not take transmission service over the affected system’s transmission system. After the repayment, the facilities construction agreement will terminate.
6. Affected system modeling and study assumptions
FERC also included specifics on how transmission providers should conduct system modeling for the affected systems studies recognizing that mandating a modeling standard for non-firm Energy Resource Interconnection Service (ERIS) is better than firm Network Resource Interconnection Service (NRIS).
Based on MISO’s experience, FERC recognized that an ERIS study would ensure that a renewable project can deliver its electric output using the existing firm or non-firm capacity of the affected system transmission provider’s system on an as-available basis.
FERC does allow a transmission provider to conduct more rigorous NRIS modeling, but they must file a Section 205 under the Federal Power Act (FPA). FERC said it would evaluate these Section 205 filings on a case-by-case basis. However, the transmission provider must include justification such as NERC Reliability Standard violation, an operational concern such as over-duty breakers, fault current violations, impacts on transmission stability, increased loop flows, or other concerns that implicate any other critical reliability parameters.
FERC seeks comment on this ERIS versus NRIS modeling standard for the affected systems studies.
7. The context for optional resource solicitation study
FERC took best practices from MISO and SPP in first-ready, first-served cluster studies and proposed changes to LGIP in Part A, and tried to learn from the delays in Affected Systems studies from both those regions in Part B. In this optional resource solicitation study proposal, FERC had chosen to apply best practices from the Public Service Company of Colorado (PSCo).
Initially, it is unclear what problem FERC is trying to solve with this state’s and state agencies-led resource solicitation study process and its role in the LGIP. But as FERC said, it received comments from offshore wind developers such as Ørsted North America Offshore, Exelon, RWE Renewables Americas, and Clean Energy Associations addressing the relationship between state electric resource procurement mandates and the generator interconnection process. That relationship is the problem that FERC is trying to solve with this resource solicitation study proposal in the NOPR.
FERC also realized that to compete successfully in the state procurement solicitations (for achieving New Jersey’s offshore wind mandate as an example) and procuring transmission service – interconnection customers are entering multiple interconnection requests in the PJM queue. And those multiple requests lead to backlogs, affecting the state’s renewable policy goals and mandates. FERC stated that PJM and Eversource Energy are concerned that if large projects driven by state procurement withdraw from the queue, it leads to restudies. Hence, FERC proposes a cluster-based process for state procurement solicitations to align state objectives with generator interconnection reforms.
8. Resource planning
FERC defined a “resource planning entity” as any entity required to develop a Resource Plan or conduct a Resource Solicitation Process, including a relevant state entity or load-serving entity. Under FERC’s proposal, the resource planning entity will play a facilitator role in grouping interconnection requests for the transmission provider’s cluster study, but this entity will not be given a queue number.
FERC is clear under this proposal that the resource planning entity is not requesting interconnection service, establishing a separate interconnection queue or queue position, or reserving interconnection capacity or transmission capacity.
FERC has built safeguards in this proposal. Only resource planning entities whose resource plan or resource solicitation process either uses competitive procurement techniques or is substantively reviewed and approved or directly managed by a relevant state agency could qualify to request that a transmission provider initiate an optional resource solicitation study. FERC built this safeguard to ensure interconnection studies are not unfairly used to favor the resource planning entity’s own economic self-interests.
The state agencies and offshore wind developers who commented earlier in the ANOPR must provide feedback on whether FERC’s proposal meets their needs and addresses their concerns in resource solicitation and generator interconnection misalignment. FERC is also seeking comments from transmission providers serving multiple states on whether they need the flexibility to meet this proposed resource solicitation study requirements.
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