United States: FERC Implements Generator Interconnection Process Reforms: Compliance Filings Due December 2023 – McGuireWoods LLP

On September 6, 2023, the Federal Register published the Federal
Energy Regulatory Commission’s (FERC) Order No. 2023, ‘Improvements to Generator
Interconnection Procedures and Agreements,’ a 1,000+ page Final
Rule adopting reforms to generator interconnection procedures and
amending the pro forma Large Generator Interconnection Procedures
(LGIP), the pro forma Large Generator Interconnection Agreement
(LGIA), the Small Generator Interconnection Procedures (SGIP) and
the Small Generator Interconnection Agreement (SGIA).¹
Responding to more than 4,500 pages of comments, FERC adopted most
of its proposals from its June 16, 2022 Notice of Proposed Rulemaking
(“NOPR”).²

Order No. 2023 is FERC’s attempt to address widely reported
backlogs in generation interconnection queues across the country
and cost uncertainty related to necessary transmission system
upgrades to accommodate new interconnections. FERC’s companion
NOPR on transmission expansion and associated cost allocation is
still pending.³

The final rule will become effective on November 5, 2023. All
FERC-jurisdictional transmission providers are required to make
compliance filings within 90 days of such publication, or by
December 5, 2023. Transmission Providers with
reciprocity OATTs are also required to conform to the revised
standards or else seek deviations to maintain their reciprocity
safe harbor. To date, a group of RTOs (PJM Interconnection, L.L.C.,
Midcontinent Independent System Operator, Inc., and Southwest Power
Pool, Inc.) have already submitted a request that the Commission
extend the deadline until after it issues a substantive rehearing
order on Order No. 2023. It is likely that other entities will seek
requests for extension of the deadline, and FERC historically has
entertained such requests.

The key reforms adopted in Order No. 2023 are:

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

• Transmission providers must transition from a serial,
  “first come, first served” study process to an
  annuaroviders are required to develop and maintain a “heat
  map” on their OASIS, and post certain information about
  interconnection capability, so that potential interconnection
  customers can better evaluate potential points of
  interconnection.




• Interconnection customers will be need to demonstrate a higher
  level of site control (90%) at the time of submitting their
  request, or a deposit in lieu of site control in limited
  situations.




• Interconnection customers will be required to submit
  “financial readiness deposits” that increase at each
  stage of the interconnection process. FERC did not adopt the
  NOPR’s proposed non-financial commercial readiness
  requirements.




• Interconnection customers will be subject to withdrawal
  penalties that increase at each stage of the interconnection
  process.

Reforms to Increase the Speed of Interconnection Queue
Processing

• The final rule eliminates the long standing “reasonable
  efforts” standard for Transmission Providers completing
  studies. Instead, the new rule imposes firm deadlines for study
  completion and subjects transmission providers (and transmission
  owners) to financial penalties if they fail to meet those
  requirements.




• The final rule establishes a detailed and standardized
  “affected system” study process and pro forma agreements
  to implement that process.

Reforms to Incorporate Technological Advancements into the
Interconnection Process

• Transmission providers must allow shared interconnection
  requests for co-located generating facilities.




• Transmission providers must consider generating facility
  additions to an existing interconnection request before
  automatically deeming it a material modification.




• The final rule adopts changes to the material modification
  process.




• The final rule adopts a process to use “surplus
  interconnection capacity” before a generating
  facility has reached commercial operation.




• The final rule adopts changes to more reliably interconnect
  inverter based resources (IBRs), including: 1) additional modeling
  information and 2) ability to provide “ride through”
  capability during disturbances.




• The final rule enumerates certain alternative technologies that
  transmission providers must evaluate in their cluster studies.
  Transmission providers will retain discretion on whether to use
  those technologies, and must describe their evaluation in their
  study reports.

Going Forward

Order No. 2023 begins what will likely be years’ worth of
compliance and transition processes for transmission providers and
interconnection customers across the country. Numerous parties
submitted requests for rehearing of the final rule by the August
28, 2023 deadline, and FERC’s forthcoming order on rehearing
will likely be followed by appeals to a court of appeals.

While the Order No. 2023 reforms are intended to be uniform
across transmission providers, individual transmission providers
can propose deviations in their upcoming compliance filings.
RTOs/ISOs will be subject to the regional entity variation
standard, while transmission providers outside of RTOs/ISOs must
meet the “consistent or superior to” standard. The
complexity of compliance filings and transition processes will vary
based on whether transmission providers have already adopted a
cluster study process, how closely a transmission provider’s
current process matches FERC’s new pro forma, and the degree to
which transmission providers seek deviations.

While transmission providers will primarily implement any
changes to their processes in their tariffs, transmission providers
may also make changes to their business practice manuals to
implement more technical implementation details.

Initial compliance filings will be due December 5, 2023, absent
FERC granting an extension of time. FERC noted in the Final Rule
that it was reasonable to shorten its originally proposed 180-day
compliance period to 90 days based on prior practice and the 60 day
compliance filing deadline for Order No. 2003. However, it is
likely that Transmission Providers will seek requests to extend the
deadline, and FERC has historically entertained such
requests.⁴

Download this white paper for details and analysis of the
final rule and implications for transmission providers.

Footnotes

1. Improvements to Generator Interconnection
Procedures and Agreements, Order No. 2023, 184 FERC ¶
61,054 (2023) (Order No. 2023).

2. Improvements to Generator Interconnection
Procedures and Agreements, Notice of Proposed Rulemaking, 179
FERC ¶ 61,194 (2022).

3. Building the Future Through Electric Regional
Transmission Planning and Cost Allocation and Generator
Interconnection, 179 FERC ¶ 61,028 at P 56
(2022).

4. For example, FERC extended the deadline for Order No.
2003 by 90 days, for a total compliance period of 120 days.
Similarly, the Commission extended the compliance deadline for
Order No. 845 twice, resulting in a total compliance period of
close to a year.