FERC on May 15 partially approved CAISO’s Order 2023 compliance filing, directing the grid operator to address mostly minor issues in the document (ER24-2042).

The commission issued Order 2023 in July 2023 in to help unclog highly congested generator interconnection queues across the U.S.

The rulemaking requires public utility transmission providers (including RTOs and ISOs) to adopt a package of “reforms” to streamline their interconnection procedures, including implementing a “first-ready, first-served” cluster study process; taking measures to accelerate interconnection processing; and incorporating “technological advancements” into the process.

To implement the changes, Order 2023 directs all transmission providers to revise their pro forma Large Generator Interconnection Procedures (LGIP), Large Generator Interconnection Agreement (LGIA), Small Generator Interconnection Procedures (SGIP) and Small Generator Interconnection Agreement (SGIA) to a standard that either meets or exceeds those set out in the order.

FERC’s most substantive rejection in the CAISO order dealt with requirements around the allocation of costs for specific network upgrades.

In this area, the commission accepted CAISO’s provisions for allocating the cost of interconnection facilities because the ISO had adopted FERC’s pro forma LGIP provisions without modification, while also approving the ISO’s proposed independent entity variation (or deviation from the pro forma language) not to adopt definitions of “substation network upgrades” and “system network upgrades” in its LGIP because those are defined elsewhere in the ISO’s tariff.

But the commission also found that, with respect to substation network upgrades (called Interconnection Reliability Network Upgrades — or IRNUs — in CAISO’s tariff), the ISO’s filing failed to address Order 2023’s requirements to define a “proportional impact method” for calculating upgrade costs, nor did it propose a method for allocating the costs in a manner consistent with the pro forma LGIP.

“The pro forma LGIP states that ‘substation network upgrades, including all switching stations, shall be allocated first per capita to interconnection facilities interconnecting to the substation at the same voltage level, and then per capita to each generating facility sharing the interconnection facility,’” FERC wrote. “CAISO’s tariff states that ‘interconnection customers assigned IRNUs in their cluster study will be allocated the full cost of the IRNUs in their maximum cost responsibility.’ CAISO’s tariff, therefore, does not explain how IRNUs will be allocated to interconnection customers, as required by Order No. 2023.”

Notably, the commission agreed with CAISO’s argument that it be exempted from the Order 2023 requirement that it implement a transition to a cluster study process because the ISO already has such a process in place.

CAISO last year won FERC’s approval for a plan to accelerate the ISO’s interconnection queue by reducing the number of projects it must review in its queue cluster study process through use of a new screening procedure that prioritizes projects based on transmission availability and commercial viability. Those changes will apply to the outsized interconnection Cluster 15 and all subsequent study clusters. (See FERC Approves CAISO Plan to Streamline Interconnection Process.)

“CAISO is proposing procedures to effectuate its Cluster 15 transitional process that align the proposed Order No. 2023 interconnection study schedule with CAISO’s transmission planning process, thereby ensuring future clusters can consider new transmission capacity before submitting interconnection requests,” the commission wrote.

The ISO must submit revisions to its compliance filing within 60 days.

PacifiCorp, PSCo Mostly Comply

FERC also largely approved the Order 2023 compliance filings of PacifiCorp (ER24-2017) and Xcel Energy subsidiary Public Service Company of Colorado (PSCo) (ER24-2030).

In both rulings, the commission said it assumed many of the deviations from Order 2023’s pro forma language it found in the filings were typographical or “minor errors” the utilities “inadvertently” included in their submissions, which the commission directed them to correct.

In the PacifiCorp ruling, FERC rejected the utility’s proposed proportional impact method for allocating network upgrade costs for short-circuit-related system network upgrades in its LGIP. PacifiCorp had proposed to allocate those costs within “cluster areas,” effectively comprising subgroups within cluster studies.

But the commission pointed out that Order 2023 explicitly states that the transmission provider cannot change how it allocates network upgrade costs even if it opts to study in subgroups. The provider must follow the requirement “to use a proportional impact method to allocate system network upgrade costs among all interconnection customers in the cluster regardless of subgroup.”

“In other words, a transmission provider’s proposed proportional impact method must allocate system network upgrade costs among all interconnection customers in the cluster, even when the transmission provider proposes to use subgroups in its cluster studies,” the commission wrote. “Here, PacifiCorp proposes to allocate proportionally the costs of short-circuit-related system network upgrades among the interconnection customers within a particular cluster area (i.e., a subgroup), rather than across the entire cluster.”

In the PSCo ruling, FERC rejected the utility’s proposal to require interconnection customers to submit a $7.5 million commercial readiness deposit, noting that it is 15 times the $500,000 maximum set out in the pro forma LGIP.

“We acknowledge that the commission accepted this amount as consistent with or superior to the Order No. 2003 pro forma LGIP; however, in the context of the reforms adopted in Order No. 2023, we find that PSCo has not demonstrated that this amount is consistent with or superior to the Order No. 2023 pro forma LGIP,” the commission wrote. “Order No. 2023 adopted a package of requirements to enter and proceed through the interconnection queue and reduce or eliminate the submission of speculative or non-viable projects that lead to delays in the interconnection process as they withdraw and create the need for restudies.”

“By significantly increasing the financial showing that an interconnection customer may make to proceed with its interconnection request, PSCo’s $7.5 million financial readiness deposit strikes a fundamentally different balance than Order No. 2023 prescribes. We are not persuaded, based on the current record before us, that PSCo’s deviation, even when coupled with additional non-financial readiness criteria, is consistent with or superior to Order No. 2023’s requirements,” the commission concluded.