FERC on Tuesday approved PJM‘s proposal to speed up its interconnection queue by handling requests through a new clustered approach that prioritizes projects that are ready to build (ER22-2110).
Under the new paradigm, PJM will shift away from its current first-come, first-served methodology to instead study new service requests with a first-ready, first-served approach that clusters proposed projects together to determine network impacts and allocate network upgrade costs. Much of the backlog of submitted projects will be grouped into transitional cycles, which are expected to be completed in the fourth quarter of 2026.
PJM Vice President of Planning Kenneth Seiler said the RTO sees FERC’s Nov. 29 order as a win for interconnection customers, stakeholders and electric users by allowing projects to more quickly move through the queue and begin development. He credited the transparency and dialogue with stakeholders through the process of drafting the proposal with creating a solution that was accepted by the commission nearly unaltered.
“We’re very happy with how FERC has come forward with this,” Seiler said.
An Aug. 30 deficiency notice from the commission seeking more information from PJM did not affect the anticipated timeline for implementing the new transitional process, Seiler said, and staff will be discussing the next steps at the Dec. 6 Planning Committee meeting. (See FERC Issues Deficiency Letter on PJM Queue Overhaul.)
“I believe we’re well on track to move forward,” he said.
Signing off on Tuesday’s order were commissioners James Danly, Mark Christie, Willie Philips and Allison Clements, who wrote a concurrence. Only Chair Richard Glick did not participate in the order; FERC’s Division of Media Relations could not supply a reason for his non-participation.
The order also requires two compliance filings from PJM. The first, due within 30 days, calls for new tariff language codifying that only new service requests with no network upgrade costs and that do not require further studies can receive acceleration to a final interconnection-related agreement.
The second filing is due 60 days before PJM begins to study interconnection requests under its new rules, after the completion of the transitional studies.
PJM is also required to submit informational reports alongside its Order 845 filings during the transitional period, detailing its progress toward reducing the backlog. The reports are to include the number of studies completed, average completion time, the number remaining in each cycle queue and updated timelines on when the RTO expects to begin and complete each phase.
Approval Paves Way for New Rules and Transitional Process
PJM has argued that the queue changes were needed as the number of new service requests tripled from 2019 through 2022, with more than 2,700 active projects as of May 10. In a letter accompanying filing, the RTO said the current interconnection process doesn’t provide incentives for speculative projects to leave the queue in timely fashion. When such projects exit the queue late in the process, they trigger restudies impacting the cost allocation for other submissions further down the queue.
Shifting from a process of studying and allocating costs for each project individually, the new approach groups projects into clusters and conducts studies in three phases, with an increasing share of a readiness deposit required at each step equal to a portion of the network upgrade costs.
Deposits vary with the size of a project, ranging between $75,000 and $400,000. There will be “off-ramps” — or decision points — between each phase for developers who wish to discontinue their projects and partial refunds of the deposits.
Developers also are required to show evidence of site control, with escalating degrees required the further a project has progressed through the three phases. Currently, developers are only required to demonstrate site control once when submitting a project and only for the generator site.
For two queue cycles, projects that entered the queue between April 2018 and September 2021 will be studied under transitional rules, while projects valued under $5 million will be subject to a “fast track” process. PJM will begin to conduct studies under the new rules after completion of both the transitional cycles and the fast-track process.
Many protestors raised concerns about the potential for the fast track to allow less mature — and possibly speculative — projects to jump the queue over more mature, higher-cost projects. Protestors also complained that the $5 million threshold was arbitrary and that the readiness deposits are insufficient to weed out speculative submissions. (See Renewable Devs Criticize PJM Response to FERC on Queue Proposal.)
But FERC found that the interconnection rule changes strike a balance of allowing PJM to expedite its ballooning interconnection backlog, helping developers progress their projects toward construction, and letting mature projects continue under the current rules.
“PJM’s proposed transition mechanism is a reasonable means of implementing PJM’s queue reform proposal and reasonably balances the interests of completing the interconnection study processes for mature New Service Requests under PJM’s current rules with the need to move expeditiously to a first-ready, first-served clustered cycle approach in order to clear the significant backlog and begin full implementation of the New Rules,” the commission wrote in its order.
“We recognize that PJM’s proposed queue cycle cutoffs for use of the current rules and the Transition Period Rules will inevitably exclude certain interconnection customers, but, as the commission has pointed out in multiple queue reform proceedings, ‘any cutoff date inevitably will have that effect.’”
Operational Penalties Eliminated for Late Tx Service Request Studies
The approved proposal also removes tariff language outlining penalties for transmission studies that are not completed on time, which PJM argued is now unnecessary given that FERC Order 845 requires that failures to meet study deadlines be publicly reported to the commission.
Protestors contended that removing the language would contradict the commission’s interconnection notice of proposed rulemaking and said the provision would lengthen delays for firm transmission service customers. But FERC determined that removal of the tariff language meets the requirements of Order 890, as the penalties “would not necessarily target delays due to studying firm transmission service requests.”
Clements Concurs Reluctantly
Clements issued a concurring opinion in which she expressed reluctant support for approving PJM’s proposal, which she described as an imperfect solution to an interconnection queue that has “spiraled out of control.”
Clements was most concerned about the requirement that developers demonstrate 100% site control for interconnection facilities at the decision point at the end of the third study phase. She noted that commenters’ protests raised the possibility that viable projects could be removed from the interconnection queue, particularly should a generation-owning transmission owner direct a late-stage route change to force a project out of the queue.
“They argue that the site control requirement may prove to be too onerous in practice because gen-tie line sites may involve numerous small land parcels for which minor issues could come up, and because last minute changes in line routes may occur. PJM’s untested approach appears to be unique among RTOs,” she said.
Clements’ also expressed concerns about the elimination of penalties for transmission service request studies that do not meet their deadlines, a revision she said only complies with the commission’s Order 890 due to the “unique circumstances of PJM’s interconnection process.”
To create an interconnection process that meets the needs of customers, she said the approved proposal should be viewed as “one step upon which several others could conceivably be layered.” She encouraged PJM and other RTOs to consider implementing forward-looking study processes that would provide those applying for interconnection with a more information that is less prone to unpredictable changes based on changes to the queue.
“Further changes that hold potential to accelerate PJM’s interconnection queue include modifying the threshold at which network upgrades are triggered by the interconnection process, and adjustments to cost allocation for interconnection upgrades such that network upgrade costs are less likely to spur queue withdrawal,” she wrote.
