FERC’s long-awaited revamp of its generator interconnection procedures will make it more costly for developers to enter and leave queues and impose penalties on transmission providers that fail to complete studies on time.

Order 2023 (RM22-14) sets a 150-calendar day deadline for completing stability analyses, power flow analyses and short circuit analyses required to study complex clusters involving numerous interconnection requests.

FERC said the 150-day deadline gives transmission providers “sufficient time to perform these technical cluster studies while providing certainty about the timeline for the interconnection process.”

The commission cited reports filed by transmission providers that showed of the 2,179 interconnection studies completed in 2022, 68% were issued late and another 2,544 studies were still ongoing and past their deadlines as of the end of the year. All RTOs/ISOs except CAISO and 14 non-RTO/ISO transmission providers reported delayed studies for the year.

About 80% of transmission providers reported delayed studies in at least one of the past three years (2020-2022) and 57% had delayed studies in at least two, FERC said. The National Association of Regulatory Utility Commissioners complained to FERC that “nearly all transmission providers across the country, including many transmission providers that have implemented queue reforms, regularly fail to meet interconnection study deadlines.”

‘Reasonable Efforts’ Standard

Previously, the pro forma large generator interconnection procedures held transmission providers to a “reasonable efforts” standard for completing studies, defined 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.”

Transmission providers argued that many of the delays resulted from situations outside of their control, including large numbers of speculative interconnection requests, a shortage of qualified engineers, delayed data from interconnection customers and cascading restudies caused by withdrawals. MISO said most of its delays resulted from the need to wait for affected systems studies.

Some commenters warned that firm deadlines might lead transmission providers to prioritize speed over accuracy and the identification of the most efficient solutions. National Grid said it could result in later corrections to engineering requirements and cost estimates, causing more late-stage queue withdrawals.

The Edison Electric Institute and Eversource Energy complained that FERC’s Notice of Proposed Rulemaking (NOPR) failed to make the case for why reliance on good utility practice remains sufficient in other situations, but not for interconnection studies. New York’s Transmission Owners and Eversource said FERC should postpone penalties until it has allowed the other process changes to take effect.

But public interest and clean energy groups said the transmission providers were ignoring potential solutions, such as policy and process improvements and increasing spending on staff. Advanced Energy United (formerly Advanced Energy Economy) said accepting high interconnection queue volumes as a legitimate cause for delays would provide providers “a permanent free pass” to miss deadlines.

Losing Patience

FERC demonstrated little patience for the providers’ excuses.

“The reasonable efforts standard worsens current-day challenges, as it fails to ensure that transmission providers are keeping pace with the changing and complex dynamics of today’s interconnection queues,” the commission said. “Contrary to the assertions of some commenters, we believe that there are steps within transmission providers’ control, from deploying transmission providers’ resources to exploring administrative efficiencies and innovative study approaches, to better ensure timely processing of interconnection studies to remedy existing deficiencies.”

It noted that the order seeks to reduce speculative interconnection requests with stricter requirements for entering and remaining in the queue (site control requirements, commercial readiness deposits and withdrawal penalties) and also seeks to improve efficiency by switching to the first-ready, first-served cluster study process from the serial, first-come, first-served process.

The penalties, FERC said, “ensure that transmission providers are doing their part as well.”

Penalties

The NOPR proposed a penalty of $500 per business day that the study is late, but the commission said it was persuaded that was too low, noting that a study delayed by six months (126 business days) would result in a penalty of only $63,000. “We view such a penalty as insufficient considering that the purpose of the penalty is to incentivize timely study completion that may be achieved, for example, by hiring additional personnel or investing in new software,” FERC said.

Instead, it imposed per-day penalties of:

• • $1,000 for delays of cluster studies;
  • $2,000 for delays of cluster restudies;
  • $2,000 for delays of affected system studies, and
  • $2,500 for delays of facilities studies.

Penalties will be distributed to interconnection customers on a pro rata per interconnection request basis to offset their study costs.

As a concession to the transmission providers, FERC said it will not impose penalties until the third cluster study cycle (including any transitional cluster study cycle) after the effective date of the transmission provider’s compliance filing.

The commission also will waive penalties for studies submitted within a 10-business-day grace period and will allow a deadline extension of 30 business days by mutual agreement of the transmission provider and all affected interconnection customers. Penalties will be capped at 100% of the initial study deposits.

FERC rejected the NOPR’s proposed force majeure penalty exception, instead saying that transmission providers will be permitted to appeal penalties to the commission.

“Transmission providers may explain in any appeal to the commission any circumstances that caused the delay, including any events that qualify as force majeure, and the commission will consider such circumstances as part of its evaluation of whether good cause exists to grant relief,” FERC said.

RTOs and ISOs will be allowed to submit a Federal Power Act Section 205 filing to recover penalties from at-fault transmission providers.

“Non-RTO/ISO transmission providers and transmission-owning members of RTOs/ISOs may not recover study delay penalties through transmission rates,” FERC said. “… Because the at-fault transmission provider’s shareholders will pay the penalty, this prohibition addresses commenters’ concerns that study delay penalty costs will ultimately be borne by customers and ratepayers through increased transmission costs.”

Transmission providers will be required to make quarterly postings making public the penalties incurred from the previous quarter.

Other Studies Rejected

The commission rejected NOPR proposals for optional resource solicitation studies or optional informational interconnection studies and adopted a modified proposal to require evaluation of certain advanced transmission technologies. The commission said those changes “should reduce the burden on transmission providers as compared to that under the NOPR.”

The NOPR sought comment on whether state agencies required to develop a resource plan or conduct a resource solicitation process should be defined as a resource planning entity and be able to request initiation of an optional resource solicitation study.

But the commission concluded there was “insufficient evidence” to justify the optional resource solicitation study as a “generic solution” across all regions for coordinating state-level resource planning with the interconnection process, noting that many transmission providers do not have load-serving entities that conduct resource solicitations.

“We are also concerned that the particular ‘one size fits all’ approach proposed in the NOPR would create uncertainty regarding the cost and timing of interconnecting to the transmission system, because the proposed study would not result in useful network upgrade cost estimates.”

It said it agreed the proposal “would divert transmission provider resources and potentially lead to delays.”