Clean energy groups were unsuccessful with FERC in their challenge of automatic withdrawal penalties in MISO’s interconnection queue.
The commission decided April 25 that MISO is clear to continue use of an automatic and escalating penalty structure despite a joint rehearing request from the American Clean Power Association, the American Council on Renewable Energy, the Solar Energy Industries Association and Clean Grid Alliance (ER24-340).
“Commission precedent and the record in this proceeding demonstrate that interconnection withdrawals create a generalized harm in MISO that more than inconveniences remaining interconnection customers in MISO’s interconnection queue,” FERC wrote to justify MISO’s penalty setup.
Under the penalty schedule, MISO can keep 10% of a developer’s per-megawatt milestone fees at the queue’s first decision point, 35% by the second decision point, 75% by the time their project reaches the third and final phase of the queue and, finally, 100% if they drop out during the negotiation stage of the generator interconnection agreement.
The penalty fees were imposed early this year as part of a package of rules meant to downsize MISO’s interconnection queue and discourage speculative projects. This week, MISO announced it received 123 GW of project proposals under its 2023 queue cycle, less than the 171 GW it fielded in 2022. (See MISO Reports 123-GW Roster for 2023 Interconnection Queue Cycle.)
The clean energy groups had argued the penalties would have a chilling effect on generation entering the MISO queue because the fees would rack up before developers receive meaningful study results from the RTO on the feasibility of their projects. They argued FERC treaded on its own philosophy that penalties shouldn’t discourage interconnection customers from lining up projects or withdrawing them in an orderly fashion. (See Clean Energy Groups Seek FERC Re-evaluation of Automatic Penalties in MISO Queue.)
However, FERC said the penalties will persuade developers to withdraw nonviable projects “before MISO has expended significant resources studying such requests.” It also said its precedent doesn’t necessarily prohibit automatic fines.
“We find that neither the establishment of an automatic withdrawal penalty nor the amount of the penalty creates a barrier to enter MISO’s interconnection queue; rather, such a penalty reinforces an existing consequence of withdrawing an interconnection request,” FERC said. “While it is true that [penalties] may discourage the submission of speculative interconnection requests or encourage earlier withdrawals to avoid higher penalties, those outcomes are not unreasonable barriers to entering the interconnection queue.”
FERC also agreed with MISO that automatic forfeitures will serve as an “appropriate mechanism to disincentivize speculative interconnection requests from entering the queue.”
