New England transmission owners no longer can require interconnection customers to pay operations and maintenance (O&M) costs for required system upgrades, FERC ruled Dec. 19 (EL23-16-00). The ruling could help reduce costs associated with interconnection in the region, potentially shifting some O&M expenses into transmission rates.  

The decision responds to a 2022 complaint by trade organization RENEW Northeast, which was supported by major clean energy associations including the New England Power Generators Association and Advanced Energy United. 

RENEW argued that the O&M requirement “can be a substantial burden on interconnection customers and can cause an unfair shifting of O&M costs from transmission customers to interconnection customers,” discouraging new development.   

The association noted that New England is the only region in the country that requires interconnection customers to pay the O&M costs associated with interconnection upgrades.  

“Because the O&M costs can be assessed for the 20- to 30-year duration of the [large generator interconnection agreement], the interconnection customer could pay O&M costs that exceed the capital costs of the network upgrades themselves,” RENEW wrote.  

ISO-NE declined to take a position on the merits of RENEW’s complaint, writing that it has no financial interest in the matter. It asked to be dismissed as a party to the proceeding, arguing that the disputed parts of the RTO’s Open Access Transmission Tariff “are within the exclusive right” of the region’s transmission owners. 

FERC denied the RTO’s request, writing that “retaining ISO-NE as a party to this proceeding will ensure that all parties required to make tariff changes pursuant to this order are parties to this proceeding.” 

Meanwhile, the New England Participating Transmission Owners (PTOs), the New England States Committee on Electricity (NESCOE), the Massachusetts Attorney General’s Office and a group of consumer-owned utilities argued that RENEW did not meet the burden of proof to show that the O&M requirement is unjust.  

“RENEW seeks to replace long-settled rules that put development risks and costs on interconnection customers with a one-sided bargain that shifts 100% of those costs to consumers,” NESCOE wrote. 

The transmission owners argued that “the current allocation of interconnection costs … is the result of a grand compromise of many interrelated rights and obligations among generation owners, transmission owners, public power and end-use customers that was determined to be just and reasonable by the commission and should not be casually tossed aside by modification of a single component.” 

FERC sided with RENEW, directing ISO-NE and the region’s transmission owners to submit a compliance filing within 60 days “removing from the tariff any language that provides for the assignment of network upgrade O&M costs to interconnection customers.” 

FERC noted that Order 2003 allows transmission providers to assign “but for” costs — which FERC defines as costs that would not exist without the interconnecting project — to interconnection customers. However, FERC determined the O&M requirements are not covered by this provision. 

“RENEW has provided substantial evidence that the network upgrade O&M costs that are being assigned to interconnection customers … do not reflect the actual but for network upgrade O&M costs that each interconnection customer’s interconnection request causes to be incurred,” FERC wrote. 

FERC also accepted RENEW’s request to require the transmission owners to widen the definition of an “interested party” within the transmission formula rate protocols. RENEW and similar trade groups are not included in the existing definition of an interested party. 

FERC wrote that the current definition “limits interested parties to a specific enumerated group and does not provide for sufficiently broad participation.” 

RENEW applauded FERC’s order, writing in a statement that the ruling “will eliminate the risks and uncertainties for interconnecting power generators that increase costs to consumers for energy and potentially delay the transition to a cleaner energy grid.” 

Joe LaRusso, manager of the Clean Grid Program at the Acadia Center, wrote on social media that “FERC has broomed away a significant obstacle to interconnection that was unique to New England.” 

A representative of ISO-NE said the RTO is assessing the order to determine its next steps.