FERC didn’t completely buy into MISO’s package of stricter rules to lighten its gridlocked interconnection queue, rejecting the RTO’s proposed annual megawatt cap on project submittals.

The commission last week denied MISO’s proposal to use a formula to calculate an annual megawatt cap on the generation projects it will accept into its generator interconnection queue (ER24-340). MISO intended for the cap to help solve its project backlog and prevent annual surges of project entrants.

However, FERC signaled it might be open to a cap with different design elements. The commission said it couldn’t greenlight MISO’s cap because of concerns over a section of the cap’s formula, proposed exemptions to the cap and MISO’s lack of attention on resource adequacy when designing the cap.

“MISO has provided evidence that a cap in some form could be beneficial,” FERC said.

FERC OK’d other provisions on queue entry and exit that MISO submitted to reduce the size of its generator interconnection queue. In addition to its request to place an annual megawatt limit on project proposals, MISO proposed to double entrance and staged fees; institute automatic and escalating penalty charges; and require developers to confirm they’re able to obtain land for projects. (See MISO Relaxes Proposal on Stricter Queue Ruleset; MISO’s More Stringent Interconnection Queue Rules Go Before FERC.) FERC said the trio of new rules “will help improve the readiness and quality of interconnection requests” and can go into effect Jan. 22.

FERC said MISO demonstrated that its current queue requirements “are not stringent enough to deter interconnection customers from submitting speculative interconnection requests into the queue, nor strong enough to prompt unready projects to exit the queue at the earliest opportunity, as underscored by the volume of submitted interconnection requests and withdrawals that MISO has experienced in recent queue cycles.”

Though MISO proved it has a problem on its hands, FERC said the megawatt cap proposal is faulty because it allowed an unlimited number of exemptions to the cap.

MISO wanted to allow developers to exceed the cap when projects are intended for load-serving obligations, have a power purchase agreement, are an approved generator replacement facility or are requesting to convert their unguaranteed level of interconnection service to firm service.

“Although MISO’s initial proposed formula includes a 5% margin to account for exemptions (which would have the effect of decreasing the cap value to be established), MISO proposes no limit on the exemptions that may enter a queue cycle beyond the established cap,” FERC explained.

FERC said it was concerned the exemptions on certain projects could create “priority access” to MISO’s queue and violate the commission’s open access requirements for generator interconnections.

FERC also said the formula MISO planned to use to calculate the cap for each of its study regions annually was a headscratcher. It said MISO’s formula inexplicably called for calculating load remaining to be served after existing generation and higher-queued generation proposals are dispatched at the lowest possible megawatt output while remaining online. FERC said the minimum output levels don’t mimic actual or expected system conditions, and it’s unclear why MISO would use them in its cap formula.

MISO intended the megawatt cap formula to be based on its ability to develop a reasonable dispatch for studying interconnection requests based on the existing system and considering regional and subregional peak loads.

Finally, FERC said MISO needed to factor its own future resource adequacy needs into the cap’s design, especially with capacity shortfalls on the horizon.

FERC said it agreed with National Grid and Steelhead that a cap must strike a “balance between limiting the volume of requests to a level that can be processed efficiently and avoiding unnecessary barriers to entry that will delay the development of the generation capacity needed to meet growing supply shortages within the MISO region.”

The megawatt cap proved the most unpopular aspect of MISO’s plan among stakeholders who commented on the FERC filing. (See MISO Champions Queue Crackdown as Stakeholders Blast MW Cap on Project Entries.)

However, Commissioner Mark Christie said he supported the controversial cap in a partial dissent to the order.

“Faced with a tsunami of interconnection requests from generation developers — many speculative, and which will never be built — MISO seeks to ameliorate its interconnection studies process in the near term with a cap on applications,” Christie wrote. “A cap is admittedly a blunt instrument, but it is also a logical one if the goal is to enable MISO to focus its undeniably limited resources to maintain an orderly and efficient interconnection process.”

Christie said FERC’s concern that the exemption provision would be so heavily used that it would dilute the cap was pure speculation. He also said cap exemptions for generation projects necessary to serve load are appropriate because they keep resource adequacy decisions in the hands of states.