FERC Implements Generator Interconnection Process Reforms: Compliance Filings Due December 2023

On September 6, 2023, the Federal Register published the Federal Energy Regulatory Commission’s (FERC) Order No. 2023, ‘Improvements to Generator Interconnection Procedures and Agreements,’ a 1,000+ page Final Rule adopting reforms to generator interconnection procedures and amending the pro forma Large Generator Interconnection Procedures (LGIP), the pro forma Large Generator Interconnection Agreement (LGIA), the Small Generator Interconnection Procedures (SGIP) and the Small Generator Interconnection Agreement (SGIA).[1] Responding to more than 4,500 pages of comments, FERC adopted most of its proposals from its June 16, 2022 Notice of Proposed Rulemaking (“NOPR”).[2] 

Order No. 2023 is FERC’s attempt to address widely reported backlogs in generation interconnection queues across the country and cost uncertainty related to necessary transmission system upgrades to accommodate new interconnections. FERC’s companion NOPR on transmission expansion and associated cost allocation is still pending.[3] 

The final will become effective on November 5, 2023. All FERC-jurisdictional transmission providers are required to make compliance filings within 90 days of such publication, or by December 5, 2023. Transmission Providers with reciprocity OATTs are also required to conform to the revised standards or else seek deviations to maintain their reciprocity safe harbor. To date, a group of RTOs (PJM Interconnection, L.L.C., Midcontinent Independent System Operator, Inc., and Southwest Power Pool, Inc.) have already submitted a request that the Commission extend the deadline until after it issues a substantive rehearing order on Order No. 2023. It is likely that other entities will seek requests for extension of the deadline, and FERC historically has entertained such requests.

The key reforms adopted in Order No. 2023 are:

Reforms to Implement a First-Ready, First-Served Cluster Study Process

• Transmission providers must transition from a serial, “first come, first served” study process to an annual “first ready, first served” cluster study process. Under a cluster study process, the transmission provider evaluates all interconnection requests submitted within a specified time window together, and all such requests are given the same queue priority.
• The final rule establishes uniform standards, including regarding the timing of deadlines within the study process, study deposit costs, cost allocation for study costs, demonstration of site control, commercial readiness deposits, and cost allocation for network upgrades.
• The final rule also establishes a standardized transition process for transmission providers that currently use serial studies.Transmission providers that have already moved to a cluster study will not have to go through an additional transition process, but will need to implement or seek deviations from the standardized rules in their compliance filings, to the extent their current accepted processes differ.

Reforms to Reduce the Number of Speculative Queue Requests

• Transmission providers are required to develop and maintain a “heat map” on their OASIS, and post certain information about interconnection capability, so that potential interconnection customers can better evaluate potential points of interconnection.
• Interconnection customers will be need to demonstrate a higher level of site control (90%) at the time of submitting their request, or a deposit in lieu of site control in limited situations.
• Interconnection customers will be required to submit “financial readiness deposits” that increase at each stage of the interconnection process. FERC did not adopt the NOPR’s proposed non-financial commercial readiness requirements. 
• Interconnection customers will be subject to withdrawal penalties that increase at each stage of the interconnection process. 

Reforms to Increase the Speed of Interconnection Queue Processing

• The final rule eliminates the long standing “reasonable efforts” standard for Transmission Providers completing studies. Instead, the new rule imposes firm deadlines for study completion and subjects transmission providers (and transmission owners) to financial penalties if they fail to meet those requirements.
• The final rule establishes a detailed and standardized “affected system” study process and pro forma agreements to implement that process.

Reforms to Incorporate Technological Advancements into the Interconnection Process

• Transmission providers must allow shared interconnection requests for co-located generating facilities.
• Transmission providers must consider generating facility additions to an existing interconnection request before automatically deeming it a material modification.
• The final rule adopts changes to the material modification process.
• The final rule adopts a process to use “surplus interconnection capacity” before a generating facility has reached commercial operation.
• The final rule adopts changes to more reliably interconnect inverter based resources (IBRs), including: 1) additional modeling information and 2) ability to provide “ride through” capability during disturbances.
• The final rule enumerates certain alternative technologies that transmission providers must evaluate in their cluster studies. Transmission providers will retain discretion on whether to use those technologies, and must describe their evaluation in their study reports. 

Going Forward

Order No. 2023 begins what will likely be years’ worth of compliance and transition processes for transmission providers and interconnection customers across the country. Numerous parties submitted requests for rehearing of the final rule by the August 28, 2023 deadline, and FERC’s forthcoming order on rehearing will likely be followed by appeals to a court of appeals.

While the Order No. 2023 reforms are intended to be uniform across transmission providers, individual transmission providers can propose deviations in their upcoming compliance filings. RTOs/ISOs will be subject to the regional entity variation standard, while transmission providers outside of RTOs/ISOs must meet the “consistent or superior to” standard. The complexity of compliance filings and transition processes will vary based on whether transmission providers have already adopted a cluster study process, how closely a transmission provider’s current process matches FERC’s new pro forma, and the degree to which transmission providers seek deviations.

While transmission providers will primarily implement any changes to their processes in their tariffs, transmission providers may also make changes to their business practice manuals to implement more technical implementation details.

Initial compliance filings will be due December 5, 2023, absent FERC granting an extension of time. FERC noted in the Final Rule that it was reasonable to shorten its originally proposed 180-day compliance period to 90 days based on prior practice and the 60 day compliance filing deadline for Order No. 2003. However, it is likely that Transmission Providers will seek requests to extend the deadline, and FERC has historically entertained such requests.[4]

Download this white paper for details and analysis of the final rule and implications for transmission providers.

The authors thank McGuireWoods case assistant Cameron Ruh for assistance preparing this legal alert. She is not licensed to practice law.

[1] Improvements to Generator Interconnection Procedures and Agreements, Order No. 2023, 184 FERC ¶ 61,054 (2023) (Order No. 2023).

[2] Improvements to Generator Interconnection Procedures and Agreements, Notice of Proposed Rulemaking, 179 FERC ¶ 61,194 (2022).

[3] Building the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, 179 FERC ¶ 61,028 at P 56 (2022).

[4] For example, FERC extended the deadline for Order No. 2003 by 90 days, for a total compliance period of 120 days. Similarly, the Commission extended the compliance deadline for Order No. 845 twice, resulting in a total compliance period of close to a year.