Editor’s note: This is the second installment of a three-part series on the FERC interconnection NOPR. Check out the first article in the series, “Breaking down the FERC interconnection NOPR.” Part 3 will examine proposed reforms to interconnection queue processing.
The FERC interconnection noPR has three parts. The first part of the FERC interconnection NOPR outlines reforms that would allow for the implementation of the first-ready, last-served cluster study process. Next, FERC proposed reforms in order to speed up interconnection queue processing, acknowledging the delays that can be caused by affected systems studies. This article will discuss this component of the NOPR.
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The queue can be shortened
FERC emphasized withdrawal penalties for interconnection customers in order to reduce backlogs in interconnection NOPR. The second piece focuses upon holding transmission providers responsible by imposing fines if they delay interconnection study.
It remains to be seen if the transmission providers will be supportive of this proposal since there haven’t been any financial penalties on transmission providers, even if studies are delayed beyond their stated deadlines.
If all MISO DPP studies for the 2021 cycle are delayed 150 days, then MISO will end up paying $31,000,000!
1. Eliminating the Standard for Reasonable Efforts
FERC realized that it was unable to find transmission providers at fault even though interconnection studies are routinely delayed due to the phrase “reasonable efforts,” which are defined in FERC Order 2003 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.” FERC is proposing to remove the phrase “reasonable efforts” from the Large Generator Interconnection Procedures (LGIP).
FERC proposes that transmission providers who fail to complete a cluster, restudy, facilities or affected system study within the stipulated deadline in the LGIP be subject to a $500 penalty per day if the study is late. This applies even after a 10-day grace period.
However, $500 per day is not enough for transmission providers to be incentivised because delays in studies can cause financial hardship for interconnection customers.
FERC is seeking comment on the $500 per day fine and asking for additional comments on whether agency staff should issue periodic reports summarizing the status of transmission providers’ queues and timeliness of interconnection studies based on information collected through existing reporting requirements.
Background: Interconnection queues facing renewable energy projects are ‘growing dramatically’: LBNL study
2. Systems affected studies
Both MISO, SPP use the first ready, first served cluster study process. They have large queue volumes, delayed studies, and partly because of affected systems studies.
FERC said: “Affected systems studies are used to study the impact of proposed interconnection requests on neighboring transmission systems.” Even though the transmission providers are currently obligated to conduct affected systems studies, FERC recognized that it has not provided guidance so far on this topic.
3. A study process
Currently, affected system studies are not included within the LGIP. FERC proposes to change that in this NOPR. Second, FERC suggested that the transmission provider notify affected system operators within 10 business days of an event causing system impact.
FERC defines this “event” as anyone of the following: (1) the cluster request window, (2) the customer engagement window, (3) the cluster study, or (4) the cluster restudy as part of the first-ready, first-served cluster study process.
FERC proposes revised definitions for affected systems study components in the LGIP. For instance, an “Affected System Interconnection Customer” is an interconnection customer whose proposed interconnection with the host transmission system impacts the transmission provider.
Transmission providers are responsible for scheduling an affected systems scoping meeting within seven days of receiving written notification that they intend to conduct an affected-system study. They also have to provide monthly informational data reports and tender an affected-system study agreement to the affected interconnection customer within five days of sharing the schedule.
The affected system interconnection customer must promptly return the signed affected system study agreement within ten business days of receipt. FERC considered cases where both the affected system interconnection customer and interconnection customers could have an effect on affected network upgrades. So, FERC proposed that the transmission provider acting as the affected system assign the affected system interconnection customer a queue position based on when the affected customer executes an affected system study, rather than when the affected system interconnection customer entered its host transmission provider’s queue.
Transmission providers acting as affected systems must provide affected system interconnection customers with affected system study results within 90 days of receiving the executed affected-system study agreement. The transmission provider is subject to a $500 daily penalty.
4. Study agreement for the Pro forma affected system
FERC acknowledged that the current affected system studies are too complicated for the interconnection customer. FERC proposes to improve the efficiency and transparency in the interactions between the affected system operator and the interconnection customer.
FERC proposes technical details as part the affected system study agreement scope. It is seeking comments on whether these technical details are adequate for the affected interconnection customer.
5. Construction agreement for pro forma affected systems facilities
FERC proposes a Facilities Construction Agreement to be used for affected systems in addition to the Study Agreement. This agreement will be between the affected system interconnection customer and the transmission provider. This agreement requires that the transmission provider design, procure and construct all network upgrades. And the interconnection customer’s responsibility is initially to fund the cost of any assigned network upgrades and be reimbursed by the transmission provider acting as the affected system.
FERC is asking for comments on the interconnection customers payment and repayment provisions. Transmission providers are required to repay affected system customers the full cost of network upgrades plus interest in a term mutually agreed upon but not exceeding twenty years. That repayment is needed because affected system interconnection customers do not take transmission service over the affected system’s transmission system. The facilities construction agreement will end after repayment.
6. Modeling of the affected system and assumptions for study
FERC also specified how transmission providers should conduct affected system studies. It recognized that mandating a modeling standards for non-firm Energy Resource Interconnection Service is better than firm Network Resource Interconnection Service.
Based on MISO’s experience, FERC recognized that an ERIS study would ensure that a renewable project can deliver its electric output using the existing firm or non-firm capacity of the affected system transmission provider’s system on an as-available basis.
FERC allows transmission providers to conduct more rigorous NRIS modelling, but they must file a Section 205 form under the Federal Power Act (FPA). FERC stated that it would review these Section 205 filings individually. The transmission provider must provide justification for violations of the NERC Reliability Standard, an operational concern like over-duty breakers, fault current violation, impacts on transmission stability or increased loop flows, as well as any other critical reliability parameters.
FERC is seeking comment on the ERIS versus NRIS modelling standard for the affected system studies.
7. The context for optional resource request study
FERC adopted best practices from SPP (MiSO) and SPP in first ready, first served cluster studies. It also proposed changes in LGIP in Part A. It also tried to learn from delays in Affected System studies from both those regions in part B. FERC applied best practices from Colorado’s Public Service Company (PSCo) to this optional resource solicitation proposal.
Initially, it is unclear what problem FERC is trying to solve with this state’s and state agencies-led resource solicitation study process and its role in the LGIP. But as FERC said, it received comments from offshore wind developers such as Ørsted North America Offshore, Exelon, RWE Renewables Americas, and Clean Energy Associations addressing the relationship between state electric resource procurement mandates and the generator interconnection process. This is the problem FERC aims to solve in the NOPR with its resource solicitation study.
FERC also realized that to compete successfully in the state procurement solicitations (for achieving New Jersey’s offshore wind mandate as an example) and procuring transmission service – interconnection customers are entering multiple interconnection requests in the PJM queue. And those multiple requests lead to backlogs, affecting the state’s renewable policy goals and mandates. FERC stated that Eversource Energy and PJM are concerned that large projects financed by state procurement might be pulled from the queue. This could lead to restudies. FERC proposes a cluster-based approach to state procurement solicitations in order to align state objectives and generator interconnection reforms.
8. Resource planning
FERC defined a “resource planning entity” as any entity required to develop a Resource Plan or conduct a Resource Solicitation Process, including a relevant state entity or load-serving entity. Under FERC’s proposal, the resource planning entity will play a facilitator role in grouping interconnection requests for the transmission provider’s cluster study, but this entity will not be given a queue number.
FERC’s proposal clarifies that the resource planning entity is not requesting Interconnection Service, establishing a separate Interconnection Queue or Position, or reserving Interconnection Capacity or Transmission Capacity.
This proposal contains safeguards that FERC has put in place. Only resource planning entities whose solicitation process or resource plan uses competitive procurement techniques, or is substantively reviewed, approved, or managed directly by a relevant state agency, could be eligible to request that a transmission provider start an optional resource solicitation. FERC built this safeguard to ensure interconnection studies are not unfairly used to favor the resource planning entity’s own economic self-interests.
The state agencies and offshore wind developers who commented earlier in the ANOPR must provide feedback on whether FERC’s proposal meets their needs and addresses their concerns in resource solicitation and generator interconnection misalignment. Transmission providers serving multiple state are also invited to comment on their ability to meet the proposed resource solicitation requirements.