[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]
[Proposed Rules]
[Pages 4464-4501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30972]



[[Page 4463]]

Vol. 82

Friday,

No. 9

January 13, 2017

Part II





Department of Energy





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Federal Energy Regulatory Commission





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18 CFR Parts 35 and 37





Reform of Generator Interconnection Procedures and Agreements; Proposed 
Rule

Federal Register / Vol. 82, No. 9 / Friday, January 13, 2017 / 
Proposed Rules

[[Page 4464]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 35 and 37

[Docket No. RM17-8-000]


Reform of Generator Interconnection Procedures and Agreements

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing to revise its regulations and the pro forma Large Generator 
Interconnection Procedures and pro forma Large Generator 
Interconnection Agreement. The Commission proposes reforms designed to 
improve certainty, promote more informed interconnection, and enhance 
interconnection processes. The proposed reforms are intended to ensure 
that the generator interconnection process is just and reasonable and 
not unduly discriminatory or preferential.

DATES: Comments are due March 14, 2017.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures section of this document.

FOR FURTHER INFORMATION CONTACT: 
Tony Dobbins (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory Commission, 888 First Street NE., 
Washington, DC 20426, (202) 502-6630, [email protected].
Adam Pan (Legal Information), Office of the General Counsel, Federal 
Energy Regulatory Commission, 888 First Street NE.,Washington, DC 
20426, (202) 502-6023, [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

 
                                                           Paragraph No.
 
I. Introduction.........................................               1
II. Background..........................................              12
    A. Order No. 2003...................................              12
    B. 2008 Order on Interconnection Queueing Practices.              16
    C. 2015 American Wind Energy Association Petition...              19
    D. 2016 Technical Conference........................              22
III. Need for Reform of the Interconnection Process.....              24
IV. Proposed Reforms....................................              32
    A. Improving Certainty for Interconnection Customers              37
        1. Scheduled Periodic Restudies.................              38
        2. The Interconnection Customer's Option to                   52
         Build..........................................
        3. Self-Funding by the Transmission Owner.......              64
        4. RTO/ISO Dispute Resolution...................              78
        5. Capping Costs for Network Upgrades...........              88
    B. Promoting More Informed Interconnection..........              96
        1. Identification and Definition of Contingent                97
         Facilities.....................................
        2. Transparency Regarding Study Models and                   109
         Assumptions....................................
        3. Congestion and Curtailment Information.......             122
        4. Definition of Generating Facility in the Pro              134
         Forma LGIP and LGIA............................
        5. Interconnection Study Deadlines..............             140
        6. Improving Coordination with Affected Systems.             152
    C. Enhancing Interconnection Processes..............             160
        1. Requesting Interconnection Service Below                  161
         Generating Facility Capacity...................
        2. Provisional Interconnection Service..........             181
        3. Utilization of Surplus Interconnection                    191
         Service........................................
        4. Material Modification and Incorporation of                212
         Advanced Technologies..........................
        5. Modeling of Electric Storage Resources for                224
         Interconnection Studies........................
V. Proposed Compliance Procedures.......................             231
VI. Information Collection Statement....................             235
VII. Regulatory Flexibility Act.........................             239
VIII. Environmental Analysis............................             242
IX. Comment Procedures..................................             243
X. Document Availability................................             247
 
                  NOT PUBLISHED IN THE FEDERAL REGISTER
Appendix A: List of Short Names of Commenters on the AWEA Petition
 (Docket No. RM 15-21-000) and the 2016 Technical Conference (Docket No.
 RM16-12-000)
Appendix B: Compilation of proposed changes to the pro forma LGIP
Appendix C: Compilation of proposed changes to the pro forma LGIA
 


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I. Introduction

    1. In this Notice of Proposed Rulemaking (Proposed Rule), the 
Commission is proposing to revise its regulations and the pro forma 
Large Generator Interconnection Procedures (LGIP) and pro forma Large 
Generator Interconnection Agreement (LGIA).\1\ The Commission proposes 
reforms designed to improve certainty, promote more informed 
interconnection, and enhance interconnection processes. The proposed 
reforms are intended to ensure that the generator interconnection 
process is just and reasonable and not unduly discriminatory or 
preferential.\2\
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    \1\ Standardization of Generator Interconnection Agreements and 
Procedures, Order No. 2003, FERC Stats. & Regs. ] 31,146 (2003) 
(Order No. 2003), order on reh'g, Order No. 2003-A, FERC Stats. & 
Regs. ] 31,160 (Order No. 2003-A), order on reh'g, Order No. 2003-B, 
FERC Stats. & Regs. ] 31,171 (2004) (Order No. 2003-B), order on 
reh'g, Order No. 2003-C, FERC Stats. & Regs. ] 31,190 (2005) (Order 
No. 2003-C), aff'd sub nom. Nat'l Ass'n of Regulatory Util. Comm'rs 
v. FERC, 475 F.3d 1277 (D.C. Cir. 2007), cert. denied, 552 U.S. 1230 
(2008).
    \2\ In this proceeding, the Commission refers to comments and 
filings in Docket Nos. RM15-21-000 and RM16-12-000. A list of 
commenters in those proceedings and the abbreviated names used in 
this Proposed Rule appears in Appendix A. Any comments to this 
Proposed Rule should be filed in this proceeding, Docket No. RM17-8-
000.
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    2. The pro forma LGIP and LGIA establish the terms and conditions 
under which public utilities \3\ must provide interconnection service 
to Large Generating Facilities.\4\ While Order No. 2003 was a 
significant step to reduce undue discrimination in the generator 
interconnection process, interconnection customers have continued to 
express concerns with systemic inefficiencies and discriminatory 
practices that affect them.\5\ In addition, there have been a number of 
developments that impact generator interconnection, including the 
changing resource mix, the emergence of new technologies, and state and 
federal policies that have impacted the resource mix. At the same time, 
transmission providers have expressed concern that the interconnection 
study process can be difficult to manage because some interconnection 
customers submit requests for interconnection service associated with 
new generating facilities that have little chance of reaching 
commercial operation. Upon consideration of these issues, the 
Commission finds that it is appropriate to propose reforms to the 
interconnection processes.
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    \3\ A public utility is a utility that owns, controls, or 
operates facilities used for transmitting electric energy in 
interstate commerce, as defined by the Federal Power Act (FPA). See 
16 U.S.C. 824(e) (2012). A non-public utility that seeks voluntary 
compliance with the reciprocity condition of an Open Access 
Transmission Tariff (OATT) may satisfy that condition by filing an 
OATT, which includes the pro forma LGIP and the pro forma LGIA. See 
Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 773.
    \4\ A large generating facility is ``a Generating Facility 
having a Generating Facility Capacity of more than 20 MW.'' Pro 
forma LGIA Art. 1.
    \5\ See, e.g., AWEA June 19, 2015 Petition at 2 (Petition).
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    3. In 2015, the American Wind Energy Association (AWEA) filed a 
Petition for Rulemaking (Petition) requesting changes to the 
Commission's interconnection rules and procedures.\6\ The Commission 
sought and received comments on the Petition. In May 2016, a technical 
conference was convened to further explore these issues (2016 Technical 
Conference). Comments were requested and received both prior to the 
technical conference and after the technical conference.
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    \6\ American Wind Energy Association, Petition for Rulemaking to 
Revise Generator Interconnection Rules and Procedures, Docket No. 
RM15-21-000 (filed June 19, 2015).
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    4. Based, in part, on that input, the Commission has identified 
proposed reforms that could remedy potential shortcomings in the 
existing interconnection processes. The Commission believes the 
proposed reforms will benefit interconnection customers through more 
timely and cost-effective interconnection and will benefit transmission 
providers by mitigating the potential for serial re-studies associated 
with late-stage interconnection request withdrawals. Specifically, the 
Commission believes that the provision of more timely and accurate 
information could increase certainty for interconnection customers and 
assist them in earlier evaluation and quicker development, as well as 
assist in earlier, less disruptive withdrawals from the interconnection 
queue. The Commission also believes that more thorough and transparent 
information presented for the interconnection customer could enable 
more informed decisions earlier in the interconnection process, which 
could reduce late-stage interconnection request withdrawals and result 
in fewer restudies and delays. More timely and accurate information 
regarding an interconnection request, as well as greater transparency, 
will also reduce the incentive for interconnection customers to submit 
multiple interconnection requests when they only intend to see one to 
commercial operation. The Commission has also identified a set of 
reforms that enhance the interconnection process by, for example, 
addressing interconnection issues experienced most acutely by new 
technologies. The Commission believes there are ways to allow 
flexibility in the interconnection process to accommodate innovation.
    5. Specifically, the Commission preliminarily finds that certain 
interconnection practices may not be just and reasonable and may be 
unduly discriminatory or preferential and proposes several potential 
reforms. The Commission is proposing fourteen reforms that focus on 
improving aspects of the pro forma LGIP and LGIA, the pro forma Open 
Access Transmission Tariff, and the Commission's regulations. The 
proposed reforms fall into three broad categories and are intended to: 
(1) Improve certainty in the interconnection process; (2) improve 
transparency by providing more information to interconnection 
customers; and (3) enhance interconnection processes.
    6. First, the Commission proposes four reforms to improve certainty 
by affording interconnection customers more predictability in the 
interconnection process. To accomplish this goal, the Commission 
proposes to: (1) Revise the pro forma LGIP to require transmission 
providers that conduct cluster studies to move toward a scheduled, 
periodic restudy process; (2) remove from the pro forma LGIA the 
limitation that interconnection customers may only exercise the option 
to build transmission provider's interconnection facilities and stand 
alone network upgrades if the transmission owner cannot meet the dates 
proposed by the interconnection customer; (3) modify the pro forma LGIA 
to require mutual agreement between the transmission owner and 
interconnection customer for the transmission owner to opt to initially 
self-fund the costs of the construction of network upgrades; and (4) 
require that the Regional Transmission Organizations (RTO) and 
Independent System Operators (ISO) establish dispute resolution 
procedures for interconnection disputes. The Commission also seeks 
comment on the extent to which a cap on the network upgrade costs for 
which interconnection customers are responsible can mitigate the 
potential for serial restudies without inappropriately shifting cost 
responsibility.
    7. Second, the Commission proposes five reforms to improve 
transparency by providing improved information for the benefit of all 
participants in the interconnection process. These reforms would 
provide a fuller picture of the considerations involved in 
interconnecting a new large generating facility. The Commission 
proposes to: (1) Require transmission providers to outline and make 
public a method for

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determining contingent facilities in their LGIPs and LGIAs based upon 
guiding principles in the Proposed Rule; (2) require transmission 
providers to list in their LGIPs and on their Open Access Same-Time 
Information System (OASIS) sites the specific study processes and 
assumptions for forming the networking models used for interconnection 
studies; (3) require congestion and curtailment information to be 
posted in one location on each transmission provider's OASIS site; (4) 
revise the definition of ``Generating Facility'' in the pro forma LGIP 
and LGIA to explicitly include electric storage resources; and (5) 
create a system of reporting requirements for aggregate interconnection 
study performance. The Commission also seeks comment on proposals or 
additional steps that the Commission could take to improve the 
resolution of issues that arise when affected systems are impacted by a 
proposed interconnection.
    8. Third, the Commission proposes five reforms to enhance 
interconnection processes by making use of underutilized existing 
interconnections, providing interconnection service earlier, or 
accommodating changes in the development process. In this area, the 
Commission proposes to: (1) Allow interconnection customers to limit 
their requested level of interconnection service below their generating 
facility capacity; (2) require transmission providers to allow for 
provisional agreements so that interconnection customers can operate on 
a limited basis prior to completion of the full interconnection 
process; (3) require transmission providers to create a process for 
interconnection customers to utilize surplus interconnection service at 
existing interconnection points; (4) require transmission providers to 
set forth a separate procedure to allow transmission providers to 
assess and, if necessary, study an interconnection customer's 
technology changes (e.g., incorporation of a newer turbine model) 
without a change to the interconnection customer's queue position; and 
(5) require transmission providers to evaluate their methods for 
modeling electric storage resources for interconnection studies and 
report to the Commission why and how their existing practices are or 
are not sufficient.
    9. The Commission seeks comments on these proposed reforms and 
areas for further comment within 60 days after publication of this 
Proposed Rule in the Federal Register.
    10. The purpose of these proposals is to ensure that the processing 
of generator interconnection requests will be just and reasonable and 
not unduly discriminatory or preferential consistent with Federal Power 
Act (FPA) sections 205 and 206. These proposed reforms could help 
improve the efficiency of processing interconnection requests for both 
transmission providers and interconnection customers, maintain 
reliability, increase energy supply, balance the needs of 
interconnection customers and transmission owners and remove barriers 
to needed resource development.\7\
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    \7\ 16 U.S.C. 824d and 824e (2012).
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    11. Unless otherwise noted, the proposed reforms described below 
would result in changes to the pro forma LGIP and pro forma LGIA and 
regulations that affect transmission provider LGIPs and LGIAs. The 
Commission also seeks comment, however, on whether any of these 
proposed reforms should be applied to small generating facilities and 
implemented in the pro forma Small Generator Interconnection Procedures 
(SGIP) and Small Generator Interconnection Agreement (SGIA).\8\
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    \8\ The Commission adopted these documents in Order No. 2006. 
Standardization of Small Generator Interconnection Agreements and 
Procedures, Order No. 2006, FERC Stats. & Regs. ] 31,180, order on 
reh'g, Order No. 2006-A, FERC Stats. & Regs. ] 31,196 (2005), order 
granting clarification, Order No. 2006-B, FERC Stats. & Regs. ] 
31,221 (2006).
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II. Background

A. Order No. 2003

    12. In 1996, the Commission issued Order No. 888,\9\ which 
``established the foundation necessary to develop competitive bulk 
power markets in the United States: Nondiscriminatory open access 
transmission services by public utilities and stranded cost recovery 
rules to provide a fair transition to competitive markets.'' \10\ In 
Order No. 888, the Commission did not, however, address generator 
interconnection issues. In Tennessee Power Company, the Commission 
encouraged, but did not require, transmission providers to revise their 
OATTs to include interconnection procedures, including a standard 
interconnection agreement and specific criteria, procedures, 
milestones, and timelines for evaluating interconnection requests.\11\
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    \9\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery 
of Stranded Costs by Public Utilities and Transmitting Utilities, 
Order No. 888, FERC Stats. & Regs. ] 31,036 (1996), order on reh'g, 
Order No. 888-A, FERC Stats. & Regs. ] 31,048, order on reh'g, Order 
No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C, 
82 FERC ] 61,046 (1998), aff'd in relevant part sub nom. 
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. 
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
    \10\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 8.
    \11\ Tenn. Power Co., 90 FERC ] 61,238 (Tennessee).
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    13. In Order No. 2003, the Commission recognized a ``pressing need 
for a single set of procedures for jurisdictional Transmission 
Providers and a single, uniformly applicable interconnection agreement 
for Large Generators.'' \12\ Prior to the issuance of Order No. 2003, 
the Commission addressed interconnection issues on a case-by-case basis 
through, for example, applications under FPA section 205.
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    \12\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    14. In Order No. 2003, the Commission asserted that interconnection 
is a ``critical component of open access transmission service and thus 
is subject to the requirement that utilities offer comparable service 
under the OATT.'' \13\ The Commission found that a standard set of 
procedures would ``minimize opportunities for undue discrimination and 
expedite the development of new generation, while protecting 
reliability and ensuring that rates are just and reasonable.'' \14\
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    \13\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 9 (citing 
Tennessee, 90 FERC ] 61,238).
    \14\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    15. Consequently, in Order No. 2003, the Commission required public 
utilities that own, control, or operate transmission facilities to file 
standard generator interconnection procedures and a standard agreement 
to provide interconnection service to generating facilities with a 
capacity greater than 20 megawatts (MW). To this end, the Commission 
adopted the pro forma LGIP and LGIA and required all public utilities 
subject to Order No. 2003 to modify their OATTs to incorporate the pro 
forma LGIP and LGIA.

B. 2008 Order on Interconnection Queueing Practices

    16. The Commission held a technical conference on December 17, 2007 
and issued a notice inviting further comments in response to concerns 
raised about the effectiveness of queue management practices.\15\ 
Comments revealed that some transmission providers were not processing 
their interconnection queues with the timelines envisioned in Order No. 
2003. Commenters pointed to surges in the volume of new generation 
development in some regions, particularly for renewable resources, as 
taxing interconnection queues. Commenters

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also noted that some regions had developed capacity markets after the 
issuance of Order No. 2003 and struggled with accommodating these new 
markets.\16\
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    \15\ Interconnection Queuing Practices, Docket No. AD08-2-000, 
November 2, 2007 Notice of Technical Conference.
    \16\ Interconnection Queuing Practices, 122 FERC ] 61,252, at P 
3 (2008) (2008 Order). With regard to capacity markets, commenters 
noted that in regions that had established capacity markets, 
interconnection queue delays could prevent least cost resources from 
being available in new capacity market auctions. Id. P 5.
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    17. On March 20, 2008, the Commission issued an order addressing 
interconnection queue issues (2008 Order). The Commission acknowledged 
that delays in processing interconnection queues were more pronounced 
in RTOs/ISOs that were attracting significant new entry.
    18. The Commission declined to impose generally applicable 
solutions, given the regional nature of some interconnection queue 
issues. However, the Commission provided guidance to assist RTOs/ISOs 
and their stakeholders in their efforts to improve the processing of 
interconnection queues.\17\ The Commission further stated that, while 
it ``may need to [impose solutions] if the RTOs and ISOs do not act 
themselves,'' each region would be provided an opportunity to propose 
its own solutions through ``consensus proposals.'' \18\ Following the 
2008 Order, RTOs/ISOs submitted multiple queue reform proposals to the 
Commission, generally moving their interconnection queuing practices 
from a ``first-come, first-served'' approach to a ``first-ready, first-
served'' approach.
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    \17\ 2008 Order, 122 FERC ] 61,252 at PP 16-18.
    \18\ 2008 Order, 122 FERC ] 61,252 at P 8.
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C. 2015 American Wind Energy Association Petition

    19. On June 19, 2015, AWEA filed the Petition in Docket No. RM15-
21-000 requesting that the Commission revise the pro forma LGIP and pro 
forma LGIA. AWEA asserts that the current interconnection process has 
``imbedded unjust and unreasonable and unduly discriminatory delays, 
costs, rates, terms and conditions'' and ``imposes barriers to the 
development of needed new generation resources.'' \19\ AWEA states that 
while transmission providers have modified their LGIPs in ways that 
``occasionally [provide] limited benefits. . . . [they] have not 
solved, and have even exacerbated, problems encountered by 
interconnection customers.'' \20\ AWEA contends that, consequently, the 
interconnection process often results in ``complex, time consuming 
technical disputes about . . . interconnection feasibility, cost, and 
cost responsibility'' with delays that ``undermine the ability of new 
generators to compete.'' \21\
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    \19\ Petition at 2.
    \20\ Petition at 3.
    \21\ Petition at 3.
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    20. AWEA proposes multiple reforms to improve: (1) Certainty in the 
interconnection study/restudy process; (2) transparency in the 
interconnection process; (3) certainty with respect to network upgrade 
costs; and (4) accountability.\22\
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    \22\ Petition at 4-5.
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    21. On July 7, 2015, the Commission issued a Notice of Petition for 
Rulemaking in Docket No. RM15-21-000 to seek public comment on the 
Petition. The Commission received thirty-five comments and three 
answers and reply comments.\23\
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    \23\ See Appendix A: List of Short Names of Commenters on the 
AWEA Petition (Docket No. RM15-21-000) and the 2016 Technical 
Conference (Docket No. RM16-12-000).
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D. 2016 Technical Conference

    22. On May 13, 2016, Commission staff convened the 2016 Technical 
Conference at Commission headquarters. The 2016 Technical Conference 
featured five panels on ``The Current State of Generator 
Interconnection Queues,'' ``Transparency and Timing in the 
Interconnection Study Process,'' ``Certainty in Cost Estimates and 
Construction Time,'' ``Other Queue Coordination and Management 
Issues,'' and ``Interconnection of Electric Storage Resources.'' The 
panels featured representatives from RTOs/ISOs, non-independent 
transmission providers, transmission owners within RTOs/ISOs, renewable 
generation developers, and other stakeholders.
    23. On June 3, 2016, the Commission issued a Notice Inviting Post-
Technical Conference Comments. The Commission received 24 post-
technical conference comments.

III. Need for Reform of the Interconnection Process

    24. Since the issuance of Order No. 2003, the electric power 
industry has undergone numerous changes. For example, the nation's 
resource mix has undergone significant change. In many regions, the 
resource mix now includes increasing amounts of generation powered by 
wind,\24\ natural gas, solar, and most recently, electric storage 
resources.\25\ These changes are the result of a multitude of factors, 
such as the economics of new power generation largely driven by 
sustained low natural gas prices, technology advances, and federal and 
state policies, including federal environmental regulations and state-
level mandates for renewable capacity. The changing resource mix has 
impacted the Commission's interconnection policies.
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    \24\ In 2015, for example, wind, natural gas, and solar power 
were the largest classes of new entrants. See Wind Adds the Most 
Electric Generation Capacity in 2015, Followed by Natural Gas and 
Solar (Mar. 23, 2016) https://www.eia.gov/todayinenergy/detail.php?id=25492.
    \25\ See U.S. Energy Information Administration, Natural Gas 
Expected to Surpass Coal in Mix of Fuel Used for U.S. Power 
Generation in 2016 (Mar. 16, 2016), http://www.eia.gov/todayinenergy/detail.cfm?id=25392; see also Energy Storage 
Association, US Surpasses 100 MW of Storage Deployments through Q3 
2015, Already Best Year Ever (Dec. 3, 2015, 11:13 a.m.), http://energystorage.org/resources/us-surpasses-100-mw-storage-deployments-through-q3-2015-already-best-year-ever. The Commission defines an 
electric storage resource as a facility that can receive electric 
energy from the grid and store it for later injection of electricity 
back to the grid. This includes all types of electric storage 
technologies, regardless of their size or storage medium (e.g., 
batteries, flywheels, compressed air, pumped-hydro, etc.). See 
Midcontinent Indep. Sys. Operator, Inc., 155 FERC ] 61,211, at n.7 
(2016).
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    25. The increasing penetration of variables energy resources and 
emerging technologies has implications for the interconnection process, 
for both interconnection customers and transmission providers.\26\ For 
example, wind generation is limited geographically because it is 
concentrated in locations where there are dependable windy conditions 
that are sufficient to generate electricity. Additionally, a lengthy 
interconnection process affects all resources attempting to 
interconnect and can have a disproportionate effect on resources that 
can be built more quickly than traditional resources. Further, 
interconnection processes should consider the evolving capabilities of 
electric storage resources, which may involve different considerations 
than the interconnection of more traditional generation resources. 
These factors suggest a need for the Commission to reevaluate its 
interconnection policies to ensure that they are just and reasonable 
and not unduly discriminatory or preferential.
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    \26\ See, e.g., Monitoring Analytics, PJM State of the Market at 
Table 12-17, http://monitoringanalytics.com/reports/PJM_State_of_the_Market/2016/2016q2-som-pjm-sec12.pdf.
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    26. As described above, beginning with Order No. 2003, the 
Commission has sought to improve the interconnection process by 
minimizing opportunities for undue discrimination and expediting the 
development of new generation while protecting system reliability and 
ensuring just and reasonable rates. However, at present, many 
interconnection customers

[[Page 4468]]

experience delays, and interconnection queues have significant backlogs 
and long timelines.\27\ According to interconnection customers and 
transmission providers, a recurring problem is that late-stage 
interconnection request withdrawals lead to interconnection study 
restudies and consequent delays for lower-queued interconnection 
customers.\28\ Interconnection request withdrawals can also lead to 
increased network upgrade cost responsibility for lower-queued 
interconnection customers, which could, in turn, result in further 
cascading withdrawals. Further, a lack of cost and timing certainty can 
hinder interconnection customers from obtaining financing. Cost 
uncertainty in particular presents a significant obstacle, as some 
interconnection customers are less able to absorb unexpected and 
potentially higher costs.
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    \27\ See, e.g., 2016 Technical Conference Tr. 210: 1-10 
(discussion of delays up to a year).
    \28\ See, e.g., 2016 Technical Conference Tr. 20:15-23 
(discussion regarding MISO's experiencing 50 percent withdrawal 
rates in many parts of the queue).
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    27. Consistent with the 2008 Order, where the Commission allowed 
RTOs/ISOs to develop and propose their own solutions to interconnection 
timing issues, most RTOs/ISOs have implemented different procedures to 
alleviate queue delays. MISO, in particular, has proposed four 
different queue reforms, each of which have been designed to improve 
and expedite the interconnection process.\29\ SPP has implemented two 
queue reforms, for similar reasons.\30\ CAISO has employed network 
upgrade cost caps and periodic, scheduled restudies in order to provide 
certainty to the interconnection customer.\31\ Despite these efforts, 
delays, backlogs, and long queue times continue to affect 
interconnection customers.\32\
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    \29\ See Midwest Indep. Transmission Sys. Operator, Inc., 124 
FERC ] 61,183 (2008), order on reh'g, 127 FERC ] 61,294 (2009); 
Midwest Indep. Transmission Sys. Operator, Inc., 129 FERC ] 61,301 
(2009); Midwest Indep. Transmission Sys. Operator, Inc., 138 FERC ] 
61,233, order on reh'g and compliance, 139 FERC ] 61,253 (2012); 
Docket No. ER17-156-000.
    \30\ See Sw. Power Pool, Inc., 128 FERC ] 61,114, order on 
compliance, 129 FERC ] 61,226 (2009), order on compliance, 133 FERC 
] 61,139 (2010); Sw. Power Pool, Inc., 147 FERC ] 61,201 (2014), 
order on reh'g and compliance, 151 FERC ] 61,235 (2015).
    \31\ See California Indep. Sys. Operator Corp., 124 FERC ] 
61,292 (2008).
    \32\ See Petition at 8-11.
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    28. The Petition highlighted some of the issues affecting the 
interconnection process and encouraged the Commission to consider these 
and other interconnection issues as well as the overall state of 
interconnection queues. In light of these issues, the Commission in 
this proceeding reviewed current interconnection processes and proposes 
reforms to ensure that these processes continue to ``minimize 
opportunities for undue discrimination and expedite the development of 
new generation, while protecting reliability and ensuring that rates 
are just and reasonable.'' \33\ The Commission conducted this review 
and developed proposals based on information provided in the 2016 
Technical Conference and comments submitted in that proceeding.
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    \33\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    29. The Commission preliminarily finds that aspects of the current 
interconnection process may hinder the timely development of new 
generation and, thereby, stifle competition in the wholesale markets, 
resulting in rates, terms, and conditions that are not just and 
reasonable or are unduly discriminatory or preferential. The current 
interconnection process can create uncertainty for interconnection 
customers regarding both costs and timing. A lack of transparency in 
the interconnection process can result in interconnection customers 
submitting interconnection requests to the queue that may be 
speculative or unlikely to reach commercial operation, which can affect 
other interconnection customers and create difficulties for 
transmission providers and owners. Increasing transparency will allow 
for interconnection customers to better evaluate the viability of an 
interconnection request prior to entering the queue, which could result 
in fewer interconnection requests dropping out of the queue. A lack of 
timely and clear information can also affect an interconnection 
customer's decisions regarding whether and where to build a generating 
facility or other resource and can also affect the viability of an 
interconnection request after it enters the interconnection queue. 
Finally, the current interconnection process can involve unnecessary 
obstacles to the interconnection of new technologies and as such, the 
Commission has proposed reforms to address these issues.
    30. The Commission also preliminarily finds that the process for a 
transmission provider to conduct interconnection studies may result in 
uncertainty and inaccurate information. The current interconnection 
study process is meant to allow for refinements in the study estimates 
of interconnection costs as an interconnection request moves through 
each of the interconnection study phases.\34\ However, uncertainty in 
study results and a lack of transparency may hamper generation 
development. Cost uncertainty presents a particularly significant 
obstacle as some interconnection customers are less able to absorb 
unexpected and potentially higher costs for interconnection facilities 
and network upgrades that may occur either in the normal course of 
refined estimates or as a result of restudy. Moreover, if an 
interconnection customer does not obtain timely studies or is assessed 
previously unanticipated network upgrade costs, this could affect a 
number of development aspects, including the interconnection customer's 
land lease agreements required to support unanticipated network 
upgrades, additional project financing required for increased network 
upgrade costs, and/or ability to obtain a power purchase agreement in 
the face of a potential delay.
---------------------------------------------------------------------------

    \34\ See Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 195, 
217-34.
---------------------------------------------------------------------------

    31. Additionally, the Commission preliminarily finds that the 
potential for discriminatory interconnection processes exists as new 
technologies enter the power generation sphere. New technologies may be 
hampered in the study process as study conductors come up to speed on 
how to evaluate the incorporation of these technologies onto the 
system. Interconnection customers involving new technologies may be 
affected more by process and information uncertainty than incumbents 
experienced with the interconnection process in certain regions.

IV. Proposed Reforms

    32. The Commission is proposing to reform certain aspects of the 
Commission's regulations and the pro forma LGIP and pro forma LGIA that 
affect the interconnection process to ensure that they are just and 
reasonable and not unduly discriminatory or preferential.
    33. The provision of more timely and accurate information could 
increase certainty for interconnection customers and assist them in 
earlier project evaluation and quicker project development, as well as 
assist in earlier, less disruptive withdrawals from the interconnection 
queue. Interconnection customers and transmission providers alike have 
frequently expressed frustration at the need for repeated restudies and 
prolonged queue times resulting from the withdrawal of higher-queued 
interconnection requests.\35\

[[Page 4469]]

With improvements in certainty and the quality of information conveyed 
at an earlier stage in the interconnection process, some of these 
withdrawals could be eliminated, and the queue could proceed more 
quickly. At the same time, fewer withdrawals would benefit transmission 
providers by reducing the burden of processing requests that are 
unlikely to reach commercial operation.
---------------------------------------------------------------------------

    \35\ See, e.g., 2016 Technical Conference Tr. 20:15-23.
---------------------------------------------------------------------------

    34. The Commission also believes that providing interconnection 
customers with access to more detailed information could enable the 
interconnection customer to make more informed decisions earlier in the 
interconnection process. For example, increased knowledge of the 
assumptions used in interconnection studies could assist an 
interconnection customer with identifying optimal points of 
interconnection as well as allow it to better anticipate the duration 
of the interconnection process and better understand issues that may 
arise as the result of study outcomes. Interconnection customers may 
also benefit from a more complete up front understanding of the network 
upgrades, contingencies, and risks of curtailment that their 
interconnection requests may face, which could reduce late-stage 
interconnection request withdrawals and result in fewer restudies and 
delays. More timely and accurate information regarding an 
interconnection request, as well as greater transparency of the study 
process and of congestion, will reduce the incentive for 
interconnection customers to submit multiple interconnection requests 
when expecting to interconnect a large generating facility. While 
interconnection customers may still submit multiple requests, the 
Commission anticipates that they would submit fewer requests with 
better information and that the interconnection customer would 
terminate a non-viable interconnection request earlier.
    35. The Commission also proposes reforms that could enhance 
interconnection processes. The Commission believes that new 
technologies will drive grid innovation, as well as offer other 
facility efficiencies and advances. These innovations may reach the 
market after an interconnection customer has initiated or completed an 
interconnection request. However, in some circumstances, there are 
likely ways to inject efficiencies in the traditional interconnection 
process or to preempt the need for a transmission provider to construct 
new, unnecessary interconnection facilities and network upgrades. 
Additionally, the Commission believes there are ways to allow 
flexibility in the interconnection process to incorporate innovation or 
developments that transpire while an interconnection request is in the 
queue.
    36. At this time, the Commission does not propose reforms to 
generator interconnection processes and agreements other than those 
described herein. This limitation includes any reforms proposed by AWEA 
in its Petition that are not included in this Proposed Reforms section.

A. Improving Certainty for Interconnection Customers

    37. The reforms proposed below would improve certainty by providing 
interconnection customers more predictability in the interconnection 
process, including more predictability regarding the costs and the 
timing of interconnecting to the grid. Increasing certainty for 
interconnection customers--particularly cost certainty--may decrease 
the number of late-stage interconnection request withdrawals from the 
interconnection queue, which could meaningfully ameliorate the cycle of 
repeated, cascading restudies. In addition to the proposed reforms, the 
Commission seeks comment on the extent to which capping interconnection 
customer cost responsibility for actual network upgrade costs to some 
margin above estimated network upgrade costs can mitigate the potential 
for serial restudies without inappropriately shifting cost 
responsibility.
1. Scheduled Periodic Restudies
    38. As discussed below, the Commission proposes to revise the pro 
forma LGIP to require transmission providers that conduct cluster 
studies to establish a schedule for conducting periodic restudies.
a. Current Provisions and Background
    39. The current pro forma LGIP requires the transmission provider 
to make reasonable efforts \36\ to provide: (i) Feasibility study 
results within 45 days after receipt of a signed feasibility agreement; 
(ii) system impact study results within 90 days after receipt of a 
signed system impact study agreement or after the cluster window 
closes; and (iii) facilities study results either within 90 days after 
receipt of a signed facilities study agreement or 180 days after 
receipt of a signed facilities study agreement, depending on the 
accuracy margin provided.\37\ For the purpose of conducting the system 
impact study, the current pro forma LGIP allows transmission providers 
the option to process interconnection requests on a serial basis or in 
groups using clusters.\38\
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    \36\ Reasonable Efforts ``shall mean, with respect to an action 
required to be attempted or taken by a Party under the Standard 
Large Generator Interconnection Agreement, efforts that are timely 
and consistent with Good Utility Practice and are otherwise 
substantially equivalent to those a Party would use to protect its 
own interests.'' Pro forma LGIP Sec. 1 (Definitions).
    \37\ See Pro forma LGIP Sec. 6.3, 7.4 and 8.3.
    \38\ See Pro forma LGIP Sec. 4.2.
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    40. A transmission provider may require a restudy of an 
interconnection customer's study results if a higher-queued 
interconnection request drops out of the queue or an interconnection 
customer modifies its interconnection request.\39\ A transmission 
provider may also require restudy if either the feasibility or system 
impact studies uncover any unexpected result not contemplated during 
the scoping meeting that will require re-designation of the point of 
interconnection. According to the pro forma LGIP, restudy of an 
interconnection feasibility study shall take no longer than 45 days 
from the date the transmission provider provides notice that such 
restudy is required. Restudy of an interconnection system impact study 
or interconnection facilities study shall not take longer than 60 days 
from the date the transmission provider provides notice to the 
interconnection customer that such restudy is required.\40\ While the 
current pro forma language establishes timeframes in which to complete 
restudies after an interconnection customer is notified, it does not 
provide guidance on the frequency at which such restudies should occur 
for clustered or grouped interconnection requests.
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    \39\ See Pro forma LGIP Sec. 6.4, 7.6, and 8.5.
    \40\ See Pro forma LGIP Sec. 6.4, 7.6 and 8.5.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    41. In its Petition, AWEA recognizes that restudies are often 
necessary, but it states that, in certain regions, restudies are 
conducted on an ad hoc basis as the need arises.\41\ AWEA argues that 
repeated restudies conducted at irregular intervals may increase or 
prolong uncertainty for interconnection customers.
---------------------------------------------------------------------------

    \41\ Petition at 22.
---------------------------------------------------------------------------

    42. AWEA further explains that, under the current pro forma LGIP, 
the withdrawal of a higher-queued interconnection request may 
necessitate a restudy, which may then change the assumptions for other 
queued interconnection requests within a cluster, necessitating further 
restudies in a cascading effect. AWEA contends that these cascading 
restudies prolong

[[Page 4470]]

cost uncertainty, cause delays in finalizing interconnection study 
results, and delay the execution of LGIAs. As a potential solution, 
AWEA proposes an annual or periodic restudy process for interconnection 
requests within a cluster, in which the transmission provider would 
consider all relevant system condition changes, including higher-queued 
interconnection requests that withdraw from the queue. AWEA contends 
that such a restudy process provides certainty because each restudy 
would be completed according to a schedule, rather than conducted on an 
ad hoc basis due to intervening events.\42\
---------------------------------------------------------------------------

    \42\ Petition at 22-25.
---------------------------------------------------------------------------

    43. However, AWEA also asserts that when an unplanned restudy 
becomes necessary outside of the scheduled restudy process, it is of 
critical importance that the restudy be processed in as timely a manner 
as possible. AWEA adds that the transmission provider should, if 
necessary, hire additional consultants or staff to ensure proper 
resources to process the restudy in a consistent and timely manner.\43\
---------------------------------------------------------------------------

    \43\ AWEA 2016 Comments at 30.
---------------------------------------------------------------------------

    44. Several commenters, including a number of entities that have 
been interconnection customers for wind generation such as NRG, EDF, 
and NextEra, support a scheduled restudy process and offer suggestions 
for how transmission providers should conduct this process.\44\ MISO 
also acknowledges that the withdrawal of higher-queued interconnection 
requests creates the need for cascading restudies of lower-queued 
interconnection requests and that scheduled restudies may alleviate the 
need for multiple ad hoc restudies.\45\ NextEra states that, under an 
annual restudy process, the transmission provider should consider all 
relevant system condition changes, as well as all higher-queued 
interconnection requests that dropped out of the queue, in one restudy 
for the applicable interconnection requests in a cluster or sub-region. 
Although it believes there may be some efficiency in a group restudy, 
EDF cautions that, if the restudy were to include different 
interconnection requests from different clusters, it could result in as 
many issues and inefficiencies as are produced by the current 
process.\46\
---------------------------------------------------------------------------

    \44\ NRG 2015 Comments at 4; EDF 2016 Comments at 31; NextEra 
2015 Comments at 8-9.
    \45\ MISO 2016 Comments at 13.
    \46\ EDP 2016 Comments at 17.
---------------------------------------------------------------------------

    45. Some commenters oppose scheduled, periodic restudies. ISO-NE., 
Xcel, and ITC express the belief that an annual, group restudy would 
not be useful. These commenters assert that the primary cause for 
restudies--namely, the withdrawal of higher-queued interconnection 
requests--is out of the transmission provider's control and can occur 
at any time. These commenters contend that limiting restudies to once a 
year could force viable generation interconnection requests to wait 
longer than necessary for restudy results.\47\ The ISO/RTO Council 
states that this proposal is inapplicable to NYISO due to its ``non-
serial'' interconnection queue approach, in which an interconnection 
request is only included in the base case for restudy when it has 
satisfied certain requirements. The ISO/RTO Council also notes that 
ISO-NE's interconnection process is merged with the Forward Capacity 
Market. Thus, the ISO/RTO Council argues, AWEA's proposals for the 
restudy process could be disruptive.\48\
---------------------------------------------------------------------------

    \47\ ISO-NE 2016 Comments at 24; Xcel 2016 Comments at 13; ITC 
2016 Comments at 8.
    \48\ ISO/RTO Council 2015 Comments at 5-7.
---------------------------------------------------------------------------

c. Proposal
    46. The Commission proposes to revise the pro forma LGIP to require 
transmission providers that conduct cluster studies to conduct 
restudies on a scheduled, periodic basis (e.g., annually, semi-
annually, quarterly, or a set number of days after the completion of 
the cluster study). The Commission proposes to require transmission 
providers to update their LGIPs to specify the frequency of restudies 
for interconnection customers in a cluster study and post the dates of 
these restudies on the transmission provider's OASIS.
    47. A scheduled, periodic restudy process could enhance the 
efficiency and certainty of the study process for all parties by 
mitigating the problem of cascading restudies. This reform could 
achieve this result because it creates some milestones that can serve 
as decision points for interconnection customers and allows 
transmission providers to further revise their interconnection 
processes as necessary to incorporate scheduled restudies. Further, the 
Commission notes that it is not proposing that all transmission 
providers establish the same restudy schedule; rather, the Commission 
proposes to give transmission providers flexibility in establishing the 
frequency of restudies to best accommodate the needs of interconnection 
customers and transmission providers.
    48. Accordingly, the Commission proposes to require each 
transmission provider that conducts cluster studies to revise sections 
6.4 and 7.6 of the pro forma LGIP as follows (proposing to delete 
italicized text):

    If Re-Study of the [insert appropriate study] Study is required 
due to a higher queued project dropping out of the queue, or a 
modification of a higher queued project subject to Section 4.4, or 
re-designation of the Point of Interconnection pursuant to Section 
[insert appropriate section] Transmission Provider shall notify 
Interconnection Customer in writing. Serially processed Re-Studies 
Such Re-Study shall take no longer than [forty-five (45)/sixty (60)] 
Calendar Days from the date of the notice. Any cost of Re-Study 
shall be borne by the Interconnection Customer being re-studied.
    If a Transmission Provider that conducts cluster studies 
identifies a need for restudies, it will conduct periodic Re-Studies 
for each cluster [placeholder for time frame proposed by each 
Transmission Provider]. Re-Study dates for each cluster will also be 
posted on the Transmission Provider's OASIS. Re-Study shall take no 
longer than [forty-five (45)/sixty (60)] Calendar Days from the 
commencement date of the Re-Study. Any cost of Re-Study shall be 
borne by the Interconnection Customer being re-studied.

    49. Likewise, the Commission proposes to require each transmission 
provider that conducts cluster studies to revise section 8.5 of the pro 
forma LGIP as follows (proposing to delete italicized text):

    If Re-Study of the Interconnection Facilities Study is required 
due to a higher queued project dropping out of the queue or a 
modification of a higher queued project pursuant to Section 4.4, 
Transmission Provider shall so notify Interconnection Customer in 
writing. Serially processed Re-Studies Such Re-Study-shall take no 
longer than sixty (60) Calendar Days from the date of the notice. 
Any cost of Re-Study shall be borne by the Interconnection Customer 
being re-studied.
    A Transmission Provider that conducts cluster studies will 
conduct periodic Re-studies for each cluster [placeholder for time 
frame proposed by each Transmission Provider]. Re-Study dates for 
each cluster will also be posted on the Transmission Provider's 
OASIS. Re-Study of the cluster shall take no longer than sixty (60) 
Calendar Days from the commencement date of the Re-Study.

    50. The Commission acknowledges the concern held by some 
stakeholders that a scheduled, periodic restudy process could force 
viable interconnection requests to wait longer than necessary to 
progress through the interconnection process. The Commission seeks 
comment on whether regions that conduct cluster studies and move to 
periodic re-studies should retain some discretion to conduct restudies 
outside of the established schedule at the request of interconnection 
customers or under specific circumstances that deem such

[[Page 4471]]

deviations necessary. The Commission seeks comments on when this 
discretion should be restricted and the circumstances under which such 
deviations should be allowed.
    51. Additionally, some commenters allege that transmission provider 
tariffs generally provide insufficient transparency regarding the type 
of triggers that would require restudy for projects processed through 
serial or cluster studies; they also contend that transmission 
providers do not apply such triggers consistently.\49\ In contrast, 
some transmission providers assert that their tariffs sufficiently 
detail restudy triggers.\50\ We believe that the Commission's proposal 
above to require scheduled, periodic restudies could help address these 
concerns for interconnection requests processed through cluster 
studies. However, the Commission also seeks comment on (1) whether the 
Commission should further revise the pro forma LGIP to improve the 
transparency and application of restudy triggers generally, and (2) if 
so, what reforms are needed.
---------------------------------------------------------------------------

    \49\ E.g., AWEA 2016 Comments at 30; Invenergy 2016 Comments at 
19-20; EDPR NA 2016 Comments at 16-17.
    \50\ MISO 2016 Comments at 15; ISO-NE 2016 Comments at 23.
---------------------------------------------------------------------------

2. The Interconnection Customer's Option To Build
    52. The Commission proposes to allow the interconnection customer 
to exercise the option to build unilaterally; that is, the Commission 
proposes that the interconnection customer's option to assume 
responsibility for construction of the transmission provider's 
interconnection facilities and stand alone network upgrades is not 
contingent on the transmission provider notifying the interconnection 
customer that it cannot complete such facilities on the schedule 
proposed by the interconnection customer.
a. Current Provisions and Background
    53. Under the current pro forma LGIA, the interconnection 
customer's option to build is contingent on the transmission provider's 
notification that the transmission provider cannot complete the 
facilities on schedule. Specifically, under the pro forma LGIA, the 
interconnection customer selects the ``In-Service Date, Initial 
Synchronization Date, and Commercial Date'' \51\ and ``either the 
Standard Option or Alternative Option'' unless mutually agreed to 
between the parties to the agreement.\52\ Under the standard option, 
the transmission provider ``shall construct the Transmission Provider's 
Interconnection Facilities \53\ and Network Upgrades using Reasonable 
Efforts to complete the construction by the dates designated by the 
Interconnection Customer.'' \54\ Under the alternate option, 
``Transmission Provider shall construct the Transmission Provider's 
Interconnection Facilities and Network Upgrades according to the 
construction completion dates established by the Interconnection 
Customer, and if it fails to meet those dates, it may be liable for 
liquidated damages,'' although the transmission provider may decline 
this option ``within 30 Calendar Days of executing the LGIA.'' \55\
---------------------------------------------------------------------------

    \51\ The In-Service Date is ``the date upon which the 
Interconnection Customer reasonably expects it will be ready to 
begin use of the Transmission Provider's Interconnection Facilities 
to obtain back feed power.'' Pro forma LGIA Art. 1. The Initial 
Synchronization Date is ``the date upon which the Generating 
Facility is initially synchronized and upon which Trial Operation 
begins.'' Id. The Commercial Operation Date is ``the date on which 
the Generating Facility commences Commercial Operation as agreed to 
by the Parties pursuant to Appendix E to the Standard Large 
Generator Interconnection Agreement.'' Id.
    \52\ Pro forma LGIA Sec. 5.1.
    \53\ According to the pro forma LGIA:
    Transmission Provider's Interconnection Facilities shall mean 
all facilities and equipment owned, controlled or operated by the 
Transmission Provider from the Point of Change of Ownership to the 
Point of Interconnection as identified in Appendix A to the Standard 
Large Generator Interconnection Agreement, including any 
modifications, additions or upgrades to such facilities and 
equipment. Transmission Provider's Interconnection Facilities are 
sole use facilities and shall not include Distribution Upgrades, 
Stand Alone Network Upgrades or Network Upgrades.
    Pro forma LGIA Art. 1.
    \54\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 351.
    \55\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 352.
---------------------------------------------------------------------------

    54. Under the current OATT, there are two other options, which are 
available if the transmission provider informs the interconnection 
customer that it cannot meet the proposed dates: The ``Option to 
Build'' and the ``Negotiated Option.'' \56\ The ``Option to Build,'' 
which the pro forma LGIA describes in section 5.1.3, provides an 
interconnection customer with the option to build the transmission 
provider's interconnection facilities and stand alone network upgrades, 
but limits that option to circumstances where the transmission provider 
cannot meet the dates proposed by the interconnection customer. That 
is, an interconnection customer may ``assume responsibility for the 
design, procurement and construction of Transmission Provider's 
Interconnection Facilities and Stand Alone Network Upgrades.'' \57\ 
However, the interconnection customer may only exercise this option if 
the transmission provider notifies the interconnection customer that 
the transmission provider cannot meet the interconnection customer's 
preferred construction completion dates.\58\
---------------------------------------------------------------------------

    \56\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 353.
    \57\ Pro forma LGIA Sec. 5.1.3.
    \58\ See, e.g., ISO New England Inc., 149 FERC ] 61,274, at P 18 
(2014).
---------------------------------------------------------------------------

    55. The ``Negotiated Option'' applies ``if the Transmission 
Provider notifies the Interconnection Customer that it cannot meet the 
dates established by the Interconnection Customer, and the 
Interconnection Customer does not want to assume responsibility for 
construction.'' \59\ Under this option, the ``Interconnection Customer 
may decide that the Parties shall negotiate in good faith to revise the 
construction completion dates and other provisions under which the 
Transmission Provider is responsible for the construction.'' \60\ If 
the parties are unable to reach an agreement during these negotiations, 
the transmission provider assumes responsibility ``for construction of 
the Transmission Provider's Interconnection Facilities and Network 
Upgrades in accordance with the Standard Option.'' \61\
---------------------------------------------------------------------------

    \59\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
    \60\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
    \61\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
---------------------------------------------------------------------------

b. Comments
    56. Multiple parties that have experience as interconnection 
customers at the 2016 Technical Conference expressed support for 
reforms that would allow them to build some interconnection facilities 
and network upgrades, explaining that they are often able to build more 
rapidly and at lower cost than transmission owners.\62\ Several 
commenters advocate expanding the option to build to circumstances 
beyond those described in current section 5.1.3 of the LGIA.\63\ They 
contend that the Commission should not condition the usage of the 
option to build on timing but should instead allow for an absolute 
right for interconnection customers to build interconnection facilities 
and stand alone upgrades.
---------------------------------------------------------------------------

    \62\ 2016 Technical Conference Tr. 121: 1-22.
    \63\ E.g., E.ON 2016 Comments at 15; Xcel 2016 Comments at 16; 
Invenergy 2016 Comments at 26; EDP 2016 Comments at 19; EDF 2016 
Comments at 40.
---------------------------------------------------------------------------

    57. Other commenters oppose expansion of the circumstances under 
which an interconnection customer may exercise the option to build.\64\ 
For

[[Page 4472]]

instance, ITC suggests that removing the limitation on when the option 
to build can be exercised would threaten system reliability.\65\ 
Additionally, MISO TOs states that in Order No. 2003-A, the Commission 
clarified that the transmission provider has no obligation to cede 
ownership of stand alone network upgrades or the transmission 
provider's interconnection facilities to the interconnection 
customer.\66\ Some commenters that support expanding the option to 
build acknowledge that usage of this option should still require that 
reliability standards be maintained.\67\
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    \64\ ISO-NE 2016 Comments at 27.
    \65\ ITC 2016 Comments at 10.
    \66\ MISO TOs 2016 Comments at 21.
    \67\ See AES 2016 Comments at 9.
---------------------------------------------------------------------------

c. Proposal
    58. The Commission preliminarily finds that limiting the option to 
build only to circumstances where the transmission provider cannot meet 
the interconnection customer's requested dates may not be just and 
reasonable and may be unduly discriminatory or preferential. The 
limitation may restrict an interconnection customer's ability to 
efficiently build the transmission provider's interconnection 
facilities and the interconnection customer's stand alone network 
upgrades in a cost-effective manner.\68\ As a result, an 
interconnection customer may pay more for the transmission provider's 
interconnection facilities and standalone upgrades. Furthermore, 
removing the limitation may provide interconnection customers more 
control and certainty during the design and construction phase of the 
interconnection process.
---------------------------------------------------------------------------

    \68\ The pro forma LGIA states that:
    Stand Alone Network Upgrades shall mean Network Upgrades that an 
Interconnection Customer may construct without affecting day-to-day 
operations of the Transmission System during their construction. 
Both the Transmission Provider and the Interconnection Customer must 
agree as to what constitutes Stand Alone Network Upgrades and 
identify them in Appendix A to the Standard Large Generator 
Interconnection Agreement.
    Pro forma LGIA Art. 1.
---------------------------------------------------------------------------

    59. The Commission proposes to modify the pro forma LGIA to allow 
an interconnection customer to exercise the option to build regardless 
of whether the transmission provider can meet the requested 
construction dates. More specifically, the Commission proposes to 
modify the pro forma LGIA to allow an interconnection customer to 
design, procure, and construct the transmission provider's 
interconnection facilities and stand alone network upgrades--even if 
the transmission provider can meet the requested construction dates--
where the interconnection customer and transmission provider (and 
transmission owner, if applicable) are in agreement as to the 
transmission provider's interconnection facilities and stand alone 
network upgrades that would be built, including the design and 
construction details. Existing responsibilities and protections, 
including reliability considerations, in section 5.2 of the pro forma 
LGIP under ``General Conditions Applicable to Option to Build'' would 
continue to apply.
    60. The Commission is not proposing changes with respect to how 
transmission provider's interconnection facilities and stand-alone 
network upgrades are designed or approved, which standards or practices 
must be followed, or the ownership of transmission provider's 
interconnection facilities and stand-alone network upgrades that are 
built under the option to build.\69\ Nor is the Commission proposing to 
expand the types of stand-alone facilities that interconnection 
customers may construct under the option to build beyond transmission 
provider's interconnection facilities and stand-alone network upgrades. 
The proposal instead removes the limitation on when the interconnection 
customer can exercise the option to build such that an interconnection 
customer may opt to build in an effort to reduce its costs or improve 
the timeline for construction. Specifically, the Commission proposes to 
modify the language in section 5.1 of the pro forma LGIA as follows 
(proposing to delete italicized text):
---------------------------------------------------------------------------

    \69\ Pro forma LGIA Sec. 5.2.

    Options. Unless otherwise mutually agreed to between the 
Parties, Interconnection Customer shall select the In-Service Date, 
Initial Synchronization Date, and Commercial Operation Date; and 
either the Standard Option or Alternate Option set forth below for 
completion of Transmission Provider's Interconnection Facilities and 
Network Upgrades, as set forth in Appendix A, Interconnection 
Facilities and Network Upgrades, and such dates and selected option 
shall be set forth in Appendix B, Milestones. At the same time, 
Interconnection Customer shall indicate whether it elects to 
exercise the Option to Build set forth in section 5.1.3 below. If 
the dates designated by Interconnection Customer are not acceptable 
to Transmission Provider, Transmission Provider shall so notify 
Interconnection Customer within thirty (30) Calendar Days. Upon 
receipt of the notification that Interconnection Customer's 
designated dates are not acceptable to Transmission Provider, the 
Interconnection Customer shall notify the Transmission Provider 
within thirty (30) Calendar Days whether it elects to exercise the 
Option to Build if it has not already elected to exercise the Option 
---------------------------------------------------------------------------
to Build.

    61. The Commission also proposes to modify the language in article 
5.1.3 of the pro forma LGIA as follows (proposing to delete italicized 
text):

    Option to Build. If the dates designated by Interconnection 
Customer are not acceptable to Transmission Provider, Transmission 
Provider shall so notify Interconnection Customer within thirty (30) 
Calendar Days. and unless the Parties agree otherwise, 
Interconnection Customer shall have the option to assume 
responsibility for the design, procurement and construction of 
Transmission Provider's Interconnection Facilities and Stand Alone 
Network Upgrades on the dates specified in Article 5.1.2. 
Transmission Provider and Interconnection Customer must agree as to 
what constitutes Stand Alone Network Upgrades and identify such 
Stand Alone Network Upgrades in Appendix A. Except for Stand Alone 
Network Upgrades, Interconnection Customer shall have no right to 
construct Network Upgrades under this option.

    62. Given the changes proposed above, revisions to the negotiated 
option are necessary because the current version of the negotiated 
option references the current limitations on the option to build. For 
this reason, it is necessary to remove these references in the 
negotiated option and to address scenarios in which an interconnection 
customer exercises the option to build and still wishes to negotiate 
completion times for other facilities, including network upgrades that 
are not stand alone network upgrades, as well as circumstances in which 
the interconnection customer does not wish to exercise the option to 
build. Such revisions are necessary because the ability to exercise the 
option to build would no longer be contingent upon a transmission 
provider's inability to meet the interconnection customer's proposed 
dates. However, the negotiated option must also contemplate the 
possibility that the transmission provider does not agree to the 
interconnection customer's proposed dates as to other facilities not 
covered by the option to build (i.e., other than transmission 
provider's interconnection facilities and stand-alone network 
upgrades). That is, even if the interconnection customer elects to 
exercise the option to build, the transmission provider would still be 
responsible for the design, procurement, and construction of the 
interconnection facilities and network upgrades other than transmission 
provider's interconnection facilities and stand-alone network upgrades. 
The option to build does not grant any right to the interconnection 
customer to construct network upgrades that are not stand-alone 
upgrades. Furthermore, both the

[[Page 4473]]

transmission provider and the interconnection customer must agree on 
which facilities are the stand-alone network upgrades and identify them 
in Appendix A to the LGIA.\70\
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    \70\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 353.
---------------------------------------------------------------------------

    63. The Commission therefore proposes to modify the language in 
article 5.1.4 of the pro forma LGIA as follows (proposing to delete 
italicized text):

    Negotiated Option. If Interconnection Customer elects not to 
exercise its option under Article 5.1.3, Option to Build, 
Interconnection Customer shall so notify Transmission Provider 
within thirty (30) Calendar Days, and If the dates designated by 
Interconnection Customer are not acceptable to Transmission 
Provider, the Parties shall in good faith attempt to negotiate terms 
and conditions (including revision of the specified dates and 
liquidated damages, the provision of incentives, or the procurement 
and construction of a portion of Transmission Provider's 
Interconnection Facilities and Stand Alone Network Upgrades by 
Interconnection Customer--all facilities other than Transmission 
Provider's Interconnection Facilities and Stand Alone Network 
Upgrades if the Interconnection Customer elects to exercise the 
Option to Build under Article 5.1.3) pursuant to which Transmission 
Provider is responsible for the design, procurement and construction 
of Transmission Provider's Interconnection Facilities and Network 
Upgrades. If the Parties are unable to reach agreement on such terms 
and conditions, then, pursuant to 5.1.1 (Standard Option), 
Transmission Provider shall assume responsibility for the design, 
procurement and construction of Transmission Provider's 
Interconnection Facilities and Network Upgradesall facilities other 
than Transmission Provider's Interconnection Facilities and Stand 
Alone Network Upgrades if the Interconnection Customer elects to 
exercise the Option to Buildpursuant to 5.1.1, Standard Option.
3. Self-Funding by the Transmission Owner
    64. The Commission proposes to require agreement between a 
transmission owner or provider and interconnection customer before the 
transmission owner or provider may elect to initially fund network 
upgrades.
a. Existing Provisions and Background
    65. Order No. 2003 laid out a pricing policy with regard to the 
costs of interconnection. There, the Commission stated that, where the 
transmission provider is not an RTO/ISO, it is appropriate for the 
interconnection customer to ``be solely responsible for the costs of 
Interconnection Facilities'' \71\ and for network upgrades \72\ to be 
``funded initially by the interconnection customer unless the 
Transmission Provider elects to fund them.'' \73\ If the 
interconnection customer funds the network upgrades, then the 
interconnection customer is ``entitled to a cash equivalent refund . . 
. equal to the total amount paid for the Network Upgrades'' paid ``as 
credits against the Interconnection Customer's payments for 
transmission services, with the full amount to be refunded . . . within 
five years of the date the Network Upgrades are placed in service.'' 
\74\ This upfront payment from the interconnection customer ``serves 
not as a rate for interconnection or transmission service, but simply 
as a financing mechanism that is designed to facilitate the efficient 
construction of Network Upgrades'' \75\ In Order No. 2003, the 
Commission explained that, while it is appropriate for the 
interconnection customer to pay the initial full cost for network 
upgrades that ``would not be needed but for the interconnection,'' the 
interconnection customer must receive transmission service credits in 
return to ensure that it ``will not have to pay both incremental costs 
and an average embedded cost rate for the use of the Transmission 
System.'' \76\ The Commission further stated that this policy helps 
ensure that every interconnection ``is treated comparably to the 
interconnections that a non-independent Transmission Provider completes 
for its own Generating Facilities.'' \77\ The Commission further 
explained that the costs of network upgrades for a transmission 
provider's own generation are traditionally rolled into the 
transmission provider's transmission rates. The Commission allows some 
pricing flexibility for transmission providers that are part of an RTO/
ISO and independent of market participants, as these transmission 
providers have ``no incentive to use the cost determination and 
allocation process to unfairly advantage [their] own generation.'' \78\
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    \71\ Interconnection Facilities refer to:
    shall mean the Transmission Provider's Interconnection 
Facilities and the Interconnection Customer's Interconnection 
Facilities. Collectively, Interconnection Facilities include all 
facilities and equipment between the Generating Facility and the 
Point of Interconnection, including any modification, additions or 
upgrades that are necessary to physically and electrically 
interconnect the Generating Facility to the Transmission Provider's 
Transmission System. Interconnection Facilities are sole use 
facilities and shall not include Distribution Upgrades, Stand Alone 
Network Upgrades or Network Upgrades.
    Pro forma LGIA Art. 1.
    \72\ Network upgrades refer to:
    the additions, modifications, and upgrades to the Transmission 
Provider's Transmission System required at or beyond the point at 
which the Interconnection Facilities connect to the Transmission 
Provider's Transmission System to accommodate the interconnection of 
the Large Generating Facility to the Transmission Provider's 
Transmission System.
    Pro forma LGIA Art. 1.
    \73\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 693-694, 
676.
    \74\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 676.
    \75\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 612.
    \76\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694.
    \77\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694.
    \78\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694; 
Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 587.
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    66. Currently, article 11.3 of the pro forma LGIA states that:

    Network Upgrades and Distribution Upgrades. Transmission 
Provider or Transmission Owner shall design, procure, construct, 
install, and own the Network Upgrades and Distribution Upgrades 
described in Appendix A, Interconnection Facilities, Network 
Upgrades and Distribution Upgrades. The Interconnection Customer 
shall be responsible for all costs related to Distribution Upgrades. 
Unless Transmission Provider or Transmission Owner elects to fund 
the capital for the Network Upgrades, they shall be solely funded by 
Interconnection Customer.

The option for the transmission owner or provider to fund the cost for 
network upgrades is termed the ``self-fund option.'' Under Order No. 
2003, a transmission owner or provider electing the self-fund option 
provides the up-front funding for the capital cost of the network 
upgrades and then recovers the costs of those upgrades through its 
rolled-in transmission rates charged to transmission customers.\79\
---------------------------------------------------------------------------

    \79\ See Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 676. 
Order No. 2003, however, allows independent entities to depart from 
the pro forma LGIA approach. See Interstate Power and Light Co. v. 
ITC Midwest, LLC, 144 FERC ] 61,052, at P 38 (2013).
---------------------------------------------------------------------------

    67. In 2009, the Commission accepted a MISO proposal to increase 
the cost responsibility of an interconnection customer to 100 percent 
of the costs of network upgrades with a possible 10 percent 
reimbursement for network upgrades that are 345 kV or above.\80\ This 
approach reflects a departure from the pro forma LGIA interconnection 
pricing policy provided in Order No. 2003. In 2013, MISO proposed to 
allow a transmission owner to elect to initially fund network upgrades 
and to directly assign those costs to the interconnection customer 
under MISO's interconnection customer funding policy.\81\ In that 
proceeding, the Commission accepted MISO's proposal for a transmission

[[Page 4474]]

owner that elects to initially fund network upgrades under MISO's pro 
forma GIA to recover the capital costs for network upgrades through a 
network upgrade charge assessed to the interconnection customer.\82\
---------------------------------------------------------------------------

    \80\ Midwest Indep. Transmission Sys. Operator, Inc., 129 FERC ] 
61,060, at P 8 (2009).
    \81\ Midcontinent Indep. Sys. Operator, Inc., 145 FERC ] 61,111 
(2013) (Hoopeston).
    \82\ Hoopeston, 145 FERC ] 61,111 at P 41.
---------------------------------------------------------------------------

    68. Recently, another transmission owner in MISO sought to 
unilaterally elect the self-fund option for network upgrades.\83\ The 
Commission found that article 11.3 of MISO's pro forma GIA may be 
unjust, unreasonable, unduly discriminatory or preferential because it 
allows the transmission owner the discretion to elect to initially fund 
the upgrades and subsequently assess the interconnection customer a 
network upgrade charge that is not later reimbursed through the 
provision of credits. The Commission found that this practice could 
result in discriminatory treatment by the transmission owner of 
different interconnection customers.\84\ The Commission additionally 
found that, by unilaterally electing to initially fund network upgrades 
for which the interconnection customer is ultimately financially 
responsible and does not receive credits for those costs, the affected 
system operator or transmission owner may deprive the interconnection 
customer of more favorable network upgrade financing options. For 
instance, the Commission found that the transmission owner's unilateral 
election to initially fund network upgrades may increase costs of 
interconnection service by assigning increased capital costs and a 
security requirement to the interconnection customer with no 
corresponding increase in service.\85\ As a result, the Commission 
directed MISO to revise article 11.3 of its GIA to require mutual 
agreement with the interconnection customer for the transmission owner 
to elect to initially fund network upgrades.\86\
---------------------------------------------------------------------------

    \83\ See Otter Tail Power Co. v. Midcontinent Indep. Sys. 
Operator, Inc., 153 FERC ] 61,352 (2015).
    \84\ See Otter Tail Power Co. v. Midcontinent Indep. Sys. 
Operator, Inc., 153 FERC ] 61,352 at P 14; Midcontinent Indep. Sys. 
Operator, Inc., 151 FERC ] 61,220 (2015); Otter Tail Power Co. v. 
Midcontinent Indep. Sys. Operator, Inc., 156 FERC ] 61,099 (2016) 
(Otter Tail Proceedings).
    \85\ Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator, 
Inc., 153 FERC ] 61,352 at P 9.
    \86\ Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 61,220 
at P 53.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    69. In its Petition, AWEA argues that, where the Commission has 
granted independent entity variations that do not credit back network 
upgrade costs to the interconnection customer, transmission owners or 
providers should not have exclusive decision-making authority with 
respect to the self-fund option. AWEA specifically raises concerns that 
the self-fund option hinders competition and provides an opportunity 
for undue discrimination and affiliate abuse. In support, AWEA argues 
that the self-fund option allows transmission owners or providers to 
levy large upgrade costs onto the interconnection customer. AWEA 
requests that the Commission allow the transmission owner or provider 
to self-fund network upgrades only if the interconnection customer 
agrees.\87\
---------------------------------------------------------------------------

    \87\ RENEW and Wind on the Wires support this request. RENEW 
2015 Comments at 6; Wind on the Wires 2015 Comments at 3.
---------------------------------------------------------------------------

    70. Some commenters oppose requiring mutual agreement for self-
funding in all regions. MISO TOs view the proposal as eliminating a 
transmission owner's right to self-fund network upgrades, arguing that 
this could preclude the transmission owner from the ability to earn a 
return on its investment.\88\ ITC agrees, arguing that it is just and 
reasonable for transmission owners to earn a fair rate of return on 
constructed network upgrades.\89\ EEI argues that the Commission has 
long permitted transmission owners to self-fund upgrades while 
collecting the capital costs for such upgrades, further asserting that 
self-funding is an important aspect of the Commission's interconnection 
pricing policy. EEI notes that the Commission has clarified that the 
self-fund option should not include the recovery of costs other than 
the return of and on the capital costs of the network upgrades.\90\ 
Additionally, several commenters state that self-funding is a regional 
issue; thus, a generic rulemaking is not needed.\91\
---------------------------------------------------------------------------

    \88\ MISO TOs 2015 Comments at 18.
    \89\ ITC 2015 Comments at 12 (citing, e.g., Ameren Energy 
Resource Generating Co. v. Midcontinent Indep. Sys. Operator, Inc., 
148 FERC ] 61,057, at P 38 (2014)).
    \90\ EEI 2015 Comments at 44-45 (citing Hoopeston, 145 FERC ] 
61,111 at P 42).
    \91\ MISO TOs 2015 Comments at 18; MISO 2015 Comments at 21.
---------------------------------------------------------------------------

c. Proposal
    71. The Commission proposes to revise the pro forma LGIA to require 
mutual agreement between the interconnection customer and the 
transmission owner or provider for the transmission owner or provider 
to elect to fund the capital for network upgrades. Specifically, the 
Commission proposes to revise section 11.3 of the pro forma LGIA to 
include the requirements established in the Otter Tail Proceedings. To 
which, the Otter Tail Proceedings resulted in the changes as indicated 
below to article 3.2.1 of MISO's Attachment X to read:

    Transmission Owner shall provide Transmission Provider and 
Interconnection Customer with written notice pursuant to Article 15 
that Transmission Owner elects to fund the capital for the Network 
Upgrades and Transmission Owner's System Protection Facilities, 
which election shall only be available upon mutual agreement of 
Interconnection Customer and Transmission Owner; otherwise, such 
facilities, if any, shall be solely funded by Interconnection 
Customer.

    As such, the Commission proposes to modify the language in article 
11.3 of the pro forma LGIA as follows:

    Transmission Provider or Transmission Owner shall design, 
procure, construct, install, and own the Network Upgrades and 
Distribution Upgrades described in Appendix A, Interconnection 
Facilities, Network Upgrades and Distribution Upgrades. The 
Interconnection Customer shall be responsible for all costs related 
to Distribution Upgrades. Unless Transmission Provider or 
Transmission Owner elects to fund the capital for the Network 
Upgrades, which election shall only be available upon mutual 
agreement of Interconnection Customer and Transmission Owner or 
Transmission Provider, they shall be solely funded by 
Interconnection Customer.

    72. The Commission preliminarily finds that allowing the unilateral 
option to self-fund to continue for any transmission owner or 
transmission provider may be unjust, unreasonable, unduly 
discriminatory, or preferential. The Commission affirmed in the Otter 
Tail Proceedings that the unilateral election to self-fund created the 
same condition that was of concern in E.ON Climate & Renewables North 
America, LLC v. Midwest Indep. Transmission Sys. Operator, Inc., namely 
``unacceptable opportunities for undue discrimination by affording a 
transmission owner the discretion to increase the costs of 
interconnection service by assigning both increased capital costs, as 
well as non-capital costs . . . to particular interconnecting 
generators, but not others.'' \92\ The Commission further added that 
the unilateral election for the transmission owner to provide initial 
funding for network upgrades may deprive the interconnection customer 
of other options to finance the cost of the network upgrades that may 
provide more favorable terms and rates.\93\
---------------------------------------------------------------------------

    \92\ E.ON Climate & Renewables North America, LLC v. Midwest 
Indep. Transmission Sys. Operator, Inc., 137 FERC ] 61,076, at P 37 
(2011), order on reh'g, 142 FERC ] 61,048, at P 21 (2013).
    \93\ Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 61,220 
at P 49 (citing E.ON, 137 FERC ] 61,076 at P 37).
---------------------------------------------------------------------------

    73. The Commission proposes this reform to balance the 
interconnection customer's ability to manage the cost of

[[Page 4475]]

interconnection with the transmission owner's or provider's desire to 
earn a return on any network upgrades. The Commission recognizes that 
interconnection customers may have internal reasons for funding their 
own network upgrades and that doing so may enhance the interconnection 
customer's ability to manage the cost of interconnection. The 
Commission, in addition, does not believe that requiring mutual 
agreement in order for the transmission provider or owner to initially 
fund network upgrades in regions that follow the pro forma LGIA 
crediting approach would harm the transmission provider or owner. To 
the extent an interconnection customer does not withhold agreement to 
allow the transmission owner or provider to pay the upfront cost of 
network upgrades, the transmission provider or owner will be able to 
earn a return. The Commission invites comment on benefits the 
interconnection customer may realize by forgoing its opportunity to 
fund network upgrades and thereby allowing the transmission owner or 
provider to initially fund the network upgrades. The Commission is 
similarly interested in the comments regarding the benefits an 
interconnection customer may realize by funding network upgrades 
itself. Finally, the Commission seeks further comment on whether 
extending the requirement for mutual agreement for the transmission 
owner or provider to initially fund the network upgrades would result 
in circumstances that could harm an interconnection customer.
    74. While the concern motivating this proposed change may typically 
be more salient in regions where transmission credits are not provided 
for the costs paid by interconnection customers, there may occasionally 
be reasons that interconnection customers in regions where transmission 
credits are provided may want to require mutual agreement with the 
transmission owner or provider before it could self-fund. Accordingly, 
the Commission proposes that all transmission providers revise article 
11.3 in their pro forma LGIA to require mutual agreement between the 
interconnection customer and transmission owner or provider before the 
transmission owner or provider can choose to self-fund, but seeks 
comment as to whether the proposal should apply to all regions, as 
proposed, or be limited to RTOs/ISOs or regions that do not provide 
transmission credits.
    75. The Commission preliminarily disagrees with MISO TOs and ITC 
that requiring mutual agreement is akin to removing the option to self-
fund. In regions where transmission credits are not provided, 
transmission owners or providers may still exercise the self-funding 
option, as long as there is mutual agreement between the 
interconnection customer and the transmission owner or provider.
    76. The Commission agrees that self-funding is an important aspect 
of the Commission's interconnection pricing policy and that 
transmission owners or providers opting to self-fund in regions where 
transmission credits are not provided, pursuant to mutual agreement 
with the interconnection customer, may recover the return of and on 
their capital costs. Further, the Commission believes that requiring 
mutual agreement between the transmission owner or provider and the 
interconnection customer should not affect the costs recovered by the 
transmission owner or provider when the self-fund option is utilized.
    77. As stated above, the Commission's proposal will clarify article 
11.3 of the existing pro forma LGIA to require mutual agreement between 
the transmission owner or provider and interconnection customer before 
the transmission owner or provider may elect to initially fund network 
upgrades. The Commission also seeks comment on whether this proposal, 
if adopted, should apply to all regions as proposed or be limited to 
RTOs/ISOs or regions that do not provide transmission credits.
4. RTO/ISO Dispute Resolution
    78. The Commission proposes that RTOs/ISOs establish 
interconnection dispute resolution procedures that allow a disputing 
party to unilaterally seek dispute resolution in RTO/ISO regions. 
Commenters have not raised dispute resolution procedures outside of 
RTO/ISO regions as an issue, so the Commission has not proposed changes 
to non-RTO/ISO dispute resolution procedures in this Proposed Rule. 
However, as discussed below, the Commission invites comments regarding 
the adequacy of dispute resolution processes outside of RTO/ISO 
regions.
a. Current Provisions and Background
    79. The current interconnection dispute resolution process is 
described in article 13.5 of the pro forma LGIP. This article states 
that, if a dispute ``arises out of or in connection with'' the LGIA, 
LGIP, or either party's performance thereunder, a disputing party 
provides written notice of dispute to the other party outlining the 
dispute's terms.\94\ If the parties have not resolved the dispute 
within thirty days, one party may, ``upon mutual consent,'' submit the 
dispute for external arbitration procedures.\95\ If the parties fail to 
agree upon a single arbitrator within ten days, they may each select an 
arbitrator, and both arbitrators will have twenty days to select a 
third arbitrator. Each arbitrator must be knowledgeable ``in electric 
utility matters, including electric transmission and bulk power issues, 
and shall not have any current or past substantial business or 
financial relationships with any party to the arbitration.'' \96\ 
Unless otherwise agreed, the arbitrator(s) must render a decision 
within ninety days, and the parties must pay their own costs and the 
costs of the arbitrators.\97\
---------------------------------------------------------------------------

    \94\ Pro forma LGIP Sec. 13.5.1.
    \95\ Pro forma LGIP Sec. 13.5.1.
    \96\ Pro forma LGIP Sec. 13.5.2.
    \97\ Pro forma LGIP Sec. 13.5.3, 13.5.4. Under section 13.5.4, 
each party must pay (1) the cost of the arbitrator chosen by the 
party to sit on the three member panel and one half of the cost of 
the third arbitrator chosen; or (2) one half the cost of the single 
arbitrator jointly chosen by the parties.
---------------------------------------------------------------------------

    80. Some RTOs/ISOs have adopted interconnection dispute resolution 
procedures similar to those laid out in the pro forma LGIP; \98\ others 
direct parties to their general dispute resolution procedures.\99\
---------------------------------------------------------------------------

    \98\ ISO-NE., Transmission, Markets and Services Tariff, Section 
II, Schedule 22 (9.0.0), Section 13.5; NYISO, NYISO Tariffs, OATT 
Section 30.13 (2.0.0) (Miscellaneous); CAISO, eTariff, FERC Electric 
Tariff, OATT, app. DD, Section 15 (1.0.0) (Miscellaneous); SPP, 
OATT, Attachment V, Section 1.5 (2.0.0).
    \99\ MISO, FERC Electric Tariff, Attachment X (49.0.0), art. 
11.5 (Disputes); PJM Interconnection, L.L.C., 123 FERC ] 61,163, at 
n. 41 (2008) (``dispute resolution procedures in section 12 [PJM, 
Intra-PJM Tariffs, OATT, Section 12 (0.0.0)] are applicable to 
disputes arising regarding the interconnection process''). PJM's 
general dispute resolution procedures are similar to those laid out 
in section 13.5 of the pro forma LGIP.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    81. Interconnection customers can have disputes with transmission 
owners about a number of issues, including costs, construction 
schedules, and the design of interconnection facilities and network 
upgrades.\100\ Multiple renewable interconnection customers state that 
they consider current RTO/ISO dispute resolution procedures inadequate 
and argue that the filing of a complaint pursuant to FPA section 206 is 
not a serviceable substitute for dispute resolution because the 
complaint process is too expensive and time-consuming, given the time 
sensitivity of the interconnection process.\101\ Nonetheless, 
commenters

[[Page 4476]]

disagree about how to improve RTO/ISO dispute resolution procedures. 
EDP contends that RTOs/ISOs are often in the best position to mediate 
such discussions and disputes.\102\ NextEra asserts, however, that on 
occasion, RTOs refuse to be a party to dispute resolution and tell the 
parties to resolve the issues themselves.\103\ Furthermore, EDP argues 
that there is some question about RTO/ISO independence because RTOs/
ISOs ``often lean on'' the transmission owner for assistance in 
modeling or design information.\104\ Similarly, EDF argues that the 
interconnection customer ``almost always loses'' because issues are 
judged by the RTO/ISO and fellow transmission owners and transmission 
providers.\105\
---------------------------------------------------------------------------

    \100\ 2016 Technical Conference Tr. 131: 4-17; 133: 18-21.
    \101\ Invenergy 2016 Comments at 2, 3, 26; EDF 2016 Comments at 
40-41; EDP 2016 Comments at 20; NextEra 2016 Comments at 9-10.
    \102\ EDP 2016 Comments at 20.
    \103\ 2016 Technical Conference Tr. 141:11-16.
    \104\ EDP 2016 Comments at 20.
    \105\ EDF 2016 Comments at 40.
---------------------------------------------------------------------------

    82. Because of its unease with RTOs/ISOs, NextEra states that the 
Commission is the ``ideal adjudicator'' of such conflicts and asks the 
Commission to devise an expeditious interconnection dispute 
adjudication process.\106\ NextEra states that this process could 
involve more formal predictable procedures through the Commission's 
hotline or some other method to quickly respond to the facts 
presented.\107\ Similarly, Invenergy and AWEA propose that each RTO/ISO 
establish an in-house ombudsman that can reach out to designated 
Commission staff to intervene as needed.\108\ EDP also voices the need 
for an independent arbiter to assist in resolving these disputes 
without relying on the RTO/ISO.\109\
---------------------------------------------------------------------------

    \106\ NextEra 2016 Comments at 9-10.
    \107\ NextEra 2016 Comments at 10.
    \108\ Invenergy 2016 Comments at 2, 3, 26; 2016 Technical 
Conference Tr. 63:11-18; AWEA 2016 Comments at 38.
    \109\ EDP 2016 Comments at 40-41.
---------------------------------------------------------------------------

    83. Not all commenters argue that the current available procedures 
are defective or that dispute resolution reform is necessary. For 
instance, MISO argues that parties rarely take advantage of its dispute 
resolution process for interconnection issues.\110\ Similarly, CAISO 
and ISO-NE state that issues that require dispute resolution seldom 
arise.\111\ These commenters and others consider the available dispute 
resolution procedures adequate.\112\
---------------------------------------------------------------------------

    \110\ MISO 2016 Comments at 21.
    \111\ 2016 Technical Conference Tr. 135: 13-15; 137: 6-9; ISO-NE 
2016 Comments at 27.
    \112\ ISO-NE 2016 Comments at 27; NYISO 2016 Comments at 26; 
AVANGRID 2016 Comments at 12; MISO 2016 Comments at 21; Modesto 
Irrigation District at 11-12.
---------------------------------------------------------------------------

c. Proposal
    84. The Commission preliminarily finds that RTO/ISO generator 
interconnection dispute resolution procedures may not be just and 
reasonable or may be unduly discriminatory or preferential. The current 
processes allow a disputing party to pursue a streamlined dispute 
resolution process only if the other party to the dispute agrees to 
this process. As a result, disputing parties may have little recourse. 
Multiple commenters have suggested that the Commission, rather than the 
RTO/ISO, is in the best position to resolve interconnection disputes. 
It is not clear whether such commenters are suggesting that the 
Commission adopt the dispute resolution provisions of the pro forma 
SGIP, which allow disputing parties to contact the Commission's Dispute 
Resolution Service to assist in either resolving a dispute or in 
selecting an appropriate dispute resolution venue.\113\ Regardless, 
because RTOs/ISOs are more familiar with the details regarding their 
respective systems and interconnection processes, the Commission 
proposes to require that RTOs/ISOs serve as the neutral decision-makers 
to interconnection disputes. While several commenters have expressed 
concern about the RTOs'/ISOs' neutrality, independence of market 
participants was, and is, a foundational requirement of the RTOs/
ISOs.\114\ The Commission proposes that RTOs/ISOs provide staff 
member(s) or utilize subcontractor(s) to preside over such dispute 
resolution (e.g., as mediators or arbitrators) and that such staff 
member(s) or subcontractor(s) be independent of the influence of 
transmission owners and interconnection customers and can thus serve as 
neutral decision-makers. To establish this neutrality, the Commission 
proposes that the selected staff member(s) or subcontractor(s) shall 
not have any current or past substantial business or financial 
relationships with any party to the dispute.\115\ This standard is 
identical to the one provided in section 13.5.2 of the pro forma LGIP. 
Additionally, the RTO/ISO-devised procedures must account for the time 
sensitivity of the generator interconnection process.
---------------------------------------------------------------------------

    \113\ Pro forma SGIP Sections 4.2.2 & 4.2.4.
    \114\ See Regional Transmission Organizations, Order No. 2000, 
FERC Stats. & Regs. ] 31,089, at PP 193-94 (1999), order on reh'g, 
Order No. 2000-A, FERC Stats. & Regs. ] 31,092 (2000), aff'd sub 
nom. Pub. Util. Dist. No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001).
    \115\ See Pro Forma LGIP Sec. 13.5.2.
---------------------------------------------------------------------------

    85. The Commission also proposes that RTOs/ISOs eliminate the 
requirement that a dispute resolution process only be available ``upon 
the mutual agreement of the Parties.'' \116\ While no commenter has 
suggested that the arbitration process embodied in section 13.5 of the 
pro forma LGIP lacks neutrality, this process is effectively 
unavailable to the interconnection customer if a transmission provider 
or a transmission owner opposes this arbitration process. The 
Commission also proposes that each Commission-approved RTO/ISO amend 
its generator interconnection procedures to provide dispute resolution 
procedures (e.g., mediation or arbitration) that are tailored to 
address interconnection process disputes.
---------------------------------------------------------------------------

    \116\ Pro forma LGIP Sec. 13.5.1.
---------------------------------------------------------------------------

    86. The comments received regarding dispute resolution procedures 
only express concerns about dispute resolution within RTOs/ISOs. 
Accordingly, the Commission has preliminarily concluded that 
interconnection customers and non-RTO/ISO transmission providers are 
satisfied with the dispute resolution procedures outside of RTOs/ISOs. 
In any case, the Commission does not propose to change section 13.5 
(Disputes) of the pro forma LGIP at this time. Additionally, at this 
time, the Commission does not propose to adopt procedures in the pro 
forma LGIP similar to those adopted in section 4.2 (Disputes) of the 
pro forma SGIP, which directs disputing parties to address their issues 
through the Commission's Dispute Resolution Service. The Commission 
seeks comment, however, on the need for reform to generator 
interconnection dispute procedures outside of the RTOs/ISOs and the 
appropriateness of adopting procedures similar to those outlined in the 
pro forma SGIP.
    87. To effectuate this proposal, the Commission proposes to revise 
section 35.28(g)(9) of the Code of Federal Regulations to require every 
Commission-approved independent system operator or regional 
transmission organization to maintain tariff provisions governing 
generator interconnection dispute resolution procedures to allow a 
disputing party to unilaterally initiate dispute resolution procedures 
under the respective tariff. Such provisions must provide for 
independent system operator or regional transmission organization staff 
member(s) or utilize subcontractor(s) to serve as the neutral decision-
maker(s) or presiding staff member(s) or subcontractor(s) to the 
dispute resolution procedures. Such staff participating in dispute 
resolution

[[Page 4477]]

procedures shall not have any current or past substantial business or 
financial relationships with any party. Additionally, such dispute 
resolution procedures must account for the time sensitivity of the 
generator interconnection process.
5. Capping Costs for Network Upgrades
a. Existing Provisions and Background
    88. The pro forma LGIP requires that transmission providers provide 
a good faith estimate of the cost of interconnection facilities and 
network upgrades needed to accommodate an interconnection customer's 
requested level of interconnection service.\117\ The transmission 
provider includes this cost estimate with the facilities study results, 
typically with a stated accuracy margin within 10 to 20 percent of the 
estimate.\118\ After completion of the construction of the transmission 
provider's interconnection facilities and network upgrades needed to 
interconnect a generating facility, the transmission provider conducts 
a true-up to assess the final cost of construction to the 
interconnection customer. The transmission provider provides a final 
invoice to the interconnection customer that details variations between 
actual and estimated costs. Overpayment by the interconnection customer 
results in a refund to the interconnection customer, or a surcharge in 
case of an underpayment.\119\
---------------------------------------------------------------------------

    \117\ See, e.g., pro forma LGIP Sec. 6.2 and 7.3.
    \118\ Pro forma LGIP Sec. 8.3.
    \119\ Pro forma LGIA Art. 12.
---------------------------------------------------------------------------

    89. In Order No. 2003-A, the Commission also clarified that the 
cost of network upgrades originally assigned to a higher-queued 
interconnection customer that has withdrawn its interconnection request 
could fall to a lower-queued interconnection customer, if the network 
upgrades are still necessary to support the interconnection of the 
lower-queued interconnection customer's generating facility. The 
Commission acknowledged that this business risk creates uncertainty for 
the interconnection customer. However, the Commission found that such 
costs shifts were just and reasonable, as the lower-queued 
interconnection customer would need the network upgrades to support the 
interconnection of its generating facility.\120\
---------------------------------------------------------------------------

    \120\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 320.
---------------------------------------------------------------------------

    90. The Commission has approved an independent entity variation 
from this Commission policy in the CAISO region.\121\ CAISO caps cost 
responsibility for reliability and local delivery network upgrades 
\122\ at the lower of its Phase I and Phase II study report amounts. 
Transmission owners are responsible for additional reliability network 
upgrade and local delivery network upgrade costs beyond the cap, unless 
they are due to interconnection customer errors or changes.\123\ 
Transmission owners, in turn, reflect these costs in their transmission 
service rates, which ultimately shifts these costs onto load.\124\
---------------------------------------------------------------------------

    \121\ California Indep. Sys. Operator Corp., 124 FERC ] 61,292.
    \122\ The CAISO Tariff defines the term ``Reliability Network 
Upgrade'' as:
    The transmission facilities at or beyond the Point of 
Interconnection identified in the Interconnection Studies as 
necessary to interconnect one or more Generating Facility(ies) 
safely and reliably to the CAISO Controlled Grid, which would not 
have been necessary but for the interconnection of one or more 
Generating Facility(ies), including Network Upgrades necessary to 
remedy short circuit or stability problems, or thermal overloads. 
Reliability Network Upgrades shall only be deemed necessary for 
system operating limits, occurring under any system condition, which 
system operating limits cannot be adequately mitigated through 
Congestion Management, Operating Procedures, or Special Protection 
Systems based on the characteristics of the Generating Facilities 
included in the Interconnection Studies, limitations on market 
models, systems, or information, or other factors specifically 
identified in the Interconnection Studies. Reliability Network 
Upgrades also include, consistent with [Western Electricity 
Coordinating Council] practice, the facilities necessary to mitigate 
any adverse impact the Generating Facility's interconnection may 
have on a path's [Western Electricity Coordinating Council] 
rating.'' CAISO Tariff, Appendix A, Definition--Reliability Network 
Upgrade.
    The CAISO Tariff defines ``Local Deliverability Network 
Upgrade'' as:
    ``A transmission upgrade or addition identified by the CAISO in 
the [Generator Interconnection and Deliverability Allocation 
Procedures] interconnection study process to relieve a Local 
Deliverability Constraint.'' CAISO Tariff, Appendix A, Definition--
Local Delivery Network Upgrade.
    \123\ CAISO Tariff, Appendix DD, Sec. 10.
    \124\ 2016 Technical Conference Tr. 161: 7-23.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    91. In its Petition, AWEA claims that interconnection customers 
frequently pay costs that exceed the higher bound of a transmission 
provider's cost estimates and that significant excess costs can disrupt 
an interconnection customer's business model. AWEA asserts that it is 
just and reasonable to protect interconnection customers from excessive 
cost overruns. AWEA contends that the transmission provider should be 
obligated to pay the portion of any final cost beyond the estimated 
cost accuracy margin for interconnection studies, excluding 
demonstrated, extraordinary costs beyond its control. AWEA asserts that 
it is unjust and unreasonable to shift the consequences of a 
transmission provider's inaccurate cost estimates onto the 
interconnection customer. It argues that the transmission provider 
should assume such risk because it has control over the interconnection 
process. AWEA points to CAISO's phased study approach as an example of 
a cost cap mechanism that would provide more cost certainty.\125\ 
Several commenters support AWEA's request to cap costs at the higher 
bound of a stated accuracy margin, absent demonstrated, extraordinary 
circumstances beyond a transmission provider's control.\126\ Six Cities 
supports establishing maximum cost responsibility for network upgrades 
but opposes a cap on interconnection facility costs, contending that 
interconnection customers should bear all cost responsibility for 
interconnection facilities.\127\ CAISO states that its phased study 
approach, coupled with a cost cap, has helped reduce the need for 
restudies in its region and provided more certainty to interconnection 
customers earlier in the study process.\128\
---------------------------------------------------------------------------

    \125\ AWEA Petition at 47-48.
    \126\ RENEW 2015 Comments at 6; Wind Coalition 2015 Comments at 
3; Wind on the Wires 2015 Comments at 3.
    \127\ Six Cities 2015 Comments at 8.
    \128\ 2016 Technical Conference Tr. 83: 17-25, 84: 1-25, 85: 1-
4.
---------------------------------------------------------------------------

    92. Other commenters oppose AWEA's proposal to impose caps on 
interconnection cost estimates.\129\ These commenters argue that this 
proposal would achieve little because the most significant contributors 
to cost overruns, such as the withdrawal of higher-queued 
interconnection requests and inaccurate cost estimates provided by 
transmission owners, are outside the transmission provider's 
control.\130\ Additionally, commenters express concerns that 
implementing a cost cap will result in inappropriate cost shifts, 
particularly to load, that violate traditional cost causation 
principles.\131\ Several commenters also express concern that AWEA's 
proposal would be problematic in regions in which the Commission has 
approved cost allocation variations from the pro forma GIA. MISO 
asserts that, because CAISO is a single-state RTO, any cost overruns 
are ultimately shifted to load, which

[[Page 4478]]

will eventually benefit from any generation resulting from the 
interconnection. MISO argues, however, that capping costs, whether in 
aggregate or per unit, and socializing the cost of overruns is not 
necessarily embraced by regulators in multistate RTOs/ISOs that require 
generator costs to be more specifically borne by the beneficiaries of 
the power from the resource.\132\ ISO-NE concurs, contending that 
implementing a cost cap would shift costs to ratepayers that the 
interconnection customer should bear. That shift, argues ISO-NE, is not 
an option under its ``but for'' cost allocation design.\133\
---------------------------------------------------------------------------

    \129\ CMUA 2015 Comments at 4-6; EEI 2015 Comments at 23-24; 
KCP&L 2015 Comments at 18; MISO 2015 Comments at 20; MISO TOs 2015 
Comments at 10-13; Modesto Irrigation District 2015 Comments at 7-
12; NYTOs 2015 Comments at 7; PSEG 2015 Comments at 8.
    \130\ CMUA 2015 Comments at 5-6; MISO 2015 Comments at 20; MISO 
TOs 2015 Comments at 12; Modesto Irrigation District 2015 Comments 
at 7-8; PSEG 2015 Comments at 8.
    \131\ EEI 2015 Comments at 23; MISO TOs 2015 Comments at 11.
    \132\ MISO 2016 Comments at 2-3.
    \133\ ISO-NE 2016 Comments at 24.
---------------------------------------------------------------------------

c. Request for Comments
    93. Several of the proposed reforms in this Proposed Rule seek to 
provide more certainty to interconnection customers during the 
interconnection study process, such as the proposal to schedule the 
frequency of restudies. As noted above, increasing certainty for 
interconnection customers--particularly cost certainty--may decrease 
the number of late-stage interconnection request withdrawals from the 
interconnection queue, which could meaningfully ameliorate the cycle of 
repeated, cascading restudies. Capping costs at a certain variance 
above estimates could provide interconnection customers with business 
certainty useful to more efficiently develop an interconnection 
request. A cost cap could also discipline the study process to produce 
more accurate cost estimates. The Commission acknowledges, however, 
that a cost cap could incentivize transmission providers to 
overestimate network upgrade costs in order to minimize potential cost 
shifts.
    94. The Commission also recognizes that the prospect of 
implementing a cost cap raises difficult issues. Several RTO/ISO 
regions have reached consensus on cost allocation policies under the 
independent entity variation that differ from the pricing policy laid 
out in Order No. 2003. These cost allocation policies, in turn, have 
become embedded in these RTO/ISO regions and have supported other cost 
allocation strategies, which are not easily disturbed. Implementing a 
cost cap would diverge from the Commission's ``but for'' cost 
allocation policy with respect to network upgrades because it would 
reallocate costs that would not have been necessary but for a 
particular interconnection request. The Commission appreciates insights 
into balancing the benefits of increasing cost certainty to 
interconnection customers against the potential drawbacks of shifting 
costs to other parties, particularly load.
    95. The Commission seeks comment on whether it should revise the 
pro forma LGIP and LGIA to provide for a cost cap that would limit an 
interconnection customer's network upgrade costs at the higher bound of 
a transmission provider's cost estimate plus a stated accuracy margin 
following a certain stage in the interconnection study process. Such a 
cap could permit the interconnection customer to assume costs that 
exceed the cap under limited circumstances, such as where there is 
demonstrable proof that the cause of a cost increase is beyond the 
transmission provider's control. The cost cap could also specify which 
party or parties would assume network upgrade costs in excess of the 
cap. The Commission seeks comment on how to minimize potential cost 
shifts to other parties if such a cost cap is imposed. The Commission 
also seeks comments on alternative proposals, or additional steps that 
the Commission could take, to provide more cost certainty to 
interconnection customers during the interconnection study process.
B. Promoting More Informed Interconnection
    96. The five reforms in this section would improve transparency 
regarding the interconnection process and provide improved information 
to the benefit of all participants in the interconnection process. 
These benefits have the potential to lead to efficiencies in the 
development process and a reduction in participation disagreements or 
uncertainty. Additionally, these reforms may address aspects of the 
interconnection process that may not be just and reasonable or that may 
be unduly discriminatory or preferential. In addition to the proposed 
reforms, the Commission seeks comment on proposals or additional steps 
that the Commission could take to improve the resolution of issues that 
arise when affected systems are impacted by a proposed interconnection.
1. Identification and Definition of Contingent Facilities
    97. The Commission proposes to revise the pro forma LGIP to require 
transmission providers to detail the method they use to determine 
contingent facilities. The Commission proposes to define contingent 
facilities as those unbuilt interconnection facilities and network 
upgrades upon which the interconnection request's costs, timing, and 
study findings are dependent, and if not built, could cause a need for 
restudies of the interconnection request or a reassessment of network 
upgrades and/or costs and timing.
a. Existing Provisions
    98. The Commission currently requires transmission providers to 
identify for interconnection customers contingencies potentially 
affecting interconnection studies \134\ and list applicable contingent 
facilities in interconnection agreements.\135\
---------------------------------------------------------------------------

    \134\ Pro forma LGIP Section 2.3.
    \135\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 409 
(``[i]f it is apparent to the Parties . . . that contingencies (such 
as other Interconnection Customers terminating their LGIAs) might 
affect the financial arrangements, the Parties should include such 
contingencies in their LGIA and address the effect of such 
contingencies on their financial obligations'').
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    99. In its Petition, AWEA asserts that interconnection customers 
rely on the detailed list of contingent facilities that are listed in 
studies and their interconnection agreements in order to assess future 
risk.\136\ AWEA states that transmission providers are not consistently 
providing full and accurate lists of contingent facilities within 
interconnection studies and interconnection agreements. Moreover, AWEA 
asserts that transmission providers and transmission owners may add 
more contingent facilities after the interconnection agreement has been 
signed or filed with the Commission.\137\ AWEA also states that some, 
but not all, LGIPs or related business practices manuals acknowledge 
the need to study contingent facilities. AWEA asserts that there is 
often neither a clear definition of contingent facilities in LGIPs or 
in business practice manuals, nor an affirmative obligation in the 
LGIPs to apprise the interconnection customer of such contingencies in 
the facilities study and interconnection agreement. AWEA further 
asserts that in some cases, the appendices to an interconnection 
agreement may contain a long list of contingencies, including higher-
queued generators throughout the RTO and numerous transmission 
upgrades; however, no showing has been made regarding whether these 
interconnection requests and facilities will impact a particular 
interconnection request.\138\ AWEA supports MISO's practice of listing, 
in the interconnection agreement, contingent facilities that have a 
five percent or greater distribution factor impact on an 
interconnection request. AWEA notes that this practice has resulted in 
a

[[Page 4479]]

reduction in the number of contingent facilities listed in 
interconnection agreements by focusing on those that are electrically-
impacted by the proposed interconnection request.\139\ In particular, 
AWEA states that MISO's five percent threshold has resulted in an 85 
percent reduction in contingent facilities listed in interconnection 
agreements.\140\
---------------------------------------------------------------------------

    \136\ Petition at 25-26.
    \137\ Petition at 26.
    \138\ Petition at 27.
    \139\ Petition at 27.
    \140\ Petition at 27.
---------------------------------------------------------------------------

    100. Several commenters assert that there is little clarity on how 
a transmission provider identifies contingent facilities and request 
that the Commission require transmission providers to specify the 
method they use to identify contingent facilities.\141\ Invenergy 
states that the number of contingent facilities can change dramatically 
from the system impact study phase to the interconnection agreement 
phase, which can result in disputes between stakeholders regarding the 
study assumptions that resulted in addition or removal of certain 
contingent facilities from the list.\142\ NextEra encourages the 
Commission to identify additional best practices that can be 
implemented in all regions.\143\
---------------------------------------------------------------------------

    \141\ EDF 2016 Comments at 38-39; AWEA 2016 Comments at 36-37; 
Invenergy 2016 Comments at 23-24; NextEra 2015 Comments at 7.
    \142\ Invenergy 2016 Comments at 23-24.
    \143\ NextEra 2015 Comments at 7.
---------------------------------------------------------------------------

    101. Some commenters note the potential difficulties in creating a 
generic methodology for determining the list of contingent facilities 
or note that a generic methodology may not be applicable to a given 
region. For example, EEI asserts that providing additional information, 
in line with MISO's five percent threshold, may increase the time and 
cost for preparing interconnection studies, cautioning that the five 
percent threshold might not work outside of MISO.\144\ Indicated NYTOs 
note that developing a contingent facilities method is not applicable 
to NYISO because of NYISO's Class Year Study process.\145\ MISO states 
that it is currently reviewing ``how to identify the network upgrades 
[that] a generation interconnection would be contingent upon.'' \146\ 
ISO-NE states that contingent facilities are identified in the system 
impact study and are memorialized in the interconnection agreement, and 
the interconnection customer learns about these contingent facilities 
through the study of its interconnection request.\147\
---------------------------------------------------------------------------

    \144\ EEI 2015 Comments at 25.
    \145\ Indicated NYTOs 2015 Comments at 4.
    \146\ MISO 2016 Comments at 19.
    \147\ ISO-NE 2016 Comments at 26.
---------------------------------------------------------------------------

c. Proposal
    102. As noted above, the Commission requires transmission providers 
to list applicable contingent facilities in interconnection 
agreements.\148\ However, the existing requirements do not specify how 
transmission providers should determine the list of contingent 
facilities, and this omission could result in uncertainty for 
interconnection customers. The Commission preliminarily finds that some 
practices with regard to these contingent facilities may not be just 
and reasonable or may be unduly discriminatory or preferential. 
Therefore, the method for determining contingent facilities must be 
described in pro forma LGIPs, rather than the business practices 
manuals.
---------------------------------------------------------------------------

    \148\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 409.
---------------------------------------------------------------------------

    103. The Commission proposes to require transmission providers to 
detail in the pro forma LGIP the method that transmission providers 
will use to determine the list of contingent facilities in evaluating 
an interconnection request. The Commission proposes that the 
transmission provider's method be transparent and sufficiently detailed 
to determine why a specific contingent facility was included on the 
list and how it impacts the interconnection request. The Commission 
also proposes for transmission providers to provide the list of 
contingent facilities to interconnection customers at the conclusion of 
the system impact study.
    104. The transmission provider should also provide, upon request of 
the interconnection customer, the estimated network upgrade costs and 
estimated in-service completion time associated with each identified 
contingent facility when this information is not commercially 
sensitive. The Commission believes that such information will inform 
the interconnection customer about the potential impacts of a 
contingent facility on an interconnection request.
    105. The Commission is considering whether the method for 
determining contingent facilities used by transmission providers should 
be harmonized among regions as much as possible. To this end, the 
Commission seeks comment on how transmission providers currently 
identify contingent facilities and what improvements to the existing 
approach(es) would be recommended by interconnection customers or 
others to determine whether there are identifiable best practices. The 
Commission also seeks comment on how the process for identifying 
contingent facilities could be standardized. For example, the 
Commission seeks comment on the usefulness of requiring transmission 
providers to include a distribution factor analysis in their 
methodologies for identifying contingent facilities, and if so, whether 
a specific distribution factor should be implemented in the pro forma 
LGIP (e.g., a 5 percent distribution factor as referenced by AWEA). The 
Commission also seeks comment on whether there are alternative 
methodologies besides a distribution factor analysis that could be used 
to identify contingent facilities, and that may be better suited for 
standardization across transmission providers and included in the pro 
forma LGIP.
    106. The Commission proposes to add the following new definition to 
Section 1 of the pro forma LGIP:

    Contingent Facilities shall mean those unbuilt interconnection 
facilities and network upgrades upon which the interconnection 
request's costs, timing, and study findings are dependent, and if 
not built, could cause a need for restudies of the interconnection 
request or a reassessment of the network upgrades and/or costs and 
timing.

    107. The Commission proposes to add a new section 3.8 to the pro 
forma LGIP:

    3.8 Identification of Contingent Facilities
    Transmission Provider shall post in this section a method for 
identifying the Contingent Facilities to be provided to 
Interconnection Customer at the conclusion of the System Impact 
Study and included in Interconnection Customer's GIA. The method 
shall be sufficiently transparent to determine why a specific 
Contingent Facility was identified and how it relates to the 
interconnection request. Transmission Provider shall also provide, 
upon request of the Interconnection Customer, the estimated 
interconnection facility and/or network upgrade costs and estimated 
in-service completion time of each identified Contingent Facility 
when this information is not commercially sensitive.

    108. The Commission seeks comment on the proposed reforms to the 
pro forma LGIP for transmission providers to include a method to 
identify contingent facilities and to provide the list of contingent 
facilities to interconnection customers at the conclusion of the system 
impact study. The Commission also seeks comment on whether estimates of 
the costs and timing of higher-queued contingent facilities are helpful 
to the interconnection customer and can be provided to the 
interconnection customer without disclosing commercially sensitive 
information.
2. Transparency Regarding Study Models and Assumptions
    109. As discussed in the previous section, increasing the 
transparency of

[[Page 4480]]

the network models and underlying assumptions used for interconnection 
studies, including shift factors and dispatch information, is a key 
improvement that could be made to the interconnection process. To 
increase transparency with regard to the interconnection study 
processes for interconnection customers and to ensure consistency in 
the analysis of interconnection requests, the Commission proposes a 
general requirement that transmission providers list all the network 
models and underlying assumptions used for interconnection studies in 
their pro forma LGIPs and on their OASIS sites. The Commission believes 
this information will benefit both interconnection customers in the 
queue as well as those developing interconnection requests by 
potentially helping them avoid entering the queue with non-viable 
interconnection requests. The Commission also proposes that 
transmission providers include non-confidential supporting data on 
OASIS.
a. Existing Provisions and Background
    110. Section 2.3 of the pro forma LGIP requires the transmission 
provider to provide base power flow, short circuit, and stability 
databases, including all underlying assumptions, and a contingency list 
upon request, subject to confidentiality provisions in section 13.1 of 
the pro forma LGIP. A transmission provider may require that an 
interconnection customer sign a confidentiality agreement before the 
release of commercially sensitive information or Critical Energy 
Infrastructure Information (CEII) in the base case data.\149\
---------------------------------------------------------------------------

    \149\ Pro forma LGIP Sec. 2.3.
---------------------------------------------------------------------------

    111. In Attachment A to the individual interconnection study 
agreements in the pro forma LGIP, the interconnection customer and the 
transmission provider list the assumptions under which the individual 
studies are to be performed. However, the general assumptions used to 
form the network models are not universally listed or posted for 
interconnection customers to examine prior to entering the queue.
    112. While some regions allow their network models to be accessed 
prior to an interconnection customer submitting an interconnection 
request in order to facilitate development decisions, such access is 
not consistent across regions. At times, information that would be 
relevant for prospective interconnection customers to plan 
interconnection requests is contained within business practice manuals 
and may not be consolidated in one location or easily found.
b. AWEA Petition and Comments
    113. It its Petition, AWEA claims that the study processes and 
assumptions for forming network models used in interconnection studies 
are not always transparent. AWEA claims that some transmission 
providers inconsistently apply certain assumptions, such as shift 
factors, which can lead to vastly different study results for similar 
interconnection requests participating in the same market.\150\ In its 
post-technical conference comments about the use of non-disclosure 
agreements to facilitate the study process, AWEA contends that, once a 
non-disclosure agreement is provided by the interconnection customer, 
the transmission provider or transmission owner should not deny or 
delay providing models or other requested information.\151\
---------------------------------------------------------------------------

    \150\ AWEA Petition at 33-35.
    \151\ AWEA 2016 Comments at 32.
---------------------------------------------------------------------------

    114. Several commenters, such as Wind on the Wires, agree with AWEA 
that further transparency is necessary with respect to interconnection 
studies and study assumptions.\152\ Additionally, the Wind Coalition 
asserts that transmission providers should make clear to all 
stakeholders how they model interconnections.\153\ EDF states that 
study assumptions have a direct effect on generator interconnection 
study results that determine available capacity and whether network 
upgrades are necessary to accommodate the level of requested 
interconnection service. According to EDF, a key study assumption is 
generation dispatch, i.e., the assumed levels of dispatch during peak 
and off-peak periods assigned to an interconnection request. EDF claims 
that it has seen significant variation in study assumptions from RTO to 
RTO and also within an RTO.\154\ EDF also states that interconnection 
customers need access to models before deciding to enter the 
interconnection queue and that these models need to take into account 
up-to-date power flow data.\155\
---------------------------------------------------------------------------

    \152\ Wind on the Wires 2015 Comments at 3.
    \153\ Wind Coalition 2015 Comments at 2.
    \154\ EDF 2015 Comments at 21-23.
    \155\ EDF 2016 Comments at 31.
---------------------------------------------------------------------------

    115. Some commenters do not think it is appropriate for the 
Commission to require transmission providers to be more transparent 
about interconnection study assumptions. ISO-NE states that it already 
provides extensive information about assumptions underlying its 
interconnection studies.\156\ TVA contends that transmission providers 
may be able to provide more detailed information regarding study 
process practices, inputs, and results, but certain information cannot 
be made public and can be provided to customers only under a non-
disclosure agreement.\157\
---------------------------------------------------------------------------

    \156\ ISO-NE 2015 Comments at 44.
    \157\ TVA 2015 Comments at 8.
---------------------------------------------------------------------------

    116. While some transmission providers might already provide 
sufficient information regarding their study assumptions, some 
commenters do not consider all transmission providers to be 
sufficiently transparent in this regard.\158\
---------------------------------------------------------------------------

    \158\ See, e.g., EDF 2015 Comments at 21-23; Wind Coalition 2015 
Comments at 2.
---------------------------------------------------------------------------

c. Proposal
    117. The Commission believes that stakeholders benefit from 
increased transparency. The Commission preliminarily finds that clear 
network model assumptions, made available early in the interconnection 
process, will provide interconnection customers with data that will 
allow them to better plan interconnection requests and lead to a more 
efficient interconnection process. Additionally, the Commission 
preliminarily finds that interconnection customers' ability to obtain 
study assumptions will reduce the need for protracted study 
discussions.
    118. The Commission proposes to require transmission providers to 
make more transparent the assumptions underlying the network models 
used in conducting interconnection studies. The Commission proposes 
that transmission providers detail the network model assumptions used 
during the feasibility study in Attachment A to Appendix 2 of the pro 
forma LGIP. The Commission also proposes that transmission providers 
detail the network model assumptions used during the system impact 
study in Attachment A to Appendix 3 of the pro forma LGIP.
    119. Additionally, because interconnection customers would benefit 
from an understanding of network models and their underlying 
assumptions before submitting interconnection requests, the Commission 
proposes that transmission providers be required to provide network 
model details on their OASIS sites, including, but not limited to, 
shift factors, dispatch assumptions, load power factors, and power 
flows. The Commission proposes modifying section 2.3 of the pro forma 
LGIP:

    Base Case Data. Transmission Provider shall provide base power 
flow, short circuit

[[Page 4481]]

and stability databases, including all underlying assumptions, and 
contingency list upon request subject to confidentiality provisions 
in LGIP Section 13.1. Additionally, Transmission Provider will 
maintain network models and underlying assumptions on its OASIS site 
for access by OASIS users. Transmission Provider is permitted to 
require that Interconnection Customer and OASIS site users sign a 
confidentiality agreement before the release of commercially 
sensitive information or Critical Energy Infrastructure Information 
in the Base Case data. Such databases and lists, hereinafter 
referred to as Base Cases, shall include all (1) generation projects 
and (ii) transmission projects, including merchant transmission 
projects that are proposed for the Transmission System for which a 
transmission expansion plan has been submitted and approved by the 
applicable authority.

    120. The Commission seeks comment on whether there are other 
specific network model details and underlying assumptions that 
transmission providers should post on their OASIS site and should 
describe in the pro forma LGIP. The Commission seeks comment on whether 
and how transmission providers should provide notice of any variation 
from posted network model assumptions for a specific study, including 
whether the Commission should require notice of any variation to be 
submitted to the Commission.
    121. The Commission appreciates that transmission providers have 
confidentiality and data security concerns associated with providing 
certain information and system access, e.g., business sensitive 
information and cybersecurity-related information. However, the 
Commission believes there are likely safeguards that can be put in 
place to satisfactorily address these concerns. The Commission seeks 
comment on any confidentiality or security concerns regarding the 
posting of specific model assumptions on OASIS or describing them in 
the pro forma LGIP. Commenters should also specify any data elements 
that should be subject to confidentiality or non-disclosure agreements.
3. Congestion and Curtailment Information
    122. The Commission proposes to require transmission providers to 
post congestion and curtailment information and seeks comment regarding 
the location of such posting and the level of disaggregation (or 
granularity) of the information posted. This information can be 
particularly important for interconnection customers that are 
considering Energy Resource Interconnection Service (ERIS),\159\ as the 
interconnection customer may interconnect to the transmission system 
and be eligible to deliver its output using the existing firm or non-
firm capacity of that transmission system on an ``as available'' 
basis.\160\ An important consideration for such a customer is the 
degree to which the customer will be curtailed. Historic congestion and 
curtailment information can inform the interconnection customer's 
assessment. This information could also be relevant for any 
interconnection customer in determining where on the system to request 
interconnection. For instance, knowledge that a particular location 
experiences frequent congestion or curtailment may suggest that any 
``as-available'' service at such a location will likely be frequently 
unavailable or may require extensive network upgrades to enable 
interconnection.
---------------------------------------------------------------------------

    \159\ Energy Resource Interconnection Service shall mean an 
Interconnection Service that allows the Interconnection Customer to 
connect its Generating Facility to the Transmission Provider's 
Transmission System to be eligible to deliver the Generating 
Facility's electric output using the existing firm or nonfirm 
capacity of the Transmission Provider's Transmission System on an as 
available basis. Energy Resource Interconnection Service in and of 
itself does not convey transmission service. See Standard Large 
Generator Interconnection Procedures, Section 1, Definitions.
    \160\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 752-
753.
---------------------------------------------------------------------------

a. Existing Provisions and Background
    123. Currently, transmission providers are not required to provide 
consistent and transparent congestion information to interconnection 
customers. The level of disaggregation and availability of this data 
varies per transmission provider. Additionally, how and where this data 
is posted may be inconsistent from transmission provider to 
transmission provider.
b. AWEA Petition and Comments
    124. In its Petition, AWEA asserts that interconnection studies do 
not provide system information showing the extent of potential 
curtailments. AWEA argues that interconnection customers cannot make 
informed business decisions regarding the financial viability of their 
interconnection requests and cannot accurately assess the extent of 
energy deliverability unless they have a reasonable expectation of 
their curtailment risk. AWEA requests that the Commission require 
transmission providers to provide curtailment risk information on their 
Web sites and in interconnection studies. AWEA contends that requiring 
transmission providers to provide curtailment information on a monthly 
basis, as well as provide more detailed information on all interfaces, 
including local interfaces, could improve the deliverability of energy 
from new generation and improve interconnection customers' ability to 
optimally site generating facilities.\161\
---------------------------------------------------------------------------

    \161\ Petition at 40.
---------------------------------------------------------------------------

    125. Several commenters concur with AWEA that more information on 
curtailment and congestion provided by transmission providers would 
benefit interconnection customers. NRG asserts that accurate reporting 
of congestion and curtailment information, and having access to 
congestion and operational data, could play a crucial role in siting 
generating facilities and lowering the amount of required network 
upgrades needed to interconnect.\162\ E.ON contends that transmission 
providers have the tools to determine the extent to which historical 
congestion on local transmission elements may impact an interconnection 
request, but they do not share this information with interconnection 
customers.\163\
---------------------------------------------------------------------------

    \162\ NRG 2015 Comments at 4-5.
    \163\ E.ON 2016 Comments at 11.
---------------------------------------------------------------------------

    126. Several commenters make specific suggestions on the types of 
information they would like transmission providers to share.\164\ For 
example, AWEA requests that the Commission require that transmission 
providers post, on a monthly basis, information on congested 
transmission facilities and interfaces covering the previous three 
years, including flow duration curves, the number of hours of 
curtailments due to congestion on those facilities and interfaces, and 
the cause(s) of congestion. AWEA also requests that the Commission 
require transmission providers to include, in interconnection studies, 
information on existing usage and congestion on the transmission 
facilities that are electrically significant to the interconnection 
request based on system conditions known at the time.\165\
---------------------------------------------------------------------------

    \164\ EDF 2016 Comments at 3; E.ON 2016 Comments at 11.
    \165\ Petition at 43-44.
---------------------------------------------------------------------------

    127. ISO-NE and MISO argue that their processes to share 
curtailment and congestion data are sufficient.\166\ ISO-NE notes that 
it frequently informs stakeholders of areas where curtailment is likely 
to occur, and MISO states that it posts real-time information on 
constraints. MISO argues that

[[Page 4482]]

interconnection customers can hire consultants to investigate 
curtailment risks, rather than requiring RTOs/ISOs to do this research 
for them.\167\ ISO-NE also argues that system impact studies are 
discrete testing programs and cannot capture the full range of real-
time load and outages. MISO and EEI argue that AWEA's request for more 
curtailment information would result in administrative burden and 
further queue delays. Additionally, ISO-NE asserts that AWEA 
inaccurately implies that ISO-NE's minimum interconnection service 
grants new generators rights to avoid curtailment risks,\168\ arguing 
that all interconnection customer of new assets face curtailment risk 
stemming from a competitive market design. Similarly, MISO TOs 
interpret AWEA's request as a complaint about the lack of certainty 
associated with ERIS, which by definition is an as-available 
service.\169\ They argue that a customer with ERIS assumes the risk of 
potentially intermittent service and could choose to pay for Network 
Resource Interconnection Service (NRIS).\170\ Six Cities argues that 
interconnection customers may misinterpret information on expected 
congestion as a commitment to future availability of service when 
interconnecting under ERIS or Energy-Only Deliverability Status 
procedures.\171\
---------------------------------------------------------------------------

    \166\ MISO 2015 Comments at 17-18. MISO states that it does post 
in real-time information on constraints according to its Business 
Practice Manuals. ISO-NE states that assumptions underlying planning 
are already shared according to its Planning Procedures and Planning 
Guides, and base case data can be requested according to section 2.3 
of Schedule 22 of its LGIP.
    \167\ MISO 2015 Comments at 17-18.
    \168\ ISO-NE 2015 Comments at 46.
    \169\ MISO TOs 2015 Comments at 16 (citing Order No. 2003, FERC 
Stats. & Regs. ] 31,146 at P 752; pro forma LGIA at Art. 1 
(definition of ERIS) and Sec. 4.1.1; MISO, FERC Electric Tariff, 
Attachment X, Sec. 3.2.1.1 (49.0.0)).
    \170\ If an interconnection customer chooses NRIS, Order No. 
2003 requires the transmission provider to conduct interconnection 
studies similar to how the transmission provider would integrate its 
own generators to serve load. This approach assumes a portion of the 
capacity of existing network resources is displaced by the output of 
the facility seeking to interconnect. Order No. 2003, FERC Stats. & 
Regs. ] 31,146 at PP 754-55.
    \171\ Six Cities 2015 Comments at 4.
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c. Proposal
    128. The Commission preliminarily finds that improving access to 
congestion and curtailment data may allow interconnection customers to 
more accurately assess curtailment risks at different locations on the 
system. As a result, interconnection customers may be better able to 
assess the value of requesting ERIS relative to NRIS and may be better 
able to choose where to site their generating facilities. Such better 
informed decision-making could result in a more efficient use of the 
transmission system. In addition, improving access to congestion and 
curtailment data could mitigate the risk of interconnection customers 
exiting at later stages of the interconnection process, thereby 
reducing the need for restudies, given that interconnection customers 
would be better informed on grid conditions through more transparent 
access to congestion and curtailment data. The Commission proposes 
revising section 37.6 of its regulations to require that transmission 
providers post congestion information and curtailment information in 
one location on their OASIS sites so that interconnection customers can 
more easily assess information that may aid in their decision-making. 
The Commission also seeks comment on whether there is congestion and 
curtailment information that is specific to an interconnection request 
and whether transmission providers should be required to provide this 
information to interconnection customers through the interconnection 
study process.
    129. Improving access to curtailment and congestion data could 
reduce uncertainties associated with as-available service, as well as 
better inform interconnection customers of the risks surrounding as-
available transmission service. With regard to whether interconnection 
customers may misinterpret information and make assumptions about the 
availability of service, the Commission finds that this is a reasonable 
risk of doing business, and it is the interconnection customers' 
responsibility to make certain decisions based on the best data 
available.
    130. In addition, the Commission proposes to require transmission 
providers to post disaggregated, or more granular (e.g., hourly and 
locational data), congestion and curtailment information that is more 
specific than the information currently provided by some transmission 
providers.\172\ The Commission proposes that the transmission provider 
must post on OASIS information on congestion data representing (i) 
total hours of curtailment on all interfaces, (ii) total hours of 
Transmission Provider-ordered generation curtailment and transmission 
service curtailment due to congestion on that facility or interface, 
(iii) the cause of the congestion (e.g., a contingency or an outage), 
and (iv) total megawatt hours of curtailment due to lack of 
transmission for that month. The Commission proposes that this data 
shall be posted on a monthly basis by the 15th day of the following 
month in one location on the OASIS, and maintained for a minimum of 
three years. This proposed reform aims to increase transparency 
regarding congestion and curtailment risks at various points in the 
transmission system that could help interconnection customers identify 
interconnection locations in less congested areas. To effectuate this 
proposal, the Commission proposes to revise section 37.6 of the Code of 
Federal Regulations to add new section (l) requiring the posting of 
congestion and curtailment data on a monthly basis by the 15th day of 
the following month in one location on the OASIS. Transmission 
providers must maintain these data for at least three years. The 
information that must be posted is as follows: (i) Total hours of 
curtailment on all interfaces, (ii) total hours of Transmission 
Provider-ordered generation curtailment and transmission service 
curtailment due to congestion on that facility or interface, (iii) the 
cause of the congestion (e.g., a contingency or an outage), and (iv) 
total megawatt hours of curtailment due to lack of transmission for 
that month.
---------------------------------------------------------------------------

    \172\ AWEA requests that the Commission require that 
transmission providers post, on a monthly basis, information on 
congested transmission facilities and interfaces covering the 
previous three years, including flow duration curves, the number of 
hours of curtailments due to congestion on those facilities and 
interfaces, and the cause(s) of congestion. AWEA also requests that 
the Commission require transmission providers to include, in 
interconnection studies, information on existing usage and 
congestion on the transmission facilities that are electrically 
significant to the interconnection request based on system 
conditions known at the time. Petition at 43-44.
---------------------------------------------------------------------------

    131. The Commission seeks comments on the level of information to 
be provided, the frequency at which the information should be provided, 
and how many months/years the provided information should cover. The 
Commission further seeks comment on the value to interconnection 
customers of requiring transmission providers to post on OASIS flow 
duration curves on the major transmission interfaces, based on hourly 
flow data. The Commission also seeks comment on whether there is 
detailed, interconnection request-specific congestion and curtailment 
information that would be more appropriately provided to the 
interconnection customer through the interconnection study process 
(e.g., at the scoping meeting).
    132. With regard to the sharing of more detailed congestion and 
curtailment data, several parties raise concerns that this level of 
detail could expose market sensitive information, such as CEII data, 
and give interconnection customers a market advantage over other market 
participants.\173\ The Commission does not find these arguments 
credible. The

[[Page 4483]]

Commission believes that the posting of more detailed congestion and 
curtailment data will not give undue advantage to interconnection 
customers over other market participants, as all market participants 
will have access to this data, and none of the data should include 
proprietary marginal costs. With regard to concerns that the provision 
of congestion and curtailment information unnecessarily burdens 
transmission providers, the Commission notes that the proposal merely 
requires the posting of congestion and curtailment information in one 
location on OASIS, which should improve interconnection customers' 
ability to conduct their own research on which to base their decisions. 
The Commission seeks comments on the level of detail appropriate for 
congestion and curtailment information, the frequency of reporting, the 
length of time reported data should cover, and whether there is 
interconnection-request-specific congestion and curtailment information 
that could be provided to interconnection customers as part of the 
interconnection study process.
---------------------------------------------------------------------------

    \173\ EEI 2015 Comments at 38-39; MISO 2015 Comments at 18.
---------------------------------------------------------------------------

    133. The Commission seeks comment on further changes to Section 
3.3.4 of the LGIP requiring transmission providers and/or transmission 
owners to provide curtailment and congestion information at the scoping 
meeting between the transmission provider, transmission owner, and 
interconnection customer. For example, the Commission could revise 
Section 3.3.4 of the LGIP to read:

    3.3.4 Scoping Meeting. Within ten (10) Business Days after 
receipt of a valid Interconnection Request, Transmission Provider 
shall establish a date agreeable to Interconnection Customer for the 
Scoping Meeting, and such date shall be no later than thirty (30) 
Calendar Days from receipt of the valid Interconnection Request, 
unless otherwise mutually agreed upon by the Parties. The purpose of 
the Scoping Meeting shall be to discuss alternative interconnection 
options, to exchange information including any transmission data, 
including any curtailment and/or congestion information, that would 
reasonably be expected to impact such interconnection options, to 
analyze such information and to determine the potential feasible 
Points of Interconnection. Transmission Provider and Interconnection 
Customer will bring to the meeting such technical data, including, 
but not limited to: (i) General facility loadings, (ii) general 
instability issues, (iii) general short circuit issues, (iv) general 
voltage issues, and (v) general reliability issues as may be 
reasonably required to accomplish the purpose of the meeting. 
Transmission Provider and Interconnection Customer will also bring 
to the meeting personnel and other resources as may be reasonably 
required to accomplish the purpose of the meeting in the time 
allocated for the meeting. On the basis of the meeting, 
Interconnection Customer shall designate its Point of 
Interconnection, pursuant to Section 6.1, and one or more available 
alternative Point(s) of Interconnection. The duration of the meeting 
shall be sufficient to accomplish its purpose.
4. Definition of Generating Facility in the Pro Forma LGIP and LGIA
    134. The Commission proposes to revise the definition of a 
``Generating Facility'' in the pro forma LGIP/LGIA to include electric 
storage resources.
a. Existing Provisions and Background
    135. While the Commission includes electric storage resources in 
the definition of a generating facility in the pro forma SGIP/
SGIA,\174\ the Commission has not explicitly set forth a similar 
definition in the pro forma LGIP/LGIA. Although some transmission 
providers have extended the clarification for electric storage 
resources to large generating facilities, doing so consistently may 
ensure that all transmission providers have interconnection procedures 
and agreements that are applicable to FERC-jurisdictional electric 
storage resources, regardless of size.
---------------------------------------------------------------------------

    \174\ Small Generator Interconnection Agreement and Procedures, 
78 FR 73,240 (Nov. 22, 2013), Order No. 792, 145 FERC ] 61,159 at P 
227, clarifying, Order 792-A, 146 FERC ] 61,214 (2014).
---------------------------------------------------------------------------

b. Proposal
    136. The Commission preliminarily finds that the failure to include 
electric storage resources in the definition of ``Generating Facility'' 
in the pro forma LGIA/LGIP may pose a barrier to the development of 
large electric storage resources, which may not be just and reasonable 
or may be unduly discriminatory or preferential. In Order No. 792, the 
Commission revised the definition of ``Small Generating Facility'' in 
the pro forma SGIP/SGIA to: ``[t]he Interconnection Customer's device 
for the production and/or storage for later injection of electricity 
identified in the Interconnection Request, but shall not include the 
Interconnection Customer's Interconnection Facilities.'' \175\
---------------------------------------------------------------------------

    \175\ Order No. 792, 145 FERC ] 61,159 at P 228 (emphasis in 
original).
---------------------------------------------------------------------------

    137. Given the existing precedent for small generators, the 
inconsistency between the pro forma definitions of small generating 
facilities and large generating facilities, and the potential that 
development of electric storage resources larger than 20 MW will 
increase,\176\ the Commission proposes a conforming change to the 
definition of ``Generating Facility'' in the pro forma LGIP/LGIA.
---------------------------------------------------------------------------

    \176\ Slaughter, Andrew, ``Electricity Storage Technologies, 
impacts, and prospects,'' Deloitte Center for Energy Solutions, 2015 
at 7; https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-er-electric-storage-paper.pdf.
---------------------------------------------------------------------------

    138. In consideration of the foregoing, the Commission proposes to 
amend the definition of Generating Facility in the pro forma LGIP/LGIA 
to:

    Generating Facility shall mean Interconnection Customer's device 
for the production and/or storage for later injection of electricity 
identified in the Interconnection Request, but shall not include the 
interconnection customer's Interconnection Facilities.

    139. This revised definition is also reflected in the proposed 
revisions to section 1 of the pro forma LGIP and the proposed revisions 
to article 1 of the pro forma LGIA.
5. Interconnection Study Deadlines
    140. The Commission proposes that transmission providers report on 
their completion of interconnection studies within established 
timeframes, in order to improve transparency and to provide greater 
insight into the causes of processing delays.
a. Existing Provisions and Background
    141. Currently in the pro forma LGIP, transmission providers must 
use ``Reasonable Efforts'' \177\ to complete feasibility studies in 45 
days, system impact studies in 90 days, and the facility studies within 
90 or 180 days.\178\ While independent entities may propose variations 
to these study completion timeframes, they must use reasonable efforts 
to complete interconnection studies within such timeframes. The 
Commission currently requires transmission providers to post 
information about transmission service request processing time on the 
transmission providers OASIS \179\ and assesses penalties to 
transmission providers that complete too many transmission service 
request studies outside of the study completion timeframes. 
Transmission providers are able to explain extenuating circumstances in 
a filing with the Commission to avoid such penalties.
---------------------------------------------------------------------------

    \177\ As noted above, Reasonable Efforts shall mean, with 
respect to an action required to be attempted or taken by a Party 
under the Standard Large Generator Interconnection Agreement, 
efforts that are timely and consistent with Good Utility Practice 
and are otherwise substantially equivalent to those a Party would 
use to protect its own interests. Pro forma LGIP Sec. 1 
(Definitions).
    \178\ Pro forma LGIP at Sec. 6.3, 7.4, and 8.3.
    \179\ See 18 CFR 37.6(h) (2016).

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[[Page 4484]]

b. AWEA Petition and Comments
    142. In its Petition, AWEA voices concern about the nature of study 
delays and requests elimination of the reasonable effort standard and 
instituting firm deadlines to give some certainty to the process.\180\ 
Some commenters disagree about AWEA's proposal to remove the reasonable 
efforts standard from established timeframes to require that 
transmission providers meet firm deadlines. Several commenters contend 
that AWEA does not account for the various factors that impact the 
interconnection study and restudy processes.\181\ NYISO states that the 
performance of interconnection studies requires the active 
participation and input of multiple parties, including the provision of 
extensive information and technical data by interconnection customers. 
NYISO and Indicated NYTOs assert that flexibility in performing 
interconnection studies is necessary.\182\ Similarly, TVA contends that 
the lack of uniformity in generator interconnection requests does not 
allow a transmission provider to follow an inflexible, standardized 
study schedule. TVA argues that differences in size and location of 
proposed generators result in significant variability in the studies' 
complexity and the required analysis time, asserting that the process 
is not entirely within a transmission provider's control.\183\ 
Additionally, some commenters argue that restudy delays are often due 
to the actions or inactions of the interconnection customer.\184\
---------------------------------------------------------------------------

    \180\ Petition at 17.
    \181\ Avista 2015 Comments at 3; EEI 2015 Comments at 21; KCP&L 
2015 Comments at 10; NYISO 2015 Comments at 20-21; TVA 2015 Comments 
at 2.
    \182\ NYISO 2015 Comments at 21 and Indicated NYTOs 2015 
Comments at 6.
    \183\ TVA 2015 Comments at 2.
    \184\ Avista 2015 Comments at 3; KCP&L 2015 Comments at 10; 
NYISO 2015 Comments at 21; PSEG 2015 Comments at 9; TVA 2015 
Comments at 3.
---------------------------------------------------------------------------

    143. TVA asserts that if a transmission provider must always meet a 
fixed study schedule, it would have to either maintain a larger 
analytical staff that would frequently be idle when there are few 
interconnection requests or would have to increasingly rely on 
contractors to conduct studies.\185\ KCP&L states that interconnection 
customers would ultimately pay the additional costs for increased 
staffing and resources needed to meet firm study deadlines.\186\ KCP&L 
argues that there are costs to faster processing of interconnection 
requests, costs which are most likely, and appropriately, recovered in 
higher study fees--fees that AWEA criticizes and seeks to cap.\187\ TVA 
contends that allowing greater flexibility in study completion time 
allows the transmission provider to balance the legitimate timing needs 
of generation developers with the costs to load.\188\
---------------------------------------------------------------------------

    \185\ TVA 2015 Comments at 2, 3.
    \186\ KCP&L Comments at 10 (citing Order No. 2003-B, FERC Stats. 
& Regs. ] 31,171 at P 2).
    \187\ KCP&L 2015 Comments at 8-9.
    \188\ TVA 2015 Comments at 2, 3.
---------------------------------------------------------------------------

    144. Several parties with experience as interconnection customers 
with renewable generating facilities support efforts to provide 
interconnection study requests and restudy results by the dates listed 
in the generator interconnection procedures.\189\ Sustainable FERC 
contends that the ability to accurately and timely complete 
interconnection studies pursuant to interconnections requests is within 
transmission providers' control but that these delays chiefly affect 
interconnection customers even though interconnection customers have no 
control over the process.\190\ NRG asserts that the uncertainty created 
by sliding study dates causes significant risk to interconnection 
customers, which is, in turn, passed through to all purchasers of 
renewable power in the form of higher risk premiums.\191\
---------------------------------------------------------------------------

    \189\ NRG Companies 2015 Comments at 3; RENEW 2015 Comments at 
4; Sustainable FERC 2015 Comments at 2; Wind Coalition 2015 Comments 
at 2; Wind on the Wires 2015 Comments at 2.
    \190\ Sustainable FERC 2015 Comments at 2.
    \191\ NRG 2015 Comments at 3.
---------------------------------------------------------------------------

    145. Similarly, RENEW argues that the current interconnection 
process, which it believes contains embedded unjust, unreasonable, and 
unduly discriminatory delays, imposes barriers to the development of 
new generation sources.\192\ In addition, Interwest Energy Alliance 
contends that for renewable energy generators in the West, some 
interconnection processes have imposed delays and unduly discriminatory 
costs that resulted in ``increased potential for missed deadlines and 
disqualification when submitting bids in response to requests for 
proposals in competitive procurements.'' \193\
---------------------------------------------------------------------------

    \192\ RENEW 2015 Comments at 3.
    \193\ Interwest 2015 Comments at 2.
---------------------------------------------------------------------------

c. Proposal
    146. The Commission has expressed concerns about interconnection 
queue delays in other proceedings.\194\ In the 2008 Order, the 
Commission required all RTOs/ISOs to file an interconnection queue 
status report at the Commission and, as a condition of approving 
requested queue reforms, required RTOs/ISOs to file periodic queue 
status updates at the Commission for a period of time.\195\
---------------------------------------------------------------------------

    \194\ See, e.g., 2008 Order, 122 FERC ] 61,252 at PP 4-6.
    \195\ See, e.g., Midwest Indep. Transmission Sys. Operator, 
Inc., 124 FERC ] 61,183 at P 164 (directing MISO to file annual 
updates on interconnection queue metrics and queue improvement 
efforts from 2009-2011); California Indep. Sys. Operator Corp., 124 
FERC ] 61,292 at PP 199-200 (directing CAISO to file quarterly 
reports on the interconnection including the number of 
interconnection requests received, studies conducted and the reasons 
for missing study deadlines).
---------------------------------------------------------------------------

    147. Although the Commission has approved queue reforms to attempt 
to streamline the interconnection process, there are still delays 
associated with the interconnection process. Some commenters have asked 
the Commission to require transmission providers to complete 
interconnection connection studies within the pro forma LGIP time 
frames rather than simply require the transmission providers to make 
reasonable efforts to do so. The Commission believes that transmission 
providers should continue to have flexibility in completing 
interconnection studies, but is nonetheless concerned that delays in 
the interconnection process continue. At times, it is not clear to 
interconnection customers why and where queue delays are occurring, and 
the underlying causes of queue delays are not always agreed upon by 
interconnection customers and transmission providers. Providing greater 
transparency by identifying the geographical locations where these 
delays are occurring and the causes of these delays would benefit 
stakeholders.
    148. The Commission proposes to require that transmission providers 
post summary statistics related to processing interconnection studies, 
pursuant to interconnection service requests, on their OASIS sites on a 
quarterly basis. This proposal is analogous to the requirement we 
established in Order No. 890 that transmission providers post 
information on processing of transmission service request studies 
within the best efforts timeframes.\196\ The Commission proposes to 
require that a transmission provider that has more than 25 percent of 
any study type exceeding study deadlines for interconnection requests 
for two consecutive quarters must file informational reports at the 
Commission for the next four calendar quarters. For example, if a 
transmission provider had 35 percent of its interconnection feasibility 
studies exceeding study deadlines one calendar quarter and 40 percent 
of them exceeding study deadlines the next calendar quarter, the 
transmission provider would have to

[[Page 4485]]

file reports to the Commission for the following four calendar quarters 
describing the reason for each study (or group of clustered studies) 
delay and post on OASIS the total number of employee or consultant 
hours devoted to processing studies that quarter. The transmission 
provider must continue to file these reports for four consecutive 
quarters. If during this period, the transmission provider exceeds more 
than 25 percent of study deadlines for any study type for two 
consecutive quarters, the reporting requirement would be retriggered 
for another four consecutive quarters from the date of the last 
consecutive quarter to exceed the 25 percent threshold. For example, if 
a transmission provider had more than 25 percent of its interconnection 
feasibility studies exceeding study deadlines every calendar quarter in 
Year 1, it must begin reporting to the Commission in the third quarter 
of Year 1 and must continue reporting until at least the fourth quarter 
of Year 2.
---------------------------------------------------------------------------

    \196\ See 18 CFR 37.6(h) (2016).
---------------------------------------------------------------------------

    149. To this end, the Commission proposes to modify section 3.4 of 
the pro forma LGIP \197\ as follows (proposing to delete italicized 
text):
---------------------------------------------------------------------------

    \197\ In the ``Utilization of Surplus Interconnection Service'' 
section, the Commission proposes revisions to the pro forma LGIP 
that result in renumbering of several existing sections. One section 
that the Commission proposes to be renumbered is section 3.4. For 
this reason, the proposed revisions to the ``OASIS Posting'' section 
(current section 3.4) will begin at section 3.5.1.

    3.4-3.5.1 OASIS Posting.
    3.5.2 The Transmission Provider will maintain on its OASIS 
summary statistics related to processing Interconnection Studies 
pursuant to Interconnection Requests, updated quarterly. For each 
calendar quarter, Transmission Providers must calculate and post the 
information detailed in sections 3.5.2.1 through 3.5.2.4.
    3.5.2.1 Interconnection Feasibility Studies processing time. (A) 
Number of Interconnection Requests that had Interconnection 
Feasibility Studies completed within the Transmission Provider's 
coordinated region during the reporting quarter, (B) Number of 
Interconnection Requests that had Interconnection Feasibility 
Studies completed within the Transmission Provider's coordinated 
region during the reporting quarter that were completed more than 
[timeline as listed in the Transmission Provider's LGIP] after 
receipt by the Transmission Provider of the Interconnection 
Customer's executed Interconnection Feasibility Study Agreement, (C) 
At the end of the reporting quarter, the number of active valid 
Interconnection Requests with ongoing incomplete Interconnection 
Feasibility Studies where such Interconnection Requests had executed 
Interconnection Feasibility Study Agreements received by the 
Transmission Provider more than [timeline as listed in the 
Transmission Provider's LGIP] before the reporting quarter end, (D) 
Mean time (in days), Interconnection Feasibility Studies completed 
within the Transmission Provider's coordinated region during the 
reporting quarter, from the date when the Transmission Provider 
received the executed the Interconnection Feasibility Study 
Agreement to the date when the Transmission Provider provided the 
completed Interconnection Feasibility Study to the Interconnection 
Customer, (E) Percentage of Interconnection Feasibility Studies 
exceeding [timeline as listed in the Transmission Provider's LGIP] 
to complete this reporting period, calculated as 1--(the sum of 
3.5.2.2(A) minus 3.5.2.2(B) and dividing that amount by the sum of 
3.5.2.2(A) plus 3.5.2.2(C)).
    3.5.2.2 Interconnection System Impact Studies processing time. 
(A) Number of Interconnection Requests that had Interconnection 
System Impact Studies completed within the Transmission Provider's 
coordinated region during the reporting quarter, (B) Number of 
Interconnection Requests that had Interconnection System Impact 
Studies completed within the Transmission Provider's coordinated 
region during the reporting quarter that were completed more than 
[timeline as listed in the Transmission Provider's LGIP] after 
receipt by the Transmission Provider of the Interconnection 
Customer's executed Interconnection System Impact Study Agreement, 
(C) At the end of the reporting quarter, the number of active valid 
Interconnection Requests with ongoing incomplete System Impact 
Studies where such Interconnection Requests had executed 
Interconnection System Impact Study Agreements received by the 
Transmission Provider more than [timeline as listed in the 
Transmission Provider's LGIP] before the reporting quarter end, (D) 
Mean time (in days), Interconnection System Impact Studies completed 
within the Transmission Provider's coordinated region during the 
reporting quarter, from the date when the Transmission Provider 
received the executed Interconnection System Impact Study Agreement 
to the date when the Transmission Provider provided the completed 
Interconnection System Impact Study to the Interconnection Customer, 
(E) Percentage of Interconnection System Impact Studies exceeding 
[timeline as listed in the Transmission Provider's LGIP] to complete 
this reporting period, calculated as 1--(the sum of 3.5.2.3(A) minus 
3.5.2.3(B) and dividing that amount by the sum of 3.5.2.3(A) plus 
3.5.2.3(C)).
    3.5.2.3 Interconnection Facilities Studies Processing time. (A) 
Number of Interconnection Requests that had Interconnection 
Facilities Studies that are completed within the Transmission 
Provider's coordinated region during the reporting quarter, (B) 
Number of Interconnection Requests that had Interconnection 
Facilities Studies that are completed within the Transmission 
Provider's coordinated region during the reporting quarter that were 
completed more than [timeline as listed in the Transmission 
Provider's LGIP] after receipt by the Transmission Provider of the 
Interconnection Customer's executed Interconnection Facilities Study 
Agreement, (C) At the end of the reporting quarter, the number of 
active valid Interconnection Service requests with ongoing 
incomplete Interconnection Facilities Studies where such 
Interconnection Requests had executed Interconnection Facilities 
Studies Agreement received by the Transmission Provider more than 
[timeline as listed in the Transmission Provider's LGIP] before the 
reporting quarter end (D) Mean time (in days), Interconnection 
Facilities Studies completed within the Transmission Provider's 
coordinated region during the reporting quarter, from the date when 
the Transmission Provider received the executed Interconnection 
Facilities Study Agreement to the date when the Transmission 
Provider provided the completed Interconnection Facilities Study to 
the Interconnection Customer, (E) Percentage of delayed 
Interconnection Facilities Studies this reporting period, calculated 
as 1--(the sum of 3.5.2.4(A) minus 3.5.2.4(B) and dividing that 
amount by the sum of 3.5.2.4(A) plus 3.5.2.4(C)).
    3.5.2.4 Interconnection Service requests withdrawn from 
interconnection queue. (A) Number of Interconnection Service 
requests withdrawn from the Transmission Provider's interconnection 
queue during the reporting quarter, (B) Number of Interconnection 
Service requests withdrawn from the Transmission Provider's 
interconnection queue during the reporting quarter before completion 
of any interconnection studies or execution of any interconnection 
study agreements, (C) Number of Interconnection Service requests 
withdrawn from the Transmission Provider's interconnection queue 
during the reporting quarter before completion of an Interconnection 
System Impact Study, (D) Number of Interconnection Service requests 
withdrawn from the Transmission Provider's interconnection queue 
during the reporting quarter before completion of an Interconnection 
Facility Study, (E) Number of Interconnection Service requests 
withdrawn from the Transmission Provider's interconnection queue 
after execution of a generator interconnection agreement or 
Interconnection Customer requests the filing of an unexecuted, new 
interconnection agreement, (F) Mean time (in days), for all 
withdrawn Interconnection Service requests, from the date when the 
request was determined to be valid to when the Transmission Provider 
received the request to withdraw from the queue.
    3.5.3 The Transmission Provider is required to post on OASIS the 
measures in paragraph 3.5.2.1(A) through paragraph 3.5.2.4(F) for 
each calendar quarter within 30 days of the end of the calendar 
quarter. The Transmission Provider will keep the quarterly measures 
posted on OASIS for three calendar years with the first required 
reporting year to be 2017.
    3.5.4 In the event that any of the values calculated in 
paragraphs 3.5.2.1(E), 3.5.2.2(E) or 3.5.2.3(E) exceeds 25 percent 
for two consecutive calendar quarters the Transmission Provider will 
have to comply with the measures below for the next four consecutive 
calendar quarters and must continue reporting this information until 
the

[[Page 4486]]

Transmission Provider reports four consecutive calendar quarters 
without the values calculated in 3.5.2.1(E), 3.5.2.2(E) or 
3.5.2.3(E) exceeding 25 percent for two consecutive calendar 
quarters:
    (i) The Transmission Provider must submit a report to the 
Commission describing the reason for each study or group of 
clustered studies pursuant to an Interconnection Request that 
exceeded its deadline (i.e., 45, 90 or 180 days) for completion 
(excluding any allowance for Reasonable Efforts). The Transmission 
Provider must describe the reasons for each study delay and any 
steps taken to remedy these specific issues and, if applicable, 
prevent such delays in the future. The report must be filed at the 
Commission within 45 days of the end of the calendar quarter.
    (ii) The Transmission Provider shall aggregate the total number 
of employee-hours and third party consultant hours expended towards 
interconnection studies within its coordinated region that quarter 
and post on OASIS. This information is to be posted within 30 days 
of the end of the calendar quarter.

    150. The Commission preliminarily finds that this proposal will 
increase transparency into study timeliness and the reason for delays 
in regions that have consistent study delays. The Commission seeks 
comment on whether to require fewer or additional interconnection 
processing statistics to be posted on OASIS by the transmission 
provider. For example, such additional statistics could include: The 
number of new valid interconnection requests received by the 
transmission provider, the average number of days it takes for the 
transmission provider to determine whether a received interconnection 
service request is a valid interconnection request, the average number 
of days it takes for an interconnection request to receive a study 
agreement, and the number of study agreements executed in the 
transmission provider's region during the reporting period. The 
Commission also seeks comment on whether it is proposing the 
appropriate summary data requirements to enhance transparency into 
interconnection queue processes and what, if any, customizations of 
these requirements should be made to adjust for different regional 
processes.
    151. The Commission notes that LGIP Sections 6.3, 7.4 and 8.3 have 
provisions requiring transmission providers to inform interconnection 
customers as to the causes of study delays and to provide them with 
revised study schedules. The Commission requests comment on whether 
interconnection customers have sufficient information regarding, and 
transparency into, the cause of study delays under the current LGIP 
provisions and whether transmission providers should have to provide a 
more detailed explanation to interconnection customers regarding the 
cause(s) of study delays. The Commission also seeks comment on whether 
a transmission provider should have to inform interconnection customers 
regarding its process for revising study timelines once a delay occurs 
and whether the transmission provider should also describe in 
sufficient detail any relevant issues that could further affect the 
revised timeline for a particular interconnection customer.
6. Improving Coordination With Affected Systems
a. Existing Provisions and Background
    152. The interconnection of a new generating facility to a 
transmission system may sometimes affect the reliability of a 
neighboring transmission system, termed the affected system. Currently, 
section 3.5 of the pro forma LGIP requires the transmission provider to 
coordinate required interconnection studies with affected systems \198\ 
and, if possible, include those results within applicable results from 
the LGIP study process. In Order No. 2003, the Commission found that:
---------------------------------------------------------------------------

    \198\ An ``Affected System shall mean an electric system other 
than the Transmission Provider's Transmission System that may be 
affected by the proposed interconnection.'' Pro forma LGIP, Sec. 1 
(Definitions); Pro Forma LGIA, Art. 1 (Definitions).

[a]lthough the owner or operator of an Affected System is not bound 
by the provisions of the Final Rule LGIP or LGIA, the Transmission 
Provider must allow any Affected System to participate in the 
process when conducting the Interconnection Studies, and incorporate 
the legitimate safety and reliability needs of the Affected 
System.\199\
---------------------------------------------------------------------------

    \199\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 121.

Because the transmission operator of the affected system is not bound 
by the terms of the LGIP or LGIA of a particular interconnection 
request, the transmission operator of the affected system may choose 
not to abide by the time limits established for the various 
interconnection studies.
    153. Order No. 2003 further explained that, if the affected system 
does not provide information in a timely manner, a transmission 
provider may proceed without taking into account any information that 
could have been provided by the affected system.\200\ Typically, 
transmission providers do not proceed with the interconnection process 
until they receive the analysis of reliability impact from the affected 
system(s). The issue of impacts on an affected system is raised in a 
recent contested proceeding.\201\
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    \200\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 121. On 
rehearing, the Commission clarified that delays by an affected 
system in performing interconnection studies or providing 
information for such studies is not an acceptable reason to deviate 
from the timetables established in Order No. 2003 unless the 
interconnection itself (as distinct from any future delivery 
service) will endanger reliability. See Order No. 2003-A, FERC 
Stats. & Regs. ] 31,171 at P 114.
    \201\ See Docket No. ER17-75-000, in which PJM filed an 
unexecuted LGIA with Lackawanna, Energy Center, LLC (Lackawanna) at 
Lackawanna's request. This unexecuted GIA contains non-conforming 
terms and conditions, including limitations on Lackawanna's output, 
due to preliminary (and as yet incomplete) affected systems analysis 
by NYISO.
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    154. Order No. 2003 does not require that transmission providers 
publicize their process for coordination with affected systems. It also 
does not require that transmission providers include the affected 
systems analysis alongside the system impact study and facilities 
study. During the Order No. 2003 process, the Commission declined 
Duke's request to require affected systems to participate in the 
interconnection process with interconnection customers.\202\ The 
Commission reiterated, however, that a transmission provider must allow 
any affected system to participate in the interconnection study process 
and incorporate the affected system's legitimate safety and reliability 
needs.\203\
---------------------------------------------------------------------------

    \202\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 121.
    \203\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 120-
121.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    155. Multiple commenters that represent interconnection customers 
and RTOs/ISOs voiced a need for improved affected system coordination. 
For example, MISO supports more specific guidance in the pro forma LGIP 
on when and how to engage affected systems, as well as how to impose 
obligations on affected systems to minimize delays in the 
interconnection process.\204\ AWEA asks the Commission to require a 
standard contract between affected systems.\205\ Additionally, AWEA 
asks the Commission to require affected systems to share their 
respective models to ensure that prospective interconnection customers 
can more readily ascertain the impacts of their interconnection 
requests in a timely manner.\206\ SoCal Edison states that the primary 
challenge associated with the coordination of affected systems is the 
enforceability of provisions in a particular balancing

[[Page 4487]]

authority area tariff if those provisions place obligations on 
potentially affected systems, especially those outside of the 
Commission's jurisdiction. To address this issue, SoCal Edison proposes 
that RTOs/ISOs amend existing balancing authority area agreements or 
enter into new, legally-binding affected system agreements, to 
implement appropriate, enforceable mechanisms, including cost 
responsibility for mitigation.
---------------------------------------------------------------------------

    \204\ Id. at 9.
    \205\ AWEA 2016 Comments at 18.
    \206\ AWEA 2016 Comments at 18.
---------------------------------------------------------------------------

    156. El Paso states that it is not always clear how many affected 
systems an interconnection request may impact until after study work on 
the request is complete or near completion. El Paso argues that, to 
improve this process, the transmission provider should invite all 
electrically-connected transmission owners and operators to participate 
in the interconnection study process upon receipt of a valid 
interconnection request. El Paso further suggests that the transmission 
provider extend this invitation to any other transmission system(s) for 
which the transmission provider has reason to suspect that the 
interconnection request may have adverse impacts, given its location, 
size, type, and other characteristics. Transmission Dependent Utility 
Systems urge the Commission to clarify the definition of affected 
system in the pro forma LGIP, pro forma LGIA, and pro forma SGIP to 
reflect the recognition, articulated in Order No. 2006, that the 
definition is not limited to transmission facilities but also to ``an 
electric system . . . that may be affected by the proposed 
interconnection.'' \207\
---------------------------------------------------------------------------

    \207\ Transmission Dependent Utility Systems 2016 Comments at 7 
(quoting Order No. 2006 at P 543). Transmission Dependent Utility 
Systems consist of the following rural electric generation and 
transmission cooperatives: Golden Spread Electric Cooperative, Inc., 
Kansas Electric Power Cooperative, Inc.; North Carolina Electric 
Membership Corporation; PowerSouth Energy Cooperative, and Seminole 
Electric Cooperative, Inc.
---------------------------------------------------------------------------

    157. Some entities, like Modesto Irrigation District, Imperial 
Irrigation District, Xcel, and MISO TOs, indicate no changes are needed 
in affected systems provisions.\208\
---------------------------------------------------------------------------

    \208\ Modesto Irrigation District 2015 Comments at 3; Imperial 
Irrigation District 2016 Comments at 4-6; Xcel 2016 Comments at 11; 
MISO TOs Comments at 13.
---------------------------------------------------------------------------

c. Request for Comments
    158. Several of the proposed reforms in this Proposed Rule seek to 
improve the information provided to interconnection customers through 
the interconnection process and facilitate the timely interconnection 
of new generating facilities. Based on the comments received, it 
appears that transmission providers may not provide sufficient 
information on the guidelines and timelines they will use to coordinate 
with affected systems during the interconnection process. Providing 
these guidelines and timelines could improve the information available 
to the interconnection customer in the interconnection process and 
could help to avoid late-stage withdrawals due to unforeseen costly 
network upgrades on affected systems. Furthermore, a clear set of 
procedures and timelines regarding the affected system's study of the 
proposed interconnection memorialized in a Commission-approved 
agreement regarding affected systems analysis could help to ameliorate 
delays experienced awaiting study results from affected systems.
    159. The Commission seeks comment on whether it should prescribe 
guidelines for affected systems analyses and coordination or if it 
should impose study requirements and associated timelines on affected 
systems that are also public utility transmission providers. The 
Commission also seeks comment on whether to standardize the process for 
coordinating an affected system analysis and whether to develop a 
standard affected system study agreement. Finally, the Commission seeks 
comments on proposals or additional steps that the Commission could 
take (e.g., conducting a workshop or technical conference focused on 
improving issues that arise when affected systems are impacted by a 
proposed interconnection).

C. Enhancing Interconnection Processes

    160. The five proposed reforms in this section would enhance 
interconnection processes by making use of underutilized 
interconnection service, providing interconnection service earlier, and 
accommodating changes in the development process.
1. Requesting Interconnection Service Below Generating Facility 
Capacity
    161. The Commission proposes to allow interconnection customers to 
request a level of interconnection service for a generating facility 
that is lower than the generating facility's capacity.\209\ The use of 
a level of interconnection service below generating facility capacity 
will allow generating facilities that do not intend to use the full 
generating facility capacity to avoid constructing network upgrades and 
interconnection facilities to meet a level of interconnection service 
that is not necessary. For example, the owner of an electric storage 
resource with a generating facility capacity of 30 MW may choose to 
always operate the facility in such a way that it only uses 25 MW of 
interconnection service. Under this proposal, the transmission provider 
would allow the interconnection customer to apply for the 25 MW it 
intends to use instead of the entire 30 MW of generating facility 
capacity. If a facility utilizes this option, it must establish in its 
interconnection agreement the appropriate hardware and/or software to 
prevent it from exceeding its interconnection service, consent to 
penalties if its output does exceed its interconnection service, and be 
subject to curtailment provisions consistent with 9.7.2 of the LGIA.
---------------------------------------------------------------------------

    \209\ The term generating facility capacity means ``the net 
capacity of the Generating Facility and the aggregate net capacity 
of the Generating Facility where it includes multiple energy 
production devices.'' Pro forma LGIA at Art.1.
---------------------------------------------------------------------------

a. Existing Provisions and Background
    162. There are no current provisions in the pro forma LGIP and LGIA 
that directly speak to this issue. However, in certain regions of the 
country, there are already generating facilities with a level of 
interconnection service lower than the generating facility capacity. 
The details of these limitations have thus far been included in 
Appendix C of the LGIA.\210\
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    \210\ See, e.g., S. Cal. Edison Co., Docket No. ER16-1459-000 
(June 14, 2016) (delegated letter order); S.Cal. Edison Co., Docket 
No. ER16-44-000 (November 16, 2015) (delegated letter order); S.Cal. 
Edison Co., Docket No. ER15-2730-000 (November 12, 2015) (delegated 
letter order).
---------------------------------------------------------------------------

b. Comments
    163. In post-technical conference comments, parties with experience 
as interconnection customers emphasized their desire for the ability to 
request interconnection service that meets a facility's needs, even if 
this service is below the generating facility capacity.\211\ Commenters 
argue that the unique characteristics of electric storage resources, 
including their fast response times and high controllability, justify 
interconnection service below the rated capacity of the facility 
because they can time their charging and discharging of the resource to 
avoid or mitigate congestion of the transmission grid or to support 
transmission grid voltage and frequency.\212\ SoCal Edison provides 
examples of interconnection agreements that limited interconnection 
service to

[[Page 4488]]

an amount lower than full capacity \213\ ESA and NextEra note that PJM 
and CAISO have allowed interconnection customers to limit injection 
rights in certain circumstances.\214\ NextEra suggests that the 
structure of interconnection rights could alternatively be set forth in 
a separate pro forma agreement, similar to MISO's Monitoring and 
Consent Agreement for Net Zero Interconnection Service.\215\
---------------------------------------------------------------------------

    \211\ See, e.g., NextEra 2016 Comments at 10-12; AES 2016 
Comments at 15; ESA 2016 Comments at 5; RES Americas 2016 Comments 
at 3, 5-6; California Energy Storage Alliance 2016 Comments at 12-
13.
    \212\ California Energy Storage Alliance 2016 Comments at 6 
(citing Midcontinent Indep. Sys. Operator, Inc., 155 FERC ] 61,211 
(2016)).
    \213\ SoCal Edison 2016 Comments at 6.
    \214\ ESA 2016 Comments at 9; NextEra 2016 Comments at 14.
    \215\ NextEra 2016 Comments at 14.
---------------------------------------------------------------------------

    164. The RTOs/ISOs comments suggest they are cautiously open to the 
idea of allowing interconnection service below the total generating 
facility capacity if the interconnection request is subject to the 
proper control technologies and penalties.\216\ MISO notes that it is 
actively discussing the issue with stakeholders.\217\ NYISO states that 
allowing interconnection at a level below the generating facility 
capacity should not be permitted without adequate provisions for 
enforcement of the maximum limit, but that interconnection customers 
should be able to submit proposals for limited interconnection 
service.\218\ ISO-NE notes that it would still need to know the network 
impacts for the full output of the generating facility capacity.\219\
---------------------------------------------------------------------------

    \216\ See, e.g., NYISO 2016 Comments at 28.
    \217\ MISO 2016 Comments at 12-13.
    \218\ NYISO 2016 Comments at 28.
    \219\ ISO-NE 2016 Comments at 28.
---------------------------------------------------------------------------

    165. Representatives of the storage industry agree that safeguards 
to limit output should be in place to ensure safety and reliability 
when limiting interconnection service.\220\ ESA and RES Americas 
suggest that operational tests and/or demonstrations could validate 
interconnection customers' intended uses and control technologies.\221\ 
Commenters also suggest that RTOs/ISOs could install physical 
safeguards and/or impose financial penalties and legal liability.\222\ 
California Energy Storage Alliance suggests that verifiable controls 
and algorithms, as well as utility equipment already in place (e.g., 
reclosers), cap the discharge at the point of interconnection and that 
there is no need to require power relays and other physical 
equipment.\223\ NYISO argues that monitoring and corrective action must 
maintain reliability if the facility exceeds the maximum power 
limit.\224\ SoCal Edison explains that, pursuant to its current 
agreements that allow interconnection below generating facility 
capacity, SoCal Edison will notify the interconnection customer if that 
customer is violating its maximum output and notes that the customer 
risks disconnection if the violation persists.\225\
---------------------------------------------------------------------------

    \220\ Xcel 2016 Comments at 18-19; Exelon 2016 Comments at 16.
    \221\ RES Americas 2016 Comments at 5-6; ESA 2016 Comments at 9.
    \222\ SoCal Edison 2016 Comments at 6; ESA 2016 Comments at 9; 
RES Americas 2016 Comments at 5-6.
    \223\ California Energy Storage Alliance 2016 Comments at 12-13.
    \224\ NYISO 2016 Comments at 28.
    \225\ SoCal Edison 2016 Comments at 6.
---------------------------------------------------------------------------

c. Proposal
    166. The Commission preliminarily finds that the pro forma LGIP and 
pro forma LGIA may not be just and reasonable and may be unduly 
discriminatory or preferential to the extent that they disallow 
interconnection service below generating facility capacity. Disallowing 
the requests for interconnection service below generating facility 
capacity forces generating facilities intending to utilize lower levels 
of interconnection service capacity to pay for interconnection 
facilities and network upgrades they do not need.
    167. The Commission proposes to require that transmission providers 
allow interconnection customers to request interconnection service 
below their generating facility capacity. The Commission recognizes the 
concerns raised regarding the need for proper control technologies and 
penalties to ensure that an interconnection is safe and reliable when a 
generating facility requests interconnection service below the 
facility's full capacity. Provided these concerns can be addressed 
through hardware and/or software installed to prevent a facility from 
exceeding its interconnection service, as well as penalties and 
possible curtailment, the Commission believes that there are legitimate 
reasons for allowing an interconnection customer to request 
interconnection service at a level less than its generating facility 
capacity. Reducing the amount of interconnection facilities and network 
upgrades required for lower interconnection service capability could 
also result in lower interconnection costs, lower ratepayer costs, and 
more efficient use of the network upgrades and interconnection 
facilities that are constructed. Therefore, the Commission 
preliminarily finds that this proposal will result in just and 
reasonable and not unduly discriminatory or preferential rates, terms 
and conditions. The proposal will help to reduce overbuilding of 
interconnection facilities and network upgrades by tailoring the 
interconnection facilities and network upgrades to a facility's needed 
capacity. This means that if a facility, for operational or other 
reasons, will never exceed its interconnection service limitations, it 
may request to build upgrades for interconnection service at a lower 
level to match the intended operation of the facility. This proposal 
will therefore remove barriers to the development of generating 
facilities which do not intend to operate at full generating facility 
capacity. Allowing generating facilities to limit their interconnection 
costs by avoiding the construction of unnecessary interconnection 
facilities and network upgrades may also lower costs to customers.
    168. The Commission proposes that transmission providers have a 
process in the pro forma LGIP and LGIA in place to consider such 
requests. The Commission proposes to require that any interconnection 
customer that seeks interconnection service below its generating 
facility capacity install appropriate monitoring and control 
technologies at its generating facility. Such a generating facility or 
interconnection customer will be subject to reasonable provisions that 
enforce a maximum export limit, a notification process to a generating 
facility that has exceeded such limit, and a process for resolving 
disputes if deemed necessary by the transmission provider and/or 
transmission owner as part of the pro forma LGIP and LGIA. 
Additionally, the Commission proposes that interconnection customers 
that request interconnection service below generating facility capacity 
be subject to reasonable penalties imposed by transmission owners, or 
transmission providers if more appropriate, if they exceed the 
limitations for interconnection service established in their 
interconnection agreements. Such penalties could be financial, could 
include a requirement to pay the cost of additional interconnection 
facilities or network upgrades, or could consist of a loss of 
interconnection rights. The Commission seeks comment on the potential 
penalties that transmission providers or transmission owners may impose 
if an interconnection customer exceeds the interconnection service 
levels agreed upon.
    169. In addition to seeking comment on these proposals, the 
Commission seeks comment on the types and availability of control 
technologies and protective equipment that could ensure that a 
generating facility does not exceed its level of interconnection 
service. The Commission expects that the transmission providers,

[[Page 4489]]

transmission owners, and interconnection customers will establish the 
necessary control technologies, as well as reasonable penalties or 
other enforcement mechanisms necessary to ensure compliance with the 
maximum injection limit in Appendix C of the pro forma LGIA. The 
Commission also seeks comment on whether certain protection systems 
would eliminate the need to study the full generator facility capacity 
in some circumstances, potentially reducing study costs.
    170. This proposal would not eliminate the transmission provider's 
potential need to study interconnection customers' interconnection 
facilities and network upgrades at generating facility capacity in 
addition to the generating facility's requested level of 
interconnection service when needed to ensure reliability.\226\ The 
Commission seeks comment on what types of studies and under what 
conditions the transmission provider may need to study the generating 
facility at its generating facility capacity, even if the 
interconnection customer does not intend to use that level of 
interconnection service and agrees to install all necessary equipment 
to prevent injections of electricity in excess of the requested level 
of interconnection service.
---------------------------------------------------------------------------

    \226\ ISO-NE suggests that it would always need to evaluate the 
generating facility capacity to know the network impacts of the full 
rated capacity and ensure reliability. ISO-NE Comments at 28.
---------------------------------------------------------------------------

    171. The Commission acknowledges that allowing interconnection 
customers to request service below their generating facility capacity 
could result in additional study costs during the interconnection 
process because the transmission provider may need to study the full 
generating facility capacity as well as the requested level of 
interconnection service. The Commission proposes that interconnection 
customers should bear any additional study costs associated with 
requesting interconnection service below their generating facility 
capacity, but the Commission seeks comment on the potential nature and 
extent of such costs.
    172. The Commission also proposes changes to the definitions of 
``Large Generating Facility'' and ``Small Generating Facility'' in the 
pro forma LGIP and pro forma LGIA so that they are based on the level 
of interconnection service for the generating facility rather than the 
generating facility capacity. The Commission considers this proposed 
change to be consistent with the reform in Order No. 792 where the 
Commission allowed, subject to certain conditions, transmission 
providers to measure the capacity of small generating facilities based 
on the capacity specified in the interconnection request.\227\ The 
Commission seeks comment on the proposed changes to the definitions of 
``Large Generating Facility'' and ``Small Generating Facility'' and the 
impact of such a change, if any, on the interconnection procedures and 
the interconnection agreement, including the need for other related 
changes to the pro forma LGIP and LGIA.
---------------------------------------------------------------------------

    \227\ See Order No. 792, 145 FERC ] 61,159 at P 230 (stating 
that ``Under section 4.10.3 adopted herein, the Transmission 
Provider is to measure the capacity of a Small Generating Facility 
based on the capacity specified in the interconnection request, 
which may be less than the maximum capacity that a device is capable 
of injecting into the Transmission Provider's system, provided that 
the Transmission Provider agrees, with such agreement not to be 
unreasonably withheld, that the manner in which the Interconnection 
Customer proposes to limit the maximum capacity that its facility is 
capable of injecting into the Transmission Provider's system will 
not adversely affect the safety and reliability of the Transmission 
Provider's system.'').
---------------------------------------------------------------------------

    173. The Commission also seeks comment on whether revisions in 
addition to those proposed here for the pro forma LGIP or LGIA are 
necessary to accommodate requests for interconnection service below 
generating facility capacity. We also seek comment on whether in lieu 
of changes to the Commission's pro forma LGIP and LGIA, transmission 
providers should describe the processes for processing and studying 
requests for interconnection service below generating facility capacity 
in their pro forma LGIPs and LGIAs on compliance, or if such requests 
should be processed on an ad hoc basis rather than having a specified 
process in the pro forma documents.
    174. The Commission proposes to add the following new paragraph at 
the end of section 3.1 of the pro forma LGIP as follows:

    The Transmission Provider shall have a process in place to 
consider requests for Interconnection Service below the Generating 
Facility Capacity. These requests for Interconnection Service shall 
be studied at the level of Interconnection Service requested for 
purposes of Interconnection Facilities, Network Upgrades, and 
associated costs, but may be subject to other studies at the full 
Generating Facility Capacity to ensure safety and reliability of the 
system, with the study costs borne by the Interconnection Customer. 
Any Interconnection Facility and/or Network Upgrade costs required 
for safety and reliability also would be borne by the 
Interconnection Customer. Interconnection Customers may be subject 
to additional control technologies as well as testing and validation 
of those technologies consistent with Article 6 of the LGIA. The 
necessary control technologies and protection systems as well as any 
potential penalties for exceeding the level of Interconnection 
Service established in the executed, or requested to be filed 
unexecuted, LGIA shall be established in Appendix C of that 
executed, or requested to be filed unexecuted, LGIA.

    175. The Commission proposes to add the following language to the 
end of section 6.3 of the pro forma LGIP:

    Transmission Provider shall study the interconnection request at 
the level of service requested by the interconnection customer, 
unless otherwise required to study the full Generating Facility 
Capacity due to safety or reliability concerns.

    176. The Commission proposes to insert the following language in 
section 7.3 of the pro forma LGIP in line 8 of the second paragraph, 
just before the sentence ``The Interconnection System Impact Study will 
provide a list of facilities that are required as a result of the 
Interconnection Request and a non-binding good faith estimate of cost 
responsibility and a non-binding good faith estimated time to 
construct.''

    For purposes of determining necessary interconnection facilities 
and network upgrades, the System Impact Study shall consider the 
level of interconnection service requested by the Interconnection 
Customer, unless otherwise required to study the full Generating 
Facility Capacity due to safety or reliability concerns.

    177. The Commission proposes to add the following language to the 
end of section 8.2 of the pro forma LGIP:

    The Facilities Study will also identify any potential control 
equipment for requests for Interconnection Service that are lower 
than the Generating Facility Capacity.

    178. The Commission proposes to add the following language to 
Appendix 1, Item 5, of the pro forma LGIP, as sub-item h:

    Requested capacity (in MW) of Interconnection Service (if lower 
than the Generating Facility Capacity)

    179. Lastly, the Commission proposes to change the definition of 
``Large Generating Facility'' and ``Small Generating Facility'' in 
section 1 of the pro forma LGIP and article 1 of the pro forma LGIA as 
follows (proposing to delete italicized text):

    Large Generating Facility shall mean a Generating Facility for 
which an Interconnection Customer has having a Generating Facility 
Capacity requested Interconnection Service of more than 20 MW.
    Small Generating Facility shall mean a Generating Facility for 
which an Interconnection Customer has requested Interconnection 
Service that has a Generating Capacity of no more than 20 MW.

    180. The Commission recognizes that the NERC reliability standards 
are

[[Page 4490]]

generally applicable to generating facilities with a gross nameplate 
rating of greater than 20 MVA,\228\ and do not generally apply to Small 
Generating Facilities with SGIAs. The Commission clarifies that its 
proposed revisions to the definition of Large Generating Facility and 
Small Generating Facility are not intended to conflict with any 
applicable NERC Reliability Standards or NERC's compliance registration 
process.
---------------------------------------------------------------------------

    \228\ See NERC Statement of Compliance Registry Criteria 
(effective: July 1, 2014), http://www.nerc.com/FilingsOrders/us/RuleOfProcedureDL/Appendix_5B_RegistrationCriteria_20140701.pdf.
---------------------------------------------------------------------------

2. Provisional Interconnection Service
    181. The Commission recognizes that the length of the 
interconnection process can pose a challenge for interconnection 
customers. In some cases, there is a certain amount of interconnection 
capacity that has already been studied at the point of interconnection. 
The Commission therefore proposes to adopt a provisional agreement 
process wherein new generating facilities could interconnect, possibly 
under limited operation, using interconnection service pursuant to 
existing and regularly updated studies while they wait to complete the 
additional studies needed to satisfy their full interconnection 
request.
a. Existing Provisions and Background
    182. There are no current provisions in the pro forma LGIP or pro 
forma LGIA that allow for provisional agreements where new generating 
facilities could interconnect, possibly under limited operation, using 
interconnection service pursuant to existing and regularly updated 
studies while they wait to complete the additional studies needed to 
satisfy their full interconnection request. Under the current 
interconnection process, an interconnection customer that seeks to 
interconnect quickly, possibly under limited operation, and is willing 
to bear the financial risk of network upgrades that will be identified 
after the interconnection process has been completed, may not use 
interconnection service that is available as indicated by existing and 
regularly updated studies. Only at the end of the interconnection 
process--after the transmission provider has studied the final form of 
the proposed generating facility and its effects, and has evaluated the 
need for any interconnection facilities and network upgrades--may the 
interconnection customer begin injection onto the grid. Thus, the pro 
forma LGIP/LGIA do not provide for provisional arrangements that would 
allow interconnection customers to interconnect using existing capacity 
on the transmission system prior to the completion of the 
interconnection study process.
    183. However certain regions, such as SPP and MISO, already permit 
interconnection customers to execute provisional agreements prior to 
the completion of the full interconnection process.\229\ In MISO, 
interconnection customers are able to request provisional agreements to 
provide a limited amount of service prior to completion of the 
interconnection process, i.e., prior to the completion of any network 
upgrades, based on the availability of existing studies.\230\ To do so, 
interconnection customers must demonstrate that sufficient facilities 
exist for the level of output requested in the provisional agreement 
and must re-verify that determination on a regular basis.\231\ 
Extending this policy to other transmission providers could help 
facilitate the interconnection of generating facilities that have a 
desire to build and/or provide service prior to completion of the full 
interconnection process.
---------------------------------------------------------------------------

    \229\ SPP, OATT, Attachment V, app. 6 (6.1.0). MISO, FERC 
Electric Tariff, Att. X, Section 11.5 (47.0.0).
    \230\ MISO, FERC Electric Tariff, Att. X, Section 11.5 (47.0.0).
    \231\ MISO, FERC Electric Tariff, Att. X, Section 11.5 (47.0.0).
---------------------------------------------------------------------------

b. Comments
    184. Multiple commenters, particularly those in the electric 
storage industry, expressed a desire to expedite the interconnection 
process and to employ existing interconnection and network facilities 
as a way to do so. Several note that increasing the speed of 
interconnection for resources such as electric storage is important 
because these resources can physically come on-line before completion 
of the interconnection process.\232\
---------------------------------------------------------------------------

    \232\ See, e.g., AES 2016 Comments at 3.
---------------------------------------------------------------------------

c. Proposal
    185. The Commission preliminarily finds that the lack of a process 
in the pro forma LGIP and the lack of a provision in the pro forma LGIA 
for an interconnection customer to obtain a provisional agreement for 
interconnection service weakens competition due to the inability of 
interconnection customers to leverage prior investments in 
interconnection studies and related facilities to provide wholesale 
services. This lack of provisional interconnection service may also 
raise costs due to the inability to use some existing interconnection 
facilities and network upgrades, thereby leading to unjust and 
unreasonable rates for customers. Although a transmission provider may 
be able to provide interconnection service at the currently studied and 
approved level of interconnection capacity while it is studying a 
larger interconnection request, the pro forma LGIP and pro forma LGIA 
do not currently provide for such flexibility for provisional service 
at currently studied levels. Therefore, lack of a process for 
provisional interconnection service precludes the interconnection 
customer from providing wholesale services during the pendency of its 
interconnection request.
    186. The Commission therefore proposes to allow interconnection 
customers to enter into provisional agreements for limited 
interconnection service prior to the completion of the full 
interconnection process. Such provisional agreements could benefit 
interconnection customers by permitting limited operation based on 
existing and regularly updated studies, and prior to the completion of 
studies and network upgrades being built for the larger interconnection 
service that is requested. Provisional agreements could also benefit 
interconnection customers with short development lead times, such as 
electric storage resources, which can provide some services prior to 
completion of the full interconnection process. Under this proposal, 
interconnection customers with provisional agreements would be able to 
begin operation up to the MW level as permitted by existing and 
regularly updated studies. The transmission provider may require 
milestone payments prior to submission of the provisional agreement. 
The provisional agreement would be in effect while awaiting the final 
results of the interconnection studies, finalization of a final 
interconnection agreement, and the construction of any additional 
interconnection facilities and network upgrades and cost assignments 
for the network upgrades that may result from the full interconnection 
process. The Commission also proposes that provisional large generator 
interconnection agreements and the associated provisional 
interconnection service would terminate upon completion of construction 
of network upgrades. At this point, the interconnection customer would 
proceed according to the terms of the interconnection agreement.
    187. Provisional agreements may also mitigate interconnection 
customer risk associated with unknown final network

[[Page 4491]]

upgrade costs by creating revenue streams earlier in an interconnection 
customer's life. However, the Commission proposes that such 
interconnection customers must still assume all risks and liabilities 
associated with the required interconnection facilities and network 
upgrades for their interconnection that are identified pursuant to the 
interconnection studies for the requested interconnection service.
    188. The Commission therefore proposes to require that transmission 
providers allow interconnection customers to request provisional 
interconnection service and operate under provisional interconnection 
agreements based on existing and regularly updated studies that 
demonstrate that necessary interconnection facilities and network 
upgrades are in place to meet applicable North American Electric 
Reliability Corporation (NERC) or other regional reliability 
requirements for new, modified, and/or expanded generating facilities. 
If available studies do not demonstrate whether provisional 
interconnection service can be reliably accommodated, the transmission 
provider shall perform additional studies as necessary. An evaluation 
of provisional service by the transmission provider shall determine 
whether stability, short circuit, and/or voltage issues would arise if 
the interconnection customer seeking provisional interconnection 
service interconnects without modifications to the generating facility 
or the transmission provider's system. The Commission also proposes 
that transmission providers must assess any safety or reliability 
concerns posed by provisional agreements, and establish a process for 
the interconnection customer that will mitigate any reliability risks 
associated with operation pursuant to provisional agreements. The costs 
of such mitigation, if necessary, would be borne by the interconnection 
customer. The Commission is interested in additional comments on this 
proposal and the means by which transmission providers and 
interconnection customers could mitigate any risks and liabilities for 
provisional interconnection service. Additionally, acknowledging that 
transmission providers have limited resources to conduct studies, we 
also seek comment on the circumstances under which provisional 
interconnection service would be beneficial and how common such 
circumstances would be for potential interconnection customers.
    189. The Commission proposes to add the following new definitions 
to Section 1 of the pro forma LGIP, as well as to article 1 of the 
LGIA:

    Provisional Interconnection Service shall mean interconnection 
service provided by the Transmission Provider associated with 
interconnecting the Interconnection Customer's Generating Facility 
to the Transmission Provider's Transmission System and enabling that 
Transmission System to receive electric energy and capacity from the 
Generating Facility at the Point of Interconnection, pursuant to the 
terms of the Provisional Large Generator Interconnection Agreement 
and, if applicable, the Tariff.
    Provisional Large Generator Interconnection Agreement shall mean 
the interconnection agreement for Provisional Interconnection 
Service established between the Transmission Provider and/or the 
Transmission Owner and the Interconnection Customer. This agreement 
shall take the form of the Large Generator Interconnection 
Agreement, modified for provisional purposes.

    190. Additionally, the Commission proposes a new section 5.10 for 
the pro forma LGIA that defines the requirements for transmission 
providers to provide provisional interconnection service and the 
responsibilities of the interconnection customer. The Commission has 
not developed a pro forma Provisional Large Generator Interconnection 
Agreement because such agreements could either be established on an ad 
hoc basis for provisional interconnection service, or transmission 
providers could establish their own pro forma provisional agreements. 
However, the Commission seeks comment on the need for the Commission to 
establish a pro forma Provisional Large Generator Interconnection 
Agreement as part of the pro forma LGIA as well as any important 
details related to the service, e.g., the stage in the interconnection 
process where the customer would be able to request this service and 
whether all milestone payments would be required to be paid upon 
submission of the provisional agreement. The Commission proposes to add 
the following new section 5.10 to the pro forma LGIA:
    5.10 Provisional Interconnection Service. Upon the request of 
Interconnection Customer, and prior to completion of requisite 
Network Upgrades, the Transmission Provider may execute a 
Provisional Large Generator Interconnection Agreement or 
Interconnection Customer may request the filing of an unexecuted 
Provisional Large Generator Interconnection Agreement with the 
Interconnection Customer for limited interconnection service at the 
discretion of Transmission Provider based upon an evaluation that 
will consider the results of available studies. Transmission 
Provider shall determine, through available studies or additional 
studies as necessary, whether stability, short circuit, thermal, 
and/or voltage issues would arise if Interconnection Customer 
interconnects without modifications to the Generating Facility or 
Transmission Provider's system. Transmission Provider shall 
determine whether any Network Upgrades, Interconnection Facilities, 
Distribution Upgrades, or System Protection Facilities that are 
necessary to meet the requirements of NERC, or any applicable 
Regional Entity for the interconnection of a new, modified and/or 
expanded Generating Facility are in place prior to the commencement 
of interconnection service from the Generating Facility. Where 
available studies indicate that such Network Upgrades, 
Interconnection Facilities, Distribution Upgrades, and/or System 
Protection Facilities that are required for the interconnection of a 
new, modified and/or expanded Generating Facility are not currently 
in place, Transmission Provider will perform a study, at the 
Interconnection Customer's expense, to confirm the facilities that 
are required for provisional interconnection service. The maximum 
permissible output of the Generating Facility in the Provisional 
Large Generator Interconnection Agreement shall be studied and 
updated on a quarterly basis. Interconnection Customer assumes all 
risks and liabilities with respect to changes between the 
Provisional Large Generator Interconnection Agreement and the Large 
Generator Interconnection Agreement, including changes in output 
limits and Network Upgrades, Interconnection Facilities, 
Distribution Upgrades, and/or System Protection Facilities cost 
responsibilities.
3. Utilization of Surplus Interconnection Service
    191. Based on comments received during this proceeding, it has 
become clear that a number of interconnection customers would like to 
co-locate new generating facilities with existing generating facilities 
which may not be fully utilizing an existing generating facility's 
interconnection service. Commenters provided examples of circumstances 
when this can happen, including instances where an existing variable 
energy resource is paired with a new electric storage resource. In this 
example, the variability in the variable energy resource's output may 
prevent it from fully utilizing its interconnection capacity during 
some hours. To address these comments, the Commission proposes to 
require transmission providers to include in their tariffs and the pro 
forma LGIP an expedited process for interconnection customers to 
utilize or transfer surplus interconnection service at existing 
generating facilities. The Commission further proposes that this 
process give an existing generating facility owner or its affiliate 
priority to use the surplus interconnection service, but that the 
tariffs and pro forma LGIP also establish

[[Page 4492]]

an open and transparent process for the sale of that surplus 
interconnection service if the owner and its affiliates elect not to 
use it, and elect to make it available to another party. Lastly, the 
Commission proposes that this expedited process for surplus 
interconnection service be available for any quantity of surplus 
interconnection service, regardless of whether it is above or below the 
20 MW threshold for small and large generator interconnection.
a. Existing Provisions and Background
    192. On occasion, interconnection customers request more 
interconnection service for an interconnection request than they may 
need at any given time. As a result, they may have surplus 
interconnection service that the relevant transmission provider has 
already studied and approved. An interconnection customer with an 
existing interconnection agreement might want to add resources, such as 
electric storage resources, which were not planned as part of the 
original interconnection request, or it may wish to sell surplus 
interconnection service without conveying the originally planned 
generating facility as part of the sale. In these instances, it is 
difficult for an interconnection customer at present to utilize this 
surplus interconnection service. The Commission has addressed the 
desire for an interconnection customer to retain access to excess 
capacity on interconnection customer interconnection facilities.\233\ 
These reforms were motivated by phased generating facilities that have 
built additional interconnection customer interconnection facility 
capacity beyond that needed by the initial phases of development. 
However, there are other circumstances when an interconnection customer 
may have surplus interconnection service and the pro forma LGIP and pro 
forma LGIA do not address the utilization or transfer of surplus 
interconnection service where there is no transfer of the underlying 
generating facility.
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    \233\ Open Access and Priority Rights on Interconnection 
Customer's Interconnection Facilities, Order No. 807, 150 FERC ] 
61,211 (2015).
---------------------------------------------------------------------------

    193. MISO's tariff offers Net Zero Interconnection Service, which 
MISO designed to allow an existing interconnection customer to increase 
the gross generating capacity at the point of interconnection of an 
existing generating facility without increasing the total 
interconnection service at the point of interconnection.\234\ Under 
MISO's approach, a new generating facility could use this service to 
interconnect at an existing point of interconnection.\235\ In MISO, Net 
Zero Interconnection Service entails a separate interconnection process 
for interconnection service that an existing interconnection customer 
wishes to make available for a new interconnection customer.\236\ This 
process includes an energy displacement agreement between the existing 
and the new interconnection customers,\237\ a monitoring and consent 
agreement between the new interconnection customer and the transmission 
owner,\238\ as well as the appropriate studies, and an evaluation 
process for Net Zero Interconnection Service.\239\
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    \234\ MISO FERC Electric Tariff, Att. X, Section 1 (Definitions) 
(47.0.0) (``Net Zero Interconnection Service shall mean a form of 
Energy Resource Interconnection Service that allows an 
interconnection customer to alter the characteristics of an existing 
generating facility, with the consent of the existing generating 
facility, at the same POI such that the Interconnection Service 
limit remains the same'').
    \235\ Midwest Indep. Transmission Sys. Operator, 138 FERC ] 
61,233 at P 16.
    \236\ MISO FERC Electric Tariff, Att. X, Section 1 (Definitions) 
(47.0.0) (``Net Zero Interconnection Service shall mean a form of 
Energy Resource Interconnection Service that allows an 
interconnection customer to alter the characteristics of an existing 
generating facility, with the consent of the existing generating 
facility, at the same POI such that the Interconnection Service 
limit remains the same'').
    \237\ MISO FERC Electric Tariff, Att. X, Section 1 (Definitions) 
(47.0.0) (``Energy Displacement Agreement shall mean an agreement 
between an Interconnection Customer with an existing generating 
facility on the Transmission Provider's Transmission System and an 
Interconnection Customer with a proposed Generating Facility seeking 
to interconnect with Net Zero Interconnection Service. The Energy 
Displacement Agreement specifies the term of operation, the 
Generating Facility Interconnection Service limit, and the mode of 
operation for energy production (common or singular operation)'').
    \238\ MISO FERC Electric Tariff, Att. X, Section 1 (Definitions) 
(47.0.0) (``Monitoring and Consent Agreement shall mean an agreement 
that defines the terms and conditions applicable to a Generating 
Facility acquiring Net Zero Interconnection Service. The Monitoring 
and Consent Agreement will list the roles and responsibilities of an 
Interconnection Customer seeking to interconnect with Net Zero 
Interconnection Service and Transmission Owner to maintain the total 
output of the Generating Facility inside the parameters delineated 
in the GIA'').
    \239\ MISO FERC Electric Tariff, Att. X, Sections 3.2.3 & 3.3.1 
(47.0.0).
---------------------------------------------------------------------------

    194. As implemented in MISO, Net Zero Interconnection Service is a 
restricted form of Energy Resource Interconnection Service. The 
interconnection study consists of reactive power, short circuit/fault 
duty, and stability analyses. Steady-state (thermal/voltage) analyses 
may be performed as necessary to ensure that all required reliability 
conditions are studied. Moreover, if the existing generating facility 
was not studied under off-peak conditions, off-peak steady state 
analyses will be performed to the required level necessary to 
demonstrate reliable operation of the Net Zero Interconnection Service. 
If no system impact study was available for the existing generation, 
both off-peak and peak analysis may need to be performed for the 
generating facility seeking Net Zero Interconnection Service in 
accordance with the LGIP. The interconnection study will identify the 
interconnection facilities required and the network upgrades necessary 
to address reliability issues.
    195. In its order accepting MISO's proposal for Net Zero 
Interconnection Service, the Commission expressed concern about the 
``lack of transparency'' and failure to ``provide a clear and 
consistent way in which generators seeking Net Zero Interconnection 
Service may identify opportunities for [such service] or how such a 
generator would be chosen for such service.'' \240\ For these reasons, 
the Commission directed MISO to submit a compliance filing to ensure 
that MISO offers Net Zero Interconnection Service ``on a fair, 
transparent, and non-discriminatory basis and that comply with the 
filing requirements of FPA section 205.'' \241\
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    \240\ Midwest Indep. Transmission Sys. Operator, Inc., 138 FERC 
] 61,233, at P 301 (2012) (First Net Zero Order).
    \241\ First Net Zero Order, 138 FERC ] 61,233 at P 302.
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b. Comments
    196. The Commission received multiple comments that support 
Commission action to improve the interconnection process with regard to 
surplus interconnection service. Some commenters stressed the 
importance of getting resources, especially electric storage resources, 
on-line more quickly. For instance, NextEra states that a program that 
allows for utilization of surplus interconnection capacity could result 
in faster processing of requests to co-locate batteries with existing 
generation.\242\ ESA argues that customers that wish to install 
electric storage resources without additional injection rights should 
be able to limit interconnection service to the level established in 
the existing interconnection agreement. ESA also suggests that 
interconnection customers should be able to transfer some of their 
injection rights to others, with thermal studies required only for the 
incremental service.\243\
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    \242\ See, e.g., NextEra 2016 Comments at 13. MISO notes that 
its Net Zero Interconnection Service product is available to any new 
resources. MISO 2016 Comments at 24-25.
    \243\ ESA 2016 Comments at 8-10.

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[[Page 4493]]

    197. Commenters also assert that co-locating electric storage 
resources with generators that have existing interconnection rights 
should require less modeling and should not require thermal injection 
studies.\244\ NextEra suggests that studies should be tailored to the 
service requested, with a focus on stability studies and thermal 
withdrawal studies only if they are necessary. NextEra suggests that 
these changes should apply to both electric storage resources that seek 
to interconnect at existing generation sites and to new brownfield 
electric storage resources co-located with new generation.\245\
---------------------------------------------------------------------------

    \244\ NextEra 2016 Comments at 13; California Energy Storage 
Alliance 2016.
    \245\ NextEra 2016 Comments at 13.
---------------------------------------------------------------------------

    198. During the technical conference, transmission providers noted 
that processes and procedures would need to be in place to determine 
whether the requested interconnection service was available, including 
having service, rights, and descriptions that are clear and 
implementable.\246\
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    \246\ Review of Generator Interconnection Agreements and 
Procedures, American Wind Energy Association, Docket No RM16-12-000, 
Technical Conference Transcript at 251.
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c. Proposal
    199. The Commission is concerned that existing interconnection 
service is underutilized. The Commission also recognizes changes in the 
industry that have created greater opportunities for co-located 
facilities, such as generation and electric storage resources. It is 
appropriate to incentivize the utilization of surplus interconnection 
service because creating an expedited process for interconnection 
customers to utilize or transfer the utilization of surplus 
interconnection service will help reduce system costs by leveraging 
existing assets. Doing so could also improve competition in the 
wholesale markets by accelerating the interconnection process and 
facilitating the use of new complementary technologies such as electric 
storage resources that can further improve reliability and competition. 
Therefore, the Commission preliminarily finds that facilitating the use 
of surplus interconnection service will reduce costs and improve 
competition, helping to ensure just and reasonable rates as required of 
the Commission under the FPA.
    200. The Commission preliminarily finds that providing an expedited 
process for interconnection customers to utilize or transfer surplus 
interconnection service at existing generating facilities could remove 
barriers to the interconnection of a new generator, or to the 
modification and/or expansion of the existing generating facility. 
Expediting the use of surplus interconnection service could be 
particularly beneficial to electric storage and other resources that 
can be developed and constructed faster than existing interconnection 
processes often allow. Allowing interconnection customers to better 
leverage existing assets, whether for their own purposes or for 
transfer to another interconnection customer, will help prevent 
stranded costs and improve access to the transmission system, thereby 
enhancing competition and helping to ensure just and reasonable rates, 
terms, and conditions.
    201. The Commission proposes to add a new definition for Surplus 
Interconnection Service to section 1 of the pro forma LGIP and to 
article 1 of the pro forma LGIA that provides an expedited process for 
interconnection customers to utilize or transfer surplus 
interconnection service at existing generating facilities. The 
Commission further proposes that this process give an existing 
generating facility owner or its affiliates priority to use the surplus 
interconnection service, but that the transmission providers would also 
establish an open and transparent process for the transfer of that 
surplus interconnection service if the generating facility owner and 
its affiliates elect not to use it, and the generating facility owner 
elects to make it available to another party.
    202. The Commission proposes that the studies for surplus 
interconnection service shall consist of reactive power, short circuit/
fault duty, and stability analyses, and that steady-state (thermal/
voltage) analyses may be performed as necessary to ensure that all 
required reliability conditions are studied. The Commission proposes 
that if the surplus interconnection service was not studied under off-
peak conditions, off-peak steady state analyses shall be performed to 
the required level necessary to demonstrate reliable operation of the 
surplus interconnection service. The Commission also proposes that if 
the original System Impact Study is not available for the surplus 
interconnection service, both off-peak and peak analysis may need to be 
performed for the existing generating facility associated with the 
request for surplus interconnection service. Additionally, the 
Commission proposes that this process for the use or transfer of 
surplus interconnection service be available for any quantity of 
surplus interconnection service that currently exists.
    203. The Commission proposes that a new interconnection agreement 
for surplus interconnection service must be executed, or filed 
unexecuted, by the transmission provider, transmission owner (as 
applicable), and the surplus interconnection service customer. The 
surplus interconnection service customer may be the interconnection 
customer for the existing generating facility, one of its affiliates, 
or a new interconnection customer selected through an open and 
transparent solicitation process. In addition to the new 
interconnection agreement for surplus interconnection service, we 
recognize that other contractual arrangements may also be necessary. 
For example, the interconnection customer for the existing generating 
facility and the surplus interconnection service customer will likely 
want to memorialize their rights and obligations with regard to the 
operation of the existing generating facility and the new generating 
facility that will use the surplus interconnection service.
    204. While the Commission does not propose specific contractual 
arrangements with respect to surplus interconnection service in this 
Proposed Rule, the Commission seeks comment on how these arrangements 
should work and on whether requirements for such arrangements should be 
established in the Commission's pro forma LGIP and LGIA. The Commission 
notes that the pro forma LGIA only permits survival of the LGIA under 
limited circumstances.\247\ For this reason, one important 
consideration for the new interconnection agreement for surplus 
interconnection service is whether the surplus interconnection service 
should survive the retirement of the existing generating facility. The 
Commission seeks comment on whether the interconnection agreement for 
surplus interconnection service should terminate upon the retirement of 
the existing generating facility, or whether there are circumstances 
under which the surplus interconnection service customer may operate 
its generating facility under terms of the surplus interconnection 
service agreement after the retirement of the existing generating 
facility. If the transmission provider, transmission owner (as 
applicable), and

[[Page 4494]]

the surplus interconnection service customer choose to provide for 
survival of the surplus interconnection service agreement for the 
surplus interconnection service customer after the retirement of the 
existing generating facility, they must memorialize this arrangement in 
the surplus interconnection service agreement. The Commission notes, 
however, that in recent precedent, the Commission stated that 
procedures that allow retiring generators to transfer their 
interconnection service must ``ensure that the opportunity to replace 
or increase the capacity of the retiring facility is offered on a fair, 
transparent, and nondiscriminatory basis.'' \248\ For this reason, the 
Commission anticipates that, upon the retirement of the existing 
generating facility, any interconnection service could only be 
transferred on a fair, transparent, and nondiscriminatory basis.
---------------------------------------------------------------------------

    \247\ Article 2.6 provide that an LGIA:
    shall continue in effect after termination to the extent 
necessary to provide for final billings and payments and for costs 
incurred hereunder, including billings and payments pursuant to this 
LGIA; to permit the determination and enforcement of liability and 
indemnification obligations arising from acts or events that 
occurred while this LGIA was in effect; and to permit each Party to 
have access to the lands of the other Party pursuant to this LGIA or 
other applicable agreements, to disconnect, remove or salvage its 
own facilities and equipment.
    Pro forma LGIA Art. 2.6 (Survival).
    \248\ Midwest Indep. Transmission Sys. Operator, Inc., 153 FERC 
] 61,313, at P 27 (2015).
---------------------------------------------------------------------------

    205. While some commenters suggest that other transmission 
providers should adopt a process similar to MISO's process for Net Zero 
Interconnection Service, upon further consideration of the MISO Net 
Zero Interconnection Service proceeding, the Commission proposes to 
modify its position with regard to utilization of surplus 
interconnection service so that the existing generating facility owners 
have priority to utilize such surplus interconnection service. In 
revisiting these previous findings, the Commission notes that existing 
generating facility owners (or their predecessors) have already paid 
for the interconnection studies and interconnection facilities and have 
real property interests and other assets associated with those existing 
generating facilities, such as real estate and permits. After executing 
an interconnection agreement, a generating facility owner is entitled 
to the interconnection service contained therein, and is not required 
to make such service available unless it elects to.
    206. Under this proposal, an existing generating facility owner or 
its affiliate would have priority to use any surplus interconnection 
service and would be able to execute, or request the filing of an 
unexecuted, new interconnection agreement for surplus interconnection 
service without posting or going through an open solicitation. However, 
if an existing generating facility owner that has surplus 
interconnection service wishes to transfer this surplus interconnection 
service, and it does not wish to use the surplus interconnection 
service itself or to transfer it to one of its affiliates, the existing 
generator must conduct an open and transparent solicitation process for 
that surplus interconnection service. The proposal to grant existing 
generating facility owners priority over their surplus interconnection 
service is similar to the Commission's findings in Order No. 807 where 
the Commission waived certain open access requirements and granted 
interconnection customers priority over their interconnection 
customer's interconnection facilities.\249\ While the Commission 
proposes that priority be given to the existing generating facility 
owner of the surplus interconnection service or its affiliates, the 
Commission seeks comment on whether any further limitations should be 
placed on the entities with priority use of that surplus 
interconnection service.
---------------------------------------------------------------------------

    \249\ Order No. 807, Open Access and Priority Rights on 
Interconnection Customer's Interconnection Facilities, 150 FERC ] 
61,211.
---------------------------------------------------------------------------

    207. In consideration of the foregoing, the Commission proposes to 
add a new definition for Surplus Interconnection Service to section 1 
of the pro forma LGIP and to article 1 of the pro forma LGIA. 
Additionally, the Commission proposes to add new sections 3.3, 3.3.1 
and 3.3.2 to the pro forma LGIP that define the requirements of the 
transmission provider regarding requests for the use of surplus 
interconnection service and the solicitation process for surplus 
interconnection service that the existing generating facility owner 
must follow if it, or one of its affiliates, elects not to use the 
surplus interconnection service and wants to transfer that service to 
another interconnection customer.
    208. The Commission proposes to add the following new definition to 
Section 1 of the pro forma LGIP and to article 1 of the pro forma LGIA:

    Surplus Interconnection Service shall mean any unused portion of 
Interconnection Service established in a Large Generator 
Interconnection Agreement, such that if Surplus Interconnection 
Service is utilized the Interconnection Service limit at the Point 
of Interconnection would remain the same.

    209. The Commission proposes to add a new section 3.3 to the pro 
forma LGIP that requires the transmission provider to establish a 
process for the use of surplus interconnection service. This section 
will displace the current section 3.3, changing the numbering of 
current sections 3.3, 3.4, 3.5, and 3.6 to 3.4, 3.5, 3.6, and 3.7, 
respectively.\250\
---------------------------------------------------------------------------

    \250\ Renumbering detailed in Appendix B of this Proposed Rule.

    Utilization of Surplus Interconnection Service. The Transmission 
Provider must provide a process that allows an Interconnection 
Customer to utilize or transfer Surplus Interconnection Service at 
an existing Generating Facility. The original Interconnection 
Customer or one of its affiliates shall have priority to utilize 
Surplus Interconnection Service. If the existing Interconnection 
Customer or one of its affiliates does not exercise its priority, 
then that service may be made available to other potential 
interconnection customers through an open and transparent 
---------------------------------------------------------------------------
solicitation process.

    210. The Commission proposes to add a new section 3.3.1 to the pro 
forma LGIP that describes the process for using surplus interconnection 
service:

Surplus Interconnection Service Requests

    Surplus Interconnection Service requests may be made by the 
existing Generating Facility or one of its affiliates. Surplus 
Interconnection Service requests also may be made by another 
Interconnection Customer selected through an open and transparent 
solicitation process. The Transmission Provider shall provide a 
process for evaluating interconnection requests for Surplus 
Interconnection Service. Studies for Surplus Interconnection Service 
shall consist of reactive power, short circuit/fault duty, stability 
analyses, and any other appropriate studies. Steady-state (thermal/
voltage) analyses may be performed as necessary to ensure that all 
required reliability conditions are studied. If the Surplus 
Interconnection Service was not studied under off-peak conditions, 
off-peak steady state analyses shall be performed to the required 
level necessary to demonstrate reliable operation of the Surplus 
Interconnection Service. If the original System Impact Study is not 
available for the Surplus Interconnection Service, both off-peak and 
peak analysis may need to be performed for the existing Generating 
Facility associated with the request for Surplus Interconnection 
Service. The reactive power, short circuit/fault duty, stability, 
and steady-state analyses for Surplus Interconnection Service will 
identify any additional Interconnection Facilities and/or Network 
Upgrades necessary.

    211. The Commission proposes to add a new section 3.3.2 to the pro 
forma LGIP that establishes the open and transparent solicitation 
process for surplus interconnection service:

Solicitation Process for Surplus Interconnection Service

    If the existing Generating Facility owner elects to transfer 
rights for Surplus Interconnection Service to an unaffiliated 
Interconnection Customer, it must do so through an open and 
transparent solicitation process. The existing Generating Facility 
owner must first request that the Transmission Provider post on its 
Web site that it is willing to accept requests for Surplus 
Interconnection Service at the existing Point of Interconnection. 
Such posting will include the name of the existing Generating 
Facility, the exact electrical location of the physical termination 
point of the Surplus Interconnection Service,

[[Page 4495]]

including proposed breaker position(s) within its substation, the 
state and county of the existing Generating Facility, and a valid 
email address and phone number to contact the representative of the 
existing Generating Facility. The existing Generating Facility owner 
must provide the Transmission Provider with the System Impact Study 
performed for the existing Generating Facility with its request for 
posting Surplus Interconnection Service or indicate that such study 
is not available.
    After the existing Generating Facility owner requests that the 
Transmission Provider post the availability of Surplus 
Interconnection Service, the Transmission Provider will also post on 
its Web site a description of the selection process for transferring 
rights to the Surplus Interconnection Service that will include a 
timeline and the selection criteria developed by the existing 
Generating Facility owner. The selection process may vary among 
existing Generating Facility owners but the existing Generating 
Facility owner will choose the winning request after all necessary 
studies have been performed by the Transmission Provider. The 
existing Generating Facility owner will submit to the Transmission 
Provider, for posting on the Transmission Provider's Web site, the 
results of the selection process and will include a description of 
whose proposal for the Surplus Interconnection Service was selected 
and why. After an Interconnection Customer has been chosen, the new 
Interconnection Customer will execute, or request the filing of an 
unexecuted, interconnection agreement with the Transmission Provider 
and Transmission Owner (as applicable) upon completion of all 
necessary studies for its new Generating Facility.
4. Material Modification and Incorporation of Advanced Technologies
    212. It is not uncommon for equipment manufacturers to make 
technological advancements to equipment while an interconnection 
request progresses through the interconnection process since the 
process can span several years. Technological advancements to equipment 
may achieve cost efficiencies and/or electrical grid performance 
benefits. These changes may include, for example, advancements to 
turbines, inverters, plant supervisory controls, or may affect a 
generating facility's ability to provide ancillary services. However, 
the pro forma LGIP does not include clear guidelines on what technology 
changes constitute material modifications and how these changes can be 
incorporated into an interconnection request. The pro forma LGIP also 
does not contain guidance regarding the analysis and modeling for the 
incorporation of technological advancements into an existing 
interconnection request. The Commission proposes to require that 
transmission providers develop: (1) A definition of permissible 
technological advancements pursuant to an interconnection request that 
the interconnection process can accommodate and (2) an accompanying 
procedure that will be used to accommodate the incorporation of 
technological advancements to interconnection requests for synchronous 
and non-synchronous generating facilities. Further, the Commission 
proposes that this definition should contemplate advancements that 
provide cost efficiency and/or electrical performance benefits.
a. Existing Provisions and Background
    213. Under the pro forma LGIP, an interconnection customer must 
submit to the transmission provider, in writing, modifications to any 
information provided in the interconnection request.\251\ An 
interconnection customer retains its queue position if the 
modifications are either allowed explicitly under the pro forma LGIP or 
if the transmission provider determines that the modifications are not 
Material Modifications.\252\ The pro forma LGIP directs transmission 
providers to commence any necessary additional studies related to the 
interconnection customer's modification request no later than 30 
calendar days after receiving notice of the request.\253\ If a 
transmission provider finds a proposed modification to be material, the 
interconnection customer can choose whether to abandon the proposed 
modification or to proceed with the modification and lose its existing 
queue position.
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    \251\ See Pro forma LGIP at Section 4.4.
    \252\ See Pro forma LGIP at Sections 4.4.1, 4.4.2, 4.4.3, 4.4.4.
    \253\ See Pro forma LGIP at Section 4.4.4.
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b. Comments
    214. During the 2016 Technical Conference, some panelists 
questioned whether interconnection customers should be able to 
incorporate technological advancements into their interconnection 
requests as they move through the interconnection study process. The 
Commission subsequently solicited post-technical conference comments on 
whether technological advancements could be incorporated without 
presenting system reliability concerns and causing delays to the 
interconnection study process.\254\ Multiple commenters assert that the 
interconnection process could benefit from the additional flexibility 
to accommodate technological advancements that do not cause significant 
reliability issues or timing delays.\255\ Some commenters state that 
these advancements should be permissible as long as they do not trigger 
the Material Modification provision of the LGIP and do not disrupt 
other interconnection requests.\256\ PacifiCorp proposed a formal 
procedure for transmission providers to evaluate technological 
advancements.\257\ In particular, PacifiCorp's proposal would require 
interconnection customers to provide formal notification and a $10,000 
deposit for the performance of a technological change study that the 
transmission provider would complete within 30 days.\258\ MISO asserts 
that a new approach to account for technological advancements would 
require manufacturers to provide validation documentation that the 
advancement performs equally or better than without the technological 
change. MISO further asserts that if a technological advancement would 
result in improved performance, in most cases, a transmission provider 
study is unnecessary.\259\ Xcel acknowledges that new technologies may 
not be appropriately modeled in the existing analytical software, and 
states that developing sufficient modeling parameters should be made 
clear to interconnection customers' technology vendors.\260\ Xcel 
argues that confidentiality issues should not preclude the sharing of 
functional specifications sufficient to model the new equipment.\261\
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    \254\ See Notice Inviting Post-Technical Conference Comments, 
Question 1.13 Docket Nos. RM16-12-000 and RM15-21-000 (June 3, 
2016).
    \255\ See, e.g., PacifiCorp 2016 Comments at 3-4; AWEA 2016 
Comments at 27; Invenergy 2016 Comments at 18; MISO 2016 Comments at 
14; EDF 2016 Comments at 25; NYISO 2016 Comments at 19; ISO-NE 2016 
Comments at 20-21.
    \256\ See, e.g., Xcel 2016 Comments at 12-13; MISO 2016 Comments 
at 14; EDP 2016 Comments at 14-15; Invenergy 2016 Comments at 18.
    \257\ PacifiCorp 2016 Comments at 3-4.
    \258\ Id.
    \259\ MISO 2016 Comments at 14.
    \260\ Xcel 2016 Comments at 12-13.
    \261\ Xcel 2016 Comments at 12-13.
---------------------------------------------------------------------------

    215. With regard to the timing of technological change requests, 
most commenters did not identify an appropriate deadline within the 
interconnection process beyond which transmission providers could not 
accommodate technological advancements. EDF argues that technological 
advancements should be accommodated as an interconnection request 
proceeds through the LGIP process up until the commercial operation 
date, because advancements provide benefits to all customers.\262\ 
NYISO, on the other hand, asserts that

[[Page 4496]]

technological advances and other modifications can be incorporated into 
an interconnection request only if they are proposed at appropriate 
stages.\263\
---------------------------------------------------------------------------

    \262\ EDF 2016 Comments at 25.
    \263\ NYISO 2016 Comments at 19.
---------------------------------------------------------------------------

c. Proposal
    216. The Commission preliminarily finds that the provisions 
regarding material modifications in the pro forma LGIP provide the 
transmission provider with significant discretion in determining 
whether a modification is deemed material, and that this discretion can 
lead to unjust and unreasonable rates, terms, and conditions, and 
unduly discriminatory or preferential practices when transmission 
providers evaluate technological advancements under the existing 
material modification construct.
    217. The Commission thus proposes to require transmission providers 
to establish a technological change procedure to assess and, if 
necessary, study whether they can accommodate a technological change 
request without the change considered to be a material modification. 
The Commission proposes that transmission providers include the 
technological change procedure in their pro forma LGIPs. The Commission 
proposes an approach below for how this new procedure should be 
structured and proposes to require that transmission providers use this 
approach when developing their technological change procedure.
    218. The Commission proposes that an interconnection customer that 
seeks to incorporate technological advancements into an interconnection 
request must formally notify the relevant transmission provider. In 
order for the transmission provider to determine that a proposed 
technological change is not a material modification,\264\ the 
interconnection customer's formal technological change request would 
include analyses to demonstrate that the proposed incorporation of the 
technological advancement would result in electrical performance that 
is equal to or better than the electrical performance expected prior to 
the technology change. In some instances, a transmission provider may 
determine that no additional study is necessary to accommodate a 
proposed technological advancement without a loss of queue position.
---------------------------------------------------------------------------

    \264\ The pro forma LGIP defines Material Modification as 
``those modifications that have a material impact on the cost or 
timing of any Interconnection Request with a later queue priority 
date.'' See pro forma LGIP at Section 1.
---------------------------------------------------------------------------

    219. In other instances, a transmission provider may require a 
study for a proposed technological advancement to not be considered a 
material modification. The Commission proposes that, in this scenario, 
the interconnection customer should tender an appropriate study deposit 
and provide the necessary modeling data that sufficiently models the 
behavior of the new equipment and any other required data about the 
technological advancement to the transmission provider. The 
transmission provider should then provide the study results within 30 
days.
    220. Under this proposal, the technological change procedure should 
specify what technological advancements can be incorporated at various 
stages of the interconnection process and the procedure should clearly 
specify which requirements apply to the interconnection customer and 
which apply to the transmission provider. The procedure should, for 
example, state that an interconnection customer that seeks to 
incorporate technological advancements into its generating facility 
should submit a formal technological change request. Additionally, the 
procedure should specify the necessary information that should be 
submitted by the interconnection customer as part of a formal 
technological change request and, to the extent practicable, specify 
the conditions when a study will or will not be necessary. If a study 
is necessary, the procedure should clearly specify the information that 
the interconnection customer needs to provide, including study 
scenarios, modeling data, and any other assumptions. The procedure 
should also clearly indicate what types of information and/or study 
results are necessary from the interconnection customer and explain how 
the transmission provider will evaluate the technological change 
request. In the instance where the transmission provider performs the 
study, the interconnection customer may be required to tender a 
deposit, and the procedure should specify the amount of the study 
deposit and include the timeframe for the transmission provider to 
perform the study and return the results to the interconnection 
customer. If a proposed technological advancement cannot be 
accommodated without triggering the material modification provision of 
the pro forma LGIP or be completed through an abbreviated assessment 
that does not affect the interconnection customer's queue position, the 
Commission proposes to require the transmission provider to provide an 
explanation to the interconnection customer. The Commission seeks 
comment on reasonable study deposits and time frames.\265\
---------------------------------------------------------------------------

    \265\ In its 2016 Comments, PacifiCorp proposes a $10,000 study 
deposit and 30-day timeframe for the study to be performed. 
PacifiCorp 2016 Comments at 4-5.
---------------------------------------------------------------------------

    221. Consistent with the discussion above, the Commission proposes 
to revise Section 4.4.2 of the pro forma LGIP as follows (proposing to 
delete italicized text):

    4.4.2 Prior to the return of the executed Interconnection 
Facility Study Agreement to the Transmission Provider, the 
modifications permitted under this Section shall include 
specifically: (a) Additional 15 percent decrease in plant size (MW), 
and (b) Large Generating Facility technical parameters associated 
with modifications to Large Generating Facility technology and 
transformer impedances; provided, however, the incremental costs 
associated with those modifications are the responsibility of the 
requesting Interconnection Customer; and (c) certain technological 
advancements for the Large Generating Facility after the submission 
of the interconnection request. Section 4.4.4 specifies a separate 
Technological Change Procedure including the requisite information 
and process that will be followed to assess whether the 
Interconnection Customer's proposed technological advancement under 
section 4.4.2(c) is a Material Modification. Section 1 contains a 
definition of technological advancements.

    222. Pursuant to this proposal, the Commission also proposes to 
require transmission providers to develop a definition of technological 
advancements in their LGIPs. This definition should consider 
technological changes to equipment that may achieve cost and grid 
performance efficiencies. Examples of technological advancements that 
fit within these parameters include, but are not limited to, upgrades 
to turbines, inverters, and plant supervisory controls.
    223. This proposal should reduce barriers to the implementation of 
technological advancements that improve the electrical characteristics 
of a generating facility and that perform equally or better than the 
performance of previous equipment and/or provide cost efficiencies. The 
Commission proposes that transmission providers use sound engineering 
judgment to determine whether they can accommodate the proposed 
technological changes so that they would not require a material 
modification. The Commission proposes to permit interconnection 
customers to submit requests to incorporate technological advancements 
prior to the execution of the interconnection facilities study 
agreement, and the

[[Page 4497]]

Commission seeks comment as to whether this is the appropriate stage in 
the interconnection process to implement the technological change 
procedure.
5. Modeling of Electric Storage Resources for Interconnection Studies
    224. The Commission proposes to require that transmission providers 
evaluate their methods for modeling electric storage resources for 
interconnection studies, identify whether their current modeling and 
study practices adequately and efficiently account for the operational 
characteristics of electric storage resources, and report to the 
Commission why and how their existing practices are or are not 
sufficient.
a. Existing Provisions and Background
    225. Electric storage resources present unique interconnection 
challenges because they are able to both receive electricity from the 
grid and inject electricity onto the grid. For this reason, 
transmission providers must study them in a way that measures their 
potential impact as both generation and load. It is not currently clear 
to the Commission whether making electric storage resources fit into 
the existing procedures for generation and load is the most effective 
means of evaluating these interconnection requests. The fact that 
generation studies and load studies are often conducted separately 
appears to complicate the way electric storage resources are modeled 
during the interconnection process and was a source of frustration 
among interconnection customers of electric storage resources that 
filed post-technical conference comments.
b. Comments
    226. At the 2016 Technical Conference, panelists and staff 
discussed the modeling of electric storage resources for 
interconnection studies, including potential means for interconnection 
studies to better reflect the intended operation of electric storage 
resources. The Commission requested comment on whether current 
interconnection studies adequately account for the operational 
characteristics of electric storage resources in its request for post-
technical conference comments. In response, several commenters note 
that two changes would improve the functionality of the interconnection 
study process: (1) Changing the way storage is evaluated and modeled to 
follow California's ``negative generation'' approach; and (2) allowing 
interconnection customers to specify the charge/discharge parameters to 
be used by the transmission provider in interconnection studies.\266\ 
Commenters also recommend that interconnection studies model the 
impacts of storage resources under their planned use cases and argue 
that they include the operational characteristics of storage and the 
benefits it provides for reliability.\267\ AES notes that its software 
eliminates the potential for voltage flicker and that transmission 
providers should be able to take into account that a particular 
interconnection customer can operate without voltage flicker.\268\
---------------------------------------------------------------------------

    \266\ See, e.g., ESA Comments at 5, RES Americas Comments at 3. 
The Commission notes that RES Americas would prefer a separate 
process but alternatively suggests using the negative generation 
approach. NextEra Comments at 10-11.
    \267\ Energy Storage Association Comments at 7-8; RES Americas 
Comments at 5; California Energy Storage Alliance Comments at 11; 
Invenergy Comments at 28; AES comments at 3-4; NextEra Comments at 
11; Xcel Comments at 18.
    \268\ AES Comments at 14.
---------------------------------------------------------------------------

    227. The RTOs/ISOs generally believe that their practices for 
modeling electric storage resources for interconnection studies are 
adequate. MISO asserts that the generator interconnection process is an 
appropriate process to study new storage interconnections and that only 
minor changes from that process are necessary for it to study storage 
interconnection.\269\ NYISO contends that interconnection studies 
currently account for the operating characteristics of electric storage 
resources to the extent necessary under the minimum interconnection 
standard. However, NYISO states that it has experienced challenges with 
the accuracy of modeling information used to evaluate electric storage 
resources in the interconnection process.\270\ ISO-NE claims that its 
current interconnection studies adequately account for the operational 
characteristics of electric storage resources.\271\
---------------------------------------------------------------------------

    \269\ MISO Comments at 23.
    \270\ NYISO Comments at 27-28.
    \271\ ISO-NE Comments at 28.
---------------------------------------------------------------------------

    228. CAISO's approach to modeling electric storage resources (or 
Non-Generator Resources) as ``negative generation'' was identified as a 
best practice during the 2016 Technical Conference and in the post-
technical conference comments.\272\ NextEra states that allowing 
electric storage resources to provide better information about their 
resources for interconnection studies would benefit the study process, 
and NYISO indicates that it has experienced challenges with the 
accuracy of modeling information.\273\ Both NextEra's and NYISO's 
concern suggests that more specific information requirements for 
modeling electric storage resources would be appropriate.
---------------------------------------------------------------------------

    \272\ ESA Comments at 5; RES Americas Comments at 3.
    \273\ NextEra Comments at 11; NYISO Comments at 28.
---------------------------------------------------------------------------

c. Proposal
    229. The Commission proposes to require that transmission providers 
evaluate their methods for modeling electric storage resources for 
interconnection studies, identify whether their current modeling and 
study practices adequately and efficiently account for the operational 
characteristics of electric storage resources, and provide their 
responses to the Commission in comments to this Proposed Rule regarding 
why and how their existing practices are or are not sufficient. 
Specifically, transmission providers and others should comment on 
whether establishing a unified model for studying electric storage 
resources would expedite the study process and therefore reduce the 
time and costs expended by the transmission providers for studying the 
interconnection of electric storage resources. For example, the 
negative-generation practice in CAISO may allow transmission providers 
to better account for the transitions of electric storage resources 
between generation and load and may better enable the use of existing 
generator interconnection procedures and agreements due to their 
treatment as negative generation instead of load. This approach to 
studying electric storage resources may also expedite their 
interconnection by allowing the transmission provider to study them as 
a single resource and perform one study (as opposed to separate studies 
for generation and load impacts). In addition, this approach may also 
help ensure the applicability of existing interconnection agreements 
and procedures to electric storage resources.
    230. Additionally, commenters should describe what information 
electric storage resources should provide that is not already 
consistently provided with interconnection requests. Since transmission 
providers evaluate electric storage resources using existing processes 
for generation and load, it is unclear to the Commission whether the 
existing information requirements for new interconnection customers 
that want to interconnect electric storage resources are adequate to 
capture the operational characteristics of electric storage resources. 
Bringing electric storage resources onto the system as efficiently as 
possible may enhance competition in the wholesale markets and improve 
reliability. If there are approaches to studying electric storage 
resources that capture their unique

[[Page 4498]]

characteristics and facilitate their interconnection, the Commission 
would like to identify those potential improvements as best practices 
for all transmission providers.

V. Proposed Compliance Procedures

    231. The Commission proposes to require each public utility \274\ 
transmission provider to submit a compliance filing within 90 days of 
the effective date of the final rule in this proceeding revising its 
LGIP and LGIA, as necessary, to demonstrate that it meets the 
requirements set forth in any final rule issued in this proceeding.
---------------------------------------------------------------------------

    \274\ A public utility is a utility that owns, controls, or 
operates facilities used for transmitting electric energy in 
interstate commerce, as defined by the FPA. See 16 U.S.C. 824(e) 
(2012). A non-public utility that seeks voluntary compliance with 
the reciprocity condition of an OATT may satisfy that condition by 
filing an OATT, which includes an SGIA.
---------------------------------------------------------------------------

    232. Some public utility transmission providers may have provisions 
in their existing LGIPs and LGIAs that the Commission has previously 
deemed to be consistent with or superior to the pro forma LGIP and pro 
forma LGIA. Where these provisions would be modified by the final rule, 
public utility transmission providers must either comply with the final 
rule or demonstrate that these previously-approved variations continue 
to be consistent with or superior to the pro forma as modified by the 
final rule. The Commission also proposes to permit appropriate entities 
to seek ``regional reliability variations'' or ``independent entity 
variations'' from the proposed revisions to the pro forma.\275\
---------------------------------------------------------------------------

    \275\ See, e.g., Order No. 2003, FERC Stats. & Regs. ] 31,146 at 
PP 822-827; Order No. 2006, FERC Stats. & Regs. ] 31,180 at PP 546-
550.
---------------------------------------------------------------------------

    233. The Commission will assess whether each compliance filing 
satisfies the proposed requirements stated above and issue additional 
orders as necessary to ensure that each public utility transmission 
provider meets the requirements of the subsequent final rule.
    234. The Commission proposes that Transmission Providers that are 
not public utilities will have to adopt the requirements of this 
Proposed Rule as a condition of maintaining the status of their safe 
harbor tariff or otherwise satisfying the reciprocity requirement of 
Order No. 888.\276\
---------------------------------------------------------------------------

    \276\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission on Services by Public Utilities; 
Recovery of Stranded Costs by Public Utilities and Transmitting 
Utilities, Order No. 888, FERC Stats. & Regs. ] 31,036, at 31,760-
763 (1996).
---------------------------------------------------------------------------

VI. Information Collection Statement

    235. The following collection of information contained in this 
Proposed Rule is subject to review by the Office of Management and 
Budget (OMB) regulations under section 3507(d) of the Paperwork 
Reduction Act of 1995.\277\ OMB's regulations require approval of 
certain information collection requirements imposed by agency 
rules.\278\ Upon approval of a collection of information, OMB will 
assign an OMB control number and expiration date. Respondents subject 
to the filing requirements of this Proposed Rule will not be penalized 
for failing to respond to the collection of information unless the 
collection of information displays a valid OMB control number.
---------------------------------------------------------------------------

    \277\ 44 U.S.C. 507(d) (2012).
    \278\ 5 CFR 1320.11 (2016).
---------------------------------------------------------------------------

    236. The reforms proposed in this Proposed Rule would revise the 
Commission's pro forma LGIP, pro forma LGIA, and the Commission's 
regulations in accordance with section 35.28(f)(1) of the Commission's 
regulations.\279\ This Proposed Rule proposes that each public utility 
transmission provider will amend its LGIP and LGIA to improve the 
interconnection process. The Commission anticipates the revisions 
proposed in this Proposed Rule, once implemented, will not 
significantly change currently existing burdens on an ongoing basis. 
The Commission will submit the proposed reporting requirements to OMB 
for its review and approval under section 3507(d) of the Paperwork 
Reduction Act.\280\
---------------------------------------------------------------------------

    \279\ 18 CFR 35.28(f)(1) (2016).
    \280\ 44 U.S.C. 3507(d) (2012).
---------------------------------------------------------------------------

    237. While the Commission expects the revisions proposed in this 
Proposed Rule will provide significant benefits, the Commission 
understands that implementation can be a complex and costly endeavor. 
The Commission solicits comments on its need for this information, 
whether the information will have practical utility, the accuracy of 
the provided burden and cost estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected or retained, 
and any suggested methods for minimizing the respondents' burdens.
    Burden Estimate and Information Collection Costs: The Commission 
believes that the burden estimates below are representative of the 
average burden on respondents. The estimated burden and cost \281\ for 
the requirements contained in this Notice of Proposed Rulemaking 
follow.
---------------------------------------------------------------------------

    \281\ The estimates for cost per response are derived using the 
following formula: Average Burden hours per Response * $74.50 per 
Hour = Average Cost per Response. The hourly cost figure comes from 
the Commission average salary of $154,647. Subject matter experts 
found that industry employment costs closely resemble the 
Commission's regarding the FERC-516F information collection.
    \282\ Any figures labeled as ``Year 2'' should be considered 
ongoing response or burden amounts.
    \283\ ($154,647/year)/(2,080 hours/year) = $74.349 per hour and 
is rounded to $74.50 per hour.

                                                                        FERC 516F
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Annual  number  of                              Average burden        Total annual  burden
                                    Number of applicable      responses  per        Total number  of      (hours) and  costs    hours  and total  annual
                                     registered entities        respondent             responses         per  response \283\              cost
                                    (1).................  (2) \282\............  (1) * (2) = (3)......  (4)..................  (3) * (4) = (5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Issue A1--Scheduled periodic        Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 restudies.                                               Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue A2--Interconnection           Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 customer's option to build.                              Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue A3--Self-funding by the       Non-RTO/ISO (126)...  N/A..................  N/A..................  N/A..................  N/A.
 transmission owner.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.

[[Page 4499]]

 
Issue A4--RTO/ISO dispute           Non-RTO/ISO (126)...  N/A..................  N/A..................  N/A..................  N/A.
 resolution.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue A5--Capping costs for         Non-RTO/ISO (126)...  N/A..................  N/A..................  N/A..................  N/A.
 network upgrades.
                                    RTO/ISO (6).........  N/A..................  N/A..................  N/A..................  N/A.
Issue B1--Identification and        Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--80...........  Year 1-10,080.
 definition of contingent                                 Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
 facilities.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--80...........  Year 1--480.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue B2--Lack of transparency in   Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--80...........  Year 1--10,080.
 the interconnection process.                             Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--80...........  Year 1--480.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue B3--Curtailment concerns....  Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
                                                          Year 2--12...........  Year 2-..............  Year 2--4............  Year 2--6,048.
                                                                                 1512.................
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--12...........  Year 2--72...........  Year 2--4............  Year 2--288.
Issue B4--Definition of generating  Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 facility.                                                Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue B5--Interconnection study     Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 deadlines.                                               Year 2--4............  Year 2--504..........  Year 2--4............  Year 2--2,016.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--4............  Year 2--24...........  Year 2--4............  Year 2--96.
Issue C1--Requesting                Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 interconnection service below                            Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
 generating facility capacity.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue C2--Provisional agreements..  Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue C3--Utilization of surplus    Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 interconnection service.                                 Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue C4--Material modification     Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--4............  Year 1--504.
 and incorporation of advanced                            Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
 technologies.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--4............  Year 1--24.
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
Issue C5--Modeling of electric      Non-RTO/ISO (126)...  Year 1--1............  Year 1--126..........  Year 1--80...........  Year 1-10,080.
 storage resources.                                       Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                    RTO/ISO (6).........  Year 1--1............  Year 1--6............  Year 1--80...........  Year 1--480
                                                          Year 2--0............  Year 2--0............  Year 2--0............  Year 2--0.
                                   ---------------------------------------------                       -------------------------------------------------
    Total.........................              Non-RTO/ISO, Year 1              276..................                       34,776.
                                                Non-RTO/ISO, Ongoing             64...................                       8,064.
                                                  RTO/ISO, Year 1                284..................                       1,704.
                                                  RTO/ISO, Ongoing               64...................                        384.
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 4500]]

    Cost to Comply: The Commission has projected the total cost of 
compliance as follows: \284\
---------------------------------------------------------------------------

    \284\ The costs for Year 1 would consist of filing proposed 
changes to the LGIP and LGIA with the Commission within 90 days of 
the effective date of the final revision plus initial 
implementation. The costs for year 2 represent ongoing requirements 
that would persist in subsequent years.
---------------------------------------------------------------------------

Year 1: $2,590,812 ($20,562/non-RTO/ISO utility), $126,948 ($21,158/
RTO/ISO utility) \285\
---------------------------------------------------------------------------

    \285\ Non-RTO/ISO utility costs (Year One): 34,776 hours * 
$74.50 = $2,590,812; $2,590,812 / 126 = $20,562. RTO/ISO utility 
costs: 384 hours * $74.50 = $28,608; $28,608 / 6 = $4,768.
---------------------------------------------------------------------------

Year 2: $600,768 ($4,768/non-RTO/ISO utility), $28,608 ($4,768/RTO/ISO 
utility) \286\
---------------------------------------------------------------------------

    \286\ Non-RTO/ISO utility costs (Year 2 and ongoing): 8,064 
hours * $74.50 = $600,768; $600,768 / 126 = $4,768. RTO/ISO utility 
costs: 384 hours * $74.50 = $28,608; $28,608 / 6 = $4,768.

    Year 1 costs reflect filing of new LGIP and LGIA language with the 
Commission, as well as certain efforts to review and revise existing 
interconnection procedures. Year 2 represents ongoing costs that the 
transmission provider will face on an ongoing basis to fulfill the 
directives of this Notice of Proposed Rulemaking. The reforms proposed 
in this Notice of Proposed Rulemaking, once implemented, would not 
significantly change existing burdens on an ongoing basis.
    Title: FERC-516, Electric Rate Schedules and Tariff Filings.
    Action: Proposed revision to an information collection.
    OMB Control No.: TBD.
    Respondents for Proposal: Businesses or other for profit and/or 
not-for-profit institutions.
    Frequency of Information: One-time during year one. Multiple times 
during subsequent years.
    Necessity of Information: The Commission issues this Proposed Rule 
to address interconnection practices that may be resulting in unjust 
and unreasonable or unduly discriminatory or preferential rates, terms, 
and conditions. The Commission seeks to improve certainty in the 
interconnection process, to promote more informed interconnection 
decisions by interconnection customers, and to enhance interconnection 
processes.
    Internal Review: The Commission has reviewed the proposed changes 
and has determined that such changes are necessary. These requirements 
conform to the Commission's need for efficient information collection, 
communication, and management within the energy industry. The 
Commission has specific, objective support for the burden estimates 
associated with the information collection requirements.
    238. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director], email: 
[email protected], phone: (202) 502-8663, fax: (202) 273-0873. 
Comments concerning the collection of information and the associated 
burden estimate(s) in the Proposed Rule should be sent to the 
Commission in this docket and may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street NW., Washington, DC 20503 [Attention: Desk Officer for 
the Federal Energy Regulatory Commission, phone: (202) 395-0710, fax: 
(202) 395-7285]. Due to security concerns, comments should be sent 
electronically to the following email address: 
[email protected]. Comments submitted to OMB should include 
FERC-516D and OMB Control No. 1902-0288.

VII. Regulatory Flexibility Act

    239. The Regulatory Flexibility Act of 1980 (RFA) \287\ generally 
requires a description and analysis of rules that will have significant 
economic impact on a substantial number of small entities. The RFA does 
not mandate any particular outcome in a rulemaking. It only requires 
consideration of alternatives that are less burdensome to small 
entities and an agency explanation of why alternatives were rejected.
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    \287\ 5 U.S.C. 601-12 (2012).
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    240. The Small Business Administration (SBA) revised its size 
standards (effective January 22, 2014) for electric utilities from a 
standard based on megawatt hours to a standard based on the number of 
employees, including affiliates. Under SBA's standards, some 
transmission owners will fall under the following category and 
associated size threshold: Electric bulk power transmission and 
control, at 500 employees.\288\
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    \288\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121 
(Electric Bulk Power Transmission and Control) (2016).
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    241. The Commission estimates that the total number of public 
utility transmission providers that would have to modify the LGIPs and 
LGIAs within their currently effective OATTs is 132. Of these, the 
Commission estimates that approximately 43 percent are small entities 
(approximately 57 entities). The Commission estimates the average total 
cost to each of these entities will be between $20,562 and $21,158 in 
Year One and $4,768 in subsequent years. According to SBA guidance, the 
determination of significance of impact ``should be seen as relative to 
the size of the business, the size of the competitor's business, and 
the impact the regulation has on larger competitors.'' \289\ The 
Commission does not consider the estimated burden to be a significant 
economic impact. As a result, the Commission certifies that the 
revisions proposed in this Proposed Rule will not have a significant 
economic impact on a substantial number of small entities.
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    \289\ U.S. Small Business Administration, A Guide for Government 
Agencies How to Comply with the Regulatory Flexibility Act, at 18 
(May 2012), https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
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VIII. Environmental Analysis

    242. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\290\ The 
Commission concludes that neither an Environmental Assessment nor an 
Environmental Impact Statement is required or the revisions proposed in 
this Proposed Rule under section 380.4(a)(15) of the Commission's 
regulations, which provides a categorical exemption for approval of 
actions under sections 205 and 206 of the FPA relating to the filing of 
schedules containing all rates and charges for the transmission or sale 
of electric energy subject to the Commission's jurisdiction, plus the 
classification, practices, contracts and regulations that affect rates, 
charges, classification, and services.\291\ The revisions proposed in 
this Proposed Rule fall within the categorical exemptions provided in 
the Commission's regulations, and as a result neither an Environmental 
Impact Statement nor an Environmental Assessment is required.
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    \290\ Regulation Implementing National Environmental Policy Act 
of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \291\ 18 CFR 380.4(a)(15) (2016).
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IX. Comment Procedures

    243. The Commission invites persons to submit comments on the 
matters and issues proposed in this Notice of Proposed Rulemaking to be 
adopted, including any related matters or alternative proposals that 
commenters may wish to discuss. Comments are due March 14, 2017. 
Comments must refer to Docket No. RM17-8-000, and must include the 
commenter's name, the

[[Page 4501]]

organization they represent, if applicable, and their address.
    244. The Commission encourages comments to be filed electronically 
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing 
formats. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    245. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    246. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability Section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

X. Document Availability

    247. In addition to publishing the full text of this document in 
the Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington, DC 20426.
    248. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number of this document, excluding the last three digits, in 
the docket number field.
    249. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

List of Subjects

18 CFR Part 35

    Electric power rates. Electric utilities, Reporting and 
recordkeeping requirements.

18 CFR Part 37

    Electric power rates, Electric utilities, Reporting and 
recordkeeping requirements.

    By direction of the Commission.

    Dated: December 15, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
Parts 35 and 37 Chapter I, Title 18, Code of Federal Regulations, as 
follows.

PART 35--FILING OF RATE SCHEDULES AND TARIFFS

0
1. The authority citation for Part 35 continues to read as follows:

    Authority:  16 U.S.C. 791a-825r; 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

0
2. Amend Sec.  35.28 by adding paragraph (g)(9) to read as follows:


Sec.  35.28  Non-discriminatory open access transmission tariff.

* * * * *
    (g) * * *
    (9) Generator Interconnection Dispute Resolution Procedures. Every 
Commission-approved independent system operator or regional 
transmission organization tariff must contain provisions governing 
generator interconnection dispute resolution procedures to allow a 
disputing party to unilaterally initiate dispute resolution procedures 
under the respective tariff. Such provisions must provide for 
independent system operator or regional transmission organization staff 
member(s) or utilize subcontractor(s) to serve as the neutral decision-
maker(s) or presiding staff member(s) or subcontractor(s) to the 
dispute resolution procedures. Such staff participating in dispute 
resolution procedures shall not have any current or past substantial 
business or financial relationships with any party. Additionally, such 
dispute resolution procedures must account for the time sensitivity of 
the generator interconnection process.

PART 37--OPEN ACCESS SAME-TIME INFORMATION SYSTEMS

0
1. The authority citation for Part 37 continues to read as follows:

    Authority:  5 U.S.C. 551-557; 16 U.S.C. 791a-825r; 31 U.S.C. 
9701; 42 U.S.C. 7107-7352.

0
2. Amend Sec.  37.6 by adding paragraph (l) as follows:


Sec.  37.6  Information to be posted on the OASIS

* * * * *
    (l) Posting of congestion and curtailment data. (1) The 
Transmission Provider must post on OASIS information as to congestion 
data representing:
    (i) Total hours of curtailment on all interfaces;
    (ii) Total hours of Transmission Provider-ordered generation 
curtailment and transmission service curtailment due to congestion on 
that facility or interface;
    (iii) The cause of the congestion (e.g., a contingency or an 
outage); and
    (iv) Total megawatt hours of curtailment due to lack of 
transmission for that month.
    (2) This data shall be posted on a monthly basis by the 15th day of 
the following month and shall be posted in one location on the OASIS. 
The Transmission Provider should maintain this data for a minimum of 
three years.

[FR Doc. 2016-30972 Filed 1-12-17; 8:45 am]
 BILLING CODE 6717-01-P