[Federal Register Volume 66, Number 212 (Thursday, November 1, 2001)]
[Proposed Rules]
[Pages 55140-55143]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-27438]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM02-1-000]


Standardizing Generator Interconnection Agreements and Procedures 
Advance Notice of Proposed Rulemaking

October 25, 2001.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission (Commission) seeks 
comments on a standard generator interconnection agreement and 
procedures that would be applicable to all public utilities that own, 
operate or control transmission facilities under the Federal Power Act.

DATES: Written comments must be received by the Commission by December 
21, 2001.

ADDRESSES: Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:
David Faerberg (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-1275.
Patrick Rooney (Technical Information), Office of Market, Tariffs and 
Rates, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 501-5546.
Roland Wentworth (Technical Information), Office of Market, Tariffs and 
Rates, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-1288.

SUPPLEMENTARY INFORMATION: The Federal Energy Regulatory Commission 
(Commission) intends to adopt a standard generator interconnection 
agreement and procedures that would be applicable to all public 
utilities that own, operate or control transmission facilities under 
the Federal Power Act. As discussed more fully below, the Commission 
requests comments on these contractual provisions and procedures. After 
receiving and considering these comments, the Commission will issue a 
notice of proposed rulemaking (NOPR).

I. Background

    In Order No. 888,\1\ the Commission mandated that public utilities 
provide non-discriminatory or comparable open access transmission 
service. Order No. 888 also established standardized terms and 
conditions for public utility-provided transmission service, i.e., a 
pro forma transmission tariff.
---------------------------------------------------------------------------

    \1\ Promoting Wholesale Competition Through Open Access 
Nondiscriminatory Transmission Services by Public Utilities; 
Recovery of Stranded Costs by Public Utilities and Transmitting 
Utilities, Order No. 888, FERC Stats. & Regs. para. 31,036 (1996), 
clarified, 76 FERC para. 61,009 and 76 FERC para. 61,347 (1996), on 
reh'g, Order No. 888-A, FERC Stats. & Regs. para. 31,048, clarified, 
79 FERC para. 61,182 (1997), on reh'g, Order No. 888-C, 82 FERC 
para. 61,046 (1998), aff'd sub nom. Transmission Access Policy Study 
Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), cert. granted in part 
and denied in part, 69 U.S.L.W. 3574 (U.S. Feb. 26, 2001).
---------------------------------------------------------------------------

    However, Order No. 888 does not directly address generator 
interconnections, which are implicitly included as a part of 
transmission service. In Tennessee Power Company

[[Page 55141]]

(Tennessee),\2\ the Commission held that interconnection service is an 
element of transmission service, that customers have the right to 
request interconnection separately from the delivery component of 
transmission service, and that interconnection must be offered under 
the terms of the pro forma tariff. The Commission has also held that 
customers have the right to request the transmission provider to file 
an unexecuted interconnection agreement if a dispute cannot be quickly 
resolved.\3\
---------------------------------------------------------------------------

    \2\ 90 FERC para. 61,238 (2000), order on reh'g, 91 FERC 61,271 
(2000).
    \3\ See, e.g., American Electric Power Service Corporation, 91 
FERC para. 61,308 (2000); Commonwealth Edison Company, et al., 92 
FERC para. 61,018 (2000).
---------------------------------------------------------------------------

    Although a number of parties have requested that the Commission 
initiate a generic proceeding or industry collaboration to address 
interconnection concerns, the Commission until now has declined to do 
so. In addressing these requests, the Commission encouraged utilities 
to revise their open access transmission tariffs (OATTs) to include 
procedures for requesting interconnections services and the criteria 
for evaluating those requests. The Commission has also stated that 
because a regional transmission organization (RTO) will administer its 
pro forma tariff, it was the Commission's hope that compliance with the 
RTO rulemaking in Order No. 2000 \4\ would eliminate concerns about 
interconnection procedures.
---------------------------------------------------------------------------

    \4\ Regional Transmission Organizations, Order No. 2000, FERC 
Stats. & Regs. para. 31,089 (1999), order on reh'g, Order No. 2000-
A, FERC Stats. & Regs. para. 31,092 (2000), petitions for review 
pending sub nom. Public Utility District No. 1 of Snohomish County, 
Washington v. FERC, Nos. 00-1174, et al.
---------------------------------------------------------------------------

    Consistent with the Commission's encouragement, a number of 
transmission providers have filed interconnection procedures as part of 
their pro forma tariffs.\5\ Some of these providers have filed pro 
forma interconnection agreements, while others have submitted only 
procedures explaining how interconnection requests will be processed.
---------------------------------------------------------------------------

    \5\ See, e.g., American Electric Power Service Corp., 91 FERC 
para. 61,308 (2000); Southwest Power Pool, Inc., 92 FERC para. 
61,109 (2000); Carolina Power & Light Company, 93 FERC para. 61,032 
(2000); Virginia Electric and Power Co., 93 FERC 61,307 (2000); 
Consumers Energy Co., 93 FERC para. 61,339 (2000).
---------------------------------------------------------------------------

    While there have been a number of positive developments with 
respect to interconnection procedures, the Commission recognizes that 
there is still dissatisfaction and uncertainty with existing 
interconnection policy and procedures that may have resulted in less 
investment in infrastructure and less confidence in the competitiveness 
of the markets. In a number of contexts, the Commission has received 
comments from both generators and transmission providers concerning 
existing interconnection policy and procedures.
    Generators assert, among other things, that (1) there is difficulty 
in securing interconnection without requesting delivery, (2) the 
treatment they receive is not comparable to the treatment received by 
the transmission provider's own generation, (3) system upgrade costs 
charged to generators are sometimes not related to the interconnection, 
(4) there are delays and uncertainty due to the lack of binding 
commitments and firm deadlines in transmission providers' pro forma 
tariffs, and (5) there is a lack of transparency of transmission 
information needed to make an independent assessment of the impact of 
an interconnection request.
    On the other hand, transmission providers argue that they need (1) 
minimum commitments from generators seeking to interconnect prior to 
performing studies to weed out those who will likely never 
interconnect, resulting in a more manageable and realistic queue, (2) 
assurance that their control area will benefit from, or at least not be 
burdened by, adding generators, particularly when the new generator 
seeks to locate on one system but serve load on another, and (3) 
improved communication between the generators and the loads they serve.

II. Discussion

    Generator interconnection is a critical aspect of open access 
transmission service. In order to fully realize the benefits of open 
access transmission service, interconnection procedures must be 
established that will encourage needed investment in infrastructure, 
remove incentives for transmission providers to favor their own 
generation, ease entry for competitors, and encourage efficient siting 
decisions. In the Commission's view, standard interconnection 
procedures are essential for providing the right incentives for both 
transmission providers and generators. Accordingly, the Commission 
intends to adopt a standard generator interconnection agreement and 
procedures that would be applicable to all public utilities that own, 
operate or control transmission facilities under the Federal Power Act.
    The Commission is considering basing the standard interconnection 
agreement and procedures on the Standard Generator Interconnection 
Agreement and Generation Interconnection Procedure of the Electric 
Reliability Council of Texas (ERCOT),\6\ as supplemented and modified 
by the various ``best practices'' that have been identified by the 
Commission in Attachment A to this order. (References in the ERCOT 
Agreement and Procedure to the Public Utility Commission of Texas 
should be generally understood for purposes of this ANOPR as references 
to FERC). These ``best practices'' are based, in part, on generator 
interconnection agreements and procedures that have been approved by 
the Commission in past cases. For purposes of commenting in this 
proceeding, assume that our current pricing policy as reflected in 
Attachment B is in effect. However, commenters should not interpret 
this as an indicator of our preference for a long-term pricing policy. 
Cost responsibility and pricing will be addressed in a subsequent 
rulemaking.
---------------------------------------------------------------------------

    \6\ The ERCOT agreement and procedures are attached as Appendix 
A to this order.
---------------------------------------------------------------------------

    Commenters advocating a standard agreement and procedures other 
than the ERCOT model as supplemented and modified by the ``best 
practices'' in Attachment A should specify in detail how their 
proposals differ from the foregoing and are superior to or more 
appropriate than the proposal herein. Any approaches suggested by 
commenters must be in the public interest by promoting competition and 
economic efficiency .
    The Commission strongly encourages interested persons to pursue 
consensus on these issues through procedures that will be initiated 
through a separate notice. As part of these procedures and separate 
from comments on this ANOPR, by December 14, 2001, participants will be 
required to file a single document reflecting as much consensus as 
possible on a standard generator interconnection agreement and 
procedures as well as pros and cons on issues where consensus was not 
reached. Any consensus reached among all interested persons will be the 
foundation for the subsequent NOPR, to the extent consistent with the 
Commission's statutory responsibility and the guidance above. Issues 
not resolved by consensus among all interested persons will be 
addressed in the subsequent NOPR consistent with this and the preceding 
paragraph.

III. Comment Procedures

    The Commission invites interested persons to submit comments, data, 
views and other information concerning matters set out in this notice.
    To facilitate the Commission's review of the comments, commenters 
are requested to provide an executive

[[Page 55142]]

summary of their position on the issues raised in the Advance Notice of 
Proposed Rulemaking (ANOPR). Commenters are requested to identify each 
specific issue posed by the ANOPR that their discussion addresses and 
to use appropriate headings. Additional issues the commenters wish to 
raise should be identified separately. The commenters should double-
space their comments.
    Comments may be filed on paper or electronically via the Internet 
and must be received by the Commission by December 21, 2001. Those 
filing electronically do not need to make a paper filing. For paper 
filings, the original and 14 copies of such comments should be 
submitted to the Office of the Secretary, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington DC 20426 and should refer 
to Docket No. RM02-1-000.
    Comments filed via the Internet must be prepared in WordPerfect, MS 
Word, Portable Document Format, or ASCII format. To file the document, 
access the Commission's website at www.ferc.gov and click on ``e-
Filing,'' and then follow the instructions for each screen. First time 
users will have to establish a user name and password. The Commission 
will send an automatic acknowledgment to the sender's E-Mail address 
upon receipt of comments.
    User assistance for electronic filing is available at 202-208-0258 
or by E-Mail to [email protected]. Comments should not be submitted 
to the E-Mail address. All comments will be placed in the Commission's 
public files and will be available for inspection in the Commission's 
Public Reference Room at 888 First Street, NE., Washington DC 20426, 
during regular business hours. Additionally, all comments may be 
viewed, printed, or downloaded remotely via the Internet through FERC's 
Homepage using the RIMS link. User assistance for RIMS is available at 
202-208-2222, or by E-mail to [email protected].

IV. Document Availability

    The Commission provides all interested persons an opportunity to 
view and/or print the contents of this document via the Internet 
through FERC's Home Page (http://www.ferc.gov) and in FERC'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. 
This document will be published in the Federal Register without the 
ERCOT Standard Generator Interconnection Agreement and Generation 
Interconnection Procedure. Those documents can be viewed in the Public 
Reference Room or via the internet at http://www.ferc.gov/electric/gen_inter.htm.
    From FERC's Home Page on the Internet, this information is 
available in both the Commission Issuance Posting System (CIPS) and the 
Records and Information Management System (RIMS).

--CIPS provides access to the texts of formal documents issued by the 
Commission since November 14, 1994.
--CIPS can be accessed using the CIPS link or the Energy Information 
Online icon. The full text of this document is available on CIPS in 
ASCII and WordPerfect 8.0 format for viewing, printing, and/or 
downloading.
--RIMS contains images of documents submitted to and issued by the 
Commission after November 16, 1981. Documents from November 1995 to the 
present can be viewed and printed from FERC's Home Page using the RIMS 
link or the Energy Information Online icon. Descriptions of documents 
back to November 16, 1981, are also available from RIMS-on-the-Web; 
requests for copies of these and other older documents should be 
submitted to the Public Reference Room.

    User assistance is available for RIMS, CIPS, and the Website during 
normal business hours from our Help line at (202) 208-2222 (E-Mail to 
[email protected]) or the Public Reference at (202) 208-1371 (E-
Mail to [email protected]).
    During normal business hours, documents can also be viewed and/or 
printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC 
Website are available. User assistance is also available.

    By direction of the Commission.
David P. Boergers,
Secretary.

Attachment A--Best Practices

    The items discussed in this attachment are intended to be additions 
or modifications to the ERCOT Interconnection Procedures.

1. Comparable Treatment

    Transmission Providers who are also load serving entities are 
currently permitted to reserve (set aside) transmission capacity for 
use by future network resources to meet projected load growth. Under 
the new interconnection procedures, other suppliers such as merchant 
plants will be allowed to be competing network resources for meeting 
load and load growth without having to be selected as a designated 
network resource at the time of interconnection.

2. Generators Must Be Offered Multiple Interconnection Products \7\
---------------------------------------------------------------------------

    \7\ The definitions are adapted from those used by PJM. See PJM 
Interconnection L.L.C., 87 FERC para. 61,299 (1999).
---------------------------------------------------------------------------

    Energy Resource: If the Generator elects to become an energy 
resource, it will be permitted to connect to the Transmission 
Provider's system and deliver the generating facility's output using 
the existing capacity of the transmission system on an ``as available'' 
basis. The Transmission Provider must conduct the necessary studies and 
construct minimal network facilities needed to allow the Generator to 
interconnect its facility to the grid and deliver the output on an ``as 
available'' basis.
    Capacity Resource: The Transmission Provider must conduct the 
necessary studies and construct the network facilities needed to 
integrate the Generators's facility in a manner comparable to that in 
which the Transmission Provider integrates its generating facilities to 
serve native load customers.

3. Exemptions

    Small generators (20 MW and below), including those owned by 
Transmission Providers or their affiliates, will be exempt from paying 
for interconnection studies or network upgrades. Interconnection of 
generating facilities of this size will not materially affect the 
Transmission Provider's system. The Transmission Provider will have 
streamlined procedures in place for administering interconnection 
requests from small generators (e.g., only conducting a feasibility 
study at no charge to determine the minimal facilities necessary to 
accommodate the request).

4. Queuing

    If requests are processed on an individual basis, the initial queue 
position for all interconnection requests will be based on the date 
that the Transmission Provider receives the request. If requests are 
processed jointly, the initial queue protocol may be modified. The 
interconnection procedures will set forth reasonable milestones and 
requirements which the Generator must meet to retain its position in 
the queue. In addition to the time line procedures listed in Section 7 
of this attachment, if the Generator misses any stipulated milestones 
or requirements (i.e., milestones tied to obtaining necessary 
application and

[[Page 55143]]

governmental approvals to show the project is on track) it will be 
given 10 working days to correct any deficiencies or lose its place in 
the queue (unless the Generator can reasonably demonstrate that 
extraordinary circumstances prevented it from meeting the deadlines). A 
Generator will also risk losing its queue position if material changes 
are made to the initial request (e.g., substantially revising the size 
or configuration of the facility).

5. Deposits

    Generators will be responsible for the costs of all required 
studies. Generators will be required to submit a $2,000 non-refundable 
deposit at the time it submits the initial interconnection request; a 
$10,000 non-refundable deposit and demonstration that it has applied 
for necessary permits before any feasibility studies commence; a 
$50,000 deposit if the Transmission Provider is asked to proceed with a 
System Impact Study (with any amount over the actual study costs 
refundable); and a $100,000 if the Transmission Provider is asked to 
proceed with a Facilities Study (with any amount over the actual study 
costs refundable).

6. Generator Siting

    Transmission Providers will post on their web site what, in their 
view, are the optimal and non-optimal sites on their system for 
locating prospective generating facilities. Transmission Providers need 
to identify areas where, for example, due to load growth, siting would 
require minimal network upgrades. Also, the Transmission Provider 
should identify areas where, for example, due to transmission 
constraints, significant network upgrades would be required, and the 
expected delay before such upgrades will be made.

7. Project Time Lines

    The time lines associated with the construction of both Generator's 
and Transmission Provider's interconnection facilities must be the 
same. At the Transmission Provider's option, System Impact Studies may 
be conducted in response to individual requests or, alternatively, all 
requests received may be studied jointly every six months (e.g., June 
30th and December 31st) during the year. If the latter approach is 
taken, the study completion date would become 90 days after the joint 
study commencement date.

Review Interconnection Request and Acknowledgment: Within 5 business 
days.
Perform Initial Feasibility Study: Within 30 business days of receipt 
of acknowledgment of request.
System Impact Study Agreement Tendered to Generator: Within 15 days of 
completed study.
Executed System Impact Study Agreement: Within 15 business days of 
receipt of System Impact Study Agreement.
Completed System Impact Study: Within 60 days of receipt of Executed 
Agreement.\8\
---------------------------------------------------------------------------

    \8\ Applies only if Transmission Provider elects to conduct 
studies on an individual basis.
---------------------------------------------------------------------------

Facilities Study Agreement Tendered to Generator: Within 30 days of 
completed System Impact Study.
Executed Facilities Study Agreement Filed: Within 15 days of receipt of 
Facilities Study Agreement.
Perform Facilities Study: Within 60 days of receipt of Executed 
Agreement.
Execute or Request Filing of Unexecuted Interconnection Agreement: 
Within 30 days of receipt of Facilities Study.

Attachment B-- Pricing

1. Interconnection Facilities: Direct Assignment

    Interconnection Facilities are defined as all facilities needed to 
establish the direct electrical interconnection between the Generator's 
facility and the Transmission Provider's network. The Generator is 
obligated to pay for 100 percent of the cost of all the interconnection 
facilities.

2. Network Facilities

    Network Facilities are defined as all facilities from the point 
where the generator connects to the grid, including facilities 
necessary to remedy short-circuit and stability problems. As discussed 
further below, the costs of these facilities will be borne initially by 
the Generator and will be credited back to the generator that funded 
them (including the time value of money) through payments for 
transmission service.

3. Credits To Follow Transmission Service

    In general, the Generator will be required to pay up front for any 
network upgrades that would not be needed ``but for'' the 
interconnecting customer. Generators will then be entitled to a credit, 
to be applied through future transmission rates, for any such costs 
that they are required to bear. The transmission rates through which 
this credit will be applied will include rates for all transmission 
service utilized by the Generator after the date of the 
interconnection. Such service will include not only new point to point 
service taken by the Generator from the location of its new facility, 
but also any other transmission service taken by that Generator from 
the Transmission Provider. In addition, the credit will be applied to 
the rates for any transmission service, including both point to point 
and network service, used by loads to deliver the output of the new 
facility to their location.

4. Time Value for Network Upgrade Costs

    Generators will be entitled to receive interest on the outstanding 
balance of network upgrade costs that they are required to bear. 
Interest will be calculated annually consistent with 18 CFR 
35.19a(a)(2) of the Commission's Regulations.

[FR Doc. 01-27438 Filed 10-31-01; 8:45 am]
BILLING CODE 6717-01-P