[Federal Register Volume 67, Number 85 (Thursday, May 2, 2002)]
[Proposed Rules]
[Pages 22250-22293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-10663]



[[Page 22249]]

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Part III





Department of Energy





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Federal Energy Regulatory Commission



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18 CFR Part 35



Standardization of Generator Interconnection Agreements and Procedures; 
Proposed Rule

  Federal Register / Vol. 67 , No. 85 / Thursday, May 2, 2002 / 
Proposed Rules  

[[Page 22250]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM02-1-000]


Standardization of Generator Interconnection Agreements and 
Procedures; Notice of Proposed Rulemaking

April 24, 2002.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing to amend its regulations to require public utilities to file 
the standardized interconnection agreement and procedures we will adopt 
in this proceeding and to take and provide interconnection service 
under them. The agreement and procedures also would apply to any non-
public utility that seeks voluntary compliance with jurisdictional 
transmission tariff reciprocity conditions.

DATES: Comments are due June 17, 2002. Comments should not exceed 30 
double-spaced pages and should include an executive summary.

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

FOR FURTHER INFORMATION CONTACT:

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.
Michael G. Henry (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-0532,

SUPPLEMENTARY INFORMATION:

I. Introduction

    The electric power industry continues to be an industry in 
transition. Where the industry was once primarily the domain of large, 
vertically integrated utilities providing power at cost-based rates, 
companies selling unbundled power at rates set by competitive markets 
have become common. But balanced market rules and sufficient 
infrastructure continue to be essential for achieving a seamless 
nationwide power market that will provide customers with reasonably 
priced and reliable service.
    The Commission continues to work to encourage fully competitive 
bulk power markets. The effort took its first big step with Order No. 
888,\1\ which required public utilities to provide others comparable 
access to their transmission lines, and continued with Order No. 
2000,\2\ which began the process that will result in the development of 
a small number of Regional Transmission Organizations (RTOs). Where 
necessary, the Commission has taken action to complete the 
establishment of robust, seamless, competitive, wholesale electric 
markets. To this end, the Commission currently is preparing a 
rulemaking on Standard Market Design that will propose a reformed open 
access transmission tariff (OATT) that will be applicable to RTOs and 
other public utilities that own, operate, or control interstate 
transmission facilities.
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    \1\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities and 
Recovery of Stranded Costs by Public Utilities and Transmitting 
Utilities, Order No. 888, 61 Fed. Reg. 21,540 (May 10, 1996), FERC 
Stats. and Regs. para. 31,036 (1996), order on reh'g, Order No. 888-
A, 62 Fed. Reg. 12,274 (March 14, 1997), FERC Stats. & Regs. para. 
31,048 (1997), order on reh'g, Order No. 888-B , 81 FERC para. 
61,248 (1997), order on reh'g, Order No. 888-C , 82 FERC para. 
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, 122 S.Ct. 1212 (2002).
    \2\ Regional Transmission Organizations, Order No. 2000, 65 Fed. 
Reg. 809 (Jan. 6, 2000), FERC Stats. & Regs. para. 31,089 (1999), 
order on reh'g, Order No. 2000-A, 65 Fed. Reg. 12,088 (March 8, 
2000), FERC Stats. & Regs. para. 31,092 (2000), aff'd sub nom. 
Public Util. Dist. No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001).
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    While the subject of interconnection arose in the Order No. 888 
rulemaking, no explicit reference to interconnection appeared in the 
pro forma tariff. Nevertheless, interconnection is a critical component 
of open access transmission service, and standard interconnection 
agreements and procedures are essential for providing the right 
incentives for both transmission providers and generators. Good 
interconnection standards and procedures will serve several important 
functions: they will encourage needed investment in infrastructure, 
limit opportunities for transmission providers to favor their own 
generation, and ease entry for competitors while ensuring efficient 
siting decisions.
    To date, the Commission has addressed interconnection issues on a 
case-by-case basis. However, these issues have arisen with increasing 
frequency as competitive markets have reacted to supply shortages. 
Generators seeking to build and interconnect their new energy resources 
with interstate transmission have been hindered by the lack of 
standardized interconnection procedures and agreements that would 
enable an expeditious and economic approval and construction process. 
As discussed below, it has become apparent that the case-by-case 
approach is insufficient to address these problems and there is a 
pressing need for a single, uniformly applicable interconnection 
agreement and set of procedures. Having a standardized set of 
procedures applicable to all interstate transmission facilities will 
expedite the development of new generation.
    Our effort to address interconnection issues generically presents 
numerous challenges. The electric industry is faced with the competing 
need, on the one hand, for additional generation and transmission 
infrastructure that will ensure reliability and, on the other hand, for 
efficient price signals for appropriate siting. Efficiency 
considerations include the assignment of cost responsibility for system 
upgrades necessary to interconnect a new generator.
    To properly implement an interconnection agreement and set of 
procedures, numerous issues must be resolved, among them: (1) How to 
ensure that accurate interconnection studies are produced in a timely 
fashion; (2) the extent to which any transmission data necessary for 
interconnection should be made transparent (i.e., available to all); 
(3) how to create the proper incentives for transmission providers to 
treat all generation comparably; (4) how to allocate equitably the 
costs and benefits of siting generation; and (5) who should pay for the 
costs of system upgrades associated with interconnection, including the 
issue of whether the generator should be required to initially finance 
the cost of systems upgrades associated with interconnection.
    The effort to generically address cost responsibility for system 
upgrades necessary to interconnect new generators is further 
complicated by prior treatment of these costs for existing Transmission 
Providers' system facilities that are necessary to interconnect their 
own generators to the transmission system. With the exception of the 
generator step-up transformers (GSUs), Transmission Providers' 
interconnection facility costs are usually recovered through the 
Transmission Providers' OATT rates, even when those facilities are 
radial or would not otherwise be necessary but for the

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Transmission Providers' generator. Treating Transmission Providers' own 
generation different than generation owned by others may put the other 
generators at a competitive disadvantage.
    The proposed rule proposes a standard interconnection agreement 
(IA) and standard interconnection procedures (IP) that will be made 
part of existing and future OATTs. The Commission believes that these 
documents will ensure that reliability needs will be met while 
providing a reasonable balance between competing needs for uniformity 
and flexibility.

II. Discussion

A. The Need for Generic Action

    Order No. 888 set forth the Commission's open access principles as 
they apply to transmission service, but it did not directly address 
generator interconnections. Later, in Tennessee Power Company 
(Tennessee), 90 FERC para. 61,238 (2000), the Commission clarified that 
interconnection is an element of transmission service and must be 
offered under the terms of the pro forma tariff. In Tennessee we 
encouraged, but did not require, transmission providers to revise their 
open access tariffs to include interconnection procedures, including 
standard interconnection agreements and specific criteria, procedures, 
milestones, and time lines for evaluating interconnection requests.\3\
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    \3\ See, e.g., Commonwealth Edison Co., 91 FERC para. 61,083 
(2000).
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    Accordingly, a number of transmission providers have filed 
interconnection procedures as part of their pro forma tariffs.\4\ Some 
of these providers have filed pro forma interconnection agreements; 
others have submitted only procedures explaining how interconnection 
requests will be processed.
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    \4\ See, e.g., American Electric Power Service Corp., 91 FERC 
para. 61,308 (2000), order denying reh'g and granting clarification, 
94 FERC para. 61,166 (2001), order dismissing request for 
clarification, 95 FERC para. 61,130 (2001), appeal docketed sub nom. 
Tenaska, Inc. v. FERC, No. 01-1194 (D.C. Cir. April 23, 2001); 
Southwest Power Pool, Inc., 92 FERC para. 61,109 (2000); Carolina 
Power & Light Co., 93 FERC para. 61,032 (2000), reh'g denied, 94 
FERC para. 61,165 (2001), appeal docketed sub nom. Tenaska, Inc. v. 
FERC, No. 01-1195 (D.C. Cir. April 23, 2001); Virginia Electric & 
Power Co., 93 FERC para. 61,307 (2000), order on clarification, 94 
FERC para. 61,045 (2001), reh'g denied, 94 FERC para. 61,164 (2001), 
appeal docketed sub nom. Tenaska, Inc. v. FERC, No. 01-1196 (D.C. 
Cir. April 23, 2001); Consumers Energy Co., 93 FERC para. 61,339 
(2000), order on reh'g and clarification, 94 FERC para. 61,230 
(2001), order on clarification and denying reh'g, 95 FERC para. 
61,131 (2001).
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    However, many industry participants remain dissatisfied with 
existing interconnection policy and procedures. 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) They have 
experienced difficulty 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 initially 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 the 
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.
    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.
    Interconnection plays a crucial role in bringing much-needed 
generation to the grid. We expect that a standard interconnection 
agreement and set of procedures will resolve these disputes and foster 
increased economic generation development and reliability through 
appropriate incentives for both transmission providers and generators. 
Accordingly, the Commission proposes to adopt a standard generator 
interconnection agreement and standard generator interconnection 
procedures. These will be required as amendments to the OATTs of all 
public utilities that own, operate, or control transmission facilities 
under the Federal Power Act (FPA).

B. Legal Authority

    In fulfilling its responsibilities under FPA sections 205 and 
206,\5\ the Commission is required to address, and has the authority to 
remedy, undue discrimination. The Commission must ensure that the 
rates, contracts, and practices affecting jurisdictional transmission 
do not reflect an undue preference or advantage and are just and 
reasonable. Additionally, as discussed in Order No. 888, there is a 
substantial body of case law that holds that the Commission's 
regulatory authority under the FPA ``clearly carries with it the 
responsibility to consider, in appropriate circumstances, the 
anticompetitive effects of regulated aspects of interstate utility 
operations pursuant to [FPA] Secs. 202 and 203, and under like 
directives contained in Secs. 205, 206, and 207.'' \6\ The Supreme 
Court recently affirmed the Commission's decision to exercise this 
authority and require non-discriminatory (comparable) open access as a 
remedy for undue discrimination.\7\
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    \5\ 16 U.S.C. 824d, 824e (1994).
    \6\ Gulf States Utils. Co. v. FPC, 411 U.S. 747, 758-59 (1973); 
see City of Huntingburg v. FPC, 498 F.2d 778, 783-84 (D.C. Cir. 
1974) (noting Commission duty to consider the potential 
anticompetitive effects of a proposed interconnection agreement).
    \7\ New York v. FERC, 122 S.Ct. 1212 (2002) .
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    In Order No. 888, the record showed that public utilities owning or 
controlling jurisdictional transmission facilities had the incentive to 
engage in, and had engaged in, unduly discriminatory transmission 
practices.\8\ The Commission also thoroughly discussed the legislative 
history and case law involving sections 205 and 206, and concluded that 
as a matter of law, it had the authority and responsibility to remedy 
the undue discrimination it had found by requiring mandatory open 
access, and that it could do so through a rulemaking on a generic, 
industry-wide basis.\9\
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    \8\ Order No. 888 at 31,679-84; Order No. 888-A at 30,209-10.
    \9\ Order No. 888 at 31,668-73, 31,676-79; Order No. 888-A at 
30,201-12; TAPS v. FERC, 225 F.3d 667, 687-88 (D.C. Cir. 2000).
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    After issuing Order No. 888, the Commission identified 
interconnection as an element of transmission service that is required 
to be provided under the open access pro forma tariff.\10\ Thus, the 
Commission may order generic interconnection terms and procedures 
pursuant to its authority to remedy undue discrimination and 
preferences under sections 205 and 206 of the FPA and further described 
in Order No. 888.
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    \10\ See Tennessee Power Co., 90 FERC para. 61,238 at 61,761, 
reh'g dismissed, 91 FERC para. 61,271 (2000).
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C. Commission Interconnection Case Law

    The Commission's current interconnection policy informs this 
generic effort. The cases addressing interconnection have been 
preoccupied with drawing distinctions between interconnection and 
network facilities, and between interconnection service and 
transmission service. The Commission has developed a simple test

[[Page 22252]]

for distinguishing interconnection from transmission facilities: 
network facilities include all facilities at or beyond the point where 
the customer or generator connects to the grid.\11\ It follows that 
interconnection facilities are those found between the generator and 
the grid connection.
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    \11\ Entergy Gulf States, Inc., 98 FERC para. 61,014 at 61,023, 
reh'g denied, 99 FERC para. ____ (2002); see Public Service Co. of 
Colorado, 59 FERC para. 61,311 (1992), reh'g denied, 62 FERC para. 
61,013 at 61,061 (1993).
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    Regarding the services themselves, the Commission has clarified 
that a generator need not enter into a transmission service agreement 
to interconnect with a transmission system.\12\ At the same time, 
interconnection service or an interconnection by itself does not confer 
any delivery rights from the generating facility to any points of 
delivery.\13\ Thus, the Commission has distinguished the upgrades and 
services related to interconnection and those related to transmission 
when a customer secures the interconnection component of transmission 
service separately from the delivery component.\14\
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    \12\ Tennessee Power Co., 90 FERC para. 61,238 at 61,761 (2000).
    \13\ See Arizona Public Service Co., 94 FERC para. 61,027 at 
61,076, order on reh'g, 94 FERC para. 61,267 (2001).
    \14\ Nevada Power Co., 97 FERC para. 61,227 at 62,035-36 (2001), 
reh'g pending (Nevada Power).
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D. Interconnection ANOPR

    The Commission issued an Advance Notice of Proposed Rulemaking 
(ANOPR) on October 25, 2001.\15\ As a point of departure, the ANOPR 
presented the Standard Generator Interconnection Agreement and 
Generation Interconnection Procedure of the Electric Reliability 
Council of Texas (ERCOT).\16\ The Commission supplemented and modified 
the ERCOT documents with various ``best practices'' that were 
identified in Attachment A to that order. These ``best practices'' were 
based, in part, on generator interconnection agreements and procedures 
that have been approved by the Commission in past cases. The ANOPR also 
instructed the parties to assume that the Commission's current pricing 
policy, as described in an ANOPR attachment, would remain effective.
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    \15\ Standardizing Generator Interconnection Agreements 
Procedures, Advance Notice of Proposed Rulemaking, 66 Fed. Reg. 
55,140 (Nov. 1, 2001), FERC Stats. & Regs. para. 35,540 (2001).
    \16\ The ERCOT agreement and procedures were attached to the 
ANOPR as Appendix A.
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    Commenters advocating a standard agreement and procedures other 
than the ERCOT model as supplemented and modified by the ``best 
practices'' in Attachment A were asked to specify in detail how their 
proposals differed and were superior to or more appropriate than the 
ERCOT-plus-best-practices model.
    The Commission also initiated a consensus-making process for 
industry participants in which interested members of the electric 
industry, government and public had an opportunity to provide 
meaningful input.
    Public meetings of the stakeholders were conducted from November 
2001 through January 2002 and included plenary sessions, private 
caucuses and drafting sessions. An interactive web site was 
established, which permitted any interested participant to view, post, 
and access documents, and post comments. These procedures made it 
possible for interested persons anywhere to participate. Public 
meetings generally were held at the Commission but also in Philadelphia 
and Denver in response to the National Association of Regulatory 
Utility Commissioner's (NARUC's) request that we hold some meetings 
outside of Washington, DC.
    Consensus was largely reached by the participants on the scope of 
interconnection service, responsibility for facilities, and 
interconnection procedures and agreements. Two drafting groups 
developed standard IA and IP documents. These drafting groups, 
generally comprising representatives from each of the electric market 
segments, met intensively for three weeks in December 2001 and January 
2002. Their efforts resulted in two documents that have largely shaped 
the text of this NOPR. We will refer to these documents as the 
Consensus IA and IP (while recognizing that a consensus was not reached 
on all matters).
    The drafting groups reached agreements on many issues and 
successfully narrowed the areas of disagreement. The Consensus IA and 
IP present alternative positions for certain provisions. For others, 
there is a reasonable degree of consensus among the industry 
participants. No party, however, has endorsed all parts of either 
Consensus IA or IP, or even all parts of all alternative provisions 
proposed by the sector to which that party belongs. In addition, some 
of the Consensus IA and IP provisions \17\ have not been discussed by 
the Drafting Groups because of lack of time.
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    \17\ Sixteen of 31 articles of the Consensus IA had not been 
discussed by the IA Drafting Group.
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    The consensus proposal was also the subject of a public meeting 
held on January 17-18, 2002.\18\ Moreover, by February 1, 2002, more 
than 120 parties had filed comments on the ERCOT-plus-best-practices 
model as well as on the Consensus IA and IP. On the whole, the 
commenters support the Commission's efforts to standardize generator 
interconnection procedures and interconnection agreements to promote 
efficiency in energy markets. The commenters, however, also raise 
questions with respect to specific provisions in the interconnection 
agreements and procedures. We will not address the comments in detail 
in this NOPR, since we are requesting further comment, but they have 
informed our analysis of the issues.
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    \18\ Notice of Staff Public Meeting, 67 Fed. Reg. 887 (Jan. 8, 
2002).
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E. ANOPR Comments on the IA and IP

    Although the parties did not reach consensus on all provisions, the 
documents reflect substantial consensus among diverse interests. The 
Commission used these documents and the subsequent comments to create 
the proposed standardized IA and IP documents (``NOPR IA and IP''). 
Generally, the NOPR uses the Consensus IA and IP provisions where there 
was consensus. When the participants could not reach consensus on a 
particular issue and options were presented in the filed agreement and 
procedures, we sought to minimize barriers to entry of new generation 
as much as possible without increasing the risk of reliability 
problems. Where issues remained unresolved and no options were 
presented, the proposal generally adopts the ERCOT text. Also, the 
proposal generally adopts the ERCOT text where the parties noted they 
had changed the text but had not completed their discussions before 
filing the documents.
    With certain exceptions, the majority of Generators and 
Transmission Providers endorse the inclusion of two products (Energy 
and Network Resource Interconnection Services \19\) in the Consensus IA 
and IP. Likewise, most Generators and Transmission Providers agree in 
concept with the principles governing queuing and restudy

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provisions set forth in the Consensus IA and IP.
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    \19\ Energy Resource Interconnection Service allows the 
Generator to connect its Facility to the Transmission System, 
thereby becoming eligible to deliver output using existing firm or 
non-firm capacity on an ``as available'' basis. IA 4.1.1.1. Network 
Resource Interconnection Service allows the Generator to connect its 
Facility in a manner comparable to that in which the Transmission 
Provider integrates its generating facilities to service native load 
or, in an independent system operator (ISO) or RTO with market-based 
congestion management, as in the same manner as other Network 
Resources. IA 4.1.2.1.
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    While the Generators and Transmission Providers agree that the 
differences between the parties have narrowed significantly, 
disagreements remain. The following section discusses several of the 
disagreements and how we decided what to propose in the NOPR IA and IP.
1. Coordination With Affected Third Party Systems (IP Sec. 3.5)
    The interconnection of a generator may affect other systems. This 
requires the Transmission Provider to coordinate studies and upgrades 
to accommodate the interconnection request. Transmission Providers 
suggest language that requires only reasonable efforts to coordinate 
with affected third-party systems. Generators generally want 
transmission providers and affected third parties to be responsible for 
coordinating and performing all necessary studies and upgrades. 
Generators also do not want to condition interconnection on the 
completion of third-party upgrades.
    The NOPR IP adopts the Generators' position. We believe that their 
approach reduces unnecessary delay by recognizing that where multiple 
transmission systems are affected, coordination studies and upgrades 
must be performed for the successful completion of a new generation 
project. We agree with the Generators that the alternative would likely 
delay the completion of the interconnection project through an 
iterative or sequential study process. Also, as we explicitly stated in 
Nevada Power, third-party interconnection studies and network upgrades 
do not apply to interconnection but to transmission delivery 
service.\20\ So, while the generator can get interconnected to the 
Transmission Provider's system, it cannot deliver or may not be able to 
deliver all of its power for the facility until the third-party 
upgrades are completed. Finally, by mandating that the affected third 
party coordinate interconnection study and network upgrades and 
additional processes with the Transmission Provider, it gives 
Transmission Providers another incentive to move quickly to become RTOs 
because RTO structure requires greater regional coordination and a move 
to single system planning.
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    \20\ Nevada Power Co., 97 FERC para. 61,227 at 62,035-36 (2001), 
reh'g pending.
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2. Interconnection Construction Acceleration (IP Sec. 12.3)
    Under certain circumstances, Transmission Providers may wish to 
accelerate construction of network facilities either on their own 
initiative or to accommodate another generator's request to do so. 
Transmission Providers want the ability to accelerate the construction 
of network upgrades without having to consult with the generator who 
will be charged for the upgrade. Generators agree that acceleration 
should be permitted and generally agree with paying for accelerated 
upgrades as long as they either receive credits or are reimbursed by 
the generator requesting the accelerated construction. But Generators 
maintain that the Transmission Provider should bear the costs of any 
accelerated construction it undertakes for its own benefit or for the 
benefit of another generator without consultation with the Generator.
    The NOPR IP adopts the Generators' proposal. The Commission 
believes that it is important to allow Transmission Providers to 
accelerate the construction of network upgrades. The approach offered 
by the Generators offers generators fair compensation (in the form of 
transmission credits) for costs that will be repaid by the Transmission 
Provider once the Transmission Provider recovers them from the 
generator requesting accelerated construction. It does not appear 
reasonable that, where a generator is expected to pay for construction 
of facilities, the Transmission Provider could accelerate the timing 
and therefore the need for financing without prior consultation.
3. Small Generator Interconnection Issues (IP Sec. 14; IP Appendix 6)
    Small Generators want the ability to interconnect without having to 
pay the cost of the interconnection studies and upgrades or having to 
deal with local and state regulatory requirements that may hinder 
development. NARUC, state regulatory agencies and certain Transmission 
Providers request that the Commission state unequivocally that states 
have jurisdiction over distribution systems and clarify that the 
Commission's treatment of Small Generators applies only to 
transmission.
    The actions proposed here are well within the authority granted to 
the Commission in the FPA; it is clear that the FPA grants federal 
jurisdiction over transmission by a public utility in interstate 
commerce and when public utilities make sales for resale in interstate 
commerce.\21\ Within this jurisdiction, we propose that the NOPR IA and 
IP will apply only when a generator interconnects to the Transmission 
Provider's transmission system or makes wholesale sales in interstate 
commerce at either the transmission or distribution voltage level.\22\
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    \21\ See New York v. FERC, 122 S. Ct. 1212 (2002).
    \22\ For example, the IA and IP would apply if the Generator 
interconnects to the Transmission Provider's transmission system 
(regardless of whether the output is being sold at wholesale or 
retail) or if the Generator interconnects to the Transmission 
Provider's distribution system and the output is being sold at 
wholesale. However, the IA and IP would not apply if the Generator 
connects to a distribution system but hast not yet proposed to sell 
the output at wholesale.
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    Regarding the request to exempt Small Generators from paying for 
study and upgrade costs, we are not inclined to adopt this proposal. 
Rather, we propose that Small Generators should be responsible for all 
studies and upgrades needed to accommodate their facilities. The 
utilities' other transmission customers should not have to subsidize 
Small Generators. However, we propose an accelerated procedure for 
Small Generators and system studies limited in scope (i.e., limited 
only to the immediate vicinity of the Small Generator's 
interconnection) and that the Transmission Provider use existing 
studies to the extent possible at no cost to the Small Generator.
4. Regional Differences
    The consensus documents require all affected entities to adopt 
standard interconnection procedures and agreements regardless of the 
geographical location or configuration of the electric systems. Yet 
there is significant disagreement about how best to incorporate 
regional differences. Transmission Providers, state regulators and 
others contend that the IA and IP documents must acknowledge regional 
differences (such as system operations, reliability, environmental 
concerns, etc.). Florida Public Service Commission, for example, says 
that the IP and IA must take into account the special protective 
relaying schemes needed by Florida utilities to ensure that the 
transmission separation unique to Florida due to its peninsular nature 
is minimized. Generators suggest that these types of regional 
differences can be addressed when the compliance filings are made after 
the Final Rule is issued.
    While the Transmission Providers, state regulators and others may 
have raised legitimate concerns regarding regional differences, they 
have not specifically identified the modifications

[[Page 22254]]

that need to be made to the IA and IP to accommodate these differences. 
In some instances, parties have raised concerns that are outside the 
standard terms and conditions of the NOPR IA and IP. The Commission 
proposes to adopt the approach used in Order No. 888: however, if 
commenters identify legitimate concerns about a need for regional 
variations in specific provisions in the NOPR IA and IP, the Commission 
will consider revisions to these provisions that would permit regional 
variations as appropriate.\23\
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    \23\ In Order No. 888, the Commission stated that it would allow 
parties to use regional differences to justify changes to certain 
tariff provisions when the proposed alternative provision is 
``reasonable, generally accepted in the region, and consistently 
adhered to by the transmission provider.'' Order No. 888 at 31,770.
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5. Tax Indemnification Provisions (IA Sec. 5.16)
    IRS Notices 2001-82 and 88-129 suggest that contributions by 
Generators to Transmission Providers in connection with interconnection 
and network facility construction are non-taxable. Consistent with 
these IRS notices, the draft tax provisions in the NOPR treat the 
funding as a non-taxable event. The IRS is moving to further address 
these and other tax indemnification issues raised in the ANOPR 
proceeding.
    Transmission Providers are concerned that the IRS Notices do not 
cover either transactions between a Generator and certain Transmission 
Providers or transmission credits for network upgrade costs. 
Accordingly, Transmission Providers want gross-up or secured indemnity 
from generators until the IRS rules that such items are not taxable. 
Generators argue that the IA tax provisions were negotiated by tax 
professionals who are familiar with and represent all sides of the 
electric power industry, including the Transmission Providers. They ask 
the Commission to either accept the tax section in its entirety or 
eliminate it from the IA.
    The NOPR IA leaves section 5.14 in place, but adds a clarification 
that provides Transmission Providers with full reimbursement in the 
future if the IRS determines that these type of events are taxable.
6. Parties to the Agreement
    The participants disagree as to the appropriate party or counter-
party to the IA. Transmission Providers generally believe that the 
Transmission Owner, whether or not it is also the Transmission 
Provider, should be the sole signatory to the IA. Generators believe in 
general that, if the Transmission Owner and Transmission Provider are 
separate entities, both must sign the IA.
    The Commission proposes that the Transmission Provider be required 
to sign the agreement because this service will be provided under the 
Transmission Provider's OATT. Moreover, no one disputes that the 
Transmission Owner must sign an agreement with the Generator, and it 
would be a waste of resources for the Transmission Provider and 
Generator to have to enter into separate agreements when one agreement 
would suffice. Accordingly, the Commission proposes that the 
Transmission Provider, and, to the extent necessary, the Transmission 
Owner, must become signatories to the IA.
7. Liquidated Damages (IA Sec. 5.1, IP Sec. 13.5)
    Liquidated Damages provisions appear in both the IA and the IP. The 
liquidated damages provision in the Consensus IA is applicable if a 
Generator chooses the construction option described in IA section 
5.1.B. Under this option, if a Transmission Provider fails to complete 
the interconnection facility by the in-service date or the network 
upgrades by the commercial operation date, the Transmission Provider 
shall pay the Generator liquidated damages. Liquidated damages would be 
limited to 0.5% per day of the actual aggregate costs of the 
interconnection facilities or network upgrades for which the 
Transmission Provider remains responsible, and such total shall not 
exceed 20% of the Transmission Provider's actual costs. The 
participants reached agreement on this provision in the Consensus IA.
    But the participants disagree about the liquidated damages 
provision in the IP. The Generators propose a provision that would make 
Transmission Providers pay liquidated damages if the Transmission 
Provider fails to meet any of its obligations in the IP and does not 
remedy the failures within 15 business days. Liquidated damages would 
be 1% of the actual costs of the applicable study cost per day, but 
would not exceed 50% of the actual cost of the applicable study. Also, 
upon expiration of the remedy period, the Transmission Provider would 
refund any deposit amount for the applicable study that the Generator 
had paid in excess of actual reasonably incurred study costs.
    Several transmission owners object to the Generators' proposal, 
stating that a Transmission Owner derives no profit from performing 
studies under the IP; it recovers only actual study costs. They reason 
that it is unfair to force a Transmission Owner to assume the risk of 
liquidated damages where there is no concomitant financial benefit. The 
National Rural Electric Cooperative Association and the American Public 
Power Association argue that the liquidated damages would be especially 
burdensome on cooperatives and public power providers because of their 
limited resources. They propose a reciprocal liquidated damages 
provision for generators applicable to the milestones that a generator 
must satisfy. The Arizona PSC argues that transmission providers should 
not be liable for delay because factors beyond their control could 
affect the schedule. It also argues that the Commission lacks the 
authority under the FPA to impose damages and argues that the 
liquidated damages provision is an assessment for nonperformance.
    Because the participants reached consensus on the liquidated 
damages provision in the consensus IA, the Commission has included this 
provision in the NOPR IA. As for the IP, the Commission will leave the 
Generators' liquidated damages language in the NOPR IP. The Commission 
did not allow for liquidated damages in the OATT provisions related to 
facilities studies.\24\ Nevertheless, we invite comments on whether the 
Commission should make the Generator's proposed provision a part of the 
IP in the final rule.
---------------------------------------------------------------------------

    \24\ Section 19.4 of the pro forma OATT requires Transmission 
Providers to use due diligence to complete a required facilities 
study within a 60-day period. If the Transmission Provider is unable 
to do so, it must notify the Transmission Customer, provide an 
estimate of the time needed to complete the study, and explain why 
the additional time is necessary. When completed, the study must 
include a description of the Generator's share of the cost of the 
required upgrade, and the time required to complete such 
construction and initiate the requested service.
---------------------------------------------------------------------------

F. Pricing Underlying the Consensus Documents

    For purposes of negotiating the IA and IP, participants were 
directed to assume our current interconnection pricing policy (see 
Attachment B to the ANOPR). While the Commission indicated that pricing 
would be addressed in a subsequent rulemaking, the ANOPR participants 
have argued forcefully that the interconnection products, terms, and 
conditions cannot be divorced from the underlying pricing that was 
assumed during negotiations. Nearly all participants have cautioned 
that the consensus documents will need to be modified if the Commission 
changes its current pricing policy.
    As a result, the interconnection terms and conditions before us go 
hand-in-

[[Page 22255]]

hand with pricing. We have, therefore, concluded that interconnection 
pricing is best addressed at this time. The NOPR IA and IP reflect our 
existing pricing policies, and we invite comment on whether those 
existing policies should be retained. In addition, we provide 
clarification below on the issue of how interconnection and 
transmission pricing must be consistent and comparable.
1. Commission's Pricing Policies
a. Network Facilities Cannot Be Directly Assigned
    The Commission has long held that the transmission grid is a single 
piece of equipment whose use can be priced on an average or incremental 
investment cost basis, but not by way of direct assignment. These 
standards are best described in Public Service Company of Colorado 
(PSCO),\25\ where the Commission described its then new policy of 
allowing use of the grid to be priced either on an incremental cost 
basis or on the traditional average or rolled-in cost basis:
---------------------------------------------------------------------------

    \25\ 59 FERC para. 61,311 (1992), reh'g denied, 62 FERC para. 
61,013 at 61,061 (1993) (footnotes omitted)

    The Commission has long held that an integrated transmission 
grid is a cohesive network moving energy in bulk. Because the grid 
operates as a single piece of equipment, the Commission has 
consistently priced transmission service based on the cost of the 
grid as a whole. The Commission has rejected the direct cost 
assignment of grid facilities even if the grid facilities would not 
be installed but for a particular customer's service. The Commission 
as reasoned that, even if a customer can be said to have caused the 
addition of a grid facility, the addition represents a system 
expansion used by and benefitting all users due to the integrated 
nature of the grid. Recognizing that the grid is a cohesive network 
in a dynamic state of development, the Commission has even included 
remote facilities in the grid on the ground that they were merely 
the first segment of what would eventually be a network loop. The 
Commission has reserved direct assignments for only those 
transmission facilities that fall into what we have referred to as 
an ``exceptional category'' consisting of radials which are so 
isolated from the grid that they are and will remain non-integrated.
    Nothing in the Commission's new pricing policy changes or 
undermines these fundamental premises. There continues to be only 
one service--service over the entire grid--and both native load and 
third party customers ``use'' the entire grid, including any 
expansion. Similarly, both native load and third party customers 
benefit from integrated grid upgrades.
    The only change in our new policy is how to price grid service. 
The ``but for'' test continues to identify the additions to the grid 
which constitute the incremental cost of expanding the grid to serve 
the transmission customer. While we now permit utilities to price on 
the basis of this incremental grid cost, we are not directly 
assigning grid additions. We are not dismembering the grid or 
directly assigning its newest components.

    At that time, service was still predominantly bundled (generation 
and transmission) and, therefore, the functionalization of costs 
between generation and transmission was not an issue. As a result, all 
transmission facilities, including generation interconnection 
facilities, were treated as part of the network.
b. Facilities Reassigned From Transmission to Generation
    In 1996, the Commission issued Order No. 888, which required the 
unbundling of transmission and wholesale generation services. Prior to 
Order No. 888, when utilities were providing primarily a bundled 
generation and transmission service, the precise functionalization of 
costs as generation or transmission was not critical, as noted above. 
However, since unbundling, the Commission has determined that the cost 
of generation step-up transformers (GSUs) are part of the generation 
function rather than the transmission function.\26\ In KU, we found 
that GSUs are used in providing generation services, and that the costs 
of these facilities should be charged to the customers using the 
generating facilities. Thus, we excluded the cost of GSUs from the 
Transmission Provider's transmission rates, reasoning that a more 
accurate method of cost recovery is to assign the costs of each GSU to 
the generator to which it is connected.
---------------------------------------------------------------------------

    \26\ Kentucky Utilities Company, 85 FERC para. 61,274 at 62,111 
(1998) (KU). A GSU is located adjacent to a generating plant and 
increases the voltage of the plant output before it reaches the 
transmission network.
---------------------------------------------------------------------------

c. Interconnection Facilities Considered Direct Assignment Facilities 
Rather Than Network Facilities
    As merchant generation took hold, entities sought interconnection 
before they had lined up specific load serving entities to purchase the 
output of the unit. Merchant generators, therefore, had a need to 
interconnect before they were ready to sign up for the delivery 
component of transmission service.
    In Tennessee Power Company (Tennessee),\27\ the Commission 
clarified that interconnection is a component of transmission service, 
that the interconnection component must be offered under the terms of 
the pro forma tariff, and that this right is without regard to whether 
the interconnection component of transmission service is requested 
along with or before the delivery component of transmission service. In 
order to interconnect to the grid, merchant generators agreed to 
finance all necessary construction costs. It was at this time that 
Transmission Providers began to request that the cost of 
interconnection facilities (i.e., all facilities needed to connect the 
generator to the network) be treated as sole use facilities and be 
directly assigned, rather than included as part of the network. In 
addition, some network upgrade costs were now being assessed prior to 
transmission delivery service. A choice between pricing the use of the 
network at its average or incremental cost could no longer be made 
because the average cost was a function of the rolled-in rate for a 
delivery service that had not as yet been requested. Therefore, the 
Commission allowed the Transmission Provider to assess an incremental 
cost rate at the time of interconnection (i.e., the customer pays the 
cost of the network upgrade that would not have been incurred but for 
its service request) but required that customers receive credits for 
the cost of the network upgrades once the delivery component of 
transmission service begins. The Commission instituted this 
``crediting'' policy to ensure that customers are not charged twice for 
the use of the network. Later, in American Electric Power Service 
Corp.,\28\ the Commission required Transmission Providers to include in 
the Transmission Credits interest on the monies paid. In certain ISOs 
with comprehensive congestion management, the Commission does not 
require credits for network upgrades that increase the transfer 
capability; the customer (generator) instead receives comparable 
compensation in the form of price protection from the cost effects of 
congestion.
---------------------------------------------------------------------------

    \27\ 90 FERC para. 61,238 at 61,761, reh'g dismissed, 91 FERC 
para. 61,271 (2000).
    \28\ 97 FERC para. 61,098 at 61,530-31 (2001).

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[[Page 22256]]

d. Summary
    In Consumers Energy Company,\29\ and Entergy Gulf States, Inc.,\30\ 
the Commission underscored that the grid is a single piece of equipment 
from which only sole use facilities are excluded; that Commission 
policy prohibits the permanent direct assignment of network facilities; 
that the prohibition against the direct assignment of network 
facilities is without regard as to the purpose of the upgrade (e.g., to 
relieve overloads, to remedy stability and short circuit problems, to 
maintain reliability, or to provide protection and service 
restoration); and that all facilities at or beyond the point where the 
customer (or generator) connects to the grid are network facilities.
---------------------------------------------------------------------------

    \29\ 95 FERC para. 61,233, order on reh'g, 96 FERC para. 61,132 
(2001).
    \30\ 98 FERC para. 61,014, reh'g denied, 99 FERC para. ______ 
(2002).
---------------------------------------------------------------------------

2. Interconnection and Transmission Pricing Must Be Comparable and 
Consistent
    In Southern Company Services, Inc. (Southern), the company proposed 
to continue to treat the cost of interconnection facilities (meaning 
facilities on the generator's side of the point of interconnection) for 
its own generators as part of the network while directly assigning the 
cost of the same type of facilities to its competitors' generators.\31\ 
Southern raised the issue of how to ensure comparability with 
interconnection and transmission pricing. Recognizing the need to 
address this issue on a generic basis, the Commission made Southern 
subject to the outcome of this rulemaking.
---------------------------------------------------------------------------

    \31\ 98 FERC para. 61,328 (2002).
---------------------------------------------------------------------------

    The NOPR IA and IP reflect the Commission's current interconnection 
pricing policy and we have invited comments on whether that policy 
should be retained. We will require that all transmission rates be 
designed in a manner that is consistent with whatever interconnection 
pricing is approved. To the extent our current interconnection pricing 
is adopted, all generation interconnection facilities, not just 
generator step-up transformers, must be removed from the transmission 
charge and directly assigned as sole use facilities. Consistent with 
our current pricing of generator step-up transformers, this sends a 
more accurate price signal by assigning the cost of interconnection 
facilities to the generation customers using them.
    If commenters wish to propose generation interconnection pricing 
that differs from the pricing we propose herein, they must identify and 
explain to what extent the NOPR IA and IP must be changed accordingly 
as well as how they will ensure that the transmission rates are 
designed on a consistent and comparable basis.
3. Pricing for Independent Entities
    After the release of the ANOPR the Commission announced its 
intention to reform public utility transmission tariffs using a 
standard market design (SMD) in Docket RM01-12. We seek comment on 
appropriate generator interconnection pricing in this docket consistent 
with the locational pricing methodology in the SMD proceeding. We note 
that in regions that use locational pricing, ISOs assess the cost of 
any new network facilities based on which network facilities would not 
be in the transmission expansion plan but for the interconnecting 
generator (this is referred to as the ``but for'' test). In this case, 
the generator typically receives transmission rights in return for the 
capacity that is created, which may take on value if the facility 
becomes congested in the future. This pricing method has only been 
allowed in regions where the transmission provider is independent of 
market participants. This is because of our concern that certain 
aspects of this method such as the congestion price signals to which 
the generator responds in asking for an upgrade, the determination of 
which generators in the queue should be responsible for which 
facilities, the cost of the facilities, and the assumptions underlying 
the power flow analysis, can be subjective. As a result, a transmission 
provider that is not an independent entity would have the ability and 
the incentive to exploit this subjectivity to its own advantage if it 
is able to assess the costs of network upgrades to the interconnecting 
generator. To address this potential problem, we invite comment on 
whether the Commission should accept an approach that departs from 
current Commission policy of providing transmission credits, and will 
consider alternative proposals as long as we can be assured that these 
cost causation determinations are made on an objective and non-
discriminatory basis by an independent entity such as an RTO.

G. Other Issues

1. Force Majeure and Other Liability Issues
    The ERCOT Standard Generation Interconnection Agreement contains 
several provisions addressing liability and a force majeure exception 
to liability. None of these provisions were reviewed and adopted by the 
IA drafting group, but they were filed as part of the Consensus IA. In 
the discussion below, we look to similar provisions in the OATT for 
comparison.
a. Insurance
    At the outset, we note that Article 9 in the ERCOT Agreement 
(Article 13 in the Consensus IA) requires each party to the agreement 
to maintain certain minimum insurance coverages. The OATT contains no 
provision requiring insurance coverage.
b. Indemnification
    Indemnification is the act of compensating another for a loss 
suffered due to a third party's act or default.\32\ The ERCOT Agreement 
and the Consensus IA contain different indemnity provisions. The ERCOT 
provision (section 10.15, which incorporates by reference a Texas 
Public Utility Commission rule, PUCT Rule 25.202(b)(2)) does not extend 
indemnity protection to cases of gross negligence or intentional 
wrongdoing, while the Consensus IA (section 19.1) does not extend 
indemnity protection to cases of ordinary negligence or willful 
misconduct. Also, the ERCOT provision makes the legal costs of 
prosecuting or defending a claim by a third person an eligible 
liability, but does not allow indemnity protection from such costs when 
the action is between the parties to the agreement, while the Consensus 
IA draws no such distinction and makes all reasonable legal costs 
recoverable. The Consensus IA also includes indemnity procedures that 
describe how a party may pursue indemnity claims, and the procedure for 
doing so.
---------------------------------------------------------------------------

    \32\ Black's Law Dictionary 772 (7th ed. 1999).
---------------------------------------------------------------------------

    The indemnification provision in the OATT (section 10.2) 
indemnifies the transmission provider for legal costs due to claims by 
third persons arising from performance of its obligations under the 
OATT, and does not explicitly allow indemnification for disputes 
arising over enforcement of this provision. Indemnification does not 
extend to cases of ordinary negligence and intentional wrongdoing by 
the Transmission Provider.
c. Consequential Damages
    Consequential damages are losses that flow indirectly from an 
injurious act rather than directly and immediately.\33\ The ERCOT 
Agreement's consequential damages provision (section 10.16, which is 
found in section 19.6 of the Consensus IA) excuses liability for losses 
or costs for any special, indirect, incidental, consequential, or 
punitive

[[Page 22257]]

damages. Liability for damages under another agreement will not be 
considered special, indirect, or consequential damages under this 
provision.
---------------------------------------------------------------------------

    \33\ Id. at 394.
---------------------------------------------------------------------------

    The OATT protects a transmission provider from consequential 
damages and indirect damage claims by third parties through 
indemnification except in cases of negligence or intentional wrongdoing 
by the transmission provider. No other protection against consequential 
damages appears in the OATT. In Order No. 888-A, the Commission stated 
that it saw no need to extend this protection, and noted that 
``liability is a separate issue from indemnification, and that nothing 
in these provisions precludes transmission providers or customers from 
relying, when and where such law is applicable, on the protection of 
statutes or other law protecting parties from consequential or indirect 
damages.'' \34\
---------------------------------------------------------------------------

    \34\ Order No. 888-A at 30,302.
---------------------------------------------------------------------------

d. Force Majeure
    Nonperformance due to a force majeure event shall not be considered 
default. The Consensus IA (Article 17) adopts the ERCOT force majeure 
provision (section 10.5), which uses a standard laundry list of causes 
that are considered ``beyond the reasonable control'' of the party 
claiming force majeure. Fault and negligence are still exceptions, but 
the force majeure event must ``materially prevent or impair'' the 
performance of the claimant's obligations. Article 17 also explains the 
procedure for making a claim of force majeure. A party affected shall 
exercise ``due diligence'' to remove its inability to meet its 
obligations with ``reasonable dispatch,'' but this does not include 
accepting unsatisfactory provisions that would resolve a labor dispute.
    The force majeure provision in the OATT (section 10.1) also adopts 
a standard laundry list of causes but excludes acts of negligence or 
intentional wrongdoing (without specifying whose negligence or 
intentional wrongdoing). Nonperformance due to a force majeure event is 
not considered default, but parties should make all reasonable efforts 
to perform their obligations under the tariff.
e. Discussion
    The Commission proposes adopting the protections afforded in the 
OATT, but making them applicable to both the transmission provider and 
the interconnection customer. Order No. 888 and its progeny clarified 
that the pro forma tariff was not intended to address liability issues 
beyond indemnification and force majeure,\35\ and we intend to apply 
that principle here as well.\36\ Accordingly, we have incorporated the 
OATT provisions into the NOPR IA, and eliminated the insurance 
requirements. Nevertheless, we invite comment on the Commission's 
proposed approach and ask commenters to address the relative merits of 
the alternative ERCOT and Consensus IA provisions.
---------------------------------------------------------------------------

    \35\ Order No. 888-A at 30,301-02; Order No. 888-B at 62,080-81.
    \36\ See, e.g., Delmarva Power & Light Co., 88 FERC para. 61,247 
at 61,786, reh'g dismissed, 89 FERC para. 61,170 (1999) (rejecting 
two parties' competing attempts to address liability issues in their 
interconnection agreement, and instructing the parties to instead 
use the indemnification and force majeure provisions from the OATT); 
but see Commonwealth Edison Co., 92 FERC para. 61,175 at 61,620 
(2000) (noting that limitation of liability provisions inconsistent 
with those in the pro forma OATT are acceptable when the individual 
IA demonstrates that a different limitation of liability provision 
was part of the specific bargain); Cinergy Services, Inc., 99 FERC 
para. 61,025 (2002).
---------------------------------------------------------------------------

2. Reciprocity
    Order No. 888 required that transmission tariffs contain a 
reciprocity provision \37\ applicable to any customer, including a non-
public utility, that owns, controls or operates interstate transmission 
facilities and that takes service under the open access tariff, and any 
affiliates of the customer that own, control or operate interstate 
transmission facilities. The purpose of this provision was to ensure 
that a public utility offering transmission access to others could 
obtain similar service from its transmission customers, including non-
public utilities. This provision further ensures that any non-public 
utility that wishes to take advantage of the open access transmission 
provided by public utilities must offer comparable transmission service 
in return. They may do so either on a utility-specific basis or through 
a Commission-approved ``reciprocity OATT'' on file with the Commission. 
Since we found in Tennessee that interconnection service is an element 
of transmission service that must be offered under the terms of the 
Transmission Provider's OATT, and the IP and IA will be added to the 
OATT, we find that interconnection service also will be subject to this 
reciprocity requirement. Although we do not have direct authority to 
require non-public utilities to make interconnection service generally 
available, we have the ability and the obligation to ensure that all 
aspects of open access transmission are as widely available as possible 
and that the implementation of this rulemaking does not result in 
competitive disadvantage to public utilities. Thus, we propose that the 
reciprocity provision apply to interconnection as well, and that any 
non-public utility that wishes either to take advantage of, or to 
continue to take advantage of, open access on a public utility's 
transmission system, must adopt the IA and IP into its own reciprocity 
service.
---------------------------------------------------------------------------

    \37\ Order No. 888 at 31,760-63; Order No. 888-A at 30,281-87.
---------------------------------------------------------------------------

H. Summary of NOPR IA and IP

1. Standard Generator Interconnection and Operating Agreement
    Article 1. Definitions--This Article contains the definitions of 
terms used in the Agreement. Capitalized terms in the summary are 
defined in the Agreement.
    Article 2. Effective Date, Term and Termination--The term of the 
Agreement will be 10 years, or longer by request, and will be 
automatically renewed each successive year thereafter. Termination 
procedures are described. Parties retain the right to seek unilateral 
modification of this Agreement under FPA sections 205 and 206.
    Article 3. Regulatory Filings--The Transmission Provider will be 
responsible for filing the document with the appropriate Governmental 
Authority. Procedures for confidential treatment of Generator 
information are described.
    Article 4. Scope of Service--This Article describes the two kinds 
of interconnection products available.\38\ Energy Resource (ER) 
Interconnection Service allows the Generator to connect its Facility to 
the Transmission System and be eligible to deliver output using 
existing firm or non-firm capacity on an ``as available'' basis. 
Network Resource (NR) Interconnection Service allows the Generator to 
connect its Facility in a manner comparable to that in which the 
Transmission Provider integrates its generating facilities to service 
native load or, in an ISO or RTO with market-based congestion 
management, in the same manner as other Network Resources. Neither ER 
nor NR Interconnection conveys any right to transmission delivery 
service, nor does the Agreement constitute a request for transmission 
delivery service. The studies for each service are described, as are 
the implications of the Generator's eligibility for delivery under each 
service.
---------------------------------------------------------------------------

    \38\ This proposal was developed in advance of the standard 
market design proposal that the Commission will issue in RM01-12-
000.
---------------------------------------------------------------------------

    Article 5. Interconnection Facilities Engineering, Procurement, and 
Construction--This Article describes

[[Page 22258]]

the procedures for designing, procuring, and constructing the 
Transmission Provider Interconnection Facilities/Network Upgrades and 
the Generator Interconnection Facilities. Construction options, rights, 
and responsibilities are also presented. Generators will not be 
responsible for costs of modifications made to the Transmission 
Provider Interconnection Facilities or the Transmission System to 
facilitate interconnection of a third party or to provide transmission 
service under the Transmission's Provider Tariff. The Parties intend 
that all payments or transfers by the Generator to the Transmission 
Provider for installation and upgrades shall be nontaxable. If these 
payments ultimately are found to be taxable, the Generator shall 
indemnify the Transmission Provider.
    Article 6. Testing and Inspection--Both Parties will conduct 
facility testing before the Commercial Operation Date and make any 
necessary modifications. The Generator shall bear the cost of these 
tests and modifications. After the Commercial Operation Date, each 
Party shall conduct routine inspection and testing of its facility at 
its own expense.
    Article 7. Metering--The Transmission Provider will install, own, 
operate and maintain Metering Equipment at the Point of 
Interconnection, but the Generator shall bear all reasonable documented 
costs. The Article also describes Metering Equipment standards and 
testing requirements.
    Article 8. Communication--The Article describes the necessary 
operating communications and dedicated data circuits between the 
Parties and the cost and maintenance responsibility for such equipment.
    Article 9. Operations--The Generator and Transmission Provider 
should operate their respective facilities and equipment in a safe and 
reliable manner. This Article also describes Reactive Power 
requirements. In the event the Parties agree or are required to allow 
third parties to use any portion of the Transmission Provider 
Interconnection Facilities, the Generator will be compensated for 
capital expenses incurred based on the pro rata use of the 
Interconnection Facilities by the Transmission Provider, all third-
party users, and the Generator.
    Article 10. Maintenance--The Generator will be responsible for all 
reasonable expenses associated with owning, operating and maintaining 
Generator and Transmission Provider Interconnection Facilities (except 
for operations and maintenance expenses associated with modifications 
necessary for providing service to a third party that pays for such 
expenses).
    Article 11. Performance Obligation--The Article describes the 
security and payment obligations of the Generator and Transmission 
Provider with respect to facility construction and Transmission 
Provider requests for service from the Generator. Section 11.4 
describes the payment mechanism for Network Upgrades, in which a 
Generator shall receive a cash refund of the amount paid to the 
Transmission Provider for Network Upgrades plus interest.
    Article 12. Invoice--This Article describes monthly invoice and 
billing dispute procedures. The Transmission Provider must provide an 
invoice of the final cost of construction of the Transmission Provider 
Interconnection Facilities and Network Upgrades within six months, and 
in sufficient detail to enable the Generator to compare actual costs 
with estimates.
    Article 13. Emergencies--This Article explains the Transmission 
Provider's and the Generator's responsibilities when Emergency 
Conditions arise.
    Article 14. Governing Law and Applicable Tariffs--The validity, 
interpretation, and performance of this Agreement shall be governed by 
the laws of the state where the Point of interconnection is located, 
without regard to that state's conflicts of law principles.
    Article 15. Notices--This Article contains the addresses at which 
the Transmission Provider and Generator will receive, among other 
things, notices, bills and payments.
    Article 16. Force Majeure--Force Majeure is defined as any cause 
beyond a Party's control. Events arising from negligence or intentional 
wrongdoing are not Force Majeure. Nonperformance due to a Force Majeure 
event shall not be considered Default.
    Article 17. Default--Article 18 defines Default as the failure of 
either Party to perform any obligation in the time or manner provided 
in this Agreement. No Default exists as a result of Force Majeure or an 
act or omission of the other Party. Notice and cure procedures also are 
described.
    Article 18. Indemnity--The Article explains that each Party shall 
indemnify the other from any and all damages, losses, and claims by or 
to third parties arising from the other Party's performance of its 
obligations under this Agreement on behalf of the indemnifying Party. 
No indemnity will be available in cases of negligence or intentional 
wrongdoing by the indemnifying Party.
    Article 19. Assignment--Written consent ordinarily is required to 
assign the Agreement, but assignment may be secured without consent if 
the assignee is an affiliate that meets certain qualifications. No 
consent is required if a Generator assigns the Agreement for collateral 
security purposes to aid in Facility financing.
    Article 20. Severability--Explains that if a court or Governmental 
Authority determines that any provision of this Agreement is invalid, 
void, or unenforceable, such determination shall not invalidate any 
other provision in this Agreement.
    Article 21. Comparability--Parties will comply with all applicable 
comparability requirements and code of conduct laws, rules and 
regulations.
    Article 22. Confidentiality--This Article describes what 
constitutes Confidential Information and the protections that will be 
afforded such information when shared between Parties.
    Article 23. Environmental Releases--Describes procedures for 
notifying the other Party of the release or remediation of Hazardous 
Substances related to the Facility or the Interconnection Facilities 
that may be expected to affect the other Party.
    Article 24. Information Requirements--This Article describes the 
requirements for submitting information regarding the electric 
characteristics of the Parties' respective facilities. Among the 
information, the Transmission Provider shall provide a monthly status 
report on construction and installation of Transmission Provider 
Interconnection Facilities and Network Upgrades.
    Article 25. Information Access and Audit Rights--Each Party shall 
make information available to the other Party necessary to verify costs 
for which the other Party is responsible under this Agreement and to 
carry out its obligations and responsibilities under this Agreement.
    Article 26. Subcontractors--The Parties may use subcontractors to 
perform obligations under this Agreement provided that the contractors 
comply with the applicable terms and conditions of the Agreement and 
each Party remains liable to the other for the subcontractor's 
performance. The hiring Party retains all of its obligations under this 
Agreement.
    Article 27. Disputes--This Article explains the dispute resolution 
and arbitration procedures.
    Article 28. Representations, Warranties and Covenants--This Article 
requires that each Party be organized and qualified to do business in 
the

[[Page 22259]]

relevant jurisdiction. Each Party has the Authority to enter into this 
Agreement, and performance of its duties does not violate or conflict 
with organizational or formation documents.
    Article 29. Operating Committee--The Parties shall convene an 
Operating Committee, comprising one representative and one alternate 
from each Party who will also be members of the joint Operating 
Committee, that will meet at least annually to carry out the duties set 
forth in this Article.
    Article 30. Miscellaneous--This Article contains provisions 
addressing matters such as rules of interpretation, a prohibition on 
third-party beneficiaries, and the right to amend the Agreement by 
mutual agreement.
    Appendices--The Agreement contains separate appendices for 
Interconnection Facilities and Network Upgrades, Time Schedule, 
Interconnection Details, Standard Generator Interconnection Agreement, 
Security Arrangement Details, Commercial Operation Date, and 
Interconnection Guidelines.
2. Standard Generator Interconnection Procedures
    Section 1. Definitions--Definitions of terms used in the 
Interconnection Procedures are provided. (In this summary, defined 
terms are capitalized.)
    Section 2. Scope and Application--The Transmission Provider must 
follow strict comparability principles. The Interconnection Procedures 
do not constitute a request for, nor confer a right to receive, 
transmission service.
    Section 3. Interconnection Requests--This section describes 
interconnection request procedures, including a refundable deposit of 
$10,000 payable to the Transmission Provider that will be applied 
toward the cost of the Interconnection Feasibility Study. The Generator 
may withdraw its request at any time, and if the Generator fails to 
adhere to all requirements of the Interconnection Procedures, the 
Transmission Provider shall deem the request to be withdrawn.
    Section 4. Queue Position--The queue position is based, in general, 
on the date and time of receipt of the valid (i.e., complete) 
Interconnection Request, and is used to determine the order of 
performing studies and cost responsibility. At the Transmission 
Provider's option, Interconnection System Impact Studies may be 
performed serially as requests are received or in clusters.
    Section 5. Procedures for Interconnection Requests Submitted Prior 
to Effective Date of Interconnection Procedures--This section provides 
for the completion of studies and the finalizing of Interconnection and 
Operating Agreements that are pending as of the effective date of the 
Interconnection Procedures.
    Section 6. Interconnection Feasibility Study--The Interconnection 
Feasibility Study shall preliminarily evaluate the feasibility of the 
proposed interconnection to the Transmission System and will consist of 
a power flow and short circuit analysis. The Generator is responsible 
for the actual cost of the study and any re-studies that may be 
required.
    Section 7. Interconnection System Impact Study--The Interconnection 
System Impact Study shall evaluate the impact of the proposed 
interconnection on the reliability of the Transmission System and will 
consist of a short circuit analysis, a stability analysis, and a power 
flow analysis. The Generator is responsible for the actual cost of the 
study and any re-studies that may be required.
    Section 8. Interconnection Facilities Study--The Interconnection 
Facilities Study shall specify and estimate the cost of implementing 
the conclusions of the Interconnection System Impact Study, including 
the nature and cost of any Transmission Provider Interconnection 
Facilities and Network Upgrades needed. It shall also provide an 
estimate of the time required to complete the construction and 
installation of these facilities. The Generator is responsible for the 
actual cost of the study and any re-studies that may be required.
    Section 9. Agreements--In order to advance the implementation of 
its interconnection, the Generator may request the Transmission 
Provider to offer an Engineering and Procurement Agreement that 
authorizes the Transmission Provider to begin engineering and 
procurement of long lead-time items necessary for the establishment of 
the interconnection.
    Section 10. Optional Study--The Generator may request the 
Transmission Provider to perform a reasonable number of Optional 
Studies. An Optional Study will consist of a sensitivity analysis and 
will identify the costs that may be required to provide transmission 
service or interconnection service based upon the results of the 
Optional Study.
    Section 11. Interconnection and Operating Agreement--When the 
Transmission Provider delivers the draft Interconnection Facilities 
Study report to the Generator, the Transmission Provider shall tender a 
draft Interconnection and Operating Agreement with draft appendices 
completed to the extent practicable. Procedures and requirements for 
filing and complying with an unexecuted agreement also are described.
    Section 12. Construction of Transmission Provider Interconnection 
Facilities and Network Upgrades--The Transmission Provider and the 
Generator shall negotiate a schedule for constructing needed facilities 
and upgrades. A Generator may request the Transmission Provider to 
advance the completion of necessary Network Upgrades that are the 
responsibility of another entity and would not otherwise be completed 
in time to support the Generator's In-Service Date. However, the 
Generator must commit to pay any expediting costs and the cost of the 
upgrades, with such payments to be refunded when the Transmission 
Provider receives payment from the responsible entity.
    Section 13. Miscellaneous--The Interconnection Procedures include a 
variety of miscellaneous provisions pertaining to: (1) Confidential 
treatment of information provided by the Generator, (2) the 
Transmission Provider's right to delegate responsibility to 
subcontractors, (3) the Generator's obligation to pay the actual costs 
of Interconnection Studies, (4) the Generator's right to request the 
Transmission Provider to contract with a third party to perform an 
Interconnection Study, (5) the obligation of the Transmission Provider 
to pay the Generator liquidated damages, and (6) dispute resolution 
procedures.
    Section 14. Small Generator Interconnection Requests--Small 
Generators are defined as units of no more than 20 MW or aggregations 
of interconnecting Facilities at a single Point of Interconnection 
totaling no more than 20 MW. Although, for Small Generators, the 
deposit requirement for each of the Interconnection Studies is waived, 
Small Generators are responsible for the costs of processing the 
Interconnection Request and the performance of Interconnection Studies, 
unless waived. Expedited procedures will be used for Small Generators' 
Interconnection Requests and Interconnection Studies, but Small 
Generators will be placed in the same queue as Generators.
    Appendices--The Interconnection Procedures include five appendices 
that provide forms of agreement for the Interconnection Request, the 
Interconnection Feasibility Study, the Interconnection System Impact 
Study, the Interconnection Facilities Study, and the Optional Study.

[[Page 22260]]

III. Public Reporting Burden and Information Collection Statement

    The following collections of information contained in this proposed 
rule are being submitted to the Office of Management and Budget (OMB) 
for review under Section 3507(d) of the Paperwork Reduction Act of 
1995. FERC identifies the information provided under Part 35 as FERC-
516.
    Comments are solicited on the Commission's need for this 
information, whether the information will have practical utility, the 
accuracy of the provided burden estimates, ways to enhance the quality, 
utility, and clarity of the information to be collected, and any 
suggested methods for minimizing respondents' burden, including the use 
of automated information techniques. The following burden estimate 
includes the cost of preparing and submitting tariff changes to comply 
with the Commission's proposed regulation.
    Public Reporting Burden: Estimated Annual Burden:

----------------------------------------------------------------------------------------------------------------
                                                            Number of     Number of     Hours per   Total annual
                Data collection FERC-516                   respondents    responses     response        hours
----------------------------------------------------------------------------------------------------------------
Reporting...............................................           270
    (In place)..........................................           145             1             4           580
    (Develop)...........................................           125             1            31         3,875
                                                         -------------------------------------------------------
        Totals..........................................           270             1            35         4,455
----------------------------------------------------------------------------------------------------------------

    Total Annual Hours for Collection (reporting + record keeping, (if 
appropriate) = 4,455 hours (270 respondents (145  x  1 filing  x  4 
hours for review, clarification or 580 hours) + (125  x  1  x  31 to 
develop interconnection agreement format or 3,875) = 4,455). 
Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost for all respondents to be:
    Annualized Capital/Startup Costs-Staffing requirements to review 
and prepare an interconnection agreement = $222,750 ($29,000 (145 
respondents  x  $200 (4 hours @ $50 hourly rate) + $ 193,750 (125 
respondents  x  $1,550 (31 hours @ $50 hourly rate) Annualized Costs 
(Operations & Maintenance). The cost per respondent is equal to $107 
(145 respondents who agreements in place), $718 (125 respondents who 
have to develop documentation).
    The OMB regulations require OMB to approve certain information 
collection requirements imposed by agency rule. 5 CFR 1320.11. 
Accordingly, pursuant to OMB regulations, the Commission is providing 
notice of its proposed information collections to OMB.
    Title: FERC-516, Electric Rate Schedule Filings.
    Action: Proposed Data Collections.
    OMB Control No.: 1902-0096.
    The applicant shall not be penalized for failure to respond to this 
collection of information unless the collection of information displays 
a valid OMB control number.
    Respondents: Business or other for profit.
    Frequency of Responses: One-time implementation.
    Necessity of Information: The proposed rule would revise the 
requirements contained in 18 CFR part 35. The Commission is seeking to 
establish standardized interconnection procedures and agreements. In 
particular, the Commission will propose this proposed rule standardized 
interconnection agreements and procedures that public utilities must 
adopt. The proposed rule would require that each public utility that 
owns, operates or controls transmission facilities participate in one-
time filings incorporating the agreement and procedures into their open 
access transmission tariffs. Internal Review: The Commission has 
assured itself, by means of internal review, that there is specific, 
objective support for the burden estimates associated with the 
information requirements. The Commission's Office of Markets, Tariffs 
and Rates will use the data included in filings under Section 203 and 
205 of the Federal Power Act to evaluate efforts for the 
interconnection and coordination of the U.S. electric transmission 
system and to ensure the orderly implementation of the interconnection 
procedures and agreement as well as for general industry oversight. 
These information requirements conform to the Commission's plan for 
efficient information collection, communication, and management within 
the electric power industry.
    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: 
Michael Miller, Capital Planning and Policy Group, Phone: (202) 208-
1415, fax: (202) 208-2425, E-mail: [email protected].]
    For submitting comments concerning the collection of information(s) 
and the associated burden estimate(s), please send your comments to the 
contact listed above and to the Office of Management and Budget, Office 
of Information and Regulatory Affairs, Washington, DC 20503, 
[Attention: Desk Officer for the Federal Energy Regulatory Commission, 
phone: (202) 395-7318, fax: (202) 395-7285].

IV. Environmental Statement

    The Commission concludes that promulgating the proposed rule would 
not present a major federal action having a significant adverse impact 
on the human environment under the Commission's regulations 
implementing the National Environmental Policy Act.\39\ The proposed 
rule falls within the categorical exemption provided in the 
Commission's regulations for approval of actions under Secs. 203 and 
205 of the Federal Power Act relating to provided for the filing of 
schedules containing all rates and charges for any transmission or sale 
subject to the Commission's jurisdiction, plus the classification, 
practices, contracts and regulations that affect rates, charges, 
classifications and services.\40\ Consequently, neither an 
environmental assessment nor an environmental impact statement is 
required.
---------------------------------------------------------------------------

    \39\ 18 CFR Part 380.
    \40\ 18 CFR Part 380.4(a)(15)(16).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) \41\ requires rulemakings to 
contain either a description and analysis of the effect that the 
proposed rule will have on small entities or a certification that the 
rule will not have a significant economic impact on a substantial 
number of small entities. The regulations proposed here impose 
requirements only on interstate transmission providers, which are not 
small businesses, and, these requirements are, in fact, designed to 
benefit all customers, including small businesses. Accordingly, 
pursuant to

[[Page 22261]]

section 605(b) of the RFA, the Commission hereby certifies that the 
proposed regulations will not have a significant adverse impact on a 
substantial number of small entities.
---------------------------------------------------------------------------

    \41\ 5 U.S.C. 601-612 (1994).
---------------------------------------------------------------------------

VI. 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 summary of their positions. 
Commenters are requested to identify each specific issue posed by the 
NOPR that their discussion addresses and to use appropriate headings 
that clearly identify the relevant IA and IP sections. 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 June 17, 2002. Comments 
should not exceed 30 double-spaced pages and should include an 
executive summary. 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].

VIII. Document Availability

    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 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 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    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.

List of Subjects in 18 CFR Part 35

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

    By direction of the Commission.
Linwood A. Watson, Jr.,
Deputy Secretary.

    In consideration of the foregoing, the Commission proposes to amend 
Part 35, Chapter I, Title 18 of the Code of Federal Regulations, as 
follows.

PART 35--FILING OF RATE SCHEDULES

    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.

    2. Add Sec. 35.28(f) to read as follows:


Sec. 35.28  Nondiscriminatory open access transmission tariff.

* * * * *
    (f) Standardized interconnection agreement and procedures. (1) 
Every public utility that is required to have on file a non-
discriminatory open access transmission tariff under this section must 
amend such tariff by adding the standardized interconnection agreement 
and procedures contained in Order No. ____, FERC Stats. & Regs. para. 
______ [Final Rule on Interconnection] or such other interconnection 
agreement and procedures as may be approved by the Commission 
consistent with Order No. ____, FERC Stats. & Regs. para. ______ [Final 
Rule on Interconnection].
    (i) The amendment required by the preceding paragraph must be filed 
no later than [60 days after the issuance of the final rule].
    (ii) Any public utility that seeks a deviation from the 
standardized interconnection agreement and procedures contained in 
Order No. ____, FERC Stats. & Regs. para. ______ [Final Rule on 
Interconnection], must demonstrate that the deviation is consistent 
with the principles of Order No. ____, FERC Stats. & Regs. para. ______ 
[Final Rule on Interconnection ].
    (2) The non-public utility procedures for tariff reciprocity 
compliance described in paragraph (e) of this section are applicable to 
the standardized interconnection agreement and procedures.

[Note: The following Attachments will not be Published in the Code of 
Federal Regulations]

Standard Generator Interconnection and Operating Agreement

Table of Contents

Article 1. Definitions

Article 2. Effective Date, Term and Termination

2.1  Effective Date
2.2  Term of Agreement
2.3  Termination Procedures
    2.3.1  Written Notice
    2.3.2  No Commercial Operation
    2.3.3  Default
2.4  Termination Costs
    2.4.1

[[Page 22262]]

    2.4.2
    2.4.3
2.5  Disconnection
2.6  Survival
2.7  Reservation of Rights

Article 3. Regulatory Filings

3.1  Filing

Article 4. Scope of Service

4.1  Interconnection Product Options
    4.1.1  Energy Resource Interconnection Service
    4.1.1.1  The Product
    4.1.1.2  The Study
    4.1.1.3  Delivery Service Implications
    4.1.2  Network Resource Interconnection Service
    4.1.2.1  The Product
    4.1.2.2  The Study
    4.1.3  Delivery Service Implications
4.2  Provision of Service
4.3  Generator Balancing Service Arrangements
    4.3.1
4.4  Performance Standards
4.5  No Transmission Delivery Service
4.6  Generator Provided Services

Article 5. Interconnection Facilities Engineering, Procurement, and 
Construction

5.1  Options
5.2  Power System Stabilizers
5.3  Equipment Procurement
    5.3.1
    5.3.2
    5.3.3
5.4  Construction Commencement
    5.4.1
    5.4.2
    5.4.3
    5.4.4
5.5  Work Progress
5.6  Information Exchange
5.7  Limited Operation
5.8  Generator Interconnection Facilities (``GIF'')
    5.8.1  Generator Specifications
    5.8.2  Transmission Provider's Review
    5.8.3  GIF Construction
5.9  Transmission Provider Interconnection Facilities Construction
    5.10  Access Rights
    5.11  Lands of Other Property Owners
    5.12  Early Construction of Base Case Facilities
    5.13  Suspension
    5.14  Taxes
    5.14.1  Generator Payments Not Taxable
    5.14.2  Representations And Covenants
    5.14.3  Indemnification for Taxes Imposed Upon Transmission 
Provider
    5.14.4  Tax Gross-Up Amount
    5.14.5  Private Letter Ruling or Change or Clarification of Law
    5.14.6  Contests
    5.14.7  Refund
    5.14.8  Taxes Other Than Income Taxes
    5.14.9  Transmission Owners Who Are Not Transmission Providers
    5.15  Tax Status
    5.16  Modification
    5.16.1  General
    5.16.2  Standards
    5.16.3  Modification Costs

Article 6. Testing and Inspection

6.1  Pre-Commercial Operation Date Testing and Modifications
6.2  Post-Commercial Operation Date Testing and Modifications
6.3  Right to Observe Testing
6.4  Right to Inspect

Article 7. Metering

7.1  General
7.2  Check Meters
7.3  Standards
7.4  Testing of Metering Equipment
7.5  Metering Data

Article 8. Communications

8.1  Generator Obligations
8.2  Remote Terminal Unit
8.3  No Annexation

Article 9. Operations

9.1  General
9.2  Control Area Notification
9.3  Transmission Provider Obligations
9.4  Generator Obligations
9.5  Start-Up and Synchronization
9.6  Reactive Power
    9.6.1  Power Factor Design Criteria
    9.6.2  Voltage Schedules
    9.6.2.1  Governors and Regulators
    9.6.3  Payment for Reactive Power
    9.7  Outages, Interruptions, and Disconnection
    9.7.1  Outages
    9.7.1.1  Outage Authority and Coordination
    9.7.1.2  Outage Schedules
    9.7.1.3  Outage Restoration
    9.7.2  Continuity of Service
    9.7.2.1
    9.7.2.2
    9.7.2.3
    9.7.2.4
    9.7.2.5
    9.7.3  Under-Frequency Load Shed Event
    9.7.4  System Protection and Other Controls Requirements
    9.7.4.1  Protection and System Quality
    9.7.4.2
    9.7.4.3
    9.7.4.4
    9.7.4.5
    9.7.4.6
    9.7.5  Requirements for Protection
    9.7.6  Power Quality
9.8  Switching and Tagging Rules
9.9  Use of Interconnection Facilities by Third Parties
    9.9.1  Purpose of Interconnection Facilities
    9.9.2  Third Party Users
9.10  Data Exchange

Article 10. Maintenance

10.1  Transmission Provider Obligations
10.2  Generator Obligations
10.3  Coordination
10.4  Secondary Systems
10.5  Operating and Maintenance Expenses

Article 11. Performance Obligation

11.1  Generator Interconnection Facilities
11.2  Transmission Provider Interconnection Facilities
11.3  Network Upgrades
11.4  Transmission Credits
    11.4.1  Refund of Amounts Advanced for Network Upgrades
    11.4.2
11.5  Financial Security Arrangements
    11.5.1  Provision of Security
    11.5.1.1
    11.5.1.2
    11.5.1.3
11.6  Generator Compensation
    11.6.1  Generator Compensation for Actions During Emergency 
Condition

Article 12. Invoice

12.1  General
12.2  Final Invoice
12.3  Payment
12.4  Disputes

Article 13. Emergencies

13.1  Definition
13.2  Obligations
13.3  Notice
13.4  Immediate Action
13.5  Transmission Provider Authority
    13.5.1  General
    13.5.2  Curtailment, Reduction, and Disconnection
13.6  Generator Authority
13.7  Limited Liability

Article 14. Governing Law and Applicable Tariffs

14.1  Regulatory Requirements
14.2  Governing Law and Applicable Tariffs
    14.2.1
    14.2.2
    14.2.3

Article 15. Notices

15.1  General
15.2  Billings and Payments
15.3  Alternative Forms of Notice
15.4  Operations and Maintenance Notice

Article 16. Force Majeure

16.1  Force Majeure

Article 17. Default

17.1  Default
17.1.1  General
17.1.2  Right to Terminate

Article 18. Indemnity

18.1  Indemnity

Article 19. Assignment

19.1  Assignment

Article 20. Severability

20.1  Severability

Article 21. Comparability

21.1  Comparability

Article 22. Confidentiality

22.1  Confidentiality
    22.1.1  Term
    22.1.2  Scope
    22.1.3  Release of Confidential Information
    22.1.4  Rights
    22.1.5  No Warranties
    22.1.6  Standard of Care
    22.1.7  Order of Disclosure
    22.1.8  Termination of Agreement
    22.1.9  Remedies
    22.1.10  Disclosure to FERC or its Staff
    22.1.11
    2.1.12

Article 23. Environmental Releases

23.1

[[Page 22263]]

Article 24. Information Requirements

24.1  Information Acquisition
24.2  Information Submission by Transmission Provider
24.3  Updated Information Submission by Generator
24.4  Information Supplementation

Article 25. Information Access and Audit Rights

25.1  Information Access
25.2  Reporting of Non-Force Majeure Events
25.3  Audit Rights
25.4  Audit Rights Periods
25.4.1  Audit Rights Period for Construction-Related Accounts and 
Records
25.4.2  Audit Rights Period for All Other Accounts and Records
25.5  Audit Results

Article 26. Subcontractors

26.1  General
26.2  Responsibility of Principal
26.3  No Limitation by Insurance

Article 27. Disputes

27.1  Submission
27.2  External Arbitration Procedures
27.3  Arbitration Decisions
27.4  Costs

Article 28. Representations, Warranties and Covenants

28.1  General
    28.1.1  Good Standing
    28.1.2  Authority
    28.1.3  No Conflict
    28.1.4  Consent and Approval

Article 29. Operating Committee

    29.1  Operating Committee
    29.1.1
    29.1.2
    29.1.3
    29.1.4
    29.1.5
    29.1.6
    29.1.7

Article 30. Miscellaneous

30.1  Binding Effect
30.2  Conflicts
30.3  Rules of Interpretation
30.4  Entire Agreement
30.5  No Third Party Beneficiaries
30.6  Waiver
30.7  Headings
30.8  Multiple Counterparts
30.9  Amendment
30.10  Modification by the Parties
30.11  Reservation of Rights
30.12  No Partnership
Appendix A--Interconnection Facilities and Network Upgrades
Appendix B--Time Schedule
Appendix C--Interconnection Details
Appendix D--Standard Generator Interconnection Agreement
Appendix E--Security Arrangement Details
Appendix F--Commercial Operation Date
Appendix G--Interconnection Guidelines

Standard Generator Interconnection and Operating Agreement

    This Standard Generator Interconnection and Operating Agreement 
(``Agreement'') is made and entered into this________day of ________ 
20____, by and between________, a________ organized and existing 
under the laws of the State/Commonwealth of ________(``Generator''), 
and ________, a [corporation] organized and existing under the laws 
of the State/Commonwealth of ________ (``Transmission Provider and/
or Transmission Owner''). Generator and Transmission Provider each 
may be referred to as a ``Party'' or collectively as the 
``Parties.''

Recitals

    Whereas, Transmission Provider operates the Transmission System; 
and
    Whereas, Generator intends to own, lease and/or control and 
operate the Facility identified in Appendix C; and,
    Whereas, Generator and Transmission Provider have agreed to 
enter into this Agreement for the purpose of interconnecting the 
Facility with the Transmission System;
    NOW, therefore, in consideration of and subject to the mutual 
covenants contained herein, it is agreed:

Article 1. Definitions

    When used in this Agreement with initial capitalization, the 
following terms shall have the meanings specified or referred to in 
this Article 1. Terms used in this Agreement with initial 
capitalization that are not defined in this Article 1 shall have the 
meanings specified in the section in which it is used or as 
specified in the Transmission Provider Tariff, as may be amended 
from time to time.
    1.1  ``Affiliate'' shall mean, with respect to a corporation, 
partnership or other entity, each such other corporation, 
partnership or other entity that directly or indirectly, through one 
or more intermediaries, controls, is controlled by, or is under 
common control with, such corporation, partnership or other entity.
    1.2   Agreement'' shall mean this Standard Generator 
Interconnection and Operating Agreement.
    1.3   Ancillary and Other Services'' shall have the same meaning 
as defined in the Transmission Provider's Tariff, as may be amended 
from time to time, and shall in addition include such other services 
as Generator Balancing, Blackstart, Automatic Generation Control, 
and Capacity.
    1.4   Applicable Laws and Regulations'' shall mean all duly 
promulgated applicable federal, state and local laws, regulations, 
rules, ordinances, codes, decrees, judgments, directives, or 
judicial or administrative orders, permits and other duly authorized 
actions of any Governmental Authority.
    1.5   Applicable Reliability Council'' shall mean the 
reliability council(s) applicable to the Transmission System to 
which the Facility is directly interconnected.
    1.6   Applicable Standards'' shall mean the requirements and 
guidelines of NERC, the Applicable Reliability Council, the Control 
Area of the Transmission System to which the Facility is directly 
interconnected and the Transmission Provider Interconnection 
Guidelines.
    1.7   Breach'' shall mean the failure of a Party to perform or 
observe any material term or condition of this Agreement.
    1.8   Breaching Party'' shall mean a Party that is in Breach of 
this Agreement.
    1.9   Commercial Operation Date'' shall mean the date on which 
Generator commences commercial operation of a unit at the Facility 
after Trial Operation of such unit has been completed as confirmed 
in writing substantially in the form shown in Appendix F.
    1.10  ``Confidential Information'' shall have the meaning set 
forth in Article 22.1.
    1.11  ``Control Area'' shall mean an electrical system or 
systems, as certified by NERC or the applicable regional reliability 
council, as the case may be, and bounded by interconnection metering 
and telemetry, to which a common automatic generation control scheme 
is applied in order to (i) match, at all times, power output of the 
generator(s) within the electrical system and capacity and energy 
purchased from or sold to entities outside the electrical system to 
load within the electrical system; (ii) maintain scheduled 
interchange with other Control Areas within the limits of Good 
Utility Practice; (iii) maintain the frequency of the electrical 
system within reasonable limits in accordance with Good Utility 
Practice; and (iv) provide sufficient generating capacity and 
operating reserves in accordance with Good Utility Practice.
    1.12  ``Default'' shall mean the failure of a Breaching Party to 
cure its Breach in accordance with Article 20.
    1.13  ``Effective Date'' shall mean the date on which this 
Agreement becomes effective in accordance with Article 2.1.
    1.14  ``Emergency Condition'' shall have the meaning set forth 
in Article 14.1.
    1.15  ``Energy Resource Interconnection Service'' shall have the 
meaning set forth in Article 4.1.1.
    1.16  ``Environmental Law'' shall mean Applicable Laws or 
Regulations relating to pollution or protection of the environment 
or natural resources.
    1.17  ``Facility'' shall mean Generator's or Transmission 
Provider/Transmission Owner's electric generating facility, but 
shall not include the Generator Interconnection Facilities.
    1.18  ``Facilities Study'' shall mean the Interconnection 
Facilities Study conducted by the Transmission Provider under the 
Interconnection Procedures.
    1.19  ``Federal Power Act'' shall mean the Federal Power Act, as 
amended, 16 U.S.C. Secs. 791a et seq.
    1.20  ``FERC'' shall mean the Federal Energy Regulatory 
Commission or its successor.
    1.21  ``Force Majeure'' shall have the meaning set forth in 
Article 16.1.
    1.22  ``Generator'' as used herein applies to any Facility 
regardless of ownership.
    1.23  ``Generator Interconnection Facilities'' shall mean all 
facilities and equipment, as identified in Appendix A, which are 
located between the Facility and the Point of Change of Ownership, 
including any modification, addition, or upgrades to such facilities 
and equipment necessary to physically and electrically connect to 
Facility to the Transmission System. Generator Interconnection 
Facilities are sole use facilities and shall not include Network 
Upgrades or facilities.
    1.24  ``Good Utility Practice'' shall mean any of the practices, 
methods and acts

[[Page 22264]]

engaged in or approved by a significant portion of the electric 
industry during the relevant time period, or any of the practices, 
methods and acts which, in the exercise of reasonable judgment in 
light of the facts known at the time the decision was made, could 
have been expected to accomplish the desired result at a reasonable 
cost consistent with good business practices, reliability, safety 
and expedition. Good Utility Practice is not intended to be limited 
to the optimum practice, method, or act to the exclusion of all 
others, but rather to be acceptable practices, methods, or acts 
generally accepted in the region. Good Utility Practice shall 
include, but not be limited to, compliance with Applicable Laws and 
Regulations, Applicable Standards, the National Electric Safety 
Code, and the National Electrical Code, as they may be amended from 
time to time, including the criteria, rules and standards of any 
successor organizations.
    1.25  ``Governmental Authority'' shall mean any federal, state, 
local or other governmental regulatory or administrative agency, 
court, commission, department, board, or other governmental 
subdivision, legislature, rulemaking board, tribunal, or other 
governmental authority having jurisdiction over the Parties, their 
respective facilities, or the respective services they provide, and 
exercising or entitled to exercise any administrative, executive, 
police, or taxing authority or power; provided, however, that such 
term does not include Generator, Transmission Provider, or any 
Afflliate thereof.
    1.26  ``Hazardous Substances'' shall mean any chemicals, 
materials or substances defined as or included in the definition of 
``hazardous substances,'' ``hazardous wastes,'' ``hazardous 
materials,'' ``hazardous constituents,'' ``restricted hazardous 
materials,'' ``extremely hazardous substances,'' ``toxic 
substances,'' ``radioactive substances,'' ``contaminants,'' 
``pollutants,'' ``toxic pollutants'' or words of similar meaning and 
regulatory effect under any applicable Environmental Law, or any 
other chemical, material or substance, exposure to which is 
prohibited, limited or regulated by any applicable Environmental 
Law.
    1.27  ``In-Service Date'' shall mean the date upon which the 
Generator reasonably expects it will be ready to begin use of the 
Transmission Provider Interconnection Facilities to obtain back feed 
power and upon which it reasonably expects to begin doing so.
    1.28  ``Independent System Operator'' (``ISO'') shall mean any 
Independent System Operator to which a transmission provider has 
transferred operational control of its transmission facilities, or 
any portion thereof, within the meaning of Order No. 888.
    1.29  ``Interconnection Facilities'' shall mean the Transmission 
Provider's Interconnection Facilities and the Generator 
Interconnection Facilities. Collectively, all facilities and 
equipment between the Facility and the Point of Interconnection, 
including any modification, additions or upgrades that are necessary 
to physically and electrically interconnect the Facility to the 
Transmission System. Interconnection Facilities are sole use 
facilities and shall not include Network upgrades or facilities.
    1.30  ``Interconnection Guidelines'' shall mean the technical 
requirements set forth in Appendix G.
    1.31  ``Interconnection Request'' shall mean a request, the form 
of Appendix 1 to the Standard Generator Interconnection Procedures, 
in accordance with the OATT, to interconnect a new Facility, or to 
increase the capacity or make a Material Modification to the 
operations characteristics of an existing Facility that is 
interconnected with the Transmission System.
    1.32  ``Interconnection Service'' shall mean those services 
associated with interconnecting a Facility to the Transmission 
System as such services are set forth in Article 4 of this 
Agreement.
    1.33  ``Initial Synchronization Date'' shall mean the date upon 
which the Facility is initially synchronized and upon which Trial 
Operation begins.
    1.34  ``IRS'' shall mean the Internal Revenue Service.
    1.35  ``Joint Operating Committee'' shall be comprised of the 
members of the individual Operating Committees. The role of this 
Committee is to address on a generic level any issues arising out of 
the duties, roles and responsibilities of the individual Operating 
Committees as described in Article 29. The Joint Operating Committee 
shall meet as necessary, but not less than once each calendar year 
to carry out those duties. Unless otherwise agreed to, the annual 
meeting will be held on the first Monday in June of each year.
    1.36  ``Loss'' shall have the meaning set forth in Article 18.1.
    1.37  ``Metering Equipment'' shall mean all metering equipment 
described in, and installed at the metering points designated in, 
Appendix C.
    1.38  ``NERC'' shall mean the North American Electric 
Reliability Council or its successor agency assuming or charged with 
similar responsibilities related to the operation and reliability of 
the North American interconnected electric transmission grid.
    1.39  ``Network Resource Interconnection Service'' shall have 
the meaning set forth in Article 4.1.2.
    1.40  ``Network Upgrades'' shall mean the additions, 
modifications, and upgrades to the Transmission System required 
beyond the point at which the generator interconnects to the 
Transmission System to accommodate the interconnection of the 
Facility to the Transmission System as identified in Appendix A, 
including any modifications, additions or upgrades made to such 
facilities. The facilities and equipment are used by and benefit all 
users of the transmission grid, without distinction or regard as to 
the purpose of the upgrade (e.g., to relieve overloads, to remedy 
stability and short circuit problems, to maintain reliability, or to 
provide protection and service restoration) including the fact that 
these facilities and equipment are being replaced or upgraded to 
accommodate the interconnection request.
    1.41  ``Non-Breaching Party'' shall mean a Party that is not in 
Breach of this Agreement with regard to a specific event of Breach 
by another Party.
    1.42  ``Notice of Dispute'' shall have the meaning set forth in 
Article 27.1.
    1.43  Operating Committee'' shall mean the Operating Committee 
as described in Article 29.
    1.44  ``Party'' or ``Parties'' shall have the meaning set forth 
in the introductory paragraph of this Agreement.
    1.45  ``Point of Change of Ownership'' shall mean the point, set 
forth in Appendix A, at which the Generator Interconnection 
Facilities connect to the Transmission Provider's Transmission 
Interconnection Facilities.
    1.46  ``Point of Interconnection''shall mean the point, set 
forth in Appendix A, where the Interconnection Facilities connect to 
the Transmission Provider's Transmission Interconnection System.
    1.47  ``Reasonable Efforts'' shall mean, with respect to an 
action required to be attempted or taken by a Party under this 
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.
    1.48  ``RTO/ISO'' shall mean any Regional Transmission 
Organization or Independent System Operator to which a Transmission 
Provider has transferred operational control of its transmission 
facilities, or any portion thereof, within the meaning of Order No. 
2000.
    1.49  ``Switching and Tagging Rules'' shall mean the switching 
and tagging procedures of Transmission Provider, and Generator, as 
they may be amended from time to time.
    1.50  ``System Protection Facilities'' shall be described in 
Appendix A, and shall mean the equipment required to protect (i) the 
Transmission System from faults or other electrical disturbances 
occurring at the Facility, and (ii) the Facility from faults or 
other electrical system disturbances occurring on the Transmission 
System or on other delivery systems and/or other generating systems 
to which the Transmission System is directly connected.
    1.51  ``Tariff'' shall mean the Transmission Provider tariff for 
which open access transmission service over, and transmission 
interconnection to the Transmission System is offered, as filed with 
FERC, and as amended or supplemented from time to time, or any 
successor tariff.
    1.52  ``Transmission Owner'' shall mean an entity that owns, 
leases or otherwise possesses interest in the portion of the 
Transmission System at the Point of Interconnection may be a party 
to this Agreement to the extent necessary.
    1.53  ``Transmission Provider'' shall mean the entity that 
provides Transmission Service under its Open Access Transmission 
Tariff.
    1.54  ``Transmission Provider Interconnection Facilities'' shall 
mean all facilities owned and/or controlled or operated by the 
Transmission Provider from the Point of Change of Ownership to the 
Point of Interconnection as identified in Appendix A, including any 
modifications, additions or upgrades to such facilities and 
equipment. Transmission Provider Interconnection Facilities are sole 
use facilities and shall not include Network Upgrades or facilities 
as defined in Article 1.39 above.
    1.55  ``Transmission System'' shall mean the facilities owned, 
controlled or operated

[[Page 22265]]

by the Transmission Provider that are used to provide transmission 
service under the Tariff, including any additions, modifications or 
upgrades made to such facilities.
    1.56  ``Trial Operation'' shall mean the period during which 
Generator is engaged in on-site test operations and commissioning of 
the Facility prior to commercial operation.

Article 2. Effective Date, Term and Termination

    2.1  Effective Date. This Agreement shall become effective upon 
execution by the Parties subject to acceptance by FERC (if 
applicable), or if filed unexecuted, upon the date specified by 
FERC. Transmission Provider shall promptly file this Agreement with 
FERC upon execution in accordance with Article 3.1.
    2.2  Term of Agreement. Subject to the provisions of Article 
2.3, this Agreement shall remain in effect for a period of ten (10) 
years from the Effective Date or such other longer period as the 
Generator may request (Term to be Specified in Individual 
Agreements) and shall be automatically renewed for each successive 
one-year period thereafter.
    2.3  Termination Procedures. This Agreement may be terminated as 
follows:
    2.3.1  Written Notice. The Generator may terminate this 
Agreement after giving the Transmission Provider thirty (30) 
Calendar Days advance written notice; or
    2.3.2  No Commercial Operation. The Transmission Provider may 
terminate this Agreement on written notice to the Generator if (i) 
the Generator's Facility has not achieved commercial operation 
within five (5) years after the scheduled Commercial Operation Date 
reflected in Appendix B, Time Schedule, or (ii) fails to be 
available for operation for a consecutive period of five (5) years 
unless major Facility upgrades are in progress.
    2.3.3  Default. Either Party may terminate this Agreement in 
accordance with Article 17.
    Notwithstanding the foregoing, no termination shall become 
effective until the Parties have complied with all Applicable Laws 
and Regulations applicable to such termination, including the filing 
with FERC of a notice of termination of this Agreement, which notice 
has been accepted for filing by FERC.
    2.4  Termination Costs. If a Party elects to terminate the 
Agreement pursuant to Article 2.3 above, each Party shall pay all 
costs incurred (including any cancellation costs relating to orders 
or contracts for interconnection facilities and equipment) or 
charges assessed by the other Party, as of the date of the other 
Party's receipt of such notice of termination, that are the 
responsibility of the Terminating Party under this Agreement. In the 
event of termination by either Party, both Parties shall use 
commercially Reasonable Efforts to mitigate the costs, damages and 
charges arising as a consequence of termination. Upon termination of 
this Agreement, unless otherwise ordered or approved by FERC:
    2.4.1  With respect to any portion of the Transmission Provider 
Interconnection Facilities that have not yet been constructed or 
installed, the Transmission Provider shall to the extent possible 
and with Generator's authorization cancel any pending orders of, or 
return, any materials or equipment for, or contracts for 
construction of, such facilities; provided that in the event 
Generator elects not to authorize such cancellation, Generator shall 
assume all payment obligations with respect to such materials, 
equipment, and contracts, and the Transmission Provider shall 
deliver such material and equipment, and, if necessary, assign such 
contracts, to Generator as soon as practicable, at Generator's 
expense. To the extent that Generator has already paid Transmission 
Provider for any or all such costs of materials or equipment not 
taken by Generator, Transmission Provider shall promptly refund such 
amounts to Generator, less any costs, including penalties incurred 
by the Transmission Provider to cancel any pending orders of or 
return such materials, equipment, or contracts.
    2.4.2  Transmission Provider may, at its option, retain any 
portion of such materials, equipment, or facilities that Generator 
chooses not to accept delivery of, in which case Transmission 
Provider shall be responsible for all costs associated with 
procuring such materials, equipment, or facilities.
    2.4.3  With respect to any portion of the Interconnection 
Facilities, and any other facilities already installed or 
constructed pursuant to the terms of this Agreement, Generator shall 
be responsible for all costs associated with the removal, relocation 
or other disposition or retirement of such materials, equipment, or 
facilities.
    2.5  Disconnection. Upon termination of this Agreement, the 
Parties will take all appropriate steps to disconnect the Facility 
from the Transmission System. All costs required to effectuate such 
disconnection shall be borne by the terminating Party, unless such 
termination resulted from the non-terminating Party's Default of 
this Agreement or such non-terminating Party otherwise is 
responsible for these costs under this Agreement.
    2.6  Survival. This Agreement 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 Agreement; to permit the determination 
and enforcement of liability and indemnification obligations arising 
from acts or events that occurred while this Agreement was in 
effect; and to permit each Party to have access to the lands of the 
other Party pursuant to this Agreement or other applicable 
agreements, to disconnect, remove or salvage its own facilities and 
equipment.
    2.7  Reservation of Rights. Notwithstanding any other provision 
in this Agreement, each Party retains its rights to unilaterally 
seek modification of this Agreement pursuant to Sections 205 and 206 
of the Federal Power Act and pursuant to FERC's rules and 
regulations promulgated thereunder.

Article 3. Regulatory Filings

    3.1  Filing. The Transmission Provider shall file this Agreement 
(and any amendment hereto) with the appropriate Governmental 
Authority, if required. Any information related to studies for 
interconnection asserted by Generator to contain competitively 
sensitive commercial or financial information shall be maintained by 
the Transmission Provider and identified as ``confidential'' under 
seal stating that Generator asserts such information is Confidential 
Information and has requested such information be kept under seal. 
If requested by the Transmission Provider, Generator shall provide 
the Transmission Provider, in writing, with the Generator's basis 
for asserting that the information referred to in this Article 3.1 
is competitively sensitive information, and the Transmission 
Provider may disclose such writing to the appropriate Governmental 
Authority. Generator shall be responsible for the costs associated 
with affording confidential treatment of such information. If the 
Generator has executed this Agreement, or any amendment thereto, the 
Generator shall reasonably cooperate with Transmission Provider with 
respect to such filing and to provide any information reasonably 
requested by Transmission Provider needed to comply with applicable 
regulatory requirements. If the Generator has executed this 
Agreement or any amendment thereto, unless the Parties agree 
otherwise, Generator shall not protest the filing of this Agreement 
or any amendment which Generator executed.

Article 4. Scope of Service

    4.1  Interconnection Product Options. Generator has selected the 
following (checked) type of Interconnection Service:
    4.1.1  Energy Resource Interconnection Service.
    4.1.1.1  The Product. Energy Resource (``ER'') Interconnection 
Service allows Generator to connect the Facility to the Transmission 
System and be eligible to deliver the Facility's output using the 
existing firm or non-firm capacity of the Transmission System on an 
``as available'' basis. To the extent Generator wants to receive ER 
Interconnection Service, the Transmission Provider shall construct 
facilities consistent with the studies identified in Attachment A. 
ER Interconnection Service does not in and of itself convey any 
transmission delivery service.
    4.1.1.2  The Study. The study consists of short circuit/fault 
duty, steady state (thermal and voltage) and stability analyses. The 
short circuit/fault duty analysis would identify direct 
interconnection facilities required and the Network Upgrades 
necessary to address short circuit issues associated with the 
interconnection facilities. The stability and steady state studies 
would identify necessary upgrades to allow full output of the 
proposed Facility and would also identify the maximum allowed 
output, at the time the study is performed, of the interconnecting 
Facility without requiring additional Network Upgrades.
    4.1.1.3  Delivery Service Implications. Under ER Interconnection 
Service, the interconnected Generator will be able to inject power 
from the Facility into and

[[Page 22266]]

deliver power across the interconnecting Transmission Provider's 
Transmission System on an ``as available'' basis up to the amount of 
MW's identified in the applicable stability and steady state studies 
to the extent the upgrades initially required to qualify for ER 
Interconnection Service have been constructed. Where eligible to do 
so (e.g., PJM, ISO-NE, NYISO), the interconnected Generator may 
place a bid to sell into the market up to the maximum identified 
Facility output, subject to any conditions specified in the 
interconnection service approval, and the Facility will be 
dispatched to the extent the Generator's bid clears. In all other 
instances, no transmission delivery service from the Facility is 
assured, but the Generator may obtain point-to-point transmission 
delivery service or be used for secondary network transmission 
service, pursuant to the Transmission Provider's Open Access 
Transmission Tariff (``OATT''), up to the maximum output identified 
in the stability and steady state studies. In those instances, in 
order for the Generator to obtain the right to deliver or inject 
energy beyond the Facility Point of Interconnection or to improve 
its ability to do so, transmission delivery service must be obtained 
pursuant to the provisions of the Transmission Provider's OATT. The 
Generator's ability to inject its Facility output beyond the Point 
of Interconnection, therefore, will depend on the existing capacity 
of the Transmission Provider's Transmission System at such time as a 
transmission service request is made that would accommodate such 
delivery.
    4.1.2  Network Resource Interconnection Service.

4.1.2.1  The Product. The Transmission Provider must conduct the 
necessary studies and construct the Network Upgrades needed to 
integrate the Facility (1) in a manner comparable to that in which the 
Transmission Provider integrates its generating facilities to serve 
native load customers; or (2) in an ISO or RTO with market based 
congestion management, in the same manner as all other Network 
Resources. Network Resource (``NR'') Interconnection Service in and of 
itself does not convey any transmission delivery service.

    4.1.2.2  The Study. The interconnection study for NR 
Interconnection Service shall assure that the Generator's Facility 
meets the requirements for ER Interconnection Service and as a 
general matter, that such Facility interconnection is also studied 
with the Transmission Provider's Transmission System at peak load, 
under a variety of severely stressed conditions, to determine 
whether, with the Generator Facility at full output, the aggregate 
of generation in the local area can be delivered to the aggregate of 
load on the Transmission Provider's Transmission System, consistent 
with the Transmission Provider's reliability criteria and 
procedures. This approach assumes that some portion of existing 
Network Resources are displaced by the output of the Generator's 
Facility. The Generator may request the studies associated with NR 
Interconnection Service at the time of its interconnection 
application, together with its request(s) for study of other levels 
of interconnection service, and, following the completion of the 
requested facilities studies and subject to the construction of all 
necessary upgrades, may elect to proceed with NR Interconnection 
Service or to proceed under a lower level of interconnection service 
to the extent that only certain upgrades will be completed.
    There is no requirement either at the time of study or 
interconnection, or at any point in the future, that the Generator's 
Facility be designated as a Network Resource by a network 
transmission customer or that the Generator identify a specific 
buyer (or sink). To the extent a Network Generator does designate 
the Facility as a Network Resource, it must do so pursuant to the 
Transmission Provider's OATT.
    4.1.2.3  Delivery Service Implications. NR Interconnection 
Service allows the Generator's Facility to be designated by any 
Network Generator on the Transmission Provider's Transmission System 
as a Network Resource, up to the Facility's full output, on the same 
basis as all other existing Network Resources interconnected to the 
Transmission Provider's Transmission System, and to be studied as a 
Network Resource on the assumption that such a designation will 
occur. Any Network Generator can utilize its network service to 
obtain delivery of energy from the interconnected Generator's 
Facility in the same manner as it accesses other Network Resources. 
A Facility receiving NR Interconnection Service may also be used to 
provide ancillary services after technical studies and/or periodic 
analyses are performed with respect to the Facility's ability to 
provide any applicable ancillary service, provided that such studies 
and analyses have been or would be required in connection with the 
provision of such ancillary services by any existing Network 
Resource. In addition, in the event of transmission constraints on 
the Transmission Provider's Transmission System, the Generator's 
Facility shall be subject to the applicable congestion management 
procedures in the Transmission Provider's Transmission System in the 
same manner as all other Network Resources.
    Once a Generator satisfies the requirements for obtaining NR 
Interconnection Service, any future transmission service request for 
delivery from the Facility within the Transmission Provider's 
Transmission System of any amount of capacity and/or energy, up to 
the amount initially studied, will not require that any additional 
studies be performed or that any further upgrades associated with 
such Facility be undertaken, regardless of whether or not such 
Facility is ever designated by a Network Generator as a Network 
Resource and regardless of changes in ownership of the Facility. To 
the extent the Generator enters into an arrangement for long term 
transmission service for deliveries from the Facility outside the 
Transmission Provider's Transmission System, such request may 
require additional studies and upgrades in order for the 
Transmission Provider to grant such request.
    Depending on how the cost allocation issue is resolved, the 
Generator may be allocated congestion rights based on the 
construction of upgrades.
    4.2  Provision of Service. Transmission Provider shall provide 
Interconnection Service for the Facility at the Point of 
Interconnection.
    4.3  Generator Balancing Service Arrangements. Generator must 
demonstrate, to the Transmission Provider's reasonable satisfaction, 
that it has satisfied the requirements of this Article 4.3 prior to 
the submission of any schedules for delivery service to such 
Transmission Provider identifying the Facility as the Point of 
Receipt for such scheduled delivery.
    4.3.1  Generator is responsible for ensuring that its actual 
Facility output matches the scheduled delivery from the Facility, on 
an integrated clock hour basis, to the Transmission Provider's 
Transmission System, including ramping into and out of such 
scheduled delivery, as measured at the Point of Interconnection. 
Generator shall arrange for the supply of energy when there is a 
difference between the actual Facility output and the scheduled 
delivery from the Facility (the ``Generator Balancing Service''). 
Generator may satisfy its obligation for making such Generator 
Balancing Service arrangements by: (a) obtaining such service from 
another entity that (i) has generating resources deliverable within 
the applicable Control Area, (ii) agrees to assume responsibility 
for providing such Generator Balancing Service to the Generator, and 
(iii) has appropriate coordination service arrangements or 
agreements with the applicable Control Area that addresses Generator 
Balancing Service for all generating resources for which the entity 
is responsible within the applicable Control Area; (b) committing 
sufficient additional unscheduled generating resources to the 
control of and dispatch by the applicable Control Area operator that 
are capable of supplying energy not supplied by the Generator's 
scheduled Facility, and entering into an appropriate coordination 
services agreement with the applicable Control Area that addresses 
Generator Balancing Service obligations for the Facility; (c) 
entering into an arrangement with another Control Area to 
dynamically schedule the Generator's Facility out of the applicable 
Control Area and into such other Control Area; (d) entering into a 
Generator Balancing Service arrangement with the applicable Control 
Area; or (e) in the event the load/generation balancing function of 
the applicable Control Area is accomplished through the function of 
its market structures approved by FERC, by entering into an 
arrangement consistent with such FERC-approved market structure. In 
the event Generator fails to demonstrate to the Transmission 
Provider that it has otherwise complied with this Article, the 
Generator shall be deemed to have elected to enter into a Generator 
Balancing Service arrangement with the applicable Control Area. 
Nothing in this provision shall prejudice either Party from 
obtaining a FERC-approved tariff addressing its obligations and 
rights with respect to Generator Balancing Service.
    4.4  Performance Standards. Each Party shall perform all of its 
obligations under this Agreement in accordance with Applicable Laws 
and Regulations, Applicable Standards, and Good Utility Practice, 
and to the extent a Party is required or prevented or limited in 
taking any action by such regulations and

[[Page 22267]]

standards, such Party shall not be deemed to be in breach of this 
Agreement for its compliance therewith.
    4.5  No Transmission Delivery Service. The execution of this 
Agreement does not constitute a request for nor the provision of any 
transmission delivery service under the Transmission Provider's 
Tariff or any local distribution service.
    4.6  Generator Provided Services. The services provided by 
Generator under this Agreement are set forth in Article 9.6 and 
Article 14.5.1. Generator shall be paid for such services in 
accordance with Article 11.6.

Article 5. Interconnection Facilities Engineering, Procurement, and 
Construction

    5.1 Options. Unless otherwise mutually agreed to between the 
Parties, Generator shall select the In-Service Date, Initial 
Synchronization Date, and Commercial Operation Date; and one of the 
options set forth below (subparagraph A or subparagraph B) for 
completion of the Transmission Provider Interconnection Facilities/
Network Upgrades and such dates and selected option shall be set 
forth in Appendix B, Time Schedule. The dates selected by Generator 
shall be dates upon which Generator reasonably expects it will be 
ready to begin use of the Transmission Provider Interconnection 
Facilities/Network Upgrades.
    A. The Transmission Provider shall design, procure, and 
construct the Transmission Provider Interconnection Facilities/
Network Upgrades, using Reasonable Efforts to complete the 
Transmission Provider Interconnection Facilities/Network Upgrades by 
the dates set forth in Appendix B, Time Schedule. The Transmission 
Provider shall not be required to undertake any action which is 
inconsistent with its standard safety practices, its material and 
equipment specifications, its design criteria and construction 
procedures, its labor agreements, and Applicable Laws and 
Regulations. In the event the Transmission Provider reasonably 
expects that it will not be able to complete the Transmission 
Provider Interconnection Facilities/Network Upgrades by the 
specified dates, the Transmission Provider will promptly provide 
written notice to the Generator and will undertake Reasonable 
Efforts to meet the earliest dates thereafter.
    B. (i) The Transmission Provider shall design, procure, and 
construct the Transmission Provider Interconnection Facilities/
Network Upgrades by the dates reflected in Appendix B, Time 
Schedule, pursuant to subparagraph 5.1.B(i)(a) or subparagraph 
5.1.B(i)(b) as applicable.
    (a) If the dates designated by Generator are acceptable to 
Transmission Provider, the Transmission Provider shall so notify 
Generator within thirty (30) Calendar Days, and shall assume 
responsibility for the design, procurement and construction of the 
Transmission Provider Interconnection Facilities/Network Upgrades by 
the designated dates. If Transmission Provider subsequently fails to 
complete Transmission Provider Interconnection Facilities by the In-
Service Date, to the extent necessary to provide backfeed service, 
or fails to complete Network Upgrades by the Initial Synchronization 
Date to the extent necessary to allow for Trial Operation at full 
power output, unless other arrangements are made by the Parties for 
such Trial Operation, or fails to complete the Network Upgrades by 
the Commercial Operation Date, as such dates are reflected in 
Appendix B, Time Schedule, Transmission Provider shall pay the 
Generator liquidated damages in accordance with this subparagraph 
5.1.B; provided, however, the dates designated by Generator shall be 
extended day for day for each day that the applicable ISO refuses to 
grant clearances to install equipment.
    (b) If the dates designated by Generator are not acceptable to 
Transmission Provider, the Transmission Provider shall notify the 
Generator within thirty (30) Calendar Days, and, unless the Parties 
agree otherwise, Generator shall have the option to assume 
responsibility for the design, procurement and construction of: (1) 
The Transmission Provider Interconnection Facilities, if 
Transmission Provider has notified Generator that the dates 
designated by Generator associated therewith are not acceptable, or 
(2) stand-alone Network Upgrade projects specified in Appendix A, 
Interconnection Facilities and Network Upgrades, if Transmission 
Provider has notified Generator that the dates designated by 
Generator associated therewith are not acceptable. If the Generator 
elects not to exercise its option to assume such responsibility, 
Generator shall so notify Transmission Provider within thirty (30) 
Calendar Days, and the Parties shall in good faith attempt to 
negotiate terms and conditions (including revision of the specified 
dates and/or liquidated damages, the provision of incentives or the 
procurement and construction of a portion of the Transmission 
Provider Interconnection Facilities/Network Upgrades by Generator) 
pursuant to which Transmission Provider is willing to assume 
responsibility for the design, procurement and construction of the 
Transmission Provider Interconnection Facilities/Network Upgrades 
pursuant to subparagraph 5.1.B(i)(a), above. If the Parties are 
unable to reach agreement on such terms and conditions, Transmission 
Provider shall assume responsibility for the design, procurement and 
construction of the Transmission Provider Interconnection 
Facilities/Network Upgrades pursuant to the terms of subparagraph 
5.1 A.
    (ii) The Parties agree that actual damages to the Generator, in 
the event the TIF/NU are not completed by the dates designated by 
the Generator and accepted by the Transmission Provider pursuant to 
subparagraph 5.1.B(i)(a), above, may include Generator's fixed 
operation and maintenance costs and lost opportunity costs. Such 
actual damages are uncertain and impossible to determine at this 
time. The Parties agree that, because of such uncertainty, any 
liquidated damages paid by the Transmission Provider to the 
Generator shall be an amount equal to \1/2\ of 1% per day of the 
actual cost of the Transmission Provider Interconnection Facilities/
Network Upgrades, in the aggregate, for which the Transmission 
Provider has design, procurement, and construction responsibility, 
in the event that Transmission Provider does not complete any 
portion of the Transmission Provider Interconnection Facilities/
Network Upgrades by the applicable dates, per day. However, in no 
event shall the total liquidated damages exceed 20% of the actual 
cost of the Transmission Provider Interconnection Facilities/Network 
Upgrades for which Transmission Provider has assumed responsibility 
to design, procure and construct. The Parties agree that the 
foregoing payments will be made by the Transmission Provider to the 
Generator as just compensation for the damages caused to the 
Generator, which actual damages are uncertain and impossible to 
determine at this time, and as reasonable liquidated damages, but 
not as a penalty or a method to secure performance of this 
Agreement.
    (iii) No liquidated damages shall be paid to Generator if: (1) 
The Generator is not ready to commence use of the Transmission 
Provider Interconnection Facilities/Network Upgrades for the 
delivery of power to the Facility for Trial Operation or export of 
power from the Facility on the specified dates, unless the Generator 
would have been able to commence use of the Transmission Provider 
Interconnection Facilities/Network Upgrades for the delivery of 
power to the Facility for Trial Operation or export of power from 
the Facility but for Transmission Provider's delay; (2) the 
Transmission Provider's failure to meet the specified dates is the 
result of the action or inaction of the Generator; (3) the Generator 
has assumed responsibility for the design, procurement and 
construction of the Transmission Provider Interconnection 
Facilities/Network Upgrades or has elected not to assume such 
responsibility pursuant to subparagraph 5.1 B.(i)(b), above, unless 
the Parties agree otherwise pursuant to Subparagraph 5.1 B.(i)(b); 
or (4) the Parties have otherwise agreed.
    (iv) If Generator has assumed responsibility for the design, 
procurement and construction of the Transmission Provider 
Interconnection Facilities/Network Upgrades pursuant to Subparagraph 
5.1.B(i)(b): (1) The Generator shall engineer, procure equipment, 
and construct the Transmission Provider Interconnection Facilities/
Network Upgrades (or portions thereof) using Good Utility Practice 
and using standards and specifications provided in advance by the 
Transmission Provider; (2) Generator's engineering, procurement and 
construction of the Transmission Provider Interconnection 
Facilities/Network Upgrades shall comply with all requirements of 
law to which Transmission Provider would be subject in the 
engineering, procurement or construction of the Transmission 
Provider Interconnection Facilities/Network Upgrades; (3) 
Transmission Provider shall review and approve the engineering 
design, acceptance tests of equipment, and the construction of the 
Transmission Provider Interconnection Facilities/Network Upgrades; 
(4) Transmission Provider shall approve and accept for operation the 
Transmission Provider Interconnection Facilities/Network Upgrades to 
the extent engineered, procured, and constructed in accordance with 
this Subparagraph 5.1.B.v; (5) Should any phase

[[Page 22268]]

of the engineering, equipment procurement, or construction of the 
Transmission Provider Interconnection Facilities/Network Upgrades, 
including selection of subcontractors, not meet the standards and 
specifications provided by Transmission Provider, and therefore not 
be approved and accepted for operation, then Generator shall be 
obligated to remedy deficiencies in that portion of the Transmission 
Provider Interconnection Facilities/Network Upgrades.
    5.2  Power System Stabilizers. The Generator shall procure, 
install, maintain and operate power system stabilizers, if and as 
required the System Impact Study. Transmission Provider reserves the 
right to reasonably establish minimal acceptable settings for any 
installed power system stabilizers, subject to the design and 
operating limitations of the Facility.
    5.3  Equipment Procurement. If responsibility for construction 
of the Transmission Provider Interconnection Facilities/Network 
Upgrades is to be borne by the Transmission Provider, then the 
Transmission Provider shall commence design of the Transmission 
Provider Interconnection Facilities/Network Upgrades and procure 
necessary equipment as soon as practicable after all of the 
following conditions are satisfied, unless the Parties otherwise 
agree in writing:
    5.3.1  The Transmission Provider has completed the Facilities 
Study pursuant to the Facilities Study Agreement;
    5.3.2  The Transmission Provider has received written 
authorization to proceed with design and procurement from the 
Generator by the date specified in Appendix B, Time Schedule; and
    5.3.3  The Generator has provided security to the Transmission 
Provider in accordance with Article 11.5 by the dates specified in 
Appendix B, Time Schedule.
    5.4  Construction Commencement. The Transmission Provider shall 
commence construction of the Transmission Provider Interconnection 
Facilities/Network Upgrades for which it is responsible as soon as 
practicable after the following additional conditions are satisfied:
    5.4.1  Approval of the appropriate Governmental Authority has 
been obtained for any facilities requiring regulatory approval;
    5.4.2  Necessary real property rights and rights-of-way have 
been obtained, to the extent required for the construction of a 
discrete aspect of the Transmission Provider Interconnection 
Facilities/Network Upgrades;
    5.4.3  The Transmission Provider has received written 
authorization to proceed with construction from the Generator by the 
date specified in Appendix B, Time Schedule; and
    5.4.4  The Generator has provided security to the Transmission 
Provider in accordance with Article 11.5 by the dates specified in 
Appendix B, Time Schedule.
    5.5  Work Progress. The Parties will keep each other advised 
periodically as to the progress of their respective design, 
procurement and construction efforts. Either Party may, at any time, 
request a progress report from the other Party. If, at any time, the 
Generator determines that the completion of the Transmission 
Provider Interconnection Facilities will not be required until after 
the specified In-Service Date, the Generator will provide written 
notice to the Transmission Provider of such later date upon which 
the completion of the Transmission Provider Interconnection 
Facilities will be required.
    5.6  Information Exchange. As soon as reasonably practicable 
after the Effective Date, the Parties shall exchange information 
regarding the design and compatibility of the Parties' 
Interconnection Facilities and compatibility of the Interconnection 
Facilities with the Transmission Provider's Transmission System, and 
shall work diligently and in good faith to make any necessary design 
changes.
    5.7  Limited Operation. If any of the Transmission Provider 
Interconnection Facilities/Network Upgrades are not reasonably 
expected to be completed prior to the Commercial Operation Date of 
the Facility, Transmission Provider shall, upon the request and at 
the expense of Generator, perform operating studies on a timely 
basis to determine the extent to which the Facility and the 
Generator Interconnection Facilities may operate prior to the 
completion of the Transmission Provider Interconnection Facilities/
Network Upgrades consistent with Applicable Laws and Regulations, 
Applicable Standards, Good Utility Practice, and this Agreement. 
Transmission Provider shall permit Generator to operate the Facility 
and the Generator Interconnection Facilities in accordance with the 
results of such studies.
    5.8  Generator Interconnection Facilities (``GIF''). Generator 
shall, at its expense, design, procure, construct, own and install 
the GIF, as set forth in Appendix A, Interconnection Facilities and 
Network Upgrades.
    5.8.1  Generator Specifications. Generator shall submit final 
specifications for the GIF, including System Protection Facilities, 
to Transmission Provider for review and comment at least ninety (90) 
Calendar Days prior to the Initial Synchronization Date. 
Transmission Provider shall review such specifications to ensure 
that the GIF are compatible with the technical specifications, 
operational control, and safety requirements of the Transmission 
Provider and comment on such specifications within thirty (30) 
Calendar Days of Generator's submission. All specifications provided 
hereunder shall be deemed confidential.
    5.8.2  Transmission Provider's Review. Transmission Provider's 
review of Generator's final specifications shall not be construed as 
confirming, endorsing, or providing a warranty as to the design, 
fitness, safety, durability or reliability of the Facility, or the 
GIF. Generator shall make such changes to the GIF as may reasonably 
be required [by Transmission Provider] to ensure that the GIF are 
compatible with the telemetry, communications, and safety 
requirements of the Transmission Provider.
    5.8.3  GIF Construction. The GIF shall be designed and 
constructed in accordance with Good Utility Practice. Within one 
hundred twenty (120) Calendar Days after the Commercial Operation 
Date, unless the Parties agree on another mutually acceptable 
deadline, the Generator shall deliver to the Transmission Provider 
the following ``as-built'' drawings, information and documents for 
the GIF: a one-line diagram, a site plan showing the Facility and 
the GIF, plan and elevation drawings showing the layout of the GIF, 
a relay functional diagram, relaying AC and DC schematic wiring 
diagrams and relay settings for all facilities associated with the 
Generator's step-up transformers, the facilities connecting the 
Generator to the step-up transformers and the GIF, and the 
impedances (determined by factory tests) for the associated step-up 
transformers and the generators.
    5.9  Transmission Provider Interconnection Facilities 
Construction. The Transmission Provider Interconnection Facilities 
shall be designed and constructed in accordance with Good Utility 
Practice. Upon request, within one hundred twenty (120) Calendar 
Days after the Commercial Operation Date, unless the Parties agree 
on another mutually acceptable deadline, the Transmission Provider 
shall deliver to the Generator the following ``as-built'' drawings, 
information and documents for the Transmission Provider 
Interconnection Facilities: [include appropriate drawings and relay 
diagrams]
    5.10  Access Rights. Upon reasonable notice and supervision by a 
Party, and subject to any required or necessary regulatory 
approvals, a Party (``Granting Party'') shall furnish [at no cost] 
to the other Party (``Access Party'') any rights of use, licenses, 
rights of way and easements with respect to lands owned or 
controlled by the Granting Party and its agents that are necessary 
to enable the Access Party to obtain ingress and egress to 
construct, operate, maintain, repair, test (or witness testing), 
inspect, replace or remove facilities and equipment to: (i) 
interconnect the Facility with the Transmission System; (ii) operate 
and maintain the Facility, the Interconnection Facilities and the 
Transmission System; and (iii) disconnect or remove the Access 
Party's facilities and equipment upon termination of this Agreement. 
In exercising such licenses, rights of way and easements, the Access 
Party shall not unreasonably disrupt or interfere with normal 
operation of the Granting Party's business and shall adhere to the 
safety rules and procedures established in advance, as may be 
changed from time to time, by the Granting Party and provided to the 
Access Party.
    5.11  Lands of Other Property Owners. If any part of the 
Transmission Provider/ Transmission Owner Interconnection Facilities 
and/or Network Upgrades is to be installed on property owned by 
persons other than Generator or Transmission Provider/Transmission 
Owner, the Transmission Provider/Transmission Owner shall at 
Generator's expense use reasonable efforts to procure from such 
persons any rights of use, licenses, rights of way and easements 
that are necessary to construct, operate, maintain, test, inspect, 
replace or remove the Transmission Provider/Transmission Owner 
Interconnection Facilities and/or Network Upgrades upon such 
property. Provided, however, where such property is owned by an 
affiliate of Transmission Provider/

[[Page 22269]]

Transmission Owner, Generator's expense for such procured property 
right shall be limited to the fair market value of the procured 
property right or such other price as required by applicable inter-
affiliate transaction requirements. The Transmission Provider/ 
Transmission Owner shall use its eminent domain authority to 
facilitate the exercise of the Parties' rights and obligations under 
this Agreement, where and to the extent that it is permitted to do 
so.
    5.12  Early Construction of Base Case Facilities. Generator may 
request Transmission Provider to construct, and Transmission 
Provider shall construct, on a schedule that will accommodate 
Generator's In-Service Date, all or any portion of any Network 
Upgrades required for Generator to be interconnected to the 
Transmission System which are included in the base case of the 
Facilities Study for the Generator, and which also are required to 
be constructed for another interconnecting generator, but where such 
construction is not scheduled to be completed in time to achieve 
Generator's In-Service Date.
    5.13  Suspension. Generator reserves the right, upon written 
notice to Transmission Provider, to suspend at any time all work by 
Transmission Provider associated with the construction and 
installation of Transmission Provider Interconnection Facilities 
and/or Network Upgrades required under this Agreement. In such 
event, Generator shall be responsible for all reasonable and 
necessary costs which Transmission Provider (i) has incurred 
pursuant to this Agreement prior to the suspension and (ii) incurs 
in suspending such work, including any costs incurred to perform 
such work as may be necessary to ensure the safety of persons and 
property and the integrity of the Transmission System during such 
suspension and, if applicable, any costs incurred in connection with 
the cancellation or suspension of material, equipment and labor 
contracts which Transmission Provider cannot reasonably avoid; 
provided, however, that prior to canceling or suspending any such 
material, equipment or labor contract, Transmission Provider shall 
obtain Generator's authorization to do so. Transmission Provider 
shall invoice Generator for such costs pursuant to Article 12 and 
shall use due diligence to minimize its costs. In the event 
Generator suspends work by Transmission Provider required under this 
Agreement pursuant to this Article 5.13, and has not requested 
Transmission Provider to recommence the work required under this 
Agreement on or before the expiration of three (3) years following 
commencement of such suspension, this Agreement shall be deemed 
terminated.
    5.14  Taxes.
    5.14.1  Generator Payments Not Taxable. The Parties intend that 
all payments or property transfers made by Generator to Transmission 
Provider for the installation of the Transmission Provider 
Interconnection Facilities and the Network Upgrades shall be non-
taxable, either as contributions to capital, or as an advance, in 
accordance with the Internal Revenue Code and any applicable state 
income tax laws and shall not be taxable as contributions in aid of 
construction or otherwise under the Internal Revenue Code and any 
applicable state income tax laws.
    5.14.2  Representations And Covenants. In accordance with IRS 
Notice 2001-82 and IRS Notice 88-129, Generator represents and 
covenants that (i) ownership of the electricity generated at the 
Facility will pass to another party prior to the transmission of the 
electricity on the Transmission System, (ii) for income tax 
purposes, the amount of any payments and the cost of any property 
transferred to the Transmission Provider for the Transmission 
Provider Interconnection Facilities will be capitalized by Generator 
as an intangible asset and recovered using the straight-line method 
over a useful life of twenty (20) years, and (iii) any portion of 
the Transmission Provider Interconnection Facilities that is a 
``dual-use intertie,'' within the meaning of IRS Notice 88-129, is 
reasonably expected to carry only a de minimis amount of electricity 
in the direction of the Facility. For this purpose, ``de minimis 
amount'' means no more than 5% of the total power flows in both 
directions, calculated in accordance with the ``5% test'' set forth 
in IRS Notice 88-129. At Transmission Provider's request, Generator 
shall provide Transmission Provider with a report from an 
independent engineer confirming its representation in clause (iii), 
above. Transmission Provider represents and covenants that the cost 
of the Transmission Provider Interconnection Facilities paid for by 
Generator will have no net effect on the base upon which rates are 
determined.
    5.14.3  Indemnification for Taxes Imposed Upon Transmission 
Provider. Notwithstanding Article 5.14.1, Generator shall protect, 
indemnify and hold harmless Transmission Provider from income taxes 
imposed against Transmission Provider as the result of payments or 
property transfers made by Generator to Transmission Provider under 
this Agreement, as well as any interest and penalties, other than 
interest and penalties attributable to any delay caused by 
Transmission Provider. Transmission Provider shall not include a 
gross-up for income taxes in the amounts it charges Generator under 
this Agreement unless (i) Transmission Provider has determined, in 
good faith, that the payments or property transfers made by 
Generator to Transmission Provider should be reported as income 
subject to taxation or (ii) any Governmental Authority directs 
Transmission Provider to report payments or property as income 
subject to taxation; provided, however, that Transmission Provider 
may require Generator to provide security, in a form reasonably 
acceptable to Transmission Provider (such as a parental guarantee or 
a letter of credit), in an amount equal to Generator's estimated tax 
liability under this Article 5.14. Generator shall reimburse 
Transmission Provider for such taxes on a fully grossed-up basis, in 
accordance with Article 5.14.4, within thirty (30) Calendar Days of 
receiving written notification from Transmission Provider of the 
amount due, including detail about how the amount was calculated.
    5.14.4  Tax Gross-Up Amount. Generator's liability for taxes 
under this Article 5.14 shall be calculated on a fully grossed-up 
basis. Except as may otherwise be agreed to by the parties, this 
means that Generator will pay Transmission Provider, in addition to 
the amount paid for the Interconnection Facilities and Network 
Upgrades, an amount equal to (1) the current taxes imposed on 
Transmission Provider (``Current Taxes'') on the excess of (a) the 
gross income realized by Transmission Provider as a result of 
payments or property transfers made by Generator to Transmission 
Provider under this Agreement (without regard to any payments under 
this Article 5.14) (the ``Gross Income Amount'') over (b) the 
present value of future tax deductions for depreciation that will be 
available as a result of such payments or property transfers (the 
``Present Value Depreciation Amount''), plus (2) an additional 
amount sufficient to permit the Transmission Provider to receive and 
retain, after the payment of all Current Taxes, an amount equal to 
the net amount described in clause (1). For this purpose, (i) 
Current Taxes shall be computed based on Transmission Provider's 
composite federal and state tax rates at the time the payments or 
property transfers are received and Transmission Provider will be 
treated as being subject to tax at the highest marginal rates in 
effect at that time (the ``Current Tax Rate''), and (ii) the Present 
Value Depreciation Amount shall be computed by discounting 
Transmission Provider's anticipated tax depreciation deductions as a 
result of such payments or property transfers by Transmission 
Provider's current weighted average cost of capital. Thus, the 
formula for calculating Generator's liability to Transmission Owner 
pursuant to this Article 5.14.4 can be expressed as follows: 
(Current Tax Rate  x  (Gross Income Amount-Present Value of Tax 
Depreciation))/(1-Current Tax Rate). Generator's estimated tax 
liability in the event taxes are imposed shall be stated in Appendix 
A, Interconnection Facilities and Network Upgrades.
    5.14.5  Private Letter Ruling or Change or Clarification of Law. 
At Generator's request and expense, Transmission Provider shall file 
with the IRS a request for a private letter ruling as to whether any 
property transferred or sums paid, or to be paid, by Generator to 
Transmission Provider under this Agreement are subject to federal 
income taxation. Generator will prepare the initial draft of the 
request for a private letter ruling, and will certify under 
penalties of perjury that all facts represented in such request are 
true and accurate to the best of Generator's knowledge. Transmission 
Provider and Generator shall cooperate in good faith with respect to 
the submission of such request. Transmission Provider shall keep 
Generator fully informed of the status of such request for a private 
letter ruling and shall execute either a privacy act waiver or a 
limited power of attorney, in a form acceptable to the IRS, that 
authorizes Generator to participate in all discussions with the IRS 
regarding such request for a private letter ruling. Transmission 
Provider shall allow Generator to attend all meetings with IRS 
officials about the request and shall permit Generator to prepare 
the initial drafts of any follow-up letters in connection with the 
request. If the private letter ruling concludes that such

[[Page 22270]]

transfers or sums are not subject to federal income taxation, or a 
clarification of or change in law results in Transmission Provider 
determining in good faith that such transfers or sums are not 
subject to federal income taxation, Generator's obligations under 
this Article 5.14 shall be reduced accordingly.
    5.14.6  Contests. In the event any Governmental Authority 
determines that Transmission Provider's receipt of payments or 
property constitutes income that is subject to taxation, 
Transmission Provider shall notify Generator, in writing, within 
thirty (30) Calendar Days of receiving notification of such 
determination by a Governmental Authority. Upon the timely written 
request by Generator and at Generator's sole expense, Transmission 
Provider shall appeal, protest, seek abatement of, or otherwise 
oppose such determination. Upon Generator's written request and sole 
expense, Transmission Provider shall file a claim for refund with 
respect to any taxes paid under this Article 5.14, whether or not it 
has received such a determination. Transmission Provider reserves 
the right to make all decisions with regard to the prosecution of 
such appeal, protest, abatement or other contest, including the 
selection of counsel and compromise or settlement of the claim, but 
Transmission Provider shall keep Generator informed, shall consider 
in good faith suggestions from Generator about the conduct of the 
contest, and shall reasonably permit Generator or a Generator 
representative to attend contest proceedings. Generator shall pay to 
Transmission Provider on a periodic basis, as invoiced by 
Transmission Provider, Transmission Provider's documented reasonable 
costs of prosecuting such appeal, protest, abatement or other 
contest. Transmission Provider will not be required to appeal or 
seek further review beyond one level of judicial review. At any time 
during the contest, Transmission Provider may agree to a settlement 
either with Generator's consent or after obtaining written advice 
from nationally-recognized tax counsel, selected by Transmission 
Provider, but reasonably acceptable to Generator, that the proposed 
settlement represents a reasonable settlement given the hazards of 
litigation. Generator's obligation shall be based on the amount of 
the settlement agreed to by Generator, or if a higher amount, so 
much of the settlement that is supported by the written advice from 
nationally-recognized tax counsel selected under the terms of the 
preceding sentence. Any settlement without Generator's consent or 
such written advice will relieve Generator from any obligation to 
indemnify Transmission Provider for the tax at issue in the contest.
    5.14.7  Refund. In the event that (a) a private letter ruling is 
issued to Transmission Provider which holds that any amount paid or 
the value of any property transferred by Generator to Transmission 
Provider under the terms of this Agreement is not subject to federal 
income taxation, (b) any legislative change or administrative 
announcement, notice, ruling or other determination makes it 
reasonably clear to Transmission Provider in good faith that any 
amount paid or the value of any property transferred by Generator to 
Transmission Provider under the terms of this Agreement is not 
taxable to Transmission Provider, (c) any abatement, appeal, 
protest, or other contest results in a determination that any 
payments or transfers made by Generator to Transmission Provider are 
not subject to federal income tax, or (d) if Transmission Provider 
receives a refund from any taxing authority for any overpayment of 
tax attributable to any payment or property transfer made by 
Generator to Transmission Provider pursuant to this Agreement, 
Transmission Provider shall promptly refund to Generator the 
following: (i) any payment made by Generator under this Article 5.14 
for taxes that is attributable to the amount determined to be non-
taxable, together with interest thereon (ii) on any amounts paid by 
Generator to Transmission Provider for such taxes which Transmission 
Provider did not submit to the taxing authority, calculated in 
accordance with the methodology set forth in FERC's regulations at 
18 CFR Sec. 35.19a(a)(2)(ii) from the date payment was made by 
Generator to the date Transmission Provider refunds such payment to 
Generator, and (iii) with respect to any such taxes paid by 
Transmission Provider, any refund or credit Transmission Provider 
receives or to which it may be entitled from any Governmental 
Authority, interest (or that portion thereof attributable to the 
payment described in clause (i), above) owed to the Transmission 
Provider for such overpayment of taxes (including any reduction in 
interest otherwise payable by Transmission Provider to any 
Governmental Authority resulting from an offset or credit); 
provided, however, that Transmission Provider will remit such amount 
promptly to Generator only after and to the extent that Transmission 
Provider has received a tax refund, credit or offset from any 
Governmental Authority for any applicable overpayment of income tax 
related to the Transmission Provider Interconnection Facilities. The 
intent of this provision is to leave both parties, to the extent 
practicable, in the event that no taxes are due with respect to any 
payment for Interconnection Facilities and Network Upgrades 
hereunder, in the same position they would have been in had no such 
tax payments been made.
    5.14.8  Taxes Other Than Income Taxes. Upon the timely request 
by Generator, and at Generator's sole expense, Transmission Provider 
shall appeal, protest, seek abatement of, or otherwise contest any 
tax (other than federal or state income tax) asserted or assessed 
against Transmission Provider for which Generator may be required to 
reimburse Transmission Provider under the terms of this Agreement. 
Generator and Transmission Provider shall cooperate in good faith 
with respect to any such contest. Unless the payment of such taxes 
is a prerequisite to an appeal or abatement or cannot be deferred, 
no amount shall be payable by Generator to Transmission Provider for 
such taxes until they are assessed by a final, non-appealable order 
by any court or agency of competent jurisdiction. In the event that 
a tax payment is withheld and ultimately due and payable after 
appeal, Generator will be responsible for all taxes, interest and 
penalties, other than penalties attributable to any delay caused by 
Transmission Provider.
    5.14.9  Transmission Owners Who Are Not Transmission Providers. 
If the Transmission Provider is not the same entity as the 
Transmission Owner, then (i) all references in this Article 5.14 to 
Transmission Provider shall be deemed also to refer to and to 
include the Transmission Owner, as appropriate, and (ii) this 
Agreement shall not become effective until such Transmission Owner 
shall have agreed in writing to assume all of the duties and 
obligations of the Transmission Provider under this Article 5.14 of 
this Agreement.
    5.15  Tax Status. Each Party shall cooperate with the other to 
maintain the other Party's tax status. Nothing in this Agreement is 
intended to adversely affect any Transmission Provider's tax exempt 
status with respect to the issuance of bonds including, but not 
limited to, Local Furnishing Bonds.
    5.16  Modification.
    5.16.1  General. Either Party may undertake modifications to its 
facilities. If a Party plans to undertake a modification that 
reasonably may be expected to affect the other Party's facilities, 
that Party shall provide to the other Party sufficient information 
regarding such modification so that the other Party may evaluate the 
potential impact of such modification prior to commencement of the 
work. Such information shall be deemed to be confidential hereunder 
and shall include information concerning the timing of such 
modifications and whether such modifications are expected to 
interrupt the flow of electricity from the Facility. The Party 
desiring to perform such work shall provide the relevant drawings, 
plans, and specifications to the other Party at least ninety (90) 
Calendar Days in advance of the commencement of the work or such 
shorter period upon which the Parties may agree, which agreement 
shall not unreasonably be withheld, conditioned or delayed. In the 
case of Generator modifications that do not require Generator to 
submit an Interconnection Request, Transmission Provider shall 
provide, within thirty (30) Calendar Days (or such other time as the 
Parties may agree), an estimate of any additional modifications to 
the Transmission System, Transmission Provider Interconnection 
Facilities or Network Upgrades necessitated by such Generator 
modification and a good faith estimate of the costs thereof.
    5.16.2  Standards. Any additions, modifications, or replacements 
made to a Party's facilities shall be designed, constructed and 
operated in accordance with this Agreement, Good Utility Practice 
and the National Electric Safety Code in effect at the time.
    5.16.3  Modification Costs. Generator shall not be responsible 
for the costs of any additions, modifications, or replacements that 
Transmission Provider makes to the Transmission Provider 
Interconnection Facilities or the Transmission System to facilitate 
the interconnection of a third party to the Transmission Provider 
Interconnection Facilities or the Transmission System, or to

[[Page 22271]]

provide transmission service under the Transmission Provider Tariff. 
Generator shall be responsible for the costs of any additions, 
modifications, or replacements to the Generator Interconnection 
Facilities that may be necessary to maintain or upgrade such 
Generator Interconnection Facilities consistent with Applicable Laws 
and Regulations, Applicable Standards or Good Utility Practice.

Article 6. Testing and Inspection

    6.1  Pre-Commercial Operation Date Testing and Modifications. 
Prior to the Commercial Operation Date, the Transmission Provider 
shall test the Transmission Provider Interconnection Facilities and 
Network Upgrades and Generator shall test the Facility and the 
Generator Interconnection Facilities to ensure their safe and 
reliable operation. Similar testing may be required after initial 
operation. Each Party shall make any modifications to its facilities 
that are found to be necessary as a result of such testing. 
Generator shall bear the cost of all such testing and modifications. 
Generator shall generate test energy at the Facility only if it has 
arranged for the delivery of such test energy.
    6.2  Post-Commercial Operation Date Testing and Modifications. 
Each Party shall at its own expense perform routine inspection and 
testing of its facilities and equipment in accordance with Good 
Utility Practice as may be necessary to ensure the continued 
interconnection of the Facility with the Transmission System in a 
safe and reliable manner. Each Party shall have the right, upon 
advance written notice, to require reasonable additional testing of 
the other Party's facilities, at the requesting Party's expense, as 
may be in accordance with Good Utility Practice.
    6.3  Right to Observe Testing. Each Party shall notify the other 
Party in advance of its performance of tests of its Interconnection 
Facilities. The other Party has the right, at its own expense, to 
observe such testing.
    6.4  Right to Inspect. Each Party shall have the right, but 
shall have no obligation to: (i) Observe the other Party's tests 
and/or inspection of any of its System Protection Facilities and 
other protective equipment, including power system stabilizers; (ii) 
review the settings of the other Party's System Protection 
Facilities and other protective equipment; and (iii) review the 
other Party's maintenance records relative to the Interconnection 
Facilities, the System Protection Facilities and other protective 
equipment. A Party may exercise these rights from time to time as it 
deems necessary upon reasonable notice to the other Party. The 
exercise or non-exercise by a Party of any such rights shall not be 
construed as an endorsement or confirmation of any element or 
condition of the Interconnection Facilities or the System Protection 
Facilities or other protective equipment or the operation thereof, 
or as a warranty as to the fitness, safety, desirability, or 
reliability of same. Any information that Transmission Provider 
obtains through the exercise of any of its rights under this Article 
6.4 shall be deemed to be confidential hereunder.

Article 7. Metering

    7.1  General. Unless otherwise agreed by the Parties, 
Transmission Provider shall install Metering Equipment at the Point 
of Interconnection prior to any operation of the Facility and shall 
own, operate, test and maintain such Metering Equipment. Power flows 
to and from the Facility shall be measured at or, at Transmission 
Provider's option, compensated to, the Point of Interconnection. 
Transmission Provider shall provide metering quantities, in analog 
and/or digital form, to Generator upon request. Generator shall bear 
all reasonable documented costs associated with the purchase, 
installation, operation, testing and maintenance of the Metering 
Equipment.
    7.2  Check Meters. Generator, at its option and expense, may 
install and operate, on its premises and on its side of the Point of 
Interconnection, one or more check meters to check Transmission 
Provider's meters. Such check meters shall be for check purposes 
only and shall not be used for the measurement of power flows for 
purposes of this Agreement, except as provided in Article 7.3 below. 
The check meters shall be subject at all reasonable times to 
inspection and examination by Transmission Provider or its designee. 
The installation, operation and maintenance thereof, however, shall 
be performed entirely by Generator in accordance with Good Utility 
Practice.
    7.3  Standards. Transmission Provider shall install, calibrate, 
and test revenue quality Metering Equipment in accordance with 
applicable ANSI standards. To the extent this Article 7 conflicts 
with the manuals, standards or guidelines of the Applicable 
Reliability Council regarding interchange metering and transactions, 
the manuals, standards and guidelines of such Applicable Reliability 
Council shall control.
    7.4  Testing of Metering Equipment. Transmission Provider shall 
inspect and test all Transmission Provider-owned Metering Equipment 
upon installation and at least once every two (2) years thereafter. 
If requested to do so by Generator, Transmission Provider shall, at 
Generator's expense, inspect or test Metering Equipment more 
frequently than every two (2) years. Transmission Provider shall 
give reasonable notice of the time when any inspection or test shall 
take place, and Generator may have representatives present at the 
test or inspection. If at any time Metering Equipment is found to be 
inaccurate or defective, it shall be adjusted, repaired or replaced 
at Generator's expense, in order to provide accurate metering, 
unless the inaccuracy or defect is due to owner failure to maintain, 
then owner shall pay. If Metering Equipment fails to register, or if 
the measurement made by Metering Equipment during a test varies by 
more than [one percent] from the measurement made by the standard 
meter used in the test, Transmission Provider shall adjust the data 
by correcting all measurements made by the inaccurate meter for the 
period during which the inaccurate measurements were made, if the 
period can be determined. If the period cannot be determined, the 
adjustment shall be for the period immediately preceding the test of 
the Metering Equipment equal to one-half the time from the date of 
the last previous test of the Metering Equipment.
    7.5  Metering Data. At Generator's expense, the metered data 
shall be telemetered to one or more locations designated by 
Transmission Provider and one or more locations designated by 
Generator. The metered data provided by Generator shall be used, 
under normal operating conditions, as the official measurement of 
the amount of energy delivered from the Facility to the Point of 
Interconnection.

Article 8. Communications

    8.1  Generator Obligations. Generator shall maintain 
satisfactory operating communications with Transmission Provider's 
system dispatcher or representative designated by Transmission 
Provider. Generator shall provide standard voice line, dedicated 
voice line and facsimile communications at its Facility control room 
or central dispatch facility through use of the public telephone 
system. Generator shall also provide the dedicated data circuit(s) 
necessary to provide Generator data to Transmission Provider as set 
forth in Appendix E, Security Arrangement Details. The data 
circuit(s) shall extend from the Facility to the location(s) 
specified by Transmission Provider. Any required maintenance of such 
communications equipment shall be performed by Generator. 
Operational communications shall be activated and maintained under, 
but not be limited to, the following events: system paralleling or 
separation, scheduled and unscheduled shutdowns, equipment 
clearances, and hourly and daily load data.
    8.2  Remote Terminal Unit. Prior to any operation of the 
Facility, a Remote Terminal Unit, or equivalent data collection and 
transfer equipment acceptable to both Parties, shall be installed by 
Generator, or by Transmission Provider at Generator's expense, to 
gather accumulated and instantaneous data to be telemetered to the 
location(s) designated by Transmission Provider through use of a 
dedicated point-to-point data circuit(s) as indicated in Article 
8.1. The communication protocol for the data circuit(s) shall be 
specified by Transmission Provider. Instantaneous bi-directional 
analog real power and reactive power flow information must be 
telemetered directly to the location(s) specified by Transmission 
Provider.
    Each Party will promptly advise the other Party if it detects or 
otherwise learns of any metering, telemetry or communications 
equipment errors or malfunctions that require the attention and/or 
correction by the other Party. The Party owning such equipment shall 
correct such error or malfunction as soon as reasonably feasible.
    8.3  No Annexation. Any and all equipment placed on the premises 
of a Party shall be and remain the property of the Party providing 
such equipment regardless of the mode and manner of annexation or 
attachment to real property, unless otherwise mutually agreed by the 
Parties.

Article 9. Operations

    9.1  General. Each Party shall comply with the Interconnection 
Guidelines set out in

[[Page 22272]]

Appendix G, Interconnection Guidelines, to this Agreement. Each 
Party shall provide to the other Party all information that may 
reasonably be required by the other Party to comply with Applicable 
Laws and Regulations and Applicable Standards.
    9.2  Control Area Notification. At least three months before 
Initial Synchronization Date, the Generator shall notify the 
Transmission Provider in writing of the Control Area in which it 
will be located. After the Initial Synchronization Date, Generator 
has the right to designate a different Control Area. In either 
event, Transmission Provider shall use Reasonable Efforts to 
accommodate such request as soon as practicable, but shall do so no 
later than six months from the date the Generator provided 
notification. If the Generator elects to be located in a Control 
Area other than the Control Area in which the Transmission Provider 
is located, all necessary arrangements, including but not limited to 
those set forth in Article 7 and Article 8 of this Agreement, and 
remote control area generator interchange agreements, if applicable, 
and the appropriate measures under such agreements, shall be 
executed and implemented prior to the placement of the Facility in 
the other Control Area. The Parties will diligently cooperate with 
one another to enable such agreements and arrangements to be 
executed and implemented on a schedule necessary to meet the 
Generator's request ``at Generator's expense''. If the Facility is 
not operated as part of Transmission Provider's Control Area, in no 
event shall this Agreement prohibit, prevent, or otherwise limit the 
ability of Generator to operate the Facility in accordance with the 
requirements of the Control Area of which it is part, and the 
Parties shall negotiate in good faith to amend this Agreement as 
necessary or appropriate.
    9.3  Transmission Provider Obligations. Transmission Provider 
shall cause the Transmission System and the Transmission Provider 
Interconnection Facilities to be operated, maintained and controlled 
in a safe and reliable manner and in accordance with this Agreement. 
Transmission Provider may provide operating instructions to 
Generator consistent with this Agreement and Transmission Provider's 
operating protocols and procedures as they may change from time to 
time. Transmission Provider will consider changes to its operating 
protocols and procedures proposed by Generator. Generator shall not 
be obligated to follow Transmission Provider's instructions to the 
extent the instructions would have a material adverse impact on the 
safe and reliable operation of Generator's facilities. Upon request, 
Generator shall provide Transmission Provider with documentation of 
any such alleged material adverse impact.
    9.4  Generator Obligations. Generator shall at its own expense 
operate, maintain and control the Facility and the Generator 
Interconnection Facilities in a safe and reliable manner and in 
accordance with this Agreement. Generator shall operate the Facility 
and the Generation Interconnection Facilities in accordance with all 
applicable requirements of the Control Area of which it is part, as 
such requirements are set forth in Appendix C, Interconnection 
Details, of this Agreement. Appendix C, Interconnection Details, 
will be modified to reflect changes to the requirements as they may 
change from time to time. Either Party may request that the other 
Party provide copies of the requirements set forth in Appendix C, 
Interconnection Details, of this Agreement.
    9.5  Start-Up and Synchronization. Consistent with Transmission 
Provider Interconnection Guidelines and the Parties' mutually 
acceptable procedures, the Generator is responsible for the proper 
synchronization of the Facility to the Transmission Provider System.
    9.6  Reactive Power.
    9.6.1  Power Factor Design Criteria. Generator shall design the 
Facility to maintain a composite power delivery at continuous rated 
power output at the Point of Interconnection at a power factor 
within the range of 0.97 leading to 0.95 lagging, unless 
Transmission Provider has established different requirements that 
apply to all generators in the Control Area on a comparable basis.
    9.6.2   Voltage Schedules. Once the Generator has synchronized 
the Facility with the Transmission System, Transmission Provider 
shall require Generator to operate the Facility to produce or absorb 
reactive power within the design limitations of the Facility set 
forth in Article 24 pursuant to voltage schedules, reactive power 
schedules or power factor schedules. Transmission Provider's 
schedules shall treat all sources of reactive power in the Control 
Area in an equitable and not unduly discriminatory manner. 
Transmission Provider shall exercise Reasonable Efforts to provide 
Generator with such schedules at least one (1) day in advance, and 
may make changes to such schedules as necessary to maintain the 
reliability of the Transmission System. Generator shall operate the 
Generating Facility to maintain the specified output voltage or 
power factor at the Point of Interconnection within the design 
limitations of the Facility set forth in Article 24. If Generator is 
unable to maintain the specified voltage or power factor, it shall 
promptly notify the System Operator.
    9.6.2.1  Governors and Regulators. Whenever the Facility is 
operated in parallel with the Transmission System and the speed 
governors (if installed on the generating unit pursuant to Good 
Utility Practice) and voltage regulators are capable of operation, 
Generator shall operate the Facility with its speed governors and 
voltage regulators in automatic operation. If the Facility's speed 
governors and voltage regulators are not capable of such automatic 
operation, the Generator shall immediately notify Transmission 
Provider's system operator, or its designated representative, and 
ensure that such Facility's reactive power production or absorption 
(measured in MVARs) are within the design capability of the 
Facility's generating unit(s) and steady state stability limits. 
Generator shall not cause its Facility to disconnect automatically 
or instantaneously from the Transmission System or trip any 
generating unit comprising the Facility for an under or over 
frequency condition unless the abnormal frequency condition persists 
for a time period beyond the limits set forth in ANSI/IEEE Standard 
C37.106, or such other standard as applied to other generators in 
the Control Area on a comparable basis.
    9.6.3   Payment for Reactive Power. Any obligation of 
Transmission Provider to pay Generator for reactive power that 
Generator provides or absorbs from the Facility shall be pursuant to 
Article 11.6 or such other agreement to which the Parties have 
otherwise agreed. To the extent that no rate schedule is in effect 
at the time the Generator is required to provide or absorb any 
Reactive Power under this Agreement, the Transmission Provider 
agrees to compensate the Generator in such amount as would have been 
due the Generator had the rate schedule been in effect at the time 
service commenced; provided, however, that such rate schedule must 
be filed at FERC or other appropriate Governmental Authority within 
sixty (60) Calendar Days of the commencement of service.]
    9.7  Outages, Interruptions, and Disconnection.
    9.7.1  Outages.
    9.7.1.1  Outage Authority and Coordination. Each Party may in 
accordance with Good Utility Practice in coordination with the other 
Party remove from service any of its respective Interconnection 
Facilities or Network Upgrades that may impact the other Party's 
facilities as necessary to perform maintenance or testing or to 
install or replace equipment. Absent an Emergency Condition, the 
Party scheduling a removal of such facility(ies) from service will 
use [Reasonable Efforts] to schedule such removal on a date and time 
mutually acceptable to both Parties. In all circumstances any Party 
planning to remove such facility(ies) from service shall use 
Reasonable Efforts to minimize the effect on the other Party of such 
removal.
    9.7.1.2  Outage Schedules. The Transmission Provider shall post 
scheduled outages of its transmission facilities on the OASIS. 
Generator shall submit its planned maintenance schedules for the 
Facility to Transmission Provider for a minimum of a rolling twenty-
four month period. Generator shall update its planned maintenance 
schedules as necessary. Transmission Provider may request Generator 
to reschedule its maintenance as necessary to maintain the 
reliability of the Transmission System; provided, however, adequacy 
of generation supply shall not be a criterion in determining 
Transmission System reliability. Transmission Provider shall 
compensate Generator for any costs of rescheduling such maintenance.
    9.7.1.3  Outage Restoration. If an outage on a Party 
Interconnection Facilities or Network Upgrades adversely affects the 
other Party's facilities, the Party that owns or controls the 
facility that is out of service shall use Reasonable Efforts to 
promptly restore such facility(ies) to a normal operating condition 
consistent with the nature of the outage.
    9.7.2  Continuity of Service. If required by Good Utility 
Practice to do so, Transmission Provider may require Generator to 
curtail, interrupt or reduce deliveries of electricity if such 
delivery of electricity would adversely

[[Page 22273]]

affect Transmission Provider's ability to perform such activities as 
are necessary to safely and reliably operate and maintain the 
Transmission System. The following provisions shall apply to any 
curtailment, interruption or reduction permitted under this Article 
9.7.2:
    9.7.2.1  The curtailment, interruption, or reduction shall 
continue only for so long as reasonably necessary under Good Utility 
Practice;
    9.7.2.2  Any such curtailment, interruption, or reduction shall 
be made on an equitable, non-discriminatory basis with respect to 
all generators directly connected to the Transmission System;
    9.7.2.3  When the curtailment, interruption, or reduction must 
be made under circumstances which do not allow for advance notice, 
Transmission Provider shall notify Generator by telephone as soon as 
practicable of the reasons for the curtailment, interruption, or 
reduction, and, if known, its expected duration. Telephone 
notification shall be followed by written notification as soon as 
practicable;
    9.7.2.4  Except during the existence of an Emergency Condition, 
when the curtailment, interruption, or reduction can be scheduled, 
Transmission Provider shall notify Generator in advance regarding 
the timing of such scheduling and further notify Generator of the 
expected duration. Transmission Provider shall schedule the 
curtailment or interruption to coincide with the scheduled outages 
of the Facility, and if not possible, Transmission Provider shall 
use Good Utility Practices to schedule the curtailment or 
interruption during periods of low demand;
    9.7.2.5  The Parties shall cooperate and coordinate with each 
other to the extent necessary in order to restore the Facility, 
Interconnection Facilities, and the Transmission System to their 
normal operating state, consistent with system conditions and Good 
Utility Practice; and,
    9.7.3  Under-Frequency Load Shed Event. The Transmission System 
is designed to automatically activate a load-shed program as 
described in the Interconnection Guidelines in the event of an 
under-frequency system disturbance. Generator shall implement an 
under-frequency relay set point for the Facility as described in the 
Interconnection Guidelines to ensure ``ride through'' capability of 
the Transmission System, to the extent allowed by equipment 
limitations or warranties.
    9.7.4  System Protection and Other Controls Requirements.
    9.7.4.1  Protection and System Quality. Generator shall, at its 
expense, install, operate and maintain System Protection Facilities 
as a part of the Facility and/or the Generator Interconnection 
Facilities. Transmission Provider shall install at Generator's 
expense any System Protection Facilities that may be required on the 
Transmission Provider Interconnection Facilities or the Transmission 
System as a result of the interconnection of the Facility and the 
Generator Interconnection Facilities.
    9.7.4.2  Each Party's facilities shall be designed to isolate 
any fault or abnormality on those facilities that would negatively 
affect the other Party's system or the other entities connected to 
the Transmission Provider's Transmission System.
    9.7.4.3  Each Party shall be responsible for protection of its 
facilities consistent with Good Utility Practice.
    9.7.4.4  Each Party's protective relay design shall incorporate 
the necessary test switches to perform the tests required in Article 
6. The required test switches will be placed such that they allow 
operation of lockout relays while preventing breaker failure schemes 
from operating and causing unnecessary breaker operations and/or the 
tripping of the Generator's units.
    9.7.4.5  Each Party will test, operate and maintain System 
Protection Facilities in accordance with Good Utility Practice.
    9.7.4.6  Prior to the In-Service Date, and again prior to the 
Commercial Operation Date, each Party or its agent shall perform a 
complete calibration test and functional trip test of the System 
Protection Facilities. At intervals suggested by Good Utility 
Practice and following any apparent malfunction of the System 
Protection Facilities, each Party shall perform both calibration and 
functional trip tests of its System Protection Facilities. These 
tests do not require the tripping of any in-service generation unit. 
These tests do, however, require that all protective relays and 
lockout contacts be activated.
    9.7.5  Requirements for Protection. In compliance with the 
Interconnection Guidelines and Applicable Standards, Generator shall 
provide, install, own, and maintain relays, circuit breakers and all 
other devices necessary to promptly remove any fault contribution of 
the Facility to any short circuit occurring on the Transmission 
System not otherwise isolated by Transmission Provider equipment. 
Such protective equipment shall include, without limitation, a 
disconnecting device or switch with load-interrupting capability 
located between the Facility and the Transmission System at a site 
selected upon mutual agreement (not to be unreasonably withheld, 
conditioned or delayed) of the Parties. Generator shall be 
responsible for protection of the Facility and Generator's other 
equipment from such conditions as negative sequence currents, over-
or under-frequency, sudden load rejection, over-or under-voltage, 
and generator loss-of-field. Generator shall be solely responsible 
to disconnect the Facility and Generator's other equipment if 
conditions on the Transmission System could adversely affect the 
Facility.
    9.7.6  Power Quality. Neither Party's facilities shall cause 
excessive voltage flicker nor introduce excessive distortion to the 
sinusoidal voltage or current waves as defined by ANSI Standard 
C84.1-1989, in accordance with IEEE Standard 519, or any applicable 
superseding electric industry standard including the Interconnection 
Guidelines. In the event of a conflict between ANSI Standard C84.1-
1989, or any applicable superseding electric industry standard, and 
the Interconnection Guidelines, ANSI Standard C84.1-1989, or the 
applicable superseding electric industry standard, shall control.
    9.8  Switching and Tagging Rules. Each Party shall provide the 
other Party a copy of its Switching and Tagging Rules that are 
applicable to the other Party's activities. Such Switching and 
Tagging Rules shall be developed on a non-discriminatory basis. The 
Parties shall comply with applicable Switching and Tagging Rules, as 
amended from time to time, in obtaining clearances for work or for 
switching operations on equipment.
    9.9  Use of Interconnection Facilities by Third Parties.
    9.9.1  Purpose of Interconnection Facilities. Except as may be 
required by Applicable Laws or Regulations, or as otherwise agreed 
to among the Parties, the Interconnection Facilities shall be 
constructed for the sole purpose of interconnecting the Facility to 
the Transmission System and shall be used for no other purpose.
    9.9.2  Third Party Users. If required by Applicable Laws or 
Regulations or if the Parties mutually agree, such agreement not to 
be unreasonably withheld, to allow one or more third parties to use 
the Transmission Provider Interconnection Facilities, or any part 
thereof, Generator will be entitled to compensation for the capital 
expenses it incurred in connection with the Interconnection 
Facilities based upon the pro rata use of the Interconnection 
Facilities by Transmission Provider, all third party users, and 
Generator, in accordance with Applicable Laws and Regulations or 
upon some other mutually-agreed upon methodology. In addition, cost 
responsibility for ongoing costs, including operation and 
maintenance costs associated with the Interconnection Facilities, 
will be allocated between Generator and any third party users based 
upon the pro rata use of the Interconnection Facilities by 
Transmission Provider, all third party users, and Generator, in 
accordance with Applicable Laws and Regulations or upon some other 
mutually agreed upon methodology. If the issue of such compensation 
or allocation cannot be resolved through such negotiations, it shall 
be submitted to FERC for resolution.
    9.10  Data Exchange. The Parties will cooperate with one another 
in the analysis of disturbances to either the Facility or the 
Transmission Provider's Transmission System by gathering and 
providing access to any information relating to any disturbance, 
including information from oscillography, protective relay targets, 
breaker operations and sequence of events records.

Article 10. Maintenance

    10.1  Transmission Provider Obligations. Transmission Provider 
shall maintain the Transmission System and the Transmission Provider 
Interconnection Facilities in a safe and reliable manner and in 
accordance with this Agreement.
    10.2  Generator Obligations. Generator shall maintain the 
Facility and the Generator Interconnection Facilities in a safe and 
reliable manner and in accordance with this Agreement.
    10.3  Coordination. The Parties shall confer regularly to 
coordinate the planning, scheduling and performance of preventive 
and corrective maintenance on the Facility and the Interconnection 
Facilities.
    10.4  Secondary Systems. Each Party shall cooperate with the 
other in the inspection,

[[Page 22274]]

maintenance, and testing of control or power circuits that operate 
below 600 volts, AC or DC, including, but not limited to, any 
hardware, control or protective devices, cables, conductors, 
electric raceways, secondary equipment panels, transducers, 
batteries, chargers, and voltage and current transformers that 
directly affect the operation of a Party's facilities and equipment 
which may reasonably be expected to impact the other Party. Each 
Party shall provide advance notice to the other Party before 
undertaking any work on such circuits, especially on electrical 
circuits involving circuit breaker trip and close contacts, current 
transformers, or potential transformers.
    10.5  Operating and Maintenance Expenses. Subject to the 
provisions herein addressing the use of facilities by others, and 
except for operations and maintenance expenses associated with 
modifications made for providing interconnection or transmission 
service to a third party and such third party pays for such 
expenses, Generator shall be responsible for all reasonable expenses 
including overheads, associated with: (1) owning, operating, 
maintaining, repairing, and replacing Generator Interconnection 
Facilities; and (2) operation, maintenance, repair and replacement 
of Transmission Provider Interconnection Facilities.

Article 11. Performance Obligation

    11.1  Generator Interconnection Facilities. Generator shall 
design, procure, construct, install, own and/or control the 
Generator Interconnection Facilities described in Appendix A, 
Interconnection Facilities and Network Upgrades, at its sole 
expense.
    11.2  Transmission Provider Interconnection Facilities. 
Transmission Owner shall design, procure, construct, install, own 
and/or control the Transmission Owner Interconnection Facilities 
described in Appendix A, Interconnection Facilities and Network 
Upgrades, at the sole expense of the Generator.
    11.3  Network Upgrades. Transmission Owner shall design, 
procure, construct, install, and own the Network Upgrades described 
in Appendix A, Interconnection Facilities and Network Upgrades. 
Unless the Transmission Provider elects to fund the capital for such 
facilities, they shall be solely funded by the Generator. In either 
case, the Generator shall be responsible for all costs related to 
Network Upgrades, subject to Article 11.4.
    11.4  Transmission Credits.
    11.4.1  Refund of Amounts Advanced for Network Upgrades. 
Generator shall be entitled to a cash refund, equal to the total 
amount paid to Transmission Provider for the Network Upgrades, 
including any tax gross-up or other tax-related payments, and not 
refunded to Generator pursuant to Article 5.14.7 or otherwise, to be 
paid to Generator on a dollar-for-dollar basis, as payments are made 
under the Transmission Provider Tariff for transmission services 
with respect to the Facility. Notwithstanding the foregoing, 
Transmission Provider shall refund all amounts paid by Generator for 
the Network Upgrades, together with interest, within five (5) years 
from the date the Network Upgrades are placed in service, so long as 
Transmission Provider continues to receive payments for transmission 
service with respect to the Facility during such period. Any refund 
shall include interest calculated in accordance with the methodology 
set forth in FERC's regulations at 18 CFR Sec. 35.19a(a)(2)(ii) from 
the date of any payment for Network Upgrades through the date on 
which the Generator receives a refund of such payment pursuant to 
this subparagraph. Generator may assign such refund rights to any 
person.
    11.4.2  Notwithstanding any other provision of this Agreement, 
nothing herein shall be construed as relinquishing or foreclosing 
any rights, including but not limited to firm transmission rights, 
capacity rights, transmission congestion rights, or transmission 
credits, that the Generator, shall be entitled to, now or in the 
future under any other agreement or tariff as a result of, or 
otherwise associated with, the transmission capacity, if any, 
created by the Network Upgrades, including the right to obtain 
refunds or transmission credits for transmission service that is not 
associated with the Facility.
    11.5  Financial Security Arrangements. At least ninety (90) 
Calendar Days prior to the commencement of the procurement, 
installation, or construction of discrete Transmission Provider 
Interconnection Facilities/Network Upgrade projects, Generator shall 
provide Transmission Provider, at Generator's option, a guarantee, a 
surety bond, letter of credit or other form of security that is 
reasonably acceptable to Transmission Provider and is consistent 
with the Uniform Commercial Code of the jurisdiction identified in 
Article 15.2.1. Such security for payment shall be in an amount 
sufficient to cover the costs for constructing, procuring and 
installing the applicable Transmission Provider Interconnection 
Facilities/Network Upgrade projects and shall be reduced on a 
dollar-for-dollar basis for payments made to Transmission Provider 
under this Agreement during its term.
    11.5.1  Provision of Security. At least thirty (30) Calendar 
Days prior to the commencement of the procurement, installation, or 
construction of discrete Transmission Provider Interconnection 
Facilities/Network Upgrade projects, Generator shall provide 
Transmission Provider, at Generator's option, a guarantee, a surety 
bond, letter of credit or other form of security that is reasonably 
acceptable to Transmission Provider and is consistent with the 
Uniform Commercial Code of the jurisdiction identified in Article 
15.2.1. Such security for payment shall be in an amount sufficient 
to cover the costs for constructing, procuring and installing the 
applicable Transmission Provider Interconnection Facilities/Network 
Upgrade projects and shall be reduced on a dollar-for-dollar basis 
for payments made to Transmission Provider under this Agreement 
during its term. In addition:
    11.5.1.1  The guarantee must be made by an entity that meets the 
creditworthiness requirements of Transmission Provider, and contain 
terms and conditions that guarantee payment of any amount that may 
be due from Generator, up to an agreed-to maximum amount.
    11.5.1.2  The letter of credit must be issued by a financial 
institution reasonably acceptable to Transmission Provider and must 
specify a reasonable expiration date.
    11.5.1.3  The surety bond must be issued by an insurer 
reasonably acceptable to Transmission Provider and must specify a 
reasonable expiration date.
    11.6  Generator Compensation. If Transmission Provider requests 
or directs Generator to provide a service pursuant to Articles 9.6.2 
(Voltage Schedules), or 13.5.1 of this Agreement, Transmission 
Provider shall compensate Generator in accordance with Generator's 
applicable rate schedule then in effect unless the provision of such 
service(s) is subject to an ISO/RTO FERC-approved rate schedule. 
Generator shall serve Transmission Provider or ISO/RTO with any 
filing of a proposed rate schedule at the time of such filing with 
FERC.
    11.6.1  Generator Compensation for Actions During Emergency 
Condition. Transmission Provider [or ISO/RTO] shall compensate 
Generator for its provision of real and reactive power and other 
Emergency Condition services that Generator provides to support the 
Transmission System during an Emergency Condition in accordance with 
Article 11.6.

Article 12. Invoice

    12.1  General. Each Party shall submit to the other Party, on a 
monthly basis, invoices of amounts due for the preceding month. Each 
invoice shall state the month to which the invoice applies and fully 
describe the services and equipment provided. The Parties may 
discharge mutual debts and payment obligations due and owing to each 
other on the same date through netting, in which case all amounts a 
Party owes to the other Party under this Agreement, including 
interest payments or credits, shall be netted so that only the net 
amount remaining due shall be paid by the owing Party.
    12.2  Final Invoice. Within six months after completion of the 
construction of the Transmission Provider Interconnection Facilities 
and the Network Upgrades, Transmission Provider shall provide an 
invoice of the final cost of the construction of the Transmission 
Provider Interconnection Facilities and the Network Upgrades and 
shall set forth such costs in sufficient detail to enable Generator 
to compare the actual costs with the estimates and to ascertain 
deviations, if any, from the cost estimates. Transmission Provider 
shall refund to Generator any amount by which the actual payment by 
Generator for estimated costs exceeds the actual costs of 
construction within thirty (30) Calendar Days of the issuance of 
such final construction invoice.
    12.3  Payment. Invoices shall be rendered to the paying Party at 
the address specified in Article 16. The Party receiving the invoice 
shall pay the invoice within thirty (30) Calendar Days of receipt. 
All payments shall be made in immediately available funds payable to 
the other Party, or by wire transfer to a bank named and account 
designated by the invoicing Party. Payment of invoices by Generator 
will not constitute a waiver of any rights or claims Generator may 
have under this Agreement.

[[Page 22275]]

    12.4  Disputes. In the event of a billing dispute between 
Transmission Provider and Generator, Transmission Provider shall 
continue to provide Interconnection Service under this Agreement as 
long as Generator: (i) continues to make all payments not in 
dispute; and (ii) pays to Transmission Provider or into an 
independent escrow account the portion of the invoice in dispute, 
pending resolution of such dispute. If Generator fails to meet these 
two requirements for continuation of service, then Transmission 
Provider may provide notice to Generator of a Breach pursuant to 
Article 17. Within thirty (30) Calendar Days after the resolution of 
the dispute, the Party that owes money to the other Party shall pay 
the amount due with interest calculated in accord with the 
methodology set forth in FERC's Regulations at 18 CFR 
Sec. 35.19a(a)(2)(ii).

Article 13. Emergencies

    13.1  Definition. ``Emergency Condition'' shall mean a condition 
or situation: (i) that in the judgment of the Party making the claim 
is imminently likely to endanger life or property; or (ii) that, in 
the case of Transmission Provider, is imminently likely (as 
determined in a non-discriminatory manner) to cause a material 
adverse effect on the security of, or damage to the Transmission 
System, the Transmission Provider Interconnection Facilities or the 
Transmission Systems of others to which the Transmission System is 
directly connected; or (iii) that, in the case of Generator, is 
imminently likely (as determined in a non-discriminatory manner) to 
cause a material adverse effect on the security of, or damage to, 
the Facility or the Generator Interconnection Facilities. System 
restoration and black start shall be considered Emergency 
Conditions; provided, that Generator is not obligated by this 
Agreement to possess black start capability. Any condition or 
situation that results from a lack of sufficient generating capacity 
to meet load requirements that results solely from economic 
conditions shall not, on its own, constitute an Emergency Condition.
    13.2  Obligations. Each Party shall comply with the Emergency 
Condition procedures of the applicable ISO/RTO, NERC, the Applicable 
Reliability Council, Applicable Laws and Regulations, and any 
emergency procedures agreed to by the Operating Committee.
    13.3  Notice. Transmission Provider shall notify Generator 
promptly when it becomes aware of an Emergency Condition that 
affects the Transmission Provider Interconnection Facilities or the 
Transmission System that may reasonably be expected to affect 
Generator's operation of the Facility or the Generator 
Interconnection Facilities. Generator shall notify Transmission 
Provider promptly when it becomes aware of an Emergency Condition 
that affects the Facility or the Generator Interconnection 
Facilities that may reasonably be expected to affect the 
Transmission System or the Transmission Provider Interconnection 
Facilities. To the extent information is known, the notification 
shall describe the Emergency Condition, the extent of the damage or 
deficiency, the expected effect on the operation of Generator's or 
Transmission Provider's facilities and operations, its anticipated 
duration and the corrective action taken and/or to be taken. The 
initial notice shall be followed as soon as practicable with written 
notice.
    13.4  Immediate Action. Unless, in Generator's reasonable 
judgment, immediate action is required, Generator shall obtain the 
consent of Transmission Provider, such consent to not be 
unreasonably withheld, prior to performing any manual switching 
operations at the Facility or the Generation Interconnection 
Facilities in response to an Emergency Condition either declared by 
the Transmission Provider or otherwise regarding the Transmission 
System.
    13.5  Transmission Provider Authority.
    13.5.1  General. Transmission Provider may take whatever actions 
or inactions with regard to the Transmission System or the 
Transmission Provider Interconnection Facilities it deems necessary 
during an Emergency Condition in order to (i) preserve public health 
and safety, (ii) preserve the reliability of the Transmission System 
or the Transmission Provider Interconnection Facilities, (iii) limit 
or prevent damage, and (iv) expedite restoration of service. 
Transmission Provider shall use Reasonable Efforts to minimize the 
effect of such actions or inactions on the Facility or the 
Generation Interconnection Facilities. [Transmission Provider may, 
on the basis of technical considerations, require the Facility to 
mitigate an Emergency Condition by taking actions necessary and 
limited in scope to remedy the Emergency Condition, including, but 
not limited to, directing Generator to shut-down, start-up, increase 
or decrease the real or reactive power output of the Facility; 
implementing a curtailment, reduction or disconnection pursuant to 
Article 14.5.2; directing the Generator to assist with blackstart 
(if available) or restoration efforts; or altering the outage 
schedules of the Facility and the Generator Interconnection 
Facilities. Generator shall comply with all of Transmission 
Provider's operating instructions concerning Facility real power 
and/or reactive power output within the manufacturer's design 
limitations of the Facility's equipment that is in service and 
physically available for operation at the time, in compliance with 
applicable laws and regulations.]
    13.5.2  Curtailment, Reduction, and Disconnection. Transmission 
Provider may curtail or reduce Interconnection Service or disconnect 
the Facility or the Generation Interconnection Facilities, when such 
curtailment, reduction or disconnection is necessary under Good 
Utility Practice due to Emergency Conditions. These rights are 
separate and distinct from any right of curtailment of the 
Transmission Provider pursuant to the Transmission Provider Tariff. 
When the Transmission Provider can schedule the curtailment, 
reduction or disconnection in advance, Transmission Provider shall 
notify Generator of the reasons, timing and expected duration of the 
curtailment, reduction or disconnection. Transmission Provider shall 
attempt to schedule such curtailment, reduction or disconnection to 
coincide with the scheduled outages of the Facility or, if that is 
not possible, to schedule such curtailment, reduction or 
disconnection during non-peak load periods. Any curtailment, 
reduction or disconnection shall continue only for so long as 
reasonably necessary under Good Utility Practice. The Parties shall 
cooperate with each other to restore the Facility, the 
Interconnection Facilities, and the Transmission System to their 
normal operating state as soon as practicable consistent with Good 
Utility Practice.
    13.6  Generator Authority. Generator may take whatever actions 
or inactions with regard to the Facility or the Generator 
Interconnection Facilities it deems necessary during an Emergency 
Condition in order to (i) preserve public health and safety, (ii) 
preserve the reliability of the Facility or the Generator 
Interconnection Facilities, (iii) limit or prevent damage, and (iv) 
expedite restoration of service. Generator shall use Reasonable 
Efforts to minimize the effect of such actions or inactions on the 
Transmission System and the Transmission Provider Interconnection 
Facilities. Transmission Provider shall use Reasonable Efforts to 
assist Generator in such actions.
    13.7  Limited Liability. Except as otherwise provided in Article 
14.7 of this Agreement, neither Party shall be liable to the other 
for any action it takes in responding to an Emergency Condition so 
long as such action is made in good faith and is consistent with 
Good Utility Practice.

Article 14. Governing Law and Applicable Tariffs

    14.1  Regulatory Requirements. Each Party's obligations under 
this Agreement shall be subject to its receipt of any required 
approval or certificate from one or more Governmental Authorities in 
the form and substance satisfactory to the applying Party, or the 
Party making any required filings with, or providing notice to, such 
Governmental Authorities, and the expiration of any time period 
associated therewith. Each Party shall in good faith seek and use 
its Reasonable Efforts to obtain such other approvals. Nothing in 
this Agreement shall require Generator to take any action that could 
result in its inability to obtain, or its loss of, status or 
exemption under the Federal Power Act or the Public Utility Holding 
Company Act of 1935, as amended.
    14.2  Governing Law and Applicable Tariffs.
    14.2.1  The validity, interpretation and performance of this 
Agreement and each of its provisions shall be governed by the laws 
of the State where the Point of Interconnection is located, without 
regard to its conflicts of law principles.
    14.2.2  This Agreement is subject to all Applicable Laws and 
Regulations.
    14.2.3  Each Party expressly reserves the right to seek changes 
in, appeal, or otherwise contest any laws, orders, rules, or 
regulations of a Governmental Authority.

Article 15. Notices

    15.1  General. Unless otherwise provided in this Agreement, any 
notice, demand or request required or permitted to be given by

[[Page 22276]]

either Party to the other and any instrument required or permitted 
to be tendered or delivered by either Party in writing to the other 
shall be effective when delivered and may be so given, tendered or 
delivered, by recognized national courier, or by depositing the same 
with the United States Postal Service with postage prepaid, for 
delivery by certified or registered mail, addressed to the Party, or 
personally delivered to the Party, at the address set out below:
    Transmission Provider:
[To be supplied.]
    Generator:
[To be supplied.]
    Either Party may change the notice information in Appendix D, 
Standard Generator Interconnection Agreement, by giving five (5) 
Business Days written notice prior to the effective date of the 
change.
    15.2  Billings and Payments. Billings and payments shall be sent 
to the addresses set out below:
    Transmission Provider:
[To be supplied.]
    Generator:
    15.3  Alternative Forms of Notice. Any notice or request 
required or permitted to be given by either Party to the other and 
not required by this Agreement to be given in writing may be so 
given by telephone, facsimile or email to the telephone numbers and 
email addresses set out below:
    Transmission Provider:
    Generator:
    15.4  Operations and Maintenance Notice. Each Party shall notify 
the other Party in writing of the identity of the person(s) that it 
designates as the point(s) of contact with respect to the 
implementation of Articles 9 and 10.

Article 16. Force Majeure

    16.1  Force Majeure. An event of Force Majeure means any act of 
God, labor disturbance, act of the public enemy, war, insurrection, 
riot, fire, storm or flood, explosion, breakage or accident to 
machinery or equipment, any Curtailment, order, regulation or 
restriction imposed by governmental military or lawfully established 
civilian authorities, or any other caused beyond a Party's control. 
A Force Majeure event does not include an act of negligence or 
intentional wrongdoing. Neither Party will be considered in default 
as to any obligation hereunder if prevented from fulfilling the 
obligation due to an event of Force Majeure. However, a Party whose 
performance under this is hindered by an event of Force Majeure 
shall make all reasonable efforts to perform its obligations 
hereunder.

Article 17. Default

17.1  Default

    17.1.1  General. The term ``Default'' shall mean the failure of 
either Party to perform any obligation in the time or manner 
provided in this Agreement. No Default shall exist where such 
failure to discharge an obligation (other than the payment of money) 
is the result of Force Majeure as defined in this Agreement or the 
result of an act or omission of the other Party. Upon a Default, the 
non-defaulting Party shall give written notice of such Default to 
the defaulting Party. Except as provided in Article 17.1.2, the 
defaulting Party shall have thirty (30) Calendar Days from receipt 
of the Default notice within which to cure such Default; provided 
however, if such Default is not capable of cure within thirty (30) 
Calendar Days, the defaulting Party shall commence such cure within 
thirty (30) Calendar Days after notice and continuously and 
diligently complete such cure within ninety (90) Calendar Days from 
receipt of the Default notice; and, if cured within such time, the 
Default specified in such notice shall cease to exist.
    17.1.2  Right to Terminate. If a Default is not cured as 
provided in this Article, or if a Default is not capable of being 
cured within the period provided for herein, the non-defaulting 
Party shall have the right to terminate this Agreement by written 
notice at any time until cure occurs, and be relieved of any further 
obligation hereunder and, whether or not that Party terminates this 
Agreement, to recover from the defaulting Party all amounts due 
hereunder, plus all other damages and remedies to which it is 
entitled at law or in equity. The provisions of this Article will 
survive termination of this Agreement.

Article 18. Indemnity

    18.1  Indemnity. The Parties shall at all times indemnify, 
defend, and save the other Party harmless from, any and all damages, 
losses, claims, including claims and actions relating to injury to 
or death of any person or damage to property, demand, suits, 
recoveries, costs and expenses, court costs, attorney fees, and all 
other obligations by or to third parties, arising out of or 
resulting from the other Party's performance of obligations under 
this Agreement on behalf of the indemnifying Party, except in cases 
of negligence or intentional wrongdoing by the indemnifying Party.

Article 19. Assignment

    19.1  Assignment. This Agreement may be assigned by either Party 
only with the written consent of the other; provided that either 
Party may assign this Agreement without the consent of the other 
Party to any affiliate of the assigning Party with an equal or 
greater credit rating and with the legal authority and operational 
ability to satisfy the obligations of the assigning Party under this 
Agreement; and provided further that the Generator shall have the 
right to assign this Agreement, without the consent of the 
Transmission Provider, for collateral security purposes to aid in 
providing financing for the Facility, provided that the Generator 
will require any secured party, trustee or mortgagee to notify the 
Transmission Provider of any such assignment. Any financing 
arrangement entered into by the Generator pursuant to this Article 
will provide that prior to or upon the exercise of the secured 
party's, trustee's or mortgagee's assignment rights pursuant to said 
arrangement, the secured creditor, the trustee or mortgagee will 
notify the Transmission Provider of the date and particulars of any 
such exercise of assignment right(s). Any attempted assignment that 
violates this Article is void and ineffective. Any assignment under 
this Agreement shall not relieve a Party of its obligations, nor 
shall a Party's obligations be enlarged, in whole or in part, by 
reason thereof. Where required, consent to assignment will not be 
unreasonably withheld, conditioned or delayed.

Article 20. Severability

    20.1  Severability. If any provision in this Agreement is 
finally determined to be invalid, void or unenforceable by any court 
or other Governmental Authority having jurisdiction, such 
determination shall not invalidate, void or make unenforceable any 
other provision, agreement or covenant of this Agreement; [provided 
that if the Generator (or any third-party, but only if such third-
party is not acting at the direction of the Transmission Provider) 
seeks and obtains such a final determination with respect to any 
provision of Article 5.1.B, then none of the provisions of Article 
5.1.B shall thereafter have any force or effect and the Parties' 
rights and obligations shall be governed solely by Article 5.1.A].

Article 21. Comparability

    21.1  Comparability. The Parties will comply with all applicable 
comparability and code of conduct laws, rules and regulations, as 
amended from time to time.

Article 22. Confidentiality

    22.1  Confidentiality. ``Confidential Information'' shall mean 
any confidential, proprietary or trade secret information of a plan, 
specification, pattern, procedure, design, device, list, concept, 
policy or compilation relating to the present or planned business of 
a Party, which is designated as confidential by the Party supplying 
the information, whether conveyed orally, electronically, in 
writing, through inspection, or otherwise. Confidential Information 
shall include, without limitation, all information relating to a 
Party's technology, research and development, business affairs, and 
pricing, and any information supplied by either of the Parties to 
the other prior to the execution of this Agreement. Information is 
Confidential Information only if it is clearly designated or marked 
in writing as confidential on the face of the document, or, if the 
information is conveyed orally or by inspection, if the Party 
providing the information orally informs the Party receiving the 
information that the information is confidential.
    22.1.1  Term. During the term of this Agreement, and for a 
period of three (3) years after the expiration or termination of 
this Agreement, except as otherwise provided in this Article 22, 
each Party shall hold in confidence and shall not disclose to any 
person Confidential Information.
    22.1.2  Scope. Confidential Information shall not include 
information that the receiving Party can demonstrate: (1) Is 
generally available to the public other than as a result of a 
disclosure by the receiving Party; (2) was in the lawful possession 
of the receiving Party on a non-confidential basis before receiving 
it from the of the receiving Party, after due inquiry, was under no 
obligation to the other Party to keep disclosing Party; (3) was 
supplied to the receiving Party without restriction by a third

[[Page 22277]]

party, who, to the knowledge such information confidential; (4) was 
independently developed by the receiving Party without reference to 
Confidential Information of the disclosing Party; (5) is, or 
becomes, publicly known, through no wrongful act or omission of the 
receiving Party or Breach of this Agreement; or (6) is required, in 
accordance with Article 22.1.7, Order of Disclosure, to be disclosed 
by any Governmental Authority or is otherwise required to be 
disclosed by law or subpoena, or is necessary in any legal 
proceeding establishing rights and obligations under this Agreement. 
Information designated as Confidential Information will no longer be 
deemed confidential if the Party that designated the information as 
confidential notifies the other Party that it no longer is 
confidential.
    22.1.3  Release of Confidential Information. Neither Party shall 
release or disclose Confidential Information to any other person, 
except to its employees, consultants, or to parties who may be or 
considering providing financing to or equity participation with 
Generator, or to potential purchasers or assignees of Generator, on 
a need-to-know basis in connection with this Agreement, unless such 
person has first been advised of the confidentiality provisions of 
this Article 22 and has agreed to comply with such provisions. 
Notwithstanding the foregoing, a Party providing Confidential 
Information to any person shall remain primarily responsible for any 
release of Confidential Information in contravention of this Article 
22.
    22.1.4  Rights. Each Party retains all rights, title, and 
interest in the Confidential Information that each Party discloses 
to the other Party. The disclosure by each Party to the other Party 
of Confidential Information shall not be deemed a waiver by either 
Party or any other person or entity of the right to protect the 
Confidential Information from public disclosure.
    22.1.5  No Warranties. By providing Confidential Information, 
neither Party makes any warranties or representations as to its 
accuracy or completeness. In addition, by supplying Confidential 
Information, neither Party obligates itself to provide any 
particular information or Confidential Information to the other 
Party nor to enter into any further agreements or proceed with any 
other relationship or joint venture.
    22.1.6  Standard of Care. Each Party shall use at least the same 
standard of care to protect Confidential Information it receives as 
it uses to protect its own Confidential Information from 
unauthorized disclosure, publication or dissemination. Each Party 
may use Confidential Information solely to fulfill its obligations 
to the other Party under this Agreement or its regulatory 
requirements.
    22.1.7  Order of Disclosure. If a court or a Government 
Authority or entity with the right, power, and apparent authority to 
do so requests or requires either Party, by subpoena, oral 
deposition, interrogatories, requests for production of documents, 
administrative order, or otherwise, to disclose Confidential 
Information, that Party shall provide the other Party with prompt 
notice of such request(s) or requirement(s) so that the other Party 
may seek an appropriate protective order or waive compliance with 
the terms of this Agreement. Notwithstanding the absence of a 
protective order or waiver, the Party may disclose such Confidential 
Information which, in the opinion of its counsel, the Party is 
legally compelled to disclose. Each Party will use reasonable 
efforts to obtain reliable assurance that confidential treatment 
will be accorded any Confidential Information so furnished.
    22.1.8  Termination of Agreement. Upon termination of this 
Agreement for any reason, each Party shall, within ten (10) Calendar 
Days of receipt of a written request from the other Party, use 
reasonable efforts to destroy, erase, or delete (with such 
destruction, erasure, and deletion certified in writing to the other 
Party) or return to the other Party, without retaining copies 
thereof, any and all written or electronic Confidential Information 
received from the other Party.
    22.1.9  Remedies. The Parties agree that monetary damages would 
be inadequate to compensate a Party for the other Party's breach of 
its obligations under this Article 22. Each Party accordingly agrees 
that the other Party shall be entitled to equitable relief, by way 
of injunction or otherwise, if the first Party breaches or threatens 
to breach its obligations under this Article 22, which equitable 
relief shall be granted without bond or proof of damages, and the 
receiving Party shall not plead in defense that there would be an 
adequate remedy at law. Such remedy shall not be deemed an exclusive 
remedy for the breach of this Article 22, but shall be in addition 
to all other remedies available at law or in equity. The Parties 
further acknowledge and agree that the covenants contained herein 
are necessary for the protection of legitimate business interests 
and are reasonable in scope. No Party, however, shall be liable for 
indirect, incidental, or consequential or punitive damages of any 
nature or kind resulting from or arising in connection with this 
Article 22.
    22.1.10  Disclosure to FERC or its Staff. Notwithstanding 
anything in this Article 22 to the contrary, if FERC or its staff, 
during the course of an investigation or otherwise, requests 
information from one of the Parties that is otherwise required to be 
maintained in confidence pursuant to this Agreement, the Party shall 
provide the requested information to FERC or its staff, within the 
time provided for in the request for information. In providing the 
information to FERC or its staff, the Party may, consistent with 18 
CFR Section 388.112, request that the information be treated as 
confidential and non-public by FERC and its staff and that the 
information be withheld from public disclose. The Party shall notify 
the other Party to the Agreement when it is notified by FERC or its 
staff that a request has been received, at which time either of the 
Parties may respond before such information would be made public, 
pursuant to 18 CFR Section 388.112.
    22.1.11  Subject to the exception in Article 22.1.10, any 
information that a Party claims is competitively sensitive, 
commercial or financial information under this Agreement 
(``Confidential Information'') shall not be disclosed by the other 
Party to any person not employed or retained by the other Party, 
except to the extent disclosure is (i) required by law; (ii) 
reasonably deemed by the disclosing Party to be required to be 
disclosed in connection with a dispute between or among the Parties, 
or the defense of litigation or dispute; (iii) otherwise permitted 
by consent of the other Party, such consent not to be unreasonably 
withheld; or (iv) necessary to fulfill its obligations under this 
Agreement or as a transmission service provider or a Control Area 
operator including disclosing the Confidential Information to the 
ISO. The Party asserting confidentiality shall notify the other 
Party in writing of the information it claims is confidential. Prior 
to any disclosures of the other Party's Confidential Information 
under this subparagraph, or if any third party or Governmental 
Authority makes any request or demand for any of the information 
described in this subparagraph, the disclosing Party agrees to 
promptly notify the other Party in writing and agrees to assert 
confidentiality and cooperate with the other Party in seeking to 
protect the Confidential Information from public disclosure by 
confidentiality agreement, protective order or other reasonable 
measures.
    22.1.12  This provision shall not apply to any information that 
was or is hereafter in the public domain (except as a result of a 
breach of this provision).

Article 23. Environmental Releases

    23.1  Each Party shall notify the other Party, first orally and 
then in writing, of the release of any Hazardous Substances, any 
asbestos or lead abatement activities, or any type of remediation 
activities related to the Facility or the Interconnection 
Facilities, each of which may reasonably be expected to affect the 
other Party. The notifying Party shall: (i) Provide the notice as 
soon as practicable, provided such Party makes a good faith effort 
to provide the notice no later than twenty-four hours after such 
Party becomes aware of the occurrence; and (ii) promptly furnish to 
the other Party copies of any publicly available reports filed with 
any Governmental Authorities addressing such events.

Article 24. Information Requirements

    24.1  Information Acquisition. Transmission Provider and the 
Generator shall submit specific information regarding the electrical 
characteristics of their respective facilities to each other as 
described below and in accordance with Applicable Standards.
    24.2  Information Submission by Transmission Provider. The 
initial information submission by Transmission Provider shall occur 
no later than one hundred eighty (180) Calendar Days prior to Trial 
Operation and shall include Transmission System information 
necessary to allow the Generator to select equipment and meet any 
system protection and stability requirements, unless otherwise 
mutually agreed to by both Parties. On a monthly basis Transmission 
Provider shall provide Generator a status report on the construction 
and installation of Transmission Provider Interconnection Facilities 
and Network

[[Page 22278]]

Upgrades, including, but not limited to, the following information: 
progress to date: (1) A description of the activities since the last 
report; (2) a description of the action items for the next period; 
and (3) the delivery status of equipment ordered.
    24.3  Updated Information Submission by Generator. The updated 
information submission by the Generator, including manufacturer 
information, shall occur no later than one hundred eighty (180) 
Calendar Days prior to the Trial Operation. Generator shall submit a 
completed copy of the generator data requirements contained in 
Transmission Provider's GIS request procedure. It shall also include 
any additional information provided to Transmission Provider for the 
Feasibility and Facilities Study [Conform with Interconnection 
Procedures]. Information in this submission shall be the most 
current Facility design or expected performance data. Information 
submitted for stability models shall be compatible with Transmission 
Provider standard models. If there is no compatible model, the 
Generator will work with a consultant mutually agreed to by the 
Parties to develop and supply a standard model and associated 
information.
    If the Generator's data is materially different from what was 
originally provided to Transmission Provider pursuant to the 
Interconnection Study Agreement between Transmission Provider and 
Generator, then Transmission Provider will conduct appropriate 
studies to determine the impact on the Transmission Provider 
Transmission System based on the actual data submitted pursuant to 
this Article 24.3. The Generator shall not begin Trial Operation 
until such studies are completed.
    24.4  Information Supplementation. Prior to the Operation Date, 
the Parties shall supplement their information submissions described 
above in this Article 24 with any and all ``as-built'' Facility 
information or ``as-tested'' performance information that differs 
from the initial submissions or, alternatively, written confirmation 
that no such differences exist. The Generator shall conduct open 
circuit ``step voltage'' tests on the generator to verify proper 
operation of the generator's automatic voltage regulator. Unless 
otherwise agreed, the test conditions shall include: (1) Generator 
at synchronous speed; (2) automatic voltage regulator on and in 
voltage control mode; and (3) a five percent (5%) change in 
generator terminal voltage initiated by a change in the voltage 
regulators reference voltage. Recordings showing the responses of 
generator terminal and field voltages shall be provided to 
Transmission Provider. In the event that direct recordings of these 
voltages is impractical, recordings of other voltages or currents 
that mirror the response of the generator's terminal or field 
voltage are acceptable if information necessary to translate these 
alternate quantities to actual generator terminal or field voltages 
is provided. The Generator may elect to provide recordings for only 
one generator when the other generators at the site are found to 
have identical design and response characteristics. Subsequent to 
the Operation Date, the Generator shall provide Transmission 
Provider any information changes due to equipment replacement, 
repair, or adjustment. Transmission Provider shall provide the 
Generator any information changes due to equipment replacement, 
repair or adjustment in the directly connected substation or any 
adjacent Transmission Provider-owned substation that may affect the 
Generator Interconnection Facilities equipment ratings, protection 
or operating requirements. The Parties shall provide such 
information no later than thirty (30) Calendar Days after the date 
of the equipment replacement, repair or adjustment.

Article 25. Information Access and Audit Rights

    25.1  Information access. Each Party (the ``disclosing Party'') 
shall make available to the other Party information that is in the 
possession of the disclosing Party and is necessary in order for the 
other Party to: (i) verify the costs incurred by the disclosing 
Party for which the other Party is responsible under this Agreement; 
and (ii) carry out its obligations and responsibilities under this 
Agreement. The Parties shall not use such information for purposes 
other than those set forth in this Article 25.1 and to enforce their 
rights under this Agreement.
    25.2  Reporting of Non-Force Majeure Events. Each Party (the 
``notifying Party'') shall notify the other Party when the notifying 
Party becomes aware of its inability to comply with the provisions 
of this Agreement for a reason other than a Force Majeure event. The 
Parties agree to cooperate with each other and provide necessary 
information regarding such inability to comply, including the date, 
duration, reason for the inability to comply, and corrective actions 
taken or planned to be taken with respect to such inability to 
comply. Notwithstanding the foregoing, notification, cooperation or 
information provided under this Article shall not entitle the Party 
receiving such notification to allege a cause for anticipatory 
breach of this Agreement.
    25.3  Audit Rights. Subject to the requirements of 
confidentiality under Article 22 of this Agreement, each Party shall 
have the right, during normal business hours, and upon prior 
reasonable notice to the other Party, to audit at its own expense 
the other Party's accounts and records pertaining to either Party's 
performance or either Party's satisfaction of obligations under this 
Agreement. Such audit rights shall include audits of the other 
Party's costs, calculation of invoiced amounts, the Transmission 
Provider's efforts to allocate responsibility for the provision of 
reactive support to the Transmission System, the Transmission 
Provider's efforts to allocate responsibility for curtailment or 
reduction of generation on the Transmission System, and each Party's 
actions in an Emergency Condition. Any audit authorized by this 
Article shall be performed at the offices where such accounts and 
records are maintained and shall be limited to those portions of 
such accounts and records that relate to each Party's performance 
and satisfaction of obligations under this Agreement. Each Party 
shall keep such accounts and records for a period equivalent to the 
audit rights periods described in Article 25.4.
    25.4  Audit Rights Periods.
    25.4.1  Audit Rights Period for Construction-Related Accounts 
and Records. Accounts and records related to the design, 
engineering, procurement, and construction of Transmission Provider 
Interconnection Facilities and Network Upgrades shall be subject to 
audit for a period of twenty-four months following Transmission 
Provider's issuance of a final invoice in accordance with Article 
12.2.
    25.4.2  Audit Rights Period for All Other Accounts and Records. 
Accounts and records related to either Party's performance or 
satisfaction of all obligations under this Agreement other than 
those described in Article 25.4.1 shall be subject to audit as 
follows: (i) for an audit relating to cost obligations, the 
applicable audit rights period shall be twenty-four months after the 
auditing Party's receipt of an invoice giving rise to such cost 
obligations; and (ii) for an audit relating to all other 
obligations, the applicable audit rights period shall be twenty-four 
months after the event for which the audit is sought.
    25.5  Audit Results. If an audit by a Party determines that an 
overpayment or an underpayment has occurred, a notice of such 
overpayment or underpayment shall be given to the other Party 
together with those records from the audit which support such 
determination.

Article 26. Subcontractors

    26.1  General. Nothing in this Agreement shall prevent a Party 
from utilizing the services of any subcontractor as it deems 
appropriate to perform its obligations under this Agreement; 
provided, however, that each Party shall require its subcontractors 
to comply with all applicable terms and conditions of this Agreement 
in providing such services and each Party shall remain primarily 
liable to the other Party for the performance of such subcontractor.
    26.2  Responsibility of Principal. The creation of any 
subcontract relationship shall not relieve the hiring Party of any 
of its obligations under this Agreement. The hiring Party shall be 
fully responsible to the other Party for the acts or omissions of 
any subcontractor the hiring Party hires as if no subcontract had 
been made; provided, however, that in no event shall the 
Transmission Provider be liable for the actions or inactions of the 
Generator or its subcontractors with respect to obligations of the 
Generator under Article 5 of this Agreement. Any applicable 
obligation imposed by this Agreement upon the hiring Party shall be 
equally binding upon, and shall be construed as having application 
to, any subcontractor of such Party.
    26.3  No Limitation by Insurance. The obligations under this 
Article 26 will not be limited in any way by any limitation of 
subcontractor's insurance.

Article 27. Disputes

    27.1  Submission. In the event either Party has a dispute, or 
asserts a claim, that arises out of or in connection with this 
Agreement or its performance, such Party (the ``disputing Party'') 
shall provide the other Party with written notice of the dispute or

[[Page 22279]]

claim (``Notice of Dispute''). Such dispute or claim shall be 
referred to a designated senior representative of each Party for 
resolution on an informal basis as promptly as practicable after 
receipt of the Notice of Dispute by the other Party. In the event 
the designated representatives are unable to resolve the claim or 
dispute within thirty (30) Calendar Days of the other Party's 
receipt of the Notice of Dispute, such claim or dispute may, upon 
mutual agreement of the Parties, be submitted to arbitration and 
resolved in accordance with the arbitration procedures set forth 
below. In the event the Parties do not agree to submit such claim or 
dispute to arbitration, each Party may exercise whatever rights and 
remedies it may have in equity or at law consistent with the terms 
of this Agreement.
    27.2  External Arbitration Procedures. Any arbitration initiated 
under this Agreement shall be conducted before a single neutral 
arbitrator appointed by the Parties. If the Parties fail to agree 
upon a single arbitrator within ten (10) Calendar Days of the 
submission of the dispute to arbitration, each Party shall choose 
one arbitrator who shall sit on a three-member arbitration panel. 
The two arbitrators so chosen shall within twenty (20) Calendar Days 
select a third arbitrator to chair the arbitration panel. In either 
case, the arbitrators shall 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 (except prior 
arbitration). The arbitrator(s) shall provide each of the Parties an 
opportunity to be heard and, except as otherwise provided herein, 
shall conduct the arbitration in accordance with the Commercial 
Arbitration Rules of the American Arbitration Association 
(``Arbitration Rules'') and any applicable FERC regulations or RTO 
rules; provided, however, in the event of a conflict between the 
Arbitration Rules and the terms of this Article 27, the terms of 
this Article 27 shall prevail.
    27.3  Arbitration Decisions. Unless otherwise agreed by the 
Parties, the arbitrator(s) shall render a decision within ninety 
(90) Calendar Days of appointment and shall notify the Parties in 
writing of such decision and the reasons therefor. The arbitrator(s) 
shall be authorized only to interpret and apply the provisions of 
the Agreement and shall have no power to modify or change any 
provision of the Agreement in any manner. The decision of the 
arbitrator(s) shall be final and binding upon the Parties, and 
judgment on the award may be entered in any court having 
jurisdiction. The decision of the arbitrator(s) may be appealed 
solely on the grounds that the conduct of the arbitrator(s), or the 
decision itself, violated the standards set forth in the Federal 
Arbitration Act or the Administrative Dispute Resolution Act. The 
final decision of the arbitrator must also be filed with FERC if it 
affects jurisdictional rates, terms and conditions of service, 
Interconnection Facilities, or Network Upgrades.
    27.4  Costs. Each Party shall be responsible for its own costs 
incurred during the arbitration process and for the following costs, 
if applicable: (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.

Article 28. Representations, Warranties and Covenants

    28.1  General. Each Party makes the following representations, 
warranties and covenants:
    28.1.1  Good Standing. Such Party is duly organized, validly 
existing and in good standing under the laws of the state in which 
it is organized, formed, or incorporated, as applicable; that it is 
qualified to do business in the state or states in which the 
Facility, Interconnection Facilities and Network Upgrades owned by 
such Party, as applicable, are located; and that it has the 
corporate power and authority to own its properties, to carry on its 
business as now being conducted and to enter into this Agreement and 
carry out the transactions contemplated hereby and perform and carry 
out all covenants and obligations on its part to be performed under 
and pursuant to this Agreement.
    28.1.2  Authority. Such Party has the right, power and authority 
to enter into this Agreement, to become a party hereto and to 
perform its obligations hereunder. This Agreement is a legal, valid 
and binding obligation of such Party, enforceable against such Party 
in accordance with its terms, except as the enforceability thereof 
may be limited by applicable bankruptcy, insolvency, reorganization 
or other similar laws affecting creditors' rights generally and by 
general equitable principles (regardless of whether enforceability 
is sought in a proceeding in equity or at law).
    28.1.3  No Conflict. The execution, delivery and performance of 
this Agreement does not violate or conflict with the organizational 
or formation documents, or bylaws or operating agreement, of such 
Party, or any judgment, license, permit, order, material agreement 
or instrument applicable to or binding upon such Party or any of its 
assets.
    28.1.4  Consent and Approval. Such Party has sought or obtained, 
or, in accordance with this Agreement will seek or obtain, each 
consent, approval, authorization, order, or acceptance by any 
Governmental Authority in connection with the execution, delivery 
and performance of this Agreement, and it will provide to any 
Governmental Authority notice of any actions under this Agreement 
that are required by Applicable Laws and Regulations.

Article 29. Operating Committee

    29.1  Operating Committee. At least six (6) months prior to the 
estimated Initial Synchronization Date, Generator and Transmission 
Provider shall each appoint one representative and one alternate to 
the Operating Committee who will also be members of the Joint 
Operating Committee. Each Party shall notify the other party of its 
appointment in writing. Such appointments may be changed at any time 
by similar notice. The Operating Committee shall meet as necessary, 
but not less than once each calendar year, to carry out the duties 
set forth herein. The Operating Committee shall hold a meeting at 
the request of either Party, at a time and place agreed upon by the 
representatives. The Operating Committee shall perform all of its 
duties consistent with the provisions of this Agreement. Each Party 
shall cooperate in providing to the Operating Committee all 
information required in the performance of the Operating Committee's 
duties. All decisions and agreements, if any, made by the Operating 
Committee shall be evidenced in writing. The duties of the Operating 
Committee shall include the following:
    29.1.1  Establish and maintain control and operating procedures, 
including those pertaining to information transfers between the 
Facility and Transmission Provider.
    29.1.2  Establish data requirements and operating record 
requirements.
    29.1.3  Review the requirements, standards, and procedures data 
acquisition equipment, protective equipment, and any other equipment 
or software.
    29.1.4  Annually review of the one (1) year forecast of 
maintenance and planned outage schedules of Transmission Provider's 
and Generator's facilities at the Point of Interconnection.
    29.1.5  Coordinate the scheduling of maintenance and planned 
outages on the Interconnection Facilities, the Facility and other 
facilities that impact the normal operation of the interconnection 
of the Facility to the Transmission System.
    29.1.6  Ensure that information is being provided by each Party 
regarding equipment availability.
    29.1.7  Perform such other duties as may be conferred upon it by 
mutual agreement of the Parties.

Article 30. Miscellaneous

    30.1  Binding Effect. This Agreement and the rights and 
obligations hereof, shall be binding upon and shall inure to the 
benefit of the successors and assigns of the Parties hereto.
    30.2  Conflicts. In the event of a conflict between the body of 
this Agreement and any attachment, appendices or exhibits hereto, 
the terms and provisions of the body of this Agreement shall prevail 
and be deemed the final intent of the Parties.
    30.3  Rules of Interpretation. This Agreement, unless a clear 
contrary intention appears, shall be construed and interpreted as 
follows: (1) The singular number includes the plural number and vice 
versa; (2) reference to any person includes such person's successors 
and assigns but, in the case of a Party, only if such successors and 
assigns are permitted by this Agreement, and reference to a person 
in a particular capacity excludes such person in any other capacity 
or individually; (3) reference to any agreement (including this 
Agreement), document, instrument or tariff means such agreement, 
document, instrument, or tariff as amended or modified and in effect 
from time to time in accordance with the terms thereof and, if 
applicable, the terms hereof; (4) reference to any applicable laws 
and

[[Page 22280]]

regulations means such applicable laws and regulations as amended, 
modified, codified, or reenacted, in whole or in part, and in effect 
from time to time, including, if applicable, rules and regulations 
promulgated thereunder; (5) unless expressly stated otherwise, 
reference to any Article, Section or Appendix means such Article or 
Section of this Agreement or such Appendix to this Agreement, as the 
case may be; (6) ``hereunder'', ``hereof'', ``herein'', ``hereto'' 
and words of similar import shall be deemed references to this 
Agreement as a whole and not to any particular Article or other 
provision hereof or thereof; (7) ``including'' (and with correlative 
meaning ``include'') means including without limiting the generality 
of any description preceding such term; and (8) relative to the 
determination of any period of time, ``from'' means ``from and 
including'', ``to'' means ``to but excluding'' and ``through'' means 
``through and including'.
    30.4  Entire Agreement. This Agreement, including all Appendices 
and Schedules attached hereto, constitutes the entire agreement 
between the Parties with reference to the subject matter hereof, and 
supersedes all prior and contemporaneous understandings or 
agreements, oral or written, between the Parties with respect to the 
subject matter of this Agreement. There are no other agreements, 
representations, warranties, or covenants which constitute any part 
of the consideration for, or any condition to, either Party's 
compliance with its obligations under this Agreement.
    30.5  No Third Party Beneficiaries. This Agreement is not 
intended to and does not create rights, remedies, or benefits of any 
character whatsoever in favor of any persons, corporations, 
associations, or entities other than the Parties, and the 
obligations herein assumed are solely for the use and benefit of the 
Parties, their successors in interest and, where permitted, their 
assigns.
    30.6  Waiver. The failure of a Party to this Agreement to 
insist, on any occasion, upon strict performance of any provision of 
this Agreement will not be considered a waiver of any obligation, 
right, or duty of, or imposed upon, such Party.
    Any waiver at any time by either Party of its rights with 
respect to this Agreement shall not be deemed a continuing waiver or 
a waiver with respect to any other failure to comply with any other 
obligation, right, duty of this Agreement. Termination or Default of 
this Agreement for any reason by the Generator shall not constitute 
a waiver of the Generator's legal rights to obtain an 
interconnection from the Transmission Provider. Any waiver of this 
Agreement shall, if requested, be provided in writing.
    30.7  Headings. The descriptive headings of the various articles 
of this Agreement have been inserted for convenience of reference 
only and are of no significance in the interpretation or 
construction of this Agreement.
    30.8  Multiple Counterparts. This Agreement may be executed in 
two or more counterparts, each of which is deemed an original but 
all constitute one and the same instrument.
    30.9  Amendment. The Parties may by mutual agreement amend this 
Agreement by a written instrument duly executed by both of the 
Parties.
    30.10  Modification by the Parties. The Parties may by mutual 
agreement amend the Appendices to this Agreement by a written 
instrument duly executed by both of the Parties. Such amendment 
shall become effective and a part of this Agreement upon 
satisfaction of all Applicable Laws and Regulations.
    30.11  Reservation of Rights. Transmission Provider shall have 
the right to make a unilateral filing with FERC to modify this 
Agreement with respect to any rates, terms and conditions, charges, 
classifications of service, rule or regulation under Section 205 or 
any other applicable provision of the Federal Power Act and FERC's 
rules and regulations thereunder, and Generator shall have the right 
to make a unilateral filing with FERC to modify this Agreement 
pursuant to Section 206 or any other applicable provision of the 
Federal Power Act and FERC's rules and regulations thereunder; 
provided that each Party shall have the right to protest any such 
filing by the other Party and to participate fully in any proceeding 
before FERC in which such modifications may be considered. Nothing 
in this Agreement shall limit the rights of the Parties or of FERC 
under Sections 205 or 206 of the Federal Power Act and FERC's rules 
and regulations thereunder, except to the extent that the Parties 
otherwise mutually agree as provided herein.
    Notwithstanding any other provision in this Agreement, each 
Party retains its rights to unilaterally seek modification of this 
Agreement pursuant to Sections 205 and 206 of the Federal Power Act 
and pursuant to FERC's rules and regulations promulgated thereunder.
    30.12  No Partnership. This Agreement shall not be interpreted 
or construed to create an association, joint venture, agency 
relationship, or partnership between the Parties or to impose any 
partnership obligation or partnership liability upon either Party. 
Neither Party shall have any right, power or authority to enter into 
any agreement or undertaking for, or act on behalf of, or to act as 
or be an agent or representative of, or to otherwise bind, the other 
Party.
    In witness whereof, the Parties have executed this Agreement in 
duplicate originals, each of which shall constitute and be an 
original effective Agreement between the Parties.

[Insert name of Transmission Provider]

By:--------------------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

[Insert name of Generator]

By:--------------------------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

Appendix A

Interconnection Facilities and Network Upgrades

Appendix B

Time Schedule

Appendix C

Interconnection Details

Appendix D

Standard Generator Interconnection Agreement

Appendix E

Security Arrangement Details

    Infrastructure security of grid equipment and operations and 
control hardware and software is essential to ensure day-to-day grid 
reliability and operational security. The Commission will expect all 
Transmission Providers, market participants, and generators 
interconnected to the grid to comply with the recommendations 
offered by the President's Critical Infrastructure Protection Board 
and, eventually, best practice recommendations from the electric 
reliability authority. All public utilities will be expected to meet 
basic standards for system infrastructure and operational security, 
including physical, operational, and cyber-security practices.

Appendix F

Commercial Operation Date

    This Appendix F is a part of the Generator Interconnection & 
Operating Agreement between Transmission Provider and [Generator].
[Date]
[Transmission Provider Address]
Re: __________ Generating Facility
Dear __________:
    On [Date] [Generator] has completed Trial Operation of Unit No. 
____. This letter confirms that [Generator] commenced commercial 
operation of Unit No. ____ at the Facility, effective as of [Date 
plus one day].
Thank you.
[Signature]
[Generator Representative]

Appendix G

Interconnection Guidelines

Standard Generator Interconnection Procedures

Table of Contents

1. Definitions

1.1  Affected System
1.2  Affected System Operator
1.3  Base Case
1.4  Business Day
1.5  Commercial Operation Date
1.6  Facility
1.7  FERC
1.8  Generator
1.9  Generator Interconnection Facilities
1.10  In-Service Date
1.11  Interconnection and Operating Agreement
1.12  Interconnection Facilities
1.13  Interconnection Facilities Study

[[Page 22281]]

1.14  Interconnection Facilities Study Agreement
1.15  Interconnection Feasibility Study
1.16  Interconnection Feasibility Study Agreement
1.17  Interconnection Request
1.18  Interconnection Service
1.19  Interconnection Study(ies)
1.20  Interconnection System Impact Study
1.21  Interconnection System Impact Study Agreement
1.22  Network Upgrades
1.23  Material Modification
1.24  Optional Study
1.26  Point of Interconnection
1.27  Reasonable Efforts
1.28  RTO/ISO
1.29  Site Control
1.30  Small Generators
1.31  Tariff
1.32  Transmission Owner
1.33  Transmission Provider
1.34  Transmission Provider Interconnection Facilities
1.35  Transmission System

2. Scope and Application

2.1  Application of Interconnection Procedures
2.2  Comparability
2.3  Base Case Data
2.4  No Applicability to Transmission Service

3. Interconnection Requests

3.1  General
3.2  Identification of Types of Interconnection Services
3.3  Valid Interconnection Request
    3.3.1  Initiating an Interconnection Request
    3.3.2  Acknowledgement of Interconnection Request
    3.3.3  Deficiencies in Interconnection Request
    3.3.4  Initial Scoping Meeting
3.4  OASIS Posting
3.5  Coordination with Affected Systems
3.6  Withdrawal

4. Queue Position

4.1  General
4.2  Clustering
4.3  Transferability of Queue Position
4.4  Modifications
    4.4.1
    4.4.2
    4.4.3
    4.4.4
    4.4.5

5. Procedures for Interconnection Requests Submitted Prior to Effective 
Date of Interconnection Procedures

5.1  Queue Position for Pending Requests
    5.1.1
    5.1.1.1
    5.1.1.2
    5.1.1.3
    5.1.2  Transition Period
5.2  New Transmission Provider

6. Interconnection Feasibility Study

6.1  Interconnection Feasibility Study Agreement
6.2  Scope of Interconnection Feasibility Study
6.3  Interconnection Feasibility Study Procedures
    6.3.1  Meeting With Transmission Provider
6.4  Re-Study

7. Interconnection System Impact Study

7.1  Interconnection System Impact Study Agreement
7.2  Execution of Interconnection System Impact Study Agreement
7.3  Scope of Interconnection System Impact Study
7.4  Interconnection System Impact Study Procedures
7.5  Meeting with Transmission Provider
7.6  Re-Study

8. Interconnection Facilities Study

8.1  Interconnection Facilities Study Agreement
    8.1.1
8.2  Scope of Interconnection Facilities Study
8.3  Interconnection Facilities Study Procedures
8.4  Meeting With Transmission Provider
8.5  Re-Study

9. Agreements

9.1  Engineering & Procurement (``E&P'') Agreement

10. Optional Study

10.1  Optional Study Agreement
10.2  Scope of Optional Study
10.3  Optional Study Procedures

11. Interconnection and Operating Agreement

11.1  Tender
11.2  Negotiation
11.3  Execution and Filing
11.4  Commencement of Interconnection Activities

12. Construction of Transmission Provider Interconnection Facilities 
and Network Upgrades

12.1  Schedule
12.2  Permits
12.3  Construction Sequencing

13. Miscellaneous

13.1  Confidentiality
13.2  Delegation of Responsibility
13.3  Obligation for Study Costs
13.4  Third Parties Conducting Studies
13.5  Performance Liquidated Damages
13.6  Disputes
    13.6.1  Submission
    13.6.2  External Arbitration Procedures
    13.6.3  Arbitration Decisions
    13.6.4  Costs

14. Small Generator Interconnection Requests

14.1  Applicability
14.2  Modified Interconnection Procedure
    14.2.1  Interconnection Study Deposits
    14.2.2  Interconnection Study Costs
    14.2.3  Expedited Procedures
14.3  Queue
14.4  Interconnection Scoping Meeting and Studies

Appendices

Appendix 1--Interconnection Request
Appendix 2--Interconnection Feasibility Study Agreement
Appendix 3--Interconnection System Impact Study Agreement
Appendix 4--Interconnection Facilities Study Agreement
Appendix 5--Optional Study Agreement

1. Definitions

1.1  Affected System

    shall mean a system other than that of Transmission Provider 
that may be affected by the proposed interconnection to the 
Transmission System.

1.2  Affected System Operator

    shall mean the entity that operates the Affected System.

1.3  Base Case

    shall be as defined in Section 2.3 of these Interconnection 
Procedures.

1.4  Business Day

    shall mean any day on which the Federal Reserve Bank of New York 
is open.

1.5  Commercial Operation Date

    shall mean the date on which Generator commences commercial 
operation of a unit at the Facility after Trial Operation of such 
unit has been completed as confirmed in writing substantially in the 
form shown in Appendix F to the Interconnection and Operating 
Agreement.

1.6  Facility

    shall mean Generator's electric generating facility (Facility) 
identified in the Interconnection Request, but shall not include the 
Generator Interconnection Facilities.

1.7  FERC

    shall mean the Federal Energy Regulatory Commission or its 
successor.

1.8  Generator

    as used herein applies to any Facility regardless of ownership.

1.9  Generator Interconnection Facilities

    shall mean all facilities and equipment, as identified in 
Appendix A to the Interconnection and Operating Agreement, which are 
located between the Facility and the Point of Change of Ownership, 
including any modification, addition, or upgrades to such facilities 
and equipment necessary to physically and electrically connect the 
Facility to the Transmission System. Generator Interconnection 
Facilities are sole use facilities and shall not include Network 
Upgrades or facilities.

1.10  In-Service Date

    shall mean the date upon which the Generator reasonably expects 
it will begin to use the Transmission Provider's Interconnection 
Facilities to obtain back feed power.

1.11  Interconnection and Operating Agreement

    shall mean an agreement in the form of the Interconnection and 
Operating Agreement included in the Transmission Provider's Open 
Access Transmission Tariff (OATT).

[[Page 22282]]

1.12  Interconnection Facilities

    shall mean the Transmission Provider's Interconnection 
Facilities and the Generator Interconnection Facilities. 
Collectively, all facilities and equipment between the Facility and 
the Point of Interconnection, including any modification, additions 
or upgrades that are necessary to physically and electrically 
interconnect the Facility to the Transmission System. 
Interconnection Facilities are sole use facilities and shall not 
include Network Upgrades or facilities.

1.13  Interconnection Facilities Study

    shall mean a study of the facilities necessary to accommodate 
the Interconnection Request the scope of which is described in 
Section 8.2 of these Interconnection Procedures.

1.14  Interconnection Facilities Study Agreement

    shall mean the Agreement described in Section 8.1 of these 
Interconnection Procedures.

1.15  Interconnection Feasibility Study

    shall mean a study to evaluate the feasibility of the 
Generator's interconnection to the Transmission System, the scope of 
which is described in Section 6.2 of these Interconnection 
Procedures.

1.16  Interconnection Feasibility Study Agreement

    shall mean the Agreement described in Section 6.1 of these 
Interconnection Procedures.

1.17  Interconnection Request

    shall mean a request, in the form of Appendix 1, in accordance 
with the OATT, to interconnect a new Facility, or to increase the 
capacity or make a Material Modification to the operating 
characteristics of an existing Facility that is interconnected with 
the Transmission System.

1.18  Interconnection Service

    Interconnection Service is defined in Article 4 of the Standard 
Generator Interconnection and Operating Agreement.

1.19  Interconnection Study(ies)

    shall mean any and all of the following studies: the 
Interconnection Feasibility Study, the Interconnection System Impact 
Study and the Interconnection Facilities Study described in these 
Interconnection Procedures.

1.20  Interconnection System Impact Study

    shall mean a study of the impact of the Interconnection Request, 
the scope of which is described in Section 7.3 of these 
Interconnection Procedures.

1.21  Interconnection System Impact Study Agreement

    shall mean the Agreement described in Section 7.1 of these 
Interconnection Procedures.

1.22  Network Upgrades

    shall mean the additions, modifications, and upgrades to the 
Transmission System required beyond the Point of Interconnection to 
the Transmission System to accommodate the interconnection of the 
Facility to the Transmission System, as identified in Appendix A to 
the Interconnection and Operating Agreement, including any 
modifications, additions or upgrades made to such facilities. The 
facilities and equipment are used by and benefit all users of the 
transmission grid, without distinction or regard as to the purpose 
of the upgrade (e.g., to relieve overloads, to remedy stability and 
short circuit problems, to maintain reliability, or to provide 
protection and service restoration) including the fact that these 
facilities and equipment are being replaced or upgraded to 
accommodate the Interconnection Request.

1.23  Material Modification

    shall have the meaning set forth in Section 4.4 of these 
Interconnection Procedures.

1.24  Optional Study

    shall mean a study in addition to the Interconnection Studies as 
described in Section 10 of these Interconnection Procedures.

1.25  Point of Change of Ownership

    shall mean the point, set forth in Appendix A to the 
Interconnection and Operating Agreement, at which the Generator 
Interconnection Facilities connect to the Transmission Provider's 
Transmission Interconnection Facilities.

1.26  Point of Interconnection

    shall mean the point or points, as set forth in Appendix A to 
the Interconnection and Operating Agreement, where the 
Interconnection Facilities connect to the Transmission Provider's 
Transmission System.

1.27  Reasonable Efforts

    shall mean, with respect to an action required to be attempted 
or taken by a party under this agreement, actions 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.

1.28  RTO/ISO

    shall mean any Regional Transmission Organization or Independent 
System Operator to which a Transmission Provider/Transmission Owner 
has transferred operational control of its transmission facilities, 
or any portion thereof, within the meaning of Order No. 2000.

1.29  Site Control

    shall mean documentation reasonably demonstrating: (i) ownership 
of, a leasehold interest in, or a right to develop a site for the 
purpose of constructing a Facility; (ii) an option to purchase or 
acquire a leasehold site for such purpose; or (iii) an exclusivity 
or other business relationship between Generator and the entity 
having the right to sell, lease or grant Generator the right to 
possess or occupy a site for such purpose.

1.30  Small Generators

    shall mean those Generators described in Section 14 of these 
Interconnection Procedures.

1.31  Tariff

    shall mean the Transmission Provider's tariff(s) under which 
open access transmission and interconnection service are offered, as 
filed with FERC, and as amended or supplemented from time to time, 
or any successor tariff(s).

1.32  Transmission Owner

    shall mean an entity that owns, leases, or otherwise possesses 
an interest in the portion of the Transmission System at the Point 
of Interconnection and may be a party to this Agreement to the 
extent necessary.

1.33  Transmission Provider

    shall mean the entity that provides Transmission Service under 
its Open Access Transmission Tariff.

1.34  Transmission Provider Interconnection Facilities

    shall mean all facilities owned and/or 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 
Interconnection and Operating Agreement, including any 
modifications, additions or upgrades to such facilities and 
equipment. Transmission Provider Facilities are sole use facilities 
and shall not include Network Upgrades or facilities as defined in 
Section 1.21 above.

1.35  Transmission System

    shall mean the facilities owned, controlled or operated by the 
Transmission Provider and/or Transmission Owner that are used to 
provide transmission service under the Tariff, including any 
additions, modifications or upgrades made to such facilities.

2. Scope and Application

2.1  Application of Interconnection Procedures

    Sections 2 through 13 apply to any Interconnection Request. 
Section 14 establishes the modified procedures for interconnecting 
Small Generators' Facilities.

2.2  Comparability

    The Transmission Provider shall receive, process and analyze all 
Interconnection Requests in a timely manner as set forth in these 
Interconnection Procedures. The Transmission Provider will use the 
same Reasonable Efforts in processing and analyzing Interconnection 
Requests from all Generators, whether the generating facilities are 
owned by Transmission Provider, its subsidiaries or affiliates or 
others.

2.3  Base Case Data

    Transmission Provider shall provide base power flow, short 
circuit and stability databases.

2.4  No Applicability to Transmission Service

    Nothing in these Interconnection Procedures shall constitute a 
request for transmission service or confer upon a Generator any 
right to receive transmission service.

[[Page 22283]]

3. Interconnection Requests

3.1  General

    A Generator shall submit to the Transmission Provider an 
Interconnection Request in the form of Appendix 1 to these 
Interconnection Procedures and a refundable deposit of $10,000. The 
Transmission Provider shall apply the deposit toward the cost of an 
Interconnection Feasibility Study. The Generator shall submit a 
separate Interconnection Request for each site and may submit 
multiple Interconnection Requests for a single site.
    At Generator's option, Transmission Provider and Generator will 
identify alternative Point(s) of Interconnection and configurations 
at the initial scoping meeting to evaluate in this process and 
attempt to eliminate alternatives in a reasonable fashion given 
resources and information available. Generator will select the 
definitive Point(s) of Interconnection no later than the execution 
of the Interconnection Feasibility Study Agreement.

3.2  Identification of Types of Interconnection Services

    At the time the Interconnection Request is submitted, Generator 
must identify the types of interconnection services requested; 
provided, however, any Generator requesting Network Resource 
Interconnection Service may also request that it be concurrently 
studied as an Energy Resource Interconnection Service, up to the 
point when an Interconnection Facility Study Agreement is executed.

3.3  Valid Interconnection Request

3.3.1  Initiating an Interconnection Request

    To initiate an Interconnection Request, Generator must submit 
all of the following: (i) A $10,000 deposit, (ii) A completed 
application in the form of Appendix 1, and (iii) demonstration of 
Site Control or a posting of an additional deposit of $10,000. Such 
deposits shall be applied toward any Interconnection Studies 
pursuant to the Interconnection Request. If Generator demonstrates 
Site Control within the cure period specified in Section 3.3.3 after 
submitting its Interconnection Request, the deposit(s) shall be 
refundable; otherwise, such deposit(s) become non-refundable. The 
expected In-Service Date of the new Facility or increase in capacity 
of the existing Facility shall be no more than the process window 
for the regional expansion planning period not to exceed seven years 
from the date the Interconnection Request is received by the 
Transmission Provider, unless the Interconnection Customer 
demonstrates that engineering, permitting and construction of the 
new Facility or increase in capacity of the existing Facility will 
take longer than the regional expansion planning period. In no event 
shall the In-Service Date exceed ten years from the date the 
Interconnection Request is received by the Transmission Provider.

3.3.2  Acknowledgement of Interconnection Request

    Transmission Provider shall acknowledge receipt of the 
Interconnection Request within five (5) Business Days of receipt of 
the request and attach a copy of the received Interconnection 
Request to the acknowledgement.

3.3.3  Deficiencies in Interconnection Request

    An Interconnection Request will not be considered to be a valid 
request until all of the above items have been received by the 
Transmission Provider. If an Interconnection Request fails to meet 
the requirements set forth in this Section, the Transmission 
Provider shall notify the Generator within five (5) Business Days of 
receipt of the initial Interconnection Request of the reasons for 
such failure and that the Interconnection Request does not 
constitute a valid request. Generator shall provide the Transmission 
Provider the additional requested information needed to constitute a 
valid request within ten (10) Business Days after receipt of such 
notice. Failure by Generator to comply with this Section 3.3.3 shall 
be treated in accordance with Section 3.6.

3.3.4  Initial Scoping Meeting

    Within ten (10) Business Days after receipt of a valid 
Interconnection Request, Transmission Provider shall establish a 
date agreeable to Generator for the initial scoping meeting, and 
such date shall be no later than thirty (30) Calendar Days from 
receipt of the Interconnection Request.
    The purpose of the initial scoping meeting shall be to discuss 
alternative interconnection options, to exchange information 
including any transmission data 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 Generator 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 Generator 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, 
Generator 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 allocate 
sufficient time to accomplish its purpose.
    Within five (5) Business Days after the scoping meeting is held, 
Generator may elect not to have an Interconnection Feasibility Study 
conducted for the Interconnection Request. If Generator so elects, 
Generator will notify the Transmission Provider in writing within 
such period. In that event, the Transmission Provider will initiate 
an Interconnection System Impact Study in accordance with Section 7 
of these Interconnection Procedures and apply the $10,000 deposit 
towards the Interconnection System Impact Study.

3.4  OASIS Posting

    The Transmission Provider will maintain on its OASIS a list of 
all Interconnection Requests. The list will identify, for each 
Interconnection Request: (i) The maximum summer and winter megawatt 
electrical output; (ii) the location by county and state; (iii) the 
station or transmission line or lines where the interconnection will 
be made; (iv) the projected In-Service Date; (v) the status of the 
Interconnection Request, including queue position; (vi) the type of 
interconnection service being requested; and (vii) the availability 
of any studies related to the Interconnection Request. The list will 
not disclose the identity of the Generator until the Generator 
executes an Interconnection and Operating Agreement or requests that 
the Transmission Provider file an unexecuted Interconnection and 
Operating Agreement with FERC. The Transmission Provider shall post 
to its OASIS site any deviations from the study timelines set forth 
herein. Interconnection Study reports and Optional Study reports 
shall be posted to the Transmission Provider's OASIS site subsequent 
to the meeting between the Generator and the Transmission Provider 
to discuss the applicable study results.

3.5  Coordination With Affected Systems

    The Transmission Provider will coordinate the conduct of any 
studies required to determine the impact of the Interconnection 
Request on Affected Systems with Affected System Operators and 
include those results in its applicable Interconnection Study within 
the time frame specified in these Interconnection Procedures. The 
Transmission Provider will include such Affected System Operators in 
all meetings held with the Generator as required by these 
Interconnection Procedures. The Generator will cooperate with the 
Transmission Provider in all matters related to the conduct of 
studies and the determination of modifications to Affected Systems. 
A transmission provider which may be an Affected System shall 
cooperate with the Transmission Provider with whom interconnection 
has been requested in all matters related to the conduct of studies 
and the determination of modifications to Affected Systems.

3.6  Withdrawal

    The Generator may withdraw its Interconnection Request at any 
time by written notice of such withdrawal to the Transmission 
Provider. In addition, if the Generator fails to adhere to all 
requirements of these Interconnection Procedures, except as provided 
in Section 13.6, the Transmission Provider shall deem the 
Interconnection Request to be withdrawn and shall provide written 
notice to the Generator of the deemed withdrawal and an explanation 
of the reasons for such deemed withdrawal. Withdrawal shall result 
in the loss of the Generator's queue position. A Generator that 
withdraws or is deemed to have withdrawn its Interconnection Request 
shall pay to the Transmission Provider all costs that the 
Transmission Provider prudently incurs with respect to that 
Interconnection Request prior to the Transmission Provider's receipt 
of notice described above. The Transmission Provider shall (i) 
update the OASIS queue posting and

[[Page 22284]]

(ii) refund to the Generator any portion of the Generator's deposit 
or study payments that exceeds the costs that the Transmission 
Provider has incurred, including interest calculated in accordance 
with Section 35.19a(a)(2) of FERC's regulations. In the event of 
such withdrawal, the Transmission Provider, subject to the 
confidentiality provisions of Section 13.1, shall provide, at 
Generator's request, all information that the Transmission Provider 
developed for any completed study conducted up to the date of 
withdrawal of the Interconnection Request.

4. Queue Position

4.1  General

    The Transmission Provider shall assign a queue position based 
upon the date and time of receipt of the valid Interconnection 
Request; provided that, if the sole reason an Interconnection 
Request is not valid is the lack of required information on the 
application form, and the Generator provides such information in 
accordance with Section 3.3.3, then the Transmission Provider shall 
assign the Generator a queue position based on the date the 
application form was originally filed. The queue position of each 
Interconnection Request will be used to determine the order of 
performing the Interconnection Studies and determination of cost 
responsibility for the facilities necessary to accommodate the 
Interconnection Request.

4.2  Clustering

    At Transmission Provider's option, Interconnection Requests may 
be studied serially or in clusters for the purpose of the 
Interconnection System Impact Study.
    If Transmission Provider elects to study Interconnection 
Requests in clusters, all Interconnection Requests received within a 
period not to exceed ninety (90) Calendar Days, hereinafter referred 
to as the ``queue cluster window,'' shall be studied together, as 
appropriate, except for Energy Resource Interconnection Service, 
which will be studied serially. Transmission Provider may study an 
Interconnection Request separately to the extent warranted by Good 
Utility Practice based upon the electrical remoteness of the 
proposed Facility.

4.3  Transferability of Queue Position

    A Generator may transfer its queue position to another entity 
only if such entity acquires the specific facility identified in the 
Interconnection Request and the Point of Interconnection does not 
change.

4.4  Modifications

    The Generator may submit to the Transmission Provider, in 
writing, modifications to any information provided in the 
Interconnection Request. The Generator shall retain its queue 
position if the modifications are in accordance with Sections 4.4.1, 
4.4.2 or 4.4.5, or are determined not to be Material Modifications 
pursuant to Sections 4.4.3 and 4.4.4.
    Notwithstanding the above, during the course of the 
Interconnection Studies, either the Generator or Transmission 
Provider may identify changes to the planned interconnection that 
may improve the costs and benefits (including reliability) of the 
interconnection, and the ability of the proposed change to 
accommodate the Interconnection Request. To the extent the 
identified changes are acceptable to the Transmission Provider and 
Generator, such acceptance not to be unreasonably withheld, 
Transmission Provider shall modify the Point of Interconnection and/
or configuration in accordance with such changes and proceed with 
any re-studies necessary to do so in accordance with Section 6.4, 
Section 7.6 and Section 8.6 as applicable and Generator shall retain 
its queue position.
    4.4.1  Prior to the return of the executed Interconnection 
System Impact Study Agreement to the Transmission Provider, 
modifications permitted under this Section shall include 
specifically: (a) A reduction up to 60% (MW) of electrical output of 
the proposed project; (b) modifying the technical parameters 
associated with the generator technology or the generator step-up 
transformer impedance characteristics; (c) modifying the 
interconnection configuration; and/or (d) any other change except to 
the Point of Interconnection. For plant increases, the incremental 
increase in plant output will go to the end of the queue for the 
purposes of cost allocation and study analysis.
    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% decrease in plant size (MW), and 
(b) generator technical parameters associated with modifications to 
generator technology and transformer impedances; provided, however, 
the incremental costs associated with those modifications are the 
responsibility of the requesting Generator.
    4.4.3  Prior to making any modification other than those 
specifically permitted by Sections 4.4.1, 4.4.2, and 4.4.5, 
Generator may first request that the Transmission Provider evaluate 
whether such modification is a Material Modification. Material 
Modifications are those modifications that have a material impact on 
the cost or timing of any Interconnection Request with a later queue 
priority date. In response to Generator's request, the Transmission 
Provider shall evaluate the proposed modifications prior to making 
them and inform the Generator in writing of whether the 
modifications would constitute a Material Modification. The 
Generator may then withdraw the proposed modification or proceed 
with a new Interconnection Request for such modification.
    4.4.4  Upon receipt of Generator's request for modification 
permitted under this Section 4.4, the Transmission Provider shall 
commence and perform any necessary additional studies as soon as 
practicable, but in no event shall the Transmission Provider 
commence such studies later than thirty (30) Calendar Days after 
receiving notice of Generator's request. Any additional studies 
resulting from such modification shall be done at Generator's cost.
    4.4.5  Extensions of less than three (3) cumulative years in the 
Commercial Operation Date of the Facility to which the 
Interconnection Request relates are not material and should be 
handled through construction sequencing.

5. Procedures for Interconnection Requests Submitted Prior to Effective 
Date of Interconnection Procedures

5.1  Queue Position for Pending Requests

    5.1.1  Any generator assigned a queue position prior to the 
effective date of these Interconnection Procedures shall retain that 
queue position.
    5.1.1.1  If an Interconnection Study Agreement has not been 
executed as of the effective date of these Interconnection 
Procedures, then such Interconnection Study, and any subsequent 
Interconnection Studies, shall be processed in accordance with these 
Interconnection Procedures.
    5.1.1.2  If an Interconnection Study Agreement has been executed 
prior to the effective date of these Interconnection Procedures, 
such Interconnection Study shall be completed in accordance with the 
terms of such agreement.
    5.1.1.3  If an Interconnection and Operating Agreement has been 
tendered as of the effective date of these Interconnection 
Procedures, then the Transmission Provider and Generator shall 
finalize its terms.

5.1.2  Transition Period

    To the extent necessary, the Transmission Provider and 
Generators with an outstanding request shall transition to these 
Interconnection Procedures within a reasonable period of time not to 
exceed sixty (60) Calendar Days. Any Generator with an outstanding 
request as of the effective date of these Interconnection Procedures 
may request a reasonable extension of any deadline, otherwise 
applicable, if necessary to avoid undue hardship or prejudice to its 
Interconnection Request. A reasonable extension shall be granted by 
the Transmission Provider to the extent consistent with the intent 
and process provided for under these Interconnection Procedures.

5.2  New Transmission Provider

    If the Transmission Provider transfers control of its 
Transmission System to a successor Transmission Provider during the 
period when an Interconnection Request is pending, the original 
Transmission Provider shall transfer to the successor Transmission 
Provider any amount of the deposit or payment that exceeds the cost 
that it incurred to evaluate the request for interconnection. Any 
difference between such net amount and the deposit or payment 
required by these Interconnection Procedures shall be paid by or 
refunded to the Generator, as appropriate. The original Transmission 
Provider shall coordinate with the successor Transmission Provider 
to complete any Interconnection Study, as appropriate, that the 
original Transmission Provider has begun but has not completed. If 
the Transmission Provider has tendered a draft Interconnection and 
Operating Agreement to the Generator but the Generator has not 
either executed the Interconnection and Operating Agreement or 
requested the filing of an unexecuted Interconnection and Operating 
Agreement with FERC, unless otherwise provided, the Generator may 
elect to complete negotiations with the Transmission Provider or the 
successor Transmission Provider.

[[Page 22285]]

6. Interconnection Feasibility Study

6.1  Interconnection Feasibility Study Agreement

    Simultaneously with the acknowledgement of a valid 
Interconnection Request the Transmission Provider shall provide to 
Generator an Interconnection Feasibility Study Agreement in the form 
of Appendix 2. The Interconnection Feasibility Study Agreement shall 
specify that Generator is responsible for the actual cost of the 
Interconnection Feasibility Study. Within five (5) Business Days 
following the initial scoping meeting Generator shall specify for 
inclusion in the attachment to the Interconnection Feasibility Study 
Agreement the Point(s) of Interconnection and any reasonable 
alternative Point(s) of Interconnection. Within five (5) Business 
Days following the Transmission Provider's receipt of such 
designation, Transmission Provider shall tender to Generator the 
Interconnection Feasibility Study Agreement signed by Transmission 
Provider, which includes a good faith estimate of the cost for 
completing the Interconnection Feasibility Study.
    On or before the return of the executed Interconnection 
Feasibility Study Agreement to the Transmission Provider, the 
Generator shall provide the technical data called for in Appendix 2.
    If the Interconnection Feasibility Study uncovers any unexpected 
result(s) not contemplated during the Initial Scoping Meeting, a 
substitute Point of Interconnection identified by either Generator 
or Transmission Provider, and acceptable to the other, such 
acceptance not to be unreasonably withheld, will be substituted for 
the designated Point of Interconnection specified above without loss 
of queue position, and re-studies shall be completed pursuant to 
Section 6.4 as applicable. For the purpose of this Section 6.1, if 
the Transmission Provider and Generator cannot agree on the 
substituted Point of Interconnection, then Generator may direct that 
one of the alternatives as specified in the Interconnection 
Feasibility Study Agreement, as specified pursuant to Section 3.3.4, 
shall be the substitute.

6.2  Scope of Interconnection Feasibility Study

    The Interconnection Feasibility Study shall preliminarily 
evaluate the feasibility of the proposed interconnection to the 
Transmission System.
    The Interconnection Feasibility Study will consider the Base 
Case as well as all generating facilities (and with respect to 
(iii), any identified Network Upgrades) that, on the date the 
Interconnection Feasibility Study is commenced: (i) Are directly 
interconnected to the Transmission System; (ii) are interconnected 
to Affected Systems and may have an impact on the Interconnection 
Request; (iii) have a pending higher queued Interconnection Request 
to interconnect to the Transmission System; and (iv) have no queue 
position but have executed an Interconnection and Operating 
Agreement or requested that an unexecuted Interconnection and 
Operating Agreement be filed with FERC. The Interconnection 
Feasibility Study will consist of a power flow and short circuit 
analysis. The Interconnection Feasibility Study will provide a list 
of facilities and a non-binding good faith estimate of cost 
responsibility and a non-binding good faith estimated time to 
construct.

6.3  Interconnection Feasibility Study Procedures

    The Transmission Provider shall utilize existing studies to the 
extent practicable when it performs the study. The Transmission 
Provider shall use Reasonable Efforts to complete the 
Interconnection Feasibility Study no later than forty-five (45) 
Calendar Days after the Transmission Provider receives the fully 
executed Interconnection Feasibility Study Agreement. At the request 
of the Generator or at any time the Transmission Provider determines 
that it will not meet the required time frame for completing the 
Interconnection Feasibility Study, Transmission Provider shall 
notify the Generator as to the schedule status of the 
Interconnection Feasibility Study. If the Transmission Provider is 
unable to complete the Interconnection Feasibility Study within that 
time period, it shall notify the Generator and provide an estimated 
completion date with an explanation of the reasons why additional 
time is required. Upon request, the Transmission Provider shall 
provide the Generator supporting documentation, workpapers and 
relevant power flow, short circuit and stability databases for the 
Interconnection Feasibility Study, subject to confidentiality 
arrangements consistent with Section 13.1.

6.3.1  Meeting With Transmission Provider

    Within ten (10) Business Days of providing an Interconnection 
Feasibility Study report to Generator, Transmission Provider and 
Generator shall meet to discuss the results of the Interconnection 
Feasibility Study.

6.4  Re-Study

    If re-study of the Interconnection Feasibility 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 
6.1 Transmission Provider shall notify Generator in writing. Such 
re-study shall take not longer than forty-five (45) Calendar Days 
from the date of the notice. Any cost of re-study shall be borne by 
the Generator being re-studied.

7. Interconnection System Impact Study

7.1  Interconnection System Impact Study Agreement

    Unless otherwise provided in Section 3.3.4, simultaneously with 
the delivery of the Interconnection Feasibility Study to the 
Generator, the Transmission Provider shall provide to the Generator 
an Interconnection System Impact Study Agreement in the form of 
Appendix 3 to these Interconnection Procedures. The Interconnection 
System Impact Study Agreement shall provide that the Generator shall 
compensate the Transmission Provider for the actual cost of the 
Interconnection System Impact Study. Within three (3) Business Days 
following the Interconnection Feasibility Study results meeting, the 
Transmission Provider shall provide to Generator a non-binding good 
faith estimate of the cost and timeframe for completing the 
Interconnection System Impact Study.

7.2  Execution of Interconnection System Impact Study Agreement

    The Generator shall execute the Interconnection System Impact 
Study Agreement and deliver the executed Interconnection System 
Impact Study Agreement to the Transmission Provider no later than 
thirty (30) Calendar Days after its receipt along with demonstration 
of Site Control, and a $50,000 deposit.
    If the Generator does not provide all such technical data when 
it delivers the Interconnection System Impact Study Agreement, the 
Transmission Provider shall notify the Generator of the deficiency 
within five (5) Business Days of the receipt of the executed 
Interconnection System Impact Study Agreement and the Generator 
shall cure the deficiency within ten (10) Business Days of receipt 
of the notice, provided, however, such deficiency does not include 
failure to deliver the executed Interconnection System Impact Study 
Agreement or deposit.
    If the Interconnection System Impact Study uncovers any 
unexpected result(s) not contemplated during the Initial Scoping 
Meeting and the Interconnection Feasibility Study, a substitute 
Point of Interconnection identified by either Generator or 
Transmission Provider, and acceptable to the other, such acceptance 
not to be unreasonably withheld, will be substituted for the 
designated Point of Interconnection specified above without loss of 
queue position, and restudies shall be completed pursuant to Section 
7.6 as applicable. For the purpose of this Section 7.6, if the 
Transmission Provider and Generator cannot agree on the substituted 
Point of Interconnection, then Generator may direct that one of the 
alternatives as specified in the Interconnection Feasibility Study 
Agreement, as specified pursuant to Section 3.3.4, shall be the 
substitute.

7.3  Scope of Interconnection System Impact Study

    The Interconnection System Impact Study shall evaluate the 
impact of the proposed interconnection on the reliability of the 
Transmission System. The Interconnection System Impact Study will 
consider the Base Case as well as all generating facilities (and 
with respect to (iii) below, any identified Network Upgrades 
associated with such higher queued interconnection) that, on the 
date the Interconnection System Impact Study is commenced: (i) Are 
directly interconnected to the Transmission System; (ii) are 
interconnected to Affected Systems and may have an impact on the 
Interconnection Request; (iii) have a pending higher queued 
Interconnection Request to interconnect to the Transmission System; 
and (iv) have no queue position but have executed an Interconnection 
and Operating

[[Page 22286]]

Agreement or requested that an unexecuted Interconnection and 
Operating Agreement be filed with FERC. The Interconnection System 
Impact Study will consist of a short circuit analysis, a stability 
analysis, and a power flow analysis. The Interconnection System 
Impact Study will state the assumptions upon which it is based; 
state the results of the analyses; and provide the requirements or 
potential impediments to providing the requested interconnection 
service, including a preliminary indication of the cost and length 
of time that would be necessary to correct any problems identified 
in those analyses and implement the interconnection. 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.

7.4  Interconnection System Impact Study Procedures

    The Transmission Provider shall coordinate the Interconnection 
System Impact Study with any Affected System that is affected by the 
Interconnection Request pursuant to Section 3.5 above. The 
Transmission Provider shall utilize existing studies to the extent 
practicable when it performs the study. The Transmission Provider 
shall use Reasonable Efforts to complete the Interconnection System 
Impact Study within ninety (90) Calendar Days after the receipt of 
the Interconnection System Impact Study Agreement or notification to 
proceed, study payment, and technical data. If Transmission Provider 
uses clustering, the Transmission Provider shall use Reasonable 
Efforts to deliver a completed Interconnection System Impact Study 
within ninety (90) Calendar Days after the close of the queue 
cluster window. At the request of the Generator or at any time the 
Transmission Provider determines that it will not meet the required 
time frame for completing the Interconnection System Impact Study, 
Transmission Provider shall notify the Generator as to the schedule 
status of the Interconnection System Impact Study. If the 
Transmission Provider is unable to complete the Interconnection 
System Impact Study within the time period, it shall notify the 
Generator and provide an estimated completion date with an 
explanation of the reasons why additional time is required. Upon 
request, the Transmission Provider shall provide the Generator all 
supporting documentation, workpapers and relevant pre-
Interconnection Request and post-Interconnection Request power flow, 
short circuit and stability databases for the Interconnection System 
Impact Study, subject to confidentiality arrangements consistent 
with Section 13.1.

7.5  Meeting With Transmission Provider

    Within ten (10) Business Days of providing an Interconnection 
System Impact Study report to Generator, Transmission Provider and 
Generator shall meet to discuss the results of the Interconnection 
System Impact Study.

7.6  Re-Study

    If re-study of the Interconnection System Impact Study is 
required due to a higher queued project dropping out of the queue, a 
modification of a higher queued project subject to 4.4, or re-
designation of the Point of Interconnection pursuant to Section 6.1 
Transmission Provider shall notify Generator in writing. Such re-
study shall take no longer than sixty (60)Calendar Days from the 
date of notice.
    Any cost of re-study shall be borne by the Generator being re-
studied.

8. Interconnection Facilities Study

8.1  Interconnection Facilities Study Agreement

    Simultaneously with the delivery of the Interconnection System 
Impact Study to the Generator, the Transmission Provider shall 
provide to the Generator an Interconnection Facilities Study 
Agreement in the form of Appendix 4 to these Interconnection 
Procedures. The Interconnection Facilities Study Agreement shall 
provide that the Generator shall compensate the Transmission 
Provider for the actual cost of the Interconnection Facilities 
Study. Within three (3) Business Days following the Interconnection 
System Impact Study results meeting, the Transmission Provider shall 
provide to Generator a non-binding good faith estimate of the cost 
and timeframe for completing the Interconnection Facilities Study. 
The Generator shall execute the Interconnection Facilities Study 
Agreement and deliver the executed Interconnection Facilities Study 
Agreement to the Transmission Provider within thirty (30) Calendar 
Days after its receipt, together with the required technical data 
and the greater of $100,000 or Generator's portion of the estimated 
monthly cost of conducting the Interconnection Facilities Study.
    8.1.1  Transmission Provider shall invoice Generator on a 
monthly basis for the work to be conducted on the Interconnection 
Facilities Study each month. Generator shall pay invoiced amounts 
within thirty (30) Calendar Days of receipt of invoice. Transmission 
Provider shall continue to hold the amounts on deposit until 
settlement of the final invoice.

8.2  Scope of Interconnection Facilities Study

    The Interconnection Facilities Study shall specify and estimate 
the cost of the equipment, engineering, procurement and construction 
work needed to implement the conclusions of the Interconnection 
System Impact Study in accordance with Good Utility Practice to 
physically and electrically connect the Interconnection Facility to 
the Transmission System. The Interconnection Facilities Study shall 
also identify the electrical switching configuration of the 
connection equipment, including, without limitation: The 
transformer, switchgear, meters, and other station equipment; the 
nature and estimated cost of any Transmission Provider 
Interconnection Facilities and Network Upgrades necessary to 
accomplish the interconnection; and an estimate of the time required 
to complete the construction and installation of such facilities.

8.3  Interconnection Facilities Study Procedures

    The Transmission Provider shall coordinate the Interconnection 
Facilities Study with any Affected System pursuant to Section 3.5 
above. The Transmission Provider shall utilize existing studies to 
the extent practicable in performing the Interconnection Facilities 
Study. The Transmission Provider shall use Reasonable Efforts to 
complete the study and issue a draft Interconnection Facilities 
Study report to the Generator within the following number of days 
after receipt of an executed Interconnection Facilities Study 
Agreement: ninety (90) Calendar Days, with no more than a 
20% cost estimate contained in the report; or one 
hundred eighty (180) Calendar Days, if the Generator requests a 
10% cost estimate. At the request of the Generator or at 
any time the Transmission Provider determines that it will not meet 
the required time frame for completing the Interconnection 
Facilities Study, Transmission Provider shall notify the Generator 
as to the schedule status of the Interconnection Facilities Study. 
If the Transmission Provider is unable to complete the 
Interconnection Facilities Study and issue a draft Interconnection 
Facilities Study report within the time required, it shall notify 
the Generator and provide an estimated completion date and an 
explanation of the reasons why additional time is required. The 
Generator may, within thirty (30) Calendar Days after receipt of the 
draft report, provide written comments to the Transmission Provider, 
which the Transmission Provider shall include in the final report. 
The Transmission Provider shall issue the final Interconnection 
Facilities Study report within fifteen (15) Business Days of 
receiving the Generator's comments or promptly upon receiving 
Generator's statement that it will not provide comments. The 
Transmission Provider may reasonably extend such fifteen-day period 
upon notice to the Generator if the Generator's comments require the 
Transmission Provider to perform additional analyses or make other 
significant modifications prior to the issuance of the final 
Interconnection Facilities Report. Upon request, the Transmission 
Provider shall provide the Generator supporting documentation, 
workpapers, and databases or data developed in the preparation of 
the Interconnection Facilities Study, subject to confidentiality 
arrangements consistent with Section 13.1.

8.4  Meeting With Transmission Provider

    Within ten (10) Business Days of providing a draft 
Interconnection Facilities Study report to Generator, Transmission 
Provider and Generator shall meet to discuss the results of the 
Interconnection Facilities Study.

8.5  Re-Study

    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

[[Page 22287]]

Provider shall so notify Generator in writing. Such re-study shall 
take no longer than sixty (60) Calendar Days from the date of 
notice.
    Any cost of re-study shall be borne by the Generator being re-
studied.

9. Agreements

9.1  Engineering & Procurement (``E&P'') Agreement

    Prior to executing an Interconnection and Operating Agreement, a 
Generator may, in order to advance the implementation of its 
interconnection, request and Transmission Provider shall offer the 
Generator, an agreement that authorizes the Transmission Provider to 
begin engineering and procurement of long lead-time items necessary 
for the establishment of the interconnection (``E&P Agreement''). 
However, the Transmission Provider shall not be obligated to offer 
an E&P Agreement if Generator is in dispute resolution as a result 
of an allegation that Generator has failed to meet any milestones or 
comply with any prerequisites specified in other parts of the 
Interconnection Procedures. The E&P Agreement is an optional 
procedure and it will not alter the Generator's queue position or 
In-Service Date. The E&P Agreement shall provide for the Generator 
to pay the cost of all activities authorized by the Generator and to 
make advance payments or provide other satisfactory security for 
such costs. The Generator shall pay the cost of such authorized 
activities and any cancellation costs for equipment that is already 
ordered for its interconnection, which cannot be mitigated as 
hereafter described, whether or not such items or equipment later 
become unnecessary. If Generator withdraws its application for 
interconnection or either party terminates the E&P Agreement, to the 
extent the equipment ordered can be canceled under reasonable terms, 
Generator shall be obligated to pay the associated cancellation 
costs. To the extent that the equipment cannot be reasonably 
canceled, Transmission Provider may elect: (i) to take title to the 
equipment, in which event Transmission Provider shall refund 
Generator any amounts paid by Generator for such equipment and shall 
pay the cost of delivery of such equipment, or (ii) to transfer 
title to and deliver such equipment to Generator, in which event 
Generator shall pay any unpaid balance and cost of delivery of such 
equipment.

10. Optional Study

10.1  Optional Study Agreement

    On or after the date when the Generator receives Interconnection 
System Impact Study results, the Generator may request, and the 
Transmission Provider shall perform a reasonable number of Optional 
Studies. The request shall describe the assumptions that the 
Generator wishes the Transmission Provider to study within the scope 
described in Section 10.2. Within five (5) Business Days after 
receipt of a request for an Optional Study, the Transmission 
Provider shall provide to the Generator an Optional Study Agreement 
in the form of Appendix 5. The Optional Study Agreement shall: (i) 
specify the technical data that the Generator must provide for each 
phase of the Optional Study, (ii) specify Generator's assumptions as 
to which Interconnection Requests with earlier queue priority dates 
will be excluded from the optional study case and assumptions as to 
the type of interconnection service for Interconnection Requests 
remaining in the optional study case, and (iii) the Transmission 
Provider's estimate of the cost of the Optional Study. To the extent 
known by the Transmission Provider, such estimate shall include any 
costs expected to be incurred by any Affected System whose 
participation is necessary to complete the Optional Study. 
Notwithstanding the above, the Transmission Provider shall not be 
required as a result of an Optional Study request to conduct any 
additional Interconnection Studies with respect to any other 
Interconnection Request. The Generator shall execute the Optional 
Study Agreement within ten (10) Business Days of receipt and deliver 
the Optional Study Agreement, the technical data and a $10,000 
deposit to the Transmission Provider.

10.2  Scope of Optional Study

    The Optional Study will consist of a sensitivity analysis based 
on the assumptions specified by the Generator in the Optional Study 
Agreement. The Optional Study will also identify the Transmission 
Provider Interconnection Facilities and the Network Upgrades, and 
the estimated cost thereof, that may be required to provide 
transmission service or interconnection service based upon the 
results of the Optional Study. The Optional Study shall be performed 
solely for informational purposes. The Transmission Provider shall 
use Reasonable Efforts to coordinate the study with any Affected 
Systems that may be affected by the types of interconnection 
services that are being studied. The Transmission Provider shall 
utilize existing studies to the extent practicable in conducting the 
Optional Study.

10.3  Optional Study Procedures

    The executed Optional Study Agreement, the prepayment, and 
technical and other data called for therein must be provided to the 
Transmission Provider within ten (10) Business Days of Generator's 
receipt of the Optional Study Agreement. The Transmission Provider 
shall use Reasonable Efforts to complete the Optional Study within a 
mutually agreed upon time period specified within the Optional Study 
Agreement. If the Transmission Provider is unable to complete the 
Optional Study within such time period, it shall notify the 
Generator and provide an estimated completion date and an 
explanation of the reasons why additional time is required. Any 
difference between the study payment and the actual cost of the 
study shall be paid to the Transmission Provider or refunded to the 
Generator, as appropriate. Upon request, the Transmission Provider 
shall provide the Generator supporting documentation and workpapers 
and databases or data developed in the preparation of the Optional 
Study, subject to confidentiality arrangements consistent with 
Section 13.1.

11. Interconnection and Operating Agreement

11.1  Tender

    Simultaneously with the issuance of the draft Interconnection 
Facilities Study report to the Generator, the Transmission Provider 
shall tender to the Generator a draft Interconnection and Operating 
Agreement together with draft appendices completed to the extent 
practicable. The draft Interconnection and Operating Agreement shall 
be in the form of the pro forma Interconnection and Operating 
Agreement. Within thirty (30) Calendar Days after the issuance of 
the draft Interconnection Facilities Study Report, the Transmission 
Provider shall tender the completed draft Interconnection and 
Operating Agreement appendices.

11.2  Negotiation

    Notwithstanding Section 11.1, at the request of the Generator 
the Transmission Provider shall begin negotiations with the 
Generator concerning the appendices to the Interconnection and 
Operating Agreement at any time after the Generator executes the 
Interconnection Facilities Study Agreement. The Transmission 
Provider and the Generator shall negotiate concerning any disputed 
provisions of the appendices to the draft Interconnection and 
Operating Agreement for not more than sixty (60) Calendar Days after 
tender of the final Interconnection Facilities Study Report. If the 
Generator determines that negotiations are at an impasse, it may 
request termination of the negotiations at any time after tender of 
the Interconnection and Operating Agreement pursuant to Section 11.1 
and request submission of the unexecuted Interconnection and 
Operating Agreement with FERC or initiate dispute resolution 
procedures pursuant to Section 13.6. If the Generator requests 
termination of the negotiations, but within sixty (60) Calendar Days 
thereafter fails to request either the filing of the unexecuted 
Interconnection and Operating Agreement or initiate dispute 
resolution, it shall be deemed to have withdrawn its Interconnection 
Request. The Transmission Provider shall provide to the Generator a 
final Interconnection and Operating Agreement within fifteen (15) 
Business Days after the completion of the negotiation process.

11.3  Execution and Filing

    Within fifteen (15) Business Days after receipt of the final 
Interconnection and Operating Agreement, the Generator shall provide 
the Transmission Provider reasonable evidence that continued Site 
Control and one or more of the following milestones in the 
development of the Facility, at the Generator's election, has been 
achieved: (i) the execution of a contract for the supply or 
transportation of fuel to the Facility; (ii) the execution of a 
contract for the supply of cooling water to the Facility; (iii) 
execution of a contract for the engineering for, procurement of 
major equipment for, or construction of, the Facility; (iv) 
execution of a contract for the sale of electric energy or capacity 
from the Facility; (v) application for an air, water, or land use 
permit; or (vi) posting of $250,000,

[[Page 22288]]

non-refundable additional security, which shall be applied toward 
future construction costs.
    The Generator shall either: (i) execute two originals of the 
tendered Interconnection and Operating Agreement and return them to 
the Transmission Provider; or (ii) request in writing that the 
Transmission Provider file with FERC an Interconnection and 
Operating Agreement in unexecuted form. As soon as practicable, but 
not later than ten (10) Business Days after receiving either the two 
executed originals of the tendered Interconnection and Operating 
Agreement or the request to file an unexecuted Interconnection and 
Operating Agreement, the Transmission Provider shall file the 
Interconnection and Operating Agreement with FERC, together with its 
explanation of any matters as to which the Generator and the 
Transmission Provider disagree and support for the costs that the 
Transmission Provider proposes to charge to the Generator under the 
Interconnection and Operating Agreement.

11.4  Commencement of Interconnection Activities

    If the Generator executes the final Interconnection and 
Operating Agreement, the Transmission Provider and the Generator 
shall perform their respective obligations in accordance with the 
terms of the Interconnection and Operating Agreement, subject to 
modification by FERC. Upon submission of an unexecuted 
Interconnection and Operating Agreement, both Generator and 
Transmission Provider shall promptly comply with the unexecuted 
Interconnection and Operating Agreement, subject to modification by 
FERC.

12. Construction of Transmission Provider Interconnection Facilities 
and Network Upgrades.

12.1  Schedule

    The Transmission Provider and the Generator shall negotiate in 
good faith concerning a schedule for the construction of the 
Transmission Provider Interconnection Facilities and the Network 
Upgrades.

12.2  Permits

    The Interconnection and Operating Agreement shall specify the 
allocation of the responsibilities of the Transmission Provider/
Owner and the Generator to obtain all permits, licenses and 
authorizations that are necessary to accomplish the interconnection 
in compliance with applicable laws and regulations. The Transmission 
Provider/Owner and the Generator shall cooperate with each other in 
good faith in obtaining any such permits, licenses and 
authorizations. Nothing in this Section 12.2 shall be construed to 
waive any rights under applicable law.

12.3  Construction Sequencing

    In general, the In-Service Date of generators seeking 
interconnection to the Transmission System will determine the 
sequence of construction of Network Upgrades. A Generator with an 
Interconnection and Operating Agreement, in order to maintain its 
In-Service Date, may request that the Transmission Provider advance 
to the extent necessary the completion of Network Upgrades that: (i) 
Were assumed in the Interconnection Studies for such Generator, (ii) 
are necessary to support such In-Service Date, and (iii) would 
otherwise not be completed, pursuant to a contractual obligation of 
an entity other than the Generator that is seeking interconnection 
to the Transmission System, in time to support such In-Service Date. 
Upon such request, Transmission Provider will use Reasonable Efforts 
to advance the construction of such Network Upgrades to accommodate 
such request; provided that the Generator commits to pay 
Transmission Provider: (i) any associated expediting costs and (ii) 
the cost of such Network Upgrades. The Transmission Provider will 
refund to the Generator the costs in clause (ii) of the prior 
sentence at such time as it receives payment from the entity with a 
contractual obligation to construct such Network Upgrades. Until 
such costs are refunded by the Transmission Provider, the Generator 
may utilize the transmission credits, if any, associated with the 
Network Upgrades the construction of which was advanced; thereafter 
the balance of such credits may be utilized by the entity that 
provided the Transmission Provider with the funds for such refund, 
to the extent of those funds. The Generator shall be entitled to 
transmission credits, if any, for any expediting costs paid. The 
inclusion of costs, recovery of costs and credits in this Section 
12.3 is subject to FERC determination of cost responsibility.
    A Generator with an Interconnection and Operating Agreement, in 
order to maintain its In-Service Date, may request that the 
Transmission Provider advance to the extent necessary the completion 
of Network Upgrades that: (i) Are necessary to support such In-
Service Date and (ii) would otherwise not be completed, pursuant to 
an expansion plan of the Transmission Provider, in time to support 
such In-Service Date. Upon such request, Transmission Provider will 
use Reasonable Efforts to advance the construction of such Network 
Upgrades to accommodate such request; provided that the Generator 
commits to pay Transmission Provider any associated expediting 
costs. The Generator shall be entitled to transmission credits, if 
any, for any expediting costs paid. The inclusion of costs, recovery 
of costs and credits in this Section 12.3 is subject to FERC 
determination of cost responsibility.
    An Interconnection System Impact Study will be amended to 
determine the facilities necessary to support the requested In-
Service Date. This amended study will include those transmission and 
generator facilities that are expected to be in service on or before 
the requested In-Service Date.

13. Miscellaneous

13.1  Confidentiality

    Transmission Provider, Transmission Owner(s), and such entities' 
officers, employees, and contractors shall keep confidential all 
information provided by Generator related to interconnection service 
required by Transmission Provider to process an Interconnection 
Request for network or similar type interconnection service as 
specified by FERC (other than the information contained in the 
Interconnection Request in Appendix 1) or that otherwise constitutes 
trade secrets or commercial or financial information, the disclosure 
of which would harm or prejudice the Generator or Generator's 
business.
    Such Confidential Information shall exclude information to the 
extent that such information is or becomes generally available to 
the public without the violation of any obligation of secrecy 
relating to the information disclosed, including the posted 
Interconnection Studies on OASIS pursuant to the terms of Section 
3.4. Transmission Provider shall use such information solely for the 
purpose of the Interconnection Study for which it was provided and 
no other purpose. Confidential Information should only be shared 
among individuals within the Transmission Provider; Transmission 
Owner; and any third party who need it to perform Interconnection 
Studies, to review Interconnection Study results, or to negotiate an 
Interconnection and Operating Agreement; provided that, under no 
circumstances shall data be shared with individuals that have 
responsibilities within the Transmission Providers/Owners and/or its 
affiliates' merchant generation and/or marketing functions and 
otherwise required pursuant to Order 889.
    Further, Transmission Provider shall be liable to Generator for 
any breach of confidentiality caused by its agents or third party 
contractors.
    The Transmission Provider shall, at Generator's election, 
destroy, in a confidential manner, or return the Confidential 
Information provided at the time the Confidential Information is no 
longer needed.
    Other than any required disclosures of Interconnection Studies 
on OASIS, should Transmission Provider be required to disclose the 
Generator's confidential information with any regulatory body, 
Transmission Provider shall request confidential treatment of such 
information from such regulatory body. If Transmission Provider 
receives any request to disclose confidential information, 
Transmission Provider shall provide Generator with prompt written 
notice of any such request so that the Generator may contest 
disclosure.
    Notwithstanding anything to the contrary herein, these 
provisions shall not require the Transmission Provider or the 
Generator to disclose information in violation of any 
confidentiality obligations to third parties.

13.2  Delegation of Responsibility

    The Transmission Provider may use the services of subcontractors 
as it deems appropriate to perform its obligations under these 
Interconnection Procedures. Transmission Provider shall remain 
primarily liable to the Generator for the performance of such 
subcontractors and compliance with its obligations of these 
Interconnection Procedures. The subcontractor shall keep all 
information provided confidential and shall use such information 
solely for the performance of such obligation for which it was 
provided and no other purpose.

[[Page 22289]]

13.3  Obligation for Study Costs

    Transmission Provider shall charge and Generator shall pay the 
actual costs of the Interconnection Studies. Any difference between 
the study deposit and the actual cost of the applicable 
Interconnection Study shall be paid by or refunded, except as 
otherwise provided herein, to Generator or offset against the cost 
of any future Interconnection Studies associated with the applicable 
Interconnection Request prior to beginning of any such future 
Interconnection Studies. Generator shall pay any such undisputed 
costs within thirty (30) Calendar Days of receipt of an invoice 
therefor. The Transmission Provider shall not be obligated to 
perform or continue to perform any studies unless Generator has paid 
all undisputed amounts in compliance herewith.

13.4  Third Parties Conducting Studies

    If (i) at the time of the signing of an Interconnection Study 
Agreement there is disagreement as to the estimated time to complete 
an Interconnection Study, (ii) the Generator receives notice 
pursuant to Sections 6.3, 7.4 or 8.3 that the Transmission Provider 
will not complete an Interconnection Study within the applicable 
timeframe for such Interconnection Study, or (iii) Generator 
receives neither the Interconnection Study nor a notice under 
Sections 6.3, 7.4 or 8.3 within the applicable timeframe for such 
Interconnection Study, then the Generator may require the 
Transmission Provider to, within thirty (30) Calendar Days of 
notifying Transmission Provider, utilize a third party reasonably 
acceptable to Generator and Transmission Provider to perform such 
Interconnection Study under the direction of the Transmission 
Provider. Transmission Provider shall convey all workpapers, 
databases, study results and all other supporting documentation 
prepared to date with respect to the Interconnection Request as soon 
as practicable upon Generator's request subject to the 
confidentiality provision in Section 13.1. In any case, such third 
party contract may be entered into with either the Generator or the 
Transmission Provider at the Transmission Provider's discretion. In 
the case of (i), (ii) and (iii) such Interconnection Study will be 
at the Generator's expense and in the case of (iii) the Generator 
maintains its right to submit a claim to dispute resolution to 
recover the costs of such third party study. Such subcontractor 
shall be required to comply with these Interconnection Procedures 
and shall use the information provided to it solely for purposes of 
performing such services and for no other purposes. The Transmission 
Provider shall cooperate with such subcontractor and Generator to 
complete and issue the Interconnection Study in the shortest 
reasonable time.

13.5  Performance Liquidated Damages

    In the event the Transmission Provider fails to meet any of its 
obligations under these Interconnection Procedures, and fails to 
remedy any failure within fifteen (15) Business Days, the 
Transmission Provider shall pay the Generator liquidated damages. 
Any liquidated damages paid by the Transmission Provider to the 
Generator shall be an amount equal to 1% of the actual cost of the 
applicable study cost (including any third party study costs), per 
day. However, in no event shall the total liquidated damages exceed 
50% of the actual cost of the applicable study(ies). In addition to 
these liquidated damages, Transmission Provider shall refund any 
deposit amount for the applicable study previously paid by Generator 
in excess of actual reasonably incurred study costs immediately upon 
expiration of the remedy period noted above.

13.6  Disputes

13.6.1  Submission

    In the event either Party has a dispute, or asserts a claim, 
that arises out of or in connection with the Interconnection and 
Operating Agreement or its performance, such Party (the ``disputing 
Party'') shall provide the other Party with written notice of the 
dispute or claim (``Notice of Dispute''). Such dispute or claim 
shall be referred to a designated senior representative of each 
Party for resolution on an informal basis as promptly as practicable 
after receipt of the Notice of Dispute by the other Party. In the 
event the designated representatives are unable to resolve the claim 
or dispute within thirty (30) Calendar Days of the other Party's 
receipt of the Notice of Dispute, such claim or dispute may, upon 
mutual agreement of the Parties, be submitted to arbitration and 
resolved in accordance with the arbitration procedures set forth 
below. In the event the Parties do not agree to submit such claim or 
dispute to arbitration, each Party may exercise whatever rights and 
remedies it may have in equity or at law consistent with the terms 
of this Agreement.

13.6.2  External Arbitration Procedures.

    Any arbitration initiated under these procedures shall be 
conducted before a single neutral arbitrator appointed by the 
Parties. If the Parties fail to agree upon a single arbitrator 
within ten (10) Calendar Days of the submission of the dispute to 
arbitration, each Party shall choose one arbitrator who shall sit on 
a three-member arbitration panel. The two arbitrators so chosen 
shall within twenty (20) Calendar Days select a third arbitrator to 
chair the arbitration panel. In either case, the arbitrators shall 
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 (except prior arbitration). The 
arbitrator(s) shall provide each of the Parties an opportunity to be 
heard and, except as otherwise provided herein, shall conduct the 
arbitration in accordance with the Commercial Arbitration Rules of 
the American Arbitration Association (``Arbitration Rules'') and any 
applicable FERC regulations or RTO rules; provided, however, in the 
event of a conflict between the Arbitration Rules and the terms of 
this Section 13, the terms of this Section 13 shall prevail.

13.6.3  Arbitration Decisions

    Unless otherwise agreed by the Parties, the arbitrator(s) shall 
render a decision within ninety (90) Calendar Days of appointment 
and shall notify the Parties in writing of such decision and the 
reasons therefor. The arbitrator(s) shall be authorized only to 
interpret and apply the provisions of the Agreement and shall have 
no power to modify or change any provision of the Agreement in any 
manner. The decision of the arbitrator(s) shall be final and binding 
upon the Parties, and judgment on the award may be entered in any 
court having jurisdiction. The decision of the arbitrator(s) may be 
appealed solely on the grounds that the conduct of the 
arbitrator(s), or the decision itself, violated the standards set 
forth in the Federal Arbitration Act or the Administrative Dispute 
Resolution Act. The final decision of the arbitrator must also be 
filed with FERC if it affects jurisdictional rates, terms and 
conditions of service, Interconnection Facilities, or Network 
Upgrades.

13.6.4  Costs

    Each Party shall be responsible for its own costs incurred 
during the arbitration process and for the following costs, if 
applicable: (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.

14. Small Generator Interconnection Requests

14.1  Applicability

    Small Generators are defined as units 20 MW and below or 
aggregations of interconnecting Facilities at a single Point of 
Interconnection totaling 20 MW and below, including those owned by 
Transmission Providers or their affiliates. Since Small Generators 
will generally have only a limited impact on a localized area of the 
Transmission Provider's Transmission System, all Interconnection 
Studies, upgrades and electric connections necessitated by the 
Interconnection Request will be conducted on an expedited basis. 
Because of the size limitation of Small Generators, any study will 
generally be limited only to the immediate vicinity of the Small 
Generator's interconnection and should use subsets of data from the 
Transmission Provider's larger system studies. If the Transmission 
Provider is able to use prior system studies to accommodate the 
Small Generator's request, there will be no charge assessed to the 
Small Generator. This Section 14 applies only to Small Generators 
that are located on the Transmission Provider's Transmission System 
or whose transaction(s) involve sales for resale.

14.2  Modified Interconnection Procedure

    Requirements related to the application and interconnection for 
larger Generator resources are followed except as modified in this 
Section 14.

14.2.1  Interconnection Study Deposits

    The deposit requirement for each of the Interconnection Studies 
is waived.

14.2.2  Interconnection Study Costs

    While the deposit requirement for the Small Generator is waived, 
the Small

[[Page 22290]]

Generator is responsible for all costs associated with the 
processing of the Interconnection Request and the performance of 
Interconnection Studies, unless waived.
    Small Generator will be billed for such costs following the 
completion of each Interconnection Study. Generator shall pay 
invoiced amounts within thirty (30) Calendar Days of receipt of 
invoice.

14.2.3  Expedited Procedures

    Expedited analysis procedures will be utilized for all 
Interconnection Requests and studies.

14.3  Queue

    Small Generators will be placed in the same queue as large 
Generators.

14.4  Interconnection Scoping Meeting and Studies

    Immediately upon receipt of a valid Interconnection Request, the 
Transmission Provider shall establish a date agreeable to the Small 
Generator for an initial scoping meeting as discussed in Section 
3.3.4 above and such meeting will be held no later than ten (10) 
Business Days from receipt of the Interconnection Request. Unless 
otherwise agreed, the Transmission Provider will conduct an 
Interconnection Feasibility Study to determine if transmission 
constraints or other contingencies within the immediate vicinity of 
the Small Generator interconnection will require Network Upgrades or 
facilities to be constructed and an Interconnection Facilities Study 
to specify and estimate the cost of the equipment, engineering, 
procurement and construction work needed to accomplish the 
interconnection. Each of the studies are to be completed by the 
Transmission Provider within fifteen (15) Calendar Days of the date 
of the applicable executed study request.

Appendices

Appendix 1--Interconnection Request
Appendix 2--Interconnection Feasibility Study Agreement
Appendix 3--Interconnection System Impact Study Agreement
Appendix 4--Interconnection Facilities Study Agreement
Appendix 5--Optional Study Agreement

Appendix 1

Interconnection Request

    1. The undersigned Generator submits this request to its 
Facility with the Transmission Provider's Transmission System 
pursuant to a Tariff.
    2. This Interconnection Request is for (check one):

__ A proposed new Facility.
__ An increase in the generating capacity or a Material Modification 
of an existing Facility.

    3. Is the Generator requesting expedited procedures pursuant to 
Section 14 of the Interconnection Procedures?

__ Yes
__ No

    4. The type of interconnection service requested (check one or 
both as appropriate):

__ [It is intended that the types of interconnection services 
specified in Article 4 of the Standard Generator and Interconnection 
Agreement be placed here.]

    5. The Generator provides the following information:
    a. Address or location or the proposed new Facility site (to the 
extent known) or, in the case of an existing Facility, the name and 
specific location of the Facility;
    b. Maximum summer at ______ degrees C and winter at ______ 
degrees C megawatt electrical output of the proposed new Facility or 
the amount of megawatt increase in the generating capacity of an 
existing Facility;
    c. General description of the equipment configuration;
    d. Commercial Operation Date by day, month, and year;
    e. Name, address, telephone number, and e-mail address of the 
Generator's contact person;
    f. Approximate location of the proposed Point of Interconnection 
(optional); and
    g. Generator Data (set forth in Attachment A)

    6. Applicable deposit amount as specified in the Interconnection 
Procedures.
    7. Evidence of Site Control as specified in the Interconnection 
Procedures (check one)

__ Is attached to this Interconnection Request
__ Will be provided at a later date in accordance with these 
Interconnection Procedures

    8. This Interconnection Request shall be submitted to the 
representative indicated below:

[To be completed by Transmission Provider]

    9. Representative of the Generator to contact:

[To be completed by Generator]

    10. This Interconnection Request is submitted by:

Name of Generator:-----------------------------------------------------
By (signature):--------------------------------------------------------
Name (type or print):--------------------------------------------------
Title:-----------------------------------------------------------------
Date:------------------------------------------------------------------

Attachment A

Generator Data

Unit Ratings

kVA ______     deg.F ______      Voltage ______
Power Factor ______
Speed (RPM) ______    Connection (e.g. Wye) ______
Short Circuit Ratio ______    Frequency, Hertz ______
Stator Amperes at Rated kVA ______    Field Volts ______
Max Turbine MW ______     deg.F ______

Combined Turbine-Generator-Exciter Inertia Data

Inertia Constant, H = ________ kW sec/kVA
Moment-of-Inertia, WR2 = ________ lb. ft.2

------------------------------------------------------------------------
                                   Direct Axis         Quadrature Axis
------------------------------------------------------------------------
Reactance Data (Per Unit-
 Rated KVA):
    Synchronous--saturated..  Xdv______             Xqv______
    Synchronous--unsaturated  Xdi______             Xqi______
    Transient--saturated....  X'dv______            X'qv______
    Transient--unsaturated..  X'di______            X'qi______
    Subtransient--saturated.  X''dv______           X''qv______
    Subtransient--unsaturate  X''di______           X''qi______
     d.
    Negative Sequence--       X2v______
     saturated.
    Negative Sequence--       X2i______
     unsaturated.
    Zero Sequence--saturated  X0v______
    Zero Sequence--           X0i______
     unsaturated.
    Leakage Reactance.......  Xlm______
Field Time Constant Data
 (SEC):
    Open Circuit............  T'do______            T'qo______
    Three-Phase Short         T'd3______            T'q______
     Circuit Transient.
    Line to Line Short        T'd2______
     Circuit Transient.
    Line to Neutral Short     T'd1______
     Circuit Transient.
    Short Circuit             T''d______            T''q______
     Subtransient.
    Open Circuit              T''do______           T''qo______
     Subtransient.
------------------------------------------------------------------------


[[Page 22291]]

Armature Time Constant Data (SEC)

Three Phase Short Circuit  Ta3______
Line to Line Short Circuit  Ta2______
Line to Neutral Short Circuit  Ta1______

MW Capability and Plant Configuration

Generator Data

Armature Winding Resistance Data (Per Unit)

Positive    R1______
Negative    R2______
Zero    R0______
Rotor Short Time Thermal Capacity I22t = ______
Field Current at Rated kVA, Armature Voltage and PF = ______ amps
Field Current at Rated kVA and Armature Voltage, 0 PF = ______ amps
Three Phase Armature Winding Capacitance = ______ microfarad
Field Winding Resistance = ______ ohms ______  deg.C
Armature Winding Resistance (Per Phase) = ______ ohms ______  deg.C

Curves

Saturation, Vee, Reactive Capability, Capacity Temperature 
Correction

    Designate normal and emergency Hydrogen Pressure operating range 
for multiple curves.

Generator Step-Up Transformer Data

Ratings

Capacity/Self-cooled/maximum nameplate
____________________________/____________________________kVA

Voltage Ratio/Generator side/System side
____________________________/____________________________kV

Winding Connections/Low V/High V (Delta or Wye)
____________________________/____________________________
Fixed Taps Available---------------------------------------------------
Present Tap Setting----------------------------------------------------

Impedance

Positive  Z1 (on self-cooled kVA rating) ________% ______ X/R
Zero  Z0 (on self-cooled kVA rating) ________% ______ X/R

Excitation System Data

    Identify appropriate IEEE model block diagram of excitation 
system and power system stabilizer (PSS) for computer representation 
in power system stability simulations and the corresponding 
excitation system and PSS constants for use in the model.

Governor System Data

    Identify appropriate IEEE model block diagram of governor system 
for computer representation in power system stability simulations 
and the corresponding governor system constants for use in the 
model.

Appendix 2

Interconnection Feasibility Study Agreement

    This agreement is made and entered into this __ day of ________, 
20__ by and between ________, a ________ organized and existing 
under the laws of the State of ______, (``Generator,'') and ________ 
a ________ existing under the laws of the State of ______, 
(``Transmission Provider ``). Generator and Transmission Provider 
each may be referred to as a ``Party,'' or collectively as the 
``Parties.''

Recitals

    Whereas, Generator is proposing to develop a Facility or 
generating capacity addition to an existing Facility consistent with 
the Interconnection Request submitted by the Generator dated ______; 
and
    Whereas, Generator desires to interconnect the Facility with the 
Transmission System; and
    Whereas, Generator has requested the Transmission Provider to 
perform an Interconnection Feasibility Study to assess the 
feasibility of interconnecting the proposed Facility to the 
Transmission System, and of any Affected Systems;
    Now, therefore, in consideration of and subject to the mutual 
covenants contained herein the Parties agreed as follows:
    1.0  When used in this agreement, with initial capitalization, 
the terms specified shall have the meanings indicated. Terms used in 
this agreement with initial capitalization but not defined in this 
Section 1 shall have the meanings specified in the Tariff.
    2.0  Generator elects and Transmission Provider shall cause to 
be performed an Interconnection Feasibility Study consistent with 
Section 6.0 of these Interconnection Procedures in accordance with 
the Tariff.
    3.0  The scope of the Interconnection Feasibility Study shall be 
subject to the assumptions set forth in Attachment A to this 
Agreement.
    4.0  The Interconnection Feasibility Study shall be based on the 
technical information provided by Generator in the Interconnection 
Request, as may be modified as the result of the Initial Scoping 
Meeting. Transmission Provider reserves the right to request 
additional technical information from Generator as may reasonably 
become necessary consistent with Good Utility Practice during the 
course of the Interconnection Feasibility Study and as designated in 
accordance with Section 3.3.4 of the Interconnection Procedures. If, 
after the designation of the Point of Interconnection pursuant to 
Section 3.3.4 of the Interconnection Procedures, Generator modifies 
its Interconnection Request, the time to complete the 
Interconnection Feasibility Study may be extended.
    5.0  The Interconnection Feasibility Study report shall provide 
the following information:

--Preliminary identification of any circuit breaker short circuit 
capability limits exceeded as a result of the interconnection;
--Preliminary identification of any thermal overload or voltage 
limit violations resulting from the interconnection; and
--Preliminary description and non-bonding estimated cost of 
facilities required to interconnect the Facility to the Transmission 
System and to address the identified short circuit and power flow 
issues.

    6.0  The Transmission Provider's good faith estimated cost for 
performance of the Interconnection Feasibility Study is $10,000.
    Upon receipt of the Interconnection Feasibility Study the 
Transmission Provider shall charge and Generator shall pay the 
actual costs of the Interconnection Feasibility Study.
    Any difference between the deposit and the actual cost of the 
study shall be paid by or refunded to the Generator, as appropriate.
    7.0  Miscellaneous. [The Interconnection Feasibility Study 
Agreement shall include standard miscellaneous terms including, but 
not limited to, indemnities, representations, disclaimers, 
warranties, governing law, amendment, execution, waiver, 
enforceability and assignment, that reflect best practices in the 
electric industry, and that are consistent with regional 
differences, applicable laws, and the organizational nature of each 
Party. All of these provisions, to the extent practicable, shall be 
consistent with the provisions of the Interconnection Procedures and 
the Interconnection and Operating Agreement.]
    In witness whereof, the Parties have caused this Agreement to be 
duly executed by their duly authorized officers or agents on the day 
and year first above written.

[Insert Name of Transmission Provider]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

[Insert Name of Generator]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

Attachment A to Interconnection Feasibility Study Agreement

Assumptions Used in Conducting the Interconnection Feasibility Study

    The Interconnection Feasibility Study will be based upon the 
information set forth in the Interconnection Request and agreed upon 
in the Initial Scoping Meeting held on ________:


Designation of Point of Interconnection and configuration to be 
studied.
Designation of alternative Point(s) of Interconnection and 
configuration.

[Above assumptions to be completed by Generator and other 
assumptions to be provided by Generator and Transmission Provider]

Appendix 3

Interconnection System Impact Study Agreement

    This agreement is made and entered into this____ day of ____, 
20____ by and between ________, a ________ organized and existing 
under the laws of the State of ________, (``Generator,'') and 
________ a ________ existing under the laws of the State of 
________, (``Transmission Provider''). Generator and Transmission 
Provider each may be referred to as a ``Party,'' or collectively as 
the ``Parties.''

Recitals

    Whereas, Generator is proposing to develop a Facility or 
generating capacity addition to an existing Facility consistent with 
the Interconnection Request submitted by the Generator dated     ; 
and

[[Page 22292]]

    Whereas, Generator desires to interconnect the Facility with the 
Transmission System;
    Whereas, the Transmission Provider has completed a 
Interconnection Feasibility Study (the ``Feasibility Study'') and 
provided the results of said study to the Generator; \1\ and
---------------------------------------------------------------------------

    \1\ This recital to be omitted if Generator has elected to 
forego the Interconnection Feasibility Study.
---------------------------------------------------------------------------

    Whereas, Generator has requested the Transmission Provider to 
perform an Interconnection System Impact Study to assess the impact 
of interconnecting the Facility to the Transmission System, and of 
any Affected Systems;
    Now, therefore, in consideration of and subject to the mutual 
covenants contained herein the Parties agreed as follows:
    1.0  When used in this agreement, with initial capitalization, 
the terms specified shall have the meanings indicated. Terms used in 
this agreement with initial capitalization but not defined in this 
Section 1 shall have the meanings specified in the Tariff.
    2.0  Generator elects and Transmission Provider shall cause to 
be performed an Interconnection System Impact Study consistent with 
Section 7.0 of these Interconnection Procedures in accordance with 
the Tariff.
    3.0  The scope of the Interconnection System Impact Study shall 
be subject to the assumptions set forth in Attachment A to this 
Agreement.
    4.0  The Interconnection System Impact Study will be based upon 
the results of the Interconnection Feasibility Study and the 
technical information provided by Generator in the Interconnection 
Request, subject to any modifications in accordance with Section 4.4 
of the Interconnection Procedures. Transmission Provider reserves 
the right to request additional technical information from Generator 
as may reasonably become necessary consistent with Good Utility 
Practice during the course of the Interconnection System Impact 
Study. If Generator modifies its designated Point of 
Interconnection, Interconnection Request, or the technical 
information provided therein is modified, the time to complete the 
Interconnection System Impact Study may be extended.
    5.0  The Interconnection System Impact Study report shall 
provide the following information:

--Identification of any circuit breaker short circuit capability 
limits exceeded as a result of the interconnection;
--Identification of any thermal overload or voltage limit violations 
resulting from the interconnection;
--Identification of any instability or inadequately damped response 
to system disturbances resulting from the interconnection and
--Description and non-binding, good faith estimated cost of 
facilities required to interconnect the Facility to the Transmission 
System and to address the identified short circuit, instability, and 
power flow issues.

    6.0  The Transmission Provider's good faith estimated cost for 
performance of the Interconnection System Impact Study is $50,000. 
The Transmission Provider's good faith estimate for the time of 
completion of the Interconnection System Impact Study is [insert 
date].
    Upon receipt of the Interconnection System Impact Study, 
Transmission Provider shall charge and Generator shall pay the 
actual costs of the Interconnection System Impact Study.
    Any difference between the deposit and the actual cost of the 
study shall be paid by or refunded to the Generator, as appropriate.
    7.0  Miscellaneous. The Interconnection System Impact Study 
Agreement shall include standard miscellaneous terms including, but 
not limited to, indemnities, representations, disclaimers, 
warranties, governing law, amendment, execution, waiver, 
enforceability and assignment, that reflect best practices in the 
electric industry, that are consistent with regional differences, 
applicable laws and the organizational nature of each Party. All of 
these provisions, to the extent practicable, shall be consistent 
with the provisions of the Interconnection Procedures and the 
Interconnection and Operating Agreement.]
    In witness thereof, the Parties have caused this Agreement to be 
duly executed by their duly authorized officers or agents on the day 
and year first above written.

[Insert Name of Transmission Provider]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

[Insert Name of Generator]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

Attachment A to Interconnection System Impact Study Agreement

Assumptions Used in Conducting the Interconnection System Impact Study

    The Interconnection System Impact Study will be based upon the 
results of the Interconnection Feasibility Study, subject to any 
modifications in accordance with Section 4.4 of the Interconnection 
Procedures, and the following assumptions:

Designation of Point of Interconnection and configuration to be 
studied.
Designation of alternative Point(s) of Interconnection and 
configuration.

[Above assumptions to be completed by Generator and other 
assumptions to be provided by Generator and Transmission Provider]

Appendix 4

Interconnection Facilities Study Agreement

    This agreement is made and entered into this ____ day of 
________, 20 ____ by and between ________, a ________ organized and 
existing under the laws of the State of ________, (``Generator,'') 
and ________ a ________ existing under the laws of the State of 
________, (``Transmission Provider ``). Generator and Transmission 
Provider each may be referred to as a ``Party,'' or collectively as 
the ``Parties.''

Recitals

    Whereas, Generator is proposing to develop a Facility or 
generating capacity addition to an existing Facility consistent with 
the Interconnection Request submitted by the Generator dated 
________; and
    Whereas, Generator desires to interconnect the Facility with the 
Transmission System;
    Whereas, the Transmission Provider has completed a 
Interconnection System Impact Study (the ``System Impact Study'') 
and provided the results of said study to the Generator; and
    Whereas, Generator has requested the Transmission Provider to 
perform an Interconnection Facilities Study to specify and estimate 
the cost of the equipment, engineering, procurement and construction 
work needed to implement the conclusions of the Interconnection 
System Impact Study in accordance with Good Utility Practice to 
physically and electrically connect the Facility to the Transmission 
System.
    Now, therefore, in consideration of and subject to the mutual 
covenants contained herein the Parties agreed as follows:
    1.0  When used in this agreement, with initial capitalization, 
the terms specified shall have the meanings indicated. Terms used in 
this agreement with initial capitalization but not defined in this 
Section 1 shall have the meanings specified in the Tariff.
    2.0  Generator elects and Transmission Provider shall cause an 
Interconnection Facilities Study consistent with Section 8.0 of 
these Interconnection Procedures to be performed in accordance with 
the Tariff.
    3.0  The scope of the Interconnection Facilities Study shall be 
subject to the assumptions set forth in Attachment A and the data 
provided in Attachment B to this Agreement.
    4.0  The Interconnection Facilities Study report (i) shall 
provide a description, estimated cost of (consistent with Attachment 
A), schedule for required facilities to interconnect the Facility to 
the Transmission System and (ii) shall address the short circuit, 
instability, and power flow issues identified in the Interconnection 
System Impact Study.
    5.0  The Transmission Provider's good faith estimated cost for 
performance of the Interconnection Facilities Study is $100,000. The 
time for completion of the Interconnection Facilities Study is 
specified in Attachment A.
    Transmission Provider shall invoice Generator on a monthly basis 
for the work to be conducted on the Interconnection Facilities Study 
each month. Generator shall pay invoiced amounts within thirty (30) 
Calendar Days of receipt of invoice. Transmission Provider shall 
continue to hold the amounts on deposit until settlement of the 
final invoice.
    6.0  Miscellaneous. [The Interconnection Facility Study 
Agreement shall include standard miscellaneous terms including, but 
not limited to, indemnities, representations, disclaimers, 
warranties, governing law, amendment, execution, waiver, 
enforceability and assignment, that reflect best practices in the 
electric industry, and that are consistent with regional 
differences,

[[Page 22293]]

applicable laws, and the organizational nature of each Party. All of 
these provisions, to the extent practicable, shall be consistent 
with the provisions of the Interconnection Procedures and the 
Interconnection and Operating Agreement.]
    In witness whereof, the Parties have caused this Agreement to be 
duly executed by their duly authorized officers or agents on the day 
and year first above written.

[Insert Name of Transmission Provider]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

[Insert Name of Generator]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

Attachment A to Interconnection Facilities Study Agreement

Generator Schedule Election for Conducting the Interconnection 
Facilities Study

    The Transmission Provider shall use Reasonable Efforts to 
complete the study and issue a draft Interconnection Facilities 
Study report to the Generator within the following number of days 
after of receipt of an executed copy of this Interconnection 
Facilities Study Agreement:

--Ninety (90) Calendar Days with no more than a 20% cost 
estimate contained in the report, or
--One hundred eighty (180) Calendar Days with no more than a 
10% cost estimate contained in the report.

Attachment B to Interconnection Facilities Study Agreement

Data Form To Be Provided by Generator With the Interconnection 
Facilities Study Agreement

    Provide location plan and simplified one-line diagram of the 
plant and station facilities. For staged projects, please indicate 
future generation, transmission circuits, etc.
    One set of metering is required for each generation connection 
to the new ring bus or existing Transmission Provider station. 
Number of generation connections:

On the one line indicate the generation capacity attached at each 
metering location. (Maximum load on CT/PT)
On the one line indicate the location of auxiliary power. (Minimum 
load on CT/PT) Amps

    Will an alternate source of auxiliary power be available during 
CT/PT maintenance? ____ Yes ____ No
    Will a transfer bus on the generation side of the metering 
require that each meter set be designed for the total plant 
generation? ____ Yes ____ No (Please indicate on one line).
    What type of control system or PLC will be located at the 
Generator's Facility?
----------------------------------------------------------------------
    What protocol does the control system or PLC use?
----------------------------------------------------------------------
    Please provide a 7.5-minute quadrangle of the site. Sketch the 
plant, station, transmission line, and property line.
----------------------------------------------------------------------
    Physical dimensions of the proposed interconnection station:
----------------------------------------------------------------------
    Bus length from generation to interconnection station:
----------------------------------------------------------------------
    Line length from interconnection station to Transmission 
Provider transmission line.
----------------------------------------------------------------------
    Tower number observed in the field. (Painted on tower leg)*
----------------------------------------------------------------------
    Number of third party easements required for transmission 
lines:*
----------------------------------------------------------------------

    * To be completed in coordination with Transmission Provider.
    Is the Facility in the Transmission Provider's service area?
____ Yes     ____ No
Local provider:--------------------------------------------------------
    Please provide proposed schedule dates:

Begin Construction--Date: ______
GSU transformers receive back feed--Date: ______
Generation Testing--Date: ______
Commercial Operation--Date: ______

Appendix 5

Optional Study Agreement

    This Agreement is made and entered into this ________ day of 
________, 20 ____by and between ________, a ________ organized and 
existing under the laws of the State of ________, (``Generator,'') 
and ________ a ________existing under the laws of the State of 
________, (``Transmission Provider ``). Generator and Transmission 
Provider each may be referred to as a ``Party,'' or collectively as 
the ``Parties.''

Recitals

    Whereas, Generator is proposing to develop a Facility or 
generating capacity addition to an existing Facility consistent with 
the Interconnection Request submitted by the Generator dated 
________;
    Whereas, Generator is proposing to establish an interconnection 
with the Transmission System; and
    Whereas, Generator has submitted to Transmission Provider an 
Interconnection Request; and
    Whereas, on or after the date when the Generator receives the 
Interconnection System Impact Study results, Generator has further 
requested that the Transmission Provider prepare an Optional Study;
    Now, therefore, in consideration of and subject to the mutual 
covenants contained herein the Parties agree as follows:
    1.0  When used in this agreement, with initial capitalization, 
the terms specified shall have the meanings indicated. Terms used in 
this agreement with initial capitalization but not defined in this 
Section 1 shall have the meanings specified in the Tariff.
    2.0  Generator elects and Transmission Provider shall cause an 
Optional Study consistent with Section 10.0 of these Interconnection 
Procedures to be performed in accordance with the Tariff.
    3.0  The scope of the Optional Study shall be subject to the 
assumptions set forth in Attachment A to this Agreement.
    4.0  The Optional Study shall be performed solely for 
informational purposes.
    5.0  The Optional Study report shall provide a sensitivity 
analysis based on the assumptions specified by the Generator in 
Attachment A to this Agreement. The Optional Study will identify the 
Transmission Provider Interconnection Facilities and the Network 
Upgrades, and the estimated cost thereof, that may be required to 
provide transmission service or interconnection service based upon 
the assumptions specified by the Generator in Attachment A.
    6.0  The Transmission Provider's good faith estimated cost for 
performance of the Optional Study is $10,000. The Transmission 
Provider's good faith estimate for the time of completion of the 
Optional Study is [insert date].
    Upon receipt of the Optional Study, the Transmission Provider 
shall charge and Generator shall pay the actual costs of the 
Optional Study.
    Any difference between the initial payment and the actual cost 
of the study shall be paid by or refunded to the Generator, as 
appropriate.
    7.0  Miscellaneous. [The Optional Study Agreement shall include 
standard miscellaneous terms including, but not limited to, 
indemnities, representations, disclaimers, warranties, governing 
law, amendment, execution, waiver, enforceability and assignment, 
that reflect best practices in the electric industry, and that are 
consistent with regional differences, applicable laws, and the 
organizational nature of each Party. All of these provisions, to the 
extent practicable, shall be consistent with the provisions of the 
Interconnection Procedures and the Interconnection and Operating 
Agreement.]
    In witness whereof, the Parties have caused this Agreement to be 
duly executed by their duly authorized officers or agents on the day 
and year first above written.

[Insert Name of Transmission Provider]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

[Insert Name of Generator]

By---------------------------------------------------------------------
Name (typed or printed):-----------------------------------------------
Title------------------------------------------------------------------

Attachment A to Optional Study Agreement

Assumptions Used in Conducting the Optional Study

[To be completed by Generator consistent with Section 10 of the 
Interconnection Procedures.]

[FR Doc. 02-10663 Filed 5-01-02; 8:45 am]
BILLING CODE 6717-01-P