[Federal Register Volume 77, Number 80 (Wednesday, April 25, 2012)]
[Proposed Rules]
[Pages 24646-24656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-9848]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket Nos. AD12-14-000 and AD11-11-000]


Open Access and Priority Rights on Interconnection Facilities

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of Inquiry.

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SUMMARY: In this Notice of Inquiry, the Commission seeks comment on 
open access and priority rights for capacity on interconnection 
facilities.

DATES: Comments are due June 11, 2012.

ADDRESSES: You may submit comments, identified by docket number and in 
accordance with the requirements posted on the Commission's Web site, 
http://www.ferc.gov. Comments may be submitted by any of the following 
methods:
     Agency Web Site: Documents created electronically using 
word processing software should be filed in native applications or 
print-to-PDF format and not in a scanned format, at http://www.ferc.gov/docs-filing/efiling.asp.

[[Page 24647]]

     Mail/Hand Delivery: Commenters unable to file comments 
electronically must mail or hand-deliver an original and copy of their 
comments to: Federal Energy Regulatory Commission, Secretary of the 
Commission, 888 First Street NE., Washington, DC 20426. These 
requirements can be found on the Commission's Web site, see, e.g., the 
``Quick Reference Guide for Paper Submissions,'' available at http://www.ferc.gov/docs-filing/efiling.asp, or via phone from Online Support 
at (202) 502-6652 or toll-free at 1-866-208-3676.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:

Becky Robinson (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory Commission, 888 First Street NE., 
Washington, DC 20426, (202) 502-8868.
Christopher Thomas (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE., 
Washington, DC 20426, (202) 502-8412.
Olga Kolotushkina (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street NE., Washington, 
DC 20426, (202) 502-6024.

SUPPLEMENTARY INFORMATION:

                            139 FERC ] 61,051
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                                                            Docket Nos.
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Open Access and Priority Rights on Interconnection           AD12-14-000
 Facilities.............................................
Priority Rights to New Participant-Funded Transmission..     AD11-11-000
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Notice of Inquiry

April 19, 2012.
    1. In this Notice of Inquiry (NOI), the Commission seeks to explore 
whether, and, if so, how the Commission should revise its current 
policy concerning priority rights and open access with regard to 
certain interconnection facilities. In a series of cases that have come 
before the Commission in recent years, the Commission has treated 
certain interconnection facilities \1\ as transmission facilities for 
purposes of open access policies. However, the Commission has permitted 
an owner of interconnection facilities to have priority to capacity 
over its facilities for its existing use at the time of a third-party 
request for service.\2\ In the instance where an owner of 
interconnection facilities has specific, pre-existing generator 
expansion plans with milestones for construction of generation 
facilities and can demonstrate that it has made material progress 
toward meeting those milestones, the Commission may grant priority 
rights for the capacity on the interconnection facilities to those 
future generation projects or expansions as well.\3\ Further, an 
affiliate of the current interconnection facility owner that is 
developing its own generator projects also may obtain priority rights 
to the capacity on the interconnection facilities by meeting the 
``specific plans and milestones'' standard with respect to future use, 
provided that the plans include a future transfer of ownership of the 
interconnection facilities to such an affiliate.\4\ This granting of 
priority rights preserves the ability of the generation developer to 
deliver its output to the point of interconnection with the 
transmission system, so long as it can make the relevant showing to the 
Commission sufficient to justify priority. The Commission requires 
that, upon receipt of a request for transmission service from an 
unaffiliated third party, a pro forma Open Access Transmission Tariff 
(OATT) must be filed by the owner of the facilities considered 
interconnection facilities under Order No. 2003 within 60 days of the 
date of the request.\5\
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    \1\ As noted below, the Commission in the past has used the term 
``generator lead lines'' to describe the class of facilities at 
issue in this proceeding. In this NOI, we will use the term 
``interconnection facilities,'' except when referencing comments on 
generator lead lines.
    \2\ See Milford Wind Corridor, LLC, 129 FERC ] 61,149, at P. 24 
(2009) (Milford); Terra-Gen Dixie Valley, LLC, 132 FERC ] 61,215, at 
P. 49 (2010) (Terra-Gen I).
    \3\ Aero Energy LLC, 116 FERC ] 61,149, at P. 28 (2006) (Aero); 
Milford, 129 FERC ] 61,149 at P. 22; and Alta Wind, 134 FERC ] 
61,109, at P. 16-17 (2011) (Alta Wind). Such plans and initial 
progress also must pre-date a valid request for service. Terra-Gen 
I, 132 FERC ] 61,215 at P. 53.
    \4\ See Milford, 129 FERC ] 61,149 at P. 5.
    \5\ Black Creek Hydro, Inc., 77 FERC ] 61,232, at 61,941 (1996); 
Termoelectrica U.S., LLC, 105 FERC ] 61,087, at P. 11 (2003).
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    2. To date, the Commission has applied this policy on a case-by-
case basis. The Commission's current policy is guided by the desire to 
prevent undue discrimination by ensuring that third parties have open 
access to available transfer capability that is not being used by the 
owner of the interconnection facilities. In doing so, the Commission 
has considered priority access to firm service, and granted waivers of 
certain provisions in the pro forma OATT to reflect the limited service 
available over interconnection facilities and the limited ability of 
generation developers to support certain OATT ancillary services and 
requirements.
    3. Through this Notice of Inquiry, the Commission seeks comment on 
options for addressing priority rights on interconnection facilities 
given the responses filed to the March 2011 technical conference, which 
identified a number of concerns with the Commission's current policy. 
As discussed in the sections that follow, the Commission seeks comments 
on alternative approaches to govern third-party requests for service 
and priority rights: continued use of an OATT framework with potential 
modification and clarification, including the potential introduction of 
a safe harbor period, and a case-by-case determination on the 
generation developer's priority rights; and use of a Large Generator 
Interconnection Agreement (LGIA)/Large Generator Interconnection 
Procedures (LGIP) framework in which the existing LGIA provisions that 
govern third-party use of a transmission provider's interconnection 
facilities would be extended to interconnection customer's 
interconnection facilities (i.e., allowing parties to mutually agree to 
the use of and compensation for the facilities). The Commission also 
seeks comment on the scope of our inquiry in this proceeding and 
whether, as a threshold matter, there is a need to reconsider the 
Commission policy as set forth in the recent series of cases.\6\
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    \6\ See, e.g., Aero, 116 FERC ] 61,149; Milford, 129 FERC ] 
61,149; Terra-Gen I, 132 FERC ] 61,215; and Alta Wind, 134 FERC ] 
61,109.
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    4. We note that there are numerous and potentially detailed issues 
embedded within the broad categories of this NOI. We encourage all 
interested stakeholders to address the specific questions for which the 
Commission seeks comment and to include as appropriate any proposed 
tariff language that should be considered.\7\ We also encourage 
comments on how any individual potential policy change discussed below 
would affect the viability of other policies (e.g., if the Commission 
were to adopt a safe harbor period, what are the implications for the 
current policy of demonstrating specific plans and milestones to secure 
priority rights)?
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    \7\ The Commission distinguishes this proceeding from the North 
American Electric Reliability Corporation's (NERC) current 
investigation into the applicability of Reliability Standards to 
interconnection facilities (Project 2010-07). Comments related to 
NERC's investigation are not the subject of this Notice of Inquiry 
and should be directed to NERC.

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[[Page 24648]]

I. Background

    5. Interconnection facilities are constructed to enable a 
generation facility or multiple generation facilities to transmit power 
from the generation facility to the integrated transmission grid. They 
are radial in nature, with a single point of interconnection with the 
network grid, and power flows toward the network grid, with no 
electrical loads between the generation facilities and the point of 
interconnection with the network grid. Interconnection facilities can 
be relatively short ancillary components to a single generation 
facility.\8\ Alternatively, they may span much longer distances and 
represent significant transmission capacity, being capable of 
interconnecting additional generation projects.\9\
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    \8\ See, e.g., Southern Company Serv., Inc., Docket No. ER12-
554-000 (involving an approximately 2,000 foot interconnection 
facility).
    \9\ See, e.g., Bayonne Energy Center, 136 FERC ] 61,019 (2011) 
(involving a 345 kV interconnection facility); Terra-Gen I, 132 FERC 
] 61,215 (involving a 212 mile interconnection facility).
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    6. Ownership and operation of interconnection facilities may take 
several forms. Under Order No. 2003,\10\ generation developers that 
wish to interconnect their generation facilities to the integrated 
transmission grid must submit an interconnection request to the 
relevant transmission provider pursuant to the transmission provider's 
LGIP and develop an LGIA. Interconnection facilities that are owned, 
controlled, or operated by the transmission provider, regardless of 
which party constructed the facilities, are designated as transmission 
provider's interconnection facilities under the LGIA. Third party use 
of the transmission provider's interconnection facilities is governed 
by the provisions of the LGIA.\11\ This provision permits the parties 
to negotiate for a third party to use the interconnection facilities 
and entitles the original interconnection customer to compensation for 
capital expenses it incurred to pay for the transmission provider's 
interconnection facilities and to compensation for the ongoing costs, 
including operation and maintenance costs, based on a pro rata use 
among the parties.
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    \10\ Standardization of Generator Interconnection Agreements and 
Procedures, Order No. 2003, FERC Stats. & Regs. ] 31,146 (2003), 
order on reh'g, Order No. 2003-A, FERC Stats. & Regs. ] 31,160, 
order on reh'g, Order No. 2003-B, FERC Stats. & Regs. ] 31,171 
(2004), order on reh'g, Order No. 2003-C, FERC Stats. & Regs. ] 
31,190 (2005), aff'd sub nom. Nat'l Ass'n of Regulatory Util. 
Comm'rs v. FERC, 475 F3d. 1277 (D.C. Cir. 2007), cert. denied, 552 
U.S. 1230 (2008).
    \11\ Section 9.9.2 states ``* * * if the Parties mutually agree, 
such agreement not to be unreasonably withheld, to allow one or more 
third parties to use Transmission Provider's Interconnection 
Facilities, or any part thereof, Interconnection Customer 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 the Transmission 
Provider, all third-party users and the Interconnection Customer * * 
*.''
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    7. However, where a generation developer has funded and constructed 
a portion of the interconnection facilities, and does not transfer 
ownership or operational control of those facilities to the 
transmission provider after construction, under the pro forma LGIA 
those facilities are classified as interconnection customer's 
interconnection facilities. That is, interconnection customers' 
interconnection facilities are located between the generation facility 
and the point at which either the transmission provider's 
interconnection facilities begin or the point of interconnection with 
the transmission provider's transmission system. Section 9.9.2 of the 
pro forma LGIA is inapplicable to third-party requests for use of an 
interconnection customer's interconnection facilities. These 
interconnection customer's interconnection facilities are the types of 
facilities at issue in this proceeding.

March 2011 Technical Conference

    8. The Commission held a technical conference in March 2011 to 
explore, among other things, the application of the Commission's open 
access policies to generator lead lines \12\ in the instance when 
affiliated or unaffiliated third-party generators also seek to use 
these facilities.\13\ Generally, commenters assert that these policies 
may be unduly burdensome and ill-suited for generator lead lines, and 
may have detrimental implications for the future development and 
financing of generator lead lines and their associated generation 
projects, especially renewable energy projects.\14\ Specifically, 
commenters \15\ argue that the Commission should recognize the 
commercial, technological, legal, and other differences between 
transmission lines and these generator lead lines when considering open 
access principles in the context of radial generator lead lines. 
Further, commenters raise a number of concerns with the Commission's 
current practice of imposing an OATT Filing requirement on generator 
lead line developers.
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    \12\ The technical conference announcements and participants 
used the term ``generator lead lines.'' While for this NOI we think 
it is appropriate to hold the discussion in terms of interconnection 
facilities, in the interest of being true to the comments, we will 
maintain the use of the term ``generator lead lines'' in this 
section.
    \13\ Priority Rights to New Participant-Funded Transmission, 
March 15, 2011 Technical Conference, AD11-11-000.
    \14\ The list of entities that filed comments or participated at 
this conference is in Appendix A of this NOI.
    \15\ First Wind, Invenergy, Duke, and NextEra.
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    9. Among the unique attributes of generator lead lines, commenters 
suggest the following features: (1) Generator lead lines are radial 
lines that serve the limited and sole purpose of connecting generation 
facilities to the transmission network, i.e., they are not an element 
of the integrated transmission network; (2) generator lead lines do not 
provide benefits to the transmission system in terms of capability or 
reliability, and cannot be relied on for coordinated operation of the 
transmission system; (3) an outage on the generator lead lines would 
not affect the entire transmission system; (4) generator lead lines do 
not provide ancillary services; (5) generator lead lines are often 
located in remote regions not in close proximity to load; (6) generator 
lead lines are owned by entities entirely different than those that 
typically own transmission; and (7) generator lead lines are viewed by 
their developers and banks providing financing as an integral part of 
the whole, not as a project or business separate from the generating 
facility.\16\
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    \16\ See, e.g., First Wind at 2-4; Invenergy at 1-2; Duke at 5-
6; and NextEra at 12-13.
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    10. Among the main concerns raised, commenters \17\ identify a 
``free rider'' problem that, in their opinion, produces a disincentive 
to be the first developer to build a generator lead line, while 
creating a relative advantage for other generation developers to be 
second in line.\18\ Several commenters \19\ argue that being subject to 
the open access requirements of Order Nos. 888, 889, and 890 (including 
the obligations to file an OATT within 60 days of a request for service 
and to administer an OATT, Open Access Same Time Information System, 
Standards of Conduct, and Uniform System of Accounts) imposes 
significant costs and difficulties for independent developers, 
especially small ones that are not affiliated with large utilities.\20\ 
These developers assert that complying with such responsibilities, in 
addition to the obligation to commence studies related to a third-party 
request for service, may require expenditure of a significant portion 
of their capital, and require

[[Page 24649]]

additional expertise, hardware, software, and staffing resources.\21\
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    \17\ Invenergy, CAHW, First Wind, Puget, and MidAmerican.
    \18\ See, e.g., Puget at 14-15; MidAmerican at 14-15.
    \19\ SCE, BP, CAHW, Puget, National Grid, MidAmerican, and 
Wenner.
    \20\ See, e.g., Puget at 7-8; AWEA at 10.
    \21\ Id.
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    11. Although these expenses may generally be considered normal 
costs of operating in a regulated environment, commenters argue that 
the costs are triggered by a relatively low threshold event--a written 
request unaccompanied by any deposit.\22\ Thus, commenters assert that 
the minimal commitment required for third-party requests for 
transmission service on generator lead lines may not sufficiently 
distinguish serious customers from those who may have merely a 
speculative interest in taking transmission service, while the 
generator lead line owner is immediately affected by having to file an 
OATT, expend significant staff resources, and incur significant costs 
to evaluate the feasibility of providing the requested service.\23\
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    \22\ See, e.g., BP at 8; CAWH at 3; and NextEra at 20-21. 
Commenters appear to be referring to sections 17.2, 18.2, or 29.2 of 
the pro forma OATT, which set forth information required for a 
completed application. In addition, where the owner of the 
facilities does not have an OATT on file, a third-party customer 
does not need to submit a deposit as part of its application for 
transmission service to the interconnection facilities. See 
Sagebrush, a California Partnership, 130 FERC ] 61,093, at P 57, 
order on reh'g, 132 FERC ] 61,234 (2010) (Sagebrush). We note that 
the deposit is required once an OATT is filed. See also Sagebrush, 
132 FERC ] 61,234 at P 44; Terra-Gen I, 132 FERC ] 61,215 at n.84.
    \23\ See, e.g., BP at 8; NextEra at 20-21.
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    12. Commenters also state that priority rights on their generator 
lead line are essential for the financing of generation projects 
because priority rights provide lenders with assurance that developers 
will still be able to use the line for their planned generation 
facilities.\24\ Commenters assert that lenders are wary of financing 
generation projects without a guarantee that the generator lead line 
will have sufficient capacity available to transmit the generation to 
the grid, for both early and later phases of their generation 
projects.\25\ In addition, commenters \26\ argue that generator 
developers are concerned with the policy of demonstrating ``specific 
plans and milestones,'' as it is unclear to them which milestones need 
to be described and which factors would adequately demonstrate material 
progress towards those milestones. They note that, although the 
Commission has found certain evidence sufficient in prior cases,\27\ 
its review was limited largely to privileged and confidential evidence, 
which could not be described in the Commission orders or otherwise 
disclosed to the public.\28\ Also, commenters argue that, given the 
uncertainty of generation project development due to financing, 
permitting, and various other factors, it may be neither possible for a 
generator developer to provide the needed detail about phases of 
generation that will be constructed in the future, nor prudent for 
developers to prematurely enter into binding contractual commitments 
merely for purposes of attempting to demonstrate priority rights.\29\
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    \24\ See, e.g., First Wind at 3-4.
    \25\ See, e.g., Allete at 2.
    \26\ Allete, BP and NextEra.
    \27\ See Aero, 118 FERC ] 61,210 at P 22; Milford, 129 FERC ] 
61,149 at P 22; and Alta Wind, 134 FERC ] 61,109 at P 17.
    \28\ NextEra at 22; BP Wind at 7.
    \29\ See, e.g., NextEra at 24; First Wind at 4.
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    13. Commenters note that certain sections of the pro forma OATT may 
be inapplicable to generator lead lines on a generic basis. For 
instance, commenters argue that a single circuit generator lead line 
can only provide firm or non-firm point-to-point service and cannot 
provide network service,\30\ so the pro forma OATT's standard terms and 
conditions for network service are unnecessary.\31\ Additionally, 
several commenters assert that because generator lead line owners do 
not have the capability to supply many ancillary services to third 
parties, the ancillary services provisions of the pro forma OATT are 
likewise inapplicable.\32\ Further, commenters argue that the planning 
requirements included in Attachment K of the OATT may be an unnecessary 
regulatory burden for generator developers of generation lead lines, as 
they have no native load growth, they do not own network transmission 
facilities, will not typically expand their lines absent a request for 
service, and the costs of such facilities are not socialized or based 
on a regional planning needs analysis.\33\
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    \30\ See, e.g., Sagebrush, 130 FERC ] 61,093 at P 29 (waiving 
the pro forma OATT's provisions for network service to a single 
transmission line that does not have a control area or the 
generation resources necessary to provide network service). See also 
Terra-Gen Dixie Valley, LLC, 134 FERC ] 61,027, at P 10-12 (2011) 
(Terra-Gen II).
    \31\ See, e.g., First Wind at 6-7.
    \32\ See, e.g., First Wind at 6-7; AWEA at 11; Edison Mission at 
25; and NextEra at 13.
    \33\ See, e.g., NextEra at 19-20.
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    14. Commenters concede that generator lead line owners are free to 
propose non-rate terms and conditions that differ from the pro forma 
OATT, where each deviation is supported by a demonstration that it is 
consistent with or superior to the pro forma OATT or does not apply 
given the particular generator lead line owner's business model.\34\ 
However, rather than the Commission continuing to evaluate such 
requests on a case-by-case basis, some commenters \35\ suggest that the 
Commission should establish a new pro forma OATT to apply generically 
to all generator lead lines.
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    \34\ See, e.g., Montana-Alberta Tie, Inc., 116 FERC ] 61,071, at 
P 60 (2006) (MATL).
    \35\ NextEra, AWEA, SCE, CAHW, NU/NSTAR, and First Wind.
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    15. As an alternative to the current Commission policy, some 
commenters suggest expanding section 9.9.2 of the LGIA, which addresses 
third-party access to transmission provider's interconnection 
facilities, to apply to interconnection customer's interconnection 
facilities as well, and argue that doing so would render unnecessary 
the requirement for the original interconnection customer to file an 
OATT when a third party requests service on their interconnection 
facilities.\36\ They argue that treating a generator requesting access 
to interconnection facilities as an interconnection request is a 
pragmatic approach that more accurately characterizes the service being 
sought, and eliminates the unduly burdensome and costly obligations 
imposed upon generation developers under the Commission's current 
policies that commenters assert impedes the development of location-
constrained renewable generation.\37\
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    \36\ Puget at 8; Edison Mission at 17.
    \37\ Edison Mission at 19.
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    16. Further, commenters express concern that the current policy 
does not adequately engage the transmission provider in the process of 
interconnecting a third-party requestor of service on a generator lead 
line.\38\ To reach load and serve customers under current policy, a 
third party may be required to make separate requests for access to the 
original interconnection customer's interconnection facilities and the 
transmission provider's interconnection facilities, as well as a 
transmission service request on the interconnecting transmission 
provider's transmission system.\39\ Commenters assert that this 
bifurcated process is inefficient.\40\
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    \38\ See, e.g., Puget at 11.
    \39\ Puget at 9.
    \40\ See, e.g., id. at 10.
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    17. Transmission providers,\41\ however, caution the Commission 
against discriminating against existing transmission providers vis-
[agrave]-vis independent merchant transmission developers with regard 
to priority rights or other regulatory requirements. Transmission 
providers argue that any separate treatment for independent developers 
is not appropriate, as transmission providers do not want to

[[Page 24650]]

be disadvantaged or discouraged from constructing generator lead lines. 
Instead, these commenters favor any future policies or clarifications 
of existing policy to be based on the type of facility being 
constructed, not on the entity that is proposing to own the 
facility.\42\
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    \41\ SCE at 3; Puget at 7; and MidAmerican at 6.
    \42\ See, e.g., Puget at 3.
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II. Discussion

A. Scope of Inquiry

    18. In this NOI, the Commission seeks comment on various options 
for addressing third-party access to and priority rights on 
interconnection customer's interconnection facilities. Appendix B to 
this document provides a schematic and explanation of what the 
Commission believes to be a typical situation. Much of the discussion 
and questions in this NOI derive from this understanding. As discussed 
above, Order No. 2003 addresses third party use of transmission 
provider interconnection facilities, but not interconnection customer 
interconnection facilities. With a goal of ensuring that a third party 
generator (G2) may be able to interconnect to interconnection customer 
interconnection facilities that in some instances have been 30, 50, or 
even hundreds of miles long, and up to 345 kV, the Commission has in a 
series of recent cases treated interconnection customer interconnection 
facilities as transmission facilities for purposes of open access 
policies and required that the original developer (G1) file an OATT 
within 60 days of a request for service on these facilities. In light 
of comments received, and as discussed in the sections that follow, the 
Commission seeks comments on two alternative approaches to govern 
third-party use and priority rights to use: (1) Continued use of an 
OATT framework with potential modification and clarification, including 
the potential introduction of a safe harbor period, and a case-by-case 
determination on the generation developer's priority rights; or (2) use 
of a LGIA/LGIP framework in which the existing LGIA provisions that 
govern third-party use of transmission provider's interconnection 
facilities would be extended to interconnection customer's 
interconnection facilities. In addition to the details of each 
approach, the Commission seeks comment on the relative ability of each 
to meet customer needs while ensuring that the rates, terms, and 
conditions of jurisdictional services remain just and reasonable and 
not unduly discriminatory.
    19. At the outset, however, the Commission also seeks comment on 
the scope of our inquiry in this proceeding and whether, as a threshold 
matter, there is a need to reconsider existing Commission policies. 
With the passage of time, concerns raised at the March 2011 technical 
conference and in subsequent comments may have been addressed as the 
industry has considered the Commission's existing precedent. If not, 
additional views on what approach would be most effective in addressing 
third-party requests for service and/or evaluating priority rights on 
interconnection facilities would be useful. The Commission encourages 
commenters to discuss their views of the needs of their business models 
in the context of the Commission's open access and interconnection 
policies, which are designed to ensure that transmission service is 
made available on terms that are just and reasonable and not unduly 
discriminatory.
    20. As noted above, the Commission intends that the focus of this 
proceeding is on interconnection customers' interconnection facilities 
as a class of facilities. If commenters disagree that this is the set 
of facilities at issue, then they should explain their understanding of 
the facilities at issue (referencing the drawing in Appendix B) and 
respond to the questions below in terms of the set of facilities they 
believe is at issue, and clarify that they are doing so. Similarly, if 
commenters distinguish application of certain policies based on the 
size of a facility or other characteristics, then they should respond 
to the questions below in terms of the relevant characteristics, and 
clarify that they are doing so.
    21. Specifically, the Commission seeks comment on these issues:

    i. To what specific set of facilities are commenters' concerns 
directed? That is, are commenters' concerns directed toward access 
to interconnection customer interconnection facilities, or to both 
interconnection customer interconnection facilities and transmission 
provider interconnection facilities?
    ii. Is requiring interconnection customer interconnection 
facilities to provide third-party access under an OATT framework 
necessary to ensure against undue discrimination and ensure just and 
reasonable rates, given that developers of remote generation are 
building interconnection facilities of considerable length and/or 
size?
    iii. Has the Commission's current policy blurred the pre-
existing line between interconnection service and transmission 
service with respect to providing for third-party access to 
interconnection facilities in such a way as to create unintended 
consequences?
    iv. Has industry largely adapted to current Commission policy 
such that the Commission should continue its current policy? If not, 
should the Commission respond to concerns expressed at the Technical 
Conference with (a) potential clarification of and modification to 
its current policy of treating interconnection facilities under the 
OATT framework; or (b) adoption of a framework under which it would 
consider issues of third-party access and priority rights under its 
interconnection rules and procedures?
    v. Should the Commission consider different treatment for larger 
versus smaller interconnection facilities, e.g., treating larger 
interconnection facilities under the OATT framework and smaller 
interconnection facilities under the LGIA/LGIP framework? If so, 
what would be the appropriate threshold for separating large versus 
small interconnection facilities (e.g., voltage, miles, or potential 
third party interconnection)? Should any distinctions be made among 
existing interconnection facilities, planned expansions of existing 
interconnection facilities, and new interconnection facilities, for 
any of the options?
    vi. From commenters' perspective, is there a meaningful 
distinction between the interconnection/operation of facilities 
proposed to provide independent transmission service (e.g., Chinook 
\43\) and generator interconnection facilities of long length and 
high voltage (e.g., Terra Gen I)?
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    \43\ Chinook Power Transmission, LLC, 126 FERC ] 61,134 (2009) 
(Chinook).
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    vii. Are there circumstances under which it would be feasible 
and/or desirable to allow the generation developer to choose whether 
its interconnection facilities would be governed by the OATT 
framework or the LGIA/LGIP framework, with the attendant rights and 
responsibilities of either choice?
    viii. For purposes of access policies, should the Commission 
distinguish between affiliates and nonaffiliates even when parties 
have otherwise agreed to the terms and conditions of access to the 
facilities?
    ix. Are there additional approaches that the Commission should 
consider? Be specific as to details. For example, commenters mention 
common facilities agreements (CFAs) as a means for parties to agree 
on access to interconnection customer's interconnection 
facilities.\44\ Commenters also mention a rebuttable de minimis 
exception for small interconnection customer's interconnection 
facilities.
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    \44\ See, e.g., BP Wind Energy North America Inc., 129 FERC ] 
61,207 (2009) (for an order accepting a CFA among affiliated parties 
and granting waiver of the requirements of Order Nos. 888 and 890). 
See Sky River, LLC, 134 FERC ] 61,064, at P 13 (2011) (for an order 
rejecting a CFA between unaffiliated parties and denying waiver of 
the requirements of Order Nos. 888 and 890). But see Ashtabula Wind, 
LLC, 127 FERC ] 61,215 at P 10 (2009) (granting waiver of the OATT 
requirements of Order Nos. 888 and 890 in the context of a Common 
Facilities Agreement between two unaffiliated parties).
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    x. To the extent that the concerns regarding third-party use and 
priority rights do not exist for transmission provider's 
interconnection facilities, why would a generation developer that 
builds its own interconnection facilities choose to retain 
operational control of them as opposed to

[[Page 24651]]

turning them over to the transmission provider?

B. Alternative Approaches for Comment

1. Open Access Transmission Tariff Framework
    22. If the Commission were to maintain reliance on the existing 
OATT framework, should it be modified to recognize the characteristics 
of interconnection customer's interconnection facilities and needs of 
generation developers?
a. Clarification of Specific Plans and Milestones Evaluation
    23. Our current case-by-case policy of determining a generation 
developer's priority rights to its interconnection facilities provides 
a degree of flexibility and recognizes that there is not necessarily a 
standard method for development of generation projects. However, as 
mentioned above, some commenters voice concerns that the Commission's 
current case-by-case evaluation of generation developers' requests for 
priority rights on their interconnection facilities based on the 
demonstration of specific plans and milestones for construction of 
their generation projects is not clear. To address this concern, the 
Commission could be more prescriptive on the ``specific plans and 
milestones'' standard to provide direction to generation developers 
seeking to establish their firm priority rights. Such requirements 
could include the type of evidence that would be indicative of 
sufficient ``specific plans and milestones,'' and the factors to be 
considered in determining whether ``material progress has been made.''
    24. The Commission seeks comment on issues related to the 
evaluation of specific plans and milestones in requests for priority 
rights to use capacity on interconnection customer's interconnection 
facilities. Specifically:

    i. Should the Commission continue its practice of evaluating 
requests for priority rights for interconnection customer's 
interconnection facilities on a case-by-case basis? If so, should 
the existing standards used to evaluate sufficiency of evidence to 
demonstrate priority be clarified or modified? How?
    ii. Should the Commission require generation developers to meet 
a given set of uniform criteria to secure priority rights? If so, 
what are the necessary criteria and what types of evidence are 
sufficient to demonstrate these criteria? Or, should generation 
developers have the flexibility to demonstrate the sufficiency of 
their plans based on various criteria, and what might these criteria 
be? In this regard, how should the Commission balance needs for 
regulatory certainty and flexibility?
b. OATT Filing Trigger
    25. The Commission's current policy to grant waiver of the 
requirement to file an OATT prior to the receipt of a third-party 
request for transmission is designed to reduce the regulatory burden on 
entities that did not intend to be transmission providers. However, as 
noted above, several commenters express concern with the existing 
standard for what constitutes a valid third-party request for service 
on interconnection customer's interconnection facilities. One panelist 
suggests that the standard for a third-party request should be at least 
to match the level of generation development that has been demonstrated 
by the original interconnection customer,\45\ although one commenter 
argues that this is an impossible standard because a generation 
developer is limited in how far it can proceed with its project until 
it has secured transmission capacity.\46\ One commenter also argues 
that generation developers should be allowed to require that 
transmission customers satisfy more stringent creditworthiness 
standards than currently required, because generation developers, in 
forming their business models and capital structure, do not contemplate 
taking on significant credit risks of competing generators.\47\
---------------------------------------------------------------------------

    \45\ Transcript at 128 (citing Kurt Adams of First Wind).
    \46\ Gradient at 7.
    \47\ Edison Mission at 24.
---------------------------------------------------------------------------

    26. Some commenters suggest modifying the rules for when and under 
what circumstances an OATT would need to be filed. For example, 
commenters argue that extending the current 60-day requirement to file 
an OATT is justified because of a possibility that a third party 
requesting service might withdraw after the generation developer has 
incurred significant costs in putting an OATT into place, including the 
internal structure to administer it.\48\ One commenter suggests 
requiring the generation developer to file a notice of a request for 
service within a certain number of days after receiving a request, and 
requiring them to file an OATT only after a generation interconnection 
agreement or a transmission service agreement is executed. They argue 
that this process would allow the generation developer to focus on 
performing the necessary studies instead of filing an OATT.\49\
---------------------------------------------------------------------------

    \48\ BP Wind at 8; NextEra at 20-21.
    \49\ NextEra at 20-21.
---------------------------------------------------------------------------

    27. The Commission seeks comment on issues related to third-party 
requests and when to require an OATT to be filed. Specifically:

    i. Should the Commission alter the standard for what constitutes 
a third-party request for service on interconnection customer's 
interconnection facilities? If so, what should the standard be? What 
would be the advantages and disadvantages of doing so, compared to 
current policy?
    ii. Should the standard that is required for a third-party 
request for service be the same standard that is required for the 
original interconnection customer (or its affiliate) to request 
priority rights, i.e., the specific plans and milestones 
demonstration discussed above? Why or why not? Would this raise 
confidentiality concerns, and if so, how could those be mitigated or 
avoided?
    iii. Should the Commission alter the requirement that a third-
party request triggers an OATT Filing requirement by the original 
interconnection customer within 60 days of receipt of a request for 
service? If so, how?
    iv. If the Commission were to alter the requirement that a 
third-party request triggers an OATT Filing requirement by the 
original interconnection customer, should there be different 
approaches when affiliates gain access to the interconnection 
facilities as opposed to when nonaffiliates gain access?
    v. Would it enhance regulatory certainty for the Commission to 
amend the LGIA to include contractual terms apprising the 
interconnection customer that it will become a transmission provider 
if a third party requests transmission service over its 
interconnection customer interconnection facilities?
    vi. Would the creation of a pro forma tailored OATT (discussed 
below) ease the burden on the generation developer to the point that 
the existing 60-day window for filing an OATT would be sufficient?
    vii. Some commenters argue that under current Commission policy, 
third parties must make up to four sequential requests for service 
(for interconnection and transmission services, from both the 
original interconnection customer and the transmission provider) to 
deliver their power. These commenters use this as an argument in 
favor of using the LGIA/LGIP framework. Is there a way under the 
OATT framework to coordinate the requests that a third party would 
need to make?
c. Tailored OATT
    28. Order No. 888 set forth a pro forma tariff that provides 
standardized terms and conditions for the provision of open access 
transmission service. The unique features of interconnection facilities 
may warrant tailoring the terms and conditions of the OATT to 
correspond to these unique features for providing open access 
transmission service. One option for recognizing these differences and 
for responding to the concerns laid out above may be to continue to use 
a pro forma OATT framework but, on a generic basis, modify the pro 
forma OATT to establish a tailored set of terms and conditions for 
service, i.e., a pro forma ``tailored

[[Page 24652]]

OATT,'' that would apply to a well-defined set of interconnection 
facilities.
    29. The Commission has previously granted waiver of specific 
provisions of the pro forma OATT to accommodate unique situations. For 
instance, as mentioned above, because interconnection facilities are 
not networked facilities, the Commission has granted waiver of the pro 
forma OATT requirement to provide network services on interconnection 
facilities.\50\ Also, because the transmission provider to which the 
interconnection facilities are interconnected is required to have an 
OATT that provides for ancillary services on a non-discriminatory 
basis, and because of the physical limitations of interconnection 
facilities, the Commission has granted waiver of the pro forma OATT 
requirement to provide ancillary services.\51\
---------------------------------------------------------------------------

    \50\ See Sagebrush, 130 FERC ] 61,093 at P 29; Terra-Gen Dixie 
Valley, LLC, 135 FERC ] 61,134, at P 12 (2011) (Terra-Gen III).
    \51\ See Sagebrush, 130 FERC ] 61,093 at P 29; Terra-Gen III, 
135 FERC ] 61,134 at PP 31-33.
---------------------------------------------------------------------------

    30. Many generation developers argue that the pro forma OATT is not 
well-suited for interconnection facilities and that these facilities 
should either be substantially or entirely exempt from pro forma OATT 
requirements.\52\ Some of those commenters argue that using a tailored 
OATT could address several of the concerns with existing policy by 
lessening the time, expense, and other burdens inherent in developing, 
filing, and administering an OATT. Proponents also argue that this 
approach would reduce confusion and the risk of inconsistency, which is 
heightened by employing a case-by-case waiver approach.\53\
---------------------------------------------------------------------------

    \52\ See, e.g., SCE at 4; Edison Mission at 13-14; Puget at 6; 
NextEra at 6; and First Wind at 7.
    \53\ NextEra at 2-3.
---------------------------------------------------------------------------

    31. Several participants in the Technical Conference identify pro 
forma OATT provisions they believe could be eliminated to create a pro 
forma tailored OATT. One commenter submitted a proposed pro forma 
``Radial OATT.'' \54\ Commenters argue that the network service 
provisions,\55\ the requirement to provide scheduling services,\56\ and 
the requirement to provide ancillary services,\57\ all provisions which 
the Commission has previously waived for interconnection customer's 
interconnection facilities, should be removed from a tailored OATT 
framework.
---------------------------------------------------------------------------

    \54\ NextEra at Attachment 1.
    \55\ CAHW at 23-24; Edison Mission at 22; NextEra at 15-16; and 
First Wind at 6-7.
    \56\ AWEA at 11; NextEra at 13.
    \57\ AWEA at 11; Edison Mission at 25; and NextEra at 11-12.
---------------------------------------------------------------------------

    32. Additionally, commenters argue that some other provisions the 
Commission has not waived are inappropriate for interconnection 
facilities. Specifically, commenters argue that requiring generation 
developers to adopt comparable Attachment K transmission planning 
process procedures makes little sense, and that instead the Commission 
should direct the generation developer, after receiving a request for 
service, to participate in the interconnecting transmission provider's 
Attachment K process.\58\ Commenters also suggest that the pro forma 
OATT requirement to calculate Available Transfer Capability may be 
inapplicable to interconnection facilities.\59\ Additionally, one 
commenter argues that developing rates for point-to-point transmission 
service for Schedules 7 and 8 may be particularly burdensome for 
generation developers not experienced with traditional rate regulation 
and that do not usually follow the Uniform System of Accounts,\60\ and 
also suggests waiver of the Open Access Same-Time Information System 
and the Standards of Conduct.\61\ Another commenter suggests allowing 
generation developers to use a single set of interconnection procedures 
and a single interconnection agreement for all generators, instead of 
separate procedures and agreements for large and small generators, 
because there is a limited set of potential customers.\62\ Another 
commenter argues that generation developers should not have an 
obligation to expand their interconnection facilities if there is 
insufficient capacity for a third party's intended use.\63\
---------------------------------------------------------------------------

    \58\ NextEra at 19-20; AWEA at 12; CAHW at 23; and NU/NSTAR at 
7-8.
    \59\ See, e.g., CAHW at 23; NextEra at 9-11.
    \60\ CAHW at 23-24.
    \61\ Id. at 24.
    \62\ Edison Mission at 27. They note the Commission rejected 
this idea in Sagebrush, 130 FERC ] 61,093 at P 52, but has allowed 
the use of a single set of procedures and a single agreement by the 
Midwest ISO.
    \63\ Invenergy at 11.
---------------------------------------------------------------------------

    33. Commenters also identify provisions in the pro forma OATT that 
they think should be modified in a tailored OATT framework. For 
instance, several commenters argue that, while the pro forma OATT 
requires the use of average line losses, it is appropriate for 
interconnection facilities to use incremental line losses, because they 
are discrete facilities and do not form a network.\64\ One commenter 
asserts that allocating average line losses under section 15.7 of the 
pro forma OATT fails to recognize that each successive user increases 
the losses borne by earlier users because losses increase as the line 
becomes fully used, and can render the power contracts of earlier users 
uneconomical or interfere with their ability to supply contracted 
power.\65\
---------------------------------------------------------------------------

    \64\ See, e.g., NextEra at 14-15; CAHW at 23; and Invenergy at 
9-10.
    \65\ CAHW at 23.
---------------------------------------------------------------------------

    34. The Commission seeks comments on these issues. Specifically:

    i. Would a pro forma tailored OATT accomplish the Commission's 
goals of ensuring non-discriminatory access? Is a pro forma tailored 
OATT appropriate in these circumstances, or should the Commission 
continue to evaluate requests for waiver of certain pro forma OATT 
provisions on interconnection facilities on a case-by-case basis?
    ii. Does a pro forma tailored OATT provide developers clarity 
beyond that which has already been established by Commission 
precedent on the applicability of the pro forma OATT to 
interconnection facilities?
    iii. How does a pro forma tailored OATT framework compare to the 
other options presented here in terms of commercial viability?
    iv. What are the relative benefits and drawbacks of the pro 
forma tailored OATT framework as compared to the existing policy? 
How should the Commission distinguish use of a pro forma tailored 
OATT for interconnection facilities and use of the pro forma OATT 
for public utility transmission providers that have divested their 
generation and thus may have limited ability to provide all OATT 
services, e.g., ancillary services? Similarly, should the Commission 
distinguish interconnection facilities that may use a pro forma 
tailored OATT from transmission facilities that may typically 
receive waiver of some pro forma OATT provisions, such as merchant 
transmission lines? If so, how?
    v. Identify the pro forma OATT provisions that should be 
excluded from a pro forma tailored OATT. Why should these be 
excluded?
    vi. What, if any, new or modified provisions only applicable to 
interconnection facilities should be added to a pro forma tailored 
OATT? Why?
    vii. If the Commission were to pursue a pro forma tailored OATT, 
should the Commission adopt the proposed pro forma Radial OATT 
submitted by NextEra? \66\ Please explain and be specific as to any 
changes that would need to be made to that proposal.
---------------------------------------------------------------------------

    \66\ NextEra at Attachment 1.
---------------------------------------------------------------------------

    viii. If a pro forma tailored OATT did not include a requirement 
to provide ancillary services, would relying on the public utility 
transmission provider to provide these services create an undue 
burden on the public utility transmission provider?
    ix. Should all interconnection customer's interconnection 
facilities be eligible to provide service under a tailored OATT? If 
not, which facilities should be excluded? Is the size of the 
facilities (for example, length, capacity, voltage) relevant to 
being eligible for tailored OATT treatment?

[[Page 24653]]

d. Safe Harbor
    35. A variation on the OATT framework is a safe harbor period. 
Within a safe harbor the generation developer would have a grace period 
in which the open access rules determined to be relevant for 
interconnection customer's interconnection facilities would not apply, 
to allow for the phased development of generation projects over that 
period. Accordingly, a generation developer would be assumed to have 
priority rights to capacity on its interconnection facilities during 
the safe harbor period.
    36. The Commission previously rejected a proposal for a safe harbor 
period of firm priority rights in Milford, stating that such a period 
would be inconsistent with Commission precedent granting waiver of open 
access requirements unless and until the owner of the line receives a 
request for transmission service.\67\ Nevertheless, many of the 
commenters \68\ suggest this option as a means to protect generation 
developers' priority rights to use their interconnection facilities for 
their phased generation project development.
---------------------------------------------------------------------------

    \67\ Milford, 129 FERC ] 61,149 at P 23.
    \68\ AWEA, BP, CAHW, Edison Mission, First Wind, Gradient, 
Invenergy, NextEra, and Sempra.
---------------------------------------------------------------------------

    37. The Commission seeks comments on issues related to a safe 
harbor period. Specifically:

    i. Is a safe harbor period a viable approach? What are the 
benefits and drawbacks of the safe harbor period approach, as 
compared with the current case by case demonstration of specific 
plans and milestones, or the other options presented herein? For 
instance, to what extent could such a safe harbor period be used as 
a means to prevent others from accessing the transmission system?
    ii. If the Commission were to institute a safe harbor period, 
should a generation developer be allowed to provide access to its 
interconnection facilities to others during the safe harbor period? 
If so, how should the Commission guard against discriminatory 
access?
    iii. If the Commission were to institute a safe harbor period, 
could the Commission adopt for the safe harbor period the 
requirement, currently applicable where the Commission has granted 
priority rights, that a generation developer make any currently 
unused capacity available to third parties until such time as its 
future generation projects come on line, in a way that is consistent 
with the objectives of a safe harbor period?
    iv. What would be the appropriate duration for the safe harbor 
period? Should there be differences in the duration of the safe 
harbor period based upon different resource types (geothermal, wind, 
solar, etc.)? If so, how can such distinctions be justified?
    v. Should a safe harbor period be established to begin 
automatically from some fixed milestone date (e.g., such as the in-
service date of the interconnection facilities)? If so, what should 
that milestone be? Or, should a developer be required to make a 
demonstration before it qualifies for a safe harbor (e.g., such as 
plans for phased generation development)? If the latter, what should 
be required to make such demonstration?
    vi. What types of interconnection facilities should qualify, and 
how should a generation developer identify itself as one that is 
pursuing phased generation development? Should there be an upper or 
lower limit on physical characteristics of the interconnection 
facilities such as length, voltage, capacity, etc. to qualify for 
safe harbor treatment?
    vii. Should there be intermediate development requirements to 
maintain safe harbor status? What would these requirements be? If 
requirements are not satisfied, what consequences are appropriate?
2. LGIA/LGIP
    38. An alternative framework for dealing with third-party requests 
for service and priority rights on interconnection customer's 
interconnection facilities would be to rely on a modified version of 
the LGIA/LGIP. Some commenters suggest expanding section 9.9.2 of the 
pro forma LGIA, which addresses third-party access to transmission 
provider's interconnection facilities, to apply to interconnection 
customer's interconnection facilities as well, and argue that doing so 
would render unnecessary the requirement for the generation developer 
to file an OATT.\69\ They argue that this would provide access to 
interconnection customer's interconnection facilities in the same 
manner that access to transmission provider's interconnection 
facilities is now provided.\70\ One commenter suggests that the 
Commission could also revise the definition of Affected System to 
include interconnection customer's interconnection facilities 
specifically, which would mean that these facilities would be studied 
as part of subsequent interconnection studies performed by the 
transmission provider for other interconnection customers, because an 
interconnection system impact study is defined in the pro forma LGIA as 
``an engineering study that evaluates the impact of the proposed 
interconnection on the safety and reliability of Transmission 
Provider's Transmission System and, if applicable, an Affected 
System.'' \71\ Commenters also propose that, under an LGIA framework, 
third parties should apply directly to the transmission provider (and 
not the generation developer) for access to excess capacity on the 
interconnection customer's interconnection facilities at the same time 
that they apply for service on the transmission provider's 
interconnection facilities and transmission system.\72\ These 
commenters argue that this process would be preferable to the 
Commission's current policy, under which a new interconnection customer 
could be required to negotiate separately with the generation developer 
and the transmission provider. Commenters further argue that involving 
the transmission provider at the onset of the process is more efficient 
because the transmission provider is critical to assessing system 
impacts, providing support such as ancillary services, and coordinating 
reliability issues.\73\
---------------------------------------------------------------------------

    \69\ Puget at 8; Edison Mission at 17; Allete at 2; SCE at 3-4; 
and MidAmerican at 15-16.
    \70\ Puget at 15.
    \71\ Edison Mission at 18 (referencing definitions in LGIA 
section 1).
    \72\ Puget at 9-10.
    \73\ Id.
---------------------------------------------------------------------------

    39. Commenters add that section 9.9.2 of the pro forma LGIA 
recognizes an opportunity for interconnection customers and the 
transmission provider to negotiate a multi-party agreement to determine 
the amount of compensation owed to an interconnection customer for 
capital expenses related to the transmission provider's interconnection 
facilities, as well as the allocation of on-going expenses.\74\ Some 
commenters suggest that the Commission could develop a pro forma multi-
party agreement to be used by entities in negotiating under section 
9.9.2.\75\
---------------------------------------------------------------------------

    \74\ See, e.g., Edison Mission at 18.
    \75\ Id.
---------------------------------------------------------------------------

    40. Generally, commenters argue that treating a third-party request 
for access to interconnection customer's interconnection facilities as 
an interconnection request is a pragmatic approach that more accurately 
characterizes the service being sought, and eliminates the unduly 
burdensome and costly obligations imposed upon generation developers 
under the Commission's current policies which commenters assert impede 
the development of location-constrained renewable generation.\76\ 
Commenters characterize expanding section 9.9.2 of the pro forma LGIA 
as an administratively simple and less onerous way to facilitate access 
to interconnection customer's interconnection facilities.\77\
---------------------------------------------------------------------------

    \76\ Edison Mission at 19.
    \77\ Puget at 8; Edison Mission at 19; and SCE at 3-4.
---------------------------------------------------------------------------

    41. The Commission seeks comment on whether treating third-party 
use of interconnection facilities as interconnection service is a 
workable

[[Page 24654]]

---------------------------------------------------------------------------
alternative to current Commission policy. Specifically:

    i. If the Commission were to expand section 9.9.2 to govern 
third party use of interconnection customer's interconnection 
facilities, what would prevent the original interconnection customer 
from evading negotiations with the third party (which is likely its 
competitor), withholding capacity for reasons other than a 
legitimate planned project, or putting excessive cost 
responsibilities on the third party?
    ii. Would extending section 9.9.2 as discussed above be 
sufficient to enable the transmission provider to facilitate 
granting third parties access to the interconnection customer's 
interconnection facilities? Or would other arrangements or 
modifications to the pro forma LGIA be needed to give the 
transmission provider that ability? For example, what commercial 
arrangements between the transmission provider and the original 
interconnection customer would be required to enable third-party 
interconnection to the interconnection customer's interconnection 
facilities?
    iii. What are the benefits and drawbacks of a third party 
requesting interconnection service from the transmission provider, 
rather than from the original interconnection customer?
    iv. Should the pro forma LGIA be modified to include an 
obligation to expand the existing capacity of the interconnection 
customer's interconnection facilities to accommodate a third-party 
request for interconnection service? If so, should the obligation 
apply to the original interconnection customer or the transmission 
provider? Would such a modification be consistent with the roles and 
responsibilities established in the rest of the pro forma LGIA for 
whichever party the obligation applies to (i.e., either the original 
interconnection customer or the transmission provider)?
    v. Are there other issues associated with third-party use of the 
interconnection customer's interconnection facilities that would 
require other modifications to the pro forma LGIA? If so, what are 
the issues, and what would these modifications be? For example, as 
the term is defined in the pro forma LGIA, interconnection 
facilities are ``sole use'' facilities. If the Commission were to 
rely on the interconnection rules and procedures to govern third 
party use of interconnection facilities, would we need to eliminate 
language in the LGIA/LGIP that refers to these as ``sole use'' 
facilities? If so, what would be the collateral consequences?
    vi. In addition to the modifications to the pro forma LGIA/LGIP 
identified above, would there be benefit in the Commission 
developing other pro forma agreements to facilitate third-party 
access to the interconnection customer's interconnection facilities 
(e.g., pro forma multi-party agency agreements, service agreements, 
cost-sharing agreements, etc.), or should those agreements be 
developed by the affected entities and reviewed by the Commission on 
a case-by-case basis?
    vii. How would expanding the pro forma LGIA to govern third-
party requests for service on the interconnection customer's 
interconnection facilities otherwise solve the concerns identified 
above? Are there other concerns with current Commission policy on 
access to interconnection customer's interconnection facilities that 
would remain under an LGIA/LGIP framework?
    viii. Should there be a limit (e.g., with respect to voltage, 
capacity, or length) to the interconnection customer's 
interconnection facilities that would qualify for treatment under 
the LGIA/LGIP framework discussed above?
    ix. How would an LGIA/LGIP approach compare to the other options 
presented here in terms of commercial viability and removing 
barriers to the development of location-constrained generation?

    42. The Commission also seeks comment on how priority rights to 
interconnection customer's interconnection facilities for phased 
generation development would work within an LGIA/LGIP framework. In 
making a valid interconnection request under the pro forma LGIP, an 
interconnection customer must submit (1) A $10,000 deposit, (2) a 
completed application with detailed generator data (Appendix 1 of the 
LGIP), and (3) a demonstration of site control or post an additional 
deposit of $10,000.\78\ Additionally, the LGIA stipulates various 
milestones that must be logged with dates for completion in Appendix B 
of the LGIA. If future generation phases are included in an initial 
request for interconnection service, then meeting these milestones as a 
means to demonstrate intended future use of the facilities would 
arguably be similar in substance to the Commission's current policy of 
demonstrating plans and milestones to secure priority rights, though 
relying solely on the interconnection rules and procedures for securing 
priority rights would nevertheless be a different approach than the 
Commission's current policy of demonstrating plans and milestones. The 
LGIP stipulates that a generator with a higher queued interconnection 
request or an executed LGIA (or unexecuted LGIA that a party has 
requested be filed with the Commission) is included in the base case 
for any subsequent Interconnection Feasibility or System Impact 
Study.\79\ So as long as the initial interconnection request or 
executed LGIA includes later phases of a generation project, under the 
interconnection rules and procedures with a modified section 9.9.2 to 
include interconnection customer interconnection facilities, the 
generation developer would not risk losing its planned interconnection 
service simply because a third party also seeks to use the 
interconnection customer interconnection facilities. Rather, the full 
capacity of the original interconnection customer's request, including 
capacity for future phases of generation if those are included in the 
original LGIA that was developed, is unavailable for use by any third 
party. This is currently how the transmission provider treats 
transmission provider interconnection facilities when it studies a new 
interconnection request. The Commission seeks comment, however, on 
whether this is a viable and fair approach for demonstrating and 
securing priority rights to capacity for phased generation projects. 
Specifically:
---------------------------------------------------------------------------

    \78\ LGIP section 3.3.1.
    \79\ See LGIP section 6.2 and 7.3.

    i. For generation projects that are built in phases, is it 
possible and/or typical to request the interconnection facilities be 
constructed in such a manner as to accommodate the capacity for 
future phases in an initial interconnection request and/or LGIA? How 
have developers been submitting interconnection requests and 
executing LGIAs for phased projects; i.e., have developers been 
including the capacity necessary for future generation phases in the 
initial interconnection request under LGIP?
    ii. How would the LGIA/LGIP approach fit with the current 
standard of demonstrating plans and milestones on a case-by-case 
basis to receive priority rights for future phases of a generation 
project? Does the existing pro forma LGIA/LGIP contain a 
sufficiently clear procedure, e.g., in submitting and maintaining a 
valid interconnection request and meeting the milestones set forth 
in Appendix B, such that this procedure might serve a similar 
purpose as the current standard of demonstrating specific plans and 
milestones?
    iii. If no separate priority rights request for a generation 
developer to establish capacity rights for its interconnection 
facilities would be necessary, what are the benefits and/or 
drawbacks of such an approach?
    iv. How would adopting an LGIA/LGIP framework otherwise affect 
generation developers seeking priority rights on their 
interconnection customer's interconnection facilities for their 
phased generation projects? If the generation developer plans to 
eventually use currently unused capacity on interconnection 
facilities, should the pro forma LGIA be modified to require that 
capacity on interconnection facilities be made available for third-
party use until the generation developer is ready to use that 
capacity?

III. Comment Procedures

    43. The Commission invites interested persons to submit comments on 
the matters, issues and specific questions identified in this notice. 
Comments are due 45 days from publication in the Federal Register. 
Comments must refer to Docket No. AD12-14, and must include the 
commenter's name, the organization they represent, if applicable, and 
their address in their comments.

[[Page 24655]]

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

IV. Document Availability

    47. 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.
    48. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    49. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at (202) 
502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

    By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

Appendix A

List of Commenters and Participants in Docket No. AD11-11-000

Adam Wenner *
Allete, Inc. d/b/a Minnesota Power
American Wind Energy Association (AWEA)
Anbaric Transmission (Anbaric)
BP Wind Energy North America (BP Wind)
California High Wind Partners (CAHW)
Clean Line Energy Partners (Clean Line)
Duke Energy (Duke)
Edison Mission Energy (Edison Mission)
Electric Power Supply Association (EPSA)
First Wind Holdings (First Wind)
Gradient Resources (Gradient)
Grasslands Renewable Energy (Grasslands)
Horizon Wind Energy LLC (Horizon)
Invenergy Wind & Invenergy Thermal (Invenergy)
LS Power Transmission (LS Power)
MidAmerican Energy Holdings Co. (MidAmerican)
National Grid USA (National Grid)
NextEra Energy Resources (NextEra)
Northeast Utilities (Northeast)
Northwestern Energy (Northwestern)
Pattern Transmission (Pattern)
Puget Sound Energy (Puget)
San Diego Gas & Electric (SDG&E)
Sempra Generation (Sempra)
Shell Wind Energy (Shell)
Southern California Edison (SCE)
Southern Co. (Southern)
Tonbridge Power (Tonbridge)
Transmission Access Policy Study Group (TAPS)
Transmission Developers, Inc. (TDI)
United Illuminating Co. (United)
Western Independent Transmission Group (WITG)
Zephyr Power Transmission (Zephyr)

    * Comments filed after due date.

Appendix B
[GRAPHIC] [TIFF OMITTED] TP25AP12.003

    Order No. 2003 addresses third party use of Transmission 
Provider Interconnection Facilities, which are those that are owned, 
controlled, or operated by the Transmission Provider. Order No. 2003 
permits the interconnection customer to build, own, control, and 
operate interconnection facilities, which are then defined as 
Interconnection Customer Interconnection Facilities under the LGIP/
LGIA, but Order No. 2003 does not address third party use of 
Interconnection Customer Interconnection Facilities. With a goal of 
ensuring that a third party generator (G2 in the above schematic) 
may be able to interconnect to Interconnection Customer 
Interconnection Facilities that in some instances have been 30, 50, 
or even hundreds of miles long, the

[[Page 24656]]

Commission has in a series of recent cases considered these 
Interconnection Customer Interconnection Facilities to be open 
access transmission facilities and required that the original 
developer (G1 in the above schematic) file an OATT within 60 days of 
a request for service on these facilities. In light of comments 
received, this NOI seeks feedback on whether the filing of an OATT, 
modifications to the LGIA/LGIP, or other means are better for 
addressing third-party access to facilities at issue here.

[FR Doc. 2012-9848 Filed 4-24-12; 8:45 am]
BILLING CODE 6717-01-P