[Federal Register Volume 84, Number 44 (Wednesday, March 6, 2019)]
[Rules and Regulations]
[Pages 8156-8185]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-03402]



[[Page 8155]]

Vol. 84

Wednesday,

No. 44

March 6, 2019

Part II





Department of Energy





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Federal Energy Regulatory Commission





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18 CFR Part 37





Reform of Generator Interconnection Procedures and Agreements; Final 
Rule

  Federal Register / Vol. 84 , No. 44 / Wednesday, March 6, 2019 / 
Rules and Regulations  

[[Page 8156]]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 37

[Docket No. RM17-8-001; Order No. 845-A]


Reform of Generator Interconnection Procedures and Agreements

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Order on rehearing and clarification.

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SUMMARY: The Federal Energy Regulatory Commission is granting in part 
and denying in part the requests for rehearing and clarification of its 
determinations in Order No. 845, which amended the Commission's pro 
forma Large Generator Interconnection Procedures and pro forma Large 
Generator Interconnection Agreement to improve certainty, promote more 
informed interconnection decisions, and enhance interconnection 
processes.

DATES: This order on rehearing and clarification is effective May 20, 
2019.

FOR FURTHER INFORMATION CONTACT: 
Tony Dobbins (Technical Information), Office of Energy Policy and 
Innovation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-6630, [email protected].
Kathleen Ratcliff (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street NE, 
Washington, DC 20426, (202) 502-8018, [email protected].
Adam Pan (Legal Information), Office of the General Counsel, Federal 
Energy Regulatory Commission, 888 First Street NE, Washington, DC 
20426, (202) 502-6023, [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

 
                                                         Paragraph No.
 
I. Introduction and Background.......................                  1
II. Discussion.......................................                  6
    A. Interconnection Customer's Option To Build....                  6
        1. Ameren Decision...........................                  7
        2. Justification for the Option To Build                      22
         Requirements................................
        3. FPA Section 203 Blanket Authorization for                  34
         Transfer of Facilities From Interconnection
         Customer to Transmission Provider...........
        4. Requirements Related to Reliability, CIP                   38
         Standards, Liability, Security, and Posting
         of Standards and Specifications.............
        5. Affected Systems..........................                 59
        6. Cluster Studies...........................                 62
        7. Stand Alone Network Upgrades..............                 65
        8. Cost Estimates............................                 69
        9. Oversight Costs...........................                 72
    B. Identification and Definition of Contingent                    76
     Facilities......................................
        1. Requests for Rehearing and Clarification..                 77
        2. Determination.............................                 78
    C. Transparency Regarding Study Models and                        79
     Assumptions.....................................
        1. Protection of Network Model Information...                 80
        2. Requirement to Post Network Model                          86
         Information.................................
    D. Congestion and Curtailment Information........                 89
        1. Request for Rehearing.....................                 90
        2. Determination.............................                 92
    E. Definition of Generating Facility in the Pro                   93
     Forma LGIP and Pro Forma LGIA...................
        1. Requests for Rehearing and Clarification..                 94
        2. Determination.............................                 95
    F. Interconnection Study Deadlines...............                 97
        1. Adoption of Order No. 845 Interconnection                  99
         Study Metric Reporting Requirements.........
        2. Interconnection Study Data Posting                        104
         Requirements................................
    G. Requesting Interconnection Service Below                      108
     Generating Facility Capacity....................
        1. Requests for Rehearing and Clarification..                111
        2. Determination.............................                114
    H. Utilization of Surplus Interconnection Service                119
        1. Original Interconnection Customer's                       122
         Ability To Utilize or Transfer Surplus
         Interconnection Service.....................
        2. Effect of Expedited Surplus                               130
         Interconnection Service Process on the Queue
         and on Transmission Planning................
        3. Impact of Differences in Electrical                       136
         Characteristics between the Surplus and
         Original Interconnection Customers..........
        4. Independent Entity Variations.............                139
        5. Additional Requests for Clarification                     142
         Regarding Surplus Interconnection Service...
    I. Material Modification Definition and                          148
     Incorporation of Advanced Technology............
        1. Requests for Rehearing and Clarification..                149
        2. Determination.............................                152
    J. Process Concerns..............................                156
        1. Compliance and Effective Dates............                156
    K. Interconnection Request Withdrawals...........                167
        1. Requests for Rehearing and Clarification..                168
        2. Determination.............................                169
    L. Wholesale Distribution Tariffs................                170
        1. Requests for Rehearing and Clarification..                170
        2. Determination.............................                172
III. Information Collection Statement................                173
IV. Regulatory Flexibility Act Certification.........                177
V. Document Availability.............................                178
VI. Effective Date...................................                181

[[Page 8157]]

 
Appendix A: List of Short Names of Entities that       .................
 Filed Requests for Rehearing or Clarification.......
Appendix B: Compilation of Final Rule Changes to the   .................
 Pro Forma LGIP Made by Order No. 845 and Order No.
 845-A...............................................
Appendix C: Compilation of Final Rule Changes to the   .................
 Pro Forma LGIA Made by Order No. 845 and Order No.
 845-A...............................................
 

I. Introduction and Background

    1. On April 19, 2018, the Federal Energy Regulatory Commission 
(Commission) issued Order No. 845.\1\ Order No. 845 revised the 
Commission's pro forma Large Generator Interconnection Procedures 
(LGIP) and pro forma Large Generator Interconnection Agreement (LGIA) 
to improve certainty for interconnection customers, promote more 
informed interconnection decisions, and enhance the interconnection 
process.\2\ The Commission expected these reforms to provide 
interconnection customers with better information and more options for 
obtaining interconnection service and that, as a result, there would 
likely be fewer interconnection requests overall and fewer 
interconnection requests that do not reach commercial operation. The 
Commission also anticipated that, as a result of these reforms, 
transmission providers would be able to focus on those interconnection 
requests that are most likely to reach commercial operation.\3\
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    \1\ Reform of Generator Interconnection Procedures and 
Agreements, Order No. 845, 83 FR 21,342 (May 9, 2018), 163 FERC ] 
61,043 (2018).
    \2\ Id. P 2. The pro forma LGIP and pro forma LGIA establish the 
terms and conditions under which public utilities that own, control, 
or operate facilities for transmitting energy in interstate commerce 
must provide interconnection service to large generating facilities. 
Id. P 6. A large generating facility is ``a Generating Facility 
having a Generating Facility Capacity of more than 20 [megawatts 
(MW)].'' See, e.g., pro forma LGIA Art. 1 (Definitions).
    \3\ Order No. 845, 163 FERC ] 61,043 at P 2.
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    2. In Order No. 845, the Commission adopted ten different reforms 
in three general categories. First, in order to improve certainty for 
interconnection customers, Order No. 845: (1) Removed the limitation 
that interconnection customers may only exercise the option to build a 
transmission provider's interconnection facilities \4\ and stand alone 
network upgrades \5\ in instances when the transmission provider cannot 
meet the dates proposed by the interconnection customer; and (2) 
required that transmission providers establish interconnection dispute 
resolution procedures that allow a disputing party to unilaterally seek 
non-binding dispute resolution. Second, to promote more informed 
interconnection decisions, Order No. 845: (1) Required transmission 
providers to outline and make public a method for determining 
contingent facilities; (2) required transmission providers to list the 
specific study processes and assumptions for forming the network models 
used for interconnection studies; (3) revised the definition of 
``Generating Facility'' to explicitly include electric storage 
resources; and (4) established reporting requirements for aggregate 
interconnection study performance. Third, Order No. 845 aimed to 
enhance the interconnection process by: (1) Allowing an interconnection 
customer to request a level of interconnection service that is lower 
than its generating facility capacity; (2) requiring transmission 
providers to allow for provisional interconnection agreements that 
provide for limited operation of a generating facility prior to 
completion of the full interconnection process; (3) requiring 
transmission providers to create a process for interconnection 
customers to use surplus interconnection service at existing points of 
interconnection; and (4) requiring transmission providers to set forth 
a procedure to allow transmission providers to assess and, if 
necessary, study an interconnection customer's technology changes 
without affecting the interconnection customer's queued position. In 
Order No. 845, the Commission made ``no changes to the variations 
allowed by Order No. 2003'' and further explained that ``on compliance, 
transmission providers may argue that they qualify for . . . variations 
from the requirements of [Order No. 845].'' \6\
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    \4\ According to the pro forma LGIA:
    Transmission Provider's Interconnection Facilities shall mean 
all facilities and equipment owned, controlled or operated by the 
Transmission Provider from the Point of Change of Ownership to the 
Point of Interconnection as identified in Appendix A to the Standard 
Large Generator Interconnection Agreement, including any 
modifications, additions or upgrades to such facilities and 
equipment. Transmission Provider's Interconnection Facilities are 
sole use facilities and shall not include Distribution Upgrades, 
Stand Alone Network Upgrades or Network Upgrades.
    Pro forma LGIA Art. 1 (Definitions).
    \5\ Stand alone network upgrades:
    Shall mean Network Upgrades that an Interconnection Customer may 
construct without affecting day-to-day operations of the 
Transmission System during their construction. Both the Transmission 
Provider and the Interconnection Customer must agree as to what 
constitutes Stand Alone Network Upgrades and identify them in 
Appendix A to the Standard Large Generator Interconnection 
Agreement.
    Id.
    \6\ Order No. 845, 163 FERC ] 61,043 at P 43 (citing 
Standardization of Generator Interconnection Agreements and 
Procedures, Order No. 2003, 68 FR 49,845 (Aug. 19, 2003), 104 FERC ] 
61,103, at P 826 (2003), order on reh'g, Order No. 2003-A, 69 FR 
15,932 (Mar. 26, 2004), 106 FERC ] 61,220 (2004), order on reh'g, 
Order No. 2003-B, 70 FR 265 (Jan. 4, 2005), 109 FERC ] 61,287 
(2004), order on reh'g, Order No. 2003-C, 70 FR 37,661 (Nov. 30, 
2005), 111 FERC ] 61,401 (2005), aff'd sub nom. Nat'l Ass'n of 
Regulatory Util. Comm'rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007), 
cert. denied, 552 U.S. 1230 (2008)).
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    3. The Commission received twelve requests for rehearing and/or 
clarification of Order No. 845.\7\ The rehearing and clarification 
requests raise issues related to all but one of the reforms adopted 
therein.\8\ E.ON Climate & Renewables North America, LLC, EDF 
Renewables, Inc., EDP Renewables North America LLC, and Enel Green 
Power North America, Inc. (collectively, Generation Developers) also 
request rehearing of the Commission's decision not to adopt a reform 
pertaining to congestion and curtailment information as the Commission 
proposed in the Notice of Proposed Rulemaking (NOPR).\9\ Some requests 
for rehearing and clarification also raised general or process 
concerns.\10\ For the reasons discussed below, we grant in part and 
deny in part the requests for rehearing and clarification.\11\
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    \7\ Appendix A provides the short names of the entities that 
filed requests for rehearing or clarification.
    \8\ No entity requested clarification or rehearing regarding the 
dispute resolution reform adopted in Order No. 845.
    \9\ Reform of Generator Interconnection Procedures and 
Agreements, 82 FR 4,464 (Jan. 13, 2017), 157 FERC ] 61,212 (2016).
    \10\ ISO New England Inc. (ISO-NE) filed an answer to AWEA's 
request for clarification. Rule 713(d) of the Commission's Rules of 
Practice and Procedure, 18 CFR 385.713(d) (2018), prohibits answers 
to requests for rehearing. Although AWEA has styled its pleading as 
a request for clarification, we consider it to be a request for 
rehearing and, on that basis, reject ISO-NE's answer. As a result, 
we also dismiss AWEA's answer to ISO-NE's answer, as well as Ameren 
and MISO TOs' answer to AWEA's answer.
    \11\ In Appendices B and C of this order, we provide all the 
revisions to, and additions of, provisions in the pro forma LGIP and 
the pro forma LGIA that the Commission made in Order No. 845 and 
this order on rehearing and clarification, Order No. 845-A. The 
underline and strikethrough in these appendices respectively reflect 
additions to, and deletions from, the pro forma LGIP and the pro 
forma LGIA made in Order Nos. 845 and Order No. 845-A. Additionally, 
these Appendices reflect several non-substantive corrections in 
these appendices to address stylistic inconsistencies in some of the 
new and revised pro forma LGIP and pro forma LGIA provisions. For 
example, in pro forma section 3.8, we have replaced the term ``GIA'' 
with ``Large Generator Interconnection Agreement'' and have 
capitalized some terms that are defined in the pro forma LGIP and/or 
the pro forma LGIA.

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[[Page 8158]]

    4. In particular, we grant rehearing with regard to the option to 
build reform to: (1) Require that transmission providers explain why 
they do not consider a specific network upgrade to be a stand alone 
network upgrade; and (2) allow transmission providers to recover 
oversight costs related to the interconnection customer's option to 
build. We also grant rehearing with regard to the surplus 
interconnection service reform to explain that the Commission does not 
intend to limit the ability of RTOs/ISOs to argue that an independent 
entity variation from the Commission's surplus interconnection service 
requirements is appropriate. We also grant rehearing in part and find 
that, with regard to the reform for requesting interconnection service 
below generating facility capacity, an interconnection customer may 
propose control technologies at any time in the interconnection process 
that it is permitted to request interconnection service below 
generating facility capacity.
    5. Additionally, we grant clarification with regard to the option 
to build by finding that: (1) The Order No. 845 option to build 
provisions apply to all public utility transmission providers, 
including those that reimburse the interconnection customer for network 
upgrades; and (2) the option to build does not apply to stand alone 
network upgrades on affected systems. We also grant clarification with 
regard to transparency regarding study models and assumptions to find 
that: (1) Transmission providers may use the Commission's critical 
energy/electric infrastructure information (CEII) regulations as a 
model for evaluating entities that request network model information 
and assumptions; and (2) the phrase ``current system conditions'' does 
not require transmission providers to maintain network models that 
reflect current real-time operating conditions of the transmission 
provider's system. With regard to the interconnection study deadlines 
reform, we grant clarification that the date for measuring study 
performance metrics and the reporting requirements do not require 
transmission providers to post 2017 interconnection study metrics. With 
regard to requesting interconnection service below generating facility 
capacity, we grant clarification that a transmission provider must 
provide a detailed explanation of its determination to perform 
additional studies at the full generating facility capacity for an 
interconnection customer that has requested service below its full 
generating facility capacity. Finally, in this order, we deny all other 
requests for rehearing and clarification.

II. Discussion

A. Interconnection Customer's Option To Build

    6. In Order No. 845, the Commission adopted a reform revising 
articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow 
interconnection customers to unilaterally select the option to build 
for stand alone network upgrades and transmission provider's 
interconnection facilities regardless of whether the transmission 
provider can complete construction of such facilities by the 
interconnection customer's proposed in-service date, initial 
synchronization date, or commercial operation date.\12\ Prior to Order 
No. 845, this option to build was available to an interconnection 
customer only if the transmission provider did not agree to the 
interconnection customer's preferred construction timeline. The 
Commission stated that the revisions adopted in Order No. 845 would 
``benefit the interconnection process by providing interconnection 
customers more control and certainty during the design and construction 
phases of the interconnection process.'' \13\
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    \12\ Order No. 845, 163 FERC ] 61,043 at PP 73-74.
    \13\ Id. P 85.
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1. Ameren Decision
    7. On January 26, 2018, less than three months prior to Order No. 
845's issuance, the United States Court of Appeals for the District of 
Columbia Circuit (D.C. Circuit) decided Ameren Services Co. v. 
FERC,\14\ a decision that vacated and remanded prior Commission 
decisions affecting the Midcontinent Independent System Operator, Inc. 
(MISO).\15\ Several requests for rehearing of Order No. 845 refer to 
the Ameren decision. To explain the context of these arguments, we 
provide some background regarding the Order No. 2003 interconnection 
pricing policy \16\ and network upgrade cost responsibility in MISO. We 
also provide a short summary of Ameren.
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    \14\ 880 F.3d 571 (D.C. Cir. 2018) (Ameren).
    \15\ In Ameren, the D.C. Circuit referred to the NOPR in this 
proceeding but only as it pertained to the Commission's original 
proposal to require agreement between a transmission owner and an 
interconnection customer before the transmission owner could elect 
to initially fund network upgrades. See Order No. 845, 163 FERC ] 
61,043 at P 122 (citing Ameren, 880 F.3d at 585). The Commission 
opted to not move forward with that particular proposal in ``light 
of the [Ameren] decision.'' Id.
    \16\ We use this term, consistent with its use in Order No. 
2003, to refer to Order No. 2003's policy of distinguishing 
interconnection facilities and network upgrades for the purpose of 
assigning ultimate cost responsibility. See, e.g., Order No. 2003, 
104 FERC ] 61,103 at PP 675-76.
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    8. In Order No. 2003, the Commission drew a distinction between 
interconnection facilities, which are ``found between the 
Interconnection Customer's Generating Facility and the Transmission 
Provider's Transmission System,'' \17\ and network upgrades, which 
``include only facilities at or beyond the point where the 
Interconnection Customer's Generating Facility interconnects to the 
Transmission Provider's Transmission System.'' \18\ Under Order No. 
2003, this classification determines which party has ultimate cost 
responsibility. Interconnection facilities ``[are] paid for solely by 
the Interconnection Customer'' and network upgrades ``[are] funded 
initially by the Interconnection Customer (unless the Transmission 
Provider elects to fund them).'' \19\
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    \17\ Id. P 21.
    \18\ Id.
    \19\ Id. P 22 (emphasis added).
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    9. While the Order No. 2003 interconnection pricing policy requires 
interconnection customers to initially fund network upgrades (unless 
the transmission provider elects to fund them), Order No. 2003 
established a crediting policy to reimburse interconnection customers 
for these costs.\20\ In particular, if the network upgrades necessary 
for an interconnection are ``funded initially by the Interconnection 
Customer,'' the interconnection customer ``would then be entitled to a 
cash equivalent refund . . . equal to the total amount paid for the 
Network Upgrades.'' \21\ Under this policy, the transmission provider 
must pay the total amount that the interconnection customer paid for 
network upgrades as ``credits against the Interconnection Customer's 
payments for transmission services.'' \22\ Order No. 2003-B states that 
``the period for reimbursement may not be longer than the period that 
would be required if the Interconnection Customer paid for transmission 
service directly and received credits on a dollar-for-dollar basis, or 
20 years [from the generating

[[Page 8159]]

facility's commercial operation date], whichever is less.'' \23\
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    \20\ In Order No. 2003, the Commission refers to this policy of 
reimbursing interconnection customers for the cost of network 
upgrades as its ``crediting policy.'' See, e.g., id. P 683. In this 
order, we refer to this mechanism as the Order No. 2003 crediting 
policy.
    \21\ Id. P 22.
    \22\ Id.
    \23\ Order No. 2003-B, 109 FERC ] 61,287 at PP 3 & 36.
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    10. MISO sought, and the Commission granted, an independent entity 
variation for MISO to depart from the Order No. 2003 crediting 
policy.\24\ Instead, MISO directly assigns to interconnection customers 
90 percent of the costs for network upgrades rated 345 kV and above 
(with the remaining 10 percent recovered on a system-wide basis) and 
100 percent of the costs for network upgrades rated below 345 kV.\25\
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    \24\ Midwest Indep. Transmission Sys. Operator, Inc., 129 FERC ] 
61,060, at P 59 (2009), order denying reh'g, 154 FERC ] 61,073 
(2016).
    \25\ Id. P 8.
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    11. In addition, under the interconnection pricing policy that MISO 
proposed and the Commission accepted, MISO's tariff provides MISO 
transmission owners two options for recovering network upgrade capital 
costs from interconnection customers. Under the first option, which we 
refer to in this order as MISO's interconnection customer initial 
funding option, the interconnection customer would fund the network 
upgrades prior to construction, and the MISO transmission owner would 
not refund the non-reimbursable portion of this capital (the 90 or 100 
percent) to the interconnection customer, and would neither include the 
capital in its rate base nor charge the interconnection customer a 
return on this capital.\26\ Under the second option, the MISO 
transmission owner would pay for the construction of the network 
upgrades and then recover the interconnection customer's portion of the 
cost burden over time through periodic network upgrade charges \27\ 
that include a return on the capital investment.\28\ In this order, we 
refer to this option as MISO's transmission owner initial funding 
option.
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    \26\ See Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 
61,220, at P 5 (2015).
    \27\ As noted by the D.C. Circuit, this network upgrade charge 
``paid from the incoming generator . . . includes both a return of 
capital . . . and a return on capital'' and is, according to the 
D.C. Circuit, ``thus economically equivalent to inclusion in the 
rate base, with the exception that they are charged specifically to 
the incoming generator rather than to all of the transmission 
owner's customers.'' Ameren, 880 F.3d at 576 (emphasis in original).
    \28\ See Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 
61,220 at P 8.
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    12. On June 18, 2015, in response to a complaint relating to these 
network upgrade initial funding options, the Commission instituted a 
proceeding under FPA section 206 to examine MISO's pro forma GIA, the 
pro forma Facilities Construction Agreement, and pro forma Multi-Party 
Facilities Construction Agreement.\29\ To support this decision, the 
Commission stated that allowing MISO transmission owners to 
unilaterally ``select transmission owner [initial] funding may be 
unjust, unreasonable, unduly discriminatory'' \30\ and ``may increase 
costs of interconnection service . . . with no corresponding increase 
in service.'' \31\
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    \29\ Id. P 2.
    \30\ Id. P 53.
    \31\ Id. P 48.
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    13. On December 29, 2015, the Commission denied rehearing on the 
June 2015 order. In particular, it stated that ``because there is the 
possibility for an increase in costs presented by a transmission 
owner's unilateral election [of transmission owner initial funding] as 
compared with [interconnection customer initial funding], and yet there 
is no increase in interconnection service provided, such unilateral 
election is unjust and unreasonable.'' \32\ For this reason, it 
directed MISO to revise its tariff ``to remove the ability of a 
transmission owner to unilaterally elect to initially fund network 
upgrades.'' \33\ In response to a request for rehearing on that order, 
the Commission again denied rehearing, finding that the December 29, 
2015 order did not deprive MISO transmission owners of the opportunity 
to earn a return ``to which they are entitled'' because pursuant to the 
interconnection customer initial funding option, ``the [MISO] 
transmission owner makes no investment of which, or on which, it is 
entitled to a return.'' \34\
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    \32\ Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator, 
Inc., 153 FERC ] 61,352, at P 32 (2015).
    \33\ Id. P 65.
    \34\ Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator, 
Inc., 156 FERC ] 61,099, at P 12 (2016). The Commission also stated 
that its ``task is to allow a public utility the opportunity to 
offer its investors a return commensurate with the risk associated 
with their investment, as represented by the utility's business and 
financial risks'' and that, under the interconnection owner initial 
funding option, ``the transmission owner does not bear that risk.'' 
Id. P 13.
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    14. The petitioners in Ameren challenged these three decisions 
regarding MISO's options for transmission owners to recover network 
upgrade capital costs from interconnection customers.\35\ The D.C. 
Circuit vacated and remanded the orders, finding that the Commission 
had not adequately responded to MISO transmission owner concerns that 
MISO's interconnection customer initial funding option ``compels 
[transmission owners] to construct, own, and operate facilities without 
compensatory network upgrade charges--thus forcing them to accept 
additional risk without corresponding return as essentially non-profit 
managers of [network] upgrade facilities.'' \36\ Regarding these risks, 
the D.C. Circuit stated that MISO transmission owners would have to 
``assume certain costs that are never compensated'' such as ``liability 
for insurance deductibles and all sorts of litigation, including 
environmental and reliability claims.'' \37\ Moreover, the D.C. Circuit 
stated that the MISO orders at issue suggest that the Commission does 
not believe that MISO transmission owners are entitled ``to earn a 
return on capital'' for network upgrades funded through MISO's 
interconnection customer initial funding despite transmission owners' 
assumption of such costs.\38\ For these reasons, the D.C. Circuit 
stated that the Commission ``must explain how investors could be 
expected to underwrite the prospect of potentially large non-profit 
appendages with no compensatory incremental return.'' \39\
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    \35\ Ameren, 880 F.3d at 573.
    \36\ Id.
    \37\ Id. at 580.
    \38\ Id. at 581.
    \39\ Id.
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a. Requests for Rehearing and Clarification
    15. MISO Transmission Owners (MISO TOs),\40\ Ameren Services 
Company (Ameren), and Edison Electric Institute (EEI) argue that Order 
No. 845's option to build revisions are contrary to (1) the regulatory 
compact (under which utilities construct facilities, have an obligation 
to serve, and receive a level

[[Page 8160]]

of earnings in return) and (2) the D.C. Circuit decision in Ameren.\41\ 
EEI argues that Order No. 845 fails to consider that transmission 
owners should receive compensation for the risk of owning and operating 
facilities. Additionally, MISO TOs, EEI, and Ameren argue that the 
Commission should grant rehearing and return to the pre-Order No. 845 
option to build provisions.\42\
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    \40\ The MISO transmission owners that participated in MISO TOs' 
Rehearing Request consist of: Ameren Services Company, as agent for 
Ameren Missouri, Ameren Illinois, and Ameren Transmission Company of 
Illinois; American Transmission Company LLC; Big Rivers Electric 
Corporation; Central Minnesota Municipal Power Agency; City Water, 
Light & Power (Springfield, IL); Cleco Power LLC; Cooperative 
Energy; Dairyland Power Cooperative; Duke Energy Business Services, 
LLC for Duke Energy Indiana, LLC; East Texas Electric Cooperative; 
Entergy Arkansas, Inc.; Entergy Louisiana, LLC; Entergy Mississippi, 
Inc.; Entergy New Orleans, LLC; Entergy Texas, Inc.; Great River 
Energy; Hoosier Energy Rural Electric Cooperative, Inc.; Indiana 
Municipal Power Agency; Indianapolis Power & Light Company; ITC 
Transmission; ITC Midwest LLC; Michigan Electric Transmission 
Company, LLC; MidAmerican Energy Company; Minnesota Power (and its 
subsidiary Superior Water, L&P); Missouri River Energy Services; 
Montana-Dakota Utilities Co.; Northern Indiana Public Service 
Company LLC; Northern States Power Company, a Minnesota corporation, 
and Northern States Power Company, a Wisconsin corporation, 
subsidiaries of Xcel Energy Inc.; Northwestern Wisconsin Electric 
Company; Otter Tail Power Company; Prairie Power Inc.; Southern 
Illinois Power Cooperative; Vectren Energy Delivery of Indiana; 
Southern Minnesota Municipal Power Agency; Wabash Valley Power 
Association, Inc.; and Wolverine Power Supply Cooperative, Inc.
    \41\ MISO TOs Rehearing Request at 11-12 (citing Ameren, 880 
F.3d at 581); Ameren Rehearing Request at 3-5; EEI Rehearing Request 
at 3-4.
    \42\ MISO TOs Rehearing Request at 14; Ameren Rehearing Request 
at 14; EEI Rehearing Request at 6.
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    16. MISO TOs argue that the revised option to build ``could impact 
the transmission provider's ability to construct, fund, and earn a 
return on stand alone network upgrades and transmission provider 
interconnection facilities'' because the ``the transmission provider 
could not place them into its rate base or otherwise earn a return on 
those upgrades and facilities.'' \43\ In support of their concerns, 
MISO TOs further state that ``compulsory generator-funded upgrades and 
facilities raise serious statutory and constitutional concerns'' 
similar to those addressed in Ameren, where the D.C. Circuit determined 
that, ``the Commission failed to explain why transmission owners should 
be forced to add `non-profit appendages' to their transmission 
system[s].'' \44\
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    \43\ MISO TOs Rehearing Request at 12-13.
    \44\ Id. at 13 (citing Ameren, 880 F.3d at 584).
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    17. If the Commission does not grant rehearing, MISO TOs and Ameren 
ask the Commission to clarify that the transmission owner may pay 
interconnection customers for construction costs incurred for the 
option to build facilities when the interconnection customer transfers 
them pursuant to article 5.2(9) of the pro forma LGIA and then charge 
the customer a return pursuant to a Facility Service Agreement.\45\ 
They argue that, without this clarification, the option to build would 
be contrary to the transmission owner's right to earn a return on 
facilities that are part of its transmission system.\46\
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    \45\ Id. at 14-15; Ameren Rehearing Request at 12-13.
    \46\ Ameren Rehearing Request at 13.
---------------------------------------------------------------------------

b. Determination
    18. We deny MISO TOs', EEI's, and Ameren's requests for rehearing. 
We find that the concerns identified in Ameren pertain solely to unique 
features of MISO's tariff and precedent that applies in MISO. As such, 
the Ameren decision does not implicate the Commission's revisions to 
the pro forma LGIP and the pro forma LGIA as outlined in Order No. 845. 
Specifically, the D.C. Circuit recognized in Ameren that, under MISO's 
transmission owner initial funding option, a MISO transmission owner 
can levy a network upgrade charge on interconnection customers after 
the transmission owner initially finances a network upgrade. The D.C. 
Circuit recognized that this network charge, which is memorialized in a 
Facilities Services Agreement, is ``paid [by] the incoming generator'' 
and ``includes both a return of capital . . . and a return on capital'' 
and ``is thus economically equivalent to inclusion in the rate base.'' 
\47\ We note that the network upgrade charge and Facilities Services 
Agreement are unique features of MISO's policy for recovering the cost 
of network upgrades, and the D.C. Circuit's primary concern was with 
the Commission's requirement that there be mutual agreement between the 
MISO transmission owner and the interconnection customer before the 
MISO transmission owner can elect MISO's transmission owner initial 
funding option. The D.C. Circuit found that, if the MISO transmission 
owner must obtain the interconnection customer's agreement to initially 
fund network upgrades, then the interconnection customer could 
effectively prevent the MISO transmission owner from assessing a 
network upgrade charge and receiving a return on its investment.\48\
---------------------------------------------------------------------------

    \47\ Ameren, 880 F.3d at 576.
    \48\ Id. at 580-81 (stating, among other things, that ``FERC 
must explain how investors could be expected to underwrite the 
prospect of potentially large non-profits appendages with no 
incremental return'' and that ``the answer FERC offered--to cajole 
consent from the generators [ ]--is a non sequitur'').
---------------------------------------------------------------------------

    19. Order No. 845 creates no such concerns. In reaching this 
conclusion, we first note that the Commission adopted the option to 
build in Order No. 2003 as part of the pro forma LGIA and that it did 
so in conjunction with the establishment of the Order No. 2003 
crediting policy. Viewing the option to build in this context, we find 
that Order No. 845 does not deprive transmission providers of the 
ability to earn a return of, and on, network upgrades, including stand 
alone network upgrades constructed pursuant to the option to build as 
outlined in the pro forma LGIA. On the contrary, Order No. 2003 
established the Order No. 2003 crediting policy, a mechanism that 
explicitly allows transmission providers to earn a return of, and on, 
the costs of network upgrades. To this end, under the Commission's 
policy as outlined in Order No. 2003, a transmission provider has the 
ability to earn a return of capital expenditure for network upgrades to 
the extent that it has reimbursed an interconnection customer with 
transmission credits.\49\ Additionally, when the transmission provider 
includes in its rate base the cost of a network upgrade, the 
transmission provider earns a return on the costs of this facility.
---------------------------------------------------------------------------

    \49\ Order No. 2003-A, 106 FERC ] 61,220 at P 657 (finding that 
a transmission provider ``cannot include the cost of the 
[interconnection customer-funded] Network Upgrades in its 
transmission rates until it has provided credits to the 
Interconnection Customer, and as long as any part of the Network 
Upgrades remains the responsibility of the Interconnection Customer, 
that part of the cost cannot be recovered in transmission rates''). 
This is true for all network upgrades, including stand alone network 
upgrades.
---------------------------------------------------------------------------

    20. In contrast to the option to build set forth in the pro forma 
LGIA, the concerns the D.C. Circuit identified in Ameren are present 
only in MISO because MISO's interconnection pricing policy is a unique 
variation from the Order No. 2003 crediting policy under which MISO 
directly assigns 90 or 100 percent of the network upgrade cost 
responsibility to interconnection customers. Commission precedent makes 
clear that, for variations from the Commission's pro forma provisions, 
it is the transmission provider that has the burden to demonstrate that 
it qualifies for the variation.\50\ Thus, we find that the Commission's 
Order No. 845 option to build revisions, which do not alter the Order 
No. 2003 crediting policy, do not conflict with the Ameren decision 
because they do not deprive transmission owners of the ability to earn 
a return on, and of, stand alone network upgrade costs.\51\
---------------------------------------------------------------------------

    \50\ See S. Cal. Edison Co., 141 FERC ] 61,100, at P 23 (2012) 
(``A transmission provider seeking a case-specific deviation from a 
pro forma interconnection agreement bears the burden of justifying 
and explaining what makes the interconnection unique and what 
operational concerns or other reasons necessitate the 
variations.''); see also PJM Interconnection, L.L.C., 111 FERC ] 
61,098, at P 9 (2005).
    \51\ Only the transmission provider's interconnection facilities 
and stand alone network upgrades, as opposed to all network 
upgrades, are relevant in the option to build discussion.
---------------------------------------------------------------------------

    21. Finally, we deny MISO's and Ameren's requests for clarification 
that the transmission owner may pay the interconnection customer for 
its option to build construction costs when the interconnection 
customer transfers the facilities to the transmission owner, and then 
charge the interconnection customer a return pursuant to a Facilities 
Services Agreement.\52\ We deny these requests because they are 
essentially requests for the Commission

[[Page 8161]]

to allow MISO to deviate from the requirements outlined in Order No. 
845 based on MISO's interconnection pricing policy, which is itself a 
deviation from Order No 2003. If MISO wishes to make such a request, it 
should do so when it submits its Order No. 845 compliance filing, and 
the Commission will consider it then.\53\
---------------------------------------------------------------------------

    \52\ MISO TOs Rehearing Request at 14-15; Ameren Rehearing 
Request at 12-13.
    \53\ We note that, in response to a similar request from MISO 
about how the requirements of Order No. 845 apply to MISO's specific 
interconnection process, the Commission stated that it will evaluate 
each transmission provider's tariff provisions at the time that it 
submits its compliance filing. Order No. 845, 163 FERC ] 61,043 at P 
204.
---------------------------------------------------------------------------

2. Justification for the Option To Build Requirements
    22. In Order No. 845, the Commission stated that the revisions it 
adopted to the option to build ``will benefit the interconnection 
process by providing interconnection customers more control and 
certainty during the design and construction phases of the 
interconnection process.'' \54\ The Commission also found that 
``limiting exercise of the option to build to circumstances where the 
transmission provider cannot meet the interconnection customer's 
requested dates is not just and reasonable.'' \55\ In support of this 
conclusion, the Commission stated that this limitation ``restrict[ed] 
an interconnection customer's ability to efficiently build the 
transmission provider's interconnection facilities and stand alone 
network upgrades in a cost-effective manner, which could result in 
higher costs for interconnection customers.'' \56\ Furthermore, the 
Commission stated that ``in circumstances where an interconnection 
customer cannot exercise the option to build, it may pay more and/or 
wait longer for the construction of the transmission provider's 
interconnection facilities and stand alone network upgrades.'' \57\
---------------------------------------------------------------------------

    \54\ Id. P 85.
    \55\ Id.
    \56\ Id.
    \57\ Id. P 86.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    23. Multiple entities argue that the Order No. 845 revisions to the 
option to build fail to satisfy the legal requirements of Federal Power 
Act (FPA) section 206.\58\ Ameren and MISO TOs argue that the 
Commission failed to make a showing of undue discrimination or harm 
arising from the current pro forma LGIA or the option to build 
provisions under MISO's tariff.\59\ MISO TOs further argue that this 
lack of undue discrimination is especially ``true in [regional 
transmission operators or independent system operators (RTOs/ISOs)] 
where the interconnection process is administered by an independent 
entity.'' \60\
---------------------------------------------------------------------------

    \58\ 16 U.S.C. 824e (2012).
    \59\ Ameren Rehearing Request at 7; MISO TOs Rehearing Request 
at 7.
    \60\ MISO TOs Rehearing Request at 7-8.
---------------------------------------------------------------------------

    24. Additionally, MISO TOs state that interconnection customers in 
non-RTOs/ISOs generally receive transmission credits to reimburse them 
for any network upgrades they fund upfront \61\ and that, in a RTO/ISO, 
an interconnection customer receives transmission rights or other 
rights in connection with the upgrades they fund.\62\ MISO TOs argue 
that these factors provide ``a level of cost protection to 
interconnection customers, and may leave them ultimately indifferent as 
to costs.'' \63\ Southern California Edison Company (SoCal Edison) 
argues that, without oversight for costs incurred, interconnection 
customers have no incentive to prevent over-spending to accelerate 
construction.\64\
---------------------------------------------------------------------------

    \61\ Id. at 9.
    \62\ Id.
    \63\ Id.
    \64\ SoCal Edison Request for Clarification at 3. Under the 
California Independent System Operator Corporation (CAISO) tariff, 
there is a limit on refunds of $60,000/MW for the cost of 
Reliability Network Upgrades, but below that threshold, SoCal Edison 
does not see any cost containment incentive or mechanism to review 
costs. CAISO Tariff, Appendix DD, Section 14.3.2.1(1); see also 
Southern Rehearing Request at 7.
---------------------------------------------------------------------------

    25. Ameren and EEI argue that the Commission failed to demonstrate 
that the existing option to build provisions are not just and 
reasonable.\65\ EEI contends that simply because an interconnection 
customer may build more cheaply and quickly does not mean that charges 
associated with facilities built by the transmission provider are 
unjust and unreasonable.\66\
---------------------------------------------------------------------------

    \65\ Ameren Rehearing Request at 7; EEI Rehearing Request at 3.
    \66\ EEI Rehearing Request at 5 & 7.
---------------------------------------------------------------------------

    26. EEI further argues that the prior option to build provisions 
``ensure that the Transmission Provider would be responsive to the 
Interconnection Customer's requested dates and provided an option . . . 
if the Transmission Provider was not responsive.'' \67\ EEI goes on to 
argue that Order No. 845 is unjust and unreasonable because, as more 
interconnection customers exercise the option the build, the 
transmission provider's ability to make decisions about its own assets 
or the location of the assets will ``progressively decline.'' \68\
---------------------------------------------------------------------------

    \67\ Id. at 7.
    \68\ Id.
---------------------------------------------------------------------------

    27. EEI, MISO TOs, and Ameren also assert that Order No. 845 only 
cites one example where cost and time savings have occurred.\69\ MISO 
TOs contend that the Commission failed to explain why this example 
justifies the ``across-the-board determination that all existing option 
to build provisions are not just and reasonable.'' \70\ Southern 
Company Services, Inc. (Southern) argues that ``merely suggesting that 
changes can occur'' does not provide ``substantial evidence'' of the 
need for the new Order No. 845 option to build requirements.\71\
---------------------------------------------------------------------------

    \69\ MISO TOs Rehearing Request at 9 (citing Order No. 845, 163 
FERC ] 61,043 at P 86); Ameren Rehearing Request at 8.
    \70\ MISO TOs Rehearing Request at 9.
    \71\ Southern Rehearing Request at 7 (citing Nat. Fuel Gas 
Supply Corp. v. Fed. Energy Reg. Comm'n, 468 F.3d 831, 839 (D.C. 
Cir. 2006); Motor Vehicle Mfrs. Assoc. of the U.S. v. State Farm 
Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) (Motor Vehicle Mfrs.); 
Allentown Mack Sales & Serv., Inc. v. Nat. Labor Relations Bd., 522 
U.S. 359, 374 (1998)).
---------------------------------------------------------------------------

    28. SoCal Edison seeks clarification regarding the Order No. 845 
option to build revisions.\72\ Specifically, it argues that the 
Commission fails to address the cost risk to California ratepayers 
under the CAISO tariff, which requires that transmission customers, not 
third party builders or interconnection customers, ultimately bear 
network upgrade costs.\73\ SoCal Edison states that, under the CAISO 
tariff, the transmission provider would reimburse the interconnection 
customer over five years for the amount the interconnection customer 
spent on the stand alone network upgrades.\74\ SoCal Edison states, 
however, that the LGIA does not include a mechanism for ratepayers to 
challenge the justness and reasonableness of the construction costs 
that the interconnection customer incurred.\75\ For these reasons, 
SoCal Edison requests that the Commission clarify whether it intended 
these new rules to apply in instances when the interconnecting customer 
does not ultimately bear the costs of its construction for network 
upgrades.\76\ Further, SoCal Edison requests that the Commission 
clarify that it would not prohibit the transmission provider from 
simply putting the interconnection customer's costs into rates per the 
CAISO tariff.\77\
---------------------------------------------------------------------------

    \72\ SoCal Edison Request for Clarification at 2.
    \73\ Id. at 3.
    \74\ Id. (citing CAISO Tariff, Appendix U, Section 3.4.3).
    \75\ Id.
    \76\ Id. at 4.
    \77\ Id.

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

[[Page 8162]]

b. Determination
    29. We deny Ameren's, MISO TOs', SoCal Edison's, EEI's, and 
Southern's rehearing requests. First, in response to Ameren's and MISO 
TOs' claims that the Commission failed to make a showing of undue 
discrimination, we note that the Commission did not argue that the 
Order No. 845 option to build provisions are necessary to address undue 
discrimination in the pre-Order No. 845 option to build process. 
Rather, the Commission justified changes to the option to build by 
stating that the pre-Order No. 845 option to build provisions are not 
just and reasonable because they restrict ``an interconnection 
customer's ability to efficiently build the transmission provider's 
interconnection facilities and stand alone network upgrades in a cost-
effective manner, which could result in higher costs for 
interconnection customers.'' \78\ In addition, the Commission found 
that the pre-Order No. 845 option to build provisions could prevent 
interconnection customers from reducing construction times.\79\
---------------------------------------------------------------------------

    \78\ Order No. 845, 163 FERC ] 61,043 at P 85.
    \79\ See id. P 86 (finding that where ``an interconnection 
customer cannot exercise the option to build, it may . . . wait 
longer for the construction of transmission provider's 
interconnection facilities and stand alone network upgrades'').
---------------------------------------------------------------------------

    30. We also disagree with MISO TOs' and SoCal Edison's assertions 
that interconnection customers that receive transmission credits, 
transmission rights, or other rights in connection with network 
upgrades have no economic incentive to reduce network upgrade costs. 
Although under Order No. 2003 interconnection customers that fund the 
costs of network upgrades receive network upgrade cost reimbursement 
through crediting of all their network upgrade costs, interconnection 
customers still are generally responsible for financing all of their 
construction costs up front and compete with other developers to meet 
the substantial requirements to obtain such financing. The need to 
obtain financing up front and the fact that interconnection customers 
can wait for years for full reimbursement of their network upgrade 
costs create an incentive for interconnection customers to keep overall 
project costs low. Additionally, interconnection customers have 
emphasized to the Commission that certainty and the ability to control 
risks are necessary to successfully develop generation.\80\ The option 
to build revisions increase certainty and the ability to control risks 
by providing interconnection customers with greater control over their 
up-front construction costs and schedule.
---------------------------------------------------------------------------

    \80\ See, e.g., 2015 AWEA Petition at 4 (``[t]he key reforms 
requested in the [AWEA petition] relate to the certainty of . . . 
the interconnection process'' and include reforms for ``creating 
more certainty on network upgrade costs'') & 8 (``typically the part 
of the project development process with the greatest uncertainty and 
risk of delay for developers and the area in which developers often 
have the fewest opportunities to manage and control . . . risks'') 
(emphasis added).
---------------------------------------------------------------------------

    31. These facts support the Commission's conclusion that 
interconnection customers have incentives to reduce network upgrade 
costs. In addition, we believe that a transmission provider's 
incentives to reduce network upgrade costs may not be as significant as 
an interconnection customer's incentives to reduce such costs. In 
support of this conclusion, we note that, under the Order No. 2003 
crediting policy, where a transmission provider reimburses the 
interconnection customer for the network upgrade costs, it does so over 
time through credits rather than funding the costs up front. Moreover, 
unlike an interconnection customer, a transmission owner is allowed to 
recover the cost of a transmission credit in its rate base as it 
reimburses the interconnection customer. By doing so, the transmission 
provider, unlike the interconnection customer, will be able to earn a 
return on its cost for providing the transmission credit. Furthermore, 
although an interconnection customer receives a transmission credit 
reimbursement for any stand alone network upgrades it pays for upfront, 
interconnection customers do not receive any form of reimbursement for 
the costs of the transmission provider's interconnection facilities. 
Thus, an interconnection customer has an even greater incentive to 
reduce costs for the transmission provider's interconnection 
facilities.
    32. In response to Ameren's and EEI's contention that the 
Commission provided insufficient evidence for concluding that the pre-
Order No. 845 option to build was unjust and unreasonable, we note the 
Commission's reliance upon the reasonable economic proposition that 
interconnection customers would have a significant economic incentive 
to build the transmission provider's interconnection facilities and 
stand alone network upgrades in a cost-effective manner.\81\ We 
reiterate the finding that ``in circumstances where an interconnection 
customer cannot exercise the option to build, it may pay more and/or 
wait longer for the construction of the transmission provider's 
interconnection facilities and stand alone network upgrades.'' \82\ 
Additionally, we continue to find that the pre-Order No. 845 option to 
build provisions were unjust and unreasonable for creating a hurdle 
that could prevent interconnection customers from reducing their costs 
and shortening their construction timelines. For these reasons, we 
disagree with EEI's, MISO TOs', and Ameren's claims that the Commission 
relied solely on a single example of time and cost savings.
---------------------------------------------------------------------------

    \81\ See S.C. Pub. Serv. Auth. v. FERC, 762 F.3d 41, 65 (D.C. 
Cir. 2014) (stating that to meet the FPA section 206 requirements, 
the Commission must support its findings by ``substantial 
evidence,'' not ``empirical evidence'' and that its findings need 
only be based upon ``reasonable economic propositions''); see also 
Pub. Serv. Co. of Colo., 163 FERC ] 61,204, at P 31 (2018) (finding 
that applying this standard requires ``evidence that `a reasonable 
mind might accept'' as ``adequate to support a conclusion'' and that 
the Commission's findings may be based on ``reasonable economic 
propositions'' and ``predictive judgments grounded in basic economic 
principles'').
    \82\ Order No. 845, 163 FERC ] 61,043 at P 86.
---------------------------------------------------------------------------

    33. Finally, we grant SoCal Edison's request and clarify that the 
Order No. 845 option to build provisions apply to all public utility 
transmission providers, including those that reimburse the 
interconnection customer for network upgrades. In Order No. 845, the 
Commission's option to build revisions only eliminated the limitation 
that prevents interconnection customers from exercising the option to 
build transmission provider's interconnection facilities and stand 
alone network upgrades unless the transmission provider informs the 
interconnection customer that it cannot meet dates proposed by the 
interconnection customer.\83\ Order No. 845 made no other modifications 
relating to the treatment of stand alone network upgrades; nor did it 
alter the Order No. 2003 crediting policy, which provides a mechanism 
for an interconnection customer to receive transmission credits in 
reimbursement for the total amount that the interconnection customer 
pays for network upgrades, including stand alone network upgrades. 
Thus, as noted above, pursuant to the Order No. 2003 crediting policy, 
the transmission provider can recover the costs of such credits in 
their transmission rate base after it provides the credits to the 
interconnection customer.\84\ Moreover, as noted above, the Commission 
relied on the reasonable economic proposition that interconnection 
customers have a greater economic incentive than

[[Page 8163]]

transmission providers to reduce the cost of stand alone network 
upgrades.
---------------------------------------------------------------------------

    \83\ Id. P 3.
    \84\ See Order No. 2003-A, 106 FERC ] 61,220 at P 657.
---------------------------------------------------------------------------

3. FPA Section 203 Blanket Authorization for Transfer of Facilities 
From Interconnection Customer to Transmission Provider
    34. Article 5.2(9) of the pro forma LGIA, which Order No. 845 did 
not modify, states that ``[u]nless Parties otherwise agree, 
Interconnection Customer shall transfer ownership of Transmission 
Provider's Interconnection Facilities and Stand Alone Network Upgrades 
to Transmission Provider.'' Eversource Energy Service Company 
(Eversource) submitted comments in response to the NOPR asking the 
Commission to grant a blanket authorization under FPA section 203 \85\ 
for the transfer of transmission provider's interconnection facilities 
and/or stand alone network upgrades constructed pursuant to the option 
to build.\86\ Eversource argued, among other things, that where 
electricity flows over transmission facilities in interstate commerce, 
such ``facilities are considered to be [Commission-jurisdictional], 
even if not otherwise in service'' and that the regulatory approval 
required by FPA section 203 is ``an additional undertaking . . . that 
would not occur but for the interconnection customer's construction of 
the transmission owner's transmission facilities.'' \87\ In Order No. 
845, the Commission did not address this request for a blanket 
authorization.
---------------------------------------------------------------------------

    \85\ 16 U.S.C. 824b.
    \86\ Eversource 2017 Comments at 17-19 (citing 18 CFR 33.1).
    \87\ Id. at 18.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    35. EEI and MISO TOs ask the Commission to grant the request 
originally made in Eversource's NOPR comments for a FPA section 203 
blanket authorization for facilities built pursuant to the option to 
build if the Commission decides to retain the Order No. 845 revisions 
to the option to build.\88\ In support, EEI states that the Commission 
provided no reasoning for not granting such a blanket authorization and 
that the required transfer, coupled with a ``likely increase'' in the 
need for such transfers, weighs in favor of ``decreasing the regulatory 
burden'' on transmission providers and interconnection customers.\89\ 
EEI argues that, like other FPA section 203 blanket authorizations, 
such transactions would not raise concerns under the Commission's 
traditional analysis.\90\ EEI further argues that failure to create 
such a blanket authorization would require transmission owners to 
either accept ownership prior to energization or face the task of 
making an FPA section 203 filing prior to transfer.\91\ EEI argues that 
such issues could delay the transfer of these facilities and cause 
other complications in the operability of assets where generating 
assets have obligations to come online on a certain timetable. EEI 
argues that a blanket authorization would increase the likelihood of 
timely transfer after the facilities are tested and determined to be 
safe to operate as part of the transmission system.\92\ Finally, EEI 
argues that granting such a blanket authorization is consistent with 
the goal of reducing the regulatory burden of FPA sections 203 and 205.
---------------------------------------------------------------------------

    \88\ EEI Rehearing Request at 8; MISO TOs Rehearing Request at 
15.
    \89\ EEI Rehearing Request at 8 & n.23.
    \90\ Id. at 8.
    \91\ Id. at 9.
    \92\ Id.
---------------------------------------------------------------------------

    36. MISO TOs argue that FPA section 203 approval is ``sometimes a 
significant undertaking'' and that the Commission should therefore 
grant this request for blanket authorization.\93\ MISO TOs argue that 
Eversource raised this issue in comments on the NOPR and that failure 
to respond to this argument would demonstrate that Order No. 845 is 
arbitrary and capricious.
---------------------------------------------------------------------------

    \93\ MISO TOs Rehearing Request at 16.
---------------------------------------------------------------------------

b. Determination
    37. We deny MISO TOs' and EEI's requests for rehearing. The 
Commission has established, in its regulations, a number of blanket 
authorizations that apply to transactions for which specific approval 
under FPA section 203 would otherwise be necessary. A transaction 
covered by a blanket authorization is ``pre-approved'' pursuant to the 
regulation itself rather than requiring an application and specific 
finding under FPA section 203 that the transaction is consistent with 
the public interest. Blanket authorizations ``under section 203 cannot 
be granted lightly, particularly generic authorizations.'' \94\ Because 
a blanket authorization is ``an ex ante determination as to the 
appropriateness of a category of transactions under section 203 and a 
counterparty is not yet identified, a blanket authorization can be 
granted only when the Commission can be assured that the statutory 
standards will be met, including ensuring that the interests of captive 
customers are safeguarded and that public utility assets are protected 
under all circumstances.'' \95\ The limited hypothetical facts MISO TOs 
and EEI provide in their rehearing requests regarding facilities 
constructed pursuant to the option to build do not provide the 
assurance that such transactions will meet these statutory standards. 
Thus, we deny rehearing.
---------------------------------------------------------------------------

    \94\ FPA Section 203 Supplemental Policy Statement, 120 FERC ] 
61,060, at P 33. (2007), order on clarification and reconsideration, 
122 FERC ] 61,157 (2008).
    \95\ Id.
---------------------------------------------------------------------------

4. Requirements Related to Reliability, CIP Standards, Liability, 
Security, and Posting of Standards and Specifications
    38. Order No. 845 made no revisions to article 5.2 of the pro forma 
LGIA, which lays out the general conditions for exercising the option 
to build. Article 5.2 (1) of the pro forma LGIA provides that the 
interconnection customer ``shall engineer, procure equipment, and 
construct Transmission Provider's Interconnection Facilities and Stand 
Alone Network Upgrades (or portions thereof) using Good Utility 
Practice and using standards and specifications provided in advance by 
Transmission Provider.'' Article 5.2(2) of the pro forma LGIA requires 
that the interconnection customer's ``engineering, procurement and 
construction . . . comply with all requirements of law to which 
Transmission Provider would be subject.''
    39. Article 5.2(7) of the pro forma LGIA requires that the 
interconnection customer ``indemnify Transmission Provider for claims 
arising from Interconnection Customer's construction . . . under the 
procedures applicable to Article 18.1 Indemnity.'' In response to 
Edison Electric Institute's, National Grid's, and Xcel Energy Services, 
Inc.'s comments on the NOPR taking issue with article 5.2(7) in light 
of the changes made in Order No. 845, the Commission reiterated the 
language in this provision and stated that this provision is 
``sufficiently broad to address EEI's, Xcel's, and National Grid's 
concerns.'' \96\
---------------------------------------------------------------------------

    \96\ Order No. 845, 163 FERC ] 61,043 at P 94.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    40. EEI and MISO TOs argue that the Commission's Order No. 845 
revisions to the option to build do not address how the changes will 
impact transmission providers' ability to maintain system 
reliability.\97\ MISO TOs state that the Commission's revisions to the 
option to build may substantially increase the number of instances when

[[Page 8164]]

the option to build is elected in, for example, RTOs/ISOs with large 
generation interconnection queues such as MISO.\98\
---------------------------------------------------------------------------

    \97\ EEI Rehearing Request at 3; MISO TOs Rehearing Request at 
17.
    \98\ MISO TOs Rehearing Request at 17-18.
---------------------------------------------------------------------------

    41. Arizona Public Service Company (APS) argues that the option to 
build, as revised by Order No. 845, conflicts with the Critical 
Infrastructure Protection Reliability Standards (CIP standards). In 
explanation, APS states that the existing CIP standards require that 
transmission providers meet specific security and access requirements, 
which increase as the impact classification increases (from low to 
high). APS argues that the assets to which interconnection customers 
would interconnect would be subject to at least one CIP standard and 
that, while a transmission provider would have ``continued 
responsibility to meet [its] compliance and security obligations . . . 
under the . . . [r]eliability [s]tandards,'' an interconnection 
customer ``may not be similarly obligated.'' \99\ APS draws this 
conclusion because, it argues, although the pro forma LGIA requires 
interconnection customers to comply with ``applicable Reliability 
Standards for procurement, engineering, and construction'' under the 
option to build, it addresses neither the reliability standards related 
to security nor transmission provider obligations related to the 
existing transmission assets within which the interconnection customer 
would build.\100\ APS contends that requiring transmission providers to 
manage CIP standard compliance for interconnection customers would 
already be ``extremely challenging'' and ``[was] rendered impossible'' 
by the Commission's rejection of requests to require transmission 
provider approval for the interconnection customers' 
subcontractors.\101\ If the Commission does not grant rehearing, APS 
asks the Commission to limit option to build construction activities so 
that they do not include ``those facilities to which the [CIP 
standards] are applicable, e.g., outside the substation perimeter.'' 
\102\
---------------------------------------------------------------------------

    \99\ APS Rehearing Request at 8-9.
    \100\ Id. at 9 (citing pro forma LGIA Art. 5.1).
    \101\ Id. (citing Order No. 845, 163 FERC ] 61,043 at P 110).
    \102\ Id. at 10.
---------------------------------------------------------------------------

    42. APS also states that the current pro forma LGIA liability and 
indemnification provisions are insufficient to protect transmission 
providers that may violate their regulatory requirements as a result of 
the expanded option to build. In particular, APS states that pro forma 
LGIA articles 5.1 and 18.1 do not explicitly address the need for 
interconnection customers to cooperate with, and adhere to, 
transmission provider processes to facilitate compliance with North 
American Electric Reliability Corporation (NERC) reliability 
standards.\103\ APS also contends that article 18.2 specifically 
excludes either party from liability that results from ``any losses, 
damages, costs or expenses for any special, indirect, incidental, 
consequential, or punitive damages.'' \104\ APS contends, however, that 
such damages are the types from which transmission providers need to 
protect themselves to ensure that the appropriate party will be 
responsible for penalties, required mitigation efforts, and other 
costs. In light of its interpretation of article 18.2, APS questions 
who would be liable for ``direct facility damage'' and ``increased 
costs for the service of load and/or wholesale customers'' if ``during 
the course of construction, a significant error is made by the 
Interconnection Customer or its contractor, which . . . results in the 
loss or destruction of a portion of the Transmission Provider's 
facilities or equipment.'' \105\ For all these reasons, APS asserts 
that the Commission should withdraw the option to build reform unless 
it proposes additional revisions that reduce the administrative burden 
on transmission providers.\106\
---------------------------------------------------------------------------

    \103\ Id. at 11.
    \104\ Id. at 11. Pro forma LGIA Article 18.2 states that:
    Other than the Liquidated Damages heretofore described, in no 
event shall either Party be liable under any provision of this LGIA 
for any losses, damages, costs or expenses for any special, 
indirect, incidental, consequential, or punitive damages, including 
but not limited to loss of profit or revenue, loss of the use of 
equipment, cost of capital, cost of temporary equipment or services, 
whether based in whole or in part in contract, in tort, including 
negligence, strict liability, or any other theory of liability; 
provided, however, that damages for which a Party may be liable to 
the other Party under another agreement will not be considered to be 
special, indirect, incidental, or consequential damages hereunder.
    \105\ Id. at 12.
    \106\ Id. at 12.
---------------------------------------------------------------------------

    43. EEI also asserts that the Commission erred in deciding that 
interconnection customers exercising the option to build no longer need 
to post security. EEI argues that the Commission's determination that 
``there would be no need for the interconnection customer to provide 
security . . . for facilities the transmission provider will not 
construct'' fails to consider scenarios where the interconnection 
customer is unable to complete the project and the transmission 
provider must do so.\107\ For these reasons, EEI argues that 
interconnection customers should have to post security for the project 
at the transmission provider's cost estimate.\108\
---------------------------------------------------------------------------

    \107\ EEI Rehearing Request at 12-13.
    \108\ Id. at 13.
---------------------------------------------------------------------------

    44. Generation Developers request rehearing of the Commission's 
decision not to require that transmission providers post the 
``standards and specifications'' required by article 5.2 of the pro 
forma LGIA for the transmission provider's interconnection facilities 
and stand alone network upgrades on their websites.\109\ They reason 
that interconnection customers cannot decide whether to exercise the 
option to build without this information and that requiring the posting 
of this information will fulfill the requirement to provide such 
information ``in advance.'' \110\ Generation Developers also argue that 
transmission providers already have these standards and specifications 
``[s]o far as Generation Developers are aware.'' \111\ In addition, 
Generation Developers argue that granting this request would enhance 
transparency and certainty.
---------------------------------------------------------------------------

    \109\ Generation Developers Rehearing Request at 3.
    \110\ Id. at 4.
    \111\ Id.
---------------------------------------------------------------------------

    45. MISO TOs argue that ``[w]ith the potential increase in 
elections of the option to build, coordination and balkanization are 
real concerns.'' \112\ Even with the safeguards provided by article 
5.2(1) of the pro forma LGIA, MISO TOs argue that transmission 
providers will have the burdensome and costly responsibilities of 
developing sufficiently detailed standards and the responsibility of 
monitoring and policing the interconnection customer' equipment 
procurement and construction activities. MISO TOs further state that 
Order No. 845 does not address the need for coordination among multiple 
interconnection customers, contractors, or other third parties.\113\
---------------------------------------------------------------------------

    \112\ MISO TOs Rehearing Request at 19.
    \113\ Id. at 20.
---------------------------------------------------------------------------

b. Determination
    46. We deny rehearing as to the arguments from EEI and MISO TOs 
that the Commission did not adequately address concerns about 
reliability related to the expanded option to build. In response to 
similar arguments made in comments to the NOPR, in Order No. 845, the 
Commission found that concerns that the option to build will compromise 
system reliability are misplaced because they ignore the safeguards for 
reliability already in place for the existing option to build.\114\ In 
particular, the Commission stated

[[Page 8165]]

that such ``vague reliability concerns about the option to build are 
misplaced and that articles 5.2.1, 5.2.3, 5.2.5, and 5.2.6 of the pro 
forma LGIA are sufficient to guarantee the reliability of the 
facilities in question.'' \115\ We again find that the safeguards 
embodied in article 5.2 of the pro forma LGIA are adequate.
---------------------------------------------------------------------------

    \114\ Order No. 845, 163 FERC ] 61,043 at P 91.
    \115\ Id. (citing Order No. 2003-A, 106 FERC ] 61,220 at P 232).
---------------------------------------------------------------------------

    47. We deny APS's request for rehearing regarding the potential for 
violations of CIP standards. Pro forma LGIA article 5.2(1) requires 
that interconnection customers ``engineer, procure equipment, and 
construct'' interconnection facilities and network upgrades using good 
utility practice and using standards and specifications provided in 
advance by the transmission provider. We clarify that such standards 
and specifications under pro forma LGIA article 5.2(1) would apply to 
any necessary contractor access to existing facilities while the 
interconnection customer exercises the option to build. In addition, 
Order No. 845 acknowledges that the transmission owner has the option 
of maintaining a list of contractors available to interconnection 
customers for the option to build.\116\ Accordingly, APS can, if it 
elects, maintain and make available a list of contractors for the 
interconnection customer to use for the option to build, thus ensuring 
that contractors used by the interconnection customer can access 
existing facilities in accordance with the relevant CIP standards. 
Furthermore, article 5.2(5) gives transmission providers ``unrestricted 
access to Transmission Provider's Interconnection Facilities and Stand 
Alone Network Upgrades.'' We read these provisions in combination to 
give transmission providers the security and access necessary to ensure 
that interconnection customers exercise the option to build in 
accordance with applicable CIP standards. Therefore, there is no 
additional need to give transmission providers the ability to approve 
subcontractors or to further limit the transmission provider's 
interconnection facilities and stand alone network upgrades for which 
the interconnection customer may exercise the option to build.
---------------------------------------------------------------------------

    \116\ Id. P 110.
---------------------------------------------------------------------------

    47. We also deny APS's request for rehearing regarding its 
liability and indemnity concerns, which appears to reflect a 
misunderstanding of the relationship between the pro forma LGIA's 
indemnification and consequential damages provisions. In Order No. 2003 
and its progeny, the Commission explained its reasoning for adopting 
these provisions and how they relate to one another. To improve 
clarity, we further explain this reasoning below.
    48. In Order No. 2003, the Commission observed that indemnification 
is defined as ``compensating another for a loss suffered due a third 
party's act of Default.'' \117\ The Commission also stated that 
``interconnection presents a greater risk of liability than exists for 
the provision of transmission service.'' \118\ For this reason, article 
18.1 (Indemnity) \119\ requires that ``the interconnecting generator 
and the transmission provider each indemnifies the other from all 
damages to third parties arising under the LGIA.'' \120\ Article 18.1 
``provide[s] protection for acts of ordinary negligence, but not for 
acts of gross negligence or intentional wrongdoing.'' \121\
---------------------------------------------------------------------------

    \117\ Order No. 2003, 104 FERC ] 61,103 at P 630 (citing Black's 
Law Dictionary 772 (7th ed. 1999)).
    \118\ Id. P 636.
    \119\ Pro forma LGIA Art. 18.1 reads:
    Indemnity. The Parties shall at all times indemnify, defend, and 
hold 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 action or inactions of its obligations under this 
LGIA on behalf of the Indemnifying Party, except in cases of gross 
negligence or intentional wrongdoing by the indemnified Party.
    \120\ Ne. Utils. Serv. Co., 111 FERC ] 61,333, at P 28 (2005) 
(emphasis supplied).
    \121\ Order No. 2003, 104 FERC ] 61,103 at P 636.
---------------------------------------------------------------------------

    49. Additionally, as noted in Order No. 845,\122\ Order No. 2003 
created safeguards in pro forma LGIA article 5.2 to protect 
transmission providers when an interconnection customer exercises the 
option to build. One such safeguard, in pro forma LGIA article 5.2(7), 
is a requirement that the interconnection customer indemnify the 
transmission provider for specific aspects related to the option to 
build.\123\ This provision ``applies to all work, regardless of the 
side of the Point of Interconnection on which the work occurs.'' \124\ 
However, this provision (in contrast to the general language of pro 
forma article 18.1) ``protect[s] the Transmission Provider from 
liability arising out of the Interconnection Customer's exercising its 
right to build.'' \125\ That is, while both article 18.1 and article 
5.2(7) pertain to indemnification for third party claims, article 
5.2(7) only indemnifies the transmission provider for third party 
claims arising from the interconnection customer's construction under 
the option to build.
---------------------------------------------------------------------------

    \122\ Order No. 845, 163 FERC ] 61,043 at PP 40 & 91.
    \123\ Pro forma LGIA Art. 5.2 (7) provides that: 
``Interconnection Customer shall indemnify Transmission Provider for 
claims arising from Interconnection Customer's construction of 
Transmission Provider's Interconnection Facilities and Stand Alone 
Network Upgrades under the terms and procedures applicable to 
Article 18.1 Indemnity.'' While the Commission modified the pro 
forma LGIA in Order No. 845 to allow interconnection customers to 
exercise the option to build regardless of whether the transmission 
provider can meet the interconnection customer's proposed in-service 
date, initial synchronization date, or commercial operation date, it 
made no other changes to the requirements that the interconnection 
customer must abide by, include the indemnity provision pro forma 
LGIA article 5.2 (7). See id. P 91 (``[i]n this Final Rule, we make 
no changes to the requirements in article 5.2'').
    \124\ Order No. 2003, 104 FERC ] 61,103 at P 638.
    \125\ Order No. 2003, 104 FERC ] 61,103 at P 357 (emphasis 
supplied).
---------------------------------------------------------------------------

    50. Order No. 2003 also adopted a no consequential damages 
provision in pro forma LGIA article 18.2 (Consequential Damages).\126\ 
This provision ``protects either Party from liability for any special, 
indirect, incidental, consequential, or punitive damages, including 
profit or revenue.'' \127\ The interconnection customer and 
transmission provider, however, ``remain liable for . . . any damages 
for which a Party may be liable to the other Party under another 
agreement.'' \128\
---------------------------------------------------------------------------

    \126\ Supra n. 103.
    \127\ Order. No. 2003, 104 FERC ] 61,103 at P 906.
    \128\ Id.
---------------------------------------------------------------------------

    51. In a request for rehearing of Order No. 2003, Central Maine 
Power Company, New York State Electric & Gas Corporation, and Rochester 
Gas and Electric Corporation sought clarity on the relationship between 
article 18.2 and the pro forma LGIA's indemnification provisions. They 
argued that, because article 18.2 ``does not exclude consequential 
damages which arise as part of [an indemnification] claim,'' the 
Commission should ``ensure the full implementation'' of the pro forma 
LGIA indemnity protections by amending article 18.2 ``to exclude 
consequential damages that arise in conjunction with indemnification.'' 
\129\
---------------------------------------------------------------------------

    \129\ Central Maine Aug. 25, 2003 Rehearing Request at 4-5 
(Docket No. RM02-1-001).
---------------------------------------------------------------------------

    52. The Commission rejected this request in Order No. 2003-A and 
stated that ``[t]he indemnification of one Party by another must be 
comprehensive and must include any liability the indemnified Party 
faces as a result of the indemnifying Party's misdeeds.'' \130\ It 
continued, stating that ``[w]hile Article 18.2 prevents one Party from 
seeking consequential damages against another

[[Page 8166]]

Party, the purpose of the indemnification provisions is different; it 
protects the Party not at fault from liability to third parties (those 
who are not Parties to the interconnection agreement).'' \131\ The 
Commission stated that ``[r]equiring the indemnifying Party to 
reimburse the indemnified Party only for, say compensatory damages and 
not for punitive damages that may be assessed against the indemnified 
Party would weaken the LGIA's protections and shield the indemnifying 
Party from full liability.'' \132\ Thus, the limitations in article 
18.2 (Consequential Damages) apply only to claims by one LGIA party 
against the other directly, and are not applicable to third party 
claims under article 18.1 and article 5.2(7) for indemnification for 
claims.
---------------------------------------------------------------------------

    \130\ Order No. 2003-A, 106 FERC ] 61,220 at P 455.
    \131\ Id.
    \132\ Id.
---------------------------------------------------------------------------

    53. Thus, article 5.2(7) in combination with the pro forma LGIA 
indemnification provisions provide sufficient protection from third 
party claims against transmission providers for claims arising from the 
interconnection customer's construction under the option to build. 
Additionally, because pro forma LGIA articles 5.2(7) and 18.1 \133\ 
address an interconnection customer's liability to the transmission 
provider only when there is a third-party claim against the 
transmission provider, these articles do not preclude a transmission 
provider from making a direct claim against an interconnection 
customer. In particular, given the extensive safeguards in pro forma 
LGIA article 5.2, the transmission provider may argue that the 
interconnection customer has breached the interconnection agreement if 
the interconnection customer fails to abide by any requirement that 
results in the transmission provider accruing damages, e.g., through 
harm to the transmission system.\134\
---------------------------------------------------------------------------

    \133\ We note, however, that, when indemnification is not 
pursuant to the option to build indemnification in pro forma LGIA 
article 5.2(7), article 18.1 requires that the interconnection 
customer and the transmission provider indemnify each other. See Ne. 
Utils. Serv. Co., 111 FERC ] 61,333 at P 28.
    \134\ If, however, harm to the transmission provider's 
transmission system results in the transmission provider's liability 
to a third party, such as an industrial customer, and such harm to 
the transmission provider's transmission system arises from the 
interconnection customer's construction pursuant to the option to 
build, the transmission provider could invoke the indemnity 
provisions of the pro forma LGIA.
---------------------------------------------------------------------------

    54. Regarding the Commission's statement in Order No. 845 that pro 
forma LGIA article 5.2(7) is ``sufficiently broad to address'' \135\ 
the concerns expressed in NOPR comments, we reiterate that the 
Commission made no changes to pro forma article 5.2, including the 
indemnity provision related to the option to build in article 
5.2(7).\136\ Additionally, the Commission did not interpret pro forma 
LGIA article 5.2(7) to expand the terms of the indemnity provisions to 
include indemnification by the interconnection customer for activities 
other than the interconnection customer's option to build construction. 
The Commission did not expand the applicability of this provision for 
multiple reasons. First, pro forma LGIA article 5.2(7) related to the 
option to build indemnifies the transmission provider for ``claims 
arising from Interconnection Customer's construction,'' and this 
language already provides indemnification for the transmission provider 
for a significant number of third party claims arising from the 
interconnection customer's option to build construction. Second, as 
noted above, even if the indemnity provisions do not apply, the 
transmission provider may pursue a claim for breach if the 
interconnection customer's conduct pursuant to the option to build 
breaches the interconnection agreement. Third, pro forma LGIA article 
5.2 gives the transmission provider ``significant oversight authority'' 
over the option to build, which, if exercised properly, gives the 
transmission provider a significant role in ensuring that the 
interconnection customer's exercise of the option to build does not 
expose the transmission provider to liability.\137\ For example, the 
transmission provider has the ability to ``set[ ] the specifications 
governing construction (Article 5.2.1), approve[ ] the Interconnection 
[Customer's] construction plans (Article 5.2.3), . . . an unlimited 
right of inspection (Article 5.2.3), and . . . the right to require the 
Interconnection Customer to remedy any deficiencies (Article 5.2.6).'' 
\138\
---------------------------------------------------------------------------

    \135\ Order No. 845, 163 FERC ] 61,043 at P 94.
    \136\ See, e.g., id. P 91.
    \137\ Id. P 110.
    \138\ Order No. 2003-A, 106 FERC ] 61,220 at P 232.
---------------------------------------------------------------------------

    55. We also deny rehearing as to EEI's contention that the 
Commission erred by removing the requirement for the interconnection 
customer to provide security if the interconnection customer fails to 
complete any option to build facilities. If such a situation arises and 
the interconnection customer still wants to move forward with the 
interconnection request, this situation would re-trigger article 11.5 
of the pro forma LGIA for ``the applicable portion of Transmission 
Provider's Interconnection Facilities [and] Network Upgrades,'' and the 
interconnection customer would then have to provide security no later 
than 30 days prior to the transmission provider recommencing 
``procurement, installation, or construction of a discrete portion of a 
Transmission Provider's Interconnection Facilities [or] . . . Network 
Upgrades.'' \139\ Thus, there is no need to require other revisions to 
the pro forma LGIA to account for EEI's suggested eventuality. In 
addition, the occurrence of such a scenario may indicate that the 
interconnection request is no longer viable, in which case, the 
transmission provider's interconnection facility or stand alone network 
upgrade would no longer be necessary.
---------------------------------------------------------------------------

    \139\ Pro forma LGIA Art. 11.5.
---------------------------------------------------------------------------

    56. We also deny Generation Developers' request for rehearing of 
the decision not to require transmission providers to post on their 
websites the ``standards and specifications'' for exercising the option 
to build. Despite Generation Developers' assertions, there is nothing 
in the record to suggest that the engineering, procurement, and 
construction standards and specifications applicable to the 
transmission provider's interconnection facilities and stand alone 
network upgrades required for a particular interconnection request 
would be available prior to the submission of a specific 
interconnection request. In fact, it might be difficult or impossible 
to provide such information on a website before an interconnection 
customer submits its interconnection request and the required technical 
data. Regardless, pursuant to article 5.2(1) of the pro forma LGIA, if 
an interconnection customer has informed the transmission provider of 
its decision to exercise the option to build, the transmission provider 
must provide such standards and specifications ``in advance'' of the 
interconnection customer ``engineer[ing], procur[ing] equipment, and 
construct[ing] Transmission Provider's Interconnection Facilities and 
Stand Alone Network Upgrades.'' \140\
---------------------------------------------------------------------------

    \140\ Pro forma LGIA Art. 5.2(1).
---------------------------------------------------------------------------

    57. In response to MISO TOs, we find that article 5.2(1) of the pro 
forma LGIA equips the transmission provider with the ability to develop 
``standards and specifications'' to avoid concerns about transmission 
system ``balkanization.'' We also note that, as discussed more fully 
below, the Commission is granting rehearing to allow transmission 
providers to recover oversight costs as negotiated between the 
interconnection customer and the transmission provider and memorialized 
in the LGIA.

[[Page 8167]]

    58. As to MISO TOs' concerns regarding the lack of guidance about 
coordination, we note that each interconnection request and each 
transmission system is unique. The transmission provider and 
interconnection customer will have an opportunity to work through the 
relevant details regarding coordination during the negotiation phase of 
the LGIA. Therefore, we decline to provide detailed instructions to 
account for a multitude of dissimilar scenarios when transmission 
providers and interconnection customers are capable of coordinating the 
option to build process for multiple interconnection requests.
5. Affected Systems
    59. The pro forma LGIP and pro forma LGIA define affected systems 
as ``electric system[s] other than the Transmission Provider's 
Transmission System that may be affected by the proposed 
interconnection.'' \141\ The interconnection system impact study 
``evaluates the impact of the proposed interconnection on the safety 
and reliability of the Transmission Provider's Transmission System, 
and, if applicable, an Affected System.'' \142\ Impacts on affected 
systems may require the construction of network upgrades to address the 
impacts caused by a particular interconnection request.
---------------------------------------------------------------------------

    \141\ Pro forma LGIP Section 1 (Definitions); Pro forma LGIA 
Art. 1 (Definitions).
    \142\ Pro forma LGIP Section 1 (Definitions); Pro forma LGIA 
Art. 1 (Definitions).
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    60. MISO TOs state that the Commission did not address whether the 
option to build extends to upgrades on affected systems. They also 
state that the burden created by the option to build revisions will be 
higher if affected systems must allow interconnection customers that do 
not interconnect with them directly to construct on their systems.\143\
---------------------------------------------------------------------------

    \143\ MISO TOs Rehearing Request at 21.
---------------------------------------------------------------------------

b. Determination
    61. We grant MISO TOs' request for clarification and clarify that 
the option to build does not apply to stand alone network upgrades on 
affected systems. To make our intent clear, we revise the definition of 
stand alone network upgrade to read (with additions in italics):

    Stand Alone Network Upgrades shall mean Network Upgrades that 
are not part of an Affected System that an Interconnection Customer 
may construct without affecting day-to-day operations of the 
Transmission System during their construction. Both the Transmission 
Provider and the Interconnection Customer must agree as to what 
constitutes Stand Alone Network Upgrades and identify them in 
Appendix A to the Standard Large Generator Interconnection 
Agreement.\144\
---------------------------------------------------------------------------

    \144\ This revision is the first of two changes to the 
definition of a stand alone network upgrade in the pro forma LGIP 
and pro forma LGIA. The additional revision is described in the 
option to build subsection on stand alone network upgrades (II.A.7).
---------------------------------------------------------------------------

6. Cluster Studies
    62. Clustering is ``the process whereby a group of Interconnection 
Requests is studied together, instead of serially, for the purpose of 
conducting the Interconnection System Impact Study.'' \145\ 
Transmission providers may ``allocate the cost of . . . common upgrades 
for clustered Interconnection Requests without regard to Queue 
Position.'' \146\ Transmission providers have the discretion to decide 
whether to study interconnection requests serially or in clusters.\147\
---------------------------------------------------------------------------

    \145\ Pro forma LGIA Art. 1 (Definitions).
    \146\ Pro forma LGIP Section 4.1
    \147\ Pro forma LGIP Section 4.2.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    63. APS argues that the expanded option to build provisions are 
incompatible for transmission providers that conduct cluster 
studies.\148\ Specifically, regarding a cluster study that identifies 
stand alone network upgrades for which multiple interconnection 
customers are responsible, APS questions which interconnection customer 
may exercise the option to build. Further, if multiple interconnection 
customers want to build a stand alone network upgrade, APS asks who 
decides which interconnection customer has priority to exercise the 
option to build.\149\
---------------------------------------------------------------------------

    \148\ APS Rehearing Request at 13.
    \149\ Id.
---------------------------------------------------------------------------

b. Determination
    64. We deny APS's rehearing request on this issue. We disagree that 
the Order No. 845 option to build revisions are incompatible with a 
cluster study approach. APS has not pointed to any specific provisions 
in the pro forma LGIA that would preclude customers in a cluster study 
from exercising the option to build. Moreover, APS has not provided any 
evidence to indicate that stand alone network upgrades being required 
by more than one interconnection customer in a cluster will be a common 
enough occurrence to require pro forma LGIA revisions tailored to such 
a scenario. Additionally, the scenario APS envisions is not tied to the 
changes adopted in this proceeding because, to the extent that such a 
circumstance occurs, multiple interconnection customers could have 
sought to exercise the option to build for the same stand alone network 
upgrade under the pre-Order No. 845 option to build. However, if a 
transmission provider that studies interconnection requests in clusters 
believes this is a concern, it should, on compliance, propose revisions 
to address how it will process requests by multiple interconnection 
customers to exercise the option to build for the same stand alone 
network upgrade.
7. Stand Alone Network Upgrades
    65. Stand alone network upgrades are ``Network Upgrades that an 
Interconnection Customer may construct without affecting day-to-day 
operations of the Transmission System during their construction.'' 
\150\ Both the transmission provider and the interconnection customer 
``must agree as to what constitutes Stand Alone Network Upgrades and 
identify them in Appendix A'' to the LGIA.\151\
---------------------------------------------------------------------------

    \150\ Pro forma LGIP Section 1 (Definitions); Pro forma LGIA 
Art. 1 (Definitions).
    \151\ Pro forma LGIP Section 1 (Definitions); Pro forma LGIA 
Art. 1 (Definitions).
---------------------------------------------------------------------------

    66. In Order No. 845, the Commission denied Generation Developers' 
request for a requirement that transmission providers explain why they 
do not think a network upgrade is a stand alone network upgrade. The 
Commission stated that ``it would be difficult for a transmission 
provider'' to make this determination ``until it is presented with the 
results of a system impact study.'' \152\
---------------------------------------------------------------------------

    \152\ Order No. 845, 163 FERC ] 61,043 at P 112.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    67. Generation Developers claim that the Commission erred by not 
requiring that transmission providers explain their reasoning when they 
disagree with an interconnection customer about whether a network 
upgrade is stand alone.\153\ They reason that not requiring such an 
explanation undermines the interconnection customer's ability to 
exercise the option to build and increases process opacity.\154\ They 
also disagree with the Commission that providing such an explanation 
would be difficult before the transmission provider has the system 
impact study results, as these results will be available prior to the 
LGIA stage of the

[[Page 8168]]

interconnection process, when the interconnection customer can first 
express its desire to exercise the option to build.\155\ Furthermore, 
Generation Developers argue that, if there is a disagreement, dispute 
resolution or a complaint filed pursuant to FPA section 206 are not 
viable options because these options involve costly delays.\156\
---------------------------------------------------------------------------

    \153\ Generation Developers Rehearing Request at 5-6.
    \154\ Id. at 6.
    \155\ Id. at 8.
    \156\ Id. at 6-7.
---------------------------------------------------------------------------

b. Determination
    68. We grant rehearing and find that the Commission erred by not 
requiring a transmission provider to explain why it does not consider a 
particular network upgrade to be a stand alone network upgrade. We 
recognize that, because of the mutual agreement requirement in the 
definition of stand alone network upgrade, disagreements may arise 
regarding whether a network upgrade is a stand alone network 
upgrade.\157\ The Commission, in Order No. 2003, was aware that 
transmission providers had reliability concerns related to the option 
to build when the Commission defined stand alone network upgrades to 
include the mutual agreement requirement.\158\ Even though the 
transmission provider has the ability to disagree when an 
interconnection customer believes a network upgrade is a stand alone 
network upgrade, the transmission provider may not unreasonably 
withhold its agreement because such an outcome would be unjust and 
unreasonable. That is, the transmission provider must explain why the 
upgrade in question is not one that an interconnection customer may 
construct without affecting the transmission system's day-to-day 
operations during construction. Therefore, we require that, when there 
is a disagreement, a transmission provider must provide the 
interconnection customer a written explanation within fifteen days of 
its determination that outlines the technical reasons why it does not 
consider a network upgrade to be a stand alone network upgrade. We 
consider this time period reasonable because it begins at the time of 
the transmission provider's determination outlining its technical 
reasons. To effectuate this revised requirement, we revise the 
definition of stand alone network upgrades in the pro forma LGIP and 
the pro forma LGIA to include the following new sentence at the end of 
the definition (with additions in italics):
---------------------------------------------------------------------------

    \157\ See Duke Energy Florida, LLC, 163 FERC ] 61,174 (2018) 
(setting for hearing an LGIA that was filed unexecuted because of 
disagreement as to whether a network upgrade was stand alone).
    \158\ See Order No. 2003, 104 FERC ] 61,103 at PP 341, 356-57 
(noting that the transmission provider must retain ``adequate 
control of the engineering and construction of . . . Stand Alone 
Network Upgrades because of its obligation to protect the safety of 
the public and maintain the reliability of the Transmission 
System'').

    Stand Alone Network Upgrades shall mean Network Upgrades that 
are not part of an Affected System that an Interconnection Customer 
may construct without affecting day-to-day operations of the 
Transmission System during their construction. Both the Transmission 
Provider and the Interconnection Customer must agree as to what 
constitutes Stand Alone Network Upgrades and identify them in 
Appendix A to the Standard Large Generator Interconnection 
Agreement. If the Transmission Provider and Interconnection Customer 
disagree about whether a particular Network Upgrade is a Stand Alone 
Network Upgrade, the Transmission Provider must provide the 
Interconnection Customer a written technical explanation outlining 
why the Transmission Provider does not consider the Network Upgrade 
to be a Stand Alone Network Upgrade within 15 days of its 
determination.\159\
---------------------------------------------------------------------------

    \159\ As noted above in the affected systems section (II.A.5), 
this is the second of two clarifying revisions that we are making to 
the definition of stand alone network upgrades in the pro forma LGIP 
and pro forma LGIA.
---------------------------------------------------------------------------

8. Cost Estimates
    69. Section 8.3 of the pro forma LGIP provides that transmission 
providers shall: Use Reasonable Efforts to . . . issue a draft 
Interconnection Facilities Study report to Interconnection Customer 
within . . . ninety . . . Calendar Days, with no more than a +/-20 
percent cost estimate contained in the report; or one hundred eighty . 
. . Calendar Days if the Interconnection Customer requests a +/-10 
percent cost estimate.
a. Requests for Rehearing and Clarification
    70. Southern asks the Commission to grant rehearing with regard to 
Order No. 845's option to build changes, but, if it does not, it asks 
the Commission to clarify that the requirement in section 8.3 of the 
pro forma LGIP would apply to interconnection customers that construct 
stand alone network upgrades.\160\ Specifically, it points to the 
requirement that transmission providers must provide an estimated cost 
that is ``plus or minus 10 or 20 percent, depending on the length of 
the study'' to provide some certainty regarding cost exposure to the 
interconnection customer.\161\ Southern argues that interconnection 
customers exercising the option to build must do the same to provide 
cost certainty to transmission providers and their native load 
customers. In particular, Southern argues that the interconnection 
customer should either be bound by the estimate in the transmission 
provider's interconnection facilities study report or ``should be 
required to provide an estimate that complies with the plus or minus 
10/20 percent cost estimate.'' \162\
---------------------------------------------------------------------------

    \160\ Southern Rehearing Request at 9.
    \161\ Id.
    \162\ Id.
---------------------------------------------------------------------------

b. Determination
    71. We deny rehearing on this issue. Section 8.3 of the pro forma 
LGIP only requires the transmission provider to make reasonable efforts 
during the interconnection study process to estimate costs to construct 
network upgrades, and the pro forma LGIP does not impose any 
consequences on transmission providers that exceed the estimate or 
accuracy margin.\163\ Southern's request would therefore require the 
Commission to hold the interconnection customer to a higher standard 
than it holds the transmission provider. We decline to do so.
---------------------------------------------------------------------------

    \163\ See Duke Energy Fla., LLC, 165 FERC ] 61,230, at P 22 
(2018) (``[t]he Commission's precedent is clear that the costs in an 
LGIA are simply estimates and that interconnection customers are 
responsible for paying the actual costs of interconnection 
facilities and network upgrades'').
---------------------------------------------------------------------------

9. Oversight Costs
    72. In Order No. 845, in response to arguments that 
``interconnection customers should assume all additional costs that 
result from exercise of the option to build,'' the Commission stated 
that it was making ``no changes with regard to cost assignment for 
transmission provider's interconnection facilities and stand alone 
network upgrades.'' \164\ Additionally, in response to concerns that 
transmission providers ``will have to expend significant resources to 
perform oversight functions'' for the option to build, the Commission 
stated that ``the Final Rule does not alter the role that the 
transmission provider would play in overseeing the option to build 
process.'' \165\
---------------------------------------------------------------------------

    \164\ Order No. 845, 163 FERC ] 61,043 at P 95.
    \165\ Id. P 103.
---------------------------------------------------------------------------

a. Requests for Rehearing and Clarification
    73. Southern argues that, as a result of Order No. 845, 
transmission providers will increasingly incur costs to provide 
additional coordination, oversight, and approval of stand alone network 
upgrade ``design, equipment specifications, contractors, construction, 
and commissioning.'' \166\ EEI asks the Commission to clarify whether 
transmission providers can recover such

[[Page 8169]]

costs associated with overseeing an interconnection customer's 
construction when the option to build is exercised.\167\ Specifically, 
it asks the Commission to allow transmission providers to recover the 
costs for ``providing the coordination, oversight, and approval 
required for the Interconnection Customer's construction.'' \168\ As 
background, EEI states that, in Order No. 2003-A, the Commission stated 
that it would ``not require the Transmission Provider [to] be 
reimbursed for construction oversight cost,'' as the interconnection 
customer may only exercise the option to build ``as a last resort'' and 
that the transmission provider ``can avoid the expense[s]'' of 
oversight by meeting the milestones and avoiding the pre-Order No. 845 
option to build trigger.\169\ EEI argues that, since this reasoning no 
longer holds true, the Commission should amend article 5.2 of the pro 
forma LGIA to add the following provision: ``(12) Transmission Provider 
shall recover all reasonable costs associated with the review, 
approval, testing, inspection and transfer of the Interconnection 
Facilities and Stand Alone Network Upgrades constructed by the 
Interconnection Customer in accordance with this Article 5.2.'' \170\
---------------------------------------------------------------------------

    \166\ Southern Rehearing Request at 8.
    \167\ EEI Rehearing Request at 13; see also SoCal Edison 
Rehearing Request at 4.
    \168\ EEI Rehearing Request at 10.
    \169\ Id. at 11-12 (citing Order No. 2003-A, 106 FERC ] 61,220 
at PP 218-19).
    \170\ Id. at 13.
---------------------------------------------------------------------------

    74. In response to the NOPR, SoCal Edison raised concerns regarding 
the additional costs and oversight that will result from the exercise 
of the option to build and sought Commission confirmation that the 
interconnection customer should bear those costs.\171\ SoCal Edison 
argues on rehearing that, despite the Commission's reliance on its 
requirement that the interconnection customers and their contractors 
must use good utility practice, the interconnection customers may have 
little incentive to rigorously adhere to the transmission provider's 
standards and specifications.\172\
---------------------------------------------------------------------------

    \171\ SoCal Edison Request for Clarification at 4 (referencing 
SoCal Edison April 13, 2017 Comments at 4-5).
    \172\ Id. (citing Order No. 845, 163 FERC ] 61,043 at P 111).
---------------------------------------------------------------------------

b. Determination
    75. With regard to oversight costs related to the option to build 
exercised by interconnection customers for the transmission provider's 
interconnection facilities and stand alone network upgrades, we grant 
rehearing. We agree with EEI that the rationale that the Commission 
provided in Order No. 2003 for disallowing collection of oversight 
costs (namely, that a transmission provider can avoid such costs by 
agreeing to meet the interconnect customer's schedule) \173\ no longer 
applies as a result of Order No. 845. For this reason, we revise 
article 5.2 of the pro forma LGIA to include a placeholder for 
transmission providers to recover the costs of executing the 
responsibilities enumerated for transmission providers in that same 
article. We expect the transmission provider and interconnection 
customer to negotiate this amount and clearly state it in the LGIA. The 
Commission will add the following language at the end of article 5.2 of 
the pro forma LGIA (with new additions in italics):
---------------------------------------------------------------------------

    \173\ Order No. 2003-A, 106 FERC ] 61,220 at P 218.

    (12) If Interconnection Customer exercises the Option to Build 
pursuant to Article 5.1.3, Interconnection Customer shall pay 
Transmission Provider the agreed upon amount of [$ PLACEHOLDER] for 
Transmission Provider to execute the responsibilities enumerated to 
Transmission Provider under Article 5.2. Transmission Provider shall 
invoice Interconnection Customer for this total amount to be divided 
on a monthly basis pursuant to Article 12.
B. Identification and Definition of Contingent Facilities
    76. In Order No. 845, the Commission added new section 3.8 to the 
pro forma LGIP, which requires that transmission providers publish a 
method for identifying contingent facilities \174\ and that they 
provide a list of potential contingent facilities to interconnection 
customers at the close of the system impact study phase. Order No. 845 
further requires that transmission providers provide, upon the 
interconnection customer's request, the estimated network upgrade costs 
and estimated in-service completion date associated with each 
identified contingent facility if the transmission provider determines 
that this information is readily available and not commercially 
sensitive.
---------------------------------------------------------------------------

    \174\ Contingent facilities ``shall mean those unbuilt 
interconnection facilities and network upgrades upon which the 
interconnection request's costs, timing, and study findings are 
dependent, and if delayed or not built, could cause the need for 
restudies of the interconnection request or a reassessment of the 
interconnection facilities and/or network upgrades and/or costs and 
timing.'' Order No. 845, 163 FERC ] 61,043 at P 218.
---------------------------------------------------------------------------

1. Requests for Rehearing and Clarification
    77. Generation Developers seek rehearing of the Commission's 
decision not to exempt interconnection customers from financial 
responsibility for late-identified contingent facilities.\175\ 
Specifically, Generation Developers state that the Commission did not 
explain why it is just and reasonable for the interconnection customer 
to bear unexpected costs in the circumstance where a transmission 
provider identifies additional contingent facilities after the close of 
the system impact study phase. Generation Developers add that Order No. 
845 provides no incentive for the transmission provider to accurately 
identify contingent facilities because it shifts all of the 
consequences of a failure to timely identify all contingent facilities 
onto the interconnection customer.\176\ Generation Developers ask the 
Commission to state that the interconnection customer will not be 
financially responsible if the transmission provider only identifies a 
new contingent facility after the close of the system impact study 
phase.\177\
---------------------------------------------------------------------------

    \175\ Id. P 201.
    \176\ Generation Developers Rehearing Request at 11.
    \177\ Id. at 10.
---------------------------------------------------------------------------

2. Determination
    78. We deny Generation Developers' rehearing request. To provide 
increased transparency to interconnection customers regarding the 
interconnection process, Order No. 845 requires that transmission 
providers outline a method to identify contingent facilities by the 
close of the system impact study phase. Thus, the interconnection 
customer will have notice of any contingent facilities identified by 
the transmission provider by the close of the system impact study 
phase. This requirement to identify contingent facilities does not 
change cost responsibilities. In denying this request, we note that it 
would be inconsistent with the cost causation principle to exempt an 
interconnection customer from interconnection facility and network 
upgrade costs that would not be necessary but for that interconnection 
request.\178\ The principle of cost causation generally requires that 
costs ``are to be allocated to those [that] cause the costs to be 
incurred and reap the resulting benefits.'' \179\ The Commission did 
not revisit this principle in Order No. 845, and we decline to do so at 
this time.
---------------------------------------------------------------------------

    \178\ See Order No. 2003, 104 FERC ] 61,103 at P 694 (``it is 
appropriate for the Interconnection Customer to pay the initial full 
cost for Interconnection Facilities and Network Upgrades that would 
not be needed but for the interconnection'').
    \179\ S.C. Pub. Serv. Auth. v. FERC, 762 F.3d at 87 (quoting 
Nat'l Assoc. of Regulatory Util. Comm'rs v. FERC, 475 F.3d at 1285).

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

[[Page 8170]]

C. Transparency Regarding Study Models and Assumptions
    79. In Order No. 845, the Commission revised section 2.3 of the pro 
forma LGIP to require transmission providers to maintain network models 
and underlying assumptions on either an Open Access Same-Time 
Information System (OASIS) site or a password-protected website. These 
revisions allow transmission providers to require interconnection 
customers, OASIS site users, and password-protected website users to 
sign a confidentiality agreement before the release of commercially 
sensitive information or CEII. The revisions also require that the 
network model information and underlying assumptions ``reasonably 
represent those used during the most recent interconnection study and 
be representative of current system conditions.'' \180\
---------------------------------------------------------------------------

    \180\ Order No. 845, 163 FERC ] 61,043 at P 236.
---------------------------------------------------------------------------

1. Protection of Network Model Information
a. Requests for Rehearing and Clarification
    80. American Public Power Association, Large Public Power Council, 
and National Rural Electric Cooperative Association (collectively, Non-
Profit Utility Trade Associations) request that the Commission clarify 
that its intention is to permit transmission providers ``to protect 
data that would qualify for CEII treatment if [they] were submitted'' 
to the Commission.\181\ They note that, under the Commission's 
regulations, an entity may submit information to the Commission and 
request that it be treated as CEII, but this information will not 
formally be designated as CEII until there is a request to access the 
information and the Commission has granted CEII status. Non-Profit 
Utility Trade Associations state that revised section 2.3 of the pro 
forma LGIA implicates a large amount of modeling and assumption 
information that meets the substantive definition of CEII but that the 
Commission has not designated such information as CEII. Non-Profit 
Utility Trade Associations contend that this technicality limits a 
transmission provider's ability to protect sensitive data, and they ask 
the Commission to clarify that information ``may be protected under 
[pro forma] LGIP section 2.3 if the Transmission Provider determined 
that it would meet the substantive criteria for CEII had it been 
submitted to the Commission for that determination.'' \182\ According 
to Non-Profit Utility Trade Associations, when there are questions 
regarding the transmission provider's judgment, the Commission's 
complaint procedures should be adequate to provide resolution.\183\
---------------------------------------------------------------------------

    \181\ Non-Profit Utility Trade Associations Rehearing Request at 
5.
    \182\ Id. at 6.
    \183\ Id. at 4-6.
---------------------------------------------------------------------------

    81. Non-Profit Utility Trade Associations also allege that the 
language of revised section 2.3 of the pro forma LGIP is broad enough 
to allow any entity to obtain network models and underlying assumptions 
for any reason. Non-Profit Utility Trade Associations further allege 
that offering a confidentiality agreement to all OASIS site users 
without further limitation could include unknown entities that pose a 
security risk. For this reason, Non-Profit Utility Trade Associations 
ask the Commission to clarify that the Commission intended to permit 
transmission providers to apply reasonable standards to requests from 
entities to enter into such confidentiality agreements. Non-Profit 
Utility Trade Associations suggest that the Commission's CEII 
regulations could provide a useful framework for standards because they 
require that requesters provide a name, contact information, and a 
statement of need. If the request is made on behalf of an organization, 
the requester must state that it is authorized to make the request on 
behalf of the organization and that all individuals in the organization 
will be bound by executed non-disclosure agreements.\184\
---------------------------------------------------------------------------

    \184\ Id. at 6-7.
---------------------------------------------------------------------------

    82. Non-Profit Utility Trade Associations expect that transmission 
providers would limit their review to ascertaining that the entity is a 
recognized industry participant or has a legitimate commercial, 
academic, or governmental interest in accessing the data. Further, Non-
Profit Utility Trade Associations contend that the potential for anti-
competitive behavior in this review seems limited and manageable 
through the Commission's complaint procedures or enforcement 
hotline.\185\
---------------------------------------------------------------------------

    \185\ Id. at 7.
---------------------------------------------------------------------------

    83. If the Commission does not grant these clarifications, Non-
Profit Utility Trade Associations request rehearing of Order No. 845's 
revisions to section 2.3 of the pro forma LGIP, asserting that the 
Commission erred in requiring transmission providers to post network 
models and underlying assumptions without permitting the transmission 
providers to adequately protect information that may be used to 
threaten critical infrastructure.\186\
---------------------------------------------------------------------------

    \186\ Id. at 7-8.
---------------------------------------------------------------------------

b. Determination
    84. Order No. 845 did not revise the Commission's existing CEII 
requirements.\187\ As Non-Profit Utility Trade Associations note, 
information is not CEII unless the Commission has designated it as CEII 
through its CEII designation process. Accordingly, we deny Non-Profit 
Utility Trade Associations' request for clarification that transmission 
providers may designate as CEII information that they believe should be 
treated as such. We also reiterate that neither the Commission's CEII 
regulations \188\ nor Order No. 845 precludes a transmission provider 
from taking necessary steps to protect information within its custody 
or control to ensure the safety and security of the electric grid.\189\
---------------------------------------------------------------------------

    \187\ Under the Commission's CEII regulations, 18 CFR 388.113, 
an entity may submit information to the Commission requesting that 
it be treated as CEII. 18 CFR 388.113 (2018).
    \188\ Section 388.113 of the Commission's regulations does not 
govern the transmission provider's handling, sharing, and 
disseminating of information that the transmission provider 
submitted for CEII designation, including how it disseminates that 
information on its OASIS site or password-protected website. Id.
    \189\ Order No. 845, 163 FERC ] 61,043 at P 241.
---------------------------------------------------------------------------

    85. We grant Non-Profit Utility Trade Associations' request for 
clarification that transmission providers may apply reasonable 
standards to requests to enter into confidentiality agreements before 
information is released. Specifically, we grant clarification to the 
extent that Non-Profit Utility Trade Associations would like to use the 
Commission's CEII regulations as a model for evaluating entities that 
request network model information and assumptions (prior to signing a 
non-disclosure agreement), they may do so.\190\
---------------------------------------------------------------------------

    \190\ See 18 CFR 388.113(g)(5)(i).
---------------------------------------------------------------------------

2. Requirement To Post Network Model Information
a. Requests for Clarification
    86. APS asks the Commission to clarify that the requirement that 
network models and underlying assumptions ``reasonably represent those 
used during the most recent interconnection study and be representative 
of current system conditions'' in revised section 2.3 of the pro forma 
LGIP does not require transmission providers to modify the network 
models and underlying assumptions utilized for evaluating 
interconnection requests so that they are representative of ``current 
system

[[Page 8171]]

conditions.'' \191\ APS also asks the Commission to clarify that such 
language simply requires that the posted network models and underlying 
assumptions reasonably represent those anticipated future system 
conditions that the transmission provider utilizes to evaluate 
interconnection requests.\192\
---------------------------------------------------------------------------

    \191\ APS Rehearing Request at 17.
    \192\ Id.
---------------------------------------------------------------------------

    87. APS notes that there are often significant differences between 
``current system conditions'' and those conditions utilized in the base 
cases and models to evaluate interconnection requests. More 
specifically, APS states that current system conditions would not 
include those facilities, equipment, configurations, relay settings, 
etc., unless they are built and operating. Conversely, APS states that 
``models and base case data utilized to evaluate Interconnection 
Request[s] incorporate planned, future facilities, equipment, 
configurations, relay settings, etc.'' \193\ For this reason, APS 
argues that the network models and underlying assumptions utilized to 
evaluate interconnection requests will, and should, always differ from 
those models and assumption utilized to ``approximate or evaluate 
`current system conditions,' which do not, and should not, incorporate, 
or rely upon, planned, future facilities, equipment, configurations, 
[and] relay settings.'' \194\
---------------------------------------------------------------------------

    \193\ Id.
    \194\ Id.
---------------------------------------------------------------------------

b. Determination
    88. We grant APS' request for clarification. In Order No. 845, the 
Commission did not require that transmission providers modify the 
network models and the underlying assumptions used in interconnection 
studies. Rather, the purpose of the revisions to section 2.3 of the pro 
forma LGIP is to make transparent the base case data, network models, 
and underlying assumptions that transmission providers use to conduct 
interconnection studies. Therefore, we clarify that the phrase 
``current system conditions'' does not require transmission providers 
to maintain network models that reflect current real-time operating 
conditions of the transmission provider's system. Instead, the network 
model information should reflect the system conditions currently used 
in interconnection studies.
D. Congestion and Curtailment Information
    89. In the NOPR, the Commission proposed to require that 
transmission providers post congestion and curtailment information in 
one location on their OASIS sites so that interconnection customers 
could more easily access information that may aid in their decision 
making.\195\ In Order No. 845, however, the Commission declined to 
adopt this proposal after considering the comments on the NOPR. The 
Commission stated that it found ``persuasive those comments that assert 
that, in some instances, generating information on the causes of 
congestion or on unit-specific or constraint-specific curtailment 
information is technically infeasible or would require significant 
additional effort.'' \196\ The Commission also noted that many 
transmission providers already publish congestion and curtailment data 
and that other pertinent information is otherwise available.\197\
---------------------------------------------------------------------------

    \195\ Order No. 845, 163 FERC ] 61,043 at P 247.
    \196\ Id. P 270.
    \197\ Id. P 271.
---------------------------------------------------------------------------

1. Request for Rehearing
    90. Generation Developers seek rehearing of the Commission's 
decision not to require the posting of congestion and curtailment 
information. They assert that transmission providers should want to 
post this information to improve siting decisions, but few transmission 
providers do so, and, even when they do, there is a lack of uniformity. 
Generation Developers add that non-disclosure agreements would address 
any confidentiality concerns.\198\
---------------------------------------------------------------------------

    \198\ Generation Developers Rehearing Request at 15-16.
---------------------------------------------------------------------------

    91. Generation Developers also assert that the Commission did not 
explain why it concluded that posting the information is ``technically 
infeasible'' when the transmission provider already knows this 
information.\199\ Generation Developers argue that the need for 
additional effort on the part of the transmission provider should not 
outweigh the need for making this information available. Finally, 
Generation Developers state that posting the information furthers the 
Commission's goal for improving transparency, and failure to do so 
increases uncertainties in the interconnection process.\200\
---------------------------------------------------------------------------

    \199\ Id. at 16.
    \200\ Id.
---------------------------------------------------------------------------

2. Determination
    92. We deny Generation Developers' request for rehearing. First, we 
reiterate that many transmission providers already publish some 
congestion and curtailment data such as locational marginal price data 
and dispatch reports.\201\ Furthermore, we again note that a 
significant amount of publicly available information for the Eastern 
Interconnection is contained in the NERC Transmission Loading Relief 
(TLR) Logs, including the duration, direction, and MW of 
curtailments.\202\ We also note that multiple commenters made a 
credible argument that imposing the proposed requirements would not 
provide information that would be useful for interconnection 
customers.\203\ We disagree with Generation Developers that the 
Commission did not explain why providing such information is 
technically infeasible. As noted in Order No. 845, PJM Interconnection 
L.L.C. (PJM), for example, explained that it lacked the software 
capability to determine congestion causes.\204\ The Commission decided 
not to proceed with its proposal in light of the limited usefulness, 
difficulty, and technical infeasibility of complying with the proposed 
requirements. For these reasons, we continue to believe that it was not 
appropriate to proceed with the proposed requirement. Additionally, we 
note that, in a rulemaking proceeding, the agency is ``accorded 
considerable deference in evaluating information presented and reaching 
decisions based upon its expertise,'' and ``the agency's decision to 
refrain from amending the elaborate, established regulatory scheme 
cannot be disturbed absent a strong showing that such action was 
unreasonable.'' \205\
---------------------------------------------------------------------------

    \201\ Order No. 845, 163 FERC ] 61,043 at P 271.
    \202\ Id.
    \203\ See id. P 264.
    \204\ Id. PP 258, 270.
    \205\ Professional Drivers Council v. Bureau of Motor Safety, 
706 F.2d 1216, 1220-21 (D.C. Cir. 1983); see also New York v. FERC, 
535 U.S. 1, at 28 (2002) (finding the Commission's choice not to 
assert jurisdiction represents a statutorily permissible policy 
choice).
---------------------------------------------------------------------------

E. Definition of Generating Facility in the Pro Forma LGIP and Pro 
Forma LGIA

    93. In Order No. 845, the Commission revised the definition of 
``Generating Facility'' to include electric storage resources and to 
allow electric storage resources to interconnect pursuant to large 
generator interconnection processes. Specifically, the Commission 
revised the definition of a generating facility in the pro forma LGIP 
and pro forma LGIA as follows (with additions in italics): ``Generating 
Facility shall mean Interconnection Customer's device for the 
production and/or storage for later injection of electricity identified 
in the Interconnection Request, but shall not include the

[[Page 8172]]

interconnection customer's Interconnection Facilities.'' \206\
---------------------------------------------------------------------------

    \206\ Order No. 845, 163 FERC ] 61,043 at P 273.
---------------------------------------------------------------------------

1. Requests for Rehearing and Clarification
    94. APS requests that the Commission revise the definition of 
``Generating Facility'' to recognize the load characteristics of 
electric storage resources.\207\ APS's concern is that the definition 
adopted by Order No. 845 could narrow the scope of studies that a 
transmission provider will perform, create ambiguity regarding the 
upgrades necessary to accommodate the load characteristics of electric 
storage resources, and create inconsistencies with the definition of 
``electric storage resource'' in Order No. 841.\208\ APS also states 
that neither the pro forma LGIP nor the pro forma LGIA allow the 
transmission provider to study the load characteristics of electric 
storage resources and are not specific as to how the transmission 
provider should recover the costs for those studies or how the 
transmission provider should classify the upgrades needed to 
accommodate the load characteristics of electric storage resources for 
cost allocation purposes.\209\
---------------------------------------------------------------------------

    \207\ APS Rehearing Request at 18.
    \208\ Id. (citing Electric Storage Participation in Markets 
Operated by Regional Transmission Organizations and Independent 
System Operators, Order No. 841, 83 FR 9,580 (Mar. 6, 2018), 162 
FERC ] 61,127 (2018)). Order No. 841 defines an electric storage 
resource as ``a resource capable of receiving electric energy from 
the grid and storing it for later injection of electric energy back 
to the grid.'' Order No. 841, 162 FERC ] 61,127 at n.1.
    \209\ APS Rehearing Request at 19.
---------------------------------------------------------------------------

2. Determination
    95. We deny APS' rehearing request. We reiterate that the 
definition change in Order No. 845 allows electric storage resources 
that wish to interconnect pursuant to the pro forma LGIP and pro forma 
LGIA to do so, and the revised definition is consistent with Order No. 
792's revisions to the definition of ``small generating facility'' in 
the pro forma Small Generator Interconnection Procedures (SGIP) and pro 
forma Small Generator Interconnection Agreement (SGIA).\210\ While 
Order No. 845 revised the definition of generating facility, it did not 
define ``electric storage resource.''
---------------------------------------------------------------------------

    \210\ Order No. 845, 163 FERC ] 61,043 at P 273.
---------------------------------------------------------------------------

    96. Moreover, we find it is not necessary to impose requirements 
regarding the scope of studies needed to account for the load 
characteristics of electric storage resources and the upgrades required 
to accommodate those load characteristics here. In Order No. 845, the 
Commission did not take a position regarding, or impose requirements 
pertaining to, the load characteristics of electric storage resources. 
Instead, the Commission observed that transmission providers have the 
flexibility to address the load characteristics of electric storage 
resources and that electric storage resources have already 
interconnected pursuant to Commission-jurisdictional LGIPs and 
LGIAs.\211\ The Commission also stated that, if a transmission provider 
finds that the terms of its pro forma LGIA are insufficient to 
accommodate a particular resource, ``the LGIP permits a transmission 
provider to enter into non-conforming LGIAs when necessary.'' \212\ 
Because the requirement in Order No. 845 is to allow electric storage 
resources to interconnect under the pro forma LGIP and pro forma LGIA, 
APS's request and discussion of the load characteristics of electric 
storage resources are beyond the scope of Order No. 845.
---------------------------------------------------------------------------

    \211\ Id. P 285.
    \212\ Id.
---------------------------------------------------------------------------

F. Interconnection Study Deadlines

    97. In Order No. 845, the Commission modified the pro forma LGIP to 
institute quarterly reporting requirements for transmission providers 
to report interconnection study performance data on their OASIS sites 
or public websites. The Commission also adopted requirements for 
transmission providers to file informational reports with the 
Commission if a transmission provider exceeds its interconnection study 
deadlines for more than 25 percent of any study type for two 
consecutive calendar quarters (Filed Report Requirement).
    98. In adopting these reporting requirements, the Commission found 
that the reporting requirements provide increased transparency and 
information to interconnection customers and do not unduly burden 
transmission providers.\213\ It also found that the increased 
transparency resulting from these new requirements should provide for 
``improved queue management and better informed interconnection 
customer planning--results that may be important enough to support some 
corresponding burden on transmission providers.'' \214\
---------------------------------------------------------------------------

    \213\ Id. P 307.
    \214\ Id.
---------------------------------------------------------------------------

1. Adoption of Order No. 845 Interconnection Study Metric Reporting 
Requirements
a. Requests for Rehearing and Clarification
    99. Southern requests rehearing, arguing that the Commission failed 
to account for events outside of a transmission provider's control and 
that the Filed Report Requirement could subject transmission providers 
to additional reporting requirements and penalties for circumstances 
beyond their control.\215\ Southern contends that ``this failure to 
make a rational connection between the facts and the requirement[s] 
adopted'' is arbitrary and capricious and in violation of the law.\216\ 
Southern contends that the Commission has adopted skewed metrics that 
inappropriately suggest that delays are the fault of the transmission 
provider without regard to possible interconnection customer action. 
Southern contends that this approach could lead to a determination that 
a transmission provider is not using reasonable efforts and result in a 
possible penalty.\217\
---------------------------------------------------------------------------

    \215\ Southern Rehearing Request at 3, 10-11.
    \216\ Id. at 10-11.
    \217\ Id.
---------------------------------------------------------------------------

    100. Southern also seeks rehearing on the start date for measuring 
interconnection study performance metrics. It asserts that the date 
that a transmission provider receives an executed study agreement from 
the interconnection customer is not the appropriate start date. In 
support of this argument, it points out that the transmission provider 
may not receive additional items required for an interconnection 
request, such as study deposits and technical data, for some time after 
the execution of the study agreement. Southern states that, if the 
Commission does not adopt ``a revised start date that commences with 
the receipt of the study deposit and provision of complete and valid 
data, then . . . [it] should clarify that an Interconnection Customer 
is required to provide the study deposit and complete and valid 
technical data before the Transmission Provider is required to begin 
the study.'' \218\
---------------------------------------------------------------------------

    \218\ Id. at 12.
---------------------------------------------------------------------------

b. Determination
    101. We deny Southern's rehearing request that the Commission 
reconsider the requirement for transmission providers to quarterly post 
interconnection study metrics. The purpose of the study reporting 
requirements is to improve

[[Page 8173]]

interconnection customer planning, transmission provider queue 
management, and Commission oversight. As noted in Order No. 845, we 
believe that the increased transparency provided through the reported 
study information could ``allow interconnection customers to assess 
whether a transmission provider is using `reasonable efforts' to 
process interconnection studies'' and allow them ``to develop informed 
expectations about how long the interconnection study portion of the 
process actually takes'' within a particular transmission system.\219\ 
The Commission has acknowledged that interconnection study delays may 
not be the result of the transmission provider's actions, and, in 
recognition of this possibility, it declined to implement automatic 
penalties for study delays.\220\ While we understand that Southern has 
concerns that posting data on transmission providers' consistency with 
tariff study timeframes may result in parties attempting to place blame 
on transmission providers, we note that the reported metric data in 
itself does not determine drivers for possible study data variance. The 
reported metrics are simply a transparency tool into the results, but 
not the drivers, of study completion. The posted study metrics indicate 
the proportion of interconnection studies a transmission provider is 
able to complete in the time frames established in its LGIP. We note 
that transmission providers are able to provide the rationale for and 
details regarding interconnection study delays to relevant 
interconnection customers under the provisions of sections 6.3, 7.4, 
and 8.3 in the pro forma LGIP and to other stakeholders as part of the 
information in the reports submitted under the Filed Report 
Requirement.
---------------------------------------------------------------------------

    \219\ Order No. 845, 163 FERC ] 61,043 at P 306 (quoting Pro 
forma LGIP Section 1 (Definition)).
    \220\ Id. P 309.
---------------------------------------------------------------------------

    102. As the Commission noted in Order No. 845, the detailed 
information provided to the Commission through the Filed Report 
Requirement should be particularly beneficial in identifying process 
deficiencies and the causes of delays in regions that persistently 
experience significant delays.\221\ This requirement also creates some 
consistency in the process for interconnection customers to obtain 
certain interconnection study information from transmission providers, 
and they will create a record that will allow the Commission to better 
assess the reasons for interconnection study delays.
---------------------------------------------------------------------------

    \221\ Id. PP 308, 310.
---------------------------------------------------------------------------

    103. We also deny Southern's request for rehearing regarding the 
start date for measuring interconnection study performance metrics, 
which Order No. 845 specifies as beginning with the execution of the 
relevant interconnection study agreement. Pursuant to the study 
performance metrics established in Order No. 845, the Commission uses 
the period between the execution of an interconnection study agreement 
and the date that the transmission provider provides the completed 
interconnection study to the interconnection customer as a time period 
for comparison \222\ against the study time frame specified for that 
interconnection study in the pro forma LGIP, as established in Order 
No. 2003.\223\ For purposes of consistency, the Commission chose to use 
the execution of an interconnection study agreement as the starting 
point for this comparison period because the pro forma LGIP uses the 
execution of an interconnection study agreement as the starting point 
for determining the time frame for completing an interconnection 
study.\224\ In response to Southern's expressed concern, we note, 
however, that, as established in Order No. 2003, an executed 
interconnection study agreement is submitted concurrently with a study 
deposit and the provision of technical data called for in the 
interconnection study agreement.\225\ As such, the timing for these 
components and their relationship with submission of an executed 
interconnection agreement has already been established and was not 
changed by Order No. 845.
---------------------------------------------------------------------------

    \222\ See Pro Forma LGIP, Sections 3.5.2.1(D), 3.5.2.2(D), & 
3.5.2.3(D).
    \223\ See Pro Forma LGIP, Section 6.3, 7.4, & 8.3.
    \224\ See, e.g., Pro Forma LGIP, Section 6.3: ``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.'' See also Pro 
Forma LGIP, Sections 7.4 & 8.3.
    \225\ See, e.g., Pro Forma LGIP, Section 6.1: ``The 
Interconnection Customer shall execute and deliver to the 
Transmission Provider the Interconnection Feasibility Study 
Agreement along with a $10,000 deposit no later than thirty (30) 
Calendar Days after its receipt. On or before the return of the 
executed Interconnection Feasibility Study Agreement to the 
Transmission Provider, the Interconnection Customer shall provide 
the technical data called for in Appendix 1, Attachment A.'' See 
also Pro Forma LGIP, Sections 7.2 & 8.1.
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2. Interconnection Study Data Posting Requirements
a. Requests for Rehearing and Clarification
    104. EEI requests clarification on two issues related to reporting 
interconnection study metrics. First, EEI requests clarification that 
the interconnection study metric reporting requirement begins with data 
for 2018, because Order No. 845 became effective on July 23, 2018.\226\ 
EEI notes that Order No. 845 adopts the NOPR language requiring the 
posting of quarterly metrics beginning with 2017. In response, EEI 
expresses concern that the study data required may not be available 
retroactively to the beginning of calendar year 2017 in the detail 
required by Order No. 845.
---------------------------------------------------------------------------

    \226\ EEI Rehearing Request at 18.
---------------------------------------------------------------------------

    105. Second, EEI seeks clarification on the timing for filing 
reports if a transmission provider triggers the Filed Report 
Requirement.\227\ Specifically, EEI asks how to comply with the Filed 
Report Requirement to submit a report ``within 45 days of the end of 
the calendar quarter'' if posted data from 2017 indicate that the Filed 
Report Requirement was triggered even though Order No. 845 ``did not go 
into effect until Q2 2018.'' \228\
---------------------------------------------------------------------------

    \227\ Id.
    \228\ Id. at 19.
---------------------------------------------------------------------------

    106. To clarify that the events that would trigger the Filed Report 
Requirement begin after Order No. 845 became effective, EEI recommends 
that the Commission revise section 3.5.3 of the pro forma LGIP as 
follows (with proposed deletions in brackets from and proposed 
additions in italics):

    3.5.3 Transmission Provider is required to post on OASIS or its 
website the measures in paragraph 3.5.2.1(A) through paragraph 
3.5.2.4(F) for each calendar quarter within 30 days of the end of 
the calendar quarter. Transmission Provider will keep the quarterly 
measures posted on OASIS or its website for three calendar years 
with the first required [reporting year to be 2017] quarterly report 
to be for the first calendar quarter after the effective date of 
Order No. 845. If Transmission Provider retains this information on 
its website, a link to the information must be provided on 
Transmission Provider's OASIS site.\229\
---------------------------------------------------------------------------

    \229\ Id.

b. Determination
    107. We grant EEI's request for clarification and confirm that the 
date for measuring study performance metrics and the reporting 
requirements do not require transmission providers to post 2017 
interconnection study metrics. EEI requested that the posting 
requirement begin in the 2018 calendar quarter after Order No. 845 
becomes effective.\230\ However, in light of the Commission's granting 
of a compliance

[[Page 8174]]

extension to a date 90 days after issuance of this order,\231\ we 
likewise extend the commencement of the retention and posting 
requirements. The reporting requirement shall commence in the first 
calendar quarter of 2020. This applies to both the study metrics 
reporting requirement and the Filed Report Requirement. To effectuate 
this clarification, we revise section 3.5.3 of the pro forma LGIP as 
follows (with deletions from and additions to the language from Order 
No. 845 in brackets and in italics, respectively):
---------------------------------------------------------------------------

    \230\ As noted below in Section J.1. Compliance and Effective 
Dates, EEI requested an extension of the Order No. 845 Compliance 
deadline.
    \231\ Notice of Extension of Compliance Date, Docket No. RM17-8-
000 (Oct. 3, 2018).

    Transmission Provider is required to post on OASIS or its 
website the measures in paragraph 3.5.2.1(A) through paragraph 
3.5.2.4(F) for each calendar quarter within 30 days of the end of 
the calendar quarter. Transmission Provider will keep the quarterly 
measures posted on OASIS or its website for three calendar years 
with the first required [reporting year to be 2017] report to be in 
the first quarter of 2020. If Transmission Provider retains this 
information on its website, a link to the information must be 
---------------------------------------------------------------------------
provided on Transmission Provider's OASIS site.

G. Requesting Interconnection Service Below Generating Facility 
Capacity

    108. In Order No. 845, the Commission modified the pro forma LGIP 
to allow interconnection customers to request interconnection service 
that is lower than the proposed generating facility capacity,\232\ 
recognizing the need for proper control technologies and flexibility 
for transmission providers to propose penalties to ensure that the 
generating facility does not inject energy above the requested level of 
service.\233\ The Commission also clarified that interconnection 
customers may either request interconnection service below generating 
facility capacity in their interconnection requests, or reduce their 
levels of requested interconnection service by up to 60 percent and 15 
percent, respectively, at two subsequent points in the interconnection 
process: (1) Prior to returning an executed system impact study 
agreement; and (2) prior to returning an executed facilities study 
agreement.\234\
---------------------------------------------------------------------------

    \232\ The term generating facility capacity means ``the net 
capacity of the Generating Facility and the aggregate net capacity 
of the Generating Facility where it includes multiple energy 
production devices.'' Pro forma LGIA Art. 1.
    \233\ Order No. 845, 163 FERC ] 61,043 at P 367.
    \234\ Id. PP 405-06.
---------------------------------------------------------------------------

    109. With respect to the need to enforce limits on energy injection 
through monitoring and control technologies, and the related issue of 
penalties for over-generation, the Commission largely relied on 
existing provisions of the pro forma LGIA to address these needs. These 
include any provisions related to system protection facilities and any 
provisions that allow a transmission provider to curtail service or 
terminate an LGIA in response to an interconnection customer exceeding 
its energy injection limit.\235\
---------------------------------------------------------------------------

    \235\ Id. PP 369-72, 396, 416-17.
---------------------------------------------------------------------------

    110. The Commission also required transmission providers to study 
interconnection requests at the level of interconnection service 
requested by the interconnection customer for purposes of identifying 
interconnection facilities and network upgrades. Furthermore, the 
Commission stated that transmission providers may, if determined 
necessary to ensure safety and reliability, perform studies at the full 
generating facility capacity. The Commission clarified that, in such 
circumstances, the transmission provider must provide a detailed 
written explanation for such a determination to the interconnection 
customer.\236\ The Commission also required that, if the transmission 
provider determines that additional network upgrades are necessary 
based on these studies, it must specify which additional network 
upgrade costs are based on which studies and provide a detailed 
explanation of why the additional network upgrades are necessary.
---------------------------------------------------------------------------

    \236\ Id. PP 383-84.
---------------------------------------------------------------------------

1. Requests for Rehearing and Clarification
    111. APS argues that the indemnification and liability provisions 
of the pro forma LGIA would not protect transmission providers where 
the action or inaction of an interconnection customer resulted in 
damage to or loss of use of the transmission provider's equipment or 
facilities or where such damage resulted in increased costs or loss of 
revenue for transmission providers. APS asks the Commission to clarify 
that transmission providers may propose stronger indemnification 
provisions in their LGIPs or LGIAs for interconnection service that is 
less than a generating facility's generating facility capacity. 
According to APS, operational controls can fail, and without explicit 
provisions addressing interconnection customer liability, the reform 
inequitably allocates consequential risk (which is directly 
attributable to a generating facility's operation) to transmission 
providers. For these reasons, APS requests clarification that 
transmission providers may propose LGIP/LGIA provisions to protect 
themselves from these risks or costs. APS also asks the Commission to 
explicitly define the interconnection customer's responsibilities for 
security, liability, indemnification, and overall reliability if an 
interconnection customer is interconnecting at a capacity lower than 
the full generating facility capacity.\237\
---------------------------------------------------------------------------

    \237\ APS Rehearing Request at 15-16.
---------------------------------------------------------------------------

    112. AWEA requests clarification regarding the timing of when a 
transmission provider must inform the interconnection customer of its 
election to perform additional studies at the full generating facility 
capacity. Specifically, AWEA argues that the transmission provider 
should inform the interconnection customer before performing these 
additional studies so that the interconnection customer can provide 
additional information or otherwise alleviate transmission provider 
concerns without the loss of time and money it may otherwise spend on 
additional studies. AWEA notes that the interconnection customer may 
bear the cost of additional studies and may seek to pursue dispute 
resolution if there is no agreement on the adequacy of control 
technologies or the need for additional study at the full generating 
facility capacity.\238\
---------------------------------------------------------------------------

    \238\ AWEA Request for Clarification at 6-7.
---------------------------------------------------------------------------

    113. AWEA also asks the Commission to clarify that there should be 
flexibility for the interconnection customer to wait until a facilities 
study is complete before the interconnection customer has to specify 
any required control technologies. It argues that this clarification is 
necessary to reconcile ambiguity in Order No. 845 concerning whether it 
is the interconnection customer's or transmission provider's 
responsibility to propose control technologies for a generating 
facility seeking service below generating facility capacity. In 
particular, AWEA is unable to reconcile two statements made by the 
Commission: (1) ``any control technologies proposed by the 
interconnection customer to restrict the generating facility's output 
to the requested interconnection service levels must be identified in 
the project description at the beginning of the study process,'' and 
(2) the Commission sees ``no reason to preclude a customer from relying 
on the transmission provider to identify protection and control 
technologies in the first instance.'' \239\
---------------------------------------------------------------------------

    \239\ Id. at 7 (quoting Order No. 845, 163 FERC ] 61,043 at P 
396).
---------------------------------------------------------------------------

2. Determination
    114. We deny APS's request for clarification because existing 
provisions in the pro forma LGIA are sufficient to

[[Page 8175]]

address APS's concerns. More specifically, we find that article 18.1 of 
the pro forma LGIA in combination with articles 9.3 (Transmission 
Provider Obligations) and 9.4 of the pro forma LGIA (Interconnection 
Customer Operations), are adequate to address APS's concerns. Article 
18.1 indemnifies a party from ``any and all damages, losses, claims . . 
. , 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 action or inactions 
of its obligations under this LGIA'' \240\ and covers ``the amount of 
such Indemnified Person's actual loss, net of any insurance or other 
recovery.'' \241\ Pro forma LGIA article 9.4 requires the 
interconnection customer ``to operate, maintain and control the Large 
Generating Facility . . . in a safe and reliable manner . . . in 
accordance with this LGIA'' and ``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 LGIA.'' The phrase 
``action or inactions of its obligations under this LGIA'' in article 
18.1 would include failure by the interconnection customer to abide by 
article 9.4 and Appendix C to the LGIA. Therefore, if the 
interconnection customer requests interconnection service below 
generating capacity, it commits to operate consistent with such a 
request under section 3.1 of the pro forma LGIP, which states that 
``[t]he necessary control technologies and protection systems . . . for 
exceeding the level of Interconnection Service established in the 
executed, or requested to be filed unexecuted, LGIA shall be 
established in Appendix C of that executed, or requested to be filed 
unexecuted, LGIA.'' \242\ Moreover, Appendix C of the LGIA, which 
contains interconnection details specific to the interconnection 
request, must memorialize the interconnection customer's commitment to 
operate consistent with its request for interconnection service below 
generating facility capacity. We note that the Commission has 
previously required the inclusion of such operating requirements in 
Appendix C.\243\
---------------------------------------------------------------------------

    \240\ Pro forma LGIA Art. 18.1.
    \241\ Id. Art. 18.1.2 (emphasis added).
    \242\ See Pro Forma LGIP Section 3.1.
    \243\ See, e.g., Essential Reliability Services and the Evolving 
Bulk-Power System--Primary Frequency Response, Order No. 842, 83 FR 
9,636 (Mar. 6, 2018), 162 FERC ] 61,128, at P 180 (2018) (requiring 
interconnection customer and transmission providers to establish in 
Appendix C of an LGIA the operating range for an interconnecting 
electric storage resource that considers the system needs for 
primary frequency response and the physical limitations of the 
electric storage resource).
---------------------------------------------------------------------------

    115. It is the transmission provider's responsibility to ensure 
that Appendix C of the LGIA includes these operational requirements. 
More specifically, under pro forma LGIA article 9.3 (Transmission 
Provider Obligations), the transmission provider ``has the 
responsibility for establishing the Interconnection Customer's 
operating instructions and operating protocols and procedures'' and 
because ``these instructions, protocols, and procedures . . . include 
reliability requirements, article 9.3 . . . gives the Transmission 
Provider responsibility for modifications to Appendix C.'' \244\
---------------------------------------------------------------------------

    \244\ Bonneville Power Admin., 112 FERC ] 61,195, at P 20 
(2005), order on reh'g, 113 FERC ] 61,005 (2005).
---------------------------------------------------------------------------

    116. Accordingly, we find the existing indemnification provision in 
pro forma LGIA article 18.1 would cover an action or inaction by the 
interconnection customer related to overgeneration because the 
interconnection customer would have failed to operate its generating 
facility consistent with its LGIA obligations. Because of this finding, 
we revise the last sentence of section 3.1 of the pro forma LGIP to now 
read ``[t]he necessary control technologies and protection systems 
shall be established in Appendix C of the executed, or requested to be 
filed unexecuted, LGIA.'' \245\ In Order No. 845, the Commission 
declined to generically adopt into the pro forma LGIP any additional 
financial penalties for exceeding the limitations for interconnection 
service established in the interconnection agreements. However, the 
Commission did allow a transmission provider to propose and justify a 
need for additional penalties in a section 205 filing. We note that, if 
a transmission provider were to propose additional penalties, then 
information on the additional penalties should also be included in 
Appendix C of the LGIA. On a different but related note, it is worth 
pointing out that an interconnection customer's failure to abide by the 
operating requirements contained in Appendix C may constitute a breach 
of the LGIA and may trigger the default and termination provisions in 
articles 17.1.1 and 17.1.2 of the pro forma LGIA, respectively.
---------------------------------------------------------------------------

    \245\ Pro Forma LGIP Section 3.1.
---------------------------------------------------------------------------

    117. In response to AWEA's request to require a transmission 
provider to inform the interconnection customer before performing 
additional studies at the full generating facility capacity, we grant 
clarification and clarify that a transmission provider must provide a 
detailed explanation of its determination to perform additional studies 
at the full generating facility capacity to an interconnection customer 
prior to performing the additional studies. This explanation will allow 
the interconnection customer to understand the transmission provider's 
reasoning for determining that additional studies are necessary before 
the studies are conducted. We also reiterate Order No. 845's 
requirement that, if after the additional studies are complete, the 
transmission provider determines that additional network upgrades are 
necessary, then the transmission provider must: (1) Specify which 
additional network upgrade costs are based on which studies; and (2) 
provide a detailed explanation of why the additional network upgrades 
are necessary.\246\ Accordingly, we revise the paragraph at the end of 
section 3.1 in the pro forma LGIP to include the following sentence 
(with new additions from Order No. 845 in italics):
---------------------------------------------------------------------------

    \246\ Order No. 845, 163 FERC ] 61,043 P 384.

    These requests for Interconnection Service shall be studied at 
the level of Interconnection Service requested for purposes of 
Interconnection Facilities, Network Upgrades, and associated costs, 
but may be subject to other studies at the full Generating Facility 
Capacity to ensure safety and reliability of the system, with the 
study costs borne by the Interconnection Customer. If after the 
additional studies are complete, Transmission Provider determines 
that additional Network Upgrades are necessary, then Transmission 
Provider must: (1) Specify which additional Network Upgrade costs 
are based on which studies; and (2) provide a detailed explanation 
---------------------------------------------------------------------------
of why the additional Network Upgrades are necessary.

    118. We deny AWEA's request for clarification to allow an 
interconnection customer the flexibility to propose control 
technologies to the transmission provider after the completion of the 
facilities study because allowing such flexibility could cause delays 
in the processing of the transmission provider's queue. However, we 
reiterate that the interconnection customer may propose control 
technologies when it submits its interconnection request at the 
beginning of the interconnection process, or, if it chooses not to, 
then it may rely on the transmission provider to identify the necessary 
control technologies. Additionally, Order No. 845 stated that an 
interconnection customer may request to reduce its interconnection 
service by up to 60 percent before it returns an executed system impact 
study agreement to the transmission provider and by up to an additional 
15 percent prior to the return of an executed facilities study

[[Page 8176]]

agreement.\247\ Because Order No. 845 permits the interconnection 
customer to reduce its interconnection service below generating 
facility capacity at these two other points in the generator 
interconnection process,\248\ we grant rehearing in part to find that 
an interconnection customer may propose control technologies at both of 
these points as well. We note that this clarification still preserves 
the transmission provider's ability to ensure system protection under 
the existing pro form LGIA.\249\
---------------------------------------------------------------------------

    \247\ Id. P 396.
    \248\ Id. P 406; see also pro forma LGIP Sections 4.4.1 & 4.4.2.
    \249\ Order No. 845, 163 FERC ] 61,043 at P 372; see also pro 
forma LGIA Section 9.7.4.1.
---------------------------------------------------------------------------

H. Utilization of Surplus Interconnection Service

    119. In Order No. 845, the Commission adopted pro forma LGIP and 
pro forma LGIA provisions to enable a new interconnection customer to 
utilize the unused portion of an existing interconnection customer's 
interconnection service within specific parameters. The intent was to 
reduce costs for interconnection customers and improve wholesale market 
competition by increasing the utilization of existing interconnection 
facilities and network upgrades rather than requiring new ones. These 
reforms were also intended to improve capabilities at existing 
generation facilities, to prevent stranded costs, and to improve access 
to the transmission system.\250\
---------------------------------------------------------------------------

    \250\ See Order No. 845, 163 FERC ] 61,043 at P 467.
---------------------------------------------------------------------------

    120. As relevant to the requests for rehearing and clarification, 
in Order No. 845, the Commission modified the pro forma LGIP and pro 
forma LGIA to: (1) Add a definition for ``Surplus Interconnection 
Service'' to section 1 of the pro forma LGIP and to article 1 of the 
pro forma LGIA; \251\ and (2) add a new section 3.3 to the pro forma 
LGIP that requires the transmission provider to establish a process for 
the use of surplus interconnection service.\252\
---------------------------------------------------------------------------

    \251\ Id. (``Surplus Interconnection Service shall mean any 
unneeded portion of Interconnection Service established in a Large 
Generator Interconnection Agreement, such that if Surplus 
Interconnection Service is utilized the total amount of 
Interconnection Service at the Point of Interconnection would remain 
the same.'').
    \252\ Id. (``Utilization of Surplus Interconnection Service--
Transmission Provider must provide a process that allows an 
Interconnection Customer to utilize or transfer Surplus 
Interconnection Service at an existing Point of Interconnection. The 
original Interconnection Customer or one of its affiliates shall 
have priority to utilize Surplus Interconnection Service. If the 
existing Interconnection Customer or one of its affiliates does not 
exercise its priority, then that service may be made available to 
other potential interconnection customers.'').
---------------------------------------------------------------------------

    121. Also relevant to the requests for rehearing, Order No. 845 
required ``transmission providers to provide an expedited process for 
interconnection customers to utilize or transfer surplus 
interconnection service at a particular point of interconnection. This 
process would be expedited in the sense that it would take place 
outside of the interconnection queue.'' \253\ It also clarified that 
the use or transfer of surplus interconnection service does not entail 
queue jumping.\254\ Finally, Order No. 845 permitted a limited, 
continuation of surplus interconnection service for up to one year 
following the retirement and permanent cessation of commercial 
operations of the original interconnection customer's generating 
facility.\255\ Below, we address the issues raised in requests for 
rehearing or clarification.
---------------------------------------------------------------------------

    \253\ Id. P 486.
    \254\ Id. PP 487.
    \255\ Id. PP 505-06.
---------------------------------------------------------------------------

    1. Original Interconnection Customer's Ability To Utilize or 
Transfer Surplus Interconnection Service
    a. Requests for Rehearing and Clarification
    122. Non-Profit Utility Trade Associations state that the 
Commission's surplus interconnection service decision builds on the 
premise that transmission providers, when considering interconnection 
applications, must study the implications of generation output at full 
capacity, and assume that each interconnection customer is fully using 
its interconnection service when studying new requests. Non-Profit 
Utility Trade Associations note that, on that basis, the Commission 
then built a ``right'' under the tariff for interconnection customers 
to market surplus interconnection capacity.\256\
---------------------------------------------------------------------------

    \256\ Non-Profit Utility Trade Associations Rehearing Request at 
9.
---------------------------------------------------------------------------

    123. However, Non-Profit Utility Trade Associations allege that 
Order No. 845 fails to account for the ``dynamic nature of the 
transmission planning and operating environment.'' \257\ In particular, 
they argue that the Commission explicitly recognized that transmission 
planners build certain assumptions into their models when it stipulated 
that studies for the use of surplus interconnection capacity will focus 
on available reactive power studies, short circuit fault duty analyses, 
stability analyses, and any other appropriate studies.\258\ Non-Profit 
Utility Trade Associations argue that, for planning models, assuming 
that interconnection customers may at any time market capacity that has 
long been idle alters the planning environment and will likely require 
additional investment.\259\
---------------------------------------------------------------------------

    \257\ Id. at 9.
    \258\ Id. at 9-10 (citing Order No. 845, 163 FERC ] 61,043 at P 
461).
    \259\ Id.
---------------------------------------------------------------------------

    124. According to Non-Profit Utility Trade Associations, while 
``the interconnection capacity needed by any interconnection customer 
may be effectively free . . . when initially secured,'' it may later 
become valuable when a subsequent interconnection customer submits an 
interconnection request. Non-Profit Utility Trade Associations argue, 
however, that permitting an interconnection customer an ongoing 
opportunity to remarket interconnection service permits the value of 
the associated capacity to be set at the cost of system expansion, 
regardless of the cost to the interconnection customer. According to 
Non-Profit Utility Trade Associations, such a result would be an 
unearned windfall for the initial interconnection customer, and holds 
the potential for it to assess monopoly rent meaningfully in excess of 
its cost. Non-Profit Utility Trade Associations further contend that, 
if the original interconnection customer does not release ``its 
capacity,'' a transmission provider would have ``to build out the grid 
for an ensuing customer,'' with the resulting cost to be borne 
ultimately by the system as a whole as costs are rolled into system-
wide rates under the Commission's generic interconnection pricing 
policy.\260\
---------------------------------------------------------------------------

    \260\ Id. at 9-11.
---------------------------------------------------------------------------

    125. Furthermore, Non-Profit Utility Trade Associations argue that, 
under Order No. 2003, all system customers are ultimately responsible 
for network upgrade costs associated with interconnection applications 
on a rolled-in cost basis.\261\ Non-Profit Utility Trade Associations 
assert that this fact ``undermines any equitable claim that 
interconnection customers may have to the financial benefit of 
transmission capacity associated with network upgrades for which they 
have provided initial funding.'' \262\ For this reason, Non-Profit 
Utility Trade Associations argue that the Commission should withdraw 
the surplus interconnection service provisions because they will drive 
up system-wide costs, permit interconnection process gaming, and will 
not increase system efficiency.\263\ Non-Profit Utility Trade 
Associations

[[Page 8177]]

concede that, after an interconnection is complete, some surplus 
capacity may exist. For this reason, Non-Profit Utility Trade 
Associations do not oppose modifications to permit the transfer of 
surplus capacity for a period of five years after the interconnection's 
energization.
---------------------------------------------------------------------------

    \261\ Id. at 10-11 (citing Order No. 2003, 104 FERC ] 61,103 at 
PP 130-33).
    \262\ Id. at 11.
    \263\ Id. at 11-12.
---------------------------------------------------------------------------

b. Determination
    126. We deny Non-Profit Utility Trade Associations' request for 
rehearing. First, we disagree with Non-Profit Utility Trade 
Associations that the establishment of surplus interconnection service 
fails to account for the ``dynamic nature of the transmission planning 
and operating environment.'' \264\ While transmission planners may make 
reasonable assumptions as to future transmission system use to plan for 
transmission system maintenance, the transmission provider has no right 
to assume in all circumstances that unused interconnection service will 
remain unused indefinitely. In fact, Order No. 845 explained that, 
``even if a generating facility only operates a few days a year, or 
routinely operates at a level below its maximum capacity, the 
remaining, unused interconnection service is assumed to be unavailable 
to other prospective interconnection customers.'' \265\ As long as the 
original interconnection customer remains in compliance with its LGIA, 
it retains the right to make full use of its contracted for 
interconnection service, and, so long as any necessary transmission 
service has been obtained, it may inject at the full level contracted 
for under its LGIA.\266\
---------------------------------------------------------------------------

    \264\ Id. at 9.
    \265\ Order No. 845, 163 FERC ] 61,043 at P 468.
    \266\ See id PP 468-72.
---------------------------------------------------------------------------

    127. As to the remainder of Non-Profit Utility Trade Associations' 
arguments, while we agree that, where transmission providers follow the 
Commission's Order No. 2003 crediting policy, transmission customers 
ultimately pay for interconnection-related network upgrades,\267\ this 
fact does not undermine the rationale for surplus interconnection 
service. The amount of interconnection service that was granted to the 
original interconnection customer remains the same throughout the term 
of its LGIA, whether or not that original interconnection customer 
ultimately receives credits for the cost of any network upgrades that 
may have been needed to accommodate its original interconnection 
request. Accordingly, the amount of surplus interconnection service 
that can be offered by the original interconnection customer likewise 
does not depend on whether the original interconnection customer 
receives or received credits for the cost of any network upgrades that 
may have been needed to accommodate its original interconnection 
request.
---------------------------------------------------------------------------

    \267\ Specifically, under the pro forma LGIA of Order No. 2003, 
an interconnection customer only provides up-front financing of 
network upgrades that enable interconnection service. After the 
interconnection customer enters commercial operation, the 
transmission provider reimburses the interconnection customer 
through transmission service credits and rolls the cost of the 
network upgrades into its transmission rates over time. Order No. 
2003, 104 FERC ] 61,103 at PP 693-96. See also LGIA Art. 11.4.1 
(``Interconnection Customer shall be entitled to a cash refund, 
equal to the total amount paid to Transmission Provider and Affected 
System Operator, if any, for the Network Upgrades, including any tax 
gross-up or other tax-related payments, and not refunded to 
Interconnection Customer pursuant to Article 5.17.8 or otherwise, to 
be paid to Interconnection Customer on a dollar-for-dollar basis for 
the non-usage sensitive portion of transmission charges, as payments 
are made under the Transmission Provider's Tariff and Affected 
System's Tariff for transmission services with respect to the Large 
Generating Facility'').
---------------------------------------------------------------------------

    128. In addition, we continue to find that these surplus 
interconnection service requirements serve to ``enhance access to the 
transmission system at [a specific] point of interconnection'' and are 
necessarily ``limited in nature,'' as stated in Order No. 845.\268\ 
These requirements are consistent with the fact that, once an original 
interconnection customer commences operation, nothing in its LGIA 
prohibits it from operating at the full amount of interconnection 
service established in its LGIA,\269\ taking into account any 
curtailment for temporary reliability reasons, even if it has not 
historically done so.\270\ In other words, rather than encouraging the 
withholding of interconnection capacity as asserted by Non-Profit 
Utility Trade Associations, the surplus interconnection service 
requirements make it easier for the original interconnection customer 
to utilize or transfer surplus interconnection service at a particular 
point of interconnection.
---------------------------------------------------------------------------

    \268\ Order No. 845, 163 FERC ] 61,043 at PP 480-81.
    \269\ For purposes of this argument, we assume that any 
necessary transmission service has been obtained to allow such 
operation of the generation facility at the full amount of 
interconnection service established in its LGIA.
    \270\ Id. P 480.
---------------------------------------------------------------------------

    129. Similarly, we disagree with Non-Profit Utility Trade 
Associations' argument that ``[p]ermitting an original interconnection 
customer an ongoing opportunity to remarket interconnection service'' 
may allow it ``to assess monopoly rent meaningfully in excess of its 
cost.'' \271\ As noted in Order No. 845, new interconnection customers 
retain the ``ability to submit an interconnection request for any 
requested point of interconnection directly with the transmission 
provider, rather than seeking surplus interconnection service with 
respect to an original interconnection customer's point of 
interconnection.''\272\ Furthermore, as also explained in Order No. 
845, surplus interconnection service is, by definition, more limited in 
nature than new interconnection service provided by the transmission 
provider because: (1) The total output of the original interconnection 
customer plus the surplus interconnection service customer behind the 
same point of interconnection will be limited to the maximum total 
amount of interconnection service granted to the original 
interconnection customer; (2) the original interconnection customer 
will be able to stipulate the amount of surplus interconnection service 
that is available, to designate when that service is available, and to 
describe any other conditions under which surplus interconnection 
service at the point of interconnection may be used; and (3) it will 
only be available at the preexisting point of interconnection of the 
original interconnection customer.\273\ Thus, surplus interconnection 
service is an inherently more limited service than non-surplus 
interconnection service. For these reasons, the original 
interconnection customer cannot assess monopoly rents through the sale 
of surplus interconnection service because a potential purchaser of 
surplus interconnection service can always opt instead for non-surplus 
interconnection service from the transmission provider. That said, we 
note that making surplus interconnection service available when it was 
not available before provides a new option for interconnection 
customers that are willing to accept the limitations associated with 
surplus interconnection service.
---------------------------------------------------------------------------

    \271\ Non-Profit Utility Trade Associations Rehearing Request at 
9.
    \272\ See, e.g., Order No. 845, 163 FERC ] 61,043 at P 482; see 
also id. PP 490 & 507.
    \273\ See, e.g., id. P 481.
---------------------------------------------------------------------------

2. Effect of Expedited Surplus Interconnection Service Process on the 
Queue and on Transmission Planning
a. Requests for Rehearing and Clarification
    130. Some rehearing requests argue that the Commission has not 
adequately addressed the impact that the expedited surplus 
interconnection service process may have on the non-surplus 
interconnection queue. APS argues that the studies associated with 
surplus interconnection service must compete

[[Page 8178]]

for the same transmission provider resources, including personnel, as 
other interconnection studies. Further, APS states that ``where interim 
facilities are necessary . . . it is not clear how and when such 
facilities would become `contingent facilities' in the normal 
interconnection study process.'' \274\ APS adds that, where studies 
from a request for surplus interconnection service identify additional 
impacts, those impacts could affect interconnection customers that are 
already in the queue.\275\ As a result, APS asks the Commission to 
clarify that transmission providers may incorporate into their pro 
forma LGIAs and LGIPs provisions that are necessary to ensure that 
these issues, when they arise, can be resolved.
---------------------------------------------------------------------------

    \274\ APS Rehearing Request at 14.
    \275\ Id. at 13-15. APS raises the same issues with respect to 
provisional interconnection service.
---------------------------------------------------------------------------

    131. Similarly, EEI and Southern argue that the Commission's 
rationale for the surplus interconnection service provisions fails to 
consider the impact to the transmission planning process if more than 
two customers seek to use the same interconnection service. They argue 
that, while the transmission provider can study the original 
interconnection customer and the surplus interconnection customer for a 
safe and reliable interconnection, transmission providers may find it 
increasingly difficult to reliably study subsequent interconnection 
requests and plan for future transmission system expansion.\276\
---------------------------------------------------------------------------

    \276\ EEI Rehearing Request at 15; Southern Rehearing Request at 
15.
---------------------------------------------------------------------------

    132. EEI also argues that, in all transmission planning studies, 
when considering safety and reliability evaluations such as breaker 
duty, grounding, or stability, the transmission provider considers all 
other transmission system components at full load even though most of 
these components do not operate at full capacity all the time. It 
argues that this methodology allows transmission providers to 
efficiently plan the transmission system to operate safely and reliably 
under stressed conditions and that the Commission should account for 
this planning consideration when implementing Order No. 845.\277\ 
Finally, EEI seeks guidance to address these implementation and 
operational issues and requests a technical conference or workshop to 
address these issues.\278\
---------------------------------------------------------------------------

    \277\ EEI Rehearing Request at 15.
    \278\ Id. at 15-16.
---------------------------------------------------------------------------

b. Determination
    133. We deny the requests by EEI, Southern, and APS for 
clarification and technical conference with respect to the potential 
impact on the queue of the expedited surplus interconnection service 
process, both with respect to interconnection requests and to 
transmission planning. While the Commission agrees with APS that, for a 
given transmission provider, the same personnel that would be 
responsible for processing the non-surplus interconnection queue would 
likely also be responsible for administering the surplus 
interconnection service process, this fact does not justify granting 
the requests for clarification. As noted in Order No. 845, transmission 
providers routinely conduct similar studies outside of the 
interconnection process without causing significant delays to other 
interconnection customers.\279\ None of the rehearing requests provided 
evidence refuting this assertion. We find it reasonable to assume that 
transmission providers will be able to similarly study surplus 
interconnection service requests without creating significant delays in 
the non-surplus interconnection process.
---------------------------------------------------------------------------

    \279\ Order No. 845, 163 FERC ] 61,043 at P 488 (citing, e.g., 
MISO FERC Electric Tariff, Attachment X (76.0.0), Section 11.5).
---------------------------------------------------------------------------

    134. Additionally, we are not persuaded by the argument that 
transmission providers may find it increasingly difficult to reliably 
study later interconnection requests and plan for future transmission 
system expansion due to the need to assess multiple scenarios for 
surplus interconnection service at the same point of interconnection. 
This issue exists irrespective of whether surplus interconnection 
service is an available option, as there are always uncertainties and 
complexities surrounding transmission system modeling. These 
uncertainties require making assumptions as to future conditions that, 
by their very nature, cannot be predicted in the present with 100 
percent accuracy.\280\ Considering all of the limitations associated 
with surplus interconnection service described elsewhere in this 
section, particularly the fact that it cannot be granted if it would 
require new network upgrades, we see no evidence that the mere 
existence of surplus interconnection service would fundamentally or 
significantly increase the difficulty of making assumptions as to 
future conditions in connection with transmission system modeling.
---------------------------------------------------------------------------

    \280\ For example, it will always be difficult for a given 
transmission provider to know with certainty how much unaffiliated 
generation will retire in the future and how much new unaffiliated 
generation may ultimately be built to replace it, and making 
reasonable assumptions in order to address these and other 
uncertainties is a necessary and intrinsic part of transmission 
system modeling.
---------------------------------------------------------------------------

    135. APS requests clarification as to how and when interim 
facilities would become ``contingent facilities'' in the normal 
interconnection study process. APS also requests clarification 
concerning additional impacts identified in surplus interconnection 
service studies affecting the determination of what upgrades are 
necessary for interconnection customers that are already in the queue. 
As discussed in more detail in the next section below, surplus 
interconnection service cannot be granted if doing so would require new 
network upgrades. Accordingly, surplus interconnection service should 
have no additional impacts affecting the determination of what upgrades 
are necessary for interconnection customers that are already in the 
queue. Similarly, because surplus interconnection service will not be 
granted if it requires new network upgrades, there should be no interim 
facilities that need to be considered contingent facilities in the 
normal interconnection study process. Accordingly, we find no basis to 
grant clarification.\281\
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    \281\ Similarly, APS raised this issue in regards to provisional 
interconnection service, and we deny clarification with respect to 
provisional interconnection on the same basis. Furthermore, 
provisional interconnection is only available when available studies 
or additional studies as necessary indicate that there is a level of 
interconnection that can occur without any additional 
interconnection facilities and/or network upgrades. See id. P 441.
---------------------------------------------------------------------------

3. Impact of Differences in Electrical Characteristics Between the 
Surplus and Original Interconnection Customers
a. Requests for Rehearing and Clarification
    136. EEI states that where two generators with different electrical 
characteristics (e.g., short circuit contribution, fault current, 
harmonic profile) share a point of interconnection, if the transmission 
provider receives a third interconnection request on the same 
transmission line, the transmission provider will have to either (1) 
choose one of the two original generators to include for the third 
generator's interconnection evaluation or (2) perform multiple 
evaluations to consider all potential generator operation scenarios. 
Under the first scenario, according to EEI, it is possible that the 
study could miss potential upgrades that could be necessary, and under 
the second scenario, the transmission provider's study and the 
transmission planning process become more complex. As a result, EEI 
requests that the Commission convene a

[[Page 8179]]

technical conference or staff-led workshop to address these issues 
prior to requiring implementation.\282\
---------------------------------------------------------------------------

    \282\ EEI Rehearing Request at 14-15.
---------------------------------------------------------------------------

    137. For similar reasons, Southern asks the Commission to clarify 
that transmission providers are only obligated to provide surplus 
interconnection service up to the amount that can be provided without 
building new network upgrades.\283\
---------------------------------------------------------------------------

    \283\ Southern Rehearing Request at 16.
---------------------------------------------------------------------------

b. Determination
    138. We clarify that, by definition, surplus interconnection 
service is only available up to the level that can be accommodated 
without requiring the construction of new network upgrades. We agree 
that a surplus interconnection service customer may have significantly 
different electrical characteristics (e.g., short circuit contribution, 
fault current, harmonic profile) than the original interconnection 
customer, and that those differences may sometimes result in the need 
to take actions up to and potentially including the construction of new 
network upgrades to maintain the reliable operation of the system in 
order to accommodate the new surplus interconnection request. This 
could be true even if the total injections of energy from the original 
and surplus interconnection customers are limited to the level of 
interconnection service contracted for by the original interconnection 
customer. Thus, in recognition of the Commission's stated objective of 
increasing efficiency in the interconnection process through this 
reform, we clarify that surplus interconnection service is only 
available up to the amount that can be accommodated without requiring 
new network upgrades.\284\ This clarification should address concerns 
regarding the potential impact of differences in electrical 
characteristics, and therefore, no additional technical conference or 
staff-led workshop is necessary.
---------------------------------------------------------------------------

    \284\ We note that surplus interconnection service will likely 
require new directly assignable interconnection facilities to 
connect the surplus interconnection service customer to the original 
interconnection customer's interconnection facilities. However, 
interconnection facilities are always the sole cost responsibility 
of the relevant interconnection customer, so requiring more of those 
for a surplus interconnection request will not impact others in the 
interconnection queue.
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4. Independent Entity Variations
a. Requests for Rehearing and Clarification
    139. New York Independent System Operator, Inc. (NYISO) asks the 
Commission to clarify that Order No. 845 does not limit the manner in 
which RTOs/ISOs demonstrate independent entity variations with respect 
to surplus interconnection service. Specifically, NYISO cites paragraph 
477 of Order No. 845, which appears to create highly prescriptive 
surplus interconnection service requirements with regard to RTO's/ISO's 
interconnection procedures. However, NYISO argues that the assumptions 
concerning the need for, and benefits of, surplus interconnection 
service are not applicable to NYISO, whose rules are ``fundamentally 
different'' from other transmission providers' rules.\285\
---------------------------------------------------------------------------

    \285\ NYISO Request for Rehearing at 6-19. NYISO provides 
examples of these regional rules that it asserts are incompatible 
with the surplus interconnection service requirements.
---------------------------------------------------------------------------

b. Determination
    140. We grant NYISO's request for rehearing because the Commission 
did not intend to limit the manner in which RTOs/ISOs may seek 
independent entity variations with respect to surplus interconnection 
service. Order No. 845 states that:

for a process to be consistent with or superior to, or an 
independent entity variation from, the Final Rule's surplus 
interconnection service requirements, the transmission provider must 
demonstrate, at a minimum, that its tariff: (1) Includes a 
definition of surplus interconnection service consistent with the 
Final Rule; (2) provides an expedited interconnection process 
outside of the interconnection queue for surplus interconnection 
service, consistent with the Final Rule; (3) allows affiliates of 
the original interconnection customers to use surplus 
interconnection service for another interconnecting generating 
facility consistent with the Final Rule; (4) allows for the transfer 
of surplus interconnection service that the original interconnection 
customer or one of its affiliates does not intend to use; and (5) 
specifies what reliability-related studies and approvals are 
necessary to provide surplus interconnection service and to ensure 
the reliable use of surplus interconnection service.\286\
---------------------------------------------------------------------------

    \286\ Order No. 845, 163 FERC ] 61,043 at P 477 (emphasis 
added).

    141. Upon further consideration, we find that it was not 
appropriate to limit the flexibility of independent entities to request 
independent entity variations. This passage from the preamble of Order 
No. 845 should have been limited to discussing whether a process is 
``consistent with or superior to'' Order No. 845 requirements and 
should not have referred to independent entity variations. Therefore, 
we modify this portion of the preamble of Order No. 845 to eliminate 
the phrase ``or an independent entity variation from.'' As NYISO 
correctly notes, requesting an independent entity variation provides 
more flexibility than requesting a variation that is ``consistent with 
or superior to'' a final rule's requirements.\287\ Nevertheless, we 
will not otherwise address any specific independent entity variation 
arguments in NYISO's request for clarification at this time. Such 
arguments are more appropriate in a proceeding on a particular 
transmission provider's Order No. 845 compliance filing.
---------------------------------------------------------------------------

    \287\ Order No. 2003, 104 FERC ] 61,103 at P 26.
---------------------------------------------------------------------------

5. Additional Requests for Clarification Regarding Surplus 
Interconnection Service
a. Requests for Rehearing and Clarification
    142. Some of the rehearing requests argue more narrowly that the 
surplus interconnection service requirements are inconsistent with 
particular Commission-approved provisions in transmission providers' 
own tariffs. In this regard, Southern argues that no LGIA to which 
Southern is a party obligates it to maintain an interconnection 
customer's capability to be designated as a network resource after the 
original generating facility's commercial operation date. It explains 
that any preservation of capacity would instead ``be done under an 
appropriate transmission delivery service arrangement.'' \288\ 
Therefore, Southern asks for clarification that the statement ``that if 
the original LGIA is for [Network Resource Interconnection Service 
(NRIS)], the surplus interconnection customer could be either [Energy 
Resource Interconnection Service (ERIS)] or NRIS'' does not apply to 
Southern.\289\
---------------------------------------------------------------------------

    \288\ Southern Rehearing Request at 16 (citing to a portion of 
Attachment J-1 to Southern's tariff).
    \289\ Id. at 17.
---------------------------------------------------------------------------

    143. AWEA requests clarification on two issues regarding the 
implementation of the surplus interconnection service requirements. 
First, AWEA seeks clarification that the Commission intends to 
accommodate a ``Multi-Phase model,'' which according to AWEA differs 
from the MISO Net Zero Interconnection Service Model. AWEA describes 
the Multi-Phase Model as a situation where a developer that planned to 
build a plant with a higher generating facility capacity enters a 
contract for a lower capacity during its development process. It argues 
that this situation could ``leave[] excess capacity in the 
interconnection service that is not immediately used,'' and the 
developer ``may wish to build an additional generating plant at that 
same site,'' or ``may wish to sell the excess capacity to

[[Page 8180]]

another party.'' \290\ AWEA contends that this Multi-Phase model would 
fit under the Commission's definition of surplus interconnection 
capacity.\291\ AWEA also states that some RTOs/ISOs have procedures 
that allow the initial party to reassign or transfer surplus 
interconnection capacity to another party consistent with this Multi-
Phase model.\292\ AWEA therefore requests clarifications that the 
situations ``similar to that of the Multi-Phase model described above, 
in addition to the Net Zero model, are . . . an intended use of surplus 
interconnection capacity, and that transmission providers should also 
provide a process by which the Multi-Phase model can allow the 
efficient use of existing interconnection capacity.'' \293\ It argues 
that both approaches to the use of surplus capacity could be 
accomplished through the same process or in two different 
processes.\294\
---------------------------------------------------------------------------

    \290\ AWEA Request for Clarification at 3.
    \291\ Id.
    \292\ Id. at 4.
    \293\ Id.
    \294\ Id.
---------------------------------------------------------------------------

    144. Second, regarding retirement of the original generator 
associated with a surplus interconnection service agreement, AWEA 
requests that the Commission clarify that, during the one-year grace 
period prior to the retirement of the original generator, a new 
generator can apply for repowering or replacement at the point of 
interconnection, with the agreement of the original interconnection 
customer, under the RTO/ISO's existing rules. Further, AWEA requests 
that the Commission clarify that, if the retirement and replacement 
process is successful, the surplus interconnection customer could 
continue to operate after that one-year grace period.\295\ AWEA also 
asks the Commission to clarify that the rules and processes that exist 
for replacement or repowering are also available to surplus 
interconnection service customers.\296\
---------------------------------------------------------------------------

    \295\ Id. at 5.
    \296\ Id.
---------------------------------------------------------------------------

b. Determination
    145. We deny the requests for clarification by Southern and AWEA, 
as discussed further below. We deny Southern's request for 
clarification regarding whether the statement ``that if the original 
LGIA is for NRIS, the surplus interconnection customer could be either 
ERIS or NRIS'' applies to Southern. Southern argues that, under its 
tariff, it is not obligated under any LGIA to maintain an 
interconnection customer's capability to be designated as a network 
resource after the original generating facility's commercial operation 
date because of a certain provision it added to its tariff. However, 
Southern fails to acknowledge the concerns the Commission identified 
when Southern first proposed this provision. Specifically, the 
Commission stated that ``[a]lthough Southern states on rehearing that 
it was `not trying to nullify, avoid, or evade the requirements of 
Order Nos. 2003 and 2003-A in adopting Attachment J-1,' we continue to 
find that, without the conditions discussed below, revised Attachment 
J-1 has not been shown to be consistent with or superior to the pro 
forma LGIA and LGIP.'' \297\ Among the referenced conditions was that 
Southern must add language stating that ``other provisions of these 
sections notwithstanding, [the relevant analyses and studies] will be 
conducted in a manner that preserves the NRIS status of existing 
generators.'' \298\ Accordingly, we deny Southern's request for 
clarification on this issue. Where a particular original 
interconnection customer's interconnection service is NRIS, if a 
surplus interconnection customer seeks to interconnect at the same 
point of interconnection, then it may seek either ERIS or NRIS.
---------------------------------------------------------------------------

    \297\ See Southern Company Services, Inc., 109 FERC ] 61,014, at 
P 18 (2004).
    \298\ See id. P 19.
---------------------------------------------------------------------------

    146. We find that AWEA's description of the Multi-Phase model is 
inconsistent with the surplus interconnection service described in 
Order No. 845. In Order No. 845, the Commission described the use of 
surplus interconnection service as appropriate when interconnection 
customers do not use the full generating facility capacity of their 
interconnection service due to the nature of their operations.\299\ The 
Commission also agreed with CAISO's argument that ``where the original 
interconnection customer . . . reduces the generating facility capacity 
of its facility from what was originally proposed for interconnection, 
it would not retain rights indefinitely to any excess interconnection 
capacity thus created.'' \300\ Furthermore, in finding that there are 
no significant concerns regarding the potential for hoarding 
interconnection service, we relied on the fact that, currently, an 
original interconnection customer can only secure interconnection 
service based on the generating facility capacity of the generating 
facility that it constructs and continues to operate.\301\ In light of 
these findings, because AWEA's proposed ``Multi-Phase'' model is based 
on the idea that the original interconnection customer would 
intentionally secure an amount of interconnection service in excess of 
the size of the generating facility that it constructs and continues to 
operate, we find that this concept would not be consistent with surplus 
interconnection service as defined in Order No. 845.
---------------------------------------------------------------------------

    \299\ Order No. 845, 163 FERC ] 61,043 at P 480.
    \300\ Id. P 493.
    \301\ Id. P 490.
---------------------------------------------------------------------------

    147. We also deny clarification with respect to AWEA's requests 
related to repowering or replacement. To the extent that a particular 
transmission provider has repowering/replacement provisions in its 
tariff, nothing in Order No. 845 would alter those provisions.\302\ 
Furthermore, if a particular repowering/replacement process is 
successful, any continued operation from that point forward would then 
be under a new interconnection agreement associated with the outcome of 
the successful repowering/replacement process.
---------------------------------------------------------------------------

    \302\ Similarly, to the extent that a particular transmission 
provider lacks such provisions, nothing in Order No. 845 creates a 
new obligation for the transmission provider to add them.
---------------------------------------------------------------------------

I. Material Modification Definition and Incorporation of Advanced 
Technology

    148. In the pro forma LGIP, section 4.4 states that an 
interconnection customer that has requested a modification in writing 
to a transmission provider ``shall retain its Queue Position if the 
modifications are in accordance with [pro forma] Sections 4.4.1, 4.4.2 
or 4.4.5, or are determined not to be Material Modifications pursuant 
to 4.4.3.'' \303\ In Order No. 845, the Commission modified section 
4.4.2(c) of the pro forma LGIP to allow an interconnection customer to 
incorporate certain technological changes to its interconnection 
request without risking the loss of its queue positon. In addition, the 
Commission modified section 4.4.4 of the pro forma LGIP to require 
transmission providers to include a technological change procedure that 
includes the requisite information and process that the transmission 
provider will follow to assess whether an interconnection customer's 
proposed technological change is a material modification. Further, 
Order No. 845 required that transmission providers develop a definition 
of permissible technological advancement that would define a category 
of technological changes that will not result in the loss of queue

[[Page 8181]]

position pursuant to the pro forma material modification 
provision.\304\
---------------------------------------------------------------------------

    \303\ Pro forma LGIP Section 4.4 (Modifications). Material 
modification ``shall mean those modifications that have a material 
impact on the cost or timing of any Interconnection Request with a 
later queue priority date.'' Pro forma LGIP Section 1 (Definitions); 
pro forma LGIA Art. 1 (Definitions).
    \304\ Order No. 845, 163 FERC ] 61,043 at P 518.
---------------------------------------------------------------------------

1. Requests for Rehearing and Clarification
    149. EEI requests that the Commission clarify that it is not 
changing the definition of material modification established in Order 
No. 2003. It argues that the material modification procedure focuses on 
the entire interconnection queue, while the process for determining if 
a technological change is a material modification would only focus on 
electrical performance, even though improved or increased electrical 
performance ``can and will have an impact on lower-queued resources.'' 
\305\ EEI states that this issue is a concern because transmission 
providers must focus on grid reliability, and not all technological 
changes will have the same impact on the grid.\306\
---------------------------------------------------------------------------

    \305\ EEI Rehearing Request at 17; see also Southern Rehearing 
Request at 13.
    \306\ EEI Rehearing Request at 17. To illustrate its point, EEI 
argues that two different interconnection customers in different 
areas of the electric system may propose to incorporate the same 
technology changes. However, it contends that one technological 
change may not affect other interconnection customers in the queue 
(if, for example, no other interconnection requests are related to 
the same line or substation bus), while the other interconnection 
customer may impact the cost and timing for others in the queue (if, 
for example, other interconnection requests are related to the same 
line or substation bus). Thus, the latter would be considered a 
material modification, while the former would not. As another 
example, Southern offers that an interconnection customer may 
``replace [its] inverters to decrease a generating facility's short 
circuit contribution . . . which could be considered `greater or 
equal electrical performance' '' but that this change could result 
in a breaker upgrade originally identified for this interconnection 
request to be triggered instead by a later-queued interconnection 
request. Thus, Southern reasons, this change would be a material 
modification. Southern Rehearing Request at 13-14.
---------------------------------------------------------------------------

    150. EEI also asks whether the Commission created a new standard 
for evaluating what constitutes a material modification.\307\ EEI 
requests that the Commission clarify that the intent is not to change 
the definition of material modification as defined in Order No. 2003, 
which is related to one interconnection customer's impact on another 
customer in the queue.\308\
---------------------------------------------------------------------------

    \307\ Id. at 17.
    \308\ Id.
---------------------------------------------------------------------------

    151. Southern argues that, because the NOPR did not indicate that 
the Commission was proposing to revise the definition of material 
modification, this failure would contravene the notice and comment 
requirements of the Administrative Procedure Act.\309\
---------------------------------------------------------------------------

    \309\ Southern Rehearing Request at 14 (citing 5 U.S.C. 553 
(2012); Chocolate Mfrs. Ass'n of U.S. v. Block, 744 F.2d 1098, 1104 
(1985)).
---------------------------------------------------------------------------

2. Determination
    152. In response to Southern and EEI, Order No. 845 did not change 
the existing material modification definition, which determines whether 
an interconnection customer's proposed change will cause it to lose its 
queue position based on whether it has a material impact on the cost or 
timing of any interconnection request with a later queue priority 
date.\310\ Order No. 845's requirement that transmission providers 
develop a definition of permissible technological advancement does not 
alter the definition of a material modification in the pro forma LGIP 
or conflict with the existing construct. Rather, Order No. 845 requires 
transmission providers to develop a definition of permissible 
technological advancements that the interconnection process will 
accommodate without triggering the loss of queue position pursuant to 
the material modification provision of the pro forma LGIP.\311\ For 
purposes of clarity, we explain further how this revision will fit in 
with the existing provisions. Permissible technological advancements, 
as determined by the transmission provider, will be added to the 
existing list of modifications in section 4.4.2 of the pro forma LGIP 
that do not require a material modification assessment and thus do not 
result in the loss of an interconnection customer's queue 
position.\312\ While the Commission included the correct pro forma LGIP 
language in section 4.4.2 of Appendix B, in the text, the Commission 
neglected to include the word ``permissible.'' Therefore, we clarify 
that section 4.4.2 of the pro forma LGIP should include the following 
language as subpart (c) (with emphasis supplied in italics):

    \310\ Sections 4.4.1, 4.4.2, and 4.4.5 of the pro forma LGIP 
enumerate modifications that an interconnection customer may make 
without losing its queue position.
    \311\ Order No. 845, 163 FERC ] 61,043 at P 530.
    \312\ See id. App. B at Section 4.4.2.
---------------------------------------------------------------------------

    a Permissible Technological Advancement for the Large Generating 
Facility after the submission of the interconnection request. 
Section 4.4.4 specifies a separate technological change procedure 
including the requisite information and process that will be 
followed to assess whether the Interconnection Customer's proposed 
technological advancement under Section 4.4.2(c) is a Material 
Modification. Section 1 contains a definition of Permissible 
Technological Advancement.

    153. It is noteworthy that existing interconnection customer 
modifications permitted under section 4.4.2 of the pro forma LGIP may 
affect lower-queued customers but do not result in loss of queue 
position.\313\ Thus, this requirement is similar to the existing 
exemptions laid out in section 4.4.2 of the pro forma LGIP, which allow 
for the identification in the tariff of specific changes to an 
interconnection request that do not result in the interconnection 
customer losing its queue position.
---------------------------------------------------------------------------

    \313\ For example, the modifications listed in section 4.4.2 of 
the pro forma LGIP include a 15 percent decrease of electrical 
output (MW) that could have a material impact on the cost of a 
lower-queued interconnection request. Pro forma LGIP Section 4.4 
(Modifications).
---------------------------------------------------------------------------

    154. We deny rehearing regarding Southern's assertion that the 
Commission did not provide notice of its proposal to revise the 
definition of material modification. The NOPR did not propose, and 
Order No. 845 did not adopt, any revisions to the definition to 
material modification.
    155. In response to EEI's and Southern's arguments that the 
requirements for a new technological change procedure and definition of 
permissible technological advancement are inconsistent with the 
definition of material modification, we clarify that the requirement 
that transmission providers develop a definition for permissible 
technological advancement is distinct from the other Order No. 845 
requirement that transmission providers develop a technological change 
procedure for determining whether or not a proposed technological 
change is a material modification. In particular, we note that a 
transmission provider's technological change procedure must specify the 
conditions under which a study will or will not be necessary to 
determine whether a proposed technological change is a material 
modification.\314\ When studies are necessary, the interconnection 
customer's technological change request must demonstrate that the 
proposed incorporation of the technological change would result in 
electrical performance that is equal to or better than the electrical 
performance expected prior to the technological change and would not 
cause any reliability concerns (i.e., materially impact the 
transmission system with regard to short circuit capability limits, 
steady-state thermal and voltage limits, or dynamic system stability 
and response).\315\ If the interconnection customer cannot demonstrate 
in its technological change request that the proposed technological 
change would result in equal or better electrical performance, the 
change will be assessed pursuant to the existing material modification 
pro forma LGIP

[[Page 8182]]

provisions. We clarify that information regarding electrical 
performance submitted by the interconnection customer is an input into 
the technological change study and that this factor alone is not 
determinative of whether a proposed technological change is a material 
modification. We also clarify that the determination of whether a 
proposed technological change (that the transmission provider does not 
otherwise include in its definition of permissible technological 
advancements) is a material modification should include an analysis of 
whether the proposed technological change materially impacts the timing 
and costs of lower-queued interconnection customers.\316\ Accordingly, 
the final decision as to whether or not a proposed technological change 
is a material modification will remain with the transmission provider. 
Consistent with Order No. 845, the transmission provider must make such 
a determination no more than 30 days after an interconnection customer 
submits a formal technological change request.\317\
---------------------------------------------------------------------------

    \314\ Order No. 845, 163 FERC ] 61,043 at P 519.
    \315\ Id. P 520.
    \316\ Order No. 2003, 104 FERC ] 61,103 at P 166.
    \317\ Order No. 845, 163 FERC ] 61,043 at P 535.
---------------------------------------------------------------------------

J. Process Concerns

1. Compliance and Effective Dates
    156. Order No. 845 was issued in the Federal Register on May 9, 
2018, and its effective date was seventy-five days after that, or July 
23, 2018. In Order No. 845, the Commission stated that all public 
utility transmission providers were to submit compliance filings to 
adopt the requirements of Order No. 845 ``as revisions to the LGIP and 
LGIA in their [Open Access Transmission Tariffs (OATT)] no later than 
90 days after the issuance of'' Order No. 845 in the Federal 
Register.\318\
---------------------------------------------------------------------------

    \318\ Id. P 555.
---------------------------------------------------------------------------

a. Motions for Extension of Time
    157. The ISO/RTO Council \319\ and Southern filed motions to extend 
the compliance date of Order No. 845. The ISO/RTO Council requested 
that the Commission extend the compliance deadline by seventy days to 
October 16, 2018.\320\ The New England Power Pool Participants 
Committee filed comments in support of this motion. Southern requested 
that the Commission extend the compliance period to a total of 180 days 
so that the compliance filing deadline would be November 5, 2018.\321\ 
On June 1, 2018, the Office of the Secretary issued a notice extending 
the compliance deadline to November 5, 2018.\322\
---------------------------------------------------------------------------

    \319\ The ISO/RTO Council is comprised of the Alberta Electric 
System Operator (AESO), CAISO, the Electric Reliability Council of 
Texas, Inc. (ERCOT), the Independent Electricity System Operator 
(IESO), ISO-NE, MISO, NYISO, PJM, and Southwest Power Pool, Inc. 
AESO, ERCOT, and IESO are not Commission-jurisdictional public 
utilities and did not join in this motion.
    \320\ ISO/RTO Council May 17, 2018 Motion to Extend the Time 
Period to Comply at 1.
    \321\ Southern May 22, 2018 Motion to Extend the Period of Time 
to Comply at 1.
    \322\ Notice of Extension of Compliance Date, Docket No. RM17-8-
000 (June 1, 2018).
---------------------------------------------------------------------------

    158. On September 24, 2018, EEI submitted a motion requesting an 
extension of the compliance deadline for Order No. 845 up to and 
including ninety (90) days after the Commission's issuance of an order 
addressing the pending requests for rehearing of Order No. 845. On 
September 26, 2018, AWEA filed an answer in opposition to EEI's motion. 
On October 3, 2018, the Office of the Secretary issued a notice 
granting EEI's motion and requiring that transmission providers submit 
the compliance filings directed in Order No. 845 within ninety days of 
the Commission's issuance of this order.\323\
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    \323\ Notice of Extension of Compliance Date, Docket No. RM17-8-
000 (Oct. 3, 2018). On October 15, 2018, AWEA requested rehearing of 
this notice, which the Commission dismissed in a November 13, 2018 
order. Reform of Generator Interconnection Procedures and 
Agreements, 165 FERC ] 61,090 (2018).
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b. Requests for Rehearing and Clarification
    159. Duke Energy Corporation (Duke) and EEI request rehearing of 
the Commission's decision to establish an effective date seventy-five 
days after publication in the Federal Register and a compliance 
deadline ninety days after publication. Duke argues that Order No. 845 
``represents the most significant change to the generator 
interconnection process . . . since Order No. 2003'' and that the 
Commission should therefore grant rehearing and establish an effective 
date and compliance deadline of November 5, 2018, 180 days after 
publication in the Federal Register.\324\
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    \324\ Duke Rehearing Request at 8-9; see also EEI Rehearing 
Request at 21. EEI also states that it does not object to the ISO/
RTO Council's request for an additional 70 days for the compliance 
period.
---------------------------------------------------------------------------

    160. Duke and EEI also argue that the Commission erred by failing 
to justify the variation in the compliance and effective date, arguing 
that this failure to align the dates is arbitrary and capricious 
because it departs from the NOPR proposal and past precedent.\325\ EEI 
argues that having an effective date in advance of the compliance date 
creates regulatory uncertainty as to the provisions that are in 
effect.\326\ Duke states that the NOPR proposed to require each public 
utility to submit a compliance filing ``within 90 days of the effective 
date of the final rule'' but that it was silent with regard to a 
proposed effective date.\327\
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    \325\ Duke Rehearing Request at 10; EEI Rehearing Request at 21.
    \326\ EEI Rehearing Request at 21.
    \327\ Duke Rehearing Request at 9.
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c. Determination
    161. We deny rehearing regarding the compliance deadline for Order 
No. 845. Duke and EEI's arguments as to the original compliance filing 
set forth in Order No. 845 are moot in light of the October 3, 2018 
notice, which extended the compliance deadline until ninety days after 
the issuance of this order. We also deny Duke's and EEI's requests for 
rehearing regarding the effective date. In response to the arguments 
that the compliance date and effective date should align, we note that 
there is no such statutory or regulatory requirement and that the 
Commission has previously required effective dates that do not coincide 
with compliance deadlines.\328\ Further, we remind Duke and EEI that 
the effective date is the effective date of Order No. 845 itself.
---------------------------------------------------------------------------

    \328\ See, e.g., Order No. 841, 162 FERC ] 61,127 at P 344 
(effective date within 90 days of publication in the Federal 
Register and compliance deadline within 270 days of publication in 
the Federal Register); see also Standards of Conduct for 
Transmission Providers, 125 FERC ] 61,291, at P 1 (2008) (stating 
that Order No. 717 would become effective 30 days after publication 
in the Federal Register and that transmission providers must be in 
full compliance no later than 60 days from publication in the 
Federal Register).
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    162. Nonetheless, in light of the confusion created by the multiple 
motions and rehearing requests that pertain to the compliance deadline 
and effective dates, we provide guidance regarding the compliance 
process and the effective dates of the LGIP/LGIA and forma LGIP/LGIA 
revisions required by Order No. 845 and Order No. 845-A. The effective 
date of Order No. 845 was July 23, 2018 (75 days after its publication 
in the Federal Register). The effective date of this order (Order No. 
845-A) will be 75 days after the publication of this order in the 
Federal Register. Each public utility transmission provider must submit 
a single compliance filing within 90 days of the issuance of this order 
that includes revisions to its pro forma LGIP and pro forma LGIA 
necessary to comply with Order Nos. 845 and 845-A. Order No. 845 was 
silent regarding the effective date of the required tariff revisions, 
so we address such effective dates here. In doing so, we find that it 
is appropriate to follow the approach taken with regard to Order No. 
2003 and its progeny as closely as possible. We describe that approach 
and the

[[Page 8183]]

approach we are taking with regard to Order No. 845 and Order No. 845-A 
below.
    163. The Commission issued Order No. 2003 on July 24, 2003. In 
response to requests to do so, the Commission extended the Order No. 
2003 compliance deadline for RTOs/ISOs and non-RTO/ISO transmission 
providers to January 20, 2004.\329\ On January 8, 2004, the Office of 
the Secretary issued a notice clarifying the compliance procedures in 
the Order No. 2003 proceeding. The notice stated that all non-RTO/ISO 
transmission providers' tariffs were ``deemed to include [the pro forma 
LGIP and the pro forma LGIA] on'' the date of the compliance deadline 
and ``directed [the non-RTO/ISO transmission providers] to make 
ministerial filings reflecting those revisions to their OATT[s] in 
their next filings with the Commission.'' \330\ For RTOs/ISOs, the 
Commission stated that ``[u]ntil the Commission acts on [their] 
compliance filings, the [RTOs'/ISOs'] existing Commission-approved 
interconnection standards and procedures will remain in effect.''\331\
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    \329\ Notice Clarifying Compliance Procedures, 69 FR 2,135 (Jan. 
14, 2004), Docket Nos. RM02-1-000 & RM02-1-001, at P 1.
    \330\ Id. P 2.
    \331\ Id. P 3.
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    164. In Order No. 2003-A, the Commission deemed the non-RTO/ISO 
transmission providers' OATTs to ``be revised to adopt [the revised] 
pro forma LGIA and LGIP on [Order No. 2003-A's] effective date'' and 
directed all such transmission providers to make ministerial filings 
reflecting such revisions ``upon their next filing(s) with the 
Commission.'' \332\ For RTOs/ISOs, the Commission required each RTO/ISO 
to file ``on or before the effective date of [the] Order on Rehearing 
either (1) a notice that it intends to adopt the [revised] pro forma 
LGIP and LGIA, or (2) new standard interconnection procedures and 
agreements developed according to Order No. 2003's `independent entity 
variation' standard.'' \333\ The Commission stated that, in ``either 
event, the [RTOs'/ISOs'] currently effective OATT will remain in effect 
pending any necessary Commission action.'' \334\
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    \332\ Order No. 2003-A, 106 FERC ] 61,220 at P 43.
    \333\ Id. P 49.
    \334\ Id. P 51.
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    165. For Order No. 2003-B, however, the Commission, in recognition 
that ``it has taken longer than anticipated for all [non-RTO/ISO 
transmission providers] to make the necessary changes,'' adopted a 
``different procedure.'' \335\ The Commission once again deemed each 
non-RTO/ISO transmission provider's tariff ``to be amended to adopt the 
revisions . . . contained [in Order No. 2003-B] on the effective date 
of [that] order,'' but the Commission required each non-RTO/ISO 
transmission providers to file an amendment to include such revisions 
within 60 days of Order No. 2003-B's issuance.\336\ The Commission also 
required each RTO/ISO to submit revised tariff sheets with 60 days of 
Order No. 2003-B's issuance.\337\ For Order No. 2003-C, the Commission 
deemed each non-RTO/ISO transmission provider's tariff ``to be amended 
to adopt the [Order No. 2003-C revisions] 30 days after the issuance of 
[that] order'' and required each non-RTO/ISO transmission provider to 
``amend its OATT to include the [new] clarifications . . . within 60 
days after issuance of'' Order No. 2003-C.\338\
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    \335\ Order No. 2003-B, 109 FERC ] 61,287 at P 139.
    \336\ Id. P 4.
    \337\ Id. P 139.
    \338\ Order No. 2003-C, 111 FERC ] 61,401 at P 3.
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    166. Because the Commission is only requiring a single compliance 
filing from transmission providers to comply with the combined 
requirements of Order Nos. 845 and Order No. 845-A, the effective date 
for each compliance filing's proposed tariff revisions should be the 
same date. Consistent with the distinction made by Order No. 2003 and 
its progeny regarding the compliance requirements for non-RTO/ISO 
transmission providers and RTOs/ISOs, we will deem the tariff 
provisions to be effective for non-RTO/ISO transmission providers on 
the effective date of this order (seventy-five days from publication in 
the Federal Register) or the compliance deadline (ninety days from the 
issuance of this order), whichever is later, and we require each non-
RTO/ISO transmission provider to file an amendment to their tariffs to 
include such provisions by the compliance deadline (ninety days from 
the issuance of this order). For each RTO/ISO, the effective date of 
the proposed revisions shall be the date established in the 
Commission's order accepting that RTO's/ISO's compliance filing, which 
will be no earlier than the issuance date of such an order.

K. Interconnection Request Withdrawals

    167. In Order No. 845, the Commission recognized that, in addition 
to significant interconnection queue backlogs and long timelines, in 
some regions, there is a ``recurring problem of late-stage 
interconnection request withdrawals that lead to interconnection 
restudies and consequent delays for lower-queued interconnection 
customers.'' \339\ The Commission stated, however, that the reforms 
adopted in Order No. 845 ``will benefit both interconnection customers 
and transmission providers.'' \340\
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    \339\ Order No. 845, 163 FERC ] 61,043 at P 24.
    \340\ Id. P 2.
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1. Requests for Rehearing and Clarification
    168. Southern contends that Order No. 845 fails to address delays 
and inefficiencies caused by ``speculative'' interconnection 
requests.\341\ It argues that, currently, a speculative interconnection 
customer can ``sit in the queue for years'' and withdraw ``at the last 
moment.'' \342\ Southern asserts that this is a cause for concern 
because, since 2014, interconnection customers have suspended or 
terminated (at their request) half the interconnection agreements 
executed under Southern's OATT. Southern asserts, however, that, while 
the Commission acknowledges this concern, Order No. 845 ``fails to 
address solutions on the customer side.'' \343\ Southern further 
objects to Order No. 845's imposition of requirements on transmission 
providers to provide additional information and flexibility, because 
such revisions ``do little to nothing to address'' the problem of 
speculative generation.\344\ Southern states further that Order No. 845 
therefore ``fails to make a rational connection with the underlying 
problem caused not by transmission providers, but by speculative 
interconnection customers'' and that is therefore ``arbitrary and 
capricious.'' \345\ Similarly, MISO TOs argue that, with regard to the 
option the build, the Commission failed to ``meaningfully respond'' to 
assertions that the main reason for increased costs, delays, and cost 
uncertainty are late-stage withdrawals and that this omission renders 
the Commission's findings ``arbitrary, capricious, and inconsistent 
with reasoned decision-making.'' \346\
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    \341\ Southern Rehearing Request at 3-6.
    \342\ Id. at 3-4.
    \343\ Id. at 5.
    \344\ Id.
    \345\ Id. at 5-6.
    \346\ MISO TOs Rehearing Request at 11 (citing Motor Vehicle 
Mfrs., 463 U.S. at 41, 43; Ameren, 880 F.3d at 581; PSEG Energy & 
Trade LLC v. FERC, 665 F.3d 203, 208, 210 (2011)).
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2. Determination
    169. We deny Southern's and MISO TOs requests for rehearing on this 
issue. Regarding the issue of speculative projects, we note that the 
Commission designed some of the Order No. 845 reforms to provide more 
and better information so that interconnection

[[Page 8184]]

customers will be more likely to submit interconnection requests that 
achieve commercial operation. For instance, the purpose of the reform 
on transparency regarding study models and assumptions is to reduce the 
likelihood that interconnection customers will submit multiple 
interconnection requests to figure out which request has the most 
suitable point of interconnection. Thus, this reform will likely result 
in more accurate and informed decision-making by the interconnection 
customer, which will, in turn, reduce the likelihood of late-stage 
withdrawals.\347\ For this reason, we continue to find that, on 
balance, the reforms adopted by Order No. 845 will improve the 
interconnection process for both interconnection customers and 
transmission providers. We also disagree with Southern's argument that 
the Commission's exercise of its discretion in developing Order No. 
845's requirements was arbitrary and capricious. As the Commission has 
noted on other occasions, it has ``broad discretion to choose how best 
to marshal its limited resources and personnel to carry out its 
delegated responsibilities'' and therefore, the Commission is not 
required to expand this rulemaking proceeding to impose additional 
requirements upon interconnection customers.\348\
---------------------------------------------------------------------------

    \347\ See Order No. 845, 163 FERC ] 61,043 at P 239.
    \348\ See, e.g., Wholesale Competition in Regions with Organized 
Electric Markets, Order No. 719-A, 74 FR 37775 (Jul. 29, 2009), 128 
FERC ] 61,059, at P 118 (2009) (responding to a rehearing request 
arguing that the Commission ``shirk[ed] its duty under the FPA in 
confining the scope of [the] proceeding to four specific areas of 
reform'') (citing Chevron U.S.A. v. Nat. Res. Def. Council, 467 U.S. 
837, 842-45 (1984)), order on reh'g, Order No. 719-B, 129 FERC ] 
61,252 (2009).
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L. Wholesale Distribution Tariffs

1. Requests for Rehearing and Clarification
    170. Pacific Gas & Electric Company (PG&E), SoCal Edison, and San 
Diego Gas & Electric Company (collectively, California Utilities) 
request that the Commission clarify, as it did for the SGIA and SGIP, 
that the new requirements in Order No. 845 do not apply to wholesale 
distribution access tariffs (WDAT).\349\ California Utilities comment 
that the Commission did not directly address these issues as raised in 
comments by Pacific Gas & Electric Company (PG&E) and SoCal Edison 
filed in response to the NOPR.\350\ In support of their request, 
California Utilities comment that, under their respective WDATs, they 
process a very small number of requests to interconnect wholesale 
generation projects to distribution facilities, which are radial in 
nature and not part of the CAISO-controlled grid.\351\
---------------------------------------------------------------------------

    \349\ California Utilities Request for Clarification at 2.
    \350\ Id.
    \351\ Id.
---------------------------------------------------------------------------

    171. California Utilities state that the interconnection of 
wholesale generation to the distribution system may trigger the need 
for upgrades to the distribution system considered to be distribution 
facilities for purposes of the WDATs.\352\ California Utilities note 
that the interconnection of wholesale generation to the distribution 
grid could also trigger an upstream need for reliability network 
upgrades on the CAISO-controlled grid but contend that there could not 
be stand alone network upgrades as defined under Order No. 845 for 
generation connected to the distribution system.\353\ Therefore, the 
California Utilities argue, these limited projects should not subject 
the WDATs to these requirements, such as OASIS site postings, which do 
not exist for the California Utilities' distribution systems.\354\ 
California Utilities maintain that the administrative burden and costs 
of complying outweigh any benefits. Moreover, many of the proposed new 
requirements concern transmission information that is available on 
CAISO's website.\355\ Alternatively, California Utilities suggest that 
any potential reforms to the WDATs should be considered together in a 
separate rulemaking.\356\
---------------------------------------------------------------------------

    \352\ Id.
    \353\ Id.
    \354\ Id.
    \355\ Id.
    \356\ Id. at 4.
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2. Determination
    172. We clarify that the requirements of Order No. 845 will not 
apply to WDATs at this time. We find that the distinct engineering and 
jurisdictional implications of an interconnection with a distribution 
system should be further evaluated before requiring California 
Utilities or other entities with a WDAT to apply the requirements of 
Order No. 845 to their WDATs.

III. Information Collection Statement

    173. The Paperwork Reduction Act (PRA) provides that an agency may 
not conduct or sponsor the collection of information unless the agency 
has published an estimate of the burden that shall result from the 
information collection in advance of adopting or revising such 
collection. The Office of Management and Budget (OMB) requires that OMB 
approve certain information collection and data retention requirements 
imposed by agency rules.\357\ However, this order on rehearing contains 
no additional reporting requirements, and is, therefore, not subject to 
OMB approval. Moreover, the Commission submitted to OMB the information 
collection requirements arising from Order No. 845, and OMB approved 
those requirements. In this order, the Commission is making no 
substantive changes to those requirements, but has provided 
clarifications that requires no additional information. Therefore, the 
Commission does not find it necessary to make a formal submission to 
OMB for review and approval under section 3507(d) of the PRA. This 
order will be submitted to OMB for informational purposes only.
---------------------------------------------------------------------------

    \357\ 5 CFR 1320.11(b) (2018).
---------------------------------------------------------------------------

    174. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE, Washington, DC 20426 [Attention: Ellen 
Brown, Office of the Executive Director], email: 
[email protected], phone: (202) 502-8663, fax: (202) 273-0873.
    175. Comments concerning the collection of information and the 
associated burden estimate(s) in Order No. 845 should be sent to the 
Commission in this docket and may also be sent to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street NW, Washington, DC 20503 [Attention: Desk Officer for 
the Federal Energy Regulatory Commission].
    176. Due to security concerns, comments should be sent 
electronically to the following email address: 
[email protected]. Comments submitted to OMB should refer to 
Docket No. RM17-8-001.

IV. Regulatory Flexibility Act Certification

    177. The Regulatory Flexibility Act of 1980 (RFA) \358\ generally 
requires a description and analysis of rules that will have significant 
economic impact on a substantial number of small entities. The RFA does 
not mandate any particular outcome in a rulemaking. It only requires 
consideration of regulatory alternatives that accomplish the stated 
objectives of a rule and that minimize any significant economic impact 
on a substantial number of small entities. The Commission has 
determined that Order No. 845 will not have a significant impact on a 
substantial number of small entities;

[[Page 8185]]

therefore these requirements under the RFA do not apply.\359\
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    \358\ 5 U.S.C. 601-12 (2012).
    \359\ See Order No. 845, 163 FERC ] 61,043 at PP 564-65.
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V. Document Availability

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

VI. Effective Date

    181. This order on rehearing and clarification is effective May 20, 
2019.

    By the Commission. Commissioner McNamee is not participating.

    Issued: February 21, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

    Note:  Appendices A, B, and C do not publish in the Federal 
Register. These appendices can be found on FERC's eLibrary 
System.\360\

    \360\ Go to http://elibrary.ferc.gov:0/idmws/file_list.asp?document_id=14746111 and select the file link to view 
the document.

[FR Doc. 2019-03402 Filed 3-5-19; 8:45 am]
BILLING CODE 6717-01-P