The Federal Energy Regulatory Commission acted at its meeting on January 17, 2013, to facilitate non-discriminatory access to the transmission grid by (a) issuing guidelines for allocation of capacity on new merchant transmission projects and cost-based participant-funded transmission projects, and (b) proposing new rules for interconnection of small generators (20 MW or smaller) to the interstate transmission grid.

Allocation of Capacity on New Transmission Projects

FERC’s new policy will allow developers of new transmission projects and new non-incumbent cost-based, participant-funded transmission projects to select a subset of transmission customers with whom to negotiate transmission rates, and then to negotiate directly with each of those customers to establish customer-specific rates, terms and conditions for up to 100% of the transmission capacity to be constructed on its proposed project.  In order to take advantage of this opportunity, each transmission project developer must (1) broadly solicit interest in the project from potential customers, and (2) demonstrate to the FERC that it has satisfied certain solicitation, selection and negotiation process criteria discussed in detail in the policy statement.

Specifically, the FERC requires all capacity on affected projects to be allocated on a not unduly discriminatory or preferential manner.  The solicitation of interest should ensure that all potentially interested customers are informed of the proposed project through a widely-circulated notice which describes the principal features of the proposed project and the criteria to be used to select transmission customers.  Once the target transmission customers are identified, the developer may negotiate customer-specific rates, terms and conditions through bilateral negotiations with each potential customer in order to ensure that 100% of the capacity in the proposed project is subscribed.  This procedure is intended to provide developers and potential transmission customers with greater flexibility to negotiate mutually-agreeable rates, terms and conditions of service, so long as such terms are not unduly discriminatory or preferential.

The FERC stated that it would evaluate each developer’s reasoning for sizing of new transmission facilities to ensure that the sizing was not the result of undue preference.  Moreover, the allocation of capacity by each developer will be subject to FERC review pursuant to Sections 205 and 206 of the Federal Power Act.  Among the factors to be considered by the FERC are the steps taken by the developer to provide broad notice, any actions taken by the developer if the amount of capacity in the proposed project is over-subscribed (i.e., increase capacity in the project, pro rate capacity among customers, etc.), and reasons for differences in terms of service to different customers.

These guidelines were adopted by the FERC in Allocation of Capacity on Merchant Transmission Projects and New Cost-Based, Participant-Funded Transmission Projects, Docket No. AD12-9-000; and Priority Rights to New Participant-Funded Transmission, Final Policy Statement issued January 17, 2013, 142 FERC ¶ 61,038 (2013).

Proposed Revisions to Small Generator Interconnection Rules

The revisions to the FERC’s pro forma small generator interconnection procedures and small generator interconnection agreement were proposed at the request of the Solar Energy Industries Association to address the growth in solar photovoltaic installations that is being driven in party by expansion of state renewable energy goals and policies.  These revisions would:

  1. Provide an Interconnection Customer with the option of requesting a pre-application report from the Transmission Provider (for a fee of $300) which provides existing information about system conditions at potential interconnection points.  Such pre-application report would be intended to enable the Interconnection Customer to make a more efficient decision on siting of its generating facility.
  2. Revise the threshold for participation in the Fast Track Process for interconnection of small generators (currently 2 MW).  The revised threshold would be up to 5 MW, depending on individual system (e.g., interconnection voltage level) and generator characteristics (e.g., generator capacity, distance of the generator from the substation).
  3. Revise supplemental review procedures following failure of the Fast Track screens to see whether the interconnection can be achieved economically under modified Fast Track procedures.
  4. Revise the Facilities Study Agreement to permit the Interconnection Customer to provide written comments on the upgrades required by the Transmission Provider for completion of the interconnection.  This comment process is intended to enable the Interconnection Customer to question the need for potentially expensive system upgrades.

The proposed rules were issued in Small Generator Interconnection Agreements and Procedures, Docket No. RM13-2-000, Notice of Proposed Rulemaking issued January 17, 2013 (142 FERC ¶ 61,049 (2013).  Comments on the proposed rules are due within 60 days after the NOPR has been published in the Federal Register.  Prior to the expiration of the comment period, the FERC Staff will hold a technical workshop at which stakeholders may discuss possible refinements to the proposals.