Federal Register: August 19, 2003 (Volume 68, Number 160)
DOCID: FR Doc 03-20155
DEPARTMENT OF ENERGY
Veterans Employment and Training Service
CFR Citation: 18 CFR Part 35
Docket ID: [Docket No. RM02-12-000]
NOTICE: Part III
DOCUMENT ACTION: Notice of proposed rulemaking.
SUBJECT CATEGORY:
Standardization of Small Generator Interconnection Agreements and Procedures
DATES: Comments are due October 3, 2003. Comments should be double spaced and include an executive summary. In order to facilitate the evaluation of comments, commenters are encouraged to file their comments electronically in WordPerfect, MS Word, Portable Document Format (PDF), or ASCII format.
DOCUMENT SUMMARY:
The Federal Energy Regulatory Commission (Commission) is proposing to amend its regulations under the Federal Power Act (FPA) to require public utilities that own, operate, or control facilities for transmitting electric energy in interstate commerce to file revised Open Access Transmission Tariffs containing standard interconnection procedures and a standard interconnection agreement for small generators. Specifically, the Commission is proposing in this Notice of Proposed Rulemaking that such public utilities shall provide interconnection service to Small Generating Facilities (i.e., devices used for the production of electricity having a capacity of no more than 20 megawatts), including their own generation, under the procedures set forth in the proposed standard interconnection procedures and according to a standard interconnection agreement. Any nonpublic utility that seeks voluntary compliance with the reciprocity condition of a jurisdictional transmission tariff may satisfy this condition by adopting these procedures and this agreement.
SUMMARY:
Energy Department, Federal Energy Regulatory Commission,
DOCUMENT BODY 2:
July 24, 2003.
SUPPLEMENTAL INFORMATION
Table of Contents
I. Introduction
A. Background
B. Generator Interconnections
C. Large Generator Interconnection Rulemaking
D. Small Generator Interconnection ANOPR, Process, and Comments II. Discussion
A. The Commission's Small Generator Interconnection Proposal
1. Jurisdiction
2. Summary of the Interconnection Process for Small Generating Facilities
3. Maximum Capacity of a Small Generator (Proposed SGIP Section 1, Proposed SGIA Article 1)
4. Precertification of Small Generating Facilities No Larger than 2 MW (Proposed SGIP Section 3.1)
5. Use of Screening Criteria (Proposed SGIP Sections 3.3 and 4.3)
a. SuperExpedited Screening Criteria (Appendix 1 to the Proposed SGIP)
b. Expedited Screening Criteria (Appendix 2 to the Proposed SGIP)
6. Dispute Resolution (Proposed SGIP Section 2.11 and Proposed SGIA Article 8)
7. Queuing (Proposed SGIP Sections 4.4 and 4.7)
8. Parties to the Proposed SGIA (Proposed SGIA Article 9)
9. Affected Systems (Proposed SGIP Section 2.8)
10. Pricing / Cost Recovery for Upgrades (Proposed SGIA Article 5)
11. Liability, Indemnity, Force Majeure, and Insurance (Proposed SGIA Articles 6.13, 6.14, and 6.16)
12. Variations From the Final Rule on Compliance
B. Summary of the Proposed SGIP and the Proposed SGIA
1. Standard Small Generator Interconnection Procedures (Proposed SGIP)
Section 1. Definitions
Section 2. General Provisions
Section 3. SuperExpedited Procedures for Interconnecting a Small Generating Facility No Larger than 2 MW to a LowVoltage Transmission System
Section 4. Procedures for Interconnecting a Small Generating Facility to a HighVoltage Transmission System and a Small
Generating Facility Larger than 2 MW to a LowVoltage Transmission System
Charts
Appendices
2. Standard Small Generator Interconnection Agreement (Proposed SGIA)
Article 1. Definitions
Article 2. Scope and Limitations of Agreement
Article 3. Inspection, Testing, Authorization, and Right of Access
Article 4. Effective Date, Term, Termination, and Disconnection
Article 5. Cost Responsibility, Milestones, Billing, and Payment
Article 6. Miscellaneous
Article 7. Confidentiality
Article 8. Disputes
Article 9. Signatures
Appendices
III. Public Reporting Burden and Information Collection Statement IV. Environmental Analysis
V. Regulatory Flexibility Act Certification
VI. Comment Procedures
VII. Document Availability
Appendix AFlow Chart of SuperExpedited Procedures for Interconnecting a Small Generating Facility No Larger than 2 MW to a LowVoltage Transmission System
Appendix BFlow Chart of Procedures for Interconnecting a Small Generating Facility to a HighVoltage Transmission System and a Small Generating Facility Larger than 2 MW to a LowVoltage Transmission System
Appendix CStandard Small Generator Interconnection Procedures (SGIP), including Standard Small Generator Interconnection Agreement (SGIA) 33
I. Introduction
1. This Notice of Proposed Rulemaking (NOPR) proposes the addition
of Standard Small Generator Interconnection Procedures (Proposed SGIP)
and a Standard Small Generator Interconnection Agreement (Proposed
SGIA) to the Open Access Transmission Tariffs (OATTs) of jurisdictional
public utilities.\1\ The Commission expects that this rulemaking will
reduce interconnection time and costs for Interconnection Customers and
Transmission Providers, prevent undue discrimination, preserve
reliability, increase energy supply, lower wholesale prices for
customers by increasing the number and variety of new generation [[Page 49975]]
resources that will compete in the wholesale electricity market, and
facilitate development of nonpolluting alternative energy sources (such as photovoltaic, fuel cell, and wind generators).
\1\ Provisions of the Proposed SGIP are referred to as
``Sections'' whereas provisions of the Proposed SGIA are referred to as ``Articles.''
2. The Proposed SGIP sets forth the procedures that Interconnection
Customers and Transmission Providers would be required to follow during
the interconnection process.\2\ Included in the Proposed SGIP are (1)
the application form (referred to as the Interconnection Request), (2)
SuperExpedited Procedures for interconnecting Precertified Small
Generating Facilities no larger than 2 MW to a LowVoltage Transmission
System (i.e., less than 69 kilovolts), (3) Expedited Procedures for
interconnecting Small Generating Facilities larger than 2 MW but no
larger than 10 MW to a LowVoltage Transmission System, (4) procedures
for interconnecting Small Generating Facilities to a HighVoltage
Transmission System (i.e., 69 kilovolts and above) and Small Generating
Facilities larger than 10 MW interconnecting with a LowVoltage Transmission System.
\2\ Unless otherwise defined in this Preamble, capitalized terms
used in this NOPR have the meanings specified in Section 1 of the
Proposed SGIP and Article 1 of the Proposed SGIA. The term
Generating Facility means the specific device for which the
Interconnection Customer has requested interconnection. The owner of
the Generating Facility is referred to as the Interconnection
Customer. The entity with which the Generating Facility is
interconnecting is referred to as the Transmission Provider. The
term Small Generator is intended to refer to any energy resource
having a capacity of no more than 20 megawatts, or the owner of such
a resource. Likewise, Large Generator refers to any energy resource
having a capacity of more than 20 megawatts, or the owner of such a resource.
3. The Proposed SGIA sets forth the legal rights and obligations of each Party, addresses cost responsibility issues, establishes Milestones for the completion of the interconnection, and lays out a process for the resolution of disputes.
4. In this NOPR, we propose standard procedures and a standard agreement to be used by a public utility to interconnect a Small Generator with the utility's transmission facilities or with its jurisdictional distribution facilities for the purpose of selling electric energy at wholesale in interstate commerce.
A. Background
5. This NOPR responds to business and technology changes in the electric industry. Where the electric industry was once primarily the domain of large, vertically integrated utilities generating power at large centralized plants, advances in technology have created a burgeoning market for small power plants that may offer economic, reliability, or environmental benefits.
6. With these developments in mind, the Commission continues to
work to encourage fully competitive bulk power markets. The effort took
its first significant step with Order No. 888,\3\ which required public
utilities to provide other entities comparable access to their
transmission systems, and continued with Order No. 2000,\4\ which began
the process of developing Regional Transmission Organizations (RTOs).
The Commission has taken numerous actions to establish and protect
robust, seamless, and competitive wholesale electricity markets.\5\
Concurrent with the issuance of this NOPR, the Commission is issuing a
Final Rule establishing standard interconnection procedures and a
standard agreement for large generators to further encourage fully
competitive bulk power markets and muchneeded investment in generation.\6\
\3\ Promoting Wholesale Competition Through Open Access Non
Discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. and Regs.
]31,036 (1996), order on reh'g, Order No. 888A, 62 FR 12274 (Mar.
14, 1997), FERC Stats. & Regs. ]31,048 (1997), order on reh'g, Order
No. 888B, 81 FERC ]61,248 (1997), order on reh'g, Order No. 888C ,
82 FERC ]61,046 (1998), aff'd in relevant part sub nom. Transmission
Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
\4\ Regional Transmission Organizations, Order No. 2000, 65 FR
810 (Jan. 6, 2000), FERC Stats. & Regs. ]31,089 (1999), order on
reh'g, Order No. 2000A, 65 FR 12088 (Mar. 8, 2000), FERC Stats. &
Regs. ]31,092 (2000), aff'd sub nom. Public Util. Dist. No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001).
\5\ E.g., Remedying Undue Discrimination Through Open Access
Transmission Service and Standard Electricity Market Design, Notice
of Proposed Rulemaking, 67 FR 55452 (Aug. 29, 2002), FERC Stats. & Regs. ]32,563 (2002).
\6\ Standardization of Generator Interconnection Agreements and
Procedures, Final Rule, Docket No. RM021000 (issued concurrently with this NOPR).
7. The Commission continues to seek the establishment of robust
competitive wholesale electric markets.\7\ A recent Commission White
Paper stated the Commission's intent to focus on the formation of RTOs
and Independent System Operators (ISOs) and on ensuring that RTOs and
ISOs have good wholesale market rules in place.\8\ It proposed to
require all public utilities to join an RTO or ISO. Further, the White
Paper stated that all RTOs and ISOs would, with limited exceptions, be
required to implement a wholesale market platform consisting of
elements that must be in place for wellfunctioning wholesale markets:
(1) Regional independent grid operation, (2) a regional transmission
planning process, (3) fair cost allocation for existing and new
transmission, (4) market monitoring and market power mitigation, (5)
spot markets to meet realtime energy needs, (6) transparency and
efficiency in congestion management, (7) firm transmission rights; and
(8) a regional approach to ensuring resource adequacy. Also, an RTO or
ISO may propose participant funding for transmission upgrades for a
generator interconnection, and, for a transitional period not to exceed
a year, a region may use participant funding as soon as an independent
entity has been approved by the Commission and the affected states.
\7\ E.g., Remedying Undue Discrimination Through Open Access
Transmission Service and Standard Electricity Market Design, Notice
of Proposed Rulemaking, 67 FR 55542 (Aug. 29, 2002), FERC Stats. & Regs. ]32,563 (2002).
\8\ White Paper: Wholesale Power Market Platform, Docket No. RM0112000 (Apr. 28, 2003) (White Paper).
B. Generator Interconnections
8. While the subject of generator interconnection arose in the Order No. 888 rulemaking, no explicit reference to it appeared in the OATT. Nevertheless, interconnection is a critical component of open access transmission service, and the Commission must ensure that interconnection service is provided under just and reasonable terms and conditions.
9. Entities seeking to interconnect generators have been hindered by the lack of standard interconnection procedures and agreements. Standard interconnection procedures limit opportunities for public utilities that own both generation and transmission to favor their own generation and help produce just and reasonable interconnection charges for generators. A standard interconnection agreement reduces market entry costs for generators and offers them access to regional energy markets on standard terms.
10. As discussed below, after the Commission initiated its interconnection NOPR in Docket No. RM021000, Standardization of Generator Interconnection Agreements and Procedures, it became apparent that the rule as proposed might not sufficiently encourage the development of small generators, and that there needed to be a separate interconnection agreement and set of procedures designed specifically for small generators.
11. The effort to generically address Small Generator
interconnection issues presents numerous challenges. The electric industry is faced with the
[[Page 49976]]
competing needs for, on the one hand, maintaining electric system
reliability and, on the other hand, encouraging increased generation,
including generation using innovative technologies. To encourage small
generators to participate in the interstate wholesale market, the
interconnection process should be affordable and the terms and
conditions should be clear, but these goals must not compromise the reliability of the electric system.
C. Large Generator Interconnection Rulemaking
12. The Commission issued an Advance Notice of Proposed Rulemaking
(ANOPR) in Docket No. RM021000 \9\ (Large Generator Interconnection
ANOPR) that was originally intended to develop standard generator
interconnection procedures and a standard agreement for generators of
all sizes. The Commission also initiated a collaborative process in
which members of the electric industry and government (collectively,
stakeholders) could draft standard interconnection procedures and
interconnection agreement documents. Public meetings of these
stakeholders culminated in the development of a Large Generator
Interconnection Procedures (Consensus LGIP) and a Large Generator
Interconnection Agreement (Consensus LGIA), which were filed with the Commission.\10\
\9\ Standardizing Generator Interconnection Agreements and
Procedures; Advance Notice of Proposed Rulemaking, 66 FR 55140 (Nov.
1, 2001), FERC Stats. & Regs. ] 35,540 (2002). The previously cited rulemaking is referred to here as the Large Generator
Interconnection rulemaking, to distinguish it from the Small Generator Interconnection rule proposed here.
\10\ While these consensus documents reflected significant
agreement, they also identified disputed provisions and left a number of issues unresolved.
13. The Commission then issued a Large Generator Interconnection
NOPR.\11\ The Commission proposed standard interconnection procedures
for generators, which is referred to here as the Proposed LGIP. It also
proposed a standard interconnection agreement for all generators, which
is referred to here as the Proposed LGIA. Both would be incorporated
into existing and future OATTs. The Proposed LGIP and Proposed LGIA
generally followed the consensus documents filed with the Commission,
but the Commission also resolved, for purposes of the NOPR, several
issues that were left unresolved in the consensus documents. A Large
Generator Interconnection Final Rule is being issued concurrently with the issuance of this NOPR.
\11\ Large Generator Interconnection NOPR, IV FERC Stats. & Regs. ] 32,560 (2002).
D. Small Generator Interconnection ANOPR, Process, and Comments
14. Although the Proposed LGIP and Proposed LGIA provided for the
expedited treatment of Small Generating Facilities, some commenters argued that the Commission should adopt separate standard
interconnection procedures and agreements that address the unique
concerns of Small Generators.\12\ Small Generator Commenters proposed
simplified standard procedures and agreements that would allow quicker,
less costly, and simpler interconnection for Small Generating
Facilities no larger than 2 MW, and different procedures and agreements
for units larger than 2 MW but no larger than 20 MW. Persuaded that
different procedures and agreements for Small Generators are needed, we
severed consideration of Small Generating Facilities from the Large
Generator Interconnection rulemaking and issued its Small Generator Interconnection ANOPR in August 2002.\13\
\12\ Those commenters included The Solar Energy Industries
Association, the U.S. Fuel Cell Council, the American Solar Energy
Society, the U.S. Combined Heat and Power Association, the
International District Energy Association, and the American Wind
Energy Association (collectively, Small Generator Commenters).
\13\ Standardization of Small Generator Interconnection
Agreements and Procedures; Advance Notice of Proposed Rulemaking, 67
FR 54749 (Aug. 26, 2002), FERC Stats. & Regs. ] 35,544 (2002).
15. The Small Generator Interconnection ANOPR proposed two small generator interconnection procedures and two small generator interconnection agreements, with the distinction between the two sets of documents being the size of the Small Generator. These documents (hereafter, respectively, ANOPR SGIPs and ANOPR SGIAs) were offered by the Small Generator Commenters in their comments to the Large Generator Interconnection NOPR. We encouraged interested parties to pursue consensus on the ANOPR SGIPs and ANOPR SGIAs. To that end, the Commission convened a series of public meetings designed to enable the parties to discuss and reach as much agreement as possible.
16. The public meetings culminated in the negotiating parties \14\
preparing two sets of standard small generator interconnection
procedures and agreements (Coalition SGIPs and Coalition SGIAs,
respectively) and submitting them to the Commission in November 2002.
While the Coalition members reached consensus on some issues,
significant disagreements remained. The documents nonetheless helped
inform the Commission of the various challenges that confront both the
owners of Small Generators and Transmission Providers. Public comments
on the Small Generator Interconnection ANOPR were filed in December 2002.
\14\ The negotiating parties included representatives of small
generators, the National Association of Regulatory Utility
Commissioners, and transmission and distribution providers (collectively, ``Coalition'').
II. Discussion
17. The results of the negotiations during the Small Generator Interconnection ANOPR process, the ANOPR comments, and the technical conference on queuing form the basis for the Proposed SGIP and Proposed SGIA that are included in this NOPR.
18. Coalition members drafted two Coalition SGIAs, one for Small Generating Facilities no larger than 2 MW, and a second for Small Generating Facilities larger than 2 MW but no larger than 20 MW. Likewise, they developed two sets of Coalition SGIPs. Although there was significant overlap between the two Coalition SGIAs as well as the two Coalition SGIPs, the Coalition members did not consolidate these four documents. To simplify the interconnection process and eliminate duplication, this NOPR offers a single Proposed SGIP and a single Proposed SGIA. The former incorporates different procedures for the processing of Interconnection Requests for Small Generating Facilities of various sizes.
19. Coalition members were often unable to reach consensus on an issue and the Commission needed to resolve the issue for the purpose of this NOPR. The Commission carefully evaluated the positions the Coalition members presented in the November 2002 consensus document as well as the ANOPR comments filed the following month. The Commission also acknowledges that NARUC has developed a model small generator interconnection procedures and agreement that is similar in many ways to the proposal contained in this NOPR. The NARUC model and its comments were very helpful in the development of this proposal.
20. Also, where appropriate, we are proposing some provisions and
definitions identical or similar to those in the Large Generator
Interconnection Final Rule (and the OATT) to ensure as much consistency as is reasonable between the large and small generator
[[Page 49977]]
tariff provisions.\15\ We invite comment on this approach, and ask
interested parties to address whether Large Generators and Small
Generators should be treated differently with respect to those parts of
the Proposed SGIP and Proposed SGIA that follow the Final Rule LGIP and Final Rule LGIA.
\15\ See, e.g., Articles 4.1, 5.1.2, 5.1.2.1, 5.2, 6.16.9, 6.126.20, 7, and 8 of the Proposed SGIA.
21. The Coalition presents various procedures to determine whether
certain Small Generators may interconnect safely with a Transmission
Provider's Transmission System. In the Coalition's proposed SGIPs, some
procedures would evaluate requests to interconnect Small Generators to
a Transmission Provider's Distribution System, while others would
evaluate requests to interconnect with its Transmission System. The
Commission here proposes instead to use the voltage level of the Transmission Provider's Transmission System at which the
interconnection is to be made as one basis for determining which
procedure may be employed \16\LowVoltage procedures would apply to
interconnections made at voltage levels below 69 kV, and HighVoltage
procedures would apply to interconnections made at voltage levels of 69
kV and above. The Commission believes that this will assist the Parties
by making clear which procedure applies to a particular Interconnection Request.
\16\ The other basis is generator size.
A. The Commission's Small Generator Interconnection Proposal
22. This NOPR includes a Proposed SGIP and a Proposed SGIA. The
Proposed SGIP describes the process for evaluating the proposed
interconnection. After the process is successfully completed, the
Parties would then execute the Proposed SGIA, which sets forth the
contractual rights and obligations of the Parties. To explain the
contents of the Proposed SGIA and Proposed SGIP, we next present: (1) A
discussion of our legal authority over a Small Generator's
interconnection to a public utility's Transmission System, (2) a
summary of the proposed interconnection process,\17\ and (3) a
discussion of significant issues that arose during the Small Generator
Interconnection ANOPR process and how we propose to resolve them.
\17\ To aid the reader, the Appendices contain flow charts that
depict the interconnection process. Appendix 1 depicts the Super
Expedited Procedures for interconnecting Small Generating Facilities
no larger than 2 MW to a LowVoltage Transmission System. Appendix 2
depicts the procedures for interconnecting Small Generating Facilities to a HighVoltage Transmission System and Small
Generating Facilities larger than 2 MW to a LowVoltage Transmission System.
1. Jurisdiction
23. At the outset, it is important to clarify several terms when discussing the question of jurisdiction. ``Local distribution'' is a legal term; under FPA section 201(b)(1), the Commission lacks jurisdiction over local distribution facilities.\18\ ``Distribution'' is an unfortunately vague term, but it is usually used to refer to lowervoltage lines that are not networked and that carry power in one direction. Some lowervoltage facilities are ``local distribution'' facilities not under our jurisdiction, but some are used for jurisdictional service such as carrying power to a wholesale power customer for resale and are included in a public utility's OATT (although in some instances, there is a separate OATT rate for using them, sometimes called a Wholesale Distribution Rate).
\18\ 16 U.S.C. 824(b)(1) (2000).
24. This NOPR proposes to apply the NOPR SGIA and NOPR SGIP in a
manner consistent with the Large Generator Interconnection Final Rule.
This is different from the authority proposed in the Small Generator
Interconnection ANOPR, where, consistent with the jurisdiction proposed
in the Large Generator Interconnection NOPR, we proposed to assert
jurisdiction when the owner of a generator seeks to interconnect with a
distribution facility to make a wholesale sale of electricity in
interstate commerce.\19\ Several commenters to the Small Generator
Interconnection ANOPR object to the Commission asserting jurisdiction
over interconnections to distribution facilities, both legally and as a
matter of policy.\20\ They argue, among other things, that the FPA
reserves jurisdiction over local distribution facilities to the States
and that the Commission lacks sufficient staff and expertise to
regulate numerous Small Generator interconnections to Distribution
Systems. These matters, they say, are best left to the States. Most of
these commenters do not distinguish between distribution facilities
owned by jurisdictional public utilities and those owned by nonpublic utilities.
\19\ Standardization of Generator Interconnection Agreements and
Procedures, Notice of Proposed Rulemaking, 67 FR 22250 (May 2, 2002), FERC Stats. & Regs. ] 32,560 at 34,178 n.22 (2002).
\20\ E.g., Baltimore Gas & Electric Co., Commonwealth of
Massachusetts Department of Telecommunications and Energy,
Connecticut Department of Public Utility Control, Edison Electric
Institute, FirstEnergy, NARUC, Public Service Commission of Wisconsin, and Southern Company Services Inc.
25. The proposed rule proposes to apply to interconnections to the
facilities of a public utility's Transmission System that, at the time
the interconnection is requested, may be used either to transmit
electric energy in interstate commerce or to sell electric energy at
wholesale in interstate commerce pursuant to a Commissionfiled
OATT.\21\ In other words, the standard interconnection procedures and
contract terms would apply when an Interconnection Customer that plans
to engage in a sale for resale in interstate commerce or to transmit
electric energy in interstate commerce requests interconnection to
facilities owned, controlled, or operated by the Transmission Provider
or the Transmission Owner, or both, that are used to provide
transmission service under an OATT that is on file at the Commission at
the time the Interconnection Request is made. Therefore, the NOPR
proposes to apply to a request to interconnect to a public utility's
facilities used for transmission in interstate commerce. It also would apply to a request to interconnect to a public utility's
``distribution'' facilities used to transmit electric energy in
interstate commerce on behalf of a wholesale purchaser pursuant to a
Commissionfiled OATT. But in such a case where the ``distribution''
facilities have a dual use, i.e., the facilities are used for both wholesale sales and retail sales, the NOPR would apply to
interconnections to these facilities only for the purpose of making
sales of electric energy for resale in interstate commerce.\22\
\21\ For purposes of this paragraph, the term ``Commissionfiled
OATT'' means a tariff that is on file at, and has been approved by, the Commission.
\22\ The Commission will exercise exclusive jurisdiction only
over the Commissionjurisdictional service. See Laguna Irrigation
District, 95 FERC ] 61,305 at 62,039 (2001) aff'd sub nom. Pacific
Gas & Electric Co. v. FERC, 44 Fed. Appx. 170 (9th Cir. 2002); Tex
La Electric Cooperative of Texas, Inc., 67 FERC ] 61,019 at 61,055
56, final order, 69 FERC ] 61,269 (1994) (both noting that the
Commission asserts jurisdiction over the service when the facilities
are not purely ``transmission'' facilities). Accordingly, the
Commission will continue to exercise exclusive jurisdiction over the
rates, terms, and conditions of the Commissionjurisdictional
service provided over the dual use ``distribution'' facility, but
the Commission will not assert jurisdiction over all uses of that
facility, because the regulation of ``local distribution'' of electricity to end users is reserved to the States.
26. For those Small Generator interconnections that would not be
subject to the Final Rule SGIP and Final Rule SGIA, the Commission will
make the Final Rule documents available as a guideline. The
standardization of small generator terms and conditions would [[Page 49978]]
benefit all customers nationwide by encouraging the development of
small generation, including generation using innovative technologies.
27. Finally, the Commission proposes to apply the reciprocity requirements in Order No. 888 to this proceeding. Under the reciprocity provision in section 6 of the OATT, if the public utility seeks transmission service from a nonpublic utility to which it provides open access transmission service, the nonpublic utility that owns, controls, or operates transmission facilities must provide comparable transmission service that it is capable of providing on its own system. A nonpublic utility that has adopted a ``safe harbor'' Tariff to comply with a reciprocity condition may add to its Tariff an interconnection agreement and interconnection procedures that substantially conform or are superior to the Final Rule SGIP and Final Rule SGIA if it wishes to continue to qualify for safe harbor treatment. A nonpublic utility that owns, controls, or operates transmission and that has not filed with the Commission a safe harbor Tariff and seeks transmission service from a public utility must either satisfy its reciprocity obligation under a bilateral agreement or seek a waiver of the OATT reciprocity condition from the public utility. 2. Summary of the Interconnection Process for Small Generating Facilities
28. To interconnect its Generating Facility with a Transmission Provider's Transmission System, an Interconnection Customer must first submit an Interconnection Request to the Transmission Provider. When the Transmission Provider deems the Interconnection Request complete, the Interconnection Request would be placed in the Transmission Provider's queue with other pending interconnection requests.
29. The Proposed SGIP divides Interconnection Requests into two groups according to whether the interconnection is to a HighVoltage Transmission System (69 kV or above) or a LowVoltage Transmission System (below 69 kV). Interconnections to LowVoltage Transmission Systems would be further divided into three groups depending on the size of the Small Generator being interconnected: (1) Small Generating Facilities larger than 10 MW but no larger than 20 MW, (2) Small Generating Facilities larger than 2 MW but no larger than 10 MW, and (3) Small Generating Facilities no larger than 2 MW.
30. The review of the proposed interconnection of a Small Generator
with a HighVoltage Transmission System or a Small Generator larger
than 10 MW with a LowVoltage Transmission System would proceed as
follows. Once the Interconnection Request is deemed complete, the
Parties would conduct a Scoping Meeting to review the Interconnection
Request and also review existing studies of the Transmission Provider's
Transmission System that are relevant to the Interconnection Request.
Interconnection Studies, including the Interconnection Feasibility
Study, Interconnection System Impact Study, and Interconnection
Facilities Study, would next be performed to evaluate the proposed
interconnection.\23\ These studies identify any Adverse System Impact
\24\ to the Transmission Provider's Transmission System that may occur
as a result of the interconnection, and the Transmission System
modifications that need to be made to address them. The Interconnection
Customer pays for the Transmission Provider's actual costs of
performing each study, and the Proposed SGIP includes time periods
within which the studies must be completed. If the Interconnection
Customer agrees to pay for any necessary modifications, the
Transmission Provider must proffer an SGIA to the Interconnection Customer.
\23\ The Interconnection Feasibility Study evaluates on a
preliminary basis the impact of the proposed interconnection to the
Transmission Provider's Transmission System. The Interconnection
System Impact Study evaluates in detail the impact of the proposed
interconnection on the safety and reliability of Transmission
Provider's Transmission System and, if applicable, Affected Systems.
The Interconnection Facilities Study determines the required
modifications to the Transmission Provider's Transmission System,
including the detailed costs and scheduled completion dates for such modifications, that would be required to accommodate the
Interconnection Request.
\24\ An Adverse System Impact means that technical or
operational limits on conductors or equipment have been exceeded,
which may compromise the safety or reliability of the electric power system.
31. Although the activities performed in the Small Generator process are the same as those in the Large Generator Interconnection Final Rule, the time lines proposed here are shorter. Accordingly, a Small Generator is likely to be interconnected more quickly under the Proposed SGIP than under the Final Rule LGIP.
32. For Small Generating Facilities larger than 2 MW but no larger than 10 MW interconnecting with a Transmission Provider's LowVoltage Transmission System, the proposed interconnection would be evaluated using the Proposed SGIP's Expedited Screening Criteria. If the proposed interconnection passes the screening criteria and the Transmission Provider agrees that the Generating Facility can be safely interconnected with its LowVoltage Transmission System, the former shall proffer an SGIA to the Interconnection Customer. However, if the Transmission Provider believes that the Generating Facility cannot be safely interconnected, irrespective of whether the proposed interconnection passes or fails the Expedited Screening Criteria, the Parties would follow the same procedures for Small Generating Facilities larger than 10 MW interconnecting with LowVoltage Transmission Systems; i.e., conduct a Scoping Meeting and perform Interconnection Studies. The Transmission Provider, after consulting with the Interconnection Customer, may determine whether a particular Generating Facility in this class of Small Generators may be interconnected absent a Scoping Meeting and Interconnection Studies. This is because, although the proposed interconnection may pass the Expedited Screening Criteria, it may nonetheless cause an Adverse System Impact, depending upon where the Small Generator is physically located on the Transmission Provider's Transmission System. Since this cannot be reflected in the screening criteria, the Transmission Provider may evaluate the proposed interconnection in greater detail and, if it is concerned about an Adverse System Impact to its Transmission System, require that a Scoping Meeting be held and Interconnection Studies be conducted.
33. However, in order to encourage the Parties to use the Expedited Screening Criteria to the fullest extent possible, the Commission proposes that, if the Interconnection Feasibility Study conducted under these conditions indicates no Adverse System Impact, the Transmission Provider must bear the cost of the Interconnection Feasibility Study. If an Adverse System Impact is identified, however, the Interconnection Customer must pay for the cost of the Interconnection Feasibility Study.
34. Interconnections of Precertified Small Generating Facilities no
larger than 2 MW with the Transmission Provider's LowVoltage
Transmission System would be evaluated under the Proposed SGIP's Super
Expedited Procedures. A Precertified Small Generator is one that has
been certified by a national testing laboratory as having met
applicable consensus industry and safety standards. If a proposed
interconnection passes all the SuperExpedited Screening Criteria, the
Transmission Provider would proffer an SGIA to the Interconnection Customer. If the proposed interconnection fails the
[[Page 49979]]
SuperExpedited screening criteria: (1) The Transmission Provider could
permit the interconnection anyway, after evaluating other factors such
as the physical location of the Generating Facility on its Transmission
System, or (2) the Interconnection Customer could ask the Transmission
Provider to perform an Additional Review, to be paid for by the Interconnection Customer.
35. The Additional Review is an expedited engineering evaluation limited to six hours of engineering time that is intended to identify minor modifications to Transmission Provider's Transmission System that may permit the Generating Facility to interconnect safely and reliably. If the Additional Review indicates that minor modifications to Transmission Provider's Transmission System can indeed be made that would permit the Generating Facility to interconnect safely and reliably, and the Interconnection Customer agrees to pay for the modifications, the Transmission Provider would provide the Interconnection Customer an SGIA. If the Additional Review does not indicate that the Generating Facility can be interconnected safely and reliably, the Parties would follow the procedures for Small Generating Facilities larger than 2 MW but no larger than 10 MW interconnecting with LowVoltage Transmission Systems.
36. Once the steps called for in the Interconnection Procedures are completed, the Transmission Provider would provide a best estimate of costs to be paid by the Interconnection Customer to effect the interconnection, and the Parties would negotiate Milestones for completing the interconnection, all of which would be incorporated into the SGIA. The SGIA would become effective upon execution by the Parties, subject to acceptance by the Commission, if necessary.\25\ \25\ Under Order No. 2001, if an executed interconnection agreement conforms with a Commissionapproved standard form of interconnection agreement, the utility does not have to file it with the Commission but must report it in the Electric Quarterly Reports. See Revised Public Utility Filing Requirements, Order No. 2001, 67 FR 31043 (2002), FERC Stats. & Regs. ] 31,127 at P 178 (2002); reh'g denied, Order 2001A, 100 FERC ] 61,074 (2002); reconsideration and clarification denied, Order No. 2001B, 100 FERC ] 61,342 (2002); further order, Order No. 200C, 101 FERC ] 61,314 (2002). An interconnection agreement must be filed only if it contains terms and conditions that deviate from the utility's generic, Commission approved interconnection agreement or is filed in unexecuted form.
37. The Commission next discusses several issues that either
divided the parties seeking to reach consensus during the Small
Generator ANOPR process or on which the Commission departs from the consensus position.
3. Maximum Capacity of a Small Generator (Proposed SGIP Section 1, Proposed SGIA Article 1)
38. Consistent with the Large Generator Interconnection Final Rule and the Small Generator Interconnection ANOPR, Small Generating Facilities no larger than 20 MW are considered Small Generating Facilities under the Proposed SGIA and Proposed SGIP. The Commission proposes to treat as a single Generating Facility the aggregated generation at a site for which an Interconnection Customer seeks a single Point of Interconnection.
39. The Commission recognizes that 10 MW is used as the threshold for small generators in Texas, California, New York and Ohio. In addition, several entities, such as the PJM Interconnection, Electric Reliability Council of Texas, and the California Independent System Operator use 10 MW as the threshold because generators under 10 MW are considered less likely to affect reliability and safety. In this NOPR, the Commission likewise proposes special procedures for generators no larger than 10 MW. The Commission, however, proposes to adopt the higher 20 MW threshold, which is used by the Midwest Independent System Operator, in this rulemaking because it would encourage the development of a greater number of Small Generators and promote the development of innovative small generation technologies.
40. Regarding Interconnection Requests that propose to increase the capacity at an existing Generating Facility, the Commission proposes that the new total capacity would determine how the Interconnection Request should be evaluated. For example, if an Interconnection Customer seeks to increase the capacity of an existing Generating Facility from 2 MW to 5 MW by the addition of a second generator, the Interconnection Request would be evaluated as if it were for a 5 MW Generating Facility. Likewise, the Commission proposes that if an Interconnection Customer seeks to increase the size of an existing Generating Facility from 10 MW to 25 MW, the Interconnection Request would be evaluated as if it were a request for a 25 MW Generating Facility. In this case, the Interconnection Request would not be eligible for evaluation under the Proposed SGIP, but rather the Final Rule LGIP. We also invite comment on whether single projects with multiple points of interconnection (as might occur for a windfarm or an industrial cogeneration project serving multiple facilities) should be treated as separate projects or as a single project for queuing and Interconnection Study purposes.
41. Some Interconnection Requests could specify a level of capacity
below the maximum capacity of the Generating Facility. We seek comment
on how such Interconnection Requests should be addressed. For example,
should an interconnection request for a device with a maximum capacity
of 22 MW but seeking an interconnection for only 20 MW (and agreeing to
restrict delivery to the Transmission Provider's Transmission System
below that level) be evaluated under the Final Rule SGIP or the Final Rule LGIP?
4. Precertification of Small Generating Facilities No Larger than 2 MW (Proposed SGIP Section 3.1)
42. A small number of states have procedures to precertify Small
Generator equipment that meet specified operational and safety
standards in order to expedite interconnections.\26\ Precertification
eliminates the need for the Transmission Provider to study the equipment for safety and reliability purposes.
\26\ The New York Department of Public Service, for example, maintains a list of approved equipment on its Web site.
43. Precertification of the Interconnection Customer's equipment does not mean that the Generating Facility can be immediately interconnected to the Transmission Provider's Transmission System. Before a Precertified Generating Facility may be interconnected, it must first be determined that the interconnection would have no Adverse System Impact on the Transmission Provider's Transmission System. The purpose of Precertification is to ensure the safety of the Generating Facility itself, not the safety or reliability of the Generating Facility's interconnection to the Transmission Provider's Transmission System.
44. Although precertification presumably has expedited the
development of small generation in states where such programs exist,
there is no national precertification program. Manufacturers tell us
that they face the cost and delay associated with having their
equipment evaluated in each state. Moreover, many states lack
procedures for evaluating equipment. In these states, generator
equipment is evaluated on a casebycase basis by the Transmission Provider in the course of
[[Page 49980]]
evaluating each Interconnection Request.
45. The Coalition proposes a single, uniform, nationwide precertification process for Small Generating Facilities no larger than 2 MW that would encourage the development of small generation while ensuring the safety of the electric system. The Coalition proposes that the Commission itself certify equipment and maintain a registry of equipment that has been certified.
46. This NOPR does not propose to adopt the Coalition's proposal in its entirety. In the Proposed SGIP, a Precertified Generating Facility is defined as one that has been tested by a nationally recognized testing laboratory to consensus industry standards in order to ensure that it will operate in a safe manner. The Commission in this NOPR concludes that certifying equipment and maintaining a registry should be done by an industryrecognized testing organization, not this agency. Accordingly, rather than establish and maintain a list of precertified equipment, as proposed by the Coalition, the Commission encourages cooperation and information sharing among the States and industry participants regarding the precertification of generating equipment. This would eliminate duplication of effort and encourage small generation development, while advancing the movement toward a nationwide set of precertification standards.
47. The Commission recognizes that the IEEE Standards Board
approved IEEE Standard 1547 for Interconnecting Distributed Resources
with Electric Power Systems on June 12, 2003 to create uniform
standards to interconnect distributed generation for safe and reliable
operation. Together with other technical industry documents, IEEE 1547
could serve as the basis for a national standard for precertification.
The Coalition proposed other documents that might be relevant to
equipment precertification. The Commission requests comments about what
role, if any, the Commission should have in assessing which entity or entities could perform this precertification function.
5. Use of Screening Criteria (Proposed SGIP Sections 3.3 and 4.3)
48. Screening criteria simplify the process of evaluating the interconnection of certain Small Generating Facilities to the Transmission Provider's Transmission System. Their purpose is to identify quickly those proposed interconnections that can be implemented with minimal or no impact on the Transmission Provider's Transmission System and can, therefore, be completed quickly. An example of a SuperExpedited Screening Criterion is that the capacity of a Small Generator proposed for a radial circuit shall not exceed five percent of that circuit's annual peak load.
49. The Coalition developed four screening criteria: (1) Primary screening criteria, (2) secondary screening criteria, (3) distribution impact screening criteria, and (4) transmission impact screening criteria. The first three only apply to proposed interconnections with the Transmission Provider's Distribution System. Not all parties in the ANOPR process supported the use of all four Coalition screening criteria, especially the last two.
50. The Proposed SGIP includes two screening criteria to evaluate proposed interconnections with a Transmission Provider's LowVoltage Transmission System (i.e., below 69 kV): (1) SuperExpedited Screening Criteria for the smallest generating facilities, and (2) Expedited Screening Criteria for somewhat larger but still small generating facilities. Although both screening criteria use similar evaluation standards, the latter are easier to satisfy than the former. The Commission does not propose screening criteria for: (1) Small Generating Facilities of any size interconnecting with the Transmission Provider's HighVoltage Transmission System and (2) Small Generating Facilities larger than 10 MW interconnecting with the Transmission Provider's LowVoltage Transmission System. Because of the potential for an Adverse System Impact, such requests to interconnect are best evaluated using the Scoping Meeting and Interconnection Studies.
51. A proposed interconnection that fails the SuperExpedited
Screening Criteria may still qualify for interconnection by being
evaluated using the Additional Review and three sequential
Interconnection Studies: the Interconnection Feasibility Study, the
Interconnection System Impact Study, and the Interconnection Facilities
Study. A proposed interconnection that fails the Expedited Screening
Criteria may still qualify for interconnection by being evaluated using
three sequential studies: the Interconnection Feasibility Study, the
Interconnection System Impact Study, and the Interconnection Facilities Study.
a. SuperExpedited Screening Criteria (Appendix 1 to the Proposed SGIP)
52. The SuperExpedited Screening Criteria \27\ are designed to
evaluate proposed interconnections for Precertified Small Generating
Facilities no larger than 2 MW that are to be interconnected with the
Transmission Provider's LowVoltage Transmission System. If the
proposed interconnection passes the SuperExpedited Screening Criteria,
the Interconnection Customer and Transmission Provider would sign an
Interconnection Agreement without any further review. However, if the
proposed interconnection does not pass, the Interconnection Customer
can request an Additional Review to be followed by, if necessary, an
Interconnection Feasibility Study, Interconnection System Impact Study, and Interconnection Facilities Study.
\27\ The Coalition SGIP referred to SuperExpedited Screening Criteria as the Primary Screening Criteria.
b. Expedited Screening Criteria (Appendix 2 to the Proposed SGIP)
53. The Expedited Screening Criteria \28\ are used to evaluate the
proposed interconnection of Small Generating Facilities larger than 2
MW but no larger than 10 MW with the Transmission Provider's Low
Voltage Transmission System. If the proposed interconnection passes the
Expedited Screening Criteria and the Transmission Provider believes
that it can interconnect the Generating Facility safely and reliably,
the Interconnection Customer would sign an Interconnection Agreement
without any further review. However, if the Generating Facility does
not pass the Expedited Screening Criteria, or if the Transmission
Provider believes that the interconnection will undermine the safety
and reliability of its Transmission System even though the proposed
interconnection passes the Expedited Screening Criteria, the Parties
would conduct a Scoping Meeting to determine the appropriate
Interconnection Studies to be performed. However, as stated above, in
order to encourage the Parties to use the Expedited Screening Criteria
to the fullest extent possible, the Commission proposes that, if a
subsequent Interconnection Feasibility Study indicates no Adverse
System Impact, the Transmission Provider must bear the cost of the
Interconnection Feasibility Study. If an Adverse System Impact is
identified, however, the Interconnection Customer would have [[Page 49981]]
to pay for the Interconnection Feasibility Study.
\28\ The Coalition SGIP referred to Expedited Screening Criteria as the Impact Screening Criteria.
6. Dispute Resolution (Proposed SGIP Section 2.11 and Proposed SGIA Article 8)
54. In the Small Generator Interconnection ANOPR, the Commission proposed that the Parties use the Commission's alternative dispute resolution service or any other informal services available to them to resolve disputes. The Commission also proposed that the outcome of the dispute resolution process would be binding if the Interconnection Customer so chooses.
55. The Coalition SGIAs and SGIPs propose using Technical Masters
to help resolve disputes between the Parties. According to the
Coalition proposal, these Technical Masters would be certified by the
Commission and provided by the Commission to the Parties at minimal or
no cost. The Coalition proposal identifies Technical Masters as
``engineers with expertise in electric power transmission and
distribution interconnection requirements who are qualified and independent.''\29\
\29\ Coalition SGIP, Attachment A Procedures Section 6, and Attachment B Procedures Section 1.11 (Nov. 12, 2002).
56. Several commenters \30\ to the ANOPR take exception to the Commission's proposal that arbitration be binding if the
Interconnection Customer so chooses. They argue that the Parties should
be able to retain their rights of appeal when using the arbitration process.
\30\ E.g., Bonneville Power Administration, Avista Corp.,
Central Maine Power Company, Public Service Company of New Mexico, and Public Service Electric and Gas Company.
57. The Proposed SGIP and Proposed SGIA would adopt the dispute
resolution process in the Large Generator Interconnection Final Rule.
The Commission endorses the use of Technical Masters and agrees that
they must have the requisite expertise to review, and where possible,
resolve technical issues raised by the Parties. The proposed Dispute
Resolution procedures satisfy these requirements.\31\ The Commission,
however, declines to adopt the Coalition's proposal that it certify
Technical Masters. Instead, the Commission proposes to maintain on its
Web site a list of Technical Masters who may be called upon by the
Parties in the event of a technical dispute. However, the Commission
will neither evaluate nor certify persons that wish to be placed on the list.
\31\ ``[A]rbitrators shall be knowledgeable in electric utility
matters, including electric transmission and bulk power issues, and
shall not have any current or past substantial business or financial
relationships with any party to the arbitration (except prior
arbitration).'' Article 27.2 of the LGIA in Standardization of
Generator Interconnection Agreements and Procedures, Final Rule, Docket No. RM021000 (issued concurrently with this NOPRA).
58. With respect to the Interconnection Customer's ability to elect that arbitration be binding, we propose to adopt the language contained in the Large Generator Interconnection Final Rule, which provides that external arbitration would be binding on the Parties. However, the Arbitrator's final decision must be filed with the Commission if it affects jurisdictional rates, terms and conditions of service, Interconnection Facilities, or Upgrades. Parties may comment on this proposal and explain whether and why large and small generators should be treated differently.
7. Queuing (Proposed SGIP Sections 4.4 and 4.7)
59. The Commission proposes that each Transmission Provider maintain a single queue per geographic area. A queue sequentially lists Interconnection Requests based upon the date and time they are complete. The Queue Position of each Interconnection Request determines the order of performing Interconnection Studies for each generator, if required, and the Interconnection Customer's cost responsibility for any Upgrades to the Transmitting Provider's Transmission System necessary to accommodate the Interconnection Request.
60. Queuing was discussed at a January 21, 2003 Technical Conference convened by Commission staff. Some conference participants suggested that the Commission require the use of a single queue for each geographic area, with Interconnection Requests being evaluated in the order in which they are received. Such an approach, it was argued, is fair, makes the queue easier to administer, and allows more efficient processing of Interconnection Requests, including the use of clustering and other study techniques. Clustering of studies allows a Transmission Provider to study multiple Interconnection Requests at the same time. Clustering may reduce study costs and allow multiple Interconnection Customers to share the cost of Upgrades. Other conference participants suggested creating multiple queues based on generator size. This approach, they argued, would prevent small generator interconnections, with their comparatively short study times, from being unreasonably delayed by large generators ahead of them in the queue.
61. While we here propose that each Transmission Provider maintain a single queue per geographic area, a Small Generator's Queue Position does not necessarily determine how long it takes to actually interconnect. In the Proposed SGIP, if a proposed interconnection passes either the SuperExpedited Screening Procedures or the Expedited Screening Procedures, the Interconnection Customer would have no cost responsibility for Upgrades. Accordingly, the Small Generator could be interconnected very quickly, regardless of its Queue Position.
62. If the proposed interconnection does not pass either the Super Expedited Screening Procedures or the Expedited Screening Procedures, Interconnection Studies will be required to evaluate the proposal. And, if Upgrades are required, Queue Position may affect the Interconnection Customer's cost responsibility for the Upgrades. This is because Upgrades for interconnections higher in the queue may affect the need for Upgrades for interconnections lower in the queue. This would impact the cost of the interconnection for a particular Small Generator. However, as such costs for Small Generating Facilities may be relatively small or localized, we would permit the Interconnection Customer to ask to be interconnected out of queue order if it agrees to pay the full cost of the required Upgrades.
8. Parties to the Proposed SGIA (Proposed SGIA Article 9)
63. In general, the Commission does not address issues in this NOPR that were treated in the Large Generator Interconnection Final Rule unless parties propose that Small Generating Facilities be treated differently. However, in the Small Generator ANOPR process, parties raised this issue repeatedly, and for this reason the Commission includes a discussion of the issue.
64. Representatives of Interconnection Customers and
representatives of Transmission Providers could not agree on whether
the Transmission Owner should be a signatory to the SGIA, if the
Transmission Provider and the Transmission Owner are different
entities. The Commission proposes here the same approach taken in the
Final Rule LGIA; that is, if the Transmission Owner is not also the
Transmission Provider, both parties should sign the SGIA. We believe
that this would better define the relationship among the Parties in one
document, protect the Interconnection Customer and, therefore,
facilitate the development of new generation resources. In an RTO or [[Page 49982]]
ISO where the Transmission Provider is not the Transmission Owner, the
RTO's or ISO's compliance filing would be able to propose a modified
interconnection agreement that provides different respective rights and
obligations in the region. In other cases, we do not believe that the
three party agreement would create an undue burden for either entity.
Accordingly, the Commission proposes to require that both the
Transmission Owner and the Transmission Provider, if applicable, sign the SGIA.
9. Affected Systems (Proposed SGIP Section 2.8)
65. The Coalition's proposal acknowledges that the interconnection
of a Small Generator with a Transmission Provider's Transmission System may directly or indirectly affect other electric systems.
Interconnection Customers generally prefer that the Transmission
Provider be responsible for coordinating and performing all necessary
Interconnection Studies and equipment Upgrades with the owner or
operator of the Affected System.\32\ Interconnection Customers also
prefer that their interconnections not be made conditional on the
completion of these studies and Upgrades. Transmission Providers,
however, maintain that while they would use their best efforts to
coordinate and complete necessary Affected System Interconnection
Studies and Upgrades in time for the interconnection of a Small
Generator, they cannot compel the owner/operator of the Affected System to perform within the specified time lines.
\32\ The Proposed SGIA and the Proposed SGIP define Affected
System as ``an electric system other than the Transmission
Provider's Transmission System that may be affected by the proposed interconnection.''
66. The Commission proposes to continue treating interconnection
and delivery as separate aspects of transmission service and allowing
Interconnection Customers to request interconnection separately from
the delivery component of transmission service. In the vast majority of
circumstances, interconnection alone is unlikely to affect the
reliability of another electric system, especially if the generator
being interconnected is a Small Generator. However, in those rare
instances in which the mere interconnection itself may cause a
reliability or safety problem on an Affected System, the Commission
proposes to adopt the approach of Order No. 888 for Upgrades required
to protect Affected Systems from reliability problems due to delivery
service.\33\ Under Order No. 888, the Transmission Provider is required
to assist the customer in coordinating with the Affected System any
Upgrades needed to protect the reliability of that system.\34\ Also, we
will allow the Transmission Provider to coordinate completion of
Network Upgrades to its own Transmission System with the completion of the necessary Affected System Upgrades.\35\
\33\ See section 21 of the OATT. See also Tampa Electric Co.,
103 FERC ] 61,047 (2003), and Nevada Power, 97 FERC ] 61,227 (2001),
reh'g denied, 99 FERC ] 61,347 (2002); but see American Electric Power Service Corporation, 102 FERC ] 61,336 (2003).
\34\ Section 21.1 of the OATT states that: ``The Transmission Provider will undertake reasonable efforts to assist the
Transmission Customer in obtaining such arrangements, including
without limitation, provide any information or data required by such other electric system pursuant to Good Utility Practice.''
\35\ Section 21.2 of the OATT states that: ``Transmission
Provider shall have the right to coordinate construction on its own
system with the construction required by others. The Transmission
Provider, after consultation with the Transmission Customer and
representatives of such other systems, may defer construction of its
new transmission facilities, if the new transmission facilities on another system cannot be completed in a timely manner.''
67. Under Order No. 888, economic losses (i.e., extra generating
costs from having to redispatch generation) do not justify delaying the
provision of the delivery component of transmission service, and the Commission proposes to adopt the same standard here for
interconnections. As mentioned in the OATT, the Commission's Dispute
Resolution Service is available should the Interconnection Customer
wish to challenge the Transmission Provider's decision to delay
construction pending completion of the Affected System's Upgrades.\36\ \36\ See Section 21.2 of the OATT.
68. We also note that NERC Planning Standards already provide that
Transmission Providers should work together to minimize effects on each
other's systems. Whenever a Transmission Provider adds its own new
generation to its Transmission System, it may cause reliability or
safety effects on other systems that require coordination with the Affected Systems. A Transmission Provider must offer any
Interconnection Customer service that is comparable to the service it provides for interconnections of its own generation.
69. The Commission notes that the proposed treatment of Affected Systems is comparable to that contained in the Large Generator Interconnection Final Rule and requests comments on if and why this approach should be modified for Small Generator interconnections. 10. Pricing/Cost Recovery for Upgrades (Proposed SGIA Article 5)
70. The Commission's current interconnection pricing policy for
Transmission Systems that are operated by nonindependent entities is
to allocate the costs of the new facilities based on whether they are
at or beyond the Point of Interconnection. Those transmission
facilities that are at or beyond the Point of Interconnection are
considered Network Upgrades, and are initially paid for by the
Interconnection Customer. The costs are then refunded to the
Interconnection Customer by the Transmission Provider in the form of
transmission credits (with interest), with the result being that the
costs of the Network Upgrades are rolled into the prices paid by all
transmission customers.\37\ Interconnection Facilities (meaning
facilities on the Generating Facility's side of the Point of
Interconnection) are considered sole use facilities and, accordingly,
are directly assigned to and paid for by the Interconnection
Customer.\38\ Consistent with the Large Generator Interconnection Final
Rule, we propose to retain this current pricing policy for Small
Generating Facilities interconnecting with a Transmission System
operated by a nonindependent entity. The Commission seeks comments on whether this approach is appropriate for Small Generator
interconnections. We also invite commenters to recount their recent
experiences with interconnecting distributed generators to the
Distribution System, in particular the process for determining whether
Distribution Upgrades were necessary, and the cost assignment of those Upgrades.
\37\ See Consumer Energy Co., 95 FERC ] 61,233, reh'g denied, 96 FERC ] 61,132 (2001).
\38\ See Public Service Company of Colorado, 59 FERC ] 61,311 (1992), reh'g denied, 62 FERC ] 61,013 (1993).
71. For the Transmission Provider, such as an RTO or ISO, that is
an independent entity, our current policy, and the policy that we
adopted in the Large Generator Interconnection Final Rule, is to allow
flexibility regarding the interconnection pricing policy that an
independent entity may propose to adopt, subject to Commission
approval. Also in that Final Rule, we permitted a Regional State
Committee to establish criteria that an independent entity would use to
determine which transmission system upgrades, including those required
for generator interconnections, should be subject to incremental
pricing (``participant funding'') and which should not. The [[Page 49983]]
Large Generator Interconnection Final Rule also permitted, fo
FOR FURTHER INFORMATION CONTACT
Bruce Poole (Technical Information), Office of Market, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 502 8468.
Patrick Rooney (Technical Information), Office of Market, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5026205.
Kirk F. Randall (Technical Information), Office of Market, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5028092.
Michael G. Henry (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5028532.